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Economy

The Lemmings

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This analysis and my own thinking on the correlation between demographics, technology, prices and their manifestation in human societies owes an inestimable debt to the work of David Hackett Fischer and his outstanding work in “The Great Wave: Price Revolutions and the Rhythm of History” (Oxford University Press, 11 November 1999). Most of the first section on the Crisis of the 14th Century is based on his book.


Sometime in the Fourteenth Century, the medieval world ended. It did not give way quietly to the beauty of the Renaissance, to Michelangelo and Botticelli. It was not an evolutionary transition: it died in agony. Harvests failed across Europe, from Portugal to Poland, leading to famine and peasant revolt. In 1347, a mysterious illness began to spread from port to port and then inland, leaving in its wake mountains of corpses, all with the characteristic black, swollen buboes. The Black Death had arrived in Europe from the steppes of Asia and carried with it such horror that the living came to envy the dead. As if this were not enough suffering, the continent erupted into a series of horrific wars of greater savagery and brutality than before. The population of Europe fell so precipitously, that some regions did not return to the same population they had in 1300 until 1900.

The civilization of the High Middle Ages should not be considered “backwards”, nor confused with images of poverty, ignorance and brutishness that many attribute to the Dark Ages after the fall of the Western Roman Empire. By the Twelfth Century, European civilization had surpassed the Romans in many respects: there had been notable advances in agricultural technologies and systems; maritime technology had advanced, increasing trade and wealth; Romanesque architecture had been perfected and the Gothic style had also been developed in northern lands. In France, the people of this century built more than 80 cathedrals, 500 monasteries and 10,000 churches; in the process, they consumed more labor and more materials than the Pyramids or the Roman road network. This was also a time of high, though not broad, educational attainment: the ancient universities of Europe traced their foundations to this era, while great literary achievements like the Chansons de Geste, the Legends of Arthur, the Nibelungenlied and the El Cid were produced.

highmedieval

The artwork of the 12th and 13th Centuries, especially in painting and embroidery, shows great opulence, at least for the privileged classes. This included not only the landed gentry, the military-aristocratic caste; it also saw the rise of a new economic elite. These were the merchants and financiers that grew up in the ports and cities of this era, principally in Italy and Flanders, who once again were able to provision the growing European market for Oriental goods and fine clothing. It was a world where wealth had increased dramatically and where the distribution of those new riches had grown increasingly unequal. Though it might be argued that the European peasantry was always impoverished, their condition worsened considerably as time passed: increasing numbers of yeomen lost their land and became mere serfs, while simultaneously, feudal dues and obligations inexorably increased.

What happened to wipe out all this achievement? The medieval world was buffeted by a series of events that it could neither anticipate, nor respond to. These events were not isolated from each other, nor coincidental. They were the symptoms of a civilization which had reached and exceeded the limits imposed upon it by technology, climate and demographics. Slowly at first, but then with ever increasing speed, stresses had accumulated. As agricultural techniques improved and wages rose with the increase in economic activity, the life of the average peasant and townsman grew better. With improved prospects, people began to marry younger and have more children. These children either divided the landholdings of their parents or were forced to clear new, less fertile lands for their own sustenance. Either case led to decreasing marginal gains in food output. More willing hands also meant that wages eventually stabilized and then began to fall: the labor market was glutted and there were no government social program to fall back on. The Church, then still universal, provided the majority of the poor relief doled out, but even that was little better than to keep people from starvation.

The economic consequences were felt quickly and described accurately by educated observers, but Europeans still lacked a theoretical framework to truly understand what was occurring. Bullion had always been scarce in Europe, especially gold; but as trade expanded, the need for a means of exchange were increasingly met by pseudo-money: letters of credit, intricate relationships among the great merchant and banking families of Italy and Flanders listing credits and debits of goods and specie. This system suffered tremendous stress: as times became rougher, gold was demanded more often. Some bankers sought safety in the “zero risk” investment of loans to the sovereign; but kings were not great respecters of filthy moneylenders, and a wave of princely defaults provoked the collapse of the great European banking houses of the age. The demand for specie became so great, and the stock of metal so limited, that debasement became the order of the day, exacerbating the problem of inflation across Europe. This debasement and currency shortage fell especially heavily on the poor, who could not deal in gold, only in silver and copper.

deaht

Eventually, the limits of sustainable population were reached, and then surpassed. Family sizes began to shrink, but not quickly enough to avert disaster. Bad harvests inevitably came, and when they did, people no longer tightened their belts, they died. More and more peasants went to the new, burgeoning towns seeking employment, further driving down wages and straining the still primitive sanitary infrastructure of the cities. Imagine tens of thousands of townsfolk, impoverished peasants and animals all eating, sleeping and defecating copiously within a small, walled town. When the Black Death arrived, it encountered a population that not only had no natural resistance, but whose living conditions were almost laboratory perfect for the propagation of the disease. No one knows for sure how many died, but perhaps 40% of Europeans perished in the generation after the arrival of plague.

Even before the arrival of the plague, the cultural mood of Europe had changed radically. The all-conquering optimism that had inspired thousands to take up the cross and go on Crusade in the Holy Land, or the Drang nach Osten of the Teutonic Knights against the pagan Balts, was replaced by uncertainty, questioning and then profound pessimism. Millennial movements sprang up and spread like wildfire, gaining adherents from the desperate, the hopeless and the mad. A group called the Pastoureaux was completely typical: inspired by some madman claiming to speak with God’s authority and railing against the injustice and the poverty that was all too prevalent in rural France. They called for a New Jerusalem and began to march in the general direction of the Holy Land; a march which immediately turned into an assault on towns, manor and castles, with a great deal of rape and pillage. They slaughtered Jews and foreigners, or anyone who looked richer than themselves. They were eventually hunted down and crushed by the forces of the local lords and the towns. The lucky ones died in battle, if such slaughter can be so dignified; thousands more were hung up from improvised gibbets or subjected to grotesque tortures. There were hundreds of such peasant revolts during the collapse of the medieval world, as well as town revolts against the encroachments of lords, baronial revolts against the encroachments of kings, and unceasing warfare between princes.

jacquerie

After the cataclysm came a period of stability and then recovery. The 15th Century was a period of rising wages, expanding trade, growing population and a general optimism that expressed itself as the literary and artistic brilliance of the Renaissance, the Reconquista and the voyages of discovery of the great Portuguese and Spanish navigators. These are clear indications of recovery: people beyond hope do not invest in new cathedrals or long shot exploration. The civilization of the 15th century was fundamentally different from those of the 13th and 14th; feudalism, the Church of Augustine and Aquinas, and the Romanesque and Gothic patterns of art and thought had suffered death blows. In their place emerged a Europe of proto-capitalism, skepticism, and realism.

The collapse of the medieval civilization and the rise of a new, Renaissance civilization out of its ashes was not an isolated case. It is a description of a pattern that we see repeating itself over and over again at all times and at all places. Before the cataclysm of the 13th century there was the collapse of the 10th century which brought to an end the civilization of the Franks. Before that, the collapse of the 7th century ushered in by Justinian’s Plague, which decimated the populations of the Byzantine and Sassanid Empires and gave rise to the Arab conquests. Before that the crisis of the 3rd century, which struck the Roman Empire at its height of power and through a combination of pestilence and war, almost destroyed it.

The cycle is not confined to Europe and the Near East either. The great civilizations of China and India have suffered these same cyclical devastations, only to arise in a new shape a century or so later. The Mayan civilization collapsed, but we lack historical records to determine the exact causes. The same happened to an advanced North American civilization in that spanned the area from the mouth of the Mississippi to the Great Lakes.

civilizations

What lessons can we learn from these periodic disasters? What do they have in common?

  • The forces at work form first positive and then negative feedback cycles. During the “Golden Ages”, every underlying force pushes in the same direction and feed off each other. Productivity increases in agriculture and manufacturing; wages rise; inequality falls; trade increases; wealth is created; credit expands; people are healthier, live longer and have more children; wars and revolutions are less frequent. All of these work together and in the same direction to push the civilization’s growth engine into overdrive. Eventually however, this growth hits technological and demographic boundaries: and at that point, the engine goes into reverse gear. This is called a secular shift in prices.

secularshift

 

  • The dynamic forces are transmitted and most visible through the price mechanism of primary goods. In the run up to the “Dark Age”, marginal output in food and energy production levels off then falls; wages begin to lag farther and farther behind inflation; inequality increases as the powerful exploit their positions to capture more and more of the economy; wars, crime and revolutions become increasing frequent as people and leaders become desperate; credit collapses as frightened bankers and merchants demand payment in specie; famine and overcrowding turn cities and ports into perfect incubators for the next epidemic; desperate, hopeless people turn to extremist versions of their religions.
  • Systemic collapses have complex causes, but can be triggered by a single event. The forces that drive a civilization towards collapse are multitudinous and span all aspects of society: economic, political, religious, social, technological, and cultural. They leave a civilization increasing weak and vulnerable, but they do not of themselves guarantee a collapse. However a single event during this vulnerable stage can plunge a society over the edge: an outbreak of plague, a volcanic eruption, a shift in the climate, or a foreign invasion. These events occur during the “Golden Ages” as well, but then these civilizations are robust enough to survive them.
  • Civilizations react collectively to stress; they are not independent of the environmental forces surrounding them. We have the impression as individuals that we are masters of our fate exercising free will, which may or not be true. But the same cannot be said of our civilizations; the most that can be said is that societies can influence and slowly change the environment around them, but they can never escape these forces. Like any living organism, civilizations can be weak or strong, diseased or stressed. Sometimes they recover, sometimes they die; but they are as finite as we are. This is hard to believe or understand, both because of our assumption that individual free will must necessarily translate into collective free will and also because the collapse of a civilization is a rare, epochal event, not something of everyday experience.
  • When stressed, civilizations produce aberrations. It ought to come as no surprise that Golden Ages are periods of peace, stability, growth, optimism and the triumph of reason: they are to some extent a cause but mostly an effect of the times. Similarly, as the cycle nears its peak, the stressed civilization reacts violently: wars are more frequent, stable orders are broken up by violent oscillations in politics and economics, pessimism reigns and reason is rejected in favor of religious and political extremism. Like a frog in a pot of water that is being slowly heated, once the frog becomes too uncomfortable, it begins to jerk and lash out, but by then it is usually too late. Civilizations too lash out, with savage violence, often without knowing the real reason why.

As the world has grown smaller through trade and immigration, the separate rhythms of the human race have also become more synchronous with each other. During the Roman period, wheat prices were the same from Carthago Novo to Alexandria in Egypt, anywhere a ship could sail to. They diverged from the market price only as you moved inland, away from ports and navigable rivers. The Empire’s political footprint was as vast as its economic footprint, with the Parthian and Sassanid Empire of Persia usually moving in a cyclical harmony to that of the Romans. However, this did not extend to India or China, much less the Americas. By the 17th and 18th centuries, however, you do find an increasing political and economic convergence between Europe, her colonies and her imperial territories in Africa and Asia. This trend has continued and has accelerated. Today we call it globalization and think it new, but it is a process of integration that has been going on for millennia.

romanworld

Today, we are in the middle of a long sustained price wave, which began after the Second World War and has not yet completed its cycle. We appear to be well passing the apex of our Golden Age and are now entering the crisis period. All the indicators are there in plain sight (if you don’t like graphs, feel free to skip ahead):

  • The longest and largest population explosion in human history has led to an immense strain on natural resources;

human pop

 

  • Primary inputs like energy, food and housing have shown strong secular changes in their price trends as a result:

energy

food

clothesmetals

 

  • Increasing returns on capital, decreasing returns on labor as elites increasingly use their power to accrue unfair (non-market) advantage to themselves, reaping a greater percentage of economic benefit while leaving less for the rest. This has led to Increasing income and wealth inequality;

earnings

 

  • This economic stratification has translated into ever increasing political and social inequality. Elites do not only use their influence to extract economic rents, the also secure for themselves, and their descendants, positions of authority, sinecures and legal protections that perpetuate these inequalities;
  • Increasing instability as less stable and affluent regimes come under increasing pressure from more successful neighbors and their own populations;
  • A revival of religious sentiment in many populations and a proliferation of millennial or fundamentalist movements.

The last point is particularly disturbing. It questions the extent to which human beings are truly free willed actors, rather than preprogrammed by complex environmental factors. Numerous studies have demonstrated the negative impact that stress, pollution and malnutrition have on the human fetus and on the subsequent development of infants. Like proverbial lemmings, human beings may be hard-wired by nature to become ever more restless, quarrelsome, and violent when environmental factors reach a certain point. Scarcity and competition would induce an actual neurochemical change, like certain switches in our brains being flipped from ‘Off’ to ‘On’. That makes good evolutionary sense: as resources are depleted, some individuals will succeed by becoming fiercer than their competitors while other individuals will succeed by being more adventurous and striking out to new, virgin lands.

zealots

But what worked well in the Stone Age for Cro-Magnon Man might be an evolutionary dead end when the world has been filled up and there is nowhere left to go. Then we simply have an increasing number of people becoming violently deranged. Furthermore, we would expect nations with high demographic pressure, poor healthcare systems, highly competitive societies, and poor access to basic resources like food, water, energy and shelter to exhibit higher rates of violence, crime, zealotry, suicide and mental disorders per capita. And that is precisely what we do see.

We can expect these trends to continue and intensify so long as the disequilibrium exists. It turns out that the polarization of politics in the United States, the Great Recession, the growing tensions in the South China Sea, the rise of Al Qaeda and the anarchy of the Middle East are not unrelated phenomenon and are, on average, likely to get worse over time. The proximate causes of the individual events may be dissimilar, as may be the outcomes; but overall, they are linked by the deep forces that are moving the world and to the biological chip settings in our brains.

Hypothesis 1: there is a risk of civilization-wide catastrophe if the human consumption demands upon available resources exceed our technological boundary of sustainability for an extended period of time;

Hypothesis 2: total human consumption consists of the demands of all humans and our domesticated animal and plant species. It depends on absolute numbers and is positively correlated with affluence;

Hypothesis 3: the rate of change of technology is an exogenous variable that is neither constant nor controllable.

The hypotheses I have proposed suggest only three important variables: 1. the population growth rate; 2. the demand intensity for each unit of population; and 3. the rate of technological change in productive capacity and efficiency. This equation is somewhat discouraging, for all three variables are beyond the control of governments; at least without taking measures that would trespass seriously on our conceptions of individual freedoms.

  • The rate of population growth is a thorny issue, seeing how it concerns reproduction, our most basic biological function. Evolution and religion are, therefore, set against any reduction in this rate. We have witnessed, in wealthy economies, an overall reduction in birthrates, but this has created a generational crisis. The obvious solution, immigration, creates its own set of political obstacles. If wealth and the spread of agnosticism in the OECD nations has led to declining growth rates in population, it is a difficult formula to apply generally across the globe;
  • Assuming we could increase affluence around the world, raising up the impoverished billions to something resembling a Western middle class lifestyle, the reduction in the population growth rate would be more than offset by the increase in demand for consumables. It seems unlikely that everyone on the planet could consume as much beef as Americans do, as much fish as the Japanese and Spanish do, or as much ‘other stuff’ as is generally consumed in the West;
  • Finally, we do not control technology. In other words, the government of the United States cannot simply say: ‘we will discover fusion power or perfect carbon sequestration next year’ and have it happen. We can certainly put money and resources towards the problem, but as the history of fusion research ought to show, that doesn’t always lead to a solution. The rate of technological change depends on some broad factors that influence the collective generation of ideas by the mass of humanity and also by the natural rate of the birth of geniuses. Governments might be able to create a more propitious climate for innovation, but they cannot yet bring about the birth of a Newton or Einstein.

These conclusions have important implications, which have not been lost on demographers, military planners, philosophers and some economists. The main reason that our current wave has been unusually long and sustained is the accelerating pace of technology; this has pushed the boundary of what is sustainable further and further out even as population has surged to the limits. But there is no guarantee that technology will be able to keep up with the demands of growing population and affluence. We are in a race to see if technological innovation will continue to outpace Malthusian demography.

If it does not, we may suffer a collapse as devastating and complete as any that afflicted our predecessors. Potentially worse: our globalized and interdependent civilization is more complex than any that has preceded it and complex systems are always less robust than simpler ones. The Europeans of the 13th Century were not sitting on nuclear arsenals either. If the lights go out and the systems fail, how much knowledge will remain when it so much of it is now stored electronically? The Dark Ages might come to be thought of as a Roman picnic. The Earth is a closed system and the limits of the petri dish have been reached; there is no New World waiting just beyond the horizon to act as a safety valve. Technology may save us; but then again it may not. We shouldn’t sit back hoping and praying for salvation, however: we must act, and prove that Man is more than a highly evolved lemming.

lemmings

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