Month: November 2018

Does capitalism destroy jobs?

If by capitalism one means “free market exchanges and production through the use of privately owned capital”, then indeed capitalism destroys jobs — those jobs that are made redundant by increasing the productivity of labor.

Imagine an economy which only produces food, and the only input to food is labor. Further imagine that the productivity of labor is such that on average, one persons’s labor produces only one’s person’s demand for food. In that economy, all the jobs will be in food production.

Now imagine someone invents a machine (that’s capital — a produced means of production) that doubles the productivity of labor. Let’s call it the Great Invention. Now only half the workers are required to produce food for everybody. That’s destroyed half the existing jobs in our economy,

After the Great Invention, half the labor of the entire economy can now make clothes. Clothes were not available to anyone before the Great Invention. Now the clothes makers can trade some of their clothes for food. There are jobs for people making clothes, and on average the consumption bundles includes both food and clothes.

More great inventions follow that make both food and clothes production more efficient. Further loss of jobs from food and clothes production. But now some labor can be devoted to making shelters. Fewer jobs in food and clothes production but more jobs in shelter construction. You get the picture.

The main point is that it is not jobs that we are primarily interested in. What matters is production. And production matters because we are interested in consumption. Were the world so that everything we need fell like manna from the heavens. In that world, we wouldn’t need to work at jobs. We’d spend our time like the lotus eaters of Greek mythology.

The Industrial Revolution released the power of human ingenuity and created wealth (stuff that we value) unimaginable to our ancestors. Untold number of old jobs were lost, and in exchange we gained leisure, and all manner of stuff what we enjoy — from smartphones to air travel to medical services and comfortable homes. That’s capitalism working its magic.

Here’s how rich we have become:

That per capita GDP growth becomes all the more astonishing when you consider that the world population has exploded around 20 times what it was in the 14th century CE.

That, ladies and gentlemen, friends and colleagues, boys and girls, is the amazing truth about the world we live in. Three cheers for capitalism.

The Panchatantra — Textbook of Niti

The following is an extended edited excerpt from Arthur Ryder’s introduction to his translation of the Panchatantra. What’s the book about? Ryder begins his introduction with:

“The Panchatantra contains the most widely known stories in the world. If it were further declared that the Panchatantra is the best collection of stories in the world, the assertion could hardly be disproved, and would probably command the assent of those possessing the knowledge for a judgment.”

The editing consists of removing quotations from the main text. Even if you don’t get around to reading the translation, you must read the introduction in full. And if you don’t want to do that either, you must read this shorter version.

(The following is quoted material, not my original. For neatness of presentation, I have avoided the use of ellipses to indicate deleted text. I have highlighted in bold font what I find most important. )

The Panchatantra is a niti-shastra, or textbook of niti. The word niti means roughly “the wise conduct of life.” Western civilization must endure a certain shame in realizing that no precise equivalent of the term is found in English, French, Latin, or Greek. Many words are therefore necessary to explain what niti is, though the idea, once grasped, is clear, important, and satisfying.

First of all, niti presupposes that one has considered, and rejected, the possibility of living as a saint. It can be practiced only by a social being, and represents an admirable attempt to answer the insistent question how to win the utmost possible joy from life in the world of men.

The negative foundation is security. For example, if one is a mouse, his dwelling must contain recesses beyond the reach of a cat’s paw. Pleasant stanzas concerning the necessity of security are scattered throughout the work.

The mere negative foundation of security requires a considerable exercise of intelligence, since the world swarms with rascals, and no sensible man can imagine them capable of reformation.

Yet roguery can be defeated; for by its nature it is stupid.

Having made provision for security, one faces the necessity of having money. The Panchatantra being very wise, never falls into the vulgar error of supposing money to be important. Money must be there, in reasonable amount, because it is unimportant, and what wise man permits things unimportant to occupy his mind?

Needless to say, worldly property need not be, indeed should not be, too extensive, since it has no value in possession, but only in use.

Now for the positive content of niti. Granted security and freedom from degrading worry, then joy results from three occupations — from resolute, yet circumspect, use of the active powers; from intercourse with like-minded friends; and above all, from worthy exercise of the intelligence.

Necessary, to begin with, for the experience of true joy in the world of men, is resolute action. Time and again this note is struck the difficulty and the inestimable reward of sturdy action.

Equal stress is laid upon the winning and holding of intelligent friends. The very name of the second book is “The Winning of Friends”; the name of the first book is “The Loss of Friends.” Throughout the whole work, we are never permitted to be long oblivious of the rarity, the necessity, and the pricelessness of friendship with the excellent.

Last of all, and in a sense including all else, is the use of the intelligence. Without it, no human joy is possible, nothing beyond animal happiness.

One must have at disposal all valid results of scholarship, yet one must not be a scholar. One must command a wealth of detailed fact, ever alert to the deceptiveness of seeming fact. One must understand that there is no substitute for judgment, and no end to the reward of discriminating judgment.

One must be ever conscious of the past, yet only as it offers material for wisdom, never as an object of brooding regret.

This is niti, the harmonious development of the powers of man, a life in which security, prosperity, resolute action, friendship, and good learning are so combined as to produce joy. It is a noble ideal, shaming many tawdry ambitions, many vulgar catchwords of our day. And this noble ideal is presented in an artistic form of perfect fitness, in five books of wise and witty stories, in most of which the actors are animals.

The stories, indeed, are charming when regarded as pure narrative; but it is the beauty, wisdom, and wit of the verses which lift the Panchatantra far above the level of the best story-books.

The large majority of the actors are animals, who have, of course, a fairly constant character. Thus, the lion is strong but dull of wit, the jackal crafty, the heron stupid, the cat a hypocrite. The animal actors present, far more vividly and more urbanely than men could do, the view of life here recommended a view shrewd, undeceived, and free of all sentimentality; a view that, piercing the humbug of every false ideal, reveals with incomparable wit the sources of lasting joy.

Berkeley, July 1925.               Arthur W Ryder

On reading the last paragraph, I wondered. Among those who presently hold political power in India, who is the strong but dull-witted lion, who the crafty jackal, who is the stupid heron, and who the hypocrite cat? The lion and the jackal are easy matches. Arun J is the hypocrite cat. There are a few contenders for the stupid heron. Leave your guess in the comments, please.

NOTES:

[1] Arthur William Ryder (1877 – 1938) was a professor of Sanskrit at the University of California, Berkeley (my alma mater, I can’t resist noting.) He is best known for translating a number of Sanskrit works into English, including the Panchatantra and the Bhagavad Gita. In the words of G. R. Noyes,

Taken as a whole, Ryder’s work as a translator is probably the finest ever accomplished by an American. It is also probably the finest body of translation from the Sanskrit ever accomplished by one man, if translation be regarded as a branch of literary art, not merely as a faithful rendering of the meaning of the original text.

[2] How old is the Panchatantra? Ryder states that it is dated to at least the 2nd century BCE, and before. His translation is from a version that is dated around 1199 CE. For more on the authorship and chronology, see the wiki.

NOTES:

[1] Arthur William Ryder (1877 – 1938) was a professor of Sanskrit at the University of California, Berkeley (my alma mater, I can’t resist noting.) He is best known for translating a number of Sanskrit works into English, including the Panchatantra and the Bhagavad Gita. In the words of G. R. Noyes,

Taken as a whole, Ryder’s work as a translator is probably the finest ever accomplished by an American. It is also probably the finest body of translation from the Sanskrit ever accomplished by one man, if translation be regarded as a branch of literary art, not merely as a faithful rendering of the meaning of the original text.

[2] How old is the Panchatantra? Ryder states that it is dated to at least the 2nd century BCE, and before. His translation is from a version that is dated around 1199 CE. For more on the authorship and chronology, see the wiki.

Pretty picture of a Fall sunset in my neighborhood a few days ago.

Did Britain Impoverish India?

Asking “Did Britain impoverish India?” is like asking “Is water wet?” Of course, Britain impoverished India during their rule as the colonial masters of India. To extract wealth from a colony and exploit its people is the primary motivation for colonization.

Expecting the colonial masters to be a benign, self-sacrificing force is delusional. Colonization is not a win-win exchange relationship. It’s a milder, gentler form of slavery; not quite as cancerously malignant but severely chronically debilitating.

British rule had two phases: first the Company Rule which began around 1757 when the British East India Company gained control over parts of the Indian subcontinent; the second when the Crown Rule began in 1858, and nominally ended in 1947. I say “nominally” because while the British Raj more or less came to a formal close in August 1947, India continued (and continues) to be governed by laws that were made by the British during the Crown Rule.

So you could say that the Britain raj lasted nearly two centuries, and that’s enough time to loot a country. But here’s the point of this piece — contemporary India’s poverty has little to do with the crimes the British committed. They committed crimes not just in India but around the world that it dominated. Pressed for time as we are, we can’t read the piles of history books written about that but we can get a sense of how terrible those crimes were by reading the twitter account titled “Crimes of Britain.”  Continue reading “Did Britain Impoverish India?”

Saving and Investment

To understand the relationship between producing, consuming, saving and investment, it is useful to start with a simple story.

Imagine a Robinson Crusoe economy — just one person in it. RC’s consumption is limited to what he can produce by fishing, hunting and gathering. He allocates his time either laboring or enjoying leisure. If he consumes less than what he produced during a particular period, he can save that for later consumption.

For example, if he has saved some fish, he can forego fishing and instead use that time to fashion a spear for hunting. That means, his savings allowed him time to invest in creating that spear. He “converted” his saved fish into a spear. The spear is what is called “capital” — something that is not directly consumed but is used for producing goods for consumption (or even more capital.) His spear will increase his productivity in hunting, thus enlarging his consumption possibility. Continue reading “Saving and Investment”

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