Wednesday, January 04, 2006

Review (Part One: End of the Old Order): The European Economy 1914-2000 (4th Edition)

Review of: The European Economy 1914-2000 (4th Edition)
Derek H. Aldcroft (2001)

Upon beginning this blog format, one must discuss the reading of books one at a time, and the letting of them rest a long time, possibly too long to write lengthly reviews, encourages returns for further and repeat readings which encourages multi-part writings. In the last month or so, with more time, this reading process has changed. Certain books have taken "on and off" values. Like an intersection of traffic signals, with regular flow rates and turns-taking. A rotating through of a wonderful buffet of books, much as one returns for courses or platefuls of food.

However, as a result the mind becomes an increasingly interesting and pliable creature. It appears to retain those points which it most desires to discuss, in this frame of reference "review" maybe, because at some subconscious perspective, it has its own destination on consolidating the learning. Writing upon economic highlights so highlights again and attempts to shade-in necessary but limited details to accent them. As far as is required, the mind is composed of memories embedded in long and short term formats. When reading, one is able often to at times note those moments when clearly, diverse topics of choice are pulling their patterns and inferences independently of and freely from previously difficult straining or highly concentrating attempts at learning in the seeking of making those connections. Writing often simply just pours out.

So gathering more confidence in the process itself lends the idea that diffusiveness of reading has its own ultimate benefit. In the pouring out of writing. In knowing what needs to be written and what is left still to be read. And a title like "The European Economy 1914-2000" Derek H. Aldcroft (2001) has an initial impression of great dryness, or an empty decanter, for the average reader it might require much watering or at least some entertaining and enlightening attempts at detailing the dowsing rod in such a book. Business is a topic taken out of enlightened self-interest. It has its patterns, like a river, it has occupied the interests of the human condition perhaps since neanderthals or some-such discovered the makings of wine from rotting grapes falling within tree stumps. Perhaps they were simply apeing the monkeys in formenting like commodities. So a hundred years past is not so simian and perhaps more palatable, thus infinitely more relevant.

Continued review of this period prior to or around 1880 as a fulcrum of sorts is a pattern of useful business study. It reveals the modern world's first defined experience with the directions to which the interventing past up to the present has been provoking itself ever since. The capitalist. There is a total, permanent separation between rural and urban culture in most developed societies starting from this period, and the shifting of the balance between skilled and unskilled from one extreme to the other, from hayseed to suit, the welding of financing to process manufacturing, technology, and decades of production being driven into the dusts of war. Furthermore, it is useful to address the economic preparations and results of the full financing of technologically derived destruction of much of Western Europe, not once, but twice in short succession. Antimony and greed were both rainmakers and rainmade.

Aldcroft essentially serves such interests, and provides the details necessary to pinpoint the key dynamics of economics which propelled Europe into its first greatest destruction. It was my father's library from which I first read, as the first growth of the US was the source of its European parents losses, his interests as a history major were mostly the Second World War Period, a period with which his generation, that born near the end, but prior to the boom, was often perplexed with. Immense losses. That which I dabbled with in my own chosen library was English Literature which illustrated almost as detailed studies however narrowly, within the great creative works of the language, but with richly patterned and symbolic details, as close respectful relationships to each of the beauties of a peacock's feathers might appear to an appreciator as they are remaining on the living bird.

Such was what was lost. So a colouring of the mind with the realms of the cultural aspects of English Literature in Canada, America, and England, much leading up to 1880 out of pure intellectual pleasure is also useful for bringing vitality to economics. So it is logical that economics is taken on fancy flights at times, it is the rebar bridge of accountability which links a couple of fairly amateurish knowledge columns, fairly incomplete understandings in discreetly contrastive but complimentary disciplines. It is best to note the caps and the luxuries of imagination the world has destroyed in seeking to compartmentalize and structure its societies and occupational knowledge requirements so closely as economics does dictate for most individuals today. There has been a great narrowing of individual perspectives from what was thought generally in the 1880s, though far more people are better off today it appears one can know less of use generally, and thus be easily more encapsulated and manipulated upon what may have once been a wider landscape-type of understanding of the world. The canvas was integrated for readers and writers to all enjoy and commune regularly in general but in more complex thus intellectually stimulating manners of personal enrichment when interest was enough, and expertise was reserved for working affairs. At least nowadays more people can read and write. More people are free. There are fewer gravely poor. More people have the opportunity to freely capitalize? It was a time of which I have read. It was a time of great hope and promise. Even among the desperately poor. I believe successful societies must possess a collective hope and promise. But it was blind.

Aldcroft details that the end of this old order, that which existed as it may be read about indirectly, was the period of 1914-1921. Through the ramping and bolting up of their foreign lending and market capitalization industries, North America and Oceania (mostly Australia, but remember the colonials) are noted to have exceeded North Western Europe in terms of incomes per capita as of 1913. It was a mere thirty years of standardization of production which accomplished this, along with fledgling formations of trade unionism, implementations of shaky minimum work standards which had paralleled and preceeded this dynamic shift. The fact was that the US domestic economy was in itself demonstrating sufficient economies of scale to provision the capital and currency to lend to the Europeans, vast sums, much remaining unpaid today, but to purchase products it had effectively given the US the power to exploit three times over (and more) as fuel for war escalations. This took decades to prepare for economically.

It was as if an instantaneous conversion of the entire Eastern North American forests and farmlands and tranquil ponds had been moulded directly into industrial driven power-plants as seen in many Asian nations for the last decades, and with the ready railroads, every one horse-town all the way to California as well. The American working public was increasing productivity at a faster rate than any nation in history had ever done before, than even its European trade partners, consumers, and first financers. Thus disposable income increased incredibly. Overnight. In a period of under thirty years. Every derivative and subsidiary industry in North America suddenly lit up like a casino jackpot one-armed bandit winner, with bells ringing and lights flashing. For over two decades. All of North America and Oceania became Las Vegas.

But so too developed the complex issues of income distribution that can be observed currently, the percentages of wealth held by the rich and investor class. In 1913, 18% of the world's population controlled 62% of the world's wealth. In only a hundred years, that proportion has increased in concentration. Half as many people again now control more. But at no time previous or since the Age of Aldcroft's Old Order did a greater proportion of US manufacturing production and commodities exit their domestic economy, as combined with proportional US financing of European loans to purchase and pay for all of that export growth. US consumption had still not caught up with its production capacities. In the case of consumption, this is also the case in China's margins for potential profit today.

Many economists are not very professionally concerned about the ethical consequences of such asset redistribution, or the direct losses accrued in human populations due to the effects of such economic gains from a humane or fire-fighting outlook. They often appear more like fire starters. Nothing propelled the world's first major global growth cycle like preparations and profits for war could. Thus statistics for war-time population losses are only numbers on a page to many economists. Human losses were highest in Germany and Russia in this period. Their combined tolls account for 22-24 million souls. Aldcroft admits that this was nearly 7% of the entire population of Europe but that it only effected industry losses in efficency in Germany and not Russia, as it was still a primarily agrarian economy where human losses were extreme but no fixed assets existed to be destroyed or removed from production.

Yet this was combined a total elimination of natural population increases in Europe for the entire duration of the war period, something which would later impact upon its regional ability to build its own economies of scale for domestic consumption and export growth. Necessary if it sought to reduce US imports, the demand for which it had created but not through increased consumer consumption or income per capita gains. It is a concurrent, coincidental statistic of the period 1914-1919. It was as if for the first time in the record of humanity, an economic snapshot had been erased completely the moment it was taken, on the economic principles of snapshot-like gathering of data indicators. That is, data is only an indicator of current situations, much as a photograph is contextualized for a moment in terms of economic time, or a sample useful for compiling sets of data at this very moment alone.

In this case it was also the first time that economists could calculate human capital losses under the auspices of gross capital losses, a century before businesses even began calculating employees as intangible assets. And these capital losses were then also concurrent with another economic coincidence. These economists could calculate losses on income yielding property, fixed assets, bricks and mortar at three to four years of normal growth rates of return. Again nearly concurrent to the duration of the war period. Aldcroft notes of these details with precision.

It was as if a triple punch had impacted the totality of European economics without even considering their future dues, reparations, loans or interests accrued on outstanding debts, real losses, borrowed from the same people they had purchased their war materials and commodities from. Collectively allies and axis powers had guaranteed the failure of their locally potential future competitive advantages in three ways for another thirty years, the next thirty years, not including the fact that they did it again fifteen years later despite warnings from a certain tall, but obviously forlorn, British jester of an economist. His name starts with the letter after "J". Probably no other economist in history ever spent as much time contemplating Yorick's skull waiting for someone, anyone, to get the point.

First, they had diverted nearly thirty years of economic gains away from capital investment and growth locally to the US for the sake of scale of bulk savings in per unit costs. Second, through import purchases of mostly US products these liquid assets potentially useful for start-up in Europe and domestic increases in production and consumption capacities were prevented from ever taking place as those assets were spent in the US. Third, dynamic income per captia increases could never be realized because the natural population growth required to increase domestic production and capacity as well as consumption and productivity had been erased with the very products which would cost them in excess of sixty years of collective lost liquid capital and market share virtually given away to their competitors. Who now effectively owned them.

The majority of the economic capacities (bricks and mortar) losses were concentrated in France and Belgium, vast portions of which were simply levelled. The total costs of the five year war, combined, exceeded the expenditures to a total of 6.5 times the total western European collective national debts of every country therein, from the end of the 18th Century to the end of The Great War.

This period of approximately two decades was the largest total economic loss up to that date in the history of human existence. It was a first. And in its being first it was last. The empty motto, "Never Again" really did mean "Never Again" but only in the fact that such a total economic loss could indeed only ever happen first once.

Every single, solitary loss of even a single sous, was multipled through accounting principles of a sous today infinitely being worth more than a sous tomorrow, compounded over and over to the present day. At least Aldcroft writes well enough economically for the realization that this old order had truly ended far earlier than many may even realize. The seeds of the end of the old order were completely determined by its outset and its aims. Blindness. Capitalist innocence?

The rainmakers were European buyers of virtually everything, credited to the seller. The sellers were the rainmade. The North Americans and Oceania. And so far they have been so made ever since. It was the greatest capital shift in history and it only took twenty years, about a century before free currency exchange even ever came (roughly) into existence. And it happened because both camps agreed it was culturally inevitable and economically necessary.

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