The Rudimentary Lathe and World Manufacturing Supremacy

What do lathes have to do with world manufacturing supremacy?

A lot, actually.

First, let us get out of the way what a lathe actually is. According to the Merriam-Webster Dictionary, a lathe is "a machine in which work is rotated about a horizontal axis and shaped by a fixed tool."

It is thus an example of what are called "machine tools," which cut, grind or otherwise shape metal and other materials.

This may sound like a very simple and humble piece of equipment, but that simplicity is both what makes it important--and very deceptive. That it is so basic a device (lathes have been used for thousands of years) is what makes it indispensable to industrial life, machine tools the machines that we use to make everything else.

At the same time, far from their production being like, for example, textile production, in its easy transfer to developing nations with little capital and lots of cheap labor, their production tends to be the purview of the most advanced industrial powers.

Why? Simply put, making the machines that make everything else is a very exacting business. And it is the needs of those doing the most manufacturing, and the most exacting manufacturing, that drive the industry. They are thus great consumers of the tools--and given that no one has their capacity to provide the supply (and that location still matters in the economic world we live in) great producers of them as well, such that for all their consumption of the tools they are typically also great net exporters of them. In fact, a country's machine tool consumption, production, export, is a good index of where it stands within world manufacturing generally--especially when we look to the "per capita" figures that make allowances for the difference in size between a Singapore on the one hand, and a China on the other.

Consider, for example, the contents of the Gardner 2016 Machine Tool Survey. According to that document in 2015 the six largest net exporters of the tools were, by order of ranking, Japan, Germany, Taiwan, Italy, Switzerland and South Korea. Where per capita consumption was concerned the top three were Switzerland, Germany, South Korea, with Singapore, Taiwan and Italy in the top ten, and Japan at #11.

A rising profile here is indicative of progress--with China, if still a net importer, an increasingly important producer, manufacturing almost as much of the tools as Japan and Germany put together to make the #1 spot in that year, while ranking #4 among exporters.

Equally a declining profile is indicative of, well, things going the other way. As late as the 1980s the U.S., a longtime champion here, was, in spite of some fairly deep problems, still the world's largest producer of such tools. By the 1990s it had slipped to the #4 position--behind Germany, Japan and Italy. By 2015 it had slipped behind China and South Korea as well. It was down to #8 on the list of exporters (behind Switzerland and Taiwan too), and running a big trade deficit in this area--even as its per capita consumption was not very high. Against Switzerland's $127 per capita consumption of the tools, and the figures of $79 for Germany, $76 for South Korea, $51 for Italy and $46 for Japan the U.S. figure was just $23--which put it just a little way ahead of developing China ($20), Mexico ($17), Thailand ($17).

Compared against the broader picture of U.S. industry over these decades it seems all too telling--the figures I calculated from the data showing American manufacturing value added growth, slowing in the late 1960s and 1970s, really stagnating in the 1980s and 1990s, and pretty much flatlining in the twenty-first century, as its makeup changed profoundly. The output of the heavy and Fordist type of industry long the foundation of U.S. industrial strength actually shrank after 1978--the output of metal and electrical goods and motor vehicles and machinery, which ought to have grown in a supposedly growing economy (and a country whose population expanded by 50 percent), instead falling by a quarter. What filled the gap was not really high-tech production (U.S. output of computer and electronics products peaked back around the turn of the century, then fell hard after), but a more basic processing of raw materials--the main areas of expansion in output petroleum and coal products, and the related field of chemicals, with all this reflected in the export profile. (World Bank figures actually have the percentage of "high-tech" in U.S. manufacturing exports falling from 30 percent in 2007 to 18 percent in 2022.)

The country's going from its earlier standing as a producer of classic heavy-Fordist manufacturing durables (and computer products!) to a producer of more oil and more chemicals is a far cry from the smug promises of "information age" propagandists who blew off the shutdown of so many of the country's steel mills and auto plants as merely the decline of "sunset" industries as rising new high-tech sectors replaced them. But that is what has happened in reality--as that changing profile of the country's consumption, production and trade in machine tools testifies.

Indeed, the web site of Summit Machine Tools sums it up nicely, explaining that "a map of modern lathe makers mirrors a map of global heavy industry," for "rudimentary" as a particular lathe may be, modern lathe-making is anything but--while regrettably, "the heyday of American-made lathes . . . passed" as part of the passing of much else.

The Sixth-Generation Fighter: How Does its Progress Stand in 2024?

Every now and then I turn my attention back to the matter of the sixth-generation fighter I first took up in 2010. Back then all I could reasonably discuss was background (explaining the system of "generations"), the desiderata that were being discussed for the next generation of fighters (hypersonic and near space-flying, AI-piloted, intercontinental-range aircraft that change shape in flight and blast the enemy with directed-energy weapons), and my thoughts as to the likelihood of such aircraft being realized in anything like the time frame being discussed.

At the time I expected that the twenty-first century would be an era of slow technological progress (certainly in the more relevant areas), making the Wunderwaffen of which the sixth-generation theorists dreamed implausible, while contributing to the slow economic growth that was going to make such aircraft unaffordable even were they to prove technically feasible. (Think fighters costing a billion dollars or more each in a time of unending austerity.) I also thought such aircraft, even if feasible and affordable, as likely to be remote from the actual needs of the major militaries in an era of muted great power conflict and "small wars."

Revisiting the issue a few years ago it seemed to me that I had been right--mostly. It has indeed been an era of slow technological progress, and weak economic growth, such that the wonder-planes people talked about circa 2010 simply were not going to happen by 2030--let alone prove affordable in any meaningful quantity. But great power conflict resurged in a big way, and in the process led to intensified interest internationally in a new generation of combat aircraft.

So where did that leave things? Between the desire for new aircraft--and the fact of slow technical progress and strained means--it seemed that there was a considerable lowering of the bar where expectations of the new aircraft were concerned. Rather than, for example, hypersonic jets they were thinking Mach 2 aircraft (with the same top speed fighters have had since the 1950s) which merely launch hypersonic missiles.

One of the more interesting developments was a turn by the U.S. Air Force back to the approach it took with its second-generation fighters--the famed "Century" series where it pursued a rapid development of a next-generation fighter it bought in some quantity, followed by another, more advanced fighter it bought in its turn using the lessons learned from the last, and so on (going from the F-100 Super Sabre to the F-106 Delta Dart in not much more than a half decade), in contrast with its later approaches (the long development, production, employment of the third-generation F-4, fourth-generation F-15 and F-16, and so on).

The reuse of the strategy pursued in the development of the second-generation planes had many critics from the start, put off by the poor image many of its aircraft have had, while being unconvinced by the buzzword-heavy arguments made for advances in digital design techniques permitting the rapid design of aircraft to be procured in small batches to be cost-effective. Still, for all the misgivings some had, it did seem the program was going ahead, the more in as in late 2020 the public was told that an actual sixth-generation jet had flown (even if no source I know of reported any more than that).

Since then, however, the Air Force seems to have shifted back toward its more conventional acquisitions process--but otherwise things remain as they appeared in 2020, no fundamental breakthrough suggesting the imminent appearance of those super-fighters that had people talking in 2010, or for that matter, any great public disclosure making it much clearer what the next-generation jet really will look like when all is said and done.

James Kenneth Galbraith's Take on the Russian Economy at War

As readers of this blog may remember I have for many years been attentive to the work of the economist James Kenneth Galbraith, who a decade ago just so happened to join Emmanuel Todd in a Harper's magazine round table regarding Germany's "conquest" of Europe. As it happened this would seem to not have been Todd's last contact with Galbraith's ideas. As one (rather sneering) reviewer of Todd's latest book observes, a paper by Professor Galbraith has been an important touchstone for his thinking about the Russian economy's potentialities within the current conflict.

The April 2023 paper in question, provocatively titled "The Gift of Sanctions", compares Russian Establishment-produced analyses of Western sanctions against Russia with American Establishment analyses of the same subject and finds that, while they argue from the same facts they draw very different conclusions. The American analysts he discussed were consistently insistent that the sanctions would devastate the Russian economy, while the Russian analysts, while recognizing in the sanctions a significant problem, saw at least the possibility of Russia adapting to cope with the situation--and possibly even make gains as a result. As Galbraith explains the matter those Western sanctions could be looked at as imposing on Russia some of the conditions that those calling for vigorous Russian redindustrialization on the basis of a robust industrial policy had called for--like quotas or tariff walls, eliminating competing sources of supply. Coming within the wartime situation they also make politically palatable the establishment of the rest of the conditions--war making politically possible forms of economic intervention that had been fiercely opposed in peacetime by groups too powerful for the Russian government to ignore (the oligarchs, to name the most obvious), with the dislocations involved in the process inhibiting even beyond such groups (a measure of pain for the Russian public in the short-term, and maybe not so short-term, unavoidable as imports are cut off, and local industry takes time to fill the gap).

Considering the possible outcome of such a reindustrialization effort Galbraith seems relatively optimistic that it would work--more than I would have expected recalling his rather orthodox aversion to government "picking winners" back in his 1989 book Balancing Acts. But then it has been a rather eventful three decades since, after which Galbraith seems less willing to concede so much to what his father called the "conventional wisdom," and anyway Russia seems to him to have many a point in its favor as it makes the attempt. Among these is Russia's size and level of development, which mean that sanctions would have a very different effect on it than they did in a Cuba or Iraq (utterly devastated by them), or even 1980s-era South Africa and 1990s-era Yugoslavia--the more in as Russia is so rich in essential resources extending beyond its obvious physical wealth to a wealth of "scientific and engineering talent." Still another is the way foreign firms became deeply established within Russia for decades, such that even in exiting Russia they leave behind their trained personnel, their organization, their plant (the car makers Nissan and Renault each selling their operations to Russia for a mere euro and ruble, respectively), as well as developed "indigenous competencies"--so that "scientific and engineering talent" by no means has to start from scratch as they seek to fill in the gaps opened up by those firms' exit and the sanctions. The result is that the war, in the absence of a completely devastating outcome for Russia (Galbraith, unlikely many, is not unmindful of the risk of nuclear war that hangs over the entire crisis), could set the country well on its way to the achievement of a modern manufacturing base that has so long eluded it.

Does the case hold up? Considering Galbraith's vision of Russian reindustrialization one should note that the sanctions acting like tariff walls not only keep foreign competitors that would price budding Russian manufacturers out of the market out, but also prevent Russian products from getting out. It is an "import substitution"-type industrialization that Galbraith writes of here, an approach to the matter that even those economists bucking a neoliberal orthodoxy tend to take a dim view, emphasizing that East Asian countries like South Korea that industrialized successfully did so on an "export-led" rather than import substitution basis, which they identify with the less happy results of such efforts in post-war, pre-neoliberal Latin America.

There is, too, the difficulty posed by the fact that in contrast with a country establishing tariff walls in normal peacetime conditions this is, again, a situation of NATO-Russia proxy war, which not only entails that much more difficulty in trading with the rest of the world, but the prioritization of the armed forces' needs, a factor that has, of course, undermined Russian development in the past. Of course, it is only fair to acknowledge that countries have also been known to make exactly this kind of progress under wartime conditions--because, just as in the case Galbraith discusses here, war allows government to make investments and engage in interventions that would be politically impossible for them in peacetime, especially when those governments' demand for weapons and other supplies permits business to go "all-out" in trying to meet them. Indeed, looking back to the World War Two era it is worth noting that the U.S. made extraordinary progress during the conflict, massively enlarging and modernizing its manufacturing base, while Germany and Japan laid key foundations of their post-war prosperity, not least by beginning their assimilation of the "Fordist" mass-production technique the U.S. had pioneered. However, one may doubt the validity of any analogy between those countries and the Russia of today--as the U.S. was already the country out on the "production frontier" and a late entry into the war rather less subject to disruption than the other participants due to the immunity of its territory to attack and Allied control of the oceans and so much of the world's resources; while Germany and Japan each had the mastery of much of a conquered continent, which they exploited ruthlessly for the sake of resourcing their wars, and the associated industrial efforts. Neither the American situation, nor the German and Japanese one, bears much resemblance to Russia's, which does not have any obvious compensating factors on its side. One may also add that the 2020s are not the 1940s, with a case existing that technological capacity has become much less transferable than before--Andrea and Mauro Gilli pointing out that in an age of simpler, less scientifically intensive, less specialized, production methods it was much easier to catch up. Simply put, in the early twentieth century if you could build a sewing machine or a bicycle you could develop a car industry; and if you could build a car you could build a fighter plane, because in each case the skills were usefully transferable from one area of industrial production to another. It does not go that way today at the high end of the technological spectrum, complicating any import substitution scheme in many a key area, in many ways--for instance, the way that military-industrial successes may be less and less transferable to civilian production to any useful end; with all that implies for such an industrialization process.

The result is that there seem to me considerable grounds for at least a greater measure of skepticism about the prospects of such an initiative than Galbraith displays here--much as he makes a thought-provoking case worthwhile as an alternative to the views too much taken for granted.