23 Things They Don't Tell You About Capitalism

Cross-country statistical analyses have failed to find any relationship between a country’s maths scores and its economic performance.[3] But let me give you more concrete examples. In the mathematical part of the 2007 TIMSS, US fourth-graders were behind not only the famously mathematical children of the East Asian countries but also their counterparts from countries such as Kazakhstan, Latvia, Russia and Lithuania.[4] Children in all other rich European economies included in the test, except England and the Netherlands, scored lower than the US children.[5] Eighth-graders from Norway, the richest country in the world (in terms of per capita income at market exchange rate – see Thing 10), were behind their counterparts not only in all other rich countries but also in much poorer countries, including Lithuania, Czech Republic, Slovenia, Armenia and Serbia (it is interesting to note that all these countries are former socialist countries).[6] Eighth-graders from Israel, a country famous for its educational zeal and exceptional performance in high-end research, scored behind Norway, falling behind Bulgaria as well. Similar stories were observed in science tests.

How about the knowledge economy?

Even if education’s impact on growth has been meagre so far, you may wonder whether the recent rise of the knowledge economy may have changed all that. With ideas becoming the main source of wealth, it may be argued, education will from now on become much more important in determining a country’s prosperity.

Against this, I must first of all point out that the knowledge economy is nothing new. We have always lived in one in the sense that it has always been a country’s command over knowledge (or lack of it) that made it rich (or poor). China was the richest country in the world during the first millennium because it possessed technical knowledge that others did not – paper, movable type, gunpowder and the compass being the most famous, but by no means the only, examples. Britain became the world’s economic hegemon in the nineteenth century because it came to lead the world in technological innovation. When Germany became as poor as Peru and Mexico right after the Second World War, no one suggested that it should be reclassified as a developing country, because people knew that it still had command over technological, organizational and institutional knowledge that had made it one of the most formidable industrial powers before the war. In that sense, the importance (or otherwise) of education has not changed in the recent period.

Of course, the knowledge stock that the humanity collectively commands today is much bigger than in the past, but that does not mean that everyone, or even the majority of the people, has to be better educated than in the past. If anything, the amount of productivity-related knowledge that an average worker needs to possess has fallen for many jobs, especially in rich countries. This may sound absurd, but let me explain.

To begin with, with the continuous rise in manufacturing productivity, a greater proportion of the workforce in rich countries now works in low-skilled service jobs that do not require much education – stacking shelves in supermarkets, frying burgers in fast food restaurants and cleaning offices (see Things 3 and 9). Insofar as the proportion of people in such professions increases, we may actually do with an increasingly less, not more, educated labour force, if we are only interested in the productivity effects of education.

Moreover, with economic development, a higher proportion of knowledge becomes embodied in machines. This means that the economy-wide productivity increases despite individual workers having less understanding of what they do than their counterparts in the past. For the most striking example, these days most shop assistants in rich countries do not even need to know how to add – a skill that their counterparts in earlier times definitely needed – as bar-code machines do that for them. For another example, blacksmiths in poor countries probably know more about the nature of metals in relation to tool-making than do most employees of Bosch or Black & Decker. For yet another example, those who work at the small electronics shops littering the streets of poor countries can fix many more things than can individual workers at Samsung or Sony.

A large part of this is due to the simple fact that mechanization is the most important way to increase productivity. But an influential Marxist school of thought argues that capitalists deliberately ‘de-skill’ their workers by using the most mechanized production technologies possible, even if they are not the most economical, in order to make the workers more easily replaceable and thus easier to control.[7] Whatever the exact cause of the mechanization process, the upshot is that more technologically developed economies may actually need fewer educated people.

The Swiss paradox