Economist Partha Dasgupta thinks Jared Diamond missed an important point in his book on environmentally induced social failure ("Collapse: How Societies Choose to Fail or Succeed").
In modern economies (unlike the pre-modern economies on which Diamond focuses) prices provide important signals. "Bottlenecks" (London Review of Books, May 19):
...I am an economist who shares Diamond’s worries, but I think he has failed to grasp both the way in which information about particular states of affairs gets transmitted (however imperfectly) in modern decentralised economies – via economic signals such as prices, demand, product quality and migration – and the way increases in the scarcity of resources can itself act to spur innovations that ease those scarcities. Without a sympathetic understanding of economic mechanisms, it isn’t possible to offer advice on the interactions between nature and the human species.
Here is an example of what I mean. Forests loom large in Diamond’s case studies. As deforestation was the proximate cause of the Easter Islanders’ demise, he offers an extended, contrasting account of the way a deforested Japan succeeded, in the early 18th century, in averting total disaster by regenerating its forests. Now consider another island: England. Deforestation here began under the Romans, and by Elizabethan times the price of timber had begun to rise ominously. In the mid-18th century what people saw across the landscape in England wasn’t trees, but stone rows separating agricultural fields. The noted economic historian Brinley Thomas argued that it was because timber had become so scarce that a lengthy search began among inventors and tinkerers for an effective coal-based energy source. By Thomas’s reckoning, the defining moment of the Industrial Revolution should be located in 1784, when Henry Cort’s process for manufacturing iron was first successfully deployed. His analysis would suggest that England became the centre of the Industrial Revolution not because it had abundant energy but because it was running out of energy. France, in contrast, didn’t need to find a substitute energy source: it was covered in forests and therefore lost out. I’m not able to judge the plausibility of Thomas’s thesis – there would appear to be almost as many views about the origins, timing and location of the Industrial Revolution (granting there was one) as there are economic historians – but the point remains that scarcities lead individuals and societies to search for ways out, which often means discovering alternatives. Diamond is dismissive of the possibility of our finding such alternatives in the future because, as he would have it, we are about to come up against natural bottlenecks...
via "Newmark's Door".
John Quiggen points out how Australian rice growers have responded to increasing prices for water: "Rice and water".
Comments