"Cake without Flour" — Duncan Foley on the Dilemmas of Economic Growth
by Sandwichman (at Econospeak)
“Cake without Flour” — Duncan Foley on the Dilemmas of Economic Growth
The following excerpt is from Duncan Foley’s outgoing Presidential Address to the Eastern Economics Association, “Dilemmas of Economic Growth,” presented March 9, 2012 (Reprinted by permission from Macmillan Publishers Ltd: Eastern Economic Journal (2012) 38, 283–295 published by Palgrave Macmillan). The title is an allusion to Herman Daly’s parody of Cobb-Douglas production function hyperbole “as implying that it is possible to bake a cake without eggs or flour as long as the cook whisks the empty bowl faster and faster.”
CAKE WITHOUT FLOUR
Some growth economists might regard the considerations we have just reviewed as rather quaintly anachronistic in putting so much emphasis on the material nature of economic production. Well-established patterns of economic growth show that as incomes rise, the proportion of output as measured by such indexes as real GDP consisting of material goods steadily declines. The major sources of growth in incomes (and, given the way we measure GDP, in indexes of output) shift to the tertiary sector, particularly services. The chief input to services is human intelligence, and at least in some accounts, intelligence is an unlimited resource. So why couldn’t real GDP, measured to include the use-value of services, continue to grow without limit?
There are some immediate problems with this conception. (below the fold)
Strictly speaking the production of almost all services does require material and energy inputs, as the gigantic server farms required for information technology are a concrete reminder. Maintaining the human capital to provide a glittering array of intellectual services requires material and energy inputs, and these very likely increase as the quality of intellectual output rises.
But this vision of endless growth without material or energy inputs requires some re-examination of just what it is that we regard as output and try to measure in indexes like real GDP.
Well you added eggs to the without because I have made and eaten some pretty awesome flourless chocolate cakes. On the point noted, isn’t this what the 1% are ultimately after? Don’t they want the other 99% to be their servants, prostitutes or slaves? And isn’t that where were headed? Some like health care workers have more leverage, but everybody has to eat and most want shelter, clothing and the latest Apple phone so at the end of the day when the 1% control all the wealth and robots the other 99% will do whatever is demanded to survive. Whether we count that as an increase in GDP is really not the point.
Sandwichman:
Since I can not get into the main text, I am gonna bet you are pulling from the abstract:
“Rosy expectations that information technology can produce a “new” economy not subject to the resource and social limitations of traditional capitalism confuse new methods of appropriation of surplus value as rent with new methods of producing value.”
One point which I will wear is the continuation of the market forces which continue today and even after its collapse in 2008. Could one say the puts of CDS and naked CDS which required no Labor input to produce a profit. It was gambling.
Terry, you might enjoy The Hunger Games is a portrayal of what’s coming.
http://www.amazon.com/s/ref=nb_sb_ss_i_0_10?url=search-alias%3Dmovies-tv&field-keywords=the+hunger+games&sprefix=the+hunger%2Cmovies-tv%2C908