28 February 2010

Beyond Stuff

History and pre-history from the Neolithic Revolution ca. 10,000 years ago through the Industrial Revolution that has gathered steam starting about 200 years ago and ending in developed nations sometime in the later 20th century has a common theme. As larger and larger percentages of the population have been free to do things other than produce food, it has been possible for these people to develop technology, larger scale social organization, and more generally more non-food goods for people to consume.

In the Third World and developing world, this trend hasn't run its course yet. Hunter-gatherer societies are virtually extinct. For a significant minority of the world's population, however, pre-industrial agricultural methods or nomadic pastoralism remain a way of life. But, mechanized farming with modern biotechnological enhancements that greatly increase productivity per farmer is the norm in the developed world and is in the process of replacing traditional food production methods everywhere else.

In the developed world, less than two percent of the population continues to be employed in agriculture and other forms of food production like fishing. Even including other natural resource production sectors like forestry and mining, the percentage of people employed in these primary resource exploiting industries is under four or five percent.

Efficiency gains continue, but they have increasingly little relevance to the structure of our society which is overwhemingly non-agricultural now and will continue to remain non-agricultural. We have reached the point where all of the food the world needs can be produced by a small percentage of the world's population. Not everyone in the world has access to abundant food supplies, but this isn't because we aren't capable of making enough food to feed everyone. We make enough food to feed everyone, even if we don't always distribute it in a way that actually does feed everyone adequately.

This is a relatively recent development in the big picture of history. In Colonial era America, two hundred to three hundred years ago, something like ninety percent of the population was engaged in food production. The decline in the percentage of the population engaged in agriculture over this time period has been a steady one.

In the United States, from the beginning of the Industrial Revolution in the 1700s, until sometime around the 1970s, a growing share of the population not engaged in direct food production, was engaged in the manufacturing and construction sectors, making things.

Japan has been the cardinal illustration of an economy that followed the logic of the Industrial Revolution to its extreme, recognizing that the natural resource inputs have become such a small share of the total manufacturing process than one can have a prosperous economy despite having to import almost all natural resources need for manufacturing and having export goods in order to find an economic demand for the goods produced.

But, sometime around the 1970s, the share of the population engaged in manufacturing and construction started to shrink. The reasons for this change have been muddy. On one hand, there has been a dramatic improvement in efficiency due to automating technologies and other technological developments (e.g. the rapidly shrinking amount of physical resources that go into a computer). On the other hand, some of the manufacturing sector's decline has been due to the offshoring of large parts of the manufacturing sector.

Globalization has degraded the usefulness of conventional, nationally collected economic statistics in understanding what is going on in the economy. The United States economy could not exist without calling upon natural resources and work forces abroad to produce goods for export, and without export markets to which it can sell goods. For example, about half of our national imports consist of imported fossil fuel resources.

Still, despite the complication created by the growing scale of modern economies as a result of globalization and international trade, the trend towards more productive manufacturing that we have seen in the United States seems sure to spread globally just as certainly as the spread of industrial era agriculture has spread.

Our abundance of goods may, sometime not so far in the future, reach a point where an increasingly small percentage of the world population can make all the goods that the people of the world need. As was the case with food, not everyone in the world may actually have all the goods that they need. But, this may come to be more of a function of fairness in distribution than it is of an inability to produce everything that is needed.

Traditional economic indicators don't contemplate and hence, do not capture very distinctively, the idea that a person can have enough goods, let alone a whole population. While microeconomists are comfortable with the idea of decreasing marginal utility for particular goods, macroeconomists by and large, operate on the implicit assumption that more is always better. Welfare economists note that the rich may need more goods less intensely than the poor, the intellectual basis for progressive taxation, but have been reluctant to quantify the idea.

The result has been that while sociologists and economists and politicians are aware that the developed world has entered a "post-industrial" era, there is little consensus about what this means. The uncertainty about where we are headed has caused us to view our post-industrial prospects with considerably more skepticism about is desirability than we do our post-agricultural prospects.

In other words, if we have enough food and we have enough stuff, what should those of us who aren't necessary to producing food and other stuff be doing?

For the most part, we are so hung up on the idea that the purpose of the economic is to make stuff that the question is difficult to even comprehend. Aphorisms like "you can't be too rich" come to mind.

There are multiple answers to the question. We could purchase leisure time in lieu of goods. We could purchase services in lieu of goods (and perhaps services should be broken into subtypes with different trend lines, with food service, business services and movie production, for example, falling into different categories). We could opt for economic security or greater sustainability.

There is nothing fundamentally wrong with letting politics and market decisions help us figure out what precisely we want to do with the prosperity that comes from increased productivity. But, to the extent that our prosperity comes from improved technology, rather than exploitation of people outside the system, and at the global level this is surely true, the trend is very likely a good one and not one to be instictively feared.

Progress is more than a simple moral judgment - economies tend to develop from primative to more advanced. The most "advanced" economy may not be the best for every time and place, but when it is available, people would overwhelmingly choose it over the alteratives.

The trick in making good political and economic decisions going forward is to have some relatively nuanced sense about where we are going. Knowing you are in a post-industrial society is all good and well, just as it is all good and well to know you are in a post-hunter-gatherer society. But, those descriptions don't provide much insight into the basic logic of the direction in which of society is heading.

What will we do when 95% of the population is engaged neither in food production nor manufacturing and construction? What will we do when fewer than 10% of the population is engaged in making or selling goods?

Are we making our society vulnerable to collapse and/or lack of future innovation, when an increasingly small percentage of the population is involved in making goods and thus lack the knowledge needed to do so, and when no one person or small geographically local group of people know how to make the goods that we need? How many people in the United States could build a television from scratch?

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