- A Book Review of Grand Transitions: How the Modern World Was Made, by Vaclav Smil.1
Smil’s most recent book, Grand Transitions, brings together his main concerns and interests. The subject of the book is the popular one of the nature of modernity and the modern world, the ways in which they differ from the greater part of the historic human past, and the process by which the old world of traditional society gave way to the one we now inhabit:, the modern. The work deftly combines two ways of addressing these:, by identifying and quantifying the novel or contrasting features of modernity as compared to the traditional, and by setting out and quantifying the processes that brought these into being. This also makes possible the subject matter of the final part of the book, which is an argument about what the future may hold. Revealingly, this last part is done more in terms of negatives—arguments about what will almost certainly NOT happen rather than extrapolations or forecasts of what WILL happen. The reason for this is the (correct) argument that we can be much more certain about what is impossible or highly unlikely than about what is possible. It would be easy for such an expansive survey to become ill-defined and sprawling but Smil avoids this with because of his clear conceptual framework and the argument that flows from it, something that draws upon his previous work.
The key concept is that of a transition. This is not original to Smil, of course, but is widely employed in discussions of modernity. The way it works is to identify in a major area of human life—such as demography, politics, or economics—the dominant features of the traditional world that we can see persisting across the centuries and variations of geography and culture and compare and contrast them to the persistent and dominant features of the contemporary world. The next step is to identify and describe the way one changed into the other over the last two to three centuries (never more than that), and so to define the nature of the transition from the one to the other. What this makes possible is a quantitative approach that also examines qualitative questions. The issue that is not easily addressed—either in Smil’s work or others like it—is that of causation, of what it was that caused the transitions. Smil’s own approach is resolutely empirical, and he explicitly argues against the use of theoretical models (especially those involving advanced and complex mathematics) and elaborate abstract theory. He takes the view that attempts to identify causes for observable major changes are almost always bound to fail because of methodological challenges but, above all, because of the central role of contingency and randomness in the historical human story. The reason for this is the nature of complex systems (examples being with both human societies and natural ecosystems being examples of that) and the difficulty of directly linking outcomes to preceding states in such a system, along with the notorious problem of high dependence upon random initial conditions and strong path dependency. What one can do—and he does expertly—is to present a careful account of the shifts and processes, as accurately as possible given the limitations of evidence. This modest approach is refreshing and welcome when we contrast it to the elevated claims to insight and knowledge that we find elsewhere.
Smil identifies four key transitions—the ‘”grand transitions”’ of his title. These are: demographic, agriculture and diet, energy, and economic. For many, the most familiar for many is the demographic, the transition from a world of high birth rates and high mortality levels—particularly among children—to one of low birth rates (often below replacement level) and low death rates. The transition involves a time period when for some time the birth rate remains high while the death rate falls with a dramatic rise in population as a result until the birth rate declines. This transition has been completed in many parts of the world but is still in process in others. All the indications are that it will have happened everywhere by the middle part of this century. One aspect of this transition that is now becoming apparent is an ageing of the population, with an unprecedentedly high proportion of the population being elderly. The second—agriculture and diet—is marked by the movement from a world of subsistence where food production was often precarious, to one where a combination of economic integration and technological innovations (such as artificial fertilizers and pesticides) plus innovation in both varieties of crops and farming methods has produced a level of food supply that our ancestors would have seen as abundant. Smil emphasizes how this is not simply a matter of more food of the traditional kind being produced and consumed as there has also been a dramatic transition in diets with a move towards much greater variety and, generally, much higher intakes of fats and refined carbohydrates and meat (as opposed to grain products). This has pled to the novel situation of health problems caused by overeating rather than starvation and malnutrition.
The last two are separate in Smil’s account but reading the relevant chapters reveals that for him economic and energy transitions are so interconnected that it could make sense to see them as a single phenomenon. The economic one is the well-known path in which we have gone from a world where living standards were low for the overwhelming majority and very stable over the long term despite periodic fluctuations to one where they rise steadily. The energy transition is the movement from a world where the primary source of energy is human and animal muscle power—augmented where possible by wind and water—to one where these are enormously added to by energy derived from fossil fuels and, more recently, nuclear and renewable sources. The two transitions are connected because of the way that the great increase in productivity (and, hence, living standards) since the early nineteenth century is clearly in large part connected to the increasing employment of these new sources of energy—notably but not only in the form of electricity.
All this raises several questions. There are four transitions for Smil, but could we also argue that there are others? The obvious candidate is innovation with a transition from a world where innovation was rare, slow to be adopted and diffused, and systematically restrained and discouraged by both overt power and social institutions, to one where it is omnipresent, rapid, and generally lauded (at least officially). This clearly plays a part in all the other transitions. I suspect that the reason why Smil does not add this is because it is much more difficult to measure (given that, for various reasons, patents are for various reasons not a reliable measure and, in any case, only exist for the period since the other transitions were under way). Another question is this: the four transitions are clearly interconnected but might we argue that one is foundational and driving all the rest? The best candidate for that is the energy transition, but even there it is not clear how that can be seen to have caused the demographic one. Smil shows that the evidence does not support the common belief that it is the economic transition that drives the demographic one if anything the opposite is true. Alternatively, and more in line with Smil’s own approach, might we argue that the four transitions are so interdependent that none of them could take place singularly and that all four had to happen together or not at all?. This would emphasizse the degree to which we are dealing with a complex phenomenon that can be measured and described but which resists analysis, much less prediction.
That in turn brings us to the final part of Smil’s work, which summarizes much of his previous writings, and looks at where we are now and what is the likely future of these transitions is. One central point, —which is why he uses the term ‘”transitions”—is that, in his view, it is overwhelmingly unlikely that the processes that have produced these transitions will continue indefinitely or even for much longer. Instead of an open-ended process, what we will have is a movement from one stable state to another, a step change and hence a transition (as opposed to e.g. a ‘”take-off”’). The way this can be put mathematically is that we are not looking at exponential curves in the various indicators but logarithmic ones (S curves). The argument Smil makes—here and elsewhere—is that the transition is almost complete and that therefore we are therefore approaching the top of the logarithmic curve where it rapidly flattens out. For example, this implies for example that we are coming to the end of an era of economic growth and arriving at the steady state predicted by inter alia Adam Smith and John Stuart Mill. Another implication is that population growth will fall dramatically and be succeeded by decline until there is a new steady state, while yet another is that both the impact and rate of innovation will decline. If true, aAll of this has far-reaching implications if true. So much of our political thinking, for example—in all parts of the spectrum—is built around the presumption of continued growth that it will be a radical disruption if this does stop. It will make sense, in that case, to return to the thinking—and maybe even the practice—of thinkers from earlier periods who did not have that foundational presumption, or at least to update them.
One thing Smil argues very forcibly is that we will not see either a continued growth in energy usage or a major switch to renewable energy. He reiterates the argument he has made elsewhere that this is extremely unlikely because of the fundamental problem of energy density. The great advantage of fossil fuels is that they contain large quantities of energy in lightweight and compact form, so they have a high density, which in turn means they can do a lot of work. By contrast, renewable energy sources—particularly solar power and wind power—are diffuse, which means they have much less usable energy. They are fine for producing electricity (allowing for intermittency) but it is difficult to impossible to employ them for things such as transport, or industrial heating (including processes such as steel making and cement production). The problems with all the alternatives suggested are both technical and economic—there is the common problem of technologies that are technically feasible but hopelessly uneconomic. The consequence is that we can look forward to not only a stagnation of energy usage but a significant decline, due to the declining EROEI ratio of existing sources (EROEI = Energy Return Over Energy Invested, the ratio between the amount of energy gained and the energy that has to be expended used to get it). This has very obvious and extensive implications, which most people have not started to consider.
One point that Smil spends a lot of time exploring is the question of whether the final stage of the transitions will be a move to greater “‘dematerialization”’ brought about by the combination of greater wealth and increased difficulties with energy supply. The argument is that the pattern of the economic transition is for increasing productivity in which resources are used ever more intensively to produce ever larger amounts of physical output. As with all processes, this faces diminishing marginal returns and, eventually, what is increasingly produced are not physical products that require inputs of raw material and energy but immaterial ones where the only major input is time. These are not subject to the limits that restrict the continued growth in the production of physical products and services. All of this is very similar to the speculations of J. S. Mill in his consideration of the steady state towards the end of his Political Economy and again raises all kinds of fascinating questions as to the implications for our current economic, social, and political arrangements. Smil himself is too cautious and respectful of the limits of his evidence to come to a firm answer although he clearly thinks that this route of dematerialization of economic life is probable.
This book is a great starting point for anyone interested in exploring finding out about Smil’s work and thought for the first time—even though it is his latest work—because it is in some ways a summation of the main themes and arguments he has explored over the years. It is also a wonderful read for anyone interested in the question of what exactly the difference is between the traditional world and the modern world and how we got from one to the other, with a wealth of solidly grounded information—Smil’s work of synthesis saves much time in going to the original or, alternatively, points to where to go to look further. It is also a work of great interest for people interested in political thought, or philosophy, or cultural analysis inasmuch as it presents us with a clear challenge: if we are indeed coming to the close of a three- hundred- year period of transition from one steady state to another, how will that affect the way we live and order our affairs, and how must our thinking change?
*Dr. Stephen Davies is the Head of Education at the IEA. Previously he was program officer at the Institute for Humane Studies (IHS) at George Mason University in Virginia. He joined IHS from the UK where he was Senior Lecturer in the Department of History and Economic History at Manchester Metropolitan University. He has also been a Visiting Scholar at the Social Philosophy and Policy Center at Bowling Green State University, Ohio. A historian, he graduated from St Andrews University in Scotland in 1976 and gained his PhD from the same institution in 1984. He has authored several books, including Empiricism and History (Palgrave Macmillan, 2003) and was co-editor with Nigel Ashford of The Dictionary of Conservative and Libertarian Thought (Routledge, 1991).
As an Amazon Associate, Econlib earns from qualifying purchases.
Euronav (NYSE:EURN) Cut to “Sell” at Zacks Investment Research
Euronav (NYSE:EURN) was downgraded by Zacks Investment Research from a “hold” rating to a “sell” rating in a research report issued to clients…
According to Zacks, “Euronav is a tanker company. It owns, operates and manages a fleet of vessels for the transportation and storage of crude oil and petroleum products. The company also offers ship management services. It operates primarily in Europe and Asia. Euronav is headquartered in Antwerp, Belgium. “
A number of other brokerages have also issued reports on EURN. ING Group upgraded shares of Euronav from a “hold” rating to a “buy” rating in a research report on Friday, October 22nd. Oddo Bhf upgraded shares of Euronav from a “neutral” rating to an “outperform” rating in a report on Friday, October 15th. Finally, TheStreet upgraded shares of Euronav from a “d+” rating to a “c-” rating in a report on Thursday, October 7th. One analyst has rated the stock with a sell rating and three have assigned a buy rating to the company. According to data from MarketBeat, the stock has an average rating of “Buy” and an average price target of $11.50.
Shares of EURN stock opened at $8.38 on Thursday. Euronav has a 1 year low of $7.55 and a 1 year high of $11.20. The firm’s 50 day moving average is $8.98 and its 200-day moving average is $9.11. The firm has a market capitalization of $1.69 billion, a price-to-earnings ratio of -5.20 and a beta of 0.29. The company has a current ratio of 1.05, a quick ratio of 1.01 and a debt-to-equity ratio of 0.65.
Euronav (NYSE:EURN) last announced its earnings results on Thursday, November 4th. The shipping company reported ($0.53) earnings per share (EPS) for the quarter, topping the Zacks’ consensus estimate of ($0.56) by $0.03. Euronav had a negative net margin of 71.01% and a negative return on equity of 14.82%. The company had revenue of $66.32 million for the quarter, compared to analyst estimates of $65.05 million. During the same period in the prior year, the business earned $0.22 earnings per share. On average, equities research analysts forecast that Euronav will post -1.59 earnings per share for the current fiscal year.
Hedge funds have recently modified their holdings of the company. Fifth Third Bancorp increased its position in shares of Euronav by 86.1% during the third quarter. Fifth Third Bancorp now owns 8,495 shares of the shipping company’s stock worth $83,000 after acquiring an additional 3,931 shares in the last quarter. Wells Fargo & Company MN increased its position in shares of Euronav by 67.1% during the second quarter. Wells Fargo & Company MN now owns 10,864 shares of the shipping company’s stock worth $101,000 after acquiring an additional 4,362 shares in the last quarter. FNY Investment Advisers LLC bought a new stake in shares of Euronav during the fourth quarter worth $142,000. Two Sigma Advisers LP bought a new stake in shares of Euronav during the third quarter worth $218,000. Finally, Lester Murray Antman dba SimplyRich bought a new stake in shares of Euronav during the third quarter worth $232,000. 37.76% of the stock is owned by institutional investors.
Euronav NV engages in the transportation and storage of crude oil. The firm operates through the following segments: Operation of Crude Oil Tankers (Tankers) and Floating Production, Storage and Offloading Operation (FpSO). The Tankers segment provides shipping services for crude oil seaborne transportation.
Recommended Story: Economic Bubble
For more information about research offerings from Zacks Investment Research, visit Zacks.com
The post Euronav (NYSE:EURN) Cut to “Sell” at Zacks Investment Research appeared first on ETF Daily News.
M2 and Nominal GDP Update: still growing rapidly
I am fascinated by the fact that these days hardly anyone is talking about the very rapid growth in both M2 and nominal GDP. Both suggest that inflation…
Chart #9 compares the growth of the personal consumption deflators for services and durable goods. Of interest is the explosive growth in durable goods prices.
A Market Green Light or No?
Was “selling the rumor” responsible for the recent weakness? … how are traders sizing up Wednesday’s Fed release? … what’s important in today’s…
Was “selling the rumor” responsible for the recent weakness? … how are traders sizing up Wednesday’s Fed release? … what’s important in today’s market
Wall Street traders often front-run major events that are likely to move the markets.
It’s the old adage of “buy the rumor, sell the news” (though in reverse).
Is that what’s been happening with the market weakness over the last few weeks? Have traders been bailing on stocks based on the rumor of what the Fed will do, preparing to buy back stocks after the fact?
Our technical experts, John Jagerson and Wade Hansen of Strategic Trader believe that’s what’s been happening.
From their Wednesday update:
Traders like to be ahead of the curve by both buying before the news is confirmed and then taking their profits off the table once the news is official.
The opposite phenomenon frequently occurs as well; traders sell their stocks before the news is confirmed and then buy back into their previous positions once the news is official.
While there isn’t an old saying that goes, “Sell the rumor; buy the news,” we think that is what has been happening in the stock market.
Traders have been worried for the past two weeks that the Federal Open Market Committee (FOMC) might signal the following things in today’s Monetary Policy statement:
- More than four rate hikes this year…
- An individual rate hike larger than a 0.25%…
- An accelerated tapering of its bond-purchase program…
- And a dramatic reduction of its $9-trillion balance sheet this year.
This worry has caused traders to sell into the rumor… or the worry, in this case.
As you know, the Federal Reserve released its policy statement on Wednesday.
How did it impact these fears? And what does that mean for a market rebound?
Let’s find out.
***Is Wall Street “buying” the news now?
For newer readers, John and Wade are the analysts behind Strategic Trader. This premier trading service combines options, insightful technical and fundamental analysis, and market history to trade the markets, whether they’re up, down, or sideways.
In their Wednesday update, they dove into the details of the Fed’s policy statement. They identified language that speaks directly to the fears that have been weighing on Wall Street traders.
From the update:
The FOMC just released its statement, and here’s what it said:
- It will likely start raising rates in March.
- “With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate.”
- It is not planning on more than four rate hikes in 2022, but it’s not taking the option off the table.
- “In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.”
- It will be accelerating its tapering… slightly.
- “The Committee decided to continue to reduce the monthly pace of its net asset purchases, bringing them to an end in early March.”
- It has no plans to start dramatically reducing its balance sheet.
- “The Federal Reserve’s ongoing purchases and holdings of securities will continue to foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses.”
John and Wade sum up by saying they believe that this statement should ease Wall Street’s worries.
Now, that doesn’t automatically mean these traders will push stocks higher. Rather, it just removes this overhang from the market. But traders are still highly sensitive to economic data and earnings.
***On that note, we’re beginning to see a pattern of Wall Street shrugging off strong earnings, focusing on weaker guidance
On Wednesday, this market darling reported strong fourth-quarter results that included a record number of vehicle deliveries.
Adjusted earnings came in at $2.52 per share versus the forecast of $2.36 per share. Revenue rose 65% year over year in the quarter, while automotive revenue totaled $15.97 billion, up 71%.
Great quarter, right? Deserving of a nice pop in the share price?
Nope. Wall Street decided to focus on the potential for problems in the months ahead.
Tesla sold off 5% after hours on Wednesday. And the pressure continued yesterday, with the stock ending the day down 12%.
Here’s CityIndex explaining why:
Tesla warned its ability to meet its ambitious target to grow deliveries this year will depend on the availability of equipment, maintaining operational efficiency and ‘stability in the supply chain’.
It is that last factor that markets fear the most.
Tesla has so far proved to be far more resilient to the supply constraints hampering the global automotive market compared to its rivals, but the company is not immune and warned supply chain issues are ‘likely to continue through 2022’.
***It was similar with Netflix’s earnings last week
The streaming giant beat on its bottom line and was in-line with revenue expectations. But shares plummeted in after-hours trading based on fears of slowing subscriber growth.
From The New York Times:
Netflix added 8.3 million subscribers in the fourth quarter, raising its worldwide subscriber base to 222 million, but the company said on Thursday that it expected growth to slow in the opening months of 2022.
That news, in the company’s earnings release, prompted the stock to drop nearly 20 percent in after-hours trading.
Netflix ended up falling more than 30% over ensuing trading sessions and remains down 26% as I write.
Now, compare Tesla and Netflix to Apple, which released earnings yesterday after the bell.
The world’s most valuable company smashed its revenue record, also topping earnings of $30 billion for the first time.
Most importantly, CEO Tim Cook said that the supply chain challenges are improving. Though Apple hasn’t given formal guidance since the beginning of the pandemic, here were Cook’s comments:
What we expect for the March quarter is solid year-over-year revenue growth.
And we expect supply constraints in the March quarter to be less than they were in the December quarter.
Bottom-line, Apple’s growth story remains intact. So, its share price is benefitting, up 6% as I write.
This all points toward a reality of today’s market…
What matters now is growth.
Can a company continue to grow despite inflation, a rising rate environment, and the threat of a slowing economy?
If so, Wall Street will reward it. If not, watch out.
***Looking at growth on a macro level, we received encouraging GDP news yesterday
Gross Domestic Product grew at a 6.9% annualized pace in the fourth quarter. That’s much higher than the 5.5% estimate.
Plus, consumer spending, which makes up more than two-thirds of GDP, climbed 3.3% for the quarter.
So, there are positives here (despite today’s massive inflation number…but that’s no surprise anymore).
Just make sure any trade you’re considering is similarly rooted in fundamental strength – which means growth.
Returning to John and Wade, they believe some short-term bullish trades are setting up.
They’re not pulling the trigger yet. Instead, they’re giving the market a few more days to digest recent news. But they’re feeling cautiously bullish.
I’ll give them the final word:
What matters most is not whether the Fed will raise the overnight rate in March and then again in the second quarter – traders are already pricing that in. What is important is whether the underlying fundamentals are still positive…
We don’t want to fall into the trap of ignoring the bad news in favor of the good, which is why we are recommending patience before adding more risk to the portfolio.
However, it’s essential to be aware of the solid prospects the market still has in the near term to rally and provide easy profits.
So, for now, we don’t recommend making any changes to our trades. Still, we think the likelihood of new opportunities and some profitable exits over the next few days is high.
Have a good evening,
Phoenix Gold Hits a New 52 Week High on the News That Mining Veteran Bruce Durham Joins as Executive Chairman.
Graphite vs lithium
Kraft-Heinz Again Raises Prices On Dozens Of Products As Inflation Continues To Bite
Real Q4 GDP Completes the Boom of 2021 – Long Leading Components Warn of Weaker 2022
The Mining Companies Leading the Way in ESG
Putin Has The Power To Intensify Europe’s Energy Crisis
Weekly investment update – Markets in a sea of uncertainty
Crestline Management LP Lowers Position in Vale S.A. (NYSE:VALE)
Peter Schiff: “We’re Screwed & The Fed Knows It”
Outlook highlights: China seeks stable growth; other EMs face bumps
Economics14 hours ago
Graphite vs lithium
Energy & Critical Metals17 hours ago
Putin Has The Power To Intensify Europe’s Energy Crisis
Precious Metals17 hours ago
The Mining Companies Leading the Way in ESG
Economics23 hours ago
Outlook highlights: China seeks stable growth; other EMs face bumps
Economics16 hours ago
Peter Schiff: “We’re Screwed & The Fed Knows It”
Economics13 hours ago
Where’s the Next Hot Place in Real Estate? Here Are 20 Contenders
Economics15 hours ago
Atlanta Fed Shocker: US Economy On Verge Of Contraction
Economics18 hours ago
Consequences, Consequences, Who Would Have Guessed…