De-Industrializing the Future; J. Martino

Joseph P. Martino De-Industrializing the Future ERNST SCHUMACHER'S 1973 book, Small Is Beautiful, popularized the term ((appropriate technology." He argued that the purpose of technol ogy is' to lighten the burden of work, but modern technology has replaced creative, useful work with frag mented 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 cre ativity. The ((appropriate technology movement" has grown beyond SchuMr. Martino is senior Research Scientist, University of Dayton Research Institute. ~ Technological Forecasting Editor for The Futurist. This article is adapted from a chapter of a forthcoming book. 288 macher. Many ((futurists" have of fered definitions which are compati ble with Schumacher's ideas, but extend them considerably.

Why should we adopt Approptiate Technology in the industrialized na tions? There are several interre lated arguments offered by futur ists. 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 simplic ity." Let's look at each of these ar guments. 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 DE-INDUSTRIALIZING THE FUTURE 289 features of our present society can not 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 his torical anomaly, based on the un usual 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 circum stances. 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 industrializa tion is an anomaly, arising from fa vorable circumstances, is simply false. This argument is based on failure to recognize what is a natu ral resource. Whether some ma terial 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. Penn sylvania 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 devel oped which could use Pennsylvania coal in iron-making. Thus the apparently ((abundant" resources which seem to have been responsible for the growth of indus trialization 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 Habundant resources" is suspect. Moreover, if that analysis leads to the conclusion that eliminating in dustrialization would be a goodthing, and that individual freedom should be restricted in order to achieve de industrialization, the conclusion is even more suspect. In particular, in dustrialization may continue if presently useless materials can be converted to ((resources." The cru cial 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.

290 THE FREEMAN May Relative Scarcity of Capital and Labor Another argument is that there will be changes in the relative scar city of capital and labor. With formerly cheap capital becoming more expensive, and formerly scarce labor becoming more plentiful, cap ital-intensive industrialization must come to an end. We must therefore alter our lifestyles which are based on capital-intensive industrializa tion. We will have to adopt lifestyles which are instead based on laborin tensive production processes. These will in general require smaller-scale, decentralized forms of industrial or ganization. A stronger form of the same ar gument calls for Appropriate Tech nology as a means of increasing em ployment. 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 pro vide more employment than do pro cesses requiring few labor hours per unit of output.

Let us first look at the issue of shifts in the relative scarcity of cap ital and labor. Has this ever hap: pened before? Is today's shift some thing unprecedented since the industrial revolution? In fact, such shifts have been quite common during the past two centu ries. 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 con stant, 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 capital. The En glish farmers adopted techniques which resulted in greater output per acre, by farming more intensively.

During the Napoleonic Wars, how ever, 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 con trast. In America, labor was scarce and costly. Woodwas plentiful. Firms in the lumber and woodworking in·· dustry utilized machinery on a large scale to substitute for scarce labor. The result was a great deal of wood ttlost" in the production process as sawdust and chips. In Europe, wood was scarce and costly, whereas labor 1981 DE-INDUSTRIALIZING THE FUTURE 291 was comparatively less costly. Th«~ European lumber industry used highly labor-intensive manufactur·· ing techniques which resulted in al· most· no loss of the wood. One Euro·· pean observer was quoted as describing the American lumber in dustry as being •criminally wasteful of wood. But in fact it was not. The American and European lumber in dustries were responding to differ ent relative scarcities of labor, capi tal and materials. In America, industry economized on scarce labor at the expense of plentiful (and re newable) wood. In Europe, industry economized on scarce wood at thE~ expense of more plentiful labor.

These examples show that in dif~ ferent places at the same time, and in the same place at different times, the relative scarcities of labor, capi tal and materials differed. In re sponse to these differences in rela tive scarcities, industries· employed different production processes. Thc~ production processes were always designed to economize on the scarCE~ items at the expense of more plenti ful items. But granted that historically pro duction processes have shifted to fol low significant shifts in relative scarcity, what about the idea of in creasing employment by utilizing labor-intensive technology? Would we benefit from a deliberate shift in the direction of Appropriate Tech nology regardless of shifts in relative scarcity of labor, capital and materials? The notion that labor-saving ma chinery reduces employment is one of the oldest fallacies known. The Roman Emperor Vespasian is re ported to have refused the services of an engineer who offered to trans port 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." BastiatExposesFallacy The French economist Frederic Bastiat offered what is perhaps the strongest refutation of this argu ment 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 flat on two sides. Now, Bastiat says, suppose a plank is washed up o~ the beach. Should Crusoe salvage it and use it? Not at all. If he salvages the plank, he will be employed only to th~ extent of walking down to the beach and re turning 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 292 THE FREEMAN May food during the time he is manufac turing the plank. Thus he assures himself of more employment in re placing that food. Finally, he can as sure himself of yet more employ ment by walking down to the beach and kicking the plank back into the sea before starting on the manufac ture of another one.

When expressed in this way it is clear that Crusoe is not interested in providing himself with employ ment. 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 ((giftfrom the sea," on the grounds that it reduces his employ ment. But the same holds true for a complex economy. Our interest is not in maximizing the amount of la bor done. Our interest is in provid ing .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 (ma chines) are deliberately not used, then employment in the machine tool industry is reduced. Since capi tal represents the savings of a large number of people, it represents the fruit of their time and labor, di verted to productive purposes in stead 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 ex perience of two centuries of indus trialization is that extensive use of capital actually increases total em ployment. But this is true only if the capital 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 em ployment suffers.

Clearly then the issue is not whether one should emphasize cap ital intensive manufacturing tech nology as opposed to labor intensive technology. Neither is right as a matter of policy. The mix of capital and labor which minimizes produc tion cost should be used. Those who emphasize labor intensive manufac turing, that is, more labor intensive than the minimum cost mix, are in fact advocating higher cost produc tion. Or equivalently, they are ad vocating 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 1981 DE-INDUSTRIALIZING THE FUTURE 293 the factors of production has taken place before. Whenever it has hap pened, industrial processes have ad justed without great difficulty.

Rather significant differences in rel ative scarcity have been .accommo dated at different places in the world, at the same time and therefore with the same level of technological ca pability. These geographic differ ences, and the transitions from one configuration of relative scarcity to another have never caused major upheavals in society. Moreover, we have seen shifts frODrl one major energy source to another within recorded history. Wind, run ning or falling water, the tides, wood, coal, petroleum, whale oil, and ura nium have all been important en ergy sources at various times and places. The transition from one en ergy 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 fa·· vor of de-industrialization· is that of saving the environment. Phrases such as ((softenergy" 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 en·· ergy. It is allegedly non-polluting"

cost-free, and indefinitely renew·· able. 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 demo cratic, 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 his torical growth) would require that an area the size of the state of Ore gon be covered with solar collectors.

The collectors to replace only exist ing 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 collec tors, 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.

294 THE FREEMAN May This will require enormous ton nages of cadmium, silicon, germa nium, selenium, gallium, copper, ar senic, sulfur, and other exotic materials. The entire 1978 world production of cadmium would suf fice only to replace 10 per cent of the world's installed capacity for elec tricity generation. And the U.S. im ports over 60 per cent of its cad mium. Thus not only is this material in extremely short supply world wide, 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, plas tics, and rubber will be required for the collectors. In addition, heat transfer fluids such as Freon, ethyl ene 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 man ufacture of these solar collectors. But the futurists will claim that they don't want to install enough so lar collectors to supply the projected U.S. energy demand. On the con trary, they not only want to keep de mand from growing, they want to cut energy consumption below what it is today. If that is done, then the task of building enough solar collec tors is reduced significantly. This is still not a sufficient an swer. Even cutting total energy con sumption 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 envi ronment. Using exotic materials only compounds the environmental dam age.

Free Sun and Free Coal; The Cost of Using What Is Free Perhaps the most important point about solar energy is that the de-in dustrializers 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 re quired 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 us able. Currently, it costs more to make ((free" solar energy usable than it 1981 DE-INDUSTRIALIZING THE FUTURE 295 costs to make ((free" coal usable. Moreover, a significant part of the! cost of solar energy is environmen tal damage. But there is more to this than so· lar energy. Is it true that industri· alization destroys the environ ment, while non-industrialized. societies don't? Let's examine, then, what a world might look like which was based on soft energy and appro priate technology.

In the flood-plains of the Chao Phraya river, north of Bangkok, Thailand, the land appears abso lutely flat. Close examination shows that in an important sense it is flat ter than any comparable area in the U.S. In most places in the world, even flat-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. Hun dreds 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 ap pear 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 struc tures, as artificial as is Manhattan Island. As Roderick Nash writes in Next: uThere may be woodsmen in Europe, but there are no backwoods men. The woodcutters and the shep herds of neighboring villages meet at the top of the ridge. The Alps to day 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 coun trysides, even in Thailand, England and France, were fabricated by peo ple living in.a softenergy, «appro priate technology" lifestyle. In Af rica and South America, the fabricated countryside is still inhab ited 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 296 THE FREEMAN May peoples still practice Hslash-and burn" agriculture. This leads di rectly to loss of forest cover, destruc tion of wildlife habitats, erosion of hillsides, and silting-up of rivers. Such a landscape may be truly ((fab ricated," but it is hardly a desirable one, and it belies the notion that Hsoft technology" is environmen tally benign. Thus whatever reasons there may be for de-industrializing and re shaping our society into the model offered by Halternative communi ties," saving the environment isn't one of them. Soft energy and appro priate technology are perfectly ca pable of creating a fabricated coun tryside. 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 en vironment disappears completely and is replaced. by a man-made one. To the casual observer this environ ment may appear natural. But that is only because the observer can't compare it with what it was like several hundred years earlier, be fore the hand of man reshaped it.

Is there something wrong with a fabricated landscape? Is there some thing 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 de sirable 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 artifi cial landscape they want. But it is absurd to refer to the results of fill ing a continent with soft energy, ap propriate technology farmsteads as ((preserving the environment." De-Industrializingby 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 envi ronment. In fact, de-industrializa tion may do at least as much dam age to the en vironmen t as industrialization has. What is needed to protect the environment is a bet ter definition of property rights in the environment. Ultimately, pollu tion 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-industri alization as such. Our industrial so ciety has reacted to shifts in the rel ative scarcity of factors of production many times during the past two cen turies. 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 1981 DE-INDUSTRIALIZING THE FUTURE 297 they can, given the relative scarci ties they see or forecast. But if none of the argum~nts of fered by futurists for de-industrial ization 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 produc tion of wealth? Should they be re quired to abandon their goals of simplicity and alternatives? Freedomthe Key Of course not. The key to the whole thing is freedom. In a society which protects people's rights while other wise 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 avail ability of resources permits. And IDEAS ON Ed Lipscomb 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-industrializa tion 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, sub ject 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 neces sary. 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 them selves and for others will achieve much more than the de-industrial izers can hope to achieve through imposing their views on everyone else. i LIBERTY FREEDOM rests, and always will, on individual responsibility, individual integrity, individual effort, individual courage, and individual religious faith. It does not rest in Washington .•It rests with you and me.