Monday, May 11, 2009

The Economic Decline of Empires

In the long view of history, economic difficulties of mature empires apparently do not stem from insufficient consumption. Rather their economic problems stemmed from the side of supply. When needs outstrip production capability, a number of tensions are bound to appear in the society. Inflation, excessive taxation, balance of payments difficulties, etc. There is conflict between consumption and investment, between private and public sector, and within the private sector, between social groups. As the struggle grows in bitterness, cooperation among the people and social groups fades away. If public spirit is faltering and the spirit of cooperation is lacking, any programme of renovation has scant possibility of success.

In environments characterised by lack of cooperation among social groups, by emphasis on right rather than duties, by a strong leisure preference, all efforts towards renewal can only develop in the unpleasant direction of compulsion and further taxation. Feelings of frustration and pessimism are bound to spread, and in this gloomy atmosphere there is little room for innovation.
Carlo Cipolla wrote these words in 1970. They are still very relevant. Sounds just like our local empire.

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