At least the Japanese can video conference when their bullet trains break
In my last post I discussed the short and medium run effects of increased trade and specialization on a society’s robustness. What is the effect over decades?
Complexity through new technology and specialisation, enabled by interpersonal and international trade, increases the productivity and productivity growth in an economy. Changes in productivity accumulate exponentially over time so in the long run they dominate any other impact. There are two ways this greater productivity can be used: in a purely Malthusian economy (which would include all of the world pre-1800 and the poorest parts of Africa today) all of the extra efficiency goes towards increasing population density while incomes remain roughly constant; in a modern post-Malthusian economy it mostly goes towards making each person richer.
When complexity results in greater population density and unchanged near-subsistence incomes, a society may be more or less vulnerable to collapse than it was before. A disturbance of similar magnitude is just as harmful for each person. The greater number of inputs makes disturbances more frequent, but the larger size of the economy allows greater diversification which is a buffer against some kinds of industry specific shocks. A larger economy can come up with more innovations as there are more people to do experiments and solve new problems. In the views of some historians complexity in subsistence income societies has resulted in the collapse of many large and sophisticated empires through history, so this is some evidence that the net effect is towards greater fragility. If our concern is not the harm a disaster inflicts on each person or the probability of a society collapsing, but rather population falling below an absolute number, which is the case when we worry about human extinction, a higher population is surely better. A disaster has to be much more severe to take the world’s population from 7 billion to zero than from 100 million to zero.
When a society uses complexity to make each person richer it is also unclear clear if it is more vulnerable than before. Though reliance on many inputs would suggest any single good or service is more likely to be disrupted, each person has a bigger ‘buffer zone’ before their income falls low enough to threaten their survival. If every person in Australia found their income halved tomorrow, we could continue surviving comfortably; when the same happened to countries in 1750 were halved, famine, riots and a cascading collapse of law and order were frequent outcomes. A rich society has other advantages that make it more robust. It can afford to stockpile more goods for security or add redundancy to any supply chain to make disruptions less frequent. It will also have more capital, idle labour and land which it can potentially reallocate to make more of anything it is struggling to obtain. A rich society, like a high density society, will have a greater capacity for innovation and problem solving and will foster some people who specialise in that task specifically. As in the Malthusian case, a richer society produces more kinds of goods across more places and sometimes in more varied ways, and this diversification makes it more resistant to shocks to any specific process. As modern industrial society is the first post-Malthusian civilization, the fate of historical empires may not have so much to teach us about the impact of complexity on robustness today.
The picture isn’t all rosy. Though more resources are available to cover for any problems, it is possible that the more complex production techniques familiar to rich countries are hard to scale up (or down) in the short term, and the specialised skills and machines found in complex economies may not be as easily reallocated to different tasks as more basic ones. The time necessary to create the physical and human capital necessary to open a nuclear power plant is probably greater than that for a traditional coal plant; a shovel can be applied to a greater range of tasks than a dental drill. The skills and technologies found in rich societies may also be less adapted to disaster scenarios than those found poorer ones. For example, nobody I know would be able to grow all their own food.
Though there are things about modern societies which make them more robust and others which make them less robust, I think the overall movement is clearly towards robustness. At a guess, rich societies today even with their 20 varieties of mobile phone charger and ‘just in time’ supply chains, are more resilient in the fact of disasters than any others in history and they will become more so the more complex and rich they get. Complexity in the financial system probably contributed to the 2008 financial crisis but after decades of productivity gains a recession is much less painful now than in the 1930s. Then many people went without food, today people tough it out without Wiis. At the other end of the spectrum, any very crowded and poor country which relies on complex technology to get its necessities is probably the most vulnerable to disaster in history.
Related thought from George Monbiot. He is more pessimistic than me.
Tagged: complexity, economics, existential risk, fragility, history, robustness, trade
