Saturday, December 17, 2005

The New Mercantile Political Economny

Tim Worstall , today’s Times (UK: 17 December), writes a barely contained blast, “Wake Up, Smell the Manure”, in a tone of well-deserved sarcasm, at Zac Goldsmith, son and heir to the Goldsmith millions. Tim asserts that Zac’s views on the declining cost of food lack intellectual content, (he certainly knows little about economic history. Zac is an ecology activist in the anti-globalist movement – a movement, we should note, that contains more sons and daughters of the western-educated, well off middle-class than it does starving poor farmers suffering from European and US agricultural protectionism (a policy they want to impose around the world into all economics sectors).

Sample this opener of Tim’s:

THE COST of the food on your table has been falling since Neolithic times. Thanks to the onward march of technology — inventions such as fertiliser, the horse collar or exciting methods of turnip weeding — yields have been increased over the past 10,000 years, so reducing, for example, the price of each extra turnip produced.”

Zac Goldsmith concludes from falling food prices that this is a horrendous mistake and, presumably should be reversed. Tim Worstall (rightly) will have none of it. He puts it beautifully:

Because of that the 98 per cent of us who are not farmers gain. This is as it should be: ever-greater quantities of ever-cheaper food are what have driven the growth of civilisation over the centuries. Moving from 100 per cent of the people scraping away in the fields to only 2 per cent is what has allowed some of us to become international financiers, editors of ecology magazines or the legatees of billionaires.”

We hear much the same thing from defenders of manufacturing at the fall in employment in the manufacturing sector. Yet falling employment in domestic manufacturing is not a sign of the end of civilisation, especially when manufacturing output is higher than it was. It’s a natural consequence of labour productivity. There is no ordained share of national product that must go to agriculture, manufacturing and services for all time.

In Adam Smith’s day, agriculture was around 50 per cent of national product. After Smith died in 1790, commercial society was joined to the technological revolution that turned employment from the former dominant agriculture to the new and soon to be dominant industrial sector. In the 20th century, the post-industrial era was well under way. Not surprisingly, Zac Goldsmith is unlikely to lament the decline in industrial employment. But the rise and decline of these sectors is part of the process of economic development, though Zac regrets all aspects of economic growth.

Smithian economists prefer to celebrate the shifting shares of national product. There are ‘too many’ farmers and ‘too many manufacturing jobs’, not too few. Trying to freeze employment in any of these sectors is the new mercantile political economy. Its instrument is the State; it supporters naive; its vision reactionary. Tim’s dismissive tone of Zac is exactly right.

You must read Tim’s article (at,,3284-1922567,00.html) and also visit Tim's Worstall's Blog by clicking the link in the lefthand column.


Blogger Tim Worstall said...

You mightwant to change the date. That piece went up last Monday, the 13th. But glad you liked it!

11:10 am  
Blogger Tim Worstall said...


11:11 am  

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