Tracing the origins of Homo Economicus

Ross Gittins has been Tracing the origins of Homo Economicus through the prism of Capitalism.

In his fascinating book, The Birth of Plenty, published by McGraw-Hill, William Bernstein identifies four inputs to economic activity - land, labour, capital and knowledge - and divides the human saga into four stages: hunter-gatherer, agricultural, industrial and post-industrial.

Emphasis Mine

Note the absence of class and economic relationships. Everything is impersonal - no human actors at all. The four (4) stages gloss over the various types of agricultural societies: barbarism (tribal based); hydraulic (irrigation); slavery; and feudalism. Among these different types of agricultural societies, the relationships between people were vastly different. Barbarism had village based democracies with a combination of private and common land. A hydraulic society required organisations to build and maintain the irrigation systems with a means to distribute the water equitably. These were the early monarchies and religious cults.

Later on, the conflict between hunter-gathers and agriculturalists is said to be resolved as follows: (Emphasis is mine)

[Bernstein] lists four reasons the hunter-gatherers had little chance of survival when they came into contact with farming communities. First, with their lower population density, they couldn't compete militarily with farming societies.

I would think the Huns and Mongols (among others) would disagree with this statement. They managed to conquer quite large civilizations like the Chinese, Roman, Persian, Arabian, etc.

Second, farming societies evolved a small elite of soldiers who specialised in the annihilation of their nomadic neighbours. An even smaller elite of rulers planned and directed these efforts.

They did not evolve these classes. The increasing productivity of the farmer meant that they could support bludgers like the military, priests, and bureaucrats (Nothing much has changed in 12,000 years!). These bludgers were able to compel the others to support them. Thus, class warfare began between the exploited (farmers) and the exploiters (rulers, priests, and warriors).

Third, the close proximity of humans and domesticated animals gave rise to diseases such as smallpox and measles. While the farmers developed immunity to these microbes, they proved lethal to their hunter-gatherer neighbours.

The survival of significant nomadic populations (Cossacks for one) well into the 17th and 18th centuries CE puts paid to that bit of nonsense.

Finally, while most early farming ventures were communal, some farmers began to individually own and run their plots. Such farms became far more efficient than their communal competitors, Bernstein says, and societies that favoured property rights quickly found themselves at an enormous advantage, not only over their hunter-gatherer neighbours, but also over communal farming societies.

Here the idea of individual private ownership is projected back into time. Well into the 17th and 18th centuries CE, the exclusive ownership of land was a foreign concept. Under Feudalism, the local magnate owned the land, but the peasants were able to use that land to grow crops and feed animals in return for service to the magnate. If the land was transferred to a new magnate, the peasants went along with the land. In this case, the land could be said to be privately owned but it was communally farmed.

It was not until the beginnings of Capitalism, that private property became important. Before then, most people fed and clothed themselves through their labour by farming and making their own clothes.

By about 1500 the modest improvements in agricultural techniques, coupled with the first stirrings of property rights, capital markets and transportation technology, allowed substantial numbers of workers to leave the farm and engage in manufacturing.

What bullshit! These people were thrown off the land that their ancestors had farmed for centuries because the local parasite (ie feudal lord) decided he could make more money by running sheep on his land. The lord did not care whether his former peasants lived or died. The law was changed to justify this bastardy (the Enclosure Laws), thereby making theft legal. Now, the former peasants had to find jobs to earn enough money to buy food, clothing, and lodgings.

Suddenly, a new beast appears from nowhere. Its name is Capital.

Better yet, manufacturing is capital-intensive. Increasing population density begets more efficient capital markets. With growth, the financing of manufacturing capacity becomes progressively easier.

No explanation is given as to the origin of Capital or how it accumulates. I assume Bernstein thinks everyone knows that Capital growth comes from the accumulation of profits. But where does profit come from? From the exploitation of the workers, of course.

Every worker and small business owner knows that he works so many hours for the government in order to pay taxes, so many hours to get enough money to fed, clothe, and lodge his/her family, and hopefully enough to garner some savings. In a primitive economy, you would only do the second part, so you work much less to achieve the same result. It is the extra work that you do beyond what you need to do in order to live, that creates the profits.

As the industrial economies increasingly employed highly productive capital and knowledge inputs, growth became self-sustaining and unstoppable.

Except for the Great Depression of 1929, the depression of the 1890's, and the many recessions since. The ministry of truth is very busy rewriting history to paint such a glorious path to heaven on earth.

"The Western world did not arrive at such an agreeable state overnight," Bernstein concludes. "It took most of the second millennium to correct feudalism's suppression of property rights, throw off the intellectual stranglehold of the Church, overcome the lack of capital markets and rectify the absence of effective transport and communication.

"Only with the completion of these four tasks have citizens of the new industrial and post-industrial societies been able to enjoy the fruits of their labours."

Talk about living in an ivory tower. All these poor, homeless, struggling small businesses, unemployed, underemployed do not exist! We have wars over resources like oil, diamonds, cobalt, etc. We have huge speculative bubbles waiting to burst. What planet are these people living on?

The only people who are enjoying the fruits of my labours are those rich bludgers who jet around the world playing polo, skiing, gambling, and complaining how hard done by they are.