A review by R. Latta of The Law of Civilization and Decay, the Brooks Adams book written in 1895. The 3-page review is from The International Journal of Ethics, Volume 9, Number 4, July 1899. The Journal was published by the University of Chicago Press. Links include:
Or you could just go to JSTOR for the July 1899 issue and download the review from there.
Sometimes,
approval can be effusive (unrestrained, excessive) and flowery. If you
want concise approval, you're better off reading a negative statement.
R. Latta's opening sentence is concise:
Mr. Adams believes that he has discovered a law which governs the movement of human society in its "oscillations between barbarism and civilization."
The words suggest that Latta himself does not believe Adams has "discovered a law". And it's all downhill from there, as Latta presents Adams's view:
... as society becomes consolidated and centralized, energy expresses itself not as Fear but as Greed, and a new type of man becomes dominant, the economic man, who is unimaginative, sceptical, unwarlike, inartistic, a monster of voracity with the cleverness of a fiend and without a redeeming quality. Every race must come to this sooner or later, and ultimately "intensifying competition appears to generate two extreme economic types,-the usurer in his most formidable aspect and the peasant whose nervous system is best adapted to thrive on scanty nutriment." (P. x.) This condition may last for a time, until it is "ended by war, by exhaustion, or by both combined, as seems to have been the case with the Eastern Empire; or, as in the Western, disintegration may set in, the civilized population may perish, and a reversion may take place to a primitive form of organism." In this last case, the energy of the race is probably exhausted, and it must wait to be refreshed by the infusion of barbarian blood.
Adams
wrote of "farmers" and usurers; Latta says usurers and "peasants". Nice trick: Latta
downgrades farmers to peasants, and implicitly attributes the insult to
Adams.
At least Latta doesn't miss the usurers. That's the important part, the growth of usury. Today we call it "financialization". Many people deny that it is a problem.
Brooks Adams, grandson of John Quincy Adams, knew it was a problem in 1895.
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| Graph #1: Nonfinancial Debt Relative to Nominal GDP. When debt increases, the interest cost also increases. We think of "usury" only in terms of interest rates. But a high level of debt has the same effect as high rates. |
The graph shows debt increasing relative to GDP. The solid red lines indicate years. The dashed red lines show the level of debt as a percent of GDP for 1895 and for 2020.
Brooks Adams wrote The Law of Civilization and Decay in 1895. Nonfinancial debt that year amounted to 58% of nominal GDP. In 1848, the year he was born, the Debt-to-GDP ratio was half as high. Less than half.
In 2020, the last year shown on the graph. the Debt-to-GDP ratio reached 293%. That is five times what it was in 1895, and more than ten times what it was in 1848.
We can't let it keep going up. It is already causing problems. If we insist on having policies that encourage the use of credit, then we must have policies that encourage the repayment of debt. In addition, the economy is fragile because debt is so high. Therefore, in addition to encouraging the repayment of debt, our policies probably should help out a little. For example: tax credits that reduce the income tax we owe if we make extra payments on our debt.
If we really want to fix the economy, this is the way.
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