Engineering and Athletics

In spite of my utter scepticism about the Olympics, and about nationalism, I had to admit that I was very proud that Canadian athletes had done so well at the recent winter Games in "Vancouver" (although most events were held in Whistler) — really for the first time ever at an Olympic games.


An article I read the other day about the Cuban Olympic boxing team, and its success at summer-Olympic games, reminded me as to how during the Cold War, the former Communist regimes of eastern Europe, were so successful at both the winter and summer games.


The figures (these from Wikipedia) are undeniable. At the 1924 summer Olympics, hosted by Paris, the top five countries by medal rank were (in order): the United States (which won ninety-nine bronze, silver and gold medals), followed by France at 38, Finland with one less than France, and then Great Britain (34) and Italy (sixteen in total). At the 1928 summer games in Amsterdam, the top five were: the U.S., Germany, Finland, Sweden and Italy. In 1932 in L.A., it was the U.S., Italy, France, Sweden and Japan.


The last summer Olympic games held before World War II (when the Olympic games were suspended) was in Berlin. Not surprisingly, Germany won the most medals (at 89), followed by the United States, Hungary, Italy and Finland. After the war, the composition of the top-ranked Olympic nations began to shift rapidly. At the 1948 summer games, held in London, the top five ranking countries were the U.S., Sweden, France, Hungary and Italy. Much the same as in previous games, but notable was the eighth-ranked country: Czechoslovakia, which just that year had seen the Communist party take power in a putsch.


By 1952, when the summer Olympics were held in Helsinki, Czechoslovakia had jumped to sixth-place. For the first time in ‘52, as well, the Soviet Union sent an Olympic team. The U.S.S.R.’s medal rank came second that year behind the U.S., with 71 versus 76. But for the 1956 Melbourne, Australia games, the Soviet Union won 99 medals (thirty-seven gold) as against only 74 for the U.S. Four years later in Rome, they did even better, getting 103 versus 71 for the Americans. Eastern bloc countries Czechoslovakia and Poland came tenth and ninth, respectively.


Again in Tokyo in 1964, the U.S. was beaten by the U.S.S.R. in total medals (though it won more gold than the Soviet Union), while Poland, Hungary and Czechoslovakia were also in the top ten. In 1968, when the summer Olympics were held in Mexico city, the U.S. beat out the Soviet Union for most medals; Hungary and Czechoslovakia were also in the top ten, but a new Olympic team, representing East Germany (or the German Democratic Republic) came in with 25 medals, almost tying West Germany with 26 (although the East did win more gold medals than the West; prior to ‘68, the two nations had competed on a single “united Germany” team). By 1972, when the summer games were held in Munich, the Soviets were back on top, with the U.S. in second, the GDR in third, handily beating out fourth-place West Germany. Meanwhile, the last three places in the top ten were held by Poland, Hungary and Bulgaria. During the Montreal Olympics in 1976, the Eastern bloc was clearly winning the field: seven out of the top ten were Communist states, with the U.S.S.R. and East Germany coming first and second, winning 215 medals between them, including 89 gold trophies.


During the Cold War, Communist authorities were clearly interested in using the Olympic games as propaganda vehicles, to show off the superiority of Leninist socialism. What is interesting is that the success of Communist-state Olympic athletes was ramped up, even as these same countries encountered both relative and absolute economic decline. I think this parallels how command economies — and the state-controlled sectors of competitive economies — are able to more successfully develop engineered technology than are firms that operate under competitive conditions.


For a decade or more, I’ve pondered as to why this is the case, even though the cash sector is able to more effectively organize a technology-based economy better than where no competition exists. My tentative conclusion on this point has been that, in regard to research and development of applied forms of engineering, financing by governmental means is not a detriment that it obviously with other forms of investment; private financing of R&D is not as successful as it is in virtually all others forms of endeavour. But why?


There are several reasons. Motivation, for instance. Perhaps more than anyone, experts looking to bring scientific theory into engineering practice, have intrinsic incentives, regardless of the profitable end that may come from their work. This is as true of researchers working under a competitive, cash economy, as under command socialism. But, quite unlike with for-profit firms, participants in research projects financed by the state, are not usually delimited in their activities, by the necessity of creating a product or service that can sell in the marketplace. The need to make a profit is what brings discipline to the activities of companies working under competitive conditions. But it appears detrimental to research and development in the field of engineering. The need for an immediate, or at least certain, return on investment, which inspires efficiency under a cash-economy as a generality, is not at all efficacious when dealing with the technological basis of a modern economy.


Research and development under command-economy conditions (or even when investments are provided by the state which presides over a “free market” economy) does frequently lead to practical results because it such work lends itself to relatively limited ends, and measurable benchmarks. This is, of course, different from the more mundane types of production, such as clothing, housing and feeding people. As is well-known, the command economies of the former Soviet bloc were notoriously inept at these basic tasks, even as they developed satellites or jet-fighter craft that were far superior technologically to their counterparts being created in Western countries.


What does this have to do with the undeniable success that Soviet bloc athletes encountered during the Cold War? The same set of conditions are in place for athletic as for technological supremacy. Like research scientists, athletes are intrinsically motivated: their desire to win has to do with the activity itself, rather than any outside incentive, such as money. And, this intrinsic motivation is evident not only for the athletes themselves, but for those who assist them — coaches, trainers, even those who cheer them on. Certainly, athletes can make a great deal of money, both from professional salaries and from endorsements of commercial products. But this doesn’t really apply to Olympic athletes, at least not so much. Being “amateur”, athletes are not paid directly for their services. Multiple gold-medalists can make a great deal of cash from commercial endorsements, but usually this doesn’t last very long. The vast bulk of Olympic athletes have no endorsement prospects at all.


In Western countries, this has meant that athletes had to be independently wealthy (as was often the case during the first few meetings of the modern Olympics), work for a living while training part-time, or else live very modestly on stipends provided by foundations, universities or government in order to have enough training-time to compete at an international level. In the Soviet bloc during the Cold War, however, authorities were so interested in beating the West — and especially the United States — on the Olympic field, that any student showing promise in athletics was whisked into special programmes to build up her competitive potential. As such, Olympic hopefuls from the Soviet bloc were granted privileges not available to the average “citizen” in Communist countries: access to Western consumer goods, relative freedom from censorship, and most of all, travel outside the country in order to compete at the Olympics and other international athletic events. Most of all, though, they were given the free time to train without worry of having to make a living at a non-athletic job. Given this, it would be surprising if Communist-bloc athletes during the Cold War were not able to beat out Western competitors with every Olympiad.


In essence, then, what Communist Olympic programmes set out to do was to engineer the superior athlete. And, like with the successful attempts by government agencies at engineered technology, state-directed athletics (and this is as true of Western countries as of former and present Communist states), shows superior results compared to “laissez-faire”, because athletics and engineered both lend themselves to accurate metrics, and thereby to higher command-and-control.

Some thoughts from Georgia...

Wakefield Tolbert, follower / reader from the great state of Georgia (U.S. Georgia that is - I've never been there but they came up with the Allman Bros. Band, and that's good enough for me!) has some thoughts germane to `Revolution and romanticism', that I thought bear repeating -


(btw, Wakefield, please believe me when I say that the comments I left on your site re: climate-change are completely friendly, respectful disagreement...)


Wakefield away!:


The Labor/Knowledge dichotomy is interesting to behold.


Reminds me of one pundit who said this is akin to how the United States Navy basically operates at the human level: A system of fantastically complex machines designed by geniuses, to be operated by dummies. Without taking so glum a view of the abilities of the quotidian masses hired to do the wet work of war, some have also pointed to the "Rosie the Riveter" phenomenon of WWII, where millions of American women--primarily secretaries and housewives for the age where most women were tending home, hearth, and snotty noses of kids--were hired to forge the machinery of war almost akin to some Tolkien narrative about Sauron hiring Orcs to beat metal into scimitars. Johnny went of to war, so Mom had to step in and follow the factory whistles and routines of labor in his absence.


Engineers set the standards for mass productions of the war such as tanks, planes, machine guns, etc. Of course. But it was demonstrated that "the average person" could very well grasp--with some shortened hurry-up training--many of these same intricacies of design. No, engineers and scientists were not made out of these women, but it's all the same fascinating to know that the majority of the American war effort's labor and detail of weaponry was made by female hands that formerly were rocking cribs.


Your knowledge of history is far more in-depth in mind. I know some of the major players and busybodies on the political or philosophical stage, and that we be about it for my elucidation in the public system of the state of Georgia. No doubt you've moved by choice and interest far beyond this kind of thing.


In any event, I can only add that it would be beyond fascinating to speculate what future historians will say was the proximate cause or main set of causes in what will invariably be our turn to have our coffee tables, refrigerators, and cars dug up from the successive layers of soil, that tomorrow's archeologists will almost doubtless sift.


Unless, of course, we end things long before then or the transition is something smoother. But whether Utopian or Dystopian, there WILL be some sort of future that we can only guess at and of which writers of all stripes have had much mirth in trying to pin down entertaining vignettes for their stories.


Wakefield's a very astute man.


With respect W.T.'s statements as what will come in the Future, I'm reminded that the most accurate predictions that I have heard, came not from `serious' science fiction, but from comedy programmes.


I'm too young to have watched the original `Laugh-In' show, that aired in the late 1960s and early '70s. I saw a retrospective of the show in the 1980s.


Not surprisingly, the producers of the retrospective decided to include clips of several `jokes' that turned out to be true (I'm going by memory here): "Dateline, Washington, Dec. 1988: President Ronald Reagan..."


and


"Berlin, 1989: the Berlin wall fell today, and was replaced by a moat of alligators..."


This is in 1968.

Note: checking this out on the net just now, I discovered a youtube clip of both of these segments:


Note: I'm planning a new essay as why the modern world differs in sensibility from the Middle Ages.

The Labour Theory of Capitalism; or Rubes, Rednecks and Hicks: The Makers of the Modern World

Reading The Industrial Revolution, published this year, and written by Lee Wyatt. It seems like an advanced undergraduate text, but general histories of this momentous event are surprisingly hard to come by. 

My long-running thesis is that "industrialization" had little to do, at first, with inventions such as the steam engine. Instead, it was the division of labour which was key. Wyatt hews to the "consensus" that machinery was essential to the industrial revolution, but presents evidence that suggests otherwise. 

The classic example of early division of labour was found, of course, in Adam Smith's Wealth of Nations, from 1776, in which is described a pin factory where work is "divided into a number of branches, of which the greater part are likewise peculiar trades. One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on, is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands, though in others the same man will sometimes perform two or three of them." (page 8 in pdf text at link above) 

What Smith described was essentially a process of manual labour — very tedious and even strenuous labour — that went largely or wholly unaided by water- or steam-power at all. The classic case of the division of labour, very familiar to modern society, is the McDonald's restaurant. Established as a single outlet in California in the 1950s, it was the McDonald brothers' themselves who established the production-line approach to service (the title of a 1972 Harvard Business Review article by Theodore Levitt) that became characteristic of the later worldwide chain, when they eliminated wait-staff (including all female employees, who were presumed to be magnets for amorous punks), radically simplified the menu (eliminating any dish that required the use of a fork and knife), and of course, divided up the responsibilities for the cooking and cashiering between several more people than would normally be employed at a hamburger joint — staffing levels made affordable by the very low wages paid for the work. 

This is, I think, "industrial revolution" in a nutshell. Like any instance of the division of labour, a McDonald's (or any fast-food) restaurant results in the de-skilling of work. McDonald's has long been the byword for low-paid, low-skill work (the "McJob") that doesn't require much talent or even brightness at all. Wages are evaluated so meagrely precisely because "any idiot" can do a McJob. It works out from the employer's point of view, because employees who quit or grow insubordinate can be quickly replaced by the next idiot. The key point is that McDonald's has never employed actual powered-machinery to achieve the "assembly-line" levels of productivity that made it the global success that it remains. Of course, the original McDonald's restaurant no doubt employed the most up-to-date appliances and other technology for fast-food production. However, in this respect, it was no different than hundreds, and even thousands, of competitors at the time. Where it was dissimilar was in the utilization of the manual labour of making hamburgers and french-fries. The McDonald's division of labour rapidly increased hamburger-productivity, and with it, the profits from selling fast-food. Eventually, of course, it was this method which resulted in billions and billions in profits, from "serving millions and millions" all around the world. 

It was the same with the pin factory and similar efforts at the division of labour in industrializing Britain. It allowed — unaided in large part by machinery — for a workforce of ten to "make among them upwards of forty-eight thousand pins in a day," as Smith described it. He went on: "Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day; that is, certainly, not the two hundred and fortieth, perhaps not the four thousand eight hundredth part of what they are at present capable of performing, in consequence of a proper division and combination of their different operations." (Wealth of Nations, page 9 of above pdf text) 

The steam engine and other engineered machinery came to be employed for productive purposes, because of the division of labour, rather than the latter being a consequence of the former. The division of labour was made possible in turn, by the widespread acceptance of wage-labour. It is the chief reason why Britain became the first industrialized country. 

There, far more than on the Continent, the feudal system had given way to enclosure, and landowners cleared their possessions of wastelands and peasantry, to farm cash crops and raise livestock. The nobility converted themselves into agrarian capitalists (the word "firm" comes from "farm"), and the toiling masses were converted into wage-labourers. 

The rural proletariat of the early-modern period were doubtless no better off than the peasantry of the Middle Ages. However, the enclosure of farmlands vastly increased agricultural productivity, thereby causing a decrease in the price of basic staples. This is the reason, too, why wages in the agricultural sector remained so pitifully low. 

However, the capitalization of the agricultural industry was also the spur for innovation and improvement in farming techniques (such as those introduced in the early eighteenth century by the pioneer agronomist Jethro Tull). These innovations, in turn, boosted productivity all the more, thereby making food staples all the more cheaper. This had the effect of boosting population in Britain considerably (an increase of thirty-three percent to nine million between 1700 and 1790), while higher productivity and a larger workforce continued to depress wages. 

According to Wyatt, already by 1700, the proportion of the workforce involved in the agricultural sector was considerably smaller than in the major European nations: "... in 1600 the average farmer in Great Britain had produced enough food to support his family and half an additional one. By 1800 that same farmer could feed his own family and one and one-half more. By the mid-19th century, Great Britain had the lowest proportion of its workforce in agriculture than any other country in the entire world." 

At that time, according to Wyatt, only 22% of the British workforce was involved in farming. It was the "surplus" non-farming population which supplied the workforce for the early manufactories, in the textiles and other industries (such as pin-making) — not to mention the markets for the cheap (in price and quality) goods that were produced from this process. It is no coincidence that the factory system developed in the very areas (namely, the midlands and north of England) where enclosure was pursued most vigorously and successfully (Wyatt points out that not all, or even the vast majority of efforts at enclosure were carried out off). It shows how industrialization, at least in its early stages, represents not the colonization of the metropole by the hinterlands, but rather, the reverse: factory-industry developed initially far from the centres of power, culture and influence, eventually drawing metropolitan areas into its orbit. This is why, as Wyatt points out, the five largest cities after London in 1800 — Manchester, Liverpool, Birmingham, Leeds, and Sheffield — were small towns or mere villages in 1600. No coincidence again, that all of these were major manufacturing centres at the turn of the nineteenth century. 

This pattern held, too, for the United States, which in 1800 could be considered one vast hinterland, in relation to the economic might of its former colonial master, Great Britain. The American industrial revolution, though, took place largely away from the old centres of power — Boston, New York city, Philadelphia, Washington, Atlanta and so on — in backwater places that later became Pittsburgh, Detroit, Chicago (which grew from a population of 250 in 1833 to three quarters of a million at the time of the great fire in 1871), Indianapolis, and Los Angeles. Manufacturing that did take place in the states that were the original Thirteen Colonies, was concentrated away from larger centres: rural New Jersey, Connecticut or New York upstate instead of New York city, Lowell, Massachusetts instead of Boston, Pittsburgh instead of Philadelphia. 

I believe conventional historical understanding of the past is mistaken, as well, in respect to the the notion that machine-industrialization (in Britain) as elsewhere, developed under "laissez-faire" or "invisible-hand" conditions. Manufacturing under division-of-labour conditions was, in eighteenth-century Britain, largely accomplished without government intervention. 

However, as Wyatt himself notes, until the Revolutionary/Napoleonic wars near the close of the eighteenth century, British industrialization was not characterized by the sort of the heavy, steam- or coal-driven machinery that would characterize factory work in the nineteenth and into the twentieth centuries: "In reality, until the 19th century the large factory was not the common sight in industrial districts, as most mills were essentially just more sophisticated workshops of the past." 

The latter form of factory industry occurred in Britain, as elsewhere, due to deliberate government involvement in the economy — whether to fight war or a result of a dirigiste economic policy (ie., as in later nineteenth-century France, Germany, Japan and, much later, Soviet Russia). 

The idea that government subsidy and other forms of intervention were necessary for factory-industry to grow was one of the few areas of agreement between Thomas Jefferson, the third U.S. president and advocate of an agrarian-yeoman republic, and Alexander Hamilton, the Caribbean-born American revolutionary and later the first Secretary of the Treasury, who advocated an industrial policy. 

They simply disagreed as to how desirable such intervention was. Hamilton pursued industrial development both in and out of government. 

As a private citizen, though, Hamilton acted not merely as a venture investor, but as a lobbyist to federal and state government for subsidies and trade restrictions which would help industry develop. Eventually, he and others entered into partnership with the New Jersey government, encouraging industrial activity in a remote area that eventually became the city of Paterson. Hamilton's efforts were, as it turns out, largely desultory, and the United States remained an agrarian nation until another form of government intervention in the civilian economy — the American civil war — sparked a real machine-industrial revolution. 

The division of labour itself, while made practicable by the existence of wage-labour as the standard form of contract (to the exclusion also of slavery), is a by-product of analytical consciousness, given such potency in modern times by the printing press, optical technologies such as telescopes, abstract-icons such as graphs, maps and clocks — timepieces especially. 

The factory itself has been described as an extension of the clock, and even before the introduction of heavy-machinery into the factory workplace, the division of labour itself was dependent upon the iron rule of the clock. The factory system's dependence upon rationality is behind the split between bourgeois and proletariat. Lord Bertrand Russell once remarked that all work consists of rearranging matter at or near the surface of the earth, and telling others to do so. The division of labour demands that a portion of the workforce must carry out tasks which are repetitive, tedious, and even robotic in nature, requiring little in the way of skill and intelligence. 

But the variegated, particularized activities of the factory demand also highly cerebral and calculative oversight — that part of the workforce which is now referred to as "management." This is the bourgeoisie, a class that once consisted largely of the direct owners of capital, but which is now made up of professional delegates of those in ownership. This basic split between worker and management, is as inevitable under the division of labour as that between lord and peasant under feudalism. 

The distinction persists even where, as in the advanced capitalist countries, a unionized worker in heavy industry (such as an automobile plant) can expect to make as much (or often much more) than many belonging to management. The class division in industrial society arises, as Marx said, in how the proletariat and bourgeoisie approach work or labour. It persists even where ownership of capital, or machine-engineering, is in the hands of the state. Marx and Engels argued that the abolition of capital would eliminate the division of labour. 

But productive wealth is based on this division. Rendering the factory system more "humane", eliminates the productivity that is the whole point of the division of labour. In the Soviet Union or any other industrialized Communist country, the division of labour was not abolished, of course, and inevitably, a managerial class emerged — the nomenclatura — which simply became the "new boss, the same as the old boss", or rather, much worse than the old boss. 

The abolition of command socialism has met with contrasting results in the two major Communist states of the twentieth century, China and Russia. Twenty years ago, the expectation might have been that Russia, which had already undergone full urbanization and industrialization, would quickly become a Westernized, developed liberal democracy after not too many years. 

China, on the other hand, was still very poor, with a vast population and Communist leadership that, while promoting economic liberalism, was ready to shoot down its own young people in the heart of the capital, Beijing, rather than submit to political reform. Instead, Chinese industrial growth zoomed far ahead not only of Russia or any other former Communist state, but also the Japanese "superstate", as well as every country in the world except for the United States, which in turn became the market for the export industries that sprang up in China during the 1990s and the new century. In the meantime, Russia went into near collapse. Not only its industrial base, but its birth rate and life expectancy went into free-fall during the ‘90s, the government unable to restore order or even to remain in office for very long, until the turn of the century when the state was taken over by a former KGB colonel. 

The conventional explanation for this divergence, is that in China, unlike Russia, the Communist party did not relinquish political control, instead abjuring political reform in favour of economic liberalization, while Russia did the opposite. 

In an article published by the Hoover Institute at Stanford university, Paul Gregory and Kate Zhou argue that the dissimilar paths taken by the two largest former Communist states, have different sources. In sum, the authors state that in China, unlike Russia, traditions of single-family ownership of farms were very ancient, an endured in spite of the period of collectivization of agriculture. 

Gregory and Zhou submit that, when privatization of land holdings came to Russia, the workforce was reluctant to depart from the security of the farm collective. But in China, the authors argue that it was the peasantry which led the way to economic reform, setting up illegal private farming operations following the lifting of totalitarian oppression after the death of Mao Tse-tung in 1976, and the removal of his radical allies the "gage of four" (including Mao's widow) thereafter. 

In contrast to China, Russia had by the time of Gorbachev's reforms experienced more than three decades of (relative) stability and (relative) liberality following the death of Stalin, Zhou and Gregory write that when reforms came in the late ‘70s, "a large percentage of the population was recovering from the catastrophes of the Mao years. Rural dwellers, in particular, had witnessed the chaos of the Great Leap and had seen their parents and children die from starvation during the 1958–61 famine. They learned they had to take care of themselves." 

In the 1980s, as Mikhail Gorbachev was offering 50-year leases of land to a resisting rural workforce, Chinese peasants "began to quietly distribute the land, with each family delivering production for the state quota. Gorbachev called for decollectivization from above; China's farmers decollectivized spontaneously from below. They created their own `contract responsibility system,' initially at risk of severe punishment. There were no leaders; there were no face-to-face confrontations. ... As agricultural production soared, Deng Xiaoping and his party realized they could not resist and could take advantage of something that was working." 

That economic reform originated in the Chinese countryside is not in dispute. There, as in Britain and the United States in the past, industrialization originated in the rural regions, before spreading to the major centres. 

Gregory and Zhou observe that in Russia in the Gorbachev era, "the farm population had shrunk to a quarter of its former size; only older workers remained, working perfunctorily on state land or tending their private plots. They had long been converted into wage workers and received pensions and socialized medical care, albeit of a low quality. In China, rural dwellers accounted for 80 percent of the population; compared to Russian farmers they were young and vibrant. They lived without the social guarantees of Russian farmers. In China, only the young had not experienced private agriculture. Small private plots had existed in China for 2,000 years." 

When, in the 1980s, both Russia and China began to privatize its non-agricultural sector, Russian entrepreneurs came largely from the city, but "China's first entrepreneurs hailed primarily from the countryside, and they got their start by marketing farm products in the cities. Private trade developed in China at the grassroots level, emerging from rural regions and prospering because it filled a vital need. The rural contract responsibility system created huge agricultural surpluses which had to be marketed outside the state system. Farm products had to be moved over long distances, either directly or through intermediaries — in violation of laws and without contracts that could be enforced in courts." 

Zhou and Gregory write, "China's early trader-entrepreneurs had to first overcome the problem of distance between producers and consumers. ... Throughout the early 1980s, farmers in north Jiangsu packed their bikes with chickens, ducks, and other fowl, crossed the Yangzi River, and shipped their products by rail to urban centers in the Yangzi basin. ... By 1983, the majority of consumers in major cities purchased their products in free markets rather than in government stores. Within one year (between 1979 and 1980), most state vegetable markets, except the highly subsidized Beijing and Shanghai markets, were out of business." 

By 2007, the authors note, the wealthiest Chinese citizen "was the daughter of a poor farmer from the southern province of Guangdong, whose family became wealthy after acquiring large tracts of land and distressed assets in the countryside, where there was no real estate business, in the early 1990s." Private firms, non-existent in 1978, numbered almost thirty million in 1997, with nearly one million corporate or joint ventures. Private capital consisted in that year two-thirds of GDP, again up from nothing almost thirty years earlier. 

Gregory and Zhou state, "Private business originated in agriculture, spread to the cities, and then returned to the countryside as rural-based industry. Many large private manufacturing firms developed in predominantly agricultural provinces (Zhejiang, Shandong, Guangdong, Hunan, and Sichuan). China's largest agribusiness, the Hoep Group, was founded by the Liu brothers, who left the city to found their company in a rural part of Sichuan province. Wang Guoduan, a rural entrepreneur from southern Guangdong province, built the largest refrigerator maker, Kelon Group; Huanyuan, China's largest air conditioner maker, is based in the agricultural province of Hunan. China's first automobile exports will likely come `from the agricultural hinterland of Anhui province...'." 

All this shows that the "capitalist" system is dependent upon the labour-factor of production, above all. Communist economics could productively organize both land and capital quite well — often better than capitalist economies (witness of the superiority of initial Soviet space technology or the MiG jet-fighter over its Western counterparts). Economic history has shown that the free market, or "invisible hand" is wont to invest in complex or engineered-machinery, i.e. productive capital, before its utility is proven by state investment in such machinery, either for war-making or as official economic policy. 

Communist economies, which have the workforce dictating the productive decisions, fail in their inability to properly organize the labour factor of production. As mentioned, Communism did not and could not abolish the division of labour. However, the organization of the workforce in this manner had desultory results, just because of the inability for command socialism to properly serve and service the vast capital infrastructure. A worker's wages could buy nothing beyond staples, and anyone was rewarded thereof regardless of how hard or little one worked (rewards came through other means, such as acting as an informant on others). As factory and industrial work generally has little inherent reward, most people chose not to work beyond what was necessary.

Engineering and Freedom, Part 10

click here to read part 1 
click here to read part 2 
click here to read part 3 
click here to read part 4 
click here to read part 5 
click here to read part 6  
click here to read part 7 
click here to read part 8 
click here to read part 9

The marketing/advertising economy is generally conceived in terms far removed from the welfare/social economy.  

In fact, both offer goods and services at very low cost to the ultimate consumer, subsidies that must be borne elsewhere in the economy. Governments pay for their social programmes through borrowing or tax revenue. Industry pays for its entertainment programmes by incorporating the cost into the price of the products it creates. In both cases, the expense of the goods on offer is socialized. 

For both the social economy of government expenditure, and the promotional economy of advertising subsidy, then, the normal rules of the cash or price economy do not apply. 

The irrelevance of price, the primary source of data for productive decisions, is the reason both government and marketing agencies must collect so much “intelligence” on the everyday habits of their clientele. 

Post-Keynesian economics has outlined in great detail how the expropriation of wealth from private hands to finance the social economy has proven deleterious to the cash economy as a whole, in large measure because the irrelevance of price in the social distorts demand and supply decision-making. 

Yet little systemic analysis has undertaken as to how what one recent book called the “entertainment economy” may, too, distort the overall cash economy, even though the mechanism for the subsidy of the latter is the same as the former. 

The main argument against the social appropriation of capital investment, advanced by neo-classical economists, is that non-private interests are much less efficient in marshalling resources than are private concerns. But couldn’t this be said equally of the appropriation of actual investment in capital, for the purposes of advertising promotion through mass media? 

Marketing funds must be borrowed from the total of that available to produce a good in the first place. It is an expense without any necessary return. If advertising improves sales, that is well and good, but if an ad campaign does not do so, its expense cannot be recouped by selling it to someone else (as is the case with say, unneeded capital goods). 

Advertising, by its very nature, represents a potential wasteful expense of resources by private capital, in the same way as does wasteful government social spending. The money spent on marketing (as is the case with government programme-spending) does indeed create jobs, often well-paying ones in both cases. 

The question is whether the jobs created are worth their value to the economy overall. For the bureaucracy that must be established in order to administer state spending, the answer that has been returned by the neo-classicists has been a resounding, “No.” But for the industry-dependent marketing sector, few have even wondered to inquire if it is worth its value at all to the economy. 

Textbooks talk about “economies-of-scale,” or the savings achieved with mass production. But contemporary manufacturing concerns have grown into continent- and globe-sized monsters less to achieve economies of scale, than to afford the vast cost of mass-media advertising. 

Oligopoly or monopoly might be a matter of course in certain industries, notably resource-extraction, where there are inherently high fixed costs of exploration, etc. The only inherently high-cost factor of production that consumer-goods manufacturers must deal with is advertising and marketing. 

Where the consumer-goods sector ought by now to be highly competitive, sensitive to price fluctuations, instead there is oligopolistic concerns the size of Coca-Cola and countless other firms of the same proportion. The fact is, the largest consumer-goods firms long abandoned reliance upon crude supply and demand measures to make production decisions. 

The development of large industries devoted to consumer goods, while relatively free from government intervention (especially in the U.S.), did not otherwise rely solely on the “invisible hand” of the unregulated marketplace. Instead, consumer-based industries sought to inspire market demand by doses of propaganda through all available mass media. 

The author Susan Strasser has traced the development of the marketing economy during Victorian times, detailing in particular the selling of the Crisco brand by Procter and Gamble. She writes, “The corporations that made and distributed mass-produced goods did not necessarily set out to create needs, nor did they do so in any straightforward way. Procter and Gamble made Crisco in order to sell it. The company employed home economists to develop recipes, but did not in fact care what consumers did with the product as long as they bought it. Its goal, in Thorstein Veblen’s words, was the `quantity-production of customers’, the making of consumer markets. Sometimes manufacturers produced needs among children for products that parents bought. Those with goods in established product categories put most of their marketing effort into producing a demand for a particular brand, not a need for the product itself.” (Strasser, Satisfaction Guaranteed: The Making of the American Mass Market, 1989, p. 17) 

Strasser observes the economic mechanism of the marketing economy: “The manufacturers who adopted the conveyer belts and gravity slides of low production... needed to dispose of their huge outputs. Because mechanization demands large amounts of capital, they sought predictability and control; they could not afford large overstocks and they wanted to free themselves from dependence on wholesalers. They took their cue from a few industries, such as book publishing and patent medicines, where manufacturers courted customers directly, placing advertisements in magazines, selling by mail, or offering commissions to salesmen who went from house to house and put on public displays, the fabled medicine shows. Copyright and patent holders held monopolies on their products, and the largest and most successful flow producers could purchase Uneeda biscuits or Ivory soap only form the National Biscuit Company or Procter and Gamble, they would have to pay the manufacturers’ prices.”[ii]. (Strasser, Satisfaction Guaranteed, 1989, p. 19).

Thus it is that the mass media grew up in tandem with the inception and development of large industrial trusts devoted almost entirely to the consumer marketplace. Printed books and other materials were the first goods produced for a mass marketplace, and periodical literature in particular was crucial to the creation of an abstract marketplace for the sale of mass-produced goods. 

In the nineteenth century, when printing was industrialized under factory conditions, the new mass-circulation dailies and periodical weeklies or monthlies were economically sustainable through revenues provided by consumer advertising. So it was with the later development (in America) of broadcast radio and television. 

The commercial messages delivered through these media, while not literally brainwashing, employ many of the techniques of psychological manipulation. Advertising conditions consumers to accept the machine-technological way of life, the necessary apparatus for the creation of mass consumer goods. 

The goods and services offered by industry, submitting to the whimsical and “trivial” of everyday concerns and anxieties, are the salve, the tonic for the personal and social estrangement which occurs in society governed by technological imperatives. Mass-media entertainment, paid for the advertising of goods and services, is a crucial part of this nexus. 

The main difference between advertising expenditure and programme expenditure by governments is that while the former is financed on a private, volitional basis, the latter is not. 

However, the state is deeply implicated in the business of advertising. First, the main vehicle for it, broadcast media, are legally public utilities in most jurisdictions. Private concerns that lease these utilities, and the industries that finance these concerns through advertising dollars, do so at the pleasure of the state. Second, business tax law in most places allow corporations to write-off the expense of advertising, so that, while only large concerns can afford to spend the big bucks necessary for a really effective ad campaign, they can also profit from by eliminating the cost from the total taxes they must pay. 

Thus, consumers pay for the expense of the marketing industry twice, in the greater expense of the goods they buy, and in the larger chunk of their personal incomes taken by governments to make up the shortfall in revenues caused by ad-expense tax write-offs. More generally, though, the culture of the “entertainment sector” (the fortunes of which is completely dependent on advertising revenues) resembles that of the social economy rather than that of the regular price economy. 

This is no less true in spite of the fact that firms in the marketing industry compete vigorously for their clients’ business. In a state-dominated economy, private firms also compete assiduously with one another for the right to government business. This does not mean, however, that private companies’ revenues that come from state coffers are automatically more efficient, just because they are private firms. 

It is competition, not the mere fact of private ownership, which promotes efficiency and improved goods. Where one’s largest or only customer is the government, there is far less pressure to offer goods and services at a premium, precisely because the threat of competition from other firms is absent. 

Similarly, marketing firms win business for reasons having to do far less often with rational supply and demand decision-making, than with their ability to persuade clients of the probability of success of the “campaign” (the analogy of that word with army generals’ pursuit of the enemy in battle is entirely appropriate). 

However, since the exact relationship between any marketing campaign and any increase in sales cannot be established (it is said that half of advertising campaigns fail to have any influence at all, positive or negative, on sales), the success of any marketing firm relative to others depends not on their ability to produce anything, or carry out some service with demonstrable success, but on political connections and active lobbying. 

Advertising as often as not has no influence whatsoever on sales. But the fear that a competitive rival will usurp their market position is enough to encourage modern captains of industry to continue to perennially invest in the marketing of their goods, rather than in the goods themselves. 

The same logic has kept junta regimes throughout history expropriating the “surplus” of actual wealth-creators in order to finance their arms races. With regard to the entertainment or marketing sector of the economy, however, it is not only that business people feel constrained by competitive forces to spend such a great amount of their capital on advertising. 

The marketing/consulting industry is responsible, as we noted above, not only for representing clients from other parts of industry, but also for collecting vital information on the public. This information is the bread and butter of the marketing economy. It is also proprietary; as those who have the responsibility of handling it usually have to sign some sort of legal agreement not to reveal its contents to anyone. If they do, they could face expensive lawsuits. 

The term “information economy” is usually associated with computers and related technology, but in fact the information sector of the economy first took off after the war, when the average computer was still the size of a room. “Information” is exactly what the marketing sector of the general economy trades in. 

The social and cultural position of those who staff it, is roughly analogous to that held by scribes in the Latin church during the Middle Ages, which is to say, it has a monopoly hold on the vital data needed to operate the primary media of communication. Since people who work in this sector of the economy are recompensed handsomely by their clientele, they have plenty of cash to spread around. 

Those not directly involved in the “information” economy thus again lose out, as producers and middlemen pay less attention to the manufacture of more utilitarian things affordable to the common people in favour of baubles favoured by information professionals and those directly employed by them. 

The socioeconomic position of those within the information economy of advertising/marketing is also analogous to that of functionaries that staff the institutions of the social economy. Both groups are economic parasites, imposing their own distinct sorts of tithes on the productive activity of others. Any sophisticated economy requires some sort of non-productive parasitism, of course. 

But is the degree of parasitism evident with the contemporary information economy serving a socially useful good at all, except for enriching a relative few at the expense of many others? Advertising/marketing, at least through mass media, are financed by private business, but its principles are contrary to those of rational self-interest. Moreover, “the media,” or electronic means of communication, would never have achieved the primacy that they have without the vast sums spent on subsidizing them by advertising promotion. 

Thus, any consideration of “the effects of television” (and more broadly, all mass media) and “the influence of advertising” are really inseparable. These cultural forms are, however, generally analyzed not only in isolation, but primarily in terms of their content. 

Thus, there has been the constant worry, since the introduction of television, about how violence depicted on TV inspires actual violence in real life, or about how advertising encourages people to buy things “they don’t need or don’t want.” 

But if we assume, correctly, that human beings, as physical and social animals, have indigenous needs and wants, a fuller understanding of how “the media” condition their audiences will be gained. 

 Thus, the information/marketing economy is not, as depicted by some observers, an inevitable opponent of the state economy. In fact, both sectors have the same object of subsidizing certain forms of consumer activity at low or no charge, in order to maintain a dominant social, economic and political position. Advertising, as with “corporate sponsorship,” is indeed the alternative means of subsidy when government subsidies are insufficient or unavailable. This is the case with art and sport events, as noted. 

Television and radio networks that don’t survive on advertising subsidy, do so on government subsidy instead. The Internet functioned for many years on the subsidy of the U.S. Department of Defence, long before anyone but defence analysts or scientists had ever heard of it. 

The Internet has been a boon to marketing intelligence, however, because with the active participation of consumers in a mass computer network, companies can track their actual Web-surfing behaviour, right down to the name and number of Web sites they visit, even the contents of their host personal computer. 

Goods or services subsidized by taxes or by advertising revenue (which is a tithe on the cost of the product itself) are “in common” in that rarely could their activities be sustained by supply and demand means. 

The significant part of the workforce that now earns its living from the marketing economy, while officially employed by the private sector, are no necessary enemies of the public sector. All government departments, as well as their political masters, now are big clients of the marketing/information economy. 

Moreover, big business, by placing their stock not in a product but in an advertised image, have attempted to bury under a mound of mass-media propaganda their actual motivations for selling their product in the first place, that is, to make money. There is a fundamental symbiosis between the marketing and welfare sectors, as complementary methods of managing markets and people. 

The theoretical foundations of the modern welfare economy, laid down by Maynard Keynes and others, specifically identify the state as agent to encourage broad consumption, to avoid the catastrophic loss in spending confidence as occurred during the Great Depression. For their part, firms dependent on marketing aim to increase consumption, as well, the more so the better. 

While big business has long called for smaller government, in rhetoric, in actuality it long reconciled itself to the social economy and the consumers it made out of the bottom fifth of the population. 

The model information/welfare economy is not the United States, Canada, Britain, France or Germany, but tiny Sweden. There, the government for decades levied heavy personal and surtaxes to support a very generous welfare regime. The state does not, however, own very much of the general economy. Beyond strict health and social regulations, Swedish firms are able to do business as they wish. 

The government’s role in the marketplace is mainly to provide big tax-breaks to firms that invest in research and development. The tax savings accrued provide the capital for R&D, but also enforce industrial concentration. The Swedes have socialized not production, but consumption. The result, given the aims, has been very successful. Swedes live in social-security, and Swedish firms have burgeoned into global consumer giants. The Scandinavian experience shows that consumerism and welfarism, far from being adversarial, are mutually-dependent pillars of the modern engineered society.

Engineering and Freedom, Part 9

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Commercial broadcasters refer to advertising, euphemistically, as “interruptions” of regular programming. 

But given that the customers of broadcast media firms are not the viewers, but the advertisers, it would be more useful to think of the programming as interruptions of the commercial “messages.” The raison d’etre of the commercial media are the ads, as seen in the fact that in mass-circulation magazines, the first thing a reader is presented with when opening the front cover is not its table of contents, but rather an advertisement. 

The glossier the magazine, the more impossible it is to find the table of contents; to get people to look at the ads is the reason also that most mass-circulation magazines, rather than placing the text of their feature articles in a serial fashion, almost always break them up, using the device “continued on page...”. 

Feature content, whether it is in magazines or on broadcast media, is what attracts consumers. The advertising, what pays for this content, is in psychological terms the associative stimuli to the primary stimuli of what is usually called programme “content.” 

Without the primary stimuli, no one would bother with the associative stimuli. However, because the primary stimuli, the programming, is entertainment which is offered virtually without charge, the associative stimuli is almost automatically guaranteed a vast audience. 

And, since this audience is given entertainment to “relax” to with virtually no effort on their part, they are at their most vulnerable to the conditioning power of the ad stimuli. Barry Skinner introduced his behavioural psychology theories during the 1930s, the decade in which commercial broadcasting over radio was institutionalized in the United States (Skinner’s master, John B. Watson, had been dismissed from a professorship, due to sexual impropriety, and then went to work for the J. Walter Thompson ad agency). 

The environment of broadcast media, the “media ecology” as some have called it, is really a vast “Skinner box,” the device the psychologist constructed in order to his demonstrate his theories of behaviour. Within this box, a lab mouse was conditioned to perform a certain behaviour, pressing a lever, and it was rewarded, on occasion, with a food pellet. 

Eventually, Skinner translated his ideas into popular works, in which he argued that human beings should give up their “freedom and dignity” in order to live in a conditioned utopia. 

Apparently, he didn’t notice that many of his countrymen, and to a lesser extent, those elsewhere in the Occident, had given up their psychic liberty, if not their self-respect, to the massive experiment in operant conditioning called commercial broadcasting. 

Except, perhaps, that where the lab mouse was expected to press a lever to receive his reward, the TV viewer is expected not to do anything, not to turn the channel and not watch something else, which would cause him to miss the advertising. 

When they do, programmers immediately remove the primary stimuli, the programming, and replace it with something that it will attract more viewers to the associative stimuli, the ads. Some critics refer, inaccurately, to the habitual use of TV and other media, as well as the consumer behaviour that follows from it, as an “addiction.” 

In fact, actual addicts usually realize their dependency on an alien substance. Those involved in and influenced by the “information” economy (which is, by now, practically everyone), do not realize that they have a dependency at all. 

And, where the addict will do almost anything to get his fix, consumers dependent on “the media” for entertainment would quickly reject it if they were made to pay its full cost. However, it is the goal of mass-media advertisers and programmers (not a conscious one, likely), to attract the youngest possible audience to what they have to offer. 

This is why, for example, commercial-television programmes can charge such a premium when they are rated as “popular” with young viewers, even for shows that have significantly less viewership than others that are popular with those over fifty years of age. 

The young, unlike the elderly, have greater psychic room to be persuaded by mass means, and thus are of much better use to the controllers of broadcast media. Commercial advertisers, without any real recognition of this fact, act in the same fashion as do ordinary propagandists of totalitarian regimes, in seeking to brainwash the young into diffidence of their elder kin relations. 

The “teenager,” who came into his/her own truly during the late 1940s and ‘50s, was the earliest of the market-research industry’s explication of society in terms of age-relative demographics. 

This category has now been joined by the similar fractionalizing of the progress of life into “twenty-something,” “thirty-something,” the “over-fifty”, and now, “tweens” and younger. Once, children’s programming was at worst merely cloying and ridiculous to adults. Today such shows serve as nothing but advertisements for the merchandise that yields their production companies profits far in excess of what they receive from putting together the actual television programmes. 

Indeed, since most children’s programming includes advertisements for other children’s products, they are advertisements paid for by other advertisements! This has occurred even as the “content” of the most popular children’s shows has become as non-violent and apparently innocuous than entertainment for kids has ever been. 

If kids’ shows consist of bright-painted, perpetually-grinning dinosaurs, cuddly animated bears, and most tellingly, alien babies wearing television heads with antennae sticking out, and if all these characters do is gibber and occasionally sing a song, their parents will fail to notice that their children are being conditioned by a constant barrage of ads to be demand-fed in the manner of a lab mouse in a Skinner box. 

People blamed the best-selling book by Dr. Benjamin Spock on baby and child care for “permissive” society of the post-‘60s generation. But could any instruction manual on child-rearing be more permissive than the electronic device the very existence of which was to stimulate the passion to consume in anyone that came into contact with it? If even grown adults require forbearance not to be taken in by its hypnotic glow, how are children to resist it at all? 

The lure of the television, for both adult and child, is summed up in the phrase, “TV is the cheapest babysitter.” Like nothing else, TV keeps kids out of trouble, by rivetting their attention and leaving them stationary for long periods at a time, whilst the parents do the necessary household chores and get some rest. 

Studies on the adverse behavioural effects on children of TV shows always focus on “content,” on the number of violent acts per hour, the relative number of “stereotyped” gender images in a programme, etc. missing the bigger point that the form of the medium itself, by encouraging physical sedation, with the simultaneous exposure of many advertised inducements for food with mal-nutritional value, is a formula for slow death by obesity. This is as much an adult as a pediatric problem, of course, first in the U.S. and then in any other country that possesses commercial television in any abundance. 

Part 10 of Engineering and Freedom 

Engineering and Freedom, Part 8

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Classical economists assume that the “market” will most effectively regulate prices and production. 

However, markets can certainly exist outside the classic supply and demand principles. The state can, by subsidizing whole or in part the costs of some product or service, create markets.  This is what occurs when governments spend billons on welfare and industrial programmes, for example. 

Markets created by these expenditures are distinct from those under conditions of laissez-faire, because demand and supply exist without price regulation (as the costs of production and consumption are subsidized). 

Economic decision-making in the welfare state sector are subject to political, not mercantile, competition, as the many varied clients of the government organize to ensure the maintenance of their programmes and subsidies. 

This social economy is the “bread” to the “circuses” that are subsidized by the marketing economy. Advertising has provided for free, through the mass media, entertainment that few among its audience would pay for voluntarily. The very fact that it is available for free means that people will watch and listen to it: this audience is the market created by the advertising industry. 

The masses attend to mass-media product simply because it costs them little but their time to do so. There is a psychological disconnect between their consumption of mass entertainment, and the great cost of this entertainment. 

Ordinary consumers in most countries are surtaxed each time they make a legal purchase. They are also subject to a hidden tithe, the added expense of the advertising and promotion of any good or service. 

The profession of marketing has the aim precisely betraying and denying the market. Susan Strasser, a historian of the advertising industry, wrote that, 

In creating the techniques to make people want things, marketers developed principles that belied neoclassical economic theory. According to that theory, price — determined in the marketplace by supply and demand — functions as an information feedback system, telling producers how much of their product to make. When prices go up, the rational manufacturing firm (which can theoretically regulate supply but not demand) will increase output; when they go down, it will cut back on production. In actual practice, manufacturers operate on the new principle that demand could be created by the manufacturer. They initiated market research in order to procure direct market information that might make planning possible before production. Market investigation supported market creation... Furthermore, manufacturers attempted to set prices directly, not only to their own wholesale customers but also to retailers and consumers; price became, in modern jargon, an element of the `marketing mix’, an attribute of the product. With heavy investments in the machinery of mass production and in massive quantities of raw materials, no manufacturer could afford to be the passive actor of neo-classical economics... (Susan Strasser, Satisfaction Guaranteed: The Making of the American Mass Market, Toronto, Random House of Canada, 1989, pp. 27-28) 

Advertising thwarts competition in several ways. First, by inciting a conditioned response among consumer to the mass-media repetition of brand name, slogan or jingle, advertising encourages impulse-buying. Second, advertising is a costly part of doing business, an expense which does not contribute directly to efficiency or productivity. Advertising costs discourage entry by smaller, novel actors into the marketplace. 

The expense of marketing also contributes to the consolidation of industrial operations. Nearly all the major mass-media advertising brand-names belong to multi-divisional, multinational corporations. Only such large concerns can afford the vast costs of promotion and advertising. 

By subsidizing the expense of radio and television (the infrastructure, programming and advertising), consumer-goods firms have created a market for their products — the mass-media audience — that would not exist without the mass-media themselves. 

Commercial broadcasting provides entertainment, and the casual viewer or listener is estranged from the sophisticated infrastructure responsible for creating mass entertainment. He doesn’t pay for it directly (the costs of marketing being hidden in the price of the advertised goods and services), and so he doesn’t attach any monetary value to it. 

The average viewer becomes as dependent upon the mass media as the “client” of the welfare states does to his hand-out, because both offer rewards without much effort. 

The sponsorship of cultural and sports events by large corporations, which has grown steadily in recent years, is of interest here. In effect, corporate sponsorships have come to subsidize these events (often, as governments once did).  

They are popular; obviously there is a “market” for jazz festivals, certain athletic events, and so on. Yet, without the sponsorship either of government or corporations, they would be economically unsustainable. 

A corporate sponsor of a cultural event does not get, and does it expect, a profit from the expense of sponsoring it. What they hope to create is a market, not for the jazz, which already exists, but for the product and brand being advertised. Corporate event-sponsorship is just the latest twist on how business has insinuated itself on the public sphere through the subsidy of goods and services that cannot be sustained by a paying marketplace alone. 

In the past, media of communication were subsidized or otherwise held as legal monopolies by the state, a tradition which holds today for publicly-financed broadcasting or publishing in some countries. Commercial broadcasting, by definition, has always operated courtesy the subsidy of the advertising monies of industry. 

Vast new markets for radio and television were created during the earlier part of the twentieth century, not because there was such a such great demand for these media beforehand, but because the costs of the production of the home appliances necessary to consume their programme content, as well as the programming itself, were “sold” to the public at far below their actual material cost. 

The means were different, but the goal for big business of spending millions on advertising was identical to the vast expenditures governments have undertaken in the past to subsidize previous forms of media, that is, to monopolize the means of communication. In essence, advertising-financed media are propagandists for the gospel of big business, just as government-subsidized media tend to be biassed in favour of the state. 

However, commercial programming has proven far more adept at attracting the attention of the masses, because it is in the interests of the advertisers to provide for free or at low cost content that will bring viewers to watch the ads. Broadcast media have always been legally public utilities. The subsidies given them by the state and especially big business have created a demand for the programming and the requisite equipment for viewing it, that probably would not have ever existed if the full cost of the programming and the infrastructure necessary to create it were borne exclusively by the viewership. 

They were thus established as a distinct sort of utility, one subsidized not mainly by taxes or state-debt expenditure, but by the expense of advertising. Information is always been essential to the conduct of war. Generals need accurate data about the shape of the battlefield as well as the strength of the enemy. They also want to be as secretive as possible with their own activities, so as to surprise the enemy. In the twentieth century, when the conduct of war spread to the whole population, so too did the need of state to begin again to regulate the flow of information. For the junta regimes that were created to fight the Great Wars, the traditional practice of collecting accurate information was employed, but extended also to the “battlefield” of the civilian population, many of whom could have had divided loyalties. 

The censorship of information, to keep the activities of the regime secret from the enemy, was achieved by the rigid control of all media of communication, in both the Axis and Allied countries, and on both sides the general population was “censored” from understanding the enemy by liberal doses of propaganda. Modern propaganda and counter-intelligence methods were developed not by the Soviets or Nazis, but by the democratic West. 

During the First Great War, Allied governments succeeded in re-making the Germans and Austrians into “Huns,” through depictions (in the new cinema medium) of “kaisers” spearing babies on their helmets, before raping their mothers, and so on. Commercial artists were drafted to encourage the masses to sign up for battle, donate to the war cause, go to work in the factories, etc. 

Western governments also put together the first systematic internal espionage operations, to track the movements of enemy aliens. By the Second Great War, intelligence agencies in the U.S., Canada and Britain became institutionalized, and continued with the advent of the Cold War. All the countries fighting the original Great War, no matter what their relative consumer sophistication, experiencing war-induced deprivation, temporarily mocking the conditions of past civilizations. 

However, commercial advertisers drafted to work in the war cause came to understand more fully the persuasive power of propaganda, and applied it to civilian life. The 1920s thus saw a great boom in the consumer economy, guided by advertising in mass-circulation magazines as well as the new medium of radio. 

Radio had been around since the early century, mostly as a hobbyist’s tool. The medium’s spread to the civilian population was blocked by its requisition by the military governments fighting the First World War. However, radio’s technological evolution was speeded by the technological selection pressure of wartime. By the end of the conflict, radio was sophisticated enough to be used for civilian broadcasting. Unlike the mass-circulation magazine, however, the character of the broadcasting audience could not be readily discerned. 

Periodicals have subscription lists, for example, but anyone at all could be listening to a radio broadcast without a trace of who they were. There was no way of identifying just who was and who was not liking a particular programme. Thus it was difficult to sell sponsors on the popular merits of any particular programme content. Broadcast firms had to roll up their sleeves, go out and ask the public what they liked to hear. 

From this, modern marketing techniques were developed. Marketing seeks to divine the greatest amount of information from the smallest possible exposure to the general public. The goal of marketing espionage, like its military counterpart, is to gather accurate, secret information about competitive rivals, while carrying on public campaigns of disinformation in the form of advertising. 

Like traditional espionage, market intelligence requires collecting detailed information from the general public to ensure that their “loyalty” is assured. Commercial broadcasting is essentially the utilization of the media weapons used by all governments during the Great Wars, to the same end of brainwashing the general public, and reducing pressure from competitive rivals. Advertising, especially through electronic media, is as conducive to oligopoly as armaments production is to the creation of a relatively few large-scale states, and for the same reason. 

Only highly-populated societies can afford to sustain arms production indefinitely, just as only large companies have the resources to pour into the production of ads in magazines, radio and television. The costs of both advertising and armaments encourage predation in commerce and politics, so that the going-concerns have the resources to pay for their costs. 

Both arms and ads help maintain the market hegemony of large concerns simply because smaller concerns can ill afford the expense of either. Both advertising and arms have the ultimate effect of managing or denying consumer demand. The junta state does this simply by expropriating all or most resources to the creation of arms so that the means of satisfying consumer demand goes unfulfilled. 

Oligopolistic industry does so by pouring resources into media of persuasion which are aimed at conditioning the public to the normalcy of their status in the first place. These media, which are virtually all electronic means of communication, supply a market which could not be sustained by the conventional laws of supply and demand. 

The commercial development of all the broadcast media, as well as mass-circulation magazines, and most recently Internet “e-commerce,” has been undertaken by industrial concerns subsidizing a want — entertainment — in order to find a market for to advertise their wares. The logic behind the big-business sponsorship of media programming is identical, on much larger scale, to what prompts liquor and tobacco concerns to underwrite arts and sport events. 

Industry, by paying the cost of entertainment production presented through mass media, is guaranteed a big audience because the programming, and the media as well, is offered so cheap. However, if this programming, and the media that are necessary to consume it, were offered on a regular market basis, effectively there would be no market for it, because it would too expensive. In reality, the programming would not be produced at all, nor would the mass media be as “mass” in their scope as they in fact are with the advertising subsidy. 

Part 9 of Engineering and Freedom