Hot grease and cotton dust

Joshua Freeman’s Behemoth: A History of the Factory and the Making of the Modern World starts – of course- with the cotton mills of northern England during the Industrial Revolution. The early chapters had a (reverse-)Proustian effect, reminding me of the distinctive assault on the senses of taking my dad his lunch in his spinning mill, where he was a mule operator, or going to see my aunties in their weaving shed: the rhythmic clatter of the machines, the smell of hot grease and cotton dust. But they were small factories. The book’s theme is the economic and cultural role of giant factoriesm behemoths.

It’s an engrossing read, progressing from Manchester in England – inspiration for Marx and Engels (the latter running a mill there) – to the New England textile industry and the American System; the late 19th century enthusiasm for factories and manufactures with the Crystal Palace Exhibition and other grand fairs; Ford and Fordism; Soviet Gigantism; the Cold War era of mass production; and ending with the giant plants in China and elsewhere in Asia today.

The book notes the magnetic appeal of big factories, even for their social critics. This started early. In the 19th century, campaigners’ indignation focused on conditions of work in the new factories, including their use of child labour. Quite right too. Yet, Freeman notes, “The novelty of the factory system drew attention to the exploitation of its workforce, while the long-standing exploitation of agricultural workers, domestic producers, servants (encompassing twice as many women as in the textile industry) and others went largely unnoted by politicians, journalists and writers, who had little interest in the lower classes.” (The same is true now of the commentariat’s focus on ‘gig’ work via digital platforms; there are lots of worse jobs around.)

For much of their history, factories have been seen as symbols of modernity – including in the arts, especially by photographers such as Margaret Bourke-White or Alexander Rodchenko. In the late 19th century again, the structures of industry represented the Sublime. The link of the huge factory complex with modernity was particularly striking in the newly industrialising Soviet Union – and one of the things I learned from the book was how much that had depended on American engineers, designers, foremen, trainers in the 1920s and 1930s. The Soviet sphere continued to manufacture on a giant scale until 1989. As a journalist in 1990, I visited the Ganz Elecrtic plant near Budapest, up for sale to western investors. Steel went in at one end, everything from buses and lightbulbs emerged at the other. Some giant plants even had steel mills, integrating the entire vertical chain.

Yet in the US the biggest companies moved away from their emphasis on huge plants like Ford’s River Rouge – a tourist destination and much photographed and celebrated – in part to reduce their vulnerability to organised labour and industrial action. The need for labour and the constant to and fro in power relations is one of the threads running through the book. Freeman argues that unionization and labour power get too little attention in the economic literature on industrial location, which I think is right. The communist countries were able to continue on the behemothic scale because unions were part of the social state.

The book ends with China’s giants, such as Foxconn City. Why are they still so big, Freeman asks? These are not long and complex production lines like those involved in building a modern car or an aircraft. And there are diseconomies of scale in terms of management and organisation – not to mention hiring and managing such a large workforce – which one might have expected to lead to production on a smaller scale. His answer is that scale today serves the retailers, not the manufacturers. The focus on marketing and branding by the likes of Apple or Nike means they want consistent, timely and huge runs of new products. Modern communications – virtual and physical – have made contract manufacturing possible on this immense scale. Many western manufacturers outsourced their manufacturing from the mid-1990s. So whereas 19th and 20th century giant factories were public marvels – criticised, yes, but also admired, visited, debated – 21st century factories in China are dull boxes surrounded by walls and rarely photographed.

Still less do they inspire poets like Walt Whitman, who wrote of the sublimeness of steam power. The poetry quoted here is by a young Foxconn worker who committed suicide: “They’ve trained me to become docile/Don’t know how to shout or rebel/How to complain or denounce/Only how to silently suffer exhaustion.”

Being a factory worker has always been exhausting, draining, deafening, dangerous – for all that there are worse alternatives. Although unions briefly won great gains for (male, long-term) factory workers in the mid-20th century, leading some people now to romanticise blue collar jobs and factory communities, I’m happy to see robots taking over ever-more of the work. And yet, and yet, factories are still fascinating.

[amazon_link asins=’0393246310′ template=’ProductAd’ store=’enlighteconom-21′ marketplace=’UK’ link_id=’37925f4c-35cc-11e8-8284-4fd87c27cf54′]

Ideal wet weather reading

In time for the long weekend, Behemoth: A history of the factory and the making of the modern world by Joshua Freeman has just arrived at Enlightenment Towers. It’s pouring with rain (well, what else would the weather do on a holiday weekend), I have an easter egg to eat, so as soon as I’ve finished reviewing a research proposal I know what I’ll be doing…

[amazon_link asins=’0393246310′ template=’ProductAd’ store=’enlighteconom-21′ marketplace=’UK’ link_id=’83101c62-3427-11e8-902f-a578bf81e570′]

 

Euro-vision

Benn Steil’s The Marshall Plan: Dawn of the Cold War reminded me at times of the movie 13 Days (about the scary 1961-62 confrontation between the US and USSR over Soviet missiles heading for Cuba): you know how the story ends, but even so the dramatic tension of men in suits talking in a room is almost unbearable. The dawn of the Cold War – particularly the status of Berlin and the airlift – was one of those extraordinary turning points too. Steil is also a terrific writer. For example, here he describes Kennan: “George Kennan would make a career out of repeatedly testing his powers of persuasion and then recoiling from the consequences.”

It’s also particularly poignant to read this book in Brexit Britain, for it makes clear the Marshall Plan’s bold vision of political cooperation and growing economic links between all of the western European nations, and the achievement of American politicians and diplomats in enabling this in a continent devastated by the war and not surprisingly beset by mutual suspicion. Prosperity and security for the whole were inextricably linked – hence the biggest challenge in launching the plan was to overcome the Europeans’ pursuit of individual national aims when the whole could be so much bigger than the sum of the parts. This went for making steel more efficiently and also for collective defence. It was difficult for the French in particular to see the (west) Germans and the Ruhr in this light. Kennan and others were clear that outside a new intergrated western Europe, “Britain would appear to have no future.” It depresses me utterly that we are turning our back on the vision that kept western Europe at peace and prospering since 1945 – this time without the Americans to set us straight.

The Marshall vision, however, also in a way sowed some Cold War seeds, for the Soviets were just as keen as the French to ensure German industry could not recover to its own benefit, but only to the extent that its outputs could be shipped to the USSR as reparations. The main issue was still Stalin’s desire to extend Soviet control as far as possible, including encouraging the Communist parties in France and Italy to engage in economic sabotage; but it’s fascinating to see how often questions of politics and influence were played out in seemingly dry economic issues such as the right to print currency, and whose versions of different currencies circulating in Berlin could be used to purchase which goods.

The essence of the Marshall Plan, Steil writes, was that the US taxpayers would sustain a minimum standard of living in the beneficiary countries in return for economic liberalization and integration to kick start the war-devastated economies and the momentum for continuing growth. “In essence the State Department was tendering the largest foreign aid program in history as a social shock absorber for the largest structural adjustment program in history.” The book covers the American political debate in detail, revealing new (to me) heroes, notably Arthur Vandenburg, the Republican senator who ensured President Truman got Congressional approval for the deal. And new villains: we all know Philby, Burgess and Maclean spied for the Soviets but they’ve been too sanitised by literature.

There are loads of nice details in the book too – for instance, when Molotov visited London on 1942 to negotiate an Anglo-Soviet treaty, he distrusted his hosts so much he slept with a revolver next to his bed. (If he were visiting London now, of course, he’d be having to distrust his compatriots more.)

A highly recommended read (and given the appendices and footnotes, not as daunting as its size suggests!)

[amazon_link asins=’0198757913′ template=’ProductAd’ store=’enlighteconom-21′ marketplace=’UK’ link_id=’112c556d-325f-11e8-ab3f-fd642d779077′]

Beyond simple-minded economics (and policies)

It isn’t that I haven’t been reading. I devoured a proof copy of Kaushik Basu’s The Republic of Beliefs and Michael Best’s How Growth Really Happens. As they’re not out until the summer, it’s a bit early to post reviews, but they will both be contenders for the 2018 Enlightened Economy Prize, essential reads.

[amazon_link asins=’0691177686′ template=’ProductAd’ store=’enlighteconom-21′ marketplace=’UK’ link_id=’194a957e-2e80-11e8-9293-b56134c728cd’] [amazon_link asins=’0691179255′ template=’ProductAd’ store=’enlighteconom-21′ marketplace=’UK’ link_id=’2b277d8c-2e80-11e8-ae92-afe059a2187a’]

It was interesting in the light of reading those two to also read this week an important pamphlet by Rachel Reeves MP, who chairs the Business, Energy and Industrial Strategy Committee in the House of Commons. The Everyday Economy starts the left-of-centre policy task of bringing together a vision of how the economy operates – or can operate –  more fairly, to the benefit of many more people than has been the case for a generation. It isn’t a work of economic theory of course, but is aligned with important strands of work in modern economics incorporating the importance of institutions and political economy, bargaining power, asymmetric information, and so on. I was pleased to see it cites the work of the Industrial Strategy Commission. Although the focus of Reeves’s pamphlet is fairness and sharing the benefits of economic growth, rather than how that growth should be generated in the first place, this seems to me to be an important contribution to the development of a coherent and realistic policy framework for a left-of-centre party. What’s particularly encouraging is that the two main parties here now both speak of industrial strategy and the need for a strategic framework for managing the economy on the supply side. It’s about time.

Anyway, what all of these signal in their various ways is a decisive public intellectual shift away from simple-minded states vs markets economics – at least from the non-partisan and from thoughtful politicians. As I’ve been saying for some years now, the high tide of simplistic free marketism in academic economics occurred a long time ago. I hope this is filtering through into the world of policy and politics. Maybe I’m being over-optimistic…. (reading the headlines).

In between I read Jon Kalman Steffenson’s About the SIze of the Universe. I was in a discussion with him (and director Anna Ledwich, and Dharshini David, whose new book is The Almighty Dollar) on Start the Week recently, about the aftermath of financial crisis. The novel isn’t really about post-crash Iceland, as the discussion led me to expect, but the universal theme of escape from a small nowheresville and the pleasures and pains of uprooting.

[amazon_link asins=’085705600X’ template=’ProductAd’ store=’enlighteconom-21′ marketplace=’UK’ link_id=’4370af1e-2e80-11e8-99ef-a9ef64425b00′] [amazon_link asins=’1783963387′ template=’ProductAd’ store=’enlighteconom-21′ marketplace=’UK’ link_id=’4cfe849c-2e80-11e8-bef5-9b679f7f0c82′]

Now I’m starting with great eagerness Benn Steil’s The Marshall Plan – first chapter already ace.

[amazon_link asins=’0198757913′ template=’ProductAd’ store=’enlighteconom-21′ marketplace=’UK’ link_id=’55e25db3-2e80-11e8-97c3-c343c8cfb5b4′]

The culture of finance

Shelia Kolhatkar’s Black Edge is a cracking good read about how the growth of hedge funds was rocket-fuelled by their extensive reliance on insider trading. The focus of the story is Steve Cohen’s SAC capital. The abuse was enabled by the fact that the regulators were slow to cotton on to the scale and interconnections of the sector, and by the presence at the head of the SEC at the time a Bush-appointed free marketeer who thought the government should keep out of the way of the markets. The book reads like a thriller (leaving just the usual slight uneasiness about how the author knows what people were feeling, and wondering who spilled the beans out of two people in a reported conversation).

It left me reflecting about the culture of financial markets and how quickly and extensively unethical and illegal behaviour spread, like a rampant infection, after the deregulatory turn in the US and UK. Perhaps the obvious conclusion is that a culture of eternal vigilance is necessary in finance, and there was something sensible about the extremely strong cultural prohibitions applying to finance in times past. It is interesting, and sobering, to note how much the main characters in this sorry saga act just like homo economicus.

The authorities did eventually charge Cohen with failing to prevent insider trading; SAC was fined Capital and the fund was closed. Cohen is active again in the markets and a super-wealthy man.

[amazon_link asins=’075355223X’ template=’ProductAd’ store=’enlighteconom-21′ marketplace=’UK’ link_id=’410d70dc-2937-11e8-86c9-ed1473c1b961′]