Ambiguous Apples

The apple is one of the most accessible forms of food for human beings. It grows on smallish trees, and when it is picked up from the ground or plucked from the tree it is ready to eat. Apples of different varieties mature at different times from early summer to late autumn, and many varieties can also be stored well into the winter; though it is well known that if one apple in a barrel goes bad, it quickly causes the rest to rot: hence the phrase 'a rotten apple' applied to a disruptively antisocial person.

When people in the earliest stages of civilisation created their accounts of how society came into being, they built up a marvelous story of the creation of the world, of humanity being set into that context as a uniquely competent species, and how that species developed a power to be destructive as well as constructive. The tale that of the first woman, Eve, being tempted to eat the forbidden fruit - an apple - and leading her male partner to do the same is still fascinating as an insight into human nature. The idea that there are good and evil impulses in humanity, derived from the fatal decision of the first people to break the orders they had received from the universal creator, became well set in religion in the 'fertile crescent' in the middle east [the area now being devastated by 'Islamic State'] and thence globally. The humble apple remains a symbol of the power that human beings have to use their abilities constructively and creatively, or destructively in terms of how their actions impinge on other people.

Isaac Newton apparently really did get the idea that the force of gravity is universal by exercising his imagination on the simple question of why do apples - among all other terrestrial objects; and with the earth's moon - tend to descend towards the centre of the earth unless that progress is stayed by some intervening force or structure. Thus the apple is recorded as part of the origin of scientific thought.

Today the corporate results for Apple are due to be published, which are forecast to confirm that it has been consolidated as the biggest business in the world; by turnover, profits and the valuation of  its stock by the markets. The apple - with a human bite taken from it - was chosen as the logo of a business which was not a substantial processor or manufacturer of any material commodity. While the huge oil companies and motor manufacturers sold billions of dollarsworth of material commodities, many of which were processed into final products by the application of manifold patents and sold under copyright brand names, their ultimate dependence on material resources was unambiguous. Apple grew by franchising out the manufacturing processes, and thus the capital that had to be tied up in material manufacturing facilities came from other sources. Apple could incorporate products - some of them highly sophisticated - that were devised by other firms into the products that they sold, and thus maintain the momentum of their inventiveness without the burden of investment in factories or in the sort of human resources management that inevitably attaches to material production.  

Apple, Google and the other leading brands in what is [rather strangely] called the 'technology' sector of the economy are not dependent on the ownership of materially productive facilities. Most of the 'hardware' through which customers access their intellectual property are made by other corporations. The assets held by the tech companies include billions of dollarsworth of financial assets that have been accumulated from their past profits, alongside their ownership of the patents and copyrights and trademarks and brands that are defended at huge cost from 'piracy' by anyone who tries to make illicit use of their technology.

The essential difference between these 'tech' companies and those that trade in material assets is that the companies in the material sphere, exemplified by the big oil producers and by the firms that make the components of the iPhone [and assemble the final product], are selling products made from finite resources of which reserves are limited. Constant exploration has so far found enough new resources to meet foreseen demand into the medium-term future, but the material components of the planet are finite and a growing population is capable of exploiting them to the point of exhaustion.  The assets belonging to Apple are capable of indefinite expansion. New ideas can be implemented all the time, new experiences can be offered to customers, and there is no obvious limit to that expansion as the collective of human minds appears to be capable of delivering an infinite expansion of intellectual property. There is a potential limit to the physical facilities through which intellectual concepts and processes can be accessed, of course, when the human race destroys the resources of the planet on which our material existence depends. At some point in that final self-destruction of the human economy the material ability to generate electricity will fail, and then the 'technology' sector will be unable to operate; but that point will be well down the process of societal and economic decay.

I was privileged to know the mathematician who served as a professor of English Literature and who explored the capabilities and ambiguities of the human mind in an unusually profound way; who wrote a book entitled Seven Types of Ambiguity. He could have selected more than seven types but his message was that the expression of human thought is infinitely flexible, and ultimately all concepts are ambiguous. That is the basis on which the 'tech' sector has been founded, and from which its continuing productiveness will stem.

Economic Literacy

The amount that has been written about the economy, over more than 2,000 years, is far beyond the capacity of any human to assimilate. Even with the most up-to-date media for abbreviation, synthesis and simplification it is impossible fully to understand Quesnay and Adam Smith and Marx and Keynes [to name just four of the most significant] sufficiently well to compare their ideas and to reach a synthesis of what can be derived from all of them together that could be taken forward as a guide for the businesswoman, the politician or the ploughman of the year 2023.

It is impossible for anyone leading a busy life in this stressful era to obtain a practical guide to navigating the economy from the great authors: or from the data published by the government's statisticians, or from the Organisation for Economic Co-operation and Development, the United Nations or the World Bank. Thus we all have to trust the simplified synopsis that each organisation produces, assuming that these public agencies retain something of their founders' mission to work to the common good of the human species; and then to apply the data as best we can.

Five years ago, the OECD [the second source referred to above] was encouraging George Osborne to press on with his destructive mission to cut government spending regardless of any potential social or political cost. Now they are singing to a different hymnsheet, whose contents are more aligned with the Labour than with the Conservative manifesto in the recent UK election. Superficially transmogrified as a 'journalist', over the past month Osborne has been one of the most trenchant critics of his own party's manifesto: thus the wheels turn to a succession of dramatically changing fashions in economic advice and in political discourse; and these do not necessarily change at the same speed or even in the same direction.

One of the great local stories of my youth in Lancashire was of the distinguished Northrop company that had produced some of the world's best weaving technology in the second great era of the cotton industry, between 1870 and 1950. Then, in the 'sixties, as Britain's competition with the Swiss and German loom manufacturers became more intense, developing countries outside Europe began to make their own machinery. Several such countries simply ignored the inconvenient fact that Northrop and Schulzer [of Switzerland] inconveniently held patents, and they pirated their choice of those patents in their own machinery. Their courts refused to enforce exploitative capitalist monopolies, when the Europeans tried to assert their rights; and that was the end of it. Northrop's market shrank fastest, and the board decided that the company must diversify to survive. Advised at great cost by an early think-tank, they bought a firm that made advanced machinery for the civil engineering and construction sectors. Then they assembled a combined team of technical experts from  the two component companies, retained expensive external consultants, and built their first demonstration equipment: a sort of primitive JCB. The contraption was first demonstrated to the board of the company and an assembly of bigwigs, including potential customers. The machine was started: and it began to bury itself. The front wheels went backwards, the rear wheel went forwards, and it dug itself into the ground, incapable moving anywhere. I have frequently recalled that incident, as a metaphor for the succession  of changes in economic fashion, which are implemented disastrously in economic policy by cobbled-together groups of supposed 'experts'

Straws in the Wind

The situation in the Eurozone is no different from last week, but the mood has become much lighter following the latest agreement on support for the weaker countries.

Now a Eurozone official is in China, asking for a contribution to the support fund. The Chinese government will agree, with published conditions and a hidden agenda. China has a highly intelligent population, with a huge output of graduates in science and technology; but China remains keen to buy western intellectual property - especially when this can be done at knock-down prices. So we can expect the covert agreement to include the concession that European governments will be less resistant to Chinese takeovers of old brands and new technologies. How this pans out will be a wonderful indicator of China's  plans for the introduction of a wider range of consumer goods in their home market.

Dim politicians talk of Britain's need for more 'manufacturing' and more exports of manufactures; but in reality - as the Chinese well know - it is not the process of manufacturing that adds 'value' to the raw materials but the amount that can be added to the material cost of production as the premium that is charged for access to the brand and the patented technology that is embedded in it. Prices for branded, patented goods and services in very many cases owe far more to the intellectual property than to the the quality of the components and the process by which they are assembled.

 China will quickly recover more than they risk from this deal with Europe, in the form of intellectual property ownership that they will be enabled to acquire. Since the appointment of Thatcher as Prime Minister, Britain has sold off intellectual property to foreign firms on a massive scale to make a small contribution to the current balance of payments of the year. That immeasurable loss can only be compensated by hard work over many years, and by austerity in living standards to make the necessary funds available for investment in the new technologies that Britain has continued to invent: and has largely sold off in its infant stages over the past thirty years.

And it is going to be very hard to compel people to accept austerity when they hear that employeees' average salary rise in the past year was 2.5%, while Chief Executives' 'compensation' has increased by 45% [on million-pound-plus packages]. Any simple sense of fairness must be repelled by such data.

 If they were capable of profound thought and clear communication skills, the Saint Paul's 'protesters' would have pointed to the inequality of incomes across the whole of society rather than keeping to the well-worn attacks on bankers and the stock exchange. But they clearly have no such capabilities. They should be moved on pronto.