Matter accumulates until black holes form and the known laws of physics no longer apply. Wealth accumulates until black holes form and the known laws of economics no longer apply.
The accumulation of matter does not begin with black holes, of course. It begins perhaps by chance. But once the accumulation begins, it begins to accelerate. For the force of gravity depends on mass: The greater the accumulation, the greater the mass, and the greater the force of gravity.
The greater the accumulation, the greater is the force drawing additional matter into the accumulation. Adam Smith described the process:
As soon as stock has accumulated in the hands of particular persons, some of them will naturally employ it in setting to work industrious people, whom they will supply with materials and subsistence, in order to make a profit by the sale of their work...Early on, the creation of value is a by-product of the process of accumulation. As long as the creation of value facilitates accumulation, the creation of value gives the appearance of being central to the process. It is not central to the process.
Late in the process of accumulation, little free matter remains in the universe. So the creation of value can do little to facilitate accumulation. Therefore, the process of accumulation evolves. The underlying force remains the same: The force of gravity attracts matter to matter, wealth to wealth. Late in the process, however, large accumulations attract large accumulations. Black holes consume black holes. Mergers and acquisitions serve the process of accumulation better than the creation of value ever could.
Maitland A. Edey and Donald C. Johanson, in Blueprints: Solving the Mystery of Evolution, compare Linnaeus to Buffon. Both men were born in the year 1707. Both rode the "surging wave of curiosity that was sweeping over Europe, an avid desire for explanation and description of the natural world."
Linnaeus devised the system of scientific classification now widely used in the biological sciences. Buffon also devised a classification system. Edey and Johanson write: "As one who sought to put the universe in order, Buffon, of necessity, had to become a classifier himself. He rejected Linnaeus's system". But Buffon's system, they say, "was preposterous."
Edey and Johanson tell us that Buffon "graded animals according to how useful they were to humans, and started with the horse, 'the noblest conquest man has ever made.'" They point out that Buffon's approach "does make clear what a strong hold the idea of the centrality of humans in the cosmos had on humans themselves--before Darwin."
Lacking a big picture, economists in the early days of the science observed the process of value creation, found it useful to humans, and assumed that value creation was central to the path of economic progress. It remains central to our understanding of economic forces today, because we have yet to learn better.
Economists today hold value creation -- economic growth -- central, because economists still place humans at the center of the economic cosmos. One day they will learn that economics is the study of the process of accumulation.
No. Let me say it better.
The force that drives economic accumulation arises from people who desire to accumulate. In a world where existing accumulations are small and atomistic, setting industrious people to work is evidently the best way to increase one's accumulation. But in a world where accumulations have become large and concentrated, there are better ways. Unfortunately, those "better ways" are better for the accumulators, but worse for the society of which they are part. Mergers and acquisitions, for example, reduce rather than increase employment.
The creation of value was never central to the process of accumulation. It was only, for a time, the best way to facilitate accumulation. Due to the long-term concentration of wealth, that is no longer true. But economists developed their basic understanding of the economy back in the day when setting industrious people to work seemed an integral part of the process. And economists still teach that job creation and accumulation of wealth go hand in hand. They still say that to create jobs we must encourage the accumulation of wealth.
That, however, was never true. Job creation was never more than a method which enabled accumulation to proceed. Moreover, having very few, very large accumulations was never a better plan that having many, smaller accumulations.
Our choices are to reverse the clock, using policies that favor small accumulations rather than accumulation in general, and thereby restore the Cycle of Civilization to its "capitalist" phase. Or, to continue on our present course and end up, most of us, as penniless serfs. Most of the present-day one percent, even: penniless serfs. For the process of accumulation does not stop until there are no more worlds to conquer.
2 comments:
i.e., why we don't need tax cuts for the wealthy.
As I see it, "the process of accumulation does not stop until there are no more worlds to conquer."
In an old post, J.W. Mason writes:
The classical economists are full of blunt statements that the only possible end of exchange is consumption. In today’s economics we find this assumption in the form of the “transversality condition” that says that wealth must go to zero as time goes to infinity. That’s right, it is an axiom in modern economics that accumulation cannot be a goal in itself. Or in the words of Simon Wren-Lewis (my new go-to source for the unexamined conventional wisdom of economists): “It would be stupid to accumulate infinite wealth.”
In comments at the Simon Wren-Lewis link, Mason says:
"When I look out at the world, I see an economy dominated by profit-making entities that are organized precisely around an effort to accumulate infinite wealth."
Accumulation *is* a goal in itself. That's what I'm saying in my original post above. Apparently, Mason and I agree on this point. As I have it: "The creation of value was never central to the process of accumulation. It was only, for a time, the best way to facilitate accumulation. Due to the long-term concentration of wealth, that is no longer true."
Mason's disagreement with Simon Wren-Lewis seems to me to be due to the fact that the economy changes -- and that it changes faster than economic thinking can change.
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