The Vanishing Of Investment Opportunity

2. Next as to the opening up of new lands—that unique opportunity for investment which cannot ever recur. Even if, for the sake of argument, we grant that humanity’s geographical frontier is closed for good—which is not in itself very obvious in view of the fact that at present there are deserts where once there were fields and populous cities—and even if we further grant that nothing will ever contribute to human welfare as much as did the foodstuffs and raw materials from those new lands—which is more plausible—it does not follow that total output per head must therefore decline, or increase at a smaller rate, during the next half-century.

This would indeed have to be expected if the lands that in the nineteenth century entered the capitalist sphere had been exploited in the sense that diminishing returns would now be due to assert themselves. This however is not the case and, as was just pointed out, the decreasing rate of increase in population removes from the range of practical considerations the idea that nature’s response to human effort either already is or must soon become less generous than it has been.

Technological progress effectively turned the tables on any such tendency, and it is one of the safest predictions that in the calculable future we shall live in an embarras de richesse of both foodstuffs and raw materials, giving all the rein to expansion of total output that we shall know what to do with. This applies to mineral resources as well.

There remains another possibility. Though the current output per head of foodstuffs and raw materials need not suffer and may even increase, the vast opportunities for enterprise and hence for investment that were afforded by the task of developing the new countries seem to have vanished with its completion and all sorts of difficulties are being predicted from the resulting reduction of outlets for savings. We will assume again for the sake of argument that those countries actually are developed for good and that savings, failing to adapt themselves to a reduction of outlets, might cause troubles and wastes unless other outlets open up instead. Both assumptions are indeed most unrealistic. But there is no necessity for us to question them because the conclusion as to the future development of output is contingent upon a third one that is completely gratuitous, viz., the absence of other outlets.

This third assumption is simply due to lack of imagination and exemplifies a mistake that very frequently distorts historical interpretation. The particular features of a historic process that impress the analyst tend in his mind to slip into the position of fundamental causes whether they have a claim to that role or not. For instance, what is usually referred to as the Rise of Capitalism roughly coincides with the influx of silver from the Potosi mines and with a political situation in which the expenditure of princes habitually outran their revenue so that they had to borrow incessantly. Both facts are obviously relevant in a variety of ways to the economic developments of those times—even peasants’ revolts and religious upheavals may without absurdity be linked up with them. The analyst thereupon is apt to jump to the conclusion that the rise of-the capitalist order of things is causally connected with them in the sense that without them (and a few other factors of the same type) the feudal world would have failed to transform itself into the capitalist one. But this is really another proposition and one for which there is, on the face of it, no warrant whatsoever. All that can be averred is that this was the road by which events traveled. It does not follow that there was no other. In this case, by the way, it cannot even be held that those factors favored capitalist development for though they certainly did do so in some respects they obviously retarded it in others.

Similarly, as we have seen in the preceding chapter, the opportunities for enterprise afforded by the new areas to be exploited were certainly unique, but only in the sense in which all opportunities are. It is gratuitous to assume not only that the “closing of the frontier” will cause a vacuum but also that “whatever steps into the vacant place must necessarily be less important in any of the senses we may choose to give to that word. The conquest of the air may well be more important than the conquest of India was—we must not confuse geographical frontiers with economic ones.

The relative positions of countries or regions may significantly change as one type of investment opportunity is replaced by another. The smaller a country or region is and the more closely its fortunes are wedded to one particular element in the productive process, the less confidence we shall feel as to the future in store for it when that element is played out. Thus agricultural countries or regions may lose permanently by the competitive synthetic products (rayon, dyes, synthetic rubber for instance), and it may be no comfort to them that, if the process be taken as a whole, there may be net gain in total output.

It is also true that the possible consequences of this may be much intensified by the division of the economic world into hostile national spheres. And it is finally true that all we can assert is that the vanishing of the investment opportunities incident to the development of new countries—if they are already vanishing—need not cause a void that would necessarily affect the rate of increase in total output. We cannot assert that they actually will be replaced by at least equivalent ones. We may point to the fact that from that development further developments naturally arise in those same countries or in others; we may put some trust in the ability of the capitalist engine to find or create ever new opportunities since it is geared to this very purpose; but such considerations do not carry us beyond our negative result. And recalling our reasons for embarking upon the subject, this is quite enough.