The Industrial Revolution is currently 256 years old, if you agree with my chronology in “Forging Modernity” dating its inception to 1768, plus or minus a year or two. Even given that it soared beyond mere human limitations, you would expect it to be showing signs of age by now. Yet in recent years, it has shown signs not merely of maturity but of senescence; it is losing capabilities that it once possessed. If the Industrial Revolution has turned Struldbrugg — Jonathan Swift’s mythical creatures who live forever, growing ever older, ever uglier and ever feebler — our economic future is a grim one.

The trajectory of the Industrial Revolution parallels a human life quite well. For its first 40 years, its economic effect was limited, indeed almost undetectable in economic statistics – it was in effect a baby, perhaps reaching toddler stage in 1783, when James Watt’s improved steam engine started to power machinery and thereby revolutionize the textile sector, becoming ubiquitous around Britain. The next 40 childhood years, until around the revolutions of 1848, were those of its fastest burgeoning, spreading from Britain to continental Europe and the United States, and late in the period developing the transport advance that revolutionized human life – railroads.

The next half century until 1900 comprised the glorious spring of its adolescence, when new industries such as steel, chemicals and above all electric power brought higher living standards to all. Then there was a half-century of troubled early manhood, extending to 1945, that brought interminable wars and showed the downsides of new technology – you can think of that as the period when it dropped out, took drugs and travelled to “find itself.” Finally, we have the Industrial Revolution’s glorious maturity from 1945 to the late 1990s, when living standards leaped ahead worldwide and its effects became truly ubiquitous, with even subsistence farmers in the depths of Africa gaining healthcare standards and life possibilities that would have seemed impossible to their ancestors.

Since about 1995, we have seen the Industrial Revolution take on an increasing senescence, with the achievements of its glorious youth and maturity now unmatchable. In its senescence, it has taken to substance abuse, mainlining money supply expansion, ultra-low interest rates and unsustainable budget deficits in behavioral depths to which it never plunged in earlier years. Since about 2015, its capabilities have declined further, and it appears now to be entering the phase of full Struldbrugg.

The Industrial Revolution’s capabilities in youth and maturity have fallen away. Industrialization might pollute and require people to learn uncomfortable new skills and work hard in unpleasant conditions, but it could be relied upon to raise living standards. This was true albeit modestly in the Industrial Revolution’s infant years; it became gloriously true in its magnificent maturity, with global poverty declining and living standards rising year after year for decades in rich and poor countries alike.

This is no longer the case. In Britain, where the Industrial Revolution originated, living standards have been falling since 2007. Even in the United States, land of its finest triumphs, they have fallen significantly since 2019. Among poor countries, living standards were converging on those of the rich world until the 2008 financial crisis but, with lousy governments proliferating, that is now true only for a few countries, notably India and Indonesia. Even in China, the most glorious success story of all after 1990, living standards appear now to have begun to recede from their already low peak.

In its maturity, the Industrial Revolution acquired other bad health habits beyond the alcoholism of easy money that accelerated the aging process and may have doomed it to Struldbrugghood. Regulations proliferated, especially in the environmental area with the global warming mania further distorting the efficient operation of the price mechanism and consumer choice. Essentially, the Industrial Revolution developed a bad smoking habit, that reduced its lung capacity, destroyed cells and degenerated the power of its attempts at creative athleticism.

Like lung cancer for smokers, this habit wrecked the Industrial Revolution’s ability to lift living standards, advancing its senescence and diverting its creativity from new products and services that are a boon to mankind to those that merely enable the economy to satisfy the interminable and enervating demands of environmental regulators. Coal, the wonder fuel that generated the Industrial Revolution’s original creative force, has now been anathematized, killing its cells, in the human analogy. Even atomic energy, the product of the Industrial Revolution’s maturity that had the potential to prolong its vigor into old age, is no longer being created, killed by the environmentalist cancer.

A final factor enervating the Industrial Revolution in its descent from middle age is the power of the cheap-labor lobby, forcing gigantic levels of immigration: legal, indentured servants (H1B/H2B) and illegal. This gives the less scrupulous employers endless supplies of labor they can exploit, driving down the wages of domestic citizens. Lord Liverpool in 1815 knew this was not the way to industrialize; cheap labor eliminates the incentive to invest capital to make the use of labor more efficient. Today, the global economy relies instead on the approach of Robert Peel’s father: combing orphanages across the country for workers he could indenture at minimal wages until they reached the age of 21. This is deeply debilitating to industrialization’s strength – equivalent to some wasting disease, like consumption.

The concentration of money and power in very large tech companies, with the market capitalization of the “Magnificient Seven” increasing ad infinitum, while other companies engage in sterile share buybacks to prop up their share prices is another wasting disease, eating away at innovation. In all countries, the Industrial Revolution’s true innovation happened in small companies, whether the early textile mills, the experimenters in new industries like the Baldwin Locomotive Company, or the German Mittelstand. A system which diverts resources towards corporate behemoths and their overstuffed bureaucrat managements is inevitably deep on the road to senescence.

The social arrangements around Swift’s original Struldbruggs are also relevant. At the age of 80, Struldbruggs were compulsorily retired from conventional society, after which they could no longer own property – otherwise, living forever as they do, they would come to own everything. One is immediately reminded of the ideas of the World Economic Form and its Chairman Klaus Schwab – himself becoming increasingly Struldbrugg at 86 – and his famous 2020 aphorism “You will own nothing and you will be happy.” The Struldbruggs own nothing as in Schwab’s ideal, but they are eternally miserable – a fate that may befall us all if the Struldbruggization of the Industrial Revolution continues to its inevitable, miserable end.

Professor Robert J. Gordon in his 2016 book “The Rise and Fall of American Growth” postulated that productivity growth could be expected to slow towards zero, as the Industrial Revolution’s major advances (which he divided into three phases) were largely played out. At the time I disagreed with that thesis, believing as I do that the inventiveness of mankind has not diminished, and that improved modern communications have brought far more people into the sphere of innovation, rather than wasting their Nobel Prize-capable intellects on subsistence agriculture.

Now I think he may have a point. If the Industrial Revolution has become a Struldbrugg, then we can expect no further innovation, merely adaptation to a forest of damaging regulations that slow the economy to a halt. Pretty soon, the economy’s Struldbrugg status will be demonstrated by progressively worse failures in the systems on which we have all come to rely, notably electric power generation, which has suffered from inadequate investment for decades and is being subjected to increasingly severe strain by regulatory mandates for electric automobiles and wind power. The distribution of goods is also likely to be affected, as electric power mandates for trucks will result in their breakdown for lack of power and massive spoilage in the produce they contain. The first Struldbrugg-driven power cuts will be temporary; later ones are likely to result in the ultimate collapse of our comfortable modern economy, with “nasty brutish and short” coming to rule the world again as they did for so many millennia.

We can partially rejuvenate the Struldbrugg Industrial Revolution, at least temporarily, by curing the vices and diseases that have caused it to age prematurely:

• Set interest rates well above the level of inflation, or better still adopt a Gold Standard, to cure its cheap money alcoholism “cold turkey.”
• Deregulate, not mildly as the Trump administration did, but fiercely, sweeping away as far as possible the jungle of environmental regulations. The Industrial Revolution’s lungs will recover only slowly, but the aging process will be retarded.
• Set a 10-year moratorium on immigration and remove as many as possible of the Biden administration’s tsunami of illegal immigrants. That will raise domestic wages and may restart genuine innovation, at least alleviating the wasting disease that has the Industrial Revolution Struldbrugg in its grip.
• Pursue a vigorous anti-trust policy, that breaks up the behemoths and discourages mergers, which generally destroy value.
• Re-establish property rights at the center of our economic system.

With those changes, vigorously implemented, the Industrial Revolution may not rejuvenate completely, but it will at least enjoy a hale and healthy old age, with most of its faculties intact.

“Second childishness and mere oblivion, sans teeth, sans eyes, sans taste, sans everything” wrote William Shakespeare of old age. The Industrial Revolution, prematurely aged by environmentalism, socialism and money printing, will reach that stage well within our lifetimes.

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(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)