For reasons we shall never know, thereafter China stagnated. It was the Dutch society in the Age of Exploration that ended highest on the flagpole of per capita Gross National Product. Then in the 17th century, Isaac Newton, standing on the shoulders of Copernicus, Kepler and Galileo, initiated our current epoch of continuous scientific progress. For two centuries, up to the late years of Empress Victoria’s reign, it was Britain that ruled the roost.

Around 1900, Britain’s rebellious child, America, with its plentiful resources, took over world economic leadership. However, 30 years from now, experienced historians in 2037 will probably trace America’s decline relative to the billions of Chinese back to the likes of young President George Bush, Vice President Dick Cheney and Cheney’s minions.

History shows that historians never do get things quite right. Even if voters had put the most perfect philosopher kings into office between 2000 and 2008, by mid-century the population living on the Pacific Rim, one-third of the world’s total, would still have surpassed North America plus Europe in total real economic output.

Why and how? It will be much the same story of how and why the United States was able to learn and utilise the best technology known to the Germans, French and British. Freed of Communist Mao’s know-nothingism, low-wage Chinese have similarly been able singularly to copy Western technologies.

By coincidence, a billion low-paid, educable workers in India – freed of Nehru’s Fabian socialism – will also increasingly out-compete more and more initially higher paid North American and Western European workers.
Readers will misinterpret my text if they think that it foretells a dismal story for the present affluent regions. Economics, unlike geopolitics, is not a zero-sum game. When Germany’s Bismarck defeated France’s Louis Napoleon in 1870, that was indeed a zero-sum political-power game, where one side lost what the other side gained. By contrast, when Japan gained on America in per capita real income from 1950 to 1990, that did not imply any falling off of US per capita real income. US GDP per capita, in the Age After Keynes, in fact continued to rise, and did so faster than in historic capitalism’s past laissez-faire periods.
 
Let me now add what needs to be added in any essay on ‘Globalisation and its Discontents:’
1) The market mechanisms necessary and sufficient to propel total productivity, alas, will invariably at the same time exacerbate inequalities between winners and losers.

Digression: Simon Kuznets, a great quantitative economic historian, guessed wrong about the future. Professor Kuznets opined that initial growth would first worsen equality; but later, he expected, competitive markets would restore greater equality. Nobel Prize winners can, alas, be wrong. Laissez-faire market capitalism has never yet arched downward measures of inequality between the luckiest rich and the no-longer-secure middle classes!)

2) The lush fruits of science, which bring us improved life expectancy and greater quality of living, also worsen our environment and ramp up our vulnerability to the devastation of war and terrorists’ malevolence.

3) What can keep economics the Non-dismal Science are the considerations that the potentialities of science itself can (a) enable us to limit contamination of air and water and (b) rectify (somewhat) the degree of worsening inequalities.

4) Will our democratic political system automatically achieve these good offsets against environmental evils and pitiable income and wealth inequalities? No. Definitely not. These admirable things happen only if the majority of voters do, purely out of altruistic impulses, agree to tax some of the winners’ winnings and use these things to reduce some of the losses that the market will mete out to the losers.

Let me now get realistic. During the Great Depression, under Franklin Roosevelt’s eloquent New Deal leadership, we voters did have a feeling, “We are all at risk together. There but for the grace of fate, I would be jobless and homeless.” Therefore, in great majority, we voters did opt from 1932 until 1980 for a mixed society and not for a libertarian, laissez-faire, market-only civilisation.

That’s the way voters still think in successful places like Finland and Denmark. In those places, libertarian economists with names like Milton Friedman and Friedrich Hayek are little mentioned. Yet when polls about ‘happiness’ are taken around the world, it is from such mixed-economy places that the bulk of people report themselves to be ‘least unhappy’ and ‘least anxious.’

Realism and conscience require me to record a final weighty warning.

No democratic government anywhere can successfully second-guess the market mechanism by extreme transfer programmes from rich to poor in the hope of levelling out family differences in wealth and income. At best, the Golden Mean of the feasible best must utilise limited state-enforced income redistributions.

© 2007 Paul Samuelson, distributed by Tribune Media Services, inc.