Thursday, April 28, 2011

The business plan of the factory is to produce externalities

To a very large extent, many of our industrial technologies are about producing "externalities". The industrial capitalist model extracts resources in distant places (destroying other peoples' nature and possibly livelihoods), it has workers do something with them and pay them only part of the added value, the cost of pollution is carried by the local communities, the cost of health care is footed by society, the cost of schooling the workers is covered by society etc. The products are sold at a profit and the waste is someone else's problem. Our natural and social "commons" are resource pools and dumping grounds for the factory. Those that are most successful in externalising their costs are the most successful. "The rationale of machine technology is to (locally) save and liberate time and space, but (crucially) at the expense of time and space consumed elsewhere in the social system" as summarized by Alf Hornborg (2006). When one realise this, one see that what economists are calling "externalities" as if they were some kind of mistake in the process, are part and parcel of the business plans that are behind factories. Of course, there are tools and machines that are producing very few externalities or where those externalities are very small. By and large, however, competition drives industries into increasing externalities. The most apparent example is re-location of factories, to the emerging economies, where salaries are lower and regulations laxer. Many more trends in modern manufacturing can be viewed with that perspective. There is always a counter-movement from society to pressurise industries to take care of those externalities, as they are indeed damaging.

Hornborg (2009) shows how the unequal exchange underlying machine technology can be exposed by measuring the net flows of biophysical resources such as energy, matter, embodied land (ecological footprints), or embodied labour. The mechanical ‘power’ of the machine is to a large extent also an expression of the economic and ideological ‘power’ through which it is sustained. Ultimately, what keeps our machines running are global terms of trade, where the poor get a raw deal. Like with so many other discussions it is hard to discern cause and effect. Is it technology, the machine, as such that creates this imbalance in power, or is the imbalance in power that skews the application of technology into favouring the powerful? I think that they are mutually reinforcing, like so many other issues. In the market place, it is clearly technologies - and organizational forms - that tilts the terms of trade in your favour that will survive. Technology has created the illusion that economic processes can "produce" resources; that we through technological and economic transformation of raw materials into consumer goods can make more resources available; for the price of a particular consumer good, we can buy more material than were used for the production of the good. This is also reflected in the extraction of added value from labour. The value (price) of a good is higher than the work embedded in it, after deduction of other costs, which means that the capitalist can buy more work. These are also the mechanism by which capitalism, technology and economic growth are intrinsically intertwined, and one more reasons for why sustainable capitalism is an oxymoron.

Hornborg, Alf 2006, Footprints in the cotton fields: The Industrial Revolution as time-space appropriation and environmental load displacement, Ecological Economics, Volume 59 Issue: 1, Pages: 74-81
Hornborg, Alf 2009, Zero-Sum World Challenges in Conceptualizing Environmental Load Displacement and Ecologically Unequal Exchange in the World-System, International Journal of Comparative Sociology Vol 50(3–4): 237–262

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