Wasted Wealth, Capital, Labor and Resources
Author and Page information
- This page: http://www.globalissues.org/article/242/wasted-wealth-capital-labor-and-resources.
- To print all information (e.g. expanded side notes, shows alternative links), use the print version:
This web page has the following sub-sections:
- Only the tip
- Efficient for whom and for what?
Hidden costsimply a lot of waste deep within the system itself
- And the waste of military conflicts to maintain disparities?
- And the waste in international finance systems to maintain disparities?
- Where does the population debate stand when we account for this waste?
- We don't have to stop consuming
- But surely we can't eliminate so many of these wasteful functions
- Why don't most people see this waste?
Only the tip
In this section on consumption, the previous pages are only beginning to hint just how wasteful our societies are.
- Not only are certain wasteful job functions unnecessary as a result, but the capital that employs this labor is therefore a wasteful use of capital.
- As a result, we see waste and misuse of the environment, as well as social and environmental degradation increasing.
- Consumption itself is terribly distorted, and wasteful. Yet most of humanity is denied the ability to increase their consumption, while production and distribution itself is also skewed.
Efficient for whom and for what?
Many believe our industries are efficient, with all the technological advances and so forth. However,
- It is true, that for the process of capital accumulation, our industries might be fairly efficient.
- But, for society's benefit, for sharing resources with everyone, for global security, for the planet's health and so on, we are clearly not.
- There is a difference then, between an industry or corporation driving towards efficiency for maximizing profits, versus driving towards efficiency that would benefit society as can be seen by examples presented throughout this site, as well as this section on consumption.
- To highlight this point further, take for example the illegal drug or tobacco industries. They, like other industries need to operate efficiently and minimize unnecessary costs. However, their impact on society is negative to say the least.
- In the same way, other industries, such as the automobile/transportation industries, health industries, even how various laws are structured, etc, can all have a net effect of improving efficiency for those industries but not always for society in general.
- For a thorough and detailed (and empirical) look into this aspect in these other industries, refer to Part I of The World's Wasted Wealth II, by J.W. Smith (Institute for Economic Democracy, 1994).
“Hidden costs” imply a lot of waste deep within the system itself
As we saw in the examples of the sugar, beef and banana industries, there is incredible waste within the structure of the system itself. Hence, so much of what is done is just not needed. Much effort goes to waste. An example of this was shown in the sugar section where the following points about waste and the effects of sugar and related industries were highlighted:
- Forests must be cleared to plant sugar
- Wood or fossil fuel is needed in processing steps
- Waste products from processing affect the environment
- Parallel consumption of other items related to sugar, including coffee, tea, chocolate, etc all collectively put additional resource requirements on the environment
- Numerous “hidden” or “external” costs include (and this is a very limited set of examples):
- To create, maintain and support the office buildings where people work in these industries
- To support the marketing
- To support efforts in creating demands as well as meeting real and resulting demands
- To distribute and sell
- To create new ideas and products
- To create, maintain and support factories to make the actual products
- To create the materials for packaging
- To deal with the waste/disposal of these packages
- To deal with resulting health problems and the resources used to deal with them
- To pay and support lobbyists to help governments and regulation agencies see their perspectives
- and so on.
These hidden costs are significant and enormous, and just examples, not complete lists. The sugar industry supports and is supported by soda drinks, fast food, sweets, chocolates and many other products and industries and so the waste (in the efficiency sense as well as ecological sense) and costs multiply.
The above lists could be applied to most wasteful industries, not just sugar. For example, beef, all the other commodities that were mentioned, automobile, tobacco, tea, coffee, medical/pharmaceutical industry (as discussed in this web site as well) and so on.
This “waste” is deep within our current system. Yet:
- The economic systems of today measure growth and the more the better.
- Hence more demand created by health costs as well as paying for environmental cleanup (if at all), for dealing with poverty and hunger related issues and so on, are all counted towards a country's Gross Domestic Product (GDP)!
- Gross Domestic Product is the most widely used indicator of economic level. It is basically the total value of all products and services bought and sold, a measure of money changing hands.
- Therefore, the waste that this really is, is not accounted for
- As Global Exchange also argues GDP is an inappropriate measure of economic health because
- it makes no distinction between productive and destructive activities. For example, illness, crime, and natural disasters all cause the GDP to increase, as money is spent to treat the sick, jail prisoners, and repair the damage. In this way the GDP rises even as the quality of life declines.
- it has no way of assessing the value of natural resources until they enter the monetary economy, or in other words, are consumed.
- it completely ignores all activities and services that have no price attached to them. For example, essential functions performed by the family, community, and volunteers, such as housework and child care, don't count in the GDP. When these services have to be paid for because people no longer have time for them, the GDP goes up — putting a positive value on the erosion of the social fabric.
- The cyclic system of waste goes on unabated.
- We are in essence, locked into this perpetual waste cycle without realizing it, because we see in the wealthy countries additional wealth being created!
- A large part of this wealth belongs to the poor.
As J.W. Smith details in his work (mentioned above), as well as in further detail in Economic Democracy; Political Struggle of the 21st Century (M.E. Sharpe, 2000), subtle “monopolies” in land, money, technology, communications/information etc are all part of a neo-mercantilist form of wealth appropriation. Entire wars (hot and cold) throughout history have supported the continued dominance of such factors.
And the waste of military conflicts to maintain disparities?
What have hardly been touched here are the military spending, the geopolitical conflicts, wars, and the waste associated with that.
- With land control and ownership also come conflicts as resources are diverted and marginalized people try to stand up for themselves.
- Or, if different groups are divided over either how to control resources or how to get control, etc., conflict can also erupt.
- Often, for larger geopolitical interest, factions have been played off against each other by the powerful.
- Dictators have been supported in the overthrow of democratically elected leaders while precious resources are then further wasted through embezzlement and corruption, etc.
- We are aware of some such wars and so on in the past such as those imperial conquests to some extent. However, before and since, power holders have continued to wage war when it is their “interests” to both support the war itself and support the system that results is costly in numerous ways.
J.W. Smith highlights an aspect of this:
It is worth also adding another quote from J.W. Smith to highlight further power politics etc:
The above only begins to hint at the amount of resources not just wasted in the process of war itself, but in maintaining the disparities that the wars themselves were about. This is a huge topic in itself, and J.W. Smith describes this in incredible detail in his above-mentioned books.
And the waste in international finance systems to maintain disparities?
Another thing also not touched is the immense resources that go into the international finance related industries.
- As mentioned on this web site, the globalization policies of today worsen disparities and poverty.
- Structural adjustments and free trade policies spearheaded by the Washington Consensus/IMF/World Bank/WTO etc open up entire nations economies for freer and more volatile flow of capital. For poorer nations this has led to the predicted downward spiral of living standards and even resulted in financial crisis.
- The cyclical pattern throughout the 700 or 800 years of mercantile, imperial and now capitalist history has seen overproduction crisis superceded by an increase in financial (increasingly speculative) activity.
- That is, money shifts from the so-called real economy to one where there is already money — just different ways of milking it out of the system in a way that concentrates its ownership is sought.
- Today's globalization of finance is such a move into this area of “high finance”
- (For more about this cyclical pattern and also the look at how most empires that have followed from production into high finance and have eventually collapsed as a result, at least up to the U.S. empire, see Giovanni Arrighi's The Long Twentieth Century (Verso Press, 1994). While he wrote the book in 1994 and therefore didn't see the patterns unfold just a few years, his model that he has developed has therefore not been applied as well as it could have to the U.S. However, one can see his model and re-apply it to the U.S. with the additional years of events that have transpired!)
- As a result, incredible amounts of resources are used to support financial centers that promote such systems, such as in New York, London etc.
- As listed above for the sugar example, here too, resources spent on office buildings, infrastructure and so on to support a wasteful system is itself wasteful.
- So much of this would not be needed if this waste was eliminated.
- It is not that none of this should be done at all. International trade and investment are always going to occur as it has for centuries. However, so much of it is wasteful that elimination of the waste would leave only productive functions remaining, and therefore provide more productive use of resources.
Where does the population debate stand when we account for this waste?
Environmentalists point out that the earth's capacity to sustain current models of consumption is very limited due to numerous problems that ecosystems around the world are already facing. That even though we will continue to find new sources and new ways of using them more efficiently etc, they are still finite, and we use them up at a rate faster than which nature can replenish. While these problems are generally agreed upon, the causes are not. Some believe in the simple Malthusian theories of population growth outstripping resources.
- We see from the U.N. statistics on consumption distribution (on the first consumption page; that the world's wealthiest 20% consume 86% of the world's resources while the poorest 20% consume just a miniscule 1.3%), that it is not most of the world consuming the resources.
- While growing populations naturally place more demands on resources, it is not as simple a reasoning to say that we are overpopulated, or that the poor and heavily populated poor nations are the causes of the environmental degradation, as some automatically conclude.
- Much degradation may be occurring in the poor countries, but global trade and economic models include a lot of enforced export out of poor nations to the centers of capital, where, as per the above U.N. statistics, most of the consumption is done.
- (Of course, the wealthy in the poor countries consume more than the poor in the poorer nations do as well, but often, finished products that poor nations might require, such as industrial tools, even food and health technologies, are made in wealthier countries, as raw materials, commodities etc are first exported there. A double blow for the poor nation then is that they buy back products which are more costly, that have been made often from their own cheap resources.)
Hence, even other issues, such as population-related issues should consider the impact of consumption on the planet more importantly and analyze where that consumption is taking place. Of course, if the entire world's population were to consume in similar ways to the wealthiest, then we would no doubt have even more environmental problems than we are already facing and in relation to how we consume we would have a serious over population issue. Yet, the roots of this would be in how resources are consumed etc, rather than just population growths and declines. Consumption modes, the political and economic models that support certain ways of consumption therefore have a far greater impact on the environment than “over” population, alone.
Note, this is not to say that rapid population growth is not an issue; it is. Historically population growths and declines have gone in line with agricultural and food production changes. But in recent history, there have been additional factors as well, so much so, that the patterns causing population changes a long time ago may not be the same patterns today in all cases. As mentioned in the population section of this web site, populations grow and decline based largely on socioeconomic factors, to the extent that often, when there is poverty, there may be an increase in population. Hence the consumption systems and other underlying causes of poverty are key issues in this perspective too.
(Far more is discussed about population issues in the population section of this web site. Links are available on the “More Information” page.)
We don't have to stop consuming
That does not mean we must stop consuming things, and restrict ourselves to the bare minimum to “save the planet.”
- That is, we don't necessarily have to go from one extreme — the current system — to another extreme, such as stop consuming everything other than the bare necessities.
- The “consumer society” can still consume, but in different ways. The ways that Americans or Western Europeans consume resources today are regarded by many as unsustainable, but that is not the only way to consume resources.
- At the very least, we must look at our modes of consumption and the underlying economic, political, social and other factors that promote various ways of consumption.
- And this doesn't have to infringe on people's rights and freedoms, either! (In fact, what is hinted here is the opposite — that is, this is about extending and increasing rights to all so that the concentrated rights of a few does not dominate and negatively impact so much of the lives of most of humanity.)
- Sensible consumption and elimination of the vast waste and inefficiencies in current economic models (no small task though!) can allow similar levels of development, but potentially for all the people of the world. Consumption disparities are so stark (as highlighted by that U.N. figure — the world's wealthiest 20% consume a massive 86% of the world's resources), that this needs to be equalized in a sensible way.
- The fast food industry for example, doesn't need to be “banned” in some authoritarian manner;
- A more responsible promotion of health policies, combined with a turn towards more sustainable consumption, etc. would make these over-sized industries come back to a more sensible size without such a forceful and sudden shock that may itself have social ramifications (such as being met with stern opposition and resistance, to say the least.)
- Economically, a number of “external costs” would need to be internalized, such as the environmental damage caused by certain types of industrial agriculture, or other industries. In the example of fast food, the cheap burger may indeed be more expensive when factoring in these costs, but they will also be more realistic and represent the value to people and planet of consuming such items.
- And for those concerned about cultural and other influences by the fast food industry, as their sizes comes back to a size more representative of what democracies want, then the large advertising and influencing budgets will also come down in size.
- We can in fact see a “chain reaction” of positive effects like this!
- Of course, a lot of this is idealistic. An industry on its own cannot do this, as others would just fill the power vacuum. If everyone were to do this simultaneously, that might provide a better chance as there is no vacuum to fill in.
- (Of course, one of the challenges here is for those with current power and influence to be convinced that it is in their interest as well, to share, help eliminate this waste etc. When power holders of an era in any segment of society risk losing influence, throughout history, they naturally try their best to prevent losing their power and prestige. One wouldn't give it up that easily! Givanni Arrighi, in his book, The Long Twentieth Century (Verso Press, 1994) documents how even in prior centuries and through other cycles of various powers, protests by people standing up for social justice was often met with violent suppression — as is happening today. An unfortunate result was the strengthening of the belief systems of the power holders who were able to show others that their methods are the way to go! More on this is on the protests section of this web site.)
- Technology doesn't have to be shunned, as some alternative extremists would say.
- Technologies should be encouraged to be used efficiently.
- Efficient technologies should also be continually researched.
- As elaborately described in her book Biopiracy, (South End Press, 1997), Vandana Shiva points out that technology is currently employed in a way that undermines people. Technology then should be used and employed in a way that enhances people's livelihoods, not work against it.
- Incentive mechanisms such as wages, but fair wages, needs to be addressed, for example. (J.W. Smith points out one of the root causes of inequality in the world being found in trades between nations that have unequal pay for equally productive work.)
- These are just some examples.
- However, the processes of how these products are created, sold, marketed, controlled, owned — as well as used — and so on, affect how wasteful or efficient the consumption becomes. For individuals though, there is a ramification of the realization that possibly one's job isn't as productive as originally thought. Real democracy, information from wider angles, cooperation and accountability is needed.
But surely we can't eliminate so many of these wasteful functions
Surely we can't eliminate so many of these functions. Jobs will be lost and economies will collapse, right?
If wasteful jobs are eliminated, then you could share the remaining productive jobs; you can achieve this by reducing the workweek.
If society does not adapt to the eliminated waste, (i.e. if the wasted jobs and functions were removed, but remaining productive jobs were not shared) then of course there would be enormous ramifications to the economy. However, poverty/inequality/exploitation will continue and so too will environmental degradation. Elimination of the waste while leaving the underlying system in place doesn't address the root cause — that is, the “subtle monopoly capitalism”/mercantilism that we have today, as J.W. Smith documents, which in part requires a cheap pool of labor (in the developing world) to continue its inequality and dependency.
That is not to say that just because this form of capitalism is bad that all forms are terrible. Smith describes a far more functional, cooperative and democratic/participatory capitalism in which the remaining productive jobs would need to be shared and fair pay would be required for the same labor (as equally productive labor in poor countries is vastly underpaid as Smith shows with his calculations as well). We can imagine a number of positive “chain reactions”:
- Reduce people's work weeks tremendously
- Freeing up time for all sorts of other activities at the same time. (This is something advocates of increasing technological advancement constantly claim will result but it hardly has. As mentioned in the poverty section of this site, people are working more hours even in the U.S. for the same wages in real terms as 20 years ago.)
- Consumption standards would likely be somewhat similar, but without the waste, and without so much poverty.
- People would even have more time to grow their own food if they wanted, which would further decrease industrial agriculture.
- With increased economic rights that this would bring, population numbers may also start a steady decline and stabilization, as population growths are largely affected by economic circumstances, as described in the population section of this web site.
- More emphasis on health etc would lead to a natural reduction in size of luxury industries such as soda drinks etc, without having to resort to some negative and authoritarian banning. People could choose more freely to consume these products, having wider and broader information available with which to make far more informed decisions. (This with a combination of reduced work weeks would contribute to a lowering of burdens placed on health systems, while possibly even reducing health budgets at the same time — a win-win situation for those who want to cut health for all anyway, and those who want universal health coverage!)
- and so on
- In this way, a more functioning capitalism for most people would be meeting needs and demands of most people as economic rights for all would be increased.
- And if nothing else, parents would have more time with their children. If there was no other benefit, this would surely have a huge, potentially very positive impact.
Too many this may sound far too utopian. Yet, so too is the theory of neoliberal free trade, but that has been given a massive (and violent) forceful try. Power politics has resulted in Adam Smith free market capitalism reverting back to a mercantilist form of capitalism when viewed from a global angle. (Mercantilism was something Adam Smith exposed and heavily criticized, as well as big business and big government.) Yet, Adam Smith free market capitalism isn't without its own criticisms too. For example, one cannot rely on social good being a “by-product” of continually driving for greed. That is a wasteful way to achieve it. The last 200 years have not delivered it to most in the world. As we saw in the poverty section, half of humanity lives on less than 2 dollars a day (and I don't have statistics to say how much of humanity lives on say 5 dollars or 11 dollars — the estimated U.S. poverty level — a day, which would surely increase the total number to even more shocking levels).
But, while in theory these things such as sensible consumption, health conscious, environment conscious policies, reduced work weeks etc are nice-sounding, it would be terribly naive to assume it is an easy switch or transition to such a system.
- As mentioned earlier, and throughout this site, vast resources have been poured into policies such as structural adjustment which promote almost the opposite of the things above.
- As J.W. Smith has detailed in his work, entire wars have been fought over such things, because naturally, no one who benefits from one particular system is going to give it up easily. In our case here, those who benefit are the wealthy and powerful people and nations. Hence, enormous resources will be spent to protect that advantage, as has occurred throughout history.
- Protests around the world have resulted due to the current form of globalization, of which SAPs etc are a part. These protests are in part because of these frustrations that stem from this system of exploitation and waste.
- But, to highlight how “simple” the poverty alleviation could be, shows that if we want, it is possible.
Why don't most people see this waste?
If there is this much waste, how come we don't see it and why don't we all know about it? It would seem remarkable that there is so much waste and yet most don't see it — especially economists, whose job this should be! It is not some major X-Files type conspiracy theory! As hinted earlier, it is because such waste is engrained into the system itself, that it makes it harder to see. GDPs and other economic indicators which we are taught about, themselves don't account for “external costs” and its implications, or wasted distribution etc. In documenting the immense waste in the beef industry around 20 years ago, Frances Lappe Moore also pondered on this question:
The education system of course teaches us how to be effective within the system we live. Hence, very few researchers research the system itself, in comparison! In his look back of over 800 years of political economic history, J.W. Smith also offers an insight into enhancements that educational systems could do with:
(I take Smith's above quote very slightly out of context as he is also talking about the historic patterns of plunder and the political economics of wars throughout history, which he also points out as being wasteful. In our context here, we could add other fields of study, such as science, ecology, social sciences and so on.) Yet, as Smith continues, it is also a matter of our personal economic security as well that makes it nearly impossible for individuals to be able to do much on their own:
In addition, trade and economics have become complex today and many people may not realize the wastage:
It would be fitting to quote the opening comments of J.W. Smith's World's Wasted Wealth II:
(As is apparent, I have quoted J.W. Smith quite a lot. He discusses and details all these important issue in far more depth and I strongly recommend reading his work. The More Information page provides more details.)
In sum then:
- The underlying processes that increase unequal consumption patterns in their current form, largely by the West, but attempting to be emulated by others, combined with the globalization of production, and increasingly, of finance, is a major contributory factor of poverty as well as environmental degradation and has an impact on many other issues.
- Furthermore, with the economic and geopolitical policies that support it and promote it, it is one of the main reasons why developing countries are unable to develop;
- To support existing consumption patterns and more importantly, the wasteful manner in which it is done, is such that there are not enough resources for the majority of the world to also follow this wasteful pattern of consumption and wasteful production.
- A combination of elimination of this waste (no easy task) and moving to sensible/sustainable consumption for the poor and rich alike, (while also increasing consumption for the poor) would allow all to share the world's wealth more evenly, eliminating poverty.
- Elimination of such deep waste and inequality that is structured into the system and into law, as J.W. Smith stresses, lies in the elimination of subtle monopolies of things like:
- Additionally, remaining productive jobs should be shared.
Once one understands wasted labor and wasted capital, go into office buildings in the middle of any city, such as an insurance building, study the names on the doors, and one will realize that some whole buildings and parts of others are totally unnecessary. Restructuring to an efficient society, as described in J.W. Smith's World's Wasted Wealth II, all that wasted labor and wasted capital disappears and society need only work half as much as today!
Without such deep changes:
- The current disparities and waste within the system are preventing the poor from moving out of poverty and hunger, while their resources continue to be used for cheap by the wealthy.
- As the rich get richer, the poor get poorer.
- Moore and Collins also point out the following about colonial times:
- If we look at maps of where structural adjustments have been applied, where the world's majority poor are, we see that this hasn't actually changed since imperial and colonial times.
- Mills quoted above, was one of the most influential economists and political thinkers of the mid-Victorian period. In the above though, he has already implied that his perspectives are not about increasing prosperity of all, or not even about caring to do so! Free trade — in its current form — (if it can even be called free trade) is not about prosperity for all; it is about maintaining inequalities and impoverishment for a minority to remain wealthy and dominant.
- Noam Chomsky describes post-War geopolitics as having a similar result:
- That so many intellectuals dissenting the mainstream processes, especially from the South, are crying out how today's forms of globalization are a continuation of colonialism, does not sound so exaggerated then.
- These processes of domination, power etc have occured throughout human history of civilization. Though we are perhaps better positioned to understand it today than before, and maybe in that, there is some chance that a positive change can occur.
As J.W. Smith's insightful phrase highlights, we have gone from “plunder by raid to plunder by trade.”
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