Periodization of Technological History
- 1 Mumford's Periodization of Technological History: Eotechnic, Paleotechnic, and Neotechnic
- 2 Periodization of the Techno-Economic Phases of Capitalism
- 3 Periodization of the P2P / Commons Transition
Mumford's Periodization of Technological History: Eotechnic, Paleotechnic, and Neotechnic
Excerpt from the draft chapter on Decentralized Production Technologies, in the forthcoming book of Kevin Carson of mutualist.org.
The idea of resurrecting old technologies in a modern context is also suggested by Mumford's periodization of technological history in Technics and Civilization. Mumford divided late medieval and modern technological development into three considerably overlapping periods: the eotechnic, the paleotechnic, and the neotechnic.
The original technological revolution of the late Middle Ages, the eotechnic, was associated with the skilled craftsmen of the free towns, and eventually incorporated the fruits of investigation by the early scientists. It began with agricultural innovations like the horse collar and horseshoe, and crop rotation. In mechanics, its greatest achievements were the invention of clockwork machinery, and the intensive development of water and wind power. It achieved great advances in the use of wood and glass, masonry, and paper (the latter including the printing press). The agricultural advances of the early second millennium were further built on by the innovations of the sixteenth and seventeenth centuries, like raised bed horticulture and greenhouses.
The eotechnic revolution largely stagnated in the early modern period, being supplanted or crowded out by the paleotechnic revolution. Paleotechnic was associated with the new centralized state and its privileged economic clients, and centered on mining, iron, coal, and steam power. It culminated in the "dark satanic mills" of the nineteenth century and the giant corporations of the late nineteenth and early twentieth. Although the paleotechnic incorporated some contributions from the eotechnic period, it was a fundamental departure in direction, and involved the abandonment of a rival path of development. To a large extent, technology was developed in the interests of the new royal absolutists, mercantilist industry and the factory system that grew out of it, and the new capitalist agriculturists (especially the Whig oligarchy of England); it incorporated only those eotechnic contributions that were compatible with the new tyrannies, and abandoned the rest.
The beginning of the neotechnic period was associated, among other things, with the invention of the prerequisites for electrical power--the dynamo, the alternator, the storage cell, the electric motor--along with the development of small-scale electric production machinery suitable for the small shop and power tools suitable for household production. Electricity made possible the use of virtually any form of energy, indirectly, as a prime mover for production: combustibles of all kinds, sun, wind, water, even temperature differentials. As Ralph Borsodi showed, with electricity most goods could be produced in small shops and households with an efficiency at least competitive with that of the great factories, once the greatly reduced distribution costs of small-scale production were taken into account.
The modest increases in unit cost of production are offset not only by greatly reduced distribution costs, but by the possibility of timing production to need instead of attempting to engineer mass-consumption to the needs of production:
if the domestic grain grinder is less efficient, from a purely mechanical standpoint, than the huge flour mills of Minneapolis, it permits a nicer timing of production to need, so that it is no longer necessary to consume bolted white flours because whole wheat flours deteriorate more quickly and spoil if they are ground too long before they are sold and used.
To put it another way, if the object is to have the highest quality flour with bran and germ intact, at a reasonable cost, as opposed to nutritionally dead wallpaper paste, the small mill is the most efficient means available. The larger mills are only more "efficient" if the consumer is subordinated to the needs of large-scale production.
The lost promise of the Eotechnic could be resurrected
It was primarily the decentralizing potential of electricity that inspired Kropotkin's vision of the merging of village and town in Fields, Factories and Workshops. As Colin Ward commented, in his edition of that work:
The very technological developments which, in the hands of people with statist, centralising, authoritarian habits of mind, as well as in the hands of mere exploiters, demand greater concentration of industry, are also those which could make possible a local, intimate, decentralised society. When tractors were first made, they were giants, suitable only for prairie-farming. Now you can get them scaled down to a Rotivator for a small-holding. Power tools, which were going to make all industry one big Dagenham, are commonplace for every do-it-yourself enthusiast.
Paul Goodman, likewise:
Think of the present proliferation of machine-tools. It could once be said that the sewing machine was the only widely distributed productive machine; but now... the idea of thousands of small machine shops, powered by electricty, has become familiar; and small power-tools are a best-selling commodity. In general, the change from coal and steam to electricity and oil has relaxed one of the greatest causes for concentration of machinery around a single driving-shaft.
The neotechnic, in a sense, is a resumption of the lines of development of the original eotechnic revolution, after the paleotechnic interlude. The neotechnic
differs from the paleotechnic phase almost as white differs from black. But on the other hand, it bears the same relation to the eotechnic phase as the adult form does to the baby.
....[T]he conceptions, the anticipations, the imperious visions of Roger Bacon, Leonardo, Lord Verulam, Porta, Glanvil, and the other philosophers and technicians of the day at last found a local habitation. The first hasty sketches of the fifteenth century were now turned into working drawings: the first guesses were now re-enforced with a technique of verification: the first crude machines were at last carried to perfection in the exquisite mechanical technology of the new age, which gave to motors and turbines properties that had but a century earlier belonged almost exclusively to the clock. The superb animal audacity of Cellini, about to cast his difficult Perseus, or the scarcely less daring work of Michelangelo, constructing the dome of St. Peter's, was replaced by a patient co-operative experimentalism: a whole society was now prepared to do what had heretofore been the burden of solitary individuals.
It would be "poetic justice," as Borsodi put it, "if electricity drawn from the myriads of long neglected small streams of the country should provide the power for an industrial counter-revolution."
Mumford suggested that, absent the dislocations imposed from above by the new states and their clients, the eotechnic might have evolved directly into the neotechnic without any disruption. A full-scale modern industrial revolution would likely have come about through such decentralized technology, as Mumford put it, "had not a ton of coal been dug in England, and had not a new iron mine been opened."
The amount of actual work actually accomplished by wind and water power compared quite favorably with that of the steam-powered industrial revolution. Indeed, the great advances in textile output of the eighteenth century were made with water-powered factories; steam power was adopted only later. The Fourneyron water-turbine, perfected in 1832, was the first prime-mover to exceed the poor 5% or 10% efficiencies of the early steam engine, and was a logical development of earlier water-power technology that would likely have followed much earlier in due course, had not the evolution of water-power been interrupted by the paleotechnic revolution.
Had the spoonwheel of the seventeenth century developed more rapidly into Fourneyron's efficient water-turbine, water might have remained the backbone of the power system until electricity had developed sufficiently to give it a wider area of use.
In The City in History, Mumford mentions abortive applications of eotechnic means to decentralized organization, unfortunately forestalled by the paleotechnic revolution, and speculates at greater length on the Kropotkinian direction social evolution might have taken had the eotechnic passed directly into the neotechnic. Of the seventeenth century villages of New England and New Netherlands, he writes:
This eotechnic culture was incorporated in a multitude of small towns and villages, connected by a network of canals and dirt roads, supplemented after the middle of the nineteenth century by short line railroads, not yet connected up into a few trunk systems meant only to augment the power of the big cities. With wind and water power for local production needs, this was a balanced economy; and had its balance been maintained, had balance indeed been consciously sought, a new general pattern of urban development might have emerged. But this possibility was blocked by the prevailing ideology, which favored intensive specialization and the centralization of economic power in a few big centers, to which small urban units would be subservient.
In 'Technics and Civilization' I pointed out how the earlier invention of more efficient prime movers, Fourneyron's water turbine and the turbine windmill, could perhaps have provided the coal mine and the iron mine with serious technical competitors that might have kept this decentralized regime long enough in existence to take advantage of the discovery of electricity and the production of the light metals. With the coordinate development of science, this might have led directly into the more humane integration of 'Fields, Factories, and Workshops' that Peter Kropotkin was to outline, once more, in the eighteen-nineties.
It's important to remember that there is no such thing as generic "superiority" of one technology over another. One technology can only be said to be superior to another with reference to some purpose. The transition to the paleotechnics, instead of further development of eotechnics, reflected a given set of interests. The paleotechnic was more "efficient" at serving the interests of the absolute state and its privileged clients, the great landowners and mercantilists.
Ralph Borsodi speculated, along lines similar to Mumford's, on the different direction things might have taken:
It is impossible to form a sound conclusion as to the value to mankind of this institution which the Arkwrights, the Watts, and the Stephensons had brought into being if we confine ourselves to a comparison of the efficiency of the factory system of production with the efficiency of the processes of production which prevailed before the factory appeared.
A very different comparison must be made.
We must suppose that the inventive and scientific discoveries of the past two centuries had not been used to destroy the methods of production which prevailed before the factory.
We must suppose that an amount of thought and ingenuity precisely equal to that used in developing the factory had been devoted to the development of domestic, custom, and guild protection.
We must suppose that the primitive domestic spinning wheel had been gradually developed into more and more efficient domestic machines; that primitive looms, churns, cheese presses, candle molds, and primitive productive apparatus of all kinds had been perfected step by step without sacrifice of the characteristic "domesticity" which they possessed.
In short, we must suppose that science and invention had devoted itself to making domestic and handicraft production efficient and economical, instead of devoting itself almost exclusively to the development of factory machines and factory production.
The factory-dominated civilization of today would never have developed. Factories would not have invaded those fields of manufacture where other methods of production could be utilized. Only the essential factory would have been developed. Instead of great cities, lined with factories and tenements, we should have innumerable small towns filled with the homes and workshops of neighborhood craftsmen. Cities would be political, commercial, educational, and entertainment centers. The homestead would have developed in countless directions and would have continued the economic center of the family. Efficient domestic implements and machines developed by centuries of scientific improvement would have eliminated drudgery from the home and the farm....
We must, in short, make a comparison between the factory economy which we have today and a hypothetical economy which I believe should have been developed.
Likewise, as P. M. Lawrence has pointed out, the proper comparison is not between agribusiness and subsistence farming as they exist, but between agribusiness and subsistence farming as it would exist had it been free to develop without enclosures, without rack-rents, and without the state's diversion of all resources for innovation into the channel of large-scale cash crop agriculture (about which more below).
Conventional histories--written by the victors, of course--give the paleotechnic phase credit for many advances of the eotechnic: schoolchildren are taught a received version of the industrial revolution in which "gentleman farmers" and inventors like Watt, Whitney, Fulton et al are elevated into demigods, while the civilization of the free towns of the late Middle Ages is telescoped back into the "Dark Ages."
For a whole century the second industrial revolution… has received credit for many of the advances that were made during the centuries that preceded it. In contrast to the supposedly sudden and inexplicable outburst of inventions after 1760 the previous seven hundred years have often been treated as a stagnant period of small-scale petty handicraft production, feeble in power resources and barren of any significant accomplishments.
One reason for this, Mumford suggests, is that the history of the paleotechnic industrial revolution is filtered largely through an English lens. England had been a backwater of the earlier eotechnic civilization compared to the great towns of the continent, and served mainly to supply raw materials for Dutch, north German and Italian industry. To English observers, the paleotechnic revolution was therefore perceived to be arising in a vacuum.
But it was in equal part arrogant, willful blindness: the temporal provincialism of Nietzsche's Last Man, who smugly proclaimed that "we have invented happiness."
At the very height of England's industrial squalor, when the houses for the working classes were frequently built beside open sewers and when rows of them were being built back to back--at that very moment complacent scholars writing in middle-class libraries could dwell upon the "filth" and "dirt" and "ignorance" of the Middle Ages, as compared with the enlightenment and cleanliness of their own.
How was that belief possible?....
The mechanism that produced the conceit and the self-complacence of the paleotechnic period was in fact beautifully simple. In the eighteenth century the notion of Progress had been elevated into a cardinal doctrine of the educated classes. Man... was climbing steadily out of the mire of superstition, ignorance, savagery, into a world that was to become ever more polished, humane, and rational....
....Assuming that progress was a reality, if the cities of the nineteenth century were dirty, the cities of the thirteenth century must have been six centuries dirtier.... If the hospitals of the early nineteenth century were overcrowded pest-houses, then those of the fifteenth century must have been even more deadly. If the workers of the new factory towns were ignorant and superstitious, then the workers who produced Chartres and Bamberg must have been more stupid and unenlightened. If the greater part of the population were still destitute despite the prosperity of the textile trades and the hardware trades, then the workers of the handicraft period must have been more impoverished.
In short, we’re presented with a Monty Python parody of the Middle Ages in which a King is identified by the fact that “he’s the only one who doesn’t have shit all over him.”
The fact that the cities of the thirteenth century were far brighter and cleaner and better ordered than the new Victorian towns: the fact that medieval hospitals were more spacious and sanitary than their Victorian successors: the fact that in many parts of Europe the medieval worker had demonstrably a far higher standard of living than the paleotechnic drudge...--these facts did not even occur to the exponents of Progress as possibilities for investigation."
Citations are from:
George McRobie, Small is Possible, pp. 39-71.
Lewis Mumford. The Myth of the Machine: The Pentagon of Power, p. 144.
Lewis Mumford. Technics and Civilization, pp. 214, 221, p. 225, p. 212, p. 118, p. 143.
Colin Ward, in Fields, Factories and Workshops Tomorrow p. 164.
Paul Goodman. Communitas p. 156.
Ralph Borsodi. This Ugly Civilization, p. 65.
Periodization of the Techno-Economic Phases of Capitalism
The Freemand and Soete Periodization
"A key book that serves as one important starting point for this undertaking is The Economics of Industrial Innovation by Freemand and Soete (1997). [Freeman, Chris, Soete, Luc, 1997. The Economics of Industrial Innovation. Third Edition. MIT Press]
The authors follow a long-waves or long-cycles approach but rather than looking only at economic factors such as the development of the profit rate, they take into account the forces that shape, drive forward or hinder technological innovation through a systematic literature review which brings together economics with, what they call, science-related technology. This term is justified because, according to Freeman and Soete, at around 1890 a step change happened in industrial innovation. From then on, the majority of innovations came no longer from inspired individuals, highly motivated private experimentors, experienced mechanics and so on, but from organised research within large firms. What the term implies is that science and technology can not be categorically separated, as technology, from the late 19th century onwards, increasingly depends on scientific 'book knowledge' and not on on the spot innovations carried out by craftsmen. (Today many science scholars speak, for the same reasons, of technoscience). Yet the key point is that Freeman and Soete treat innovation not as a factor exogenous to economics.
So, according to Freeman and Soete, the 1st Industrial Revolution lasted from 1780 till 1840 and was based on factory production for textiles, the 2nd from 1840 to 1890 was based on steam and railways, the 3rd from 1890 to 1940s was the age of electricity and steel, the 4th from 1940s - 1990s was the age of mass production, of Fordism in automobiles and synthetic materials and in the 1990s began the age of microelectronics and computer networks (Table 1.3, p.19). The authors acknowledge that many of those inventions were made much earlier compared to how they are periodised here, but argue that their periodisation only considers the time when that particular technology was truly widespread and of a defining character. What really matters is the diffusion of technologies in society, not the date when they were invented. So, while micro-electronics have been around much longer, truly only the 1990s saw the breakthrough of PCs and the net in terms of mass usership, which makes this table plausible.
Moreover, the authors point out the systemic nature of leading technologies, the 'interdependence of many innovations themselves' and the 'interdependence of technical and economic change' (op. cit., p. 21). Usually, a technological paradigm change needs a motive force or energy source to take place, such as steam, electricity or oil/the internal combustion engine, plus a new material technology (steel, plastic) and / or a new way of production (for instance mass production using assembly lines). Those leading technologies are also accompanied by other innovations in the domain of communication, such as the telegraph, the telephone, radio. The interdependence of those technologies means that they are mutually re-enforcing each other and together lead to change of a system-.wide nature. Each of those name-giving technological revolutions was based on clusters of innovations, some of them involving big changes and discontinuities ('radical' innovations) and others involving many small improvements ('incremental' innovations) pp. 21-22 (NOTE: In another passage the authors claim that also incremental change can lead to radical innovation and therfore paradigm change). Freeman and Soete's model is also based on ideas put forward by Joseph Schumpeter, who 'included in his definition of 'innovations' not only technical innovations, but also marketing and organisational innovations. [...] The [industrial] revolution involved a very fundamental organisational change from a system of cottage production of textiles to a system of factory production and this could not take place without political change and conflicts as well as cultural changes, such as the work discipline of factory hours and supervision' (op.cit p. 36)
To recapitulate: leading or paradigm changing technologies, appearing in pairs or clusters, start to reshape key industries and by doing so provide an incentive for changing the whole economic system, as the new energy sources, materials and ways of operation diffuse into other areas of the economy. Those paradigm changes appear with a certain regularity of app. 40 to 60 years. However, considering the title 'Economics of Industrial Innovation' there is astonishingly little economics in this book. The constant drive for profit and the ways in which companies can achieve profits is given very little space. Another area which is given relatively little attention is the agency of workers; for instance, how 'innovation' reacts to labour struggles, and / or the recomposition of the class structure after ca. 1970 are hardly mentioned.The main aim seems to be to bring innovation into the heart of economic thinking, as well as attempting to theorise problems such as how innovation generally happens within industrial society, how to measure innovation, how to relate the process of technological R&D to market sources, etc. While the book accounts for organisational and institutional change as well as the potential for social tensions and disturbances, thereby avoiding technological determinism, concrete and specific historic developments of a political dimension are mentioned, but not emphasised. The role of new media, while presented as part of the bigger picture of the development of technologies, is not concptualised as different from being purely aids to production technologies, except with regard to some aspects of ICT as reshaping the nature of information and knowledge." (http://www.thenextlayer.org/node/646)
"The model of Freeman and Soete is further developed by Carlota Perez in Technological Revolutions and Financial Capital (2002). Perez distinguishes her model from Kondratieff cycles putting into doubt the validity of metaphors such as waves or cycles for a number of reasons, first of all, because they assume a stable median along which a sinus-like wave swings. Rather than of waves she speaks of 'great surges of development' enabled by paradigm changing technologies which appear roughly every 50 years. Those technological revolutions can become the foundation of a new techno-economic paradigm. As the usage of the word paradigm suggests Perez' model relates more to Kuhnian paradigm shifts than to long-wave theory as proposed by, for instance, Ernest Mandel (1975). Contained in this notion of the paradigm is a relationship between a before and an after. Following Freeman and Soete, there have been five techno-economic paradigms so far. The shift from one paradigm to another is neither abrupt nor frictionless as the new paradigm has to overcome resistance put forward by social institutions created during the deployment and maturity phase of the previous paradigm. This involves a great deal of creative destruction in which financial capital plays a specific role. According to Perez, when a 'technological revolution errupts in the scene, it does not just add some dynamic new industries to the previous production structure. Through the configuration of a techno-economic paradigm, it provides the means for modernising all the existing industries and activities. The process of both the revolution and its paradigm across the eocnomy constitutes a great surge of development' (Perez, op.cit. p. 151). Each surge has two distinct periods which are themselves divided into further two phases: a period of installation and a period of deployment who are separated by a financial crisis in between them. While an existing paradigm, which has reached maturity phase, is still in place, the big bang of the next coming revolution occurs. This big bang can be rather silent at the time, known only by a few specialists, like the production of the first microprocessor by Intel in 1971 for example. The grown up, mature paradigm in place will have created social institutions specific to its needs. It will also have lost its initial economic dynamics which is expressed by a low profit rate. While the mainstream of the economy will still keep producing the same things in the same way, financial capital, looking for a higher profit rate, will start to support the new innovation through venture capitals of various kinds. In this first half of the first phase, called 'irruption' time, the new technology will have a hard time finding a foothold in the economy. Gradually it will succed finding more acceptance. It will start growing at a higher rate than other industries still belonging to the old paradigm. This will create higher profits, the betting of venture capitals will pay off. This gets increasingly recognised by other players in the financial industry who also want to enjoy participation in the higher profit rate. A stage of 'frenzy' sets in, when ever more investors buy into the new sector. Over-investment into the still young sector creates a financial bubble, a level of investment and believe in future returns not founded by rational assumptions or fundamentals, suchs the earnings to price ratio. The frenzy becomes unsustainable but before the bubble bursts, financial capital changes its face from its initially beneficial role with regard to the support of the new technology to a stage when it completely decouples itself from the real economy and becomes 'innovative' in a peculiar sense. The bubble starts to feed on itself and creates profits by paper speculation and practices bordering on fraud or being actually fraudulent. Once the bubble bursts, however, the frenzy phase will have allowed enough money to flow into installing the base of the new infrastructure - for instance the creation of the backbone of new fibre optic networks in the late 1990s. Once the bubble has burst it is up to political and institutional players to create a new regulatory framework which is beneficial to the by now pardigm changing technology. It reaches the second phase of deployment. The first half of the deployment phase is a stage of 'synergy'. The new paradigm will by now have become common sense, engineers, entrepreneurs, politicians, it all makes sense to them. It starts to diffuse into other areas of industry and allows them to grow, which pushes up productivity in those area. Once the process of diffucion into all areas is more or less finished, the stage of maturity starts. Change will only be incremental and limited to specific areas, whil profit rates will start to fall and equalise across the economy. Later developing countries will adopt the new technology, which throws it another lease of life but the dynamics that initially drove the establishment of the paradigm have played themselvs out. Under the surface, noticed by a few, a new technological revolution happens in one of the core countries of the mature one. The strength of this model is that it gives space to 'complex processes of social assimilation. They encompass radical changes in the patterns of production, organisation, management, communication, transportation and consumption, leading ultimately to a different 'way of life' (ibid,.p. 153). Perez points out that 'any dogmatic or rigid application of the model will defeat its prupose. Its main value is serving as a tool to help organise the richness of real life but not to hammer facts into tight boxes' (p. 160). She also readily acknowledges that the proposed model contains a high level of abstraction and refers to long term dynamics so that it cannot explain individual events (ibid). While the model can explain a certain type of financial bubble and crisis, there are other types of financial crises for which it should not be used. Perez also warns that while some paradigm changing technologies can lead to a new Golden Age, there is no automatism behind it and that it ultimately depends on circumstances and the wisdom of policy and decision makers to take the right steps to reach 'synrgy' and 'maturity'. It is those qualifications which make the model even more convincing and support the conclusion that the current pardigm of the information society demands, at the very point of it where we are now, the right steps need to be taken to create a sustainable knowledge society." (http://www.thenextlayer.org/node/646)
Source: pp. 169 - 171, see also, Perez, Carlota, 2009. Technological roots and structural implications of the double bubble at the turn of the Century, http://www.carlotaperez.org/papers/CERFWorkingPaper.html
"While Carlota Perez model operates on such a level ov abstraction that it cannot explain individual events, some of the gaps in the periodisation of the 2nd half od the 20th century are filled by The Boom and the Bubble, by Robert Brenner (2002).[The Boom and the Bubble, The US in the World Economy, London and New York, Verso 2002] Brenner looks at long term developments of economic indicators such as productivity and the profit rate in order to assess if the New Economy of the 1990s did indeed mark a turnaround for the USA economy to a more sustained growth phase after the long slump from the 1970s to the early 1990s. Economic factors are investigated in close relationship with technological innovation especially in key areas of manufacturing, together with other factors such as monetary policies.
As many economists agree, from the 1940s to the early 1970s, the core countries of industrial development, first the USA, then West Germany, Japan and other European countries, experienced a long phase of economic growth with high levels of productivity growth and relatively high levels of profit rates. This phase is often referred to as a Golden Age with comparatively rising levels of welfare for a majority of the populations of core countries. The underlying technologies are, as Freeman and Soete pointed out, mass production of consumer goods, in particular automobiles, but also consumer durables and electric/electronic consumer goods (radio and tv sets, washing machines, fridges, etc), oil and later atomic energy as energy sources, and plastic as a generic term for synthetic materials made from oil. The according social-political form of organisation is referred to as Fordism-Keynesianism by various authors. Fordims, because the form of production is derived from the Ford auto factory with the use of the assembly line since 1908, Keynesianism because of a range of policies initiated by John Maynard Keynes in the wake of the Great Depression of the 1930s and agreed on in the form of the Bretton Woods agreement by major Western powers towards the end of WWII. Keynesianism is in its social aspects also described as a middle-way between socialism and capitalism whereby the state mediates between class interests and state expenditure supports demand as well as aspects of reproduction of the workforce. Regarding aspects of monetary policies it was underpinned by fixed exchange rates set by governments, the dollar as a world reserve currency and the IMF and the World Bank as institutions to supervise developments and provide stability. These are of course generalised concepts explained in very simple terms here.
What Brenner explains is how the crisis of the US economy began much earlier than is generally conceived and how the economies of Germany and Japan who were for a time catching up and then even surging ahead would then experience similar problems. The infrastructure for the mass production of consumer goods was put into place in the USA already during the boom of the 1920s which produced a stock market frenzy and a crisis of over-accumulation so that a lot of plant and equipment lay idle during the long depression in the USA. Yet despite the depression, US industry kept improving and investing to a certain degree so that at the end of the 1930s the US had the most advanced indudstrial infrastructure in the world. The is paid off when the US entered the war and high levels of profit and productivity could be achieved. When, after the immedeate reconstruction effort after the end of the war Germany and Japan relaunched their industries, they could play a catching up game.
The USA's initially advanced technology was embodied in great masses of sunk fixed capital which was one among another factors which discouraged further capital accumulation so that from after the Korean war onwards Germany and Japan became the more dynamic economies because their advantage was to be later developers who could buy cheap but advanced US technology (Brenner, op.cit, p. 11, paraphrased and abbreviated). America experienced an internationalising thrust of its banks and corporations - the new markets in Germany and Japan encouraged US multinational firms to increase investment abroad while high costs at home discouraged investment there and the catching up economies could keep wages down because they commanded a reserve army of rural workers and workers in overstaffed family businesses, plus they benefitted from close ties with government institutions and banks who gave them cheap credit and government protection for home industries by import barriers, subsidies, securing undervalued currencies and by repressing finance (pp. 12-13 paraphrased). The US economy gre less by exports than by 'means of the relocation of industry, carried through by dynamic multinational corporations and banks. The US government strongly supported this effort and, throughout the period, constituted a powerful force for the liberalization of the world economy - not only free trade, but also the free movement of both long- and short-term capital- sometimes at the expense of domestically based manufacturing' (ibid., p. 13). Within this scenario, 'post-war international economic development within the advanced capitalist world could, for a brief time, manifest a relatively high degree of international cooperation - marked by high levels of US aid to and politico-economic support for its allies and competitors ... One therefore witnessed, at least for a time, a symbiosis, if a highly conflictual and unstable one, of leader and followers, of early and later developers, and of hegemon and hegemonized' (ibid., p. 15)
Some problems not addressed by Brenner: The economic miracles of Germany and Japan and the also catching up economies of Italy and France were far less free from conflict as it appears in sanitised TV documentaries. Author collectives such as Socialisme ou Barbarie in France and the operaio movement in Italy were involved in self-organisational efforts by workers committees and to their research efforts we owe insights into the levels of discontent on behalf of workers in the Fordist factory long before this culminated in May 1968, while in Japan a powerful movement of dissent against the renewal of contracts for naval bases of the USA forged alliances between students and workers which challeneged the hegemony of the Japanes version of Fordism-Keynisianism. It would be a subject of further research to show a high level of official and inofficial strike activity during the 1950s which are often made to look as such a docile period from the viewpoint of generalising histories. Furthermore, such research could also show how concessions from capital were not granted by a benevolent state but won exactly through those workers actions and how emergent youth cultures in the 1950s and 1960s were not just expressions of an increasingly wealthy consumer culture but of dicsontent with an outlook on life in a Fordist factory regime. A text by Federucci Gambino furthermore highlights how the use of the term Fordism can be misleading, especially with regard to the construction of a post-Fordism after the end of the so called Golden Age (see http://www.wildcat-www.de/en/zirkular/28/z28e_gam.htm).
Yet to return to Brenner's narrative. The conditions described above lead to the onset of over-capacity and the crisis of profitability between 1965 -73. From the end of the 1950s currencies became convertible and trade barriers were lowered (op.cit. p. 16). Japanese and Germans started producing the same goods as the Americans and increasingly flooded international markets, whereby especially Japanese companies were able to put pressure on prices because of their own relatively low labour costs. Thus, while Japan and Germany enjoyed still a relatively high profit rate, the US economy started feel the squeeze. The result was 'a declining aggregate rate of profit in the international manufacturing sector, which manifested system-wide over-capacity and over-production' (ibid., p. 17). As Brenner will show throughout the rest of the book, this condition of system-wide and structural over-capacity will remain the same up till today, aggravated by new entrants into world markets such as Korea, Taiwan, Mexico and Brasil in the 1970s and east Asian and south-east Asian countries in the 1990s. Because of a dramatic fall of the rate of profit in the US from 1967 onwards and for Germany and Japan after 1973, a long phase of stagnation set in, from 1973 to 1993 - a period of intensified international competition which would again and again lead to over-capacity which would force down profit rates.
Yet before that happened the Bretton Woods system had to be dismantled. The Vietnam war brought about a skyrocketing US balance of payments deficits. Because the number of dollars held abroad rose enormously, relative to demand for US products and assets, huge downward pressure was exerted on the US currency, and the world monetary system was propelled into crisis. Between 1971 and 1973 the Bretton Woods system of fixed exchange rates was jettisoned and the US dollar sharply devalued, while the mark and the yen were correspondingly revalued' (pp. 17-18). In August 1971 the Nixon administration ended dollar convertibility (into gold) and in February 1973 the Bretton Woods system of fixed exchange rates was ended and currencies started to float' (ibid., p. 27).
The conditions were created for the rise of neo-liberalism.What contributed to that were the new possibilities for financial speculation. The US had during the early 1960s already taken 'a decisive step to nurture the re-emergence of free international capital markets when it sanctioned the rise of the unregulated Eurodollar market in London' (ibid., p. 29). Together with the Bretton Woods agreement, the US ended its tolerance for capital controls of its trading partners. And whereas US allies wanted to have the IMF organise the recycling of Arab oil surpluses especially to hard-hit third world economies, the US insisted on its big investment banks performing this task so that 'a handful of US and other international banks were thus enabled to gain private control over this process. They ended up channeling hundreds of billions of dollars to the governments of a small number of leading Less Developed Countries (LDCs) - such as Brazil, Mexico and a few others - enabling them for a time to accelerate their industrializing efforts but opening the way to the LDC debt crisis of the early 1980s' (ibid., p. 29). This plan was implemented also with a view on strengthening domestic financal interests' (ibid., p. 28). Thereafter the US tried an expansionary monetary and Keynesian budget deficit policy with the goal of stimulating domestic demand, devaluating the dollar in aid of manufacturing competitiveness, and deprecating the dollar overhang - dollar reserves held by foreign firms, governments and individuals - (ibid., p. 27). The strategy of the US was that speculative capital flows away from the dollar would force the value of currencies of competitors up even more which would also force those competitors to engage in expansionary macroeconomic policies which would a) facilitate higher US exports, b) create flows of capital into US capital markets by which US could cover its high budget deficits caused by Keynesian growth stimulance' (ibid., p. 28).
As Brenner summarises, 'during the long downturn that followed, between the early 1970s and the mid-1990s, the growth of investment fell sharply and issued in much-reduced productivity increase and sharply slowed wage growth (if not absolute decline), along with depression level unemployment (if we leave aside the United States) and a succession of recessions and financial crises, the like of which had not been seen since the 1930s' (ibid., p.7). The change in policies allowed to reverse gains that had been made by labour movements. 'Supported by government, employers across the advanced capitalist world unleashed an ever more aggressive attack on workers organisations and workers living standards. They succeeded in asphyxiating the growth of real wages and social spending (from the 1970s onwards yet without being ableto restore profit rates of the golden age)' (ibid., p. 24). This was made worse, from the point of view of workers, by the increasing practice of out-sourcing, of moving first production but then also other activities to low wage countries. Those practices were pioneered by US high-tech industries in the areas of electronics and semi-conductors from the early 1960s onwards. Those companies appear to have been on the forefront of anti-union practices (cf. David Bacon. The New face of union-busting, http://dbacon.igc.org/Unions/02ubust4.htm)." (http://www.thenextlayer.org/node/646)
Joshua S. Goldstein
"To may knowledge, the most comprehensive book on long waves is Long Cycles, Prosperity and War in the Modern Age, by Joshua S. Goldstein, Yale University Press 1988. Luckily, the whole book is available online (link above). There, in Part One, Debates, chapter 4, Goldstein compares all the existing data series and discusses their merits.
There, I found this periodisation from p.90 quite convincing: ()
Brian Holmes adds the following comment:
"Goldstein published a piece in 2005 updating his work since the late 80s when the book was published. The predictive power of his idealized long-wave cycle is impressive: http://www.joshuagoldstein.com/jgkond.htm .
For more on regulation theory and its approach to periodization, see chapters 2, 3 and 11 of this book by Bob Jessop and Ngai-Ling Sum: http://www.thenextlayer.org/node/1235 ."
Periodization of the P2P / Commons Transition
Following Paul Mason, I believe that there are now two great possibilities, i.e. a bifurcation.
The first one would be a more or less successful adoption of techno-social changes, that would lead to a new long wave of capitalist development. This would mean a successful incorporation of 'green' and 'p2p' aspects into the new model. But, failing this scenario, a descent in something 'worse than capitalism', as argued by McKenzie Wark.
The second, more positive hypothesis is one of a successful 'Commons Transition'. By analogy of the invention of the microchip in 1973, which then took about 20 years to have actual re-organizing effects for capitalism, i.e. the boom of the 1990's which established the neoliberal model, I would argue that the techno-social invention of the social web and the browser in 1993, is leading, 20 years later, to the birth of new models with strong potential to push eventually to such a commons transition. If the first wave of networks was exclusively controlled by elite forces, this has changed with the democratisation of the networks, and while we all can see the negative consequences as well, it is also leading to grassroots re-organisations of economic and social forms. I have documented these trends in the following two articles:
So, we can posit that if capitalism does not succeed in adopting these new forms, as Paul Mason argues, and if we want to avoid the negative scenario, then there is a real opportunity for a positive bifurcation as well.