Monthly articles (in English and French) on the theme "Querying economic orthodoxy"

No. 50 - February 2010

Waste not, want not!


This will be the final essay in this series, as I need to devote more time to other writing activities. The fifty articles will remain on this site; should you have any comments, criticisms or queries concerning them, please do not hestitate to contact me (see email link at the end of this essay).

Business loves waste, because more waste means more consumer spending. While governments urge us to 'reduce, re-use and recycle', manufacturers and marketers of consumer goods spend billions persuading us to 'increase, replace and discard'. 
Prof. Clive Hamilton,1 see link
Lower prices encourage waste

A shocking 40% waste of food

In an American scientific review, PLOS (Public Library of Science), there appeared last November a startling finding: food waste in the USA has progressively increased from about 30% of the available food supply in 1974 to almost 40% in recent years. This is not the only research on this topic; other investigations have already shown more or less similar results.

The bulk of this startling wastage occurs "at the end of the chain", that is at the level of consumption. It is not a question of massive loss in the production, transport or storage of foodstuffs, which is a serious problem in under-developed countries. On the contrary, in modern economies, thanks to pest control, refrigeration and rapid transport, little is lost between field and shop. Waste is due mainly to shops throwing out food which has passed its sell-by date, and to losses in restaurants, canteens and at home.

Cheaper food, but more waste

Progress in the efficiency of production and distribution has cut retail prices. Sadly, however, as food has become cheaper, we have become less careful about avoiding waste. Businesses boast of the benefits of low prices, achieved through industrialised production and sale in supermarkets; but where is the gain, if these benefits are offset by wastage?  

One may well jib at paying the high prices asked for 'organic' foods and in traditional small shops (if you can find them). But if factory-made bread sells at £1.50 a pound in the supermarket, and if 40% is wasted; then, without waste, you could buy real bread at the bakery at £2.50 a pound without spending any more on bread.2 This would reduce consumption of raw materials. And besides, you would eat far better!

Clearly, the neediest families do not waste their food; the disappearance of cheap food would (other things being equal) increase the problems of poverty. My argument applies to the national economy as a whole, not necessarily to particular households. And yet, it is possible that more costly production and distribution, by employing more people, would help to reduce unemployment - and thus poverty.

The quest for minimum retail prices

Since the dawn of modern economic science, economists have given priority to the pursuit of efficiency, of productivity, of minimum retail prices. The aim of all this is to allow everyone to consume more. The Viennese professor Carl Menger, writing in 1871, exalted the idea of unimpeded competition, because it maximises the production and sale of all kinds of merchandise: true competition not only causes the entire quantity of a commodity actually available to be offered for sale, but also has the much more important result of increasing the quantity that becomes available.3

In 1871, the world population, at around 1.4 billion, was only a fifth of its present level; human pressure on the Earth's natural resources was still moderate. Moreover, even in the richer countries, large proportions of the people lived very poorly. The desire to encourage a general increase in consumption was therefore legitimate.

Today, we live in a world very different from Menger's. After a hundred and forty years of demographic and economic growth, we have reached the point where human consumption of natural resources is becoming unsustainable. Nevertheless, at least in developed countries, the majority of people consume wastefully. We (or the businesses that supply what we buy) waste paper, plastics, metals, energy, food... Low-cost production has led to careless, excessive consumption. Menger's system no longer makes sense.

Old-fashioned conservation of materials

Our forebears generally used resources economically. The wooden panelling in certain elegant rooms comes from grand old ocean liners, long since scrapped. Examine carefully a tattered book dating back a century or so; you will probably find, within the binding, paper consisting of recycled pages from another book; those pages are sometimes more interesting than the book they bind! Years ago, men did not throw away razor blades; they honed daily, on a horsehide strop, the traditional 'cut-throat' blades that never wore out. 

In the memoirs of the famous Italian shoemaker Salvatore Ferragamo, you can read how, as soon as he could walk, the little Salvatore - already fascinated by footwear - haunted the cobbler's shop in the village of Bonito, east of Naples. This was at the beginning of the twentieth century. As the boy wanted to learn something of the trade by helping the shoemakers with their work, he was given the task of gathering up the used nails and straightening them, so that they could be used again.

Incidentally, Salvatore's father, a small farmer, was very reluctant to let his son go into the shoemaking trade; for, in the Italian society of those days, that was regarded as the lowest of the low.  Fortunately, the boy managed to make his way into it nonetheless!

Our wasteful habits

We have largely lost the habit of conserving, of reusing materials and fabricated objects of all kinds. It is a consequence of the fact that the efficiency of manufacture and distribution has made new products more affordable. It is no longer worth the bother of repairing anything; simpler and cheaper to replace it. Especially since original manufacture is automated and done overseas, while repair needs human labour and is done here. Notice the link with the problem of unemployment.

The need for a radical change of direction

We need a major change of direction. A return to the practice of making really lasting things, which can be adapted or repaired as needed. Thus we will reduce our waste of raw materials, while enhancing local employment. A purchase of furniture will become, as it once was, a long-term investment. Down with short-termism!

I am well aware that this argument clashes head-on with our current culture of incessant change, of continual renewal of furniture and décor, of the frequent demand for a 'new look'. We consider a society moribund if it is not continually and hastily transforming everything. Change is thought to be the only sign of life. It is a kind of pervasive hyperactivity which we see even in theology. There, the idea of a paradise of rest - Requiem aeternam dona eis, Domine - is nowadays often frowned upon. We are told that even in heaven we shall be ceaselessly busy. I don't believe that. There will be a place also for la dolcezza di far niente.

If the human race wants to have a stable future, it will have to adopt greater stability in its habits. To achieve that, the changes necessary should be enough to satisfy the most enthusiastic advocates of change.

Stabilised prices to reduce waste

And what can be done for those countries where food is not wasted, because it is in short supply? According to a report by the FAO (the United Nations Food and Agriculture Organisation), providing stable prices to farmers is just as important for production as high prices. The report strongly recommends a return to commodity price stabilisation policies, long since abandoned in the general obsession with Carl Menger's free competitive markets. Despite their practical difficulties, such policies are by and large the most efficient means to develop the production of any agricultural commodity.5

It is true that this would offend against a sacred principle of the free-marketeers, namely minimum consumer prices at all costs. With stabilised and supported prices for raw materials, prices in our shops would be somewhat higher. But there would then be less waste here, and more happiness in the countries that supply us.

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1  Clive Hamilton, an Australian writer and academic, is Professor of Public Ethics at the Centre for Applied Philosophy and Public Ethics, a research centre linked to three major Australian universities, and founder of The Australia Institute, a public policy think-tank.
2  For example, to eat a pound of factory bread at £1.50 per pound, with 40% wastage, one has to buy 1.667 pounds, costing £2.50. Surely it is better to buy a pound of real bread ar £2.50, and avoid waste!

3  Carl Menger, Principles of Economics [Grundsätze der Volkswirtschaftslehre, Vienna, 1871], 
chap. V, #3C   

4   Salvatore Ferragamo, Shoemaker of Dreams (Harrap, London, 1957), chap. 2

5   FAO, Food Security and Agricultural Development in Sub-Saharan Africa (Rome, 2006),  conclusion