Saturday, 31 May 2008

The Great Food Flim Flam

One of the few benefits of getting older is that you get a different, a more rounded perspective on life. Fewer things are completely new to you, just repetitions of things you have seen previously over the years, in varying degrees of modification. When you are young every new event appears to have world or historical importance - and of course some do - everything is painted in the brightest colours. But, often what appeared to be Earth shattering or crucial at the time, turns out not to be so, and the great calamity or great renewal that was expected never materialises, life goes on pretty much as before. As I said, not always had you been around when those huge meteors struck the Earth, like those that wiped out the dinosaurs, you would have noticed a change, and the Great French Revolution, and the Russian Revolution left lasting marks. But, such events are rare.

I think about that when I listen to all the current discussions about the price of oil and food, the way the Malthusians emerge again from the cupboard to argue, as Jonathan Porritt did a couple of nights ago on Newsnight that there are just too many damn people, and we have to stop them - nearly always them is considered to be people not in the developed capitalist economies - from breeding. Even the petit-bourgeois left, isolated from the working class it claims to put at the centre of its politics, has jumped with both feet into Environmentalism, keen no doubt to Party build within yet another petit-bourgeois milieu. But, as Porritt's statement demonstrates this kind of attitude inevitably leads to the development of reactionary ideas. It is very, very dangerous.

And, although young people today faced with oil having gone up to over $130 a barrel, and likely to go to $200 before the end of the year, with food prices going through the roof, and the bourgeois media reporting on food shortages and food riots in various parts of the world, and the potential for starvation such dramatic events must appear significant. In fact, when the same events occurred 30 odd years ago, I too then thought they were significant! I still have somewhere a record from the early 1970's by a soul band, Executive Suite, entitled, "When the Fuel Runs Out".

I bought my first car back in 1972, a Mark One Ford Escort. At that time not many people had cars. I only had mine because my parents, who didn't have a car, let me off paying any Board Money, and gave me the odd quid for petrol when I took them out. Not long after I had the car I started work at the other end of the City, and my girlfriend lived at the other end of the City too. At first, having the car made that easier instead of the long bus rides or walks I'd had to have before. But then, as a result of the Arab-Israeli War the price of petrol rocketed, and worse the Government announced it would be put on ration. I collected my ration coupons, but the rationing didn't actually come in. I did though have to make do with visiting my girlfriend, but leaving the car at her house while we spent the evening walking for a few hours.

The price of petrol went up to £1 a gallon. I remember around the same time that food prices rocketed too, even more than the general high level of inflation. In fact, I can remember giving up sugar because of the price increase, and coffee went up a lot as well. Compared to that £1 a gallon the current price of around £5 a gallon seems high, but of course wages have gone up too. In 1972 when petrol went up to £1 a gallon I was earning just over £20 a week. The average wage today is reckoned to be around £25,000 a year, even allowing for just £20,000 a year or £400 a week that is 20 times what it was in 1972. Put another way if petrol had gone up in line with wages then compared with 1972 it should be around £20 a gallon today. But, the fact is that even allowing for the high taxes, petrol is very, very cheap and the cost of driving has fallen by around 11% in the last 10 years. No wonder that compared with 1972 when few peole had cars, today we see 2, 3 or more cars on almost every driveway. And back in 1972 the environmentalists and Malthusians were saying the end of the world was nigh, and oil would have run out by the ned of the century. Well, it came and went, and it didn't run out, and oil was selling at the end of the century at a fraction of the price in real terms it was in 1972.

Part of the reason for that is that from the mid 1970's until the end of the 90's the world economy was in a long wave downswing, during which times the large investments made over the previous 25 years of upswing in new mines, and raw material production, food production etc. reach their peak, precisely at a time when economic activity declines relatively - hence the food mountains in Europe for instance - so that supply exceeds demand causing prices to fall or remain flat in nominal terms. But, another explanation is that because prices of these products is highest towards the end of the period of boom the capitalists that use these products have an incentive to find either alternatives, or ways of using these products more efficiently, not to mention of finding new ways of getting them out of the ground more efficiently. In the last 30 years the marginal increase in demand for oil per unit of GDP has fallen dramatically, as science has produced more efficient cars, more efficient boilers and generators, and a whole plethora of more efficient means of using oil. In addition, new techniques, and whole new companies have developed that enable more oil to be got out of the ground than was previously economically possible.

It is quite possible that the world HAS hit Peak Oil i.e.that the capacity to produce oil cannot be raised from current levels, and will indeed begin to fall from here. Certainly, no major oil fields have been discovered since the 1970's, and according to one oil geologist who predicted almost exactly when the US would hit Peak Oil, there is none to be found. The current attempts by the West to get OPEC to increase output reflect either woeful inadequate knowledge of the situation, or else are just PR by people who really don't know how to respond. OPEC countries like Saudi Arabia are already producing at such a high level that they risk damaging the longevity of the fields being exploited. The new fields announced recently in the North Sea are insignificant, and even ANWAR in the US, which is unlikely to get off the ground for environmental reasons only has enough oil to supply the US for around 6 months. Brazil has just announced some large finds, and there is oil in the Arctic, but it is expensive to exploit. There are billions of barrels available in oil sands, but again the cost is high.

Legendary US Oil man, T. Boone Pickens, has said that the US has to get away from oil, and he has proposed using natural gas, but the US has pretty much tapped out its supply of natural gas too, relying on gas from Canada. Even J.R. Ewing himself, Larry Hagman has converted his ranch to solar power!

But Capitalism has seen such crises before. At the beginning of the last century a similar crisis emerged when the same cry was raised that whale oil was running out, and people would have nothing to use in their lamps! Fortunately, the problem was solved by the introduction first of gas, and their electric lamps. Not only do motor vehicle producers have an incentive now for producing more efficient engines, but already large sums ar being spent on hybrid and other types of engines. The high price of oil will reduce demand to a certain degree, and unless the government gives in to the lorry drivers, there will be a great incentive to transfer freight from the roads to where it should be on the rails. For my part the road hauliers spokeswoman didn't do them any favours last week when she pointed out how inefficient road haulage was with lorries she said doing only 8 miles per gallon.

There is a whole range of economic, technological and social changes that can and likely will be brought about that will offset the effects of both the high price of oil, and its diminishing availability. Changes to the way people work to avoid travel, greater use of the Internet for a whole range of activities and so on. But, the revolution in computing has now been linked with the revolution in biotechnology and nanotechnology which although now in its infancy will open up vast possibilities for exploiting oil and other natural resources, probably without the need for mining and other environmentally damaging extraction techniques, using microbes, and nanobots to extract and process materials in situ before bringing them to the surface as finished raw material. That is without the use of such biological and nano technology to actually fabricate synthetically many of these products.

Just look to at all those products which were demanding of raw materials on a large scale which have been replaced. Instead of vast amounts of vinyl being used to produce records, we went first to cassette tapes, then to CD's, and now thousands of records can be kept on a single stick using virtually no materials. The same is true of films and many more products.

But the same is true with food. According to Newsnight a week or so ago, the average British family throws away a third of the food they buy. That is ameasure of how cheap food has been, another being the continual decline that food has comprised as a percentage of the average family budget. In 1990 the UN said that the world had the capacity to produce enough food to feed 35 billion people. Since then agricultural techniques have improved further so that figure will be even higher. The problem with feeding the world's poor is not one of technological capacity, it is a problem of capitalism. The fact is that although the current high food prices are likely to cause considerable problems for many poor people, in the longer term they could be of benefit to those same people. One of the problems of peasants and farmers in developing and poor countries is the fact that they face farmers in developed countries that benefit from large state subsidies. But subsidies are usually only needed when supply exceeds demand, and market prices are low. During periods like the present when demand outstrips supply and prices rise quickly it is more often consumers that get subsidies to offset the worst effects, and thereby raises demand further - such as the proposal from Hugo Chavez for the oil producers to create a special fund to subsidise and provide food for the world's poor. For farmers and peasants in poor countries this means at least the possibility of being able to sell some products profitably on the market, whilst retaining some food for their own consumption. In Africa huge potential exists for development in providing both raw materials and food if sufficient infrastructural development takes place to make the opening up of such resources worthwhile. China is embarking on such a programme in Congo, for instance. As with all of capitalist development such a process will happen via a series of crises, and given the nature of food supply, no doubt some horrendous suffering, but capitalism does have the means to resolve such situations and socialists should not fall into the trap of thinking it can't.

Just as the last long boom after the Second World War brought new economies into the frame in Asia, economies who as has happened in the past became the most dynamic as the new boom began following the logic of the process of combined and uneven development, so the current boom is likely to see the emergecne of new economies in Africa as the last area of the world where capitalist development has yet to bring about what Marx called its "civilising mission", the raising up of general living standards, and opening up to the working class of culture, art and education, the precondition for the development of socialism.

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