‘How does this all end?’
It’s a regular subject for guesswork here at the Diary.
Of course, to see what’s coming, you have to look back on what’s come before.
In 1900, a survey was done. ‘What do you see coming?’ asked the pollsters.
All of those people questioned forecast better times ahead. Machines were just making their debut, but already people saw their potential.
You can see some of that optimism on display today in the Paris Metro.
In the Montparnasse station is an illustration from the late 1800s of what the artist imagined for the next century. It is a fantastic vision — of flying vehicles…elevated sidewalks…incredible mechanical devices, all elaborated from the Machine Age technology as it was understood at the time.
There is no sign of hydraulics, jet engines, or electrical devices, for example, just gears and pulleys…and flying machines that flapped their wings like a bird.
But when asked what lay ahead, the most remarkable opinion, at least from our point of view, was that the government would decline in size and power.
Almost everyone thought so. We wouldn’t need so much government, they said. People will all be rich. Wealthy people may engage in fraud and finagling. But they don’t wait in dark allies to bop people over the head and steal their wallets.
They don’t need government pensions or government health care either. Nor do they attack their neighbours.
The great illusion
In 1909, British politician Norman Angell published a bestselling book, The Great Illusion, in which he explained why.
Wealth is no longer based on land, Angell argued. Instead, it depended on factories, finance, and delicate relationships between suppliers, manufacturers, and consumers. And as this capitalism made people better off, he said, they wouldn’t want to do anything to interfere with it. It would only make them poorer.
One of his most important readers was Viscount Esher of Britain’s Committee of Imperial Defence. Set up in 1904, its task was to research and coordinate military strategy for the empire. Esher told listeners that ‘new economic factors clearly prove the inanity of aggressive wars.’
One of the most important components of the wealth of the late 19th century was international commerce. Capitalism flourishes in times of peace, sound money, respect for property rights and free trade. It was clear that everyone benefitted. Who would want to upset that apple cart?
‘War must soon be a thing of the past,’ Escher concluded.
He was wrong. In August 1914, the cart fell over anyway.
The Great War began five years after Angell’s book hit the bestseller lists. On the first day of the Battle of the Somme — 100 years ago — there were more than 70,000 casualties.
By the time Americans arrived in 1917, the average soldier at the frontlines had a life expectancy of only 21 days. And by the time of Armistice Day — on the 11th day of the 11th month at 11:00am of 1918 — the war had killed 17 million people, wounded another 20 million and knocked off the major ruling families of continental Europe — the Hohenzollerns, the Hapsburgs, and the Romanoffs (the Bourbons and Bonapartes were already gone from France).
The age of ‘isms’
After the Great War came a 30-year spell of trouble.
In keeping with the metaphor of the Machine Age, the disintegration of pre-war institutions broke the tie rods that connected civilised economies to their governments.
Reparations imposed on the Weimar Republic after the war sparked hyperinflation in Germany. The US, meanwhile, enjoyed a ‘Roaring 20s’, as Europeans paid their debts — in gold — to US lenders.
But that joyride came to an end in 1929. Then the feds flooded the carburettor, in their disastrously maladroit efforts to get the motor started again — including the Smoot-Hawley Act, which restricted cross-border trade.
The ‘isms’ — fascism, communism, syndicalism, socialism, anarchism — issued forth, like carbon monoxide.
They offered solutions!
Finally, the brittle rubber of communism (aided by modern democratic capitalism) met the mean streets of fascism in another six-year bout of government-led violence: the Second World War.
By the end of this period, the West decided enough was enough. Europe settled down with bourgeois governments of various social-democrat forms.
The US went back to business, with order books filled and its factories still intact.
The end of history?
The ‘isms’ held firm in the Soviet Union and moved to the Orient — with further wear and tear on the machinery of warfare in Korea…and later Vietnam.
Finally, in 1979, Chinese leader Deng Xiaoping announced that, although the ruling Communist Party would stay in control, the country would abandon its Marxist-Leninist-Maoist creed.
China joined the world economy with its own version of state-guided capitalism. Then, 10 years later, the Soviet Union gave up even more completely…rejecting both the Communist Party and communism itself.
This was the event hailed in a silly essay by American political scientist Francis Fukuyama, ‘The End of History?’
Finally, the long battle was won. It was, wrote Fukuyama, the ‘endpoint of mankind’s ideological evolution and the universalization of western liberal democracy as the final form of human government.’
For Markets and Money, Australia