Freeman

ARTICLE

De-Industrializing the Future

MAY 01, 1981 by JOSEPH P. MARTINO

Mr. Martino is Senior Research Scientist, University of Dayton Research Institute. He is Technological Forecasting Editor for The Futurist. This article is adapted from a chapter of a forthcoming book.

Ernst Schumacher’s 1973 book, Small Is Beautiful, popularized the term “appropriate technology.” He argued that the purpose of technology is to lighten the burden of work, but modern technology has replaced creative, useful work with fragmented work which the worker does not enjoy. He argued that instead, technology should produce methods and equipment which are: (a) cheap enough so that they are accessible to virtually everyone; (b) suitable for small scale applications; and (c) compatible with man’s need for creativity.

The “appropriate technology movement” has grown beyond Schumacher. Many “futurists” have offered definitions which are compatible with Schumacher’s ideas, but extend them considerably.

Why should we adopt Appropriate Technology in the industrialized nations? There are several inter-related arguments offered by futurists. These include shortages, changes in the relative scarcity of capital and labor, and the industrial threat to the environment. These lead to a call for “voluntary simplicity.” Let’s look at each of these arguments.

Shortages

Futurists argue that centralized mass production, mass distribution and mass consumption are based on the availability of large amounts of cheap energy and materials. These features of our present society cannot last in the face of energy and materials shortages. Therefore we must alter our lifestyles away from these things.

Several futurists have written that our industrialized society is a historical anomaly, based on the unusual circumstances of cheap energy and abundant resources. According to Ezra Mishan: “The advance of technology in the West over the past 200 years might well be attributable to especially favorable circumstances. Certainly there was no problem up to the present of limits to the assimilative capacity of the biosphere. Nor was there a problem of the availability of cheap fossil fuels.”

The argument that industrialization is an anomaly, arising from favorable circumstances, is simply false. This argument is based on failure to recognize what is a natural resource. Whether some material constitutes a natural resource depends on the kind of technology available. In the early 19th century, crude oil which contaminated salt wells was nothing but a nuisance. The coal deposits of England were of no value until the late Middle Ages, when it was realized that coal could be burned. Even then, coal was not important industrially because it was full of impurities which reduced the quality of pig iron smelted with coal. It was not until 1750 that a process was developed which overcame the effects of the coal impurities. Pennsylvania coal was not recognized as a “resource” until even later, since it is a “hard” coal which is harder to ignite than was English “soft” coal. Only in 1828 was a process developed which could use Pennsylvania coal in iron-making.

Thus the apparently “abundant” resources which seem to have been responsible for the growth of industrialization during the 19th and 20th centuries were not even recognized as resources until the beginning of the 19th century. Industrialization succeeded, not because resources were abundant, but because people learned how to convert abundant but useless materials into resources.

Any analysis of industrialization which is based on the assumption that it developed only because of “abundant resources” is suspect. Moreover, if that analysis leads to the conclusion that eliminating industrialization would be a good thing, and that individual freedom should be restricted in order to achieve de-industrialization, the conclusion is even more suspect. In particular, industrialization may continue if presently useless materials can be converted to “resources.” The crucial point, however, is not whether industrialization continues. The crucial point is that we do not need to restrict people’s freedom in order to de-industrialize.

Relative Scarcity of Capital and Labor

Another argument is that there will be changes in the relative scarcity of capital and labor. With formerly cheap capital becoming more expensive, and formerly scarce labor becoming more plentiful, capital-intensive industrialization must come to an end. We must therefore alter our lifestyles which are based on capital-intensive industrialization. We will have to adopt lifestyles which are instead based on labor-intensive production processes. These will in general require smaller-scale, decentralized forms of industrial organization.

A stronger form of the same argument calls for Appropriate Technology as a means of increasing employment. It is argued that manufacturing processes utilizing Appropriate Technology require more labor hours and less capital per dollar of output. They thus not only conserve scarce capital but provide more employment than do processes requiring few labor hours per unit of output.

Let us first look at the issue of shifts in the relative scarcity of capital and labor. Has this ever happened before? Is today’s shift something unprecedented since the industrial revolution?

In fact, such shifts have been quite common during the past two centuries. The history of American agriculture, during the last half of the Nineteenth Century, involved using technology to allow a worker to farm more and more acres. Land was plentiful and labor was scarce. Be tween 1840 and 1911 the yield of grain per acre remained almost constant, but the acres per worker grew significantly. Over half the increase in output per worker was due to the increase in acreage per worker through mechanization. In England in the early Nineteenth Century, farmland was in fixed supply and therefore relatively scarce compared to both labor and capita]. The English farmers adopted techniques which resulted in greater output per acre, by farming more intensively. During the Napoleonic Wars, however, labor became scarce compared with capital, and farmers shifted to more machines and less labor. When the wars ended, the English farmers shifted back.

Lumber Industries Compared

A comparison of the American and European lumber industries in the 1870s presents the same kind of contrast. In America, labor was scarce and costly. Wood was plentiful. Firms in the lumber and woodworking industry utilized machinery on a large scale to substitute for scarce labor. The result was a great deal of wood “lost” in the production process as sawdust and chips. In Europe, wood was scarce and costly, whereas labor was comparatively less costly. The European lumber industry used highly labor-intensive manufacturing techniques which resulted in almost no loss of the wood. One European observer was quoted as describing the American lumber industry as being criminally wasteful of wood. But in fact it was not. The American and European lumber industries were responding to different relative scarcities of labor, capital and materials. In America, industry economized on scarce labor at the expense of plentiful (and renewable) wood. In Europe, industry economized on scarce wood at the expense of more plentiful labor.

These examples show that in different places at the same time, and in the same place at different times, the relative scarcities of labor, capital and materials differed. In response to these differences in relative scarcities, industries employed different production processes. The production processes were always designed to economize on the scarce items at the expense of more plentiful items.

But granted that historically production processes have shifted to follow significant shifts in relative scarcity, what about the idea of increasing employment by utilizing labor-intensive technology? Would we benefit from a deliberate shift in the direction of Appropriate Technology regardless of shifts in relative scarcity of labor, capital and materials?

The notion that labor-saving machinery reduces employment is one of the oldest fallacies known. The Roman Emperor Vespasian is reported to have refused the services of an engineer who offered to transport some huge columns up to the Capitol using a mechanical device. Vespasian stated, “I must always ensure that the working classes earn enough money to buy themselves food.”

Bastiat Exposes Fallacy

The French economist Frederic Bastiat offered what is perhaps the strongest refutation of this argument ever written, by presenting an example to show how absurd it is. He described Robinson Crusoe on his island, having to make planks for constructing a shelter. He makes them by cutting down trees, and hewing them fiat on two sides. Now, Bastiat says, suppose a plank is washed up on the beach. Should Crusoe salvage it and use it? Not at all. If he salvages the plank, he will be employed only to the extent of walking down to the beach and returning with the plank. However, if he ignores it, he will be employed to the extent of cutting down a tree and hewing another plank out of it. His axe will become dull, so he is assuring himself more employment in sharpening it. He will consume food during the time he is manufacturing the plank. Thus he assures himself of more employment in replacing that food. Finally, he can assure himself of yet more employment by walking down to the beach and kicking the plank back into the sea before starting on the manufacture of another one.

When expressed in this way it is clear that Crusoe is not interested in providing himself with employment. He is interested in providing himself with manufactured products. He wants to get them with as little labor as possible. It would be absurd to reject a “gift from the sea,” on the grounds that it reduces his employment. But the same holds true for a complex economy. Our interest is not in maximizing the amount of labor done. Our interest is in providing consumers with the goods they want, at the lowest possible cost.

However, the issue of replacing capital-intensive production with labor-intensive production goes deeper than simply the total wealth produced. If capital goods (machines) are deliberately not used, then employment in the machine-tool industry is reduced. Since capital represents the savings of a large number of people, it represents the fruit of their time and labor, diverted to productive purposes instead of consumption. Advocating the replacement of capital with labor is to ignore all the labor and other resources which went into the capital currently being employed. The experience of two centuries of industrialization is that extensive use of capital actually increases total employment. But this is true only if the capita] is used efficiently. If capital is used where available labor would actually be cheaper, the total wealth produced is less. Say’s Law then comes into play. Since less wealth is produced, there is less to be offered in exchange for the production of others. Thus a demand which might have existed never appears, and employment suffers.

Clearly then the issue is not whether one should emphasize capital intensive manufacturing technology as opposed to labor intensive technology. Neither is right as a matter of policy. The mix of capital and labor which minimizes production cost should be used. Those who emphasize labor intensive manufacturing, that is, more labor intensive than the minimum cost mix, are in fact advocating higher cost production. Or equivalently, they are advocating less production for the same cost, which means a lower standard of living.

Why the Big Deal?

Even granted that energy is going to be more expensive and materials scarcer, why the big deal? Why the fuss over de-industrialization? This sort of shift in relative scarcity of the factors of production has taken place before. Whenever it has happened, industrial processes have adjusted without great difficulty. Rather significant differences in relative scarcity have been accommodated at different places in the world, at the same time and therefore with the same level of technological capability. These geographic differences, and the transitions from one configuration of relative scarcity to another have never caused major upheavals in society.

Moreover, we have seen shifts from one major energy source to another within recorded history. Wind, running or falling water, the tides, wood, coal, petroleum, whale oil, and uranium have all been important energy sources at various times and places. The transition from one energy source to another has taken place time and again without major dislocations to either society or the economy.

Saving the Environment

Another argument offered in favor of de-industrialization is that of saving the environment. Phrases such as “soft energy” and “alternate energy” are commonly used. The implication is that “hard energy” is environmentally damaging, while soft energy is benign. Solar energy is offered as the ultimate in soft energy. It is allegedly non-polluting, cost-free, and indefinitely renewable. But as Donald C. Winston has written in Newsweek, “Solar energy is potentially the most polluting and ecologically threatening form of commercial power being proposed in the world today.” Why does he make such a statement?

Solar energy is said to be democratic, in that it falls on everyone alike. But the reverse side of that coin is that solar energy is dilute. The global average for solar energy intensity, taking into account sun altitude and length of day, is 160 watts per square meter. Taking into account cloud cover and other losses, only about 5 to 10 per cent of this can be converted into electricity. Thus solar energy will be available at about 25 megawatts per square mile. The entire projected power consumption of the U.S. in the year 2000 (assuming continuation of historical growth) would require that an area the size of the state of Oregon be covered with solar collectors. The collectors to replace only existing and projected nuclear power plants would cover the state of West Virginia. Since effective coverage can be only about 50 per cent, to allow workers to have access to the collectors, those areas really should be doubled. But that is only part of the story. There are worse threats to the environment than simply covering vast areas with solar collectors.

Suppose the electricity is to be generated using photovoltaic cells. This will require enormous tonnages of cadmium, silicon, germanium, selenium, gallium, copper, arsenic, sulfur, and other exotic materials. The entire 1978 world production of cadmium would suffice only to replace 10 per cent of the world’s installed capacity for electricity generation. And the U.S. imports over 60 per .cent of its cadmium. Thus not only is this material in extremely short supply worldwide, but the U.S. would be even more dependent upon foreign sources than it is for petroleum.

Unseen Risks

If the electricity is to be generated using thermal conversion, then enormous tonnages of glass, plastics, and rubber will be required for the collectors. In addition, heat transfer fluids such as Freon, ethylene glycol, or liquid metals such as mercury or molten sodium will be required. A Freon spill would do more damage than all the deodorant sprays ever manufactured. A mercury spill would be catastrophic.

Finally, regardless of whichever type of collector is used, it must be produced. That means enormous tonnages of coal or petroleum must be burned; enormous tonnages of ore removed from mines, shipped and processed; and enormous tonnages of pollutants generated in the manufacture of these solar collectors.

But the futurists will claim that they don’t want to install enough solar collectors to supply the projected U.S. energy demand. On the contrary, they not only want to keep demand from growing, they want to cut energy consumption below what it is today. If that is done, then the task of building enough solar collectors is reduced significantly.

This is still not a sufficient answer. Even cutting total energy consumption to half of today’s level will result in significant environmental damage if it all comes from solar. The critical issue is that despite its apparent advantages, solar energy simply is not benign. Because it is so dilute, collecting it requires a great deal of effort and involves large areas. This alone affects the environment. Using exotic materials only compounds the environmental damage.

Free Sun and Free Coal; The Cost of Using What Is Free

Perhaps the most important point about solar energy is that the de-industrializers are wrong when they call it “free” energy from the sun. Coal under the ground costs no more than does sunlight falling on the ground. No human action is required to produce either one; both are free gifts of nature. The costs for solar energy, just as for coal, are the costs to make that “free” energy usable. Currently, it costs more to make “free” solar energy usable than it costs to make “free” coal usable. Moreover, a significant part of the cost of solar energy is environmental damage.

But there is more to this than solar energy. Is it true that industrialization destroys the environment, while non-industrialized societies don’t? Let’s examine, then, what a world might look like which was based on soft energy and appropriate technology.

In the flood-plains of the Chao Phraya river, north of Bangkok, Thailand, the land appears absolutely fiat. Close examination shows that in an important sense it is flatter than any comparable area in the U.S. In most places in the world, even fiat-appearing land will be cut up by small watercourses. But in Thailand the creeks, the brooks, the rivulets have all been obliterated. Only the major rivers remain. Hundreds of square miles have been formed, by low earthen dikes, into small rectangular rice-fields. Every drop of rain passes over somebody’s rice- field before it reaches a major river.

The countrysides of England and France show the effects of man to the same degree. The hedgerows of Normandy cut the land up into little rectangles just as do the dikes in Thailand, although there is not the same concern with water. The farm plots of England, looking as though they had been manicured, also cover the countryside as far as one can see.

To the casual observer, it may appear as though the residents of these areas are living in a natural setting. The countrysides may appear rustic and pastoral. But in reality the countrysides are man-made structures, as artificial as is Manhattan Island. As Roderick Nash writes in Next: “There may be woodsmen in Europe, but there are no backwoodsmen. The woodcutters and the shepherds of neighboring villages meet at the top of the ridge. The Alps today are a large garden—pastoral, but not wild.” He goes on to point out that the same sort of thing is true in Africa and South America. Even though the countrysides may not be as neat-appearing as is the case in Europe, they are dominated and shaped by man.

Even the Most Primitive Cultures May be Man-Made

But the point is that these countrysides, even in Thailand, England and France, were fabricated by people living in a soft-energy, “appropriate technology” lifestyle. In Africa and South America, the fabricated countryside is still inhabited by people living this lifestyle.

Indeed we might be fortunate if a low-technology culture produced merely fabricated landscapes like those of Thailand and Europe. In many parts of the world, primitive peoples still practice “slash-and-burn” agriculture. This leads directly to loss of forest cover, destruction of wildlife habitats, erosion of hillsides, and silting-up of rivers. Such a landscape may be truly “fabricated,” but it is hardly a desirable one, and it belies the notion that “soft technology” is environmentally benign.

Thus whatever reasons there may be for de-industrializing and reshaping our society into the model offered by “alternative communities,” saving the environment isn’t one of them. Soft energy and appropriate technology are perfectly capable of creating a fabricated countryside. Wherever they have been employed on a wide scale and for any length of time, such as in Thai land and in Europe, the natural environment disappears completely and is replaced by a man- made one. To the casual observer this environment may appear natural. But that is only because the observer can’t compare it with what it was like several hundred years earlier, before the hand of man reshaped it.

Is there something wrong with a fabricated landscape? Is there something undesirable about converting a wilderness into neat rectangular patches of human-dominated farms and gardens? Not at all. But it is only a value judgment that such an artificial landscape is any more desirable than is a neat and clean urban setting. And not everyone would agree with such a judgment. One is just as artificial as the other, and each has its supporters. It would seem more desirable to allow people a free choice of which kind of artificial landscape they want. But it is absurd to refer to the results of filling a continent with soft energy, appropriate technology farmsteads as “preserving the environment.”

De-Industrializing by Free Choice

Much of what the futurists say in support of de-industrialization is simply wrong. There is no need to de-industrialize to protect the environment. In fact, de-industrialization may do at least as much damage to the environment as industrialization has. What is needed to protect the environment is a better definition of property rights in the environment. Ultimately, pollution hurts people, and people must be recognized as having the right not to be victimized by pollution.

Nor does the existence of shifts in the relative scarcity of capital, labor and materials require de-industrialization as such. Our industrial society has reacted to shifts in the relative scarcity of factors of production many times during the past two centuries. It will undoubtedly do so again. What is needed to cope with those shifts is freedom on the part of producers, workers, investors and consumers to make the best choices they can, given the relative scarcities they see or forecast.

But if none of the arguments offered by futurists for de-industrialization hold up, does that mean we shouldn’t de-industrialize? What about the people who sincerely do choose voluntary simplicity? What about the people who like living in “alternative communities,” some of which are quite successful and self-sufficient, rather than depending upon grants and gifts for survival? Doesn’t the fact that some people voluntarily abandoned an affluent lifestyle support their argument that there is more to life than the production of wealth? Should they be required to abandon their goals of simplicity and alternatives?

Freedom the Key

Of course not. The key to the whole thing is freedom. In a society which protects people’s rights while otherwise letting them alone, each may have his own choice. Those who wish to adopt voluntary simplicity may do so. Those who prefer “un-simple” lives may enjoy as much of the world’s material goods as the availability of resources permits. And perhaps most important, those now in involuntary simplicity can escape from that state through economic growth. They may then have a choice about whether or not they will live simply.

Thus the most fruitful course for those advocating de-industrialization is to support greater freedom for all. Their goals would be better served by a society in which all are free to make their own choices, subject to the limits imposed by the rights of others and the constraints which result from the scarcity of the world’s resources. Attempting to force all of society into any particular mold, whether industrialized or de-industrialized, would be unwise. First, the choice may turn out to be wrong, in which case the future would be much worse than necessary. Second, that would prevent the free search for alternatives which might turn out to be more desirable than any of those which are being debated today. Freedom for themselves and for others will achieve much more than the de-industrial-izers can hope to achieve through imposing their views on everyone else.

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May 1981

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