Monthly articles (English and French) on the theme "Querying economic orthodoxy"

No. 3 - March 2006

The Pace of Change


Change for the sake of change should never appeal to any Conservative.
John Major (UK prime minister 1990 - 1997), speech to the Conservative Party conference, Bournemouth, October 1994

Fundamentalism is in evidence worldwide in societies that are in economic, political or cultural crisis, affected by rapid evolution…..it expresses not only religious feeling but also a state of frustration, of resentment, of being thrown off balance by social, political and cultural changes.
Mokhtar Ben Barka, Les nouveaux rédempteurs: le fondamentalisme protestant aux Etats-Unis (Les Editions de l'Atelier, Paris 1998) p171

How strange it is that people who call themselves "conservatives" in America, or "Conservatives" in Britain, should embrace the principle of maximum competition, and thus deliberately induce rapidly accelerating change!

Some years ago I had a curious argument with a doctor friend. I asked him if he had many patients who complained of stresses caused by the increasing competitiveness and pace of change in the world today. Not surprisingly, his answer was a clear yes. I then put to him my view that most people are willing to accept, or even welcome, a certain amount of change, but abhor too much of it. He strongly disagreed. In his opinion, most people are opposed to all and any change.

That is perhaps an overstatement. Yet it is surely true that most of us do not welcome rapid and frequent changes in our way of life. For many of us, today's ever-faster pace of change brings more annoyance than advantage; for some of us, it brings serious trouble. Indeed, it causes or aggravates many economic and social problems.

Unemployment is the most obvious example. Within fast-changing modern economies, employment has become highly unstable, for at least two reasons. First, in our pursuit of maximum productivity we are constantly finding ways of doing the same work with fewer people; so businesses are able to cut back their payrolls, and competition compels them to do so.

Second, our obsession with innovation means that existing products and services grow very quickly obsolete; the jobs involved in providing them are then redundant. For both these reasons, existing employments are in continual decline, while the creation of new businesses and new employments cannot always keep pace. So many countries are troubled with persistently high unemployment.

Too rapid changes have other troublesome consequences. One is that new products and processes spread quickly worldwide, since nobody dares fall behind in the innovation race by delaying their introduction. So we discover their unexpected problems too late, after they have become very widespread and difficult to reverse. A striking example is the misuse of antibiotics, some kinds of which have come to be widely used in farm animal foods and household cleaning materials (1). This practice encourages the development of resistant bacteria.

Another potentially perilous field is genetic modification. The Americans want us all to adopt GM crops without delay. If the whole world were to do so, and if they were to lead to problems not yet foreseen, the consequences could be immensely troublesome.

Still more alarming is the global epidemic of religious fundamentalism and extremism. It seems that this is, in part, a visceral reaction against a world that is changing faster than many people can tolerate. They seek stability in reversion to antique traditions, rules and customs, in rigidly literal readings of ancient texts. Do these archaisms make sense today? The question seems to be irrelevant. All that matters is that they provide clear, stable guidelines that are believed to have divine authority.

This is by no means only a Muslim problem. We can see counterparts to Islamic fundamentalism in Christian churches of various kinds, in ultra-orthodox Judaism, in the Hindu world.

The free-market economists who are determined to impose their views on the world have only one solution to the problems caused by too rapid change. That is to sweep away every remaining economic rigidity, every restraint on market freedom, thus making our economies more flexible, more competitive, more able to respond to the changes that confront them, more able to create their own changes. Faster innovation and enhanced competitiveness are held up by these ideologues as the only way forward.

All that appears, on the face of it¸ realistic and practical. We have to keep up with our competitors. Likewise, they have to keep up with us. The world is changing faster, and we have none of us any choice but to make haste to keep abreast of it. But this seemingly pragmatic view leads logically to a perverse conclusion. It tells us that the only cure for societies that have trouble coping with rapid change is to adopt policies which will accelerate the pace of change still further.

For the production of change, the marriage of electronics and competition is formidably prolific. Information technology opens up ever wider competition. If you are simply a private individual buying a book or a bicycle, the internet lets you compare prices from many more sources than you could have encountered in the past. If you are a business purchaser buying materials or components in quantity, you can compare prices from suppliers all over the world.

Meanwhile, the industries that supply the electronic technology are among the most competitive in the world, striving day and night to launch faster and more powerful systems. Technology strengthens competition, while competition boosts technology. Here is a self-feeding spiral that promotes not merely rapid change, but ever-accelerating change.

One is reminded of a curious phenomenon in electrical engineering. This is the series-wound DC motor, that reliable old work-horse that has been powering streetcars and suburban trains for a century and more. When the motor is in the workshop for overhaul or test, it must never be allowed to run free on full power; for this type of motor, when not restrained by the inertia of the train, develops a self-feeding acceleration which in theory has no limit. In practice, the limit is reached when, racing out of control, the machine flies apart. Not funny when it is a traction motor weighing a ton or two.

Can we envisage whole societies flying apart, going completely off the rails, because their peoples cannot tolerate bewilderingly rapid changes? Already it seems that exposure to over-rapid change is one factor causing the current crises in the Muslim world. Some may argue that this merely shows what happens when people living in backward societies come into contact with the modern world. We, they think, born and brought up in advanced societies, should be able to live with tumultuous changes; we have no excuse for trying to resist them. Such complacency is foolish. Some of the worst examples of religious extremism can be found among Christians in the USA.

Economists talk as if the accelerating pace of change were something like the weather or the tides, over which we have no control, which we must simply accept and cope with as best we can. What nonsense! The changes in our world are not external influences beyond our control; they are the results of our own behaviour. If we are not willing, or able, to live with ever more rapid change, we should adopt policies that are less conducive to change.

This means, among other things, that we should refrain from worshipping the principle of maximum competition and from persecuting anyone who attempts to restrain it. For excessive competition is probably the most potent element among the various causes of too-rapid change. Sadly, free-marketeers are committed to the theory that we cannot restrain the markets without losing our freedom. Perhaps there is something basically wrong with their notion of freedom. But that is a topic we must tackle later.

How strange it is that people who call themselves "conservatives" in America, or "Conservatives" in Britain, should embrace the principle of maximum competition, and thus deliberately induce rapidly accelerating change! This gigantic contradiction threatens more than the future of their own parties. It gravely undermines the order, stability and well-being of our societies.

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(1) In 1995, 23 household surface-cleaning products containing anti-bacterials were available; by the end of the decade, 700 were being sold…these agents leave residues…in sewers and on household surfaces, where resistant bacteria can develop.

Stuart B Levy, Clinical Consequences of Antibiotic Misuse, American College of Physicians session topics, April 12 2002