Part 8- Harbingers of the Depression Era

Challenging the Reality of Nature

A third challenge to accepted verities occurred in physics when the nature of reality was put into question by Max Planck’s 1901 article in Annulen der Physik proposing his q8antum theory y which radiation is not continuous by quanticized, neither wave nor particle but partaking of both characteristics.  Planck (1858-1947) was preceded by J. J. Thomson’s 1897 identification of the first sub-atomic particle, the ‘corpuscle,’ which we now know as the electron.  Thompson was explaining electricity in terms of matter, while his contemporary, Lorentz, used Johnstone Stoney’s term ‘electron’ to explain matter in terms of electricity.  At the time it was assumed that electrons moved in Newtonian dynamics and revolved like a planet within the atom.  This view had to be given up by 1930.

Between 1925 and 1927, Werner Heisenberg (1901-1976) and Erwin Schrödinger (1897-1961) developed the indeterminacy concept whereby the more accurate the attempt to locate the position of a particle, the less accurate its determinable velocity and vice versa.  As Sir William Dampier stated in his 1949 History of Science: “…the electron was resolved into an unknown source of radiation or disembodied wave-system.  The last trace of the old, hard, massy particle has disappeared, and the ultimate conceptions of physics seem to be reduced to mathematical equations.”

While the fuzzy nature of matter was being developed, Albert Einstein (1879-1955) began another disconcerting line of understanding of reality.  In 1905 he noted the ideas of absolute space and time were imaginary constructs and not absolute, but relative to the observer.  Thus light always travels with the same measured velocity relative to any observer.  This theory of relativity meant that simultaneity disappears.  The light of a star seem now is that of a past dependent upon its distance away.  Einstein’s relativity theory was laid out in his 1922 Vier Vorlesungen über Relativitätstheorie.  He had applied his theory of relativity to gravity in his 1915 paper showing that gravity deflects light, which was confirmed by Sir Arthur Eddington in 1919 in his observations of the eclipse of that year.  In 1919, Einstein announced the first of his Unitary Field Theories, which made electro-magnetism a metric property of space-time.  Various atomic particles began to be discovered in addition to the electron.  The positron was identified by Carl Anderson and Millikan in 1932 while 1934 saw the mesotron theorized and confirmed in 1938, while the proton had been identified by Rutherford in 1919 as part of experiments bombarding elements such as nitrogen resulting in atomic transformations.  Hahn and Meitner split the uranium atom in 1939.

            Challenging Classic Economic Verities

Economic verities were also questioned by the time of the depression.  In 1923 the first modern hyper-inflation took place in Germany and reduced the old mark value of 25¢ to practically nothing so that to mail a letter took billions of marks and wheelbarrows full to buy staples such as bread.  The effect was to intensify the concentration upon material goods.  When Arthur Hind died in 1933, his estate of millions of dollars in real estate, stocks and bonds had been badly depreciated by the great depression.  His stamp collection of U.S. material for which he spent $250,000 realized $245,000.  The Hind British Empire holding brought $675,000 not including his penny magenta British Guiana.  Stamps were the one investment known to have held value, a fact that did not go unnoticed by American stamp collectors.

There were challenges to classic economics at earlier periods.  Karl Marx (1818-1883) published volume I of Das Kapital during his lifetime in September 1867.  The remainder of the four-volume work was not completed and published until 1902 and was primarily edited by Fredrich Engels (1820-1895) and completed by Karl Kautsky and Franz Mehring, with the first scholarly edition of the Marx-Engels papers published, theMarx-Engels Gesamtausgabe, between 1927 and 1935.  Since the days of Adam Smith, classical economics had developed very much in a theoretical fashion through the writings of Bentham, Ricardo and John Stuart Mill.  One of Marx’s revolutionary moves was to go back to Adam Smith’s empirical approach of seeing how events played out in the market.

Marx’s theory of history, whereby the incongruities between the economic conditions of production and exchange would inevitably conflict with the prevailing cultural and political order led him to posit an obvious development of class warfare between owners and toilers.  There would be a growing concentration of monopoly power, which in turn would lead to increasing exploitation of both resources and labor.  This, in turn, would lead to warfare and the end of the recognizably efficient capitalist system as workers would to gain control over the production process in which they were involved.  In his Manifesto of 1848, he indicated the change would be both rapid and violent.

This view of inevitable warfare didn’t particularly take with the American working class, despite the I.W.W. ‘wobblies’ and other radical groups, for most workers saw themselves as either already being in the middle class or moving into it.  Rather, the theory found American roots in the heart of the upper, or managerial, class and was widely expressed during Franklin Roosevelt’s presidency by those calling him a class traitor.  It was still quite prevalent in conservative circles even after World War II and was also adopted by the scions of his class during the 1930s.  Their acceptance of class war enabled them to justify an unreasoning support of Stalinist Russia as exemplified by the words of the ‘mandarin’ intellectuals of France, the British ‘Cliveden set’ and the ‘Oxbridge’ spy circles as well as the American spy rings who were serving Russia in government post here.

In addition to the useful point of forcing economists to again look at the marketplace, Marx made a second valid contribution in his focus upon the change in institutions.  Although he proposed the changes would be sharp historical breaks with the past as in the French Revolution, the concept of change was important and acknowledged the Alfred Marshall (1842-1924), whose 1890 Principles of Economics dominated standard class economic theory until the 1930s.  Marshall accepted Marx’s concept of change but rejected his radical break approach with his ‘Natura non facit saltum’ comment on the title page of his work as well as in his discussion of the ‘principle of continuity’ in the preface to his first edition of Principles.  In the 1920 eighth edition he picked up on the influence of Darwin, when he noted: “the Mecca of the economist lies in economic biology rather than in economic dynamics…” It remained for A. C. Pigou (1877-1959) in his 1920 Economics of Welfare, re-edited in 1928 and 1932, to reject the smooth curves of demand and supply of classic theory and introduce ‘lumpy factors’ such as the jumps in supply when a new machine or new factory comes on stream.  This is similar to the evolutionary discontinuities seen in the fossil records of evolutionary change.

Edward Chamberlin (1899-1967) of Harvard, in his 1932 Theory of Monopolistic Competition, and Cambridge scholar Joan Robinson (1903-1983) in her 1933 Economics of Imperfect Competition, pointed out that the assumptions behind the pure competition espoused by Bentham, Ricardo and Mill did not match the real world and that new models were needed.  It remained for Marshall’s star pupil, John Maynard Keynes (1893-1963) to suggest in his 1935 General Theory of Employment, Interest, and Money that the boom and bust cycle of economic activity was not self-correcting and that vigorous government policies were sometimes needed to combat the economic downturns.  M.I.T.’s 1970 Nobel laureate in economics, Paul Samuelson, in 1986 state: “The Keynesian revolution was the most significant event in twentieth-century economics.”

In a preliminary essay on the Protest work ethic published in 1905, Max Weber (1864-1920) linked religion with the rise of capitalism.  The essay was expanded in his 1920 Gesmmelt Aufstaze zur Religionssoziology.  R. W. Tawney (1880-1982), in the 1937 edition of his 1927 work Religion and the Rise of Capitalism, noted in regard to the connection between the economic Radicalism of the Manchester mills and the religious Radicalism of the Calvinists, “ Religion influence, o a degree which to-day is difficult to appreciate, men’s outlook on society.  Economic and social changes acted powerfully on religion..

Puritanism helped to mould the social order, but it was also itself increasingly moulded by it.”  In his conclusion he added:

“Circumstances alter from age to age, and the practical interpretation of moral principles must alter with them.  Few who consider dispassionately the facts of social history will be disposed to deny that the exploitation of the weak by the powerful organized for the purposes of economic gain, buttressed by imposing systems of law, and screened by decorous draperies of virtuous sentiment and resounding rhetoric, has been a permanent feature in the life of most communities that the world has yet seen.  But the quality in modern societies which is most sharply opposed to the teaching ascribed to the Founder of the Christian Faith lies deeper than the exceptional failure and abnormal follies against which criticism is most commonly directed.  It consists in the assumption, accepted by most reformers with hardly less naiveté than by the defenders of the established order, that the attainment of material riches is the supreme object of human endeavor and the final criterion of human success.”

What Tawney is saying on the eve of the great depression is that two of societies basic belief systems are in conflict.  Conflicts such as this and the other challenges to social underpinnings meant that when the extent of the social devastation of the depression was seen, there was a cry for solutions and a new approach, possibly even a new order of society.  It meant that a quintet of political theorists whose devotion to a critical examination of social structure in a realpolitik manner would at a later date have themselves labeled The Machiavellians in a book of that title by James Burnam in the 1940s.  Many such as Francis Coker in his 1934Recent Political Thought saw them as attackers of democracy rather than creators of the basis of a new realpolitik democracy, which was also a possibility.

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