Hudson’s Theory of Economics in less than 300 words

The industrial revolution was a unique event taking place between about 1780 and 1980. The first five decades were driven by a new class of middle class entrepreneurs aspiring to become aristocrats, and subsequently by working class people aspiring to become the new middle class. By then also, traditional mechanical principles were giving way to new scientific discoveries that had proceeded since the times of Galileo (around 1600).

By 1980, the repertoire of status goods was exhausted and the world financial sector had become deeply complicated by the need to somehow keep high consumer demand growing at previous levels — around 3.5% per annum. It didn’t succeed and the monetary system blew up during 2007/8.

By 1980, the same seven countries that had initiated the industrial revolution — Britain, France, Belgium, Holland, Denmark, Germany and America — still dominated world trading in high value goods because they had a monopoly of what was by then many centres of fundamental scientific research. They still do so today, keeping one another supplied with the very latest improved version of each of the status goods in the standard repertoire.

The remaining countries of the world will industrialise as best they can, but will never be able to break into the high-value trading ring of the seven advanced countries. They will become trapped at standards of living only a little more advanced than where they are now unless massive injections of high-intensity energy can be added into the world economy. This is unlikely to say the least. Otherwise, the world economy, being a physical system, will accord to the basic laws of thermodynamics, including “the law of least effort”. Thus they’ll stay approximately at a level of where they are now. Most of the countries of the world can only aspire to a decent standard of living by reducing their populations.

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