The Industrial Revolution began over 200 years ago, yet a major portion of the planet is still unindustrialized. Many non-industrialized nations contain valuable natural resources, such as oil. When oil prices are high, the economies of the oil-producing nations flourish. When prices drop, these economies enter recession, resulting in anguishing hardships for the people who have nothing to fall back on. A current example is Brazil, where eroding oil prices have created economic setbacks and political mayhem, allowing fascist forces – exploiting popular discontent – to reassert themselves after decades of progressive governance.
This raises the simple question as to why most oil-producing nations haven’t industrialized in order to be free of dependency on a single resource that is subject to constant market fluctuations, with the ensuing economic downturns. A key to the answer can be found in a New York Times article (6/06/16) that says the Obama administration plans “to push for cuts in excess Chinese industrial output, which has inundated foreign markets with discounted steel, aluminum, and other products…The question of excess capacity is one that really has an enormous effect on global markets…we’re seeing distortion in global markets because of excess capacity.” The Times also reported on how Spain is destabilizing wine prices by pouring too much wine on the market.
What exactly is “excess capacity,” why does it result in “discounted” commodities, why is this bad in having the allegedly ill effect of “distorting” global markets – and how does this all connect to the misfortune of non-industrialization in most of the world’s nations?
The answer is in the core principle of for-profit production: the greater the abundance of goods, the lower the price, and therefore the smaller the profit. As technology increases the capacity to produce, the harder it is to restrain these forces (creating “excess capacity”) in order to maintain the levels of scarcity that guarantee maximum profit – as examplified by the above cited admonitions to China and Spain.
This also accounts for the confinement of advanced industrialization to relatively small sectors of the world. Imagine every nation of the world pouring out automobiles, computers, and dishwashers at full capacity – which is technically possible! The planet would be so inundated with commodities as to make them virtually valueless – like the book of matches given away with every pack of cigarettes. While this would be a great boon to the majority of the world’s population that needs these commodities, it would destroy the system of for-profit production that enriches the miniscule percentage of the population that depends upon the scarcity that deprives the majority.
This systemic prohibitive to universal industrialization also guarantees chronic unemployment and underemployment worldwide. When the highly industrialized U.S. shifted much of its industry overseas, the result has been decades of stagnant wages for American workers. And the problem increases proportionate to the elimination of human labor by advancing technologies. In the deliberately non-industrialized nations – which are the majority – people’s survival remains dependent upon the unstable market value of a natural resource – if they have one.
Clearly, the more advanced the productive technology, the harder – and more inappropriate – it is to thwart production. It’s ironic that the economic system that fueled the Industrial Revolution now struggles to prevent its full realization. Since the geometrically increasing capacity to produce cannot be contained within the parameters of the for-profit system that demands scarcity, we are on the cusp of an epochal systemic change that will at last give full vent to these capacities. In the meantime, most of the earth’s people will suffer from the systemic need to curtail not only production, as Obama demands, but industrialization itself.
Manchester Journal 7/29/16