[R-G] [BillTottenWeblog] Reviving the Household Economy

[Bill Totten]

by John Michael Greer

The Archdruid Report (July 30 2008)

Druid perspectives on nature, culture, and the future of industrial society


Part One: The World Outside the Market

As the current pullback in oil prices continues - one of the benchmark
grades dropped to a little over $120 a barrel yesterday, though it
jumped back up $4 in early trading today - peak oil skeptics have seized
the opportunity to insist that there's nothing wrong with the petroleum
market that a few more trillion-dollar giveaways to the oil industry
wouldn't fix. One interesting lesson worth drawing from the current
barrage of punditry is that most of people who reject the concept of
peak oil don't actually seem to know what the phrase means.

A case in point is a recent opinion piece that denounced peak oil as
"sheer nonsense", on the grounds that the world still has some forty
years of oil left at today's rate of production. The author of this
piece somehow managed not to notice that the peak oil theory focuses on
precisely the point he took for granted, the sustainability of today's
rate of production. The world may well have the equivalent of forty
years' worth of current annual petroleum production left in its
reserves, but if the amount it can produce each year plateaus and then
begins to shrink due to geological limits, a global economy founded on
ever-expanding energy supplies is in trouble. That's the essence of the
peak oil position, and waving around claims about the absolute size of
global reserves doesn't address it at all.

Still, it's not surprising that so many people are finding such
ingenious ways just now to avoid understanding the implications of peak
oil. As worldwide oil production remains stuck in its current plateau -
a plateau that increasingly has had to be propped up by massive
production of high-cost biofuels and tar-sand products - some of the
most basic presuppositions of the modern world are turning out to be
well past their pull dates. Once production begins to slip down the far
side of the world's Hubbert curve, that process is likely to accelerate,
and much of what counts as conventional wisdom today will end up sitting
in history's dumpster next to phlogiston and the divine right of kings.

One example with sweeping implications unfolds from a particular
mismatch between current economic theories and the practical realities
of the age of peak oil. Perhaps the best way to introduce this example
is to invite my readers to put on their walking shoes, pick up their
canvas shopping bags, and join me in one of yesterday's errands.

In the southern Oregon town where I live, Tuesday is the day of the
weekly grower's market, and so yesterday, as we do nearly every Tuesday
between March and November, my wife Sara and I walked the 3/4 of a mile
or so to the National Guard armory parking lot where local growers and
ranchers sell their produce. Among our purchases was a flat of fresh
raspberries, and this afternoon we'll be turning those into home-canned
raspberry jam for the year to come.

Now it's unquestionably true that we could just buy an equivalent volume
of commercially manufactured raspberry jam and eat that instead. Still,
these two ways of putting by a supply of raspberry jam are by no means
equal. Set aside for a moment the higher quality of homemade jam, which
(in this case, at least) is made of fresher ingredients and prepared in
small batches; one of the most important differences between the two
processes is that the homemade jam represents a much more efficient use
of fossil fuels.

The grower who produced the raspberries used organic methods, which
saved the petroleum and natural gas that would otherwise have had to go
into pesticides and fertilizers. While she used a pickup to bring her
crop to the market, the ten miles or so she drove compares favorably to
the thousands of miles agricultural products are routinely shipped in
their journey from farm to factory, warehouse, and supermarket, and even
if we owned a car and drove to and from the market, the extra mile and a
half of gas wouldn't shift the balance much.

Turning berries into jam and canning the result probably takes about an
equal amount of energy per pint of jam whether it's done in a home
kitchen or a huge factory, though it's a lot easier to provide the
energy via a solar cooker or other renewable source on a small scale.
Even without that, though, the homemade jam takes a small fraction of
the energy to go from raspberry canes to our pantry than commercial jam
requires. One measure of these energy economies is that, including all
expenses, our homemade jam costs us only about two-thirds as much as the
same volume of commercial jam.

Compare the homemade jam with its commercial equivalent from the
viewpoint of conventional economic measures, though, and the balance
swings the other way. In terms of its impact on the gross domestic
product - generally considered the broadest measure of national
prosperity - our homemade jam is practically an economic disaster. The
very modest price of raspberries, sugar, pectin, and new lids for our
much-recycled canning jars is the only contribution it makes to the
economy. By contrast, making, shipping, storing, and selling the
commercial jam requires, directly and indirectly, the expenditure of a
very large amount of money, all of which counts mightily toward a higher
gross domestic product.

Consider the economics from the perspective of the participants in the
creation of the homemade jam, though, and things take on a very
different shape. Even aside from the other reasons Sara and I might want
homemade jam, we have a potent economic motive; by making the jam
ourselves we get a superior product at a lower price. The raspberry
grower, in turn, benefits handsomely from the same decision; the price
she gets for her berries when sold directly to the consumer is several
times the price she can get from wholesalers. According to conventional
economics, the end result of individuals freely pursuing their own
interest in a market should be the maximization of prosperity - and yet
if prosperity is measured by the gross domestic product, our free
pursuit of our own interest decreases our contribution to national
prosperity.

What is happening here, of course, reflects one of the largest of the
blind spots of contemporary economics: the assumption that market
transactions mediated by money are the only significant form of economic
activity. Our household jam-making activities drop off the economic
radar screen the moment we finish paying for the raw materials. Value is
being produced - the same jam offered for sale at next week's market
would bring substantially more than the cost of the raw materials - but
it's being produced outside the market economy, and therefore has no
official existence in an economy measured entirely by market metrics.

What makes this particularly relevant in the twilight of the age of
cheap oil is that the world's industrial nations, and above all the
United States, have spent most of the last century transferring as much
as possible of the household economy into the market sphere. In making
our own jam, among other things, Sara and I belong to a minority of
American households. Glance back a hundred years, by contrast, and
nearly every family in the country outside the very rich and the very
poor had an active household economy that produced a large fraction of
the total goods and services they consumed. Many factors contributed to
this dramatic shift, but one of the most significant is the availability
of cheap abundant energy.

Most of the economies of scale that make mass production of processed
foods economically viable, after all, are economies only because the
cost of transportation is low enough to permit them. As recently as the
first half of the 20th century, most consumer products in the US were
produced locally for regional markets, in large part because
transportation costs were still high enough to make national
distribution a costly proposition. (Those brands that did find a
nationwide niche, such as Coca-Cola (tm), did it by franchising out
manufacturing and bottling to local firms.) It took the birth of a new
transportation network of diesel-powered trucks using a massive new
interstate highway network to create today's national distribution
chains, and cheap petroleum provided the foundation on which the whole
system arose.

The twilight of cheap oil, in turn, bids fair to throw this process of
economic centralization into reverse. As transportation costs rise to
become a major part of the cost of consumer products, the economies to
be gained by local production will sooner or later outweigh the
economies of scale that shape the current system, opening economic
niches for small and midsized firms nimble enough to move with the
currents of economic change. Equally, though, the financial advantages
of the household economy will become overwhelming. In a world of scarce
oil, anything that can decrease the amount of fossil fuel energy that
has to go into an product will pay off handsomely, and if the transition
to scarcity involves widespread impoverishment - as seems most likely
just now - the choice faced by many households throughout the industrial
world may well come down to doing things themselves or doing without.

At the same time, it's crucial to recognize that the forces holding the
current economic order in place reach beyond the realm of simple
economic calculations into murkier areas of culture and collective
psychology. For those who have access to fruit growers - and with the
growth of farmers markets across the US and elsewhere, this has become a
tolerably large fraction of the population - making one's own jam, and a
great many other food products, is already a paying proposition; so are
many other activities that once formed part of the household economy,
and very likely will do so again; yet these activities remain the
hobbies of a minority of today's Americans, and most of their neighbors
turn to the market economy to get inferior products at higher prices
instead. The forces motivating this sort of economic irrationality will
be the focus of next week's post.

_____

John Michael Greer has been active in the alternative spirituality
movement for more than 25 years, and is the author of a dozen books,
including The Druidry Handbook (Weiser, 2006). He lives in Ashland, Oregon.

http://thearchdruidreport.blogspot.com/2008/07/reviving-household-economy.html#links


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