‘Market Forces will save us’

Some people want to rely on the panacea capabilities of ‘markets.’ Is this a reasonable hope?

Global markets will clearly do something in response to climate change, significant changes in the availability of oil resources, soil erosion and so on. I think you’d have to be working from some kind of quasi-religious certainty to be sure that the response of the markets will necessarily be both entirely beneficial and sufficient to this problem, as some seem to do.

The question from my point of view is not whether the sacred power of markets will make everything turn out for the best automatically. I think that unlikely for a variety of reasons, in much the same way as I think Resurrection and Virgin Birth unlikely. Free market theology aside though, I think that markets will clearly play a significant role in responding to oil and gas depletion, but I think it’s unlikely to be a uniformly positive one. Similarly, as is probably clear from my review of the Stern Report below, I don’t think much of their response to the early signals of climate change.

Political-military rather than strictly economic responses may also occur. Some might argue that they are already occurring, say in Iraq.

The petroleum energy requirements of industrial agriculture suggest that where industrial agriculture is practiced, the demand for petroleum energy is both high and inelastic, with worrying implications for food security as global reserves become sigificantly depleted.

Right now we are in a steady state where we and billions like us mostly live on food grown using high oil-input agriculture. That looks to me very like a system that might fail catastrophically given the appropriate conditions. Those conditions might not be met, but I think the science says that such conditions could exist.

It seems likely, given that it takes ten units of oil energy to put one unit of food energy on our tables, that we’d see catastrophic global food security problems if the supply were to fail suddenly and drastically. So as a limiting case, industrial agriculture would fail catastrophically, if oil supplies were cut off totally and suddenly.

In the real world, energy supplies will probably not be cut off so suddenly and totally, but then the question arises, just how drastic would the onset of oil scarcity have to be, before a catastrophic failure of industrial agriculture is likely to occur?

That wars are apparently already being fought over these resources, suggests to me that extreme conditions might occur.

I think that when people suggest that this is a matter that can be handled by the working of markets, they’re in effect assuming a steady-state case, and that may be right. It doesn’t mean that catastrophic cases can’t arise. Nor does it mean that the ‘civilised’ rules of the markets game can’t get suspended in favour of the use of force to simply appropriate these indispensable resources.

Markets may do something useful about global food security, but they may also do things that are counterproductive.

My problem isn’t with the idea that markets might have a useful contribution to make, they may; it’s with anyone that appears to suggest, that markets are in and of themselves, reliably and certainly the answer to the problem of depletion, where the resource being depleted plays such a fundamental role in the functioning of our societies.

It takes ten units of oil energy to put one unit of food energy on our tables. This isn’t just about people driving slightly smaller cars.

I have a big problem with any doctrine that makes light of the fundamental questions raised by oil/gas depletion or suggests that it’ll be solved by some form of continuing business as usual.

I think some more fundamental approaches may be required, and some of those would significantly benefit from public policy support. For example, fundamental structural adjustments are needed, I suspect, for agriculture to do its job in a world of depleted oil. These adjustments would tend to involve radical decentralisation of our food systems, bringing grower and consumer physically closer to reduce fuel costs. They also involve moving away from input-based agriculture towards one that recycles nutrients, especially Phosphorous.

These changes are at present ones that the agri-chem commercial interests and their representatives in government are likely to passionately oppose. Can you imagine for example, Lord Sainsbury giving his wholehearted support to a food security policy that takes us away from massively centralised supermarket chains (like the ones that made him a billionaire?) Or can you imagine what the very influential oil and chemical giants would make of an approach to nutrient managment that was largely decentralised and not profitable, leaving them out of the loop, despite being more sustainable?

One plausible approach I’ve seen suggested, from a sustainability point of view is Folke Gunther’s ‘Re-ruralisation’. A progressive rearrangement of our population distribution over decades into sustainable eco-villages. Interview about this approach with Dr Gunther here

For the sake of discussion only, let’s imagine that the case for the ruralisation approach advocated in the article I linked is the optimal way, from a greatest good for the greatest number of people point of view, for achieving sustainability.

Given the starting conditions, how do we get to a point in the UK where that strategy is being applied effectively?

I don’t think the magic power of The Market is going to do it, in fact I’d be surprised if market advocates didn’t try to argue that it can’t be a correct strategy because The Market won’t do it.

I can’t see any of the people who profit from centralisation giving support to decentralisation, in fact I’d expect them to be hostile.

Both the farmer and the consumer are getting a better deal at the expense of a bunch of people in the middle, who are mostly involved in the distribution, industrial processing aspects of our current food system, and those oil companies who sell them energy. Also being disadvantaged by ruralisation are property developers, estate agents and others.

So, could this scenario be brought about by market forces alone?

My guess is not.

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3 Comments

  1. Posted July 8, 2007 at 4:41 pm | Permalink

    I think a key factor in the forthcoming catastrophe of climate change + peak oil is population: if the worlds population halved the strain on resources would be that much lower.

    Population is a complicated subject with many issues to address – not least the taboo of suggesting it is “wrong” to have too many children.

    Leaving this and many other factors aside for the moment it is not impossible to imagine market forces having a factor in reducing the birthrate.Perhaps they already are in the “west”.

    If food and energy becomes scarce and expensive, it may well proove a factor that encourages people to have less chidlren.

    But whatever effect market forces will play in reshaping our world it wont be before being faced with a range of cataclysmic events. Market forces wont stop food shortages and droughts, but they will have an impact on how the world re-orders itself following these tragedies.

    …it will be interesting to see how expensive the new technologies that will better enable communities to off-grid will cost.

  2. Posted July 8, 2007 at 7:04 pm | Permalink

    Yep, population is a minefield.

    I’m with Murray Bookchin when he says says something to the effect that while you still have business as usual, ie capitalism as we know it, then it makes no sense to talk about reducing population, because all you’re going to do is keep recreating the same conditions that led to these problems all over again.

    If you want to actually fix the problems, you need to address the causes in such a way that you don’t keep getting the same problems over and over again.

  3. Posted June 19, 2008 at 8:54 am | Permalink

    Somehow i missed the point. Probably lost in translation :) Anyway … nice blog to visit.

    cheers, Arson.


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