more light on a dark subject -- 2

Note: blogger was being uncooperative today, so I had to split this post into two posts. Sorry for the reading inconvenience.

Anyway, if you want to read this all the way through, you have to scroll down to the first post, more light on a dark subject -1.

Anyway, Nordhaus throughout his article is seeking, first, to quantify changes in lighting both in terms of the power of illumination and in terms of service, and then to extrapolate his results to a model for pricing technological change in general. He estimates that there was an improvement in lighting of a mere 0.04 percent per year from the Babylonian times to the nineteenth century – a period encompassing improvements in candle manufacture, but also significant decline in lighting technology and service after the fall of the Roman Empire – but that there was an increase by a factor of 900 between 1800 and 1992, with the increase coming out to 3.6 per year. And yet, he finds by traditional neo-classical pricing methods, the price of lighting has gone up. For instance, the price of lighting using electricity instead of kerosene from 1883 to 1993, can be weighted hedonically to show that, in terms of the price of fuels, kerosene has gone up 10 fold and electricity has gone down 3 fold. But “if the price index were incorrectly constructed, say using 1883 consumption weights and tracking gas/kerosene prices, it would show a substantial upward increase by a factor of ten.” Nordhaus points to the effect of this in figuring “true” prices, and hence, true standards of living. What is not read into the traditional construction of the price index is the “vast efficiency” of electric lighting.

Now what is interesting about this is how, subtly and silently, only positive externalities are counted, here. Since this is a week to commemorate the twentieth anniversary of Chernobyl, LI will take up other externalities in some later posts. The point here is that ‘forms of value’ pose a problem for all economists, not just Karl M.

Curious about how Karl M. might have read his bluebooks and penned his tomes, I went to another essay that builds upon Nordhaus’ work by Roger Fouquet and Peter J.G. Pearson on the Price and Use of light in the U.K. from 1500 – 2000. This is a treasure trove of light minutiae. For instance, the candle makers old enemy, the sun, does figure as a taxable entity in the British economy. Under Queen Anne, a window tax was instituted which had a real effect on the way houses were constructed – talk about your substructure effecting your superstructure! of course, the tax was instituted to pay for various wars (bemoaned by Swift) – tax and war being the Tweedle Dee and Tweedle Dum of economic history. Taxes, of course, shape a lot of economic activity – for instance, since the tax on lighting by fish oil was low, whale oil was, at one point, grandfathered in as an oil deriving from a fish – hence, one of the jokes in Melville’s taxonomy of the creatures in Moby Dick.

“In 1750, around 370 million lumen-hours seem to have been generated from about 3,000 tons of sperm and whale oil; and while whale oil made up nine-tenths of this total, sperm oil was about twice as effective in providing illuminating. By 1774, the oils (30% from sperm oil) generated just over one billion lumen-hours. And although lighting from sperm and whale oils fell back to less than 300 million lumen-hours in 1781, once hostilities [between the Americans and the British] ceased whale and sperm oil imports resurged, reaching more than 1.8 billion lumen-hours by 1787.”

However, by the time Marx got to England in 1850, the lighting industry had been revolutionized by the introduction of another fuel based on organic compounds: gas.

“In 1812, the Gas Light and Coke Company received the first charter to supply parts of London and, after eighteen months of errors in equipment investment and design, the market for gas-lighting grew quickly as prices fell. In 1820, gas lighting cost around £3,000 per million lumen-hours. By 1840, it had fallen to £1,000 and then, by 1850, to below £500 per million lumen-hours...

The dramatic cost decline was to generate the first of three phases of growth in the demand. Gas lighting rose ten-fold - from around 25 billion lumen-hours in 1820 to 250 billion in 1850. The growing wealth and associated desire for comforts, the accelerating industrialisation and the increased urbanisation of Britain were also factors driving the demand. Initial demand was for public street lighting, commercial establishments (especially shops), and some wealthy households. By the 1840s, middle class families were starting to use gas in their homes.”

Fouquet and Pearson confirm Nordhaus’ story of exponential improvement of lighting service and efficiency during the nineteenth century. The candle itself became a more reliable, more powerful instrument. And kerosene successfully competed with the ever volatile supply of whale oil to become a private illuminator of choice. A happy thing for the whale – whose own standard of living is not going to be captured in the price index charts, right? And whose elevation to a value and fall to a zero value is a story economists of all stripes can agree on. Unfortunately.

Marx lived long enough—he died in 1883 - to see the next wave of light technology, the largescale use of electric lighting – which, as with gas, began first as a public investment. As so often in technology, it is not private enterprise per se but the state that is the driver. However, LI’s hasty research has not turned up the lighting situation in Marx’s own house in London – whether he had a kerosene lamp or gas to do his work and read his Balzac (or Paul de Kock – like Leopold Bloom, Marx had an affection for this writer). I imagine I could deduce this out of his daughter Laura’s photoalbum, which was made in 1868, and published in 1970. Actually, the famous photograph of Marx is an indication of the Marx family’s better circumstances. In 1863, K.M.’s mother died, and he inherited from her – and a year later he was a legatee of Wilhelm Wolff’s estate, an old companero from the 40s years. The family was able, on account of this, to move to a bigger, better house – which most probably meant gas heat and lighting. So, unlike Goethe, when Marx was dying in his armchair, he could, actually, have gotten more light by simply turning a knob.

Which probably pleased him...