Wednesday 25 August 2010

Hidden Costs of modern life

Reading this article reminded me that the Marxist understanding of cost and value needs to be developed in away that Marx just wasn't aware of but is vital to our peak oil times.

Free Dissent writes:

"Mutualists (or non-vulgar market anarchists) accept that products have natural values. Each product on average commands a certain amount of time and energy to produce. The average amount of labor put into a product directly determines its cost. For example, technology and labor-saving devices have made farming much more efficient to produce. Due to this, food is more abundant and cheap. Producing 500 apples requires a lot less labor today compared to 300 years ago. This is exactly why the natural value of an apple is much lower today than in the past. The Labor Theory of Value helps explain this very clearly. It is the natural values of varying products that drive the economic engine."

Before going into the dynamics of cost and value it is important to flag up the problem of hidden cost. This makes no difference to the thrust of the article quoted above but it matters anyway. We think that by reducing labour and relying instead on machinery we are reducing cost but all that happens is we are hiding several costs that involve less labour and land: the production of fossil fuels.

Finding, processing, and delivering fossil fuels are not part of the hidden costs. The farmer pays money for these things and has to make them balance. But the millions of years forming gas, oil, and coal are real costs that are not included. Likewise the future costs to the farmer of changes in climate due to use of fossil fuels is not calculated - these are costs hidden in the future.

I sat in the pub sith someone the otehr day who said -as though it was a given - that we tend to ever greater efficiency therefore supermarkets must be more efficient that community agricultre. But that's because our inefficient, or costs, are hidden under the ground and in the air.

Thus the profit margin is increased efficiently. Ta da!

Okay, now we can think about surplus labour...