Sunday, 18 April 2021

The Economic Content of Narodism, Chapter 4 - Part 15

Struve sees the root of Danielson's fear as being his recognition of only extensive agriculture. This is also the foundation of Malthusianism, including in its modern found amongst some environmentalists. It is the view that output can only be significantly increased by cultivating ever greater areas. Even when global production was dominated by the production of material commodities rather than services, there was no justification for such a view; today, when, in the developed, and many developing economies, it is service industry that accounts for around 80% of output, there is even less justification for such a position. In many developed economies, the physical mass of material consumed in production is falling proportionally. Using the materials footprint measure, which includes the mass of imported materials, as well as domestic materials production, developed economies, on average increase their MF, on average, by 6% for every 10% increase in GDP. Obviously, this does not mean absolutely less material being consumed, but relatively less. 

I set out the reason for that some time ago. Many commodities, today, combine the functionality of several previous commodities. A smart phone is also a SatNav, video camera, music player, video player, games console, portable computer and so on. All of the materials previously required for the production of these separate commodities are no longer required, because the smart phone replaces them. That is the case with whole ranges of commodities. Moreover, the development of materials science means that whole new ranges of synthetic materials are being produced that are cheaper and more functional than existing materials. Technology also ensures that materials are used more efficiently. One of the clearest examples of that is energy. Global GDP grew six times faster than oil consumption between 1980-2006, because of far more efficient means of converting oil to energy. The development of solar, wind, wave, geothermal and other renewable technologies means that progress is likely to continue to increase. 

But, the other main factor is a transition from a manufacturing to a service industry economy that has been as profound as the transition from agricultural to manufacturing economies in the 19th century. Huge areas of the economy, today, involve the purchase of labour services that only involve the consumption of auxiliary rather than raw materials. If I purchase an Amazon Prime or Netflix subscription, the number of films I stream has no impact on the consumption of raw materials. At most, it has a minor impact on the energy required for such streaming, and an even more minor effect on the wear and tear of the fixed capital infrastructure involved. The same is true if I go to the cinema, or if I buy an online game, subscribe to an online music service, or a smart phone subscription, or go to a live comedy or music performance. 

If I go to a restaurant, rather than eat at home, the raw materials consumed are no greater, and possibly less, because of economies of scale; what I have bought is actually the labour service of the restaurant workers, and, if its a fancy restaurant, run by a celebrity chef, even more is that the case. It has, in fact, been the progressive role played by capital in raising productivity to such phenomenal levels that has made this possible. It has reduced the cost of producing food and other material commodities to such an extent that the average worker in a developed economy now only needs to spend about 15-20% of their income on their purchase. That has meant that consumption has shifted to the purchase of services, a manifestation of the Civilising Mission of Capital. Even in relation to the main single item of workers' budgets – shelter – the cost of this would have been reduced significantly, also, were it not for speculation having driven up asset prices, including land and property, into hyperinflationary bubbles. 

So, the idea that continued economic growth involves increased use of natural resources, and, thereby, of land is itself false. Only in terms of raising the living standards of millions of people in non-industrialised countries does that remain the case. But, in those countries too, capitalist development, particularly capitalist development by large-scale, multinational capital, means that production, from the start, can be based on efficient capital intensive methods that reduce the amount of land and resources required for production. The individual peasant farmer is unable to use capital intensive methods. Pressed down upon by usurers and merchant capital, and the state, they are forced to farm their land aggressively, often destroying its fertility in the process, simply in order to survive in the short-term. A large capitalist farmer, however, sees the land as a long-term asset from which they hope to derive profits for decades to come. They have every interest in using the land efficiently, but also of protecting and curating it, of utilising crop rotation, and other methods to retain and develop its fertility. The more such capital is able to raise productivity, the less land it needs to cultivate, in order to obtain a given level of output. 

Look at the example of Brazil. Farmers using modern capital intensive, and scientific methods have been able to increase the output of maize per hectare, by increasing the number of harvests per year. The FT reported a while ago, 

“Using new varieties of seeds that have allowed them to shorten soya and corn crop cycles, Brazilian farmers in the country’s centre-west savannah areas have moved from planting one crop to incorporating the second, the safrinha. In some areas where irrigation is available they are even contemplating a third harvest. 

The corn crop has benefited most from the safrinha. In the 2012-13 year, corn output is expected to total nearly 80m tonnes, up from about 56mt in 2011. Soyabeans, meanwhile, are estimated at more than 80mt compared with about 75mt in 2011.” 

By contrast, as Brazil's industrial population increases, and rising living standards led to a rising demand for food and other materials, farmers, lacking the same access to capital, to utilise these scientific methods resorted to more extensive agriculture. The actions of burning the rainforest, are, in fact, the actions of farmers who do not have access to the same amounts of capital, so as to be able to farm capital-intensively, and so who must try to compete by farming more extensively, and more aggressively and less efficiently. Once again, it is the inadequate development of capitalism that leads to the problem.

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