Monday, 3 January 2011

Abundance, scarcity, and distributive justice. Let's come to grips with a new #economics.


I am grateful to Liz McLellan of Hyperlocavore for drawing my attention to this post.

I have long complained about the emphasis of Economics on scarcity. I have never turned my head in the same way as Roberto Verzola to thoughts about abundance, its meaning, its impact, its consequences. From hereon, however, I will set about doing so.

The first thing one learns when studying Economics is that it is concerned with the allocation of scarce resources.  I prefer to ask what would have happened to Economics as a science and (as it is said) a dismal one if it had been based on the premise that there is sufficient on the planet for our need but not for our greed.  My view is that this would have/could have opened up a wholly different sets of questions and discussions from those that have given us our modern knowledge together with the current Global Financial Crisis (GFC).  I said a lot in a comment on Liz's Amplify post which you can find here.

I am not denying that scarcity does exist - but it usually does not exist across the whole planet at the same point in time.  This means that in times of scarcity - and in times of abundance, too - distribution comes to the forefront.
My view is that there has been too little attention given to distribution as an integral economic factor and a vital factor when it comes to human life and well-being.

I want to keep this simple so I will start close to home.  In Australia, there are two major food distributors in Australia: Coles and Woolworths.  I said I was trying to keep this simple so I have omitted IAG, Aldi, and the up and coming Costco.  Most Australians would think of Coles and Woolworths as retailers, predominantly of food but also of other necessities of daily life.

Coles and Woolworths have a greater role than merely making their shelves available to us for selection of goods and trolley-ing them through the check-out.  They are logistics operators.

They are a vital link in Australia's trade - from grower, manufacturer, wholesaler - whether these are nationally or internationally based - through their logistics operations into Coles and Woolworths stores to the families in your street. If you live in Queensland at the moment where the floodwaters are  the size of New South Wales, you might have an understanding of the vital logistical role that the major duopoly of Australian retailing has.

This huge logistical enterprise is central to food security and food quality in this country.  I once lived in Mount Isa in north-west Queensland at a time when the roads in and out were closed by floods for six weeks.  Milk and bread could be air-freighted in and out.  Everything that modern people and families need could not be - and, even if it could be, the price to the consumer would be prohibitive. It was interesting to watch the cabbages - which have a rather long shelf life when need be - growing smaller each day. Why? As the external leaves of  these long lasting cabbages turned brown and unattractive, staff would remove them. Thus the ever-smaller cabbage.
I was at at this conference in Gippsland last year. At a workshop, a speaker got up to spruik his recently formed company specialising in logistics.  He was telling of all the clever things his company could do.  I told him the story of Mount Isa, the floods, being cut-off, and the cabbages and asked what his company could have done in such circumstances.  The answer was that his company could not have done anything either. In short, they would not have got through.

That is food security in Australia at its most basic.  It was not that there was insufficient food in Australia for us.  It just could not reach us in any practical way.  In other parts of the world, food security is challenged by famine. There is no food to be had.  Right across the world, even in the rich developed world, food security can be challenged by personal poverty.  Food is available but it is out of reach because of high prices or low or nil incomes.

Food quality is a matter of logistics too.  Why is there not more organic food in Coles and Woolworths? Why is organic food not priced more reasonably so that if I have a household with six children, I can still include organic food in my shopping list?  There can be a few reasons for this.

First: Availability and dependability of supply and quality. Food farming is a huge enterprise. Broadscale food farming sustains the major distributors of food.  Organic food production is still, more or less, in its infancy.  A lot of organic food growers can not guarantee availability of sufficiently large quantities even if they can guarantee quality.

Second: A lot of organic farmers can not guarantee quantity with any sort of dependability.  Large logistical operations demand reasonable continuity of supply.  The advent of Farmers Markets is good for smaller farmers and consumers demanding quality products at affordable prices.  This avenue is where smaller producers can begin their journey.  However, as a national food distribution mechanism, Farmers Markets just don't cut it.
Third: Quality.  These days we are asking ourselves in respect of our food - What is Quality?  In an age of terminator seeds; genetic modification; pesticides; growth hormones and so on and so on, what is quality? And what about the visual? A blemish on a banana or a spot of fungus on the fuji and the consumer is likely to turn up his or her nose.  Why are capsicums so huge these days? Why is it a red-letter day for me to discover my favourite Ellendale mandarines in store?  Woolworths and Coles are not fools.  They have come to know what consumer preferences are and they trade accordingly.

Fourth: Price.  I reckon that Woolworths and Coles know precisely what the consumer is prepared to pay for what at any given time.  So if our duopoly knows we will only purchase organic food if it is competitive with mainstream chemically produced food, this is going to make it difficult to get organic food on the shelf in any sort of reliability, availability, etc.

If you go here, you will find some of my posts connected to the matters under discussion here. You will also find that I have written from time to time about Roger Corbett, the person I consider to be most influential in Australian public life; more even than the Prime Minister, the Governor-General  or the Governor of the Reserve Bank. If you read the posts, you will understand my reasoning.

So while the bankers are getting boosted by governments and making glittering prizes profits, let's turn away from their sort of economics to considering the subject of distribution: how it is done, what are its outcomes, how can it be done better, how can it be done to benefit the whole population of the planet, how can we distribute the sufficiency efficiently to all instead of allowing a few aggressive and self-centred people to indulge and support a system which can leave significant proportions of the planet's people to die or survive in inequitable, personality-stunting, health-denying circumstances.

Except for a few landmark examples, Economics has not acquitted itself well in the service of humanity and the service of the environmental circumstances of the planet. In fact, one is able to see frequently that it is not merely the dismal science. It is, in its mainstream form, the science of death and destruction.

So why don't we turn our heads around. Let's think deeply and broadly about our human and environmental circumstances and the needs that abound them.  If we can do this in the knowledge that the planet has sufficient to supply the needy but not the greedy, who knows what ideas might not become abundant.

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