Hobsbawm on relative decline and social disruption

Posted by Dietrich Vollrath on September 14, 2016 · 9 mins read

I recently re-read Eric Hobsbawm’s Industry and Empire. I didn’t have a reason, other than that it was shelved near something else I was looking for in the library, and caught my eye. It was definitely before graduate school that I last read it, so it seemed worth revisiting now that I’ve got my fancy-schmancy education in economics.

It’s a bit of a mess as far as history goes. Yes, it deals with events and people that happened long ago. But so does Star Wars. It is a narrative informed occassionally by some vague stylized facts. It is pure interpretation. To my point, I’ll just note that Hobsbawm has a section of figures and tables, in the appendix. That appendix is prefaced by the following quote: “It is not easy to include a sufficient selection of quantitative data in a text without making it unreadable.” Well, it may not be easy, but it is possible. Instead, Hobsbawm’s book is all about the narrative.

His main thesis is as follows:

The relative decline of Britain is, broadly speaking, due to its early and long-sustained start as an industrial power.

Well, okay. But I think the immediate reaction to this should be “no kidding”. This is like saying that the relative decline of my height compared to my daughters is, broadly speaking, due to my early and long-sustained start at being alive.

Spending at least a little time thinking about the processes involved in economic growth, even intuitively, will suggest that this relative decline is going to be almost inevitable for the country who industrializes first. It is easier to copy technologies than invent them, so countries behind Britain (the US, Germany, etc.) are able to catch up quickly. Or, if you believe - wrongly - that growth is limited by stocks of natural resources, then Britain has no particular advantage over continental Europe, much less the US, so it would be impossible to sustain an early lead.

Hobsbawm doesn’t even give you a clear notion of what he means by “relative decline”. In what? GDP per capita? Wages? Some measure of human well-being like health? Number of stripes on flags? He seems to have in mind some ambiguous concept like “dynamism”, which fits well in a narrative but of course is a completely empty term.

His own review of the history of Britain belies the idea that Britain lacked dynamism, by which I mean the growth of new sectors or industries. While Germany and the US were ratcheting up their own manufacturing sectors, Britain was moving into services like insurance and finance, and shedding low margin work to those countries. But Hobsbawm appears to fall into the same trap as many of fetishizing manufaturing work over all else. So Britain’s continued use of older-generation spinning machines or blast furnaces compared to Germany is some kind of indictment of not just the economy, but British society. There was, according to Hobsbawm, a “genuine loss of impetus and efficiency”. Not that we are treated to a single piece of evidence regarding this assertion, or even told what impetus is supposed to refer to, or what is the definition of efficiency he has in mind.

One explanation offered for the relative decline of Britain is the empire. This provided an effectively closed market for manufactured goods, and British industry was thus able to survive without having to be competitive with newer German and US firms. There is probably an interesting argument to be made regarding the role of empire in British industrial growth, but that argument would involve, you know, data. And this isn’t necessarily the same argument as the one involving the relative decline of Britain.

This is quite harsh on my part. But for all that, there are some ideas in Hobsbawm worth thinking hard about. From his Chapter 4 (The Human Results of the Industrial Revolution), consider the following quote.

Those classes whose lives were least transformed were also, normally, those which benefitted most obviously in material terms (and vice versa), and their failure to grasp what was troubling the rest, or to do anything effective about it, was due not only to material but also to moral contentment. Nobody is more complacent than a well-off or successful man who is also at ease in a world which seems to have been constructed precisely with persons like him in mind.

Hobsbawm was talking about the aristocracy and “business class” of Britain during the early IR, who not only were made better off, but did not find themselves socially disrupted. The source of their money may have started changing, but they had a clear idea of where they fit in (i.e. schools, clubs, political positions). In contrast, the mass of people who were being drawn into industrial work were generally being asked to trade one low-paying occupation (farming or home craft work) for another (factory work) that had an entirely different set of social conditions. They were employees, not self-employed. They were subject to the clock, not the calendar. They were expected to live in cities, not the country. Think of this last one; what would it be like to go from living among familiar faces with the occassional stranger, to living among strangers with the occassional familiar face? Even if your material standard of living was unchanged, or even higher, it would be socially difficult to adapt.

Whatever the merits of Industry and Empire as an actual history, it left me thinking about the social transformations that are part of structural change to this day. The lingering move out of manufacturing and into services, and from certain services (trade, transport) into others (education, health), also involves social disruption. It even involves the movement of people from relatively rural - or small-town - environments to larger urban areas.

And to Hobsbawm’s point, I find it highly likely that I do not appreciate the amount of disruption involved in these changes. My inclination would be to say that the transition we’re involved in now isn’t nearly as socially disruptive as the original industrial revolution. But how do I know? I am part of the “class” whose life has transformed very little in response to the decline of manufacturing and rise of “softer” services. I fit very nicely into a world that values educational achievement and professional skills. If anything, these economic changes mean that it is getting easier for me to find my way.

Which leaves me wondering how complacent I am regarding these disruptions. Complacency, as Hobsbawm suggested for Britain, has consequences. Polyani makes a set of similar points. For something more recent, I think you can do a lot worse than revisiting some of what Dani Rodrik has written, say here and here, about the reactions to globalization over the last two decades. That backlash certainly smell similar to the reactions that Hobsbawm tracks in Britain around 1820 to 1850-ish: Luddites, Chartists, and the like. Were the complacent classes of Britain as surprised by these reactions - but why would they smash those looms? - as the complacent classes of today are surprised by similar reactions - but why would they vote to leave the EU?

I have no way to neatly wrap up this post. I’ve written six different final paragraphs, but none that do anything other than stray into my own Hobsbawm-sian data-free narrative building exercise. Let me just offer up that if one includes social disruption in the accounting, then structural shifts between sectors/industries/locations are perhaps the most important aspect of economic growth to consider, even more than the growth rate itself.