Manufactured scarcity

[div class=attrib]From Eurozine:[end-div]

“Manufacturing scarcity” is the new watchword in “Green capitalism”. James Heartfield explains how for the energy sector, it has become a license to print money. Increasing profits by cutting output was pioneered by Enron in the 1990s; now the model of restricted supply together with domestic energy generation is promoted worldwide.

The corporate raiders of the 1980s first worked out that you might be able to make more money downsizing, or even breaking up industry than building it up. It is a perverse result of the profit motive that private gain should grow out of public decay. But even the corporate raiders never dreamt of making deindustrialisation into an avowed policy goal which the rest of us would pay for.

What some of the cannier Green Capitalists realised is that scarcity increases price, and manufacturing scarcity can increase returns. What could be more old hat, they said, than trying to make money by making things cheaper? Entrepreneurs disdained the “fast moving consumer goods” market.

Of course there is a point to all this. If labour gets too efficient the chances of wringing more profits from industry get less. The more productive labour is, the lower, in the end, will be the rate of return on investments. That is because the source of new value is living labour; but greater investment in new technologies tends to replace living labour with machines, which produce no additional value of their own.[2] Over time the rate of return must fall. Business theory calls this the diminishing rate of return.[3] Businessmen know it as the “race for the bottom” – the competitive pressure to make goods cheaper and cheaper, making it that much harder to sell enough to make a profit. Super efficient labour would make the capitalistic organisation of industry redundant. Manufacturing scarcity, restricting output and so driving up prices is one short-term way to secure profits and maybe even the profit-system. Of course that would also mean abandoning the historic justification for capitalism, that it increased output and living standards. Environmentalism might turn out to be the way to save capitalism, just at the point when industrial development had shown it to be redundant.

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