Whether you regard President Donald Trump’s rejection of America’s trade agreements as a good thing or a bad thing, few people understand what canceling them would mean. From an ecological point of view, abruptly pulling out of trade agreements, agreements which have resulted in innumerable long-term investments and commitments, is the ecological equivalent of a reduction in scope.
A reduction of scope means that occupational niches which arise specifically to facilitate trade in shipping by land, sea and air, manufacturing for export, warehousing, finance, insurance, government employment (such as customs officials and coast guard forces) and other trade-related occupations, all are endangered when the scope of their activities is reduced as a result of new trade restrictions.
To understand what this means, we need to understand the flipside of scope reduction, scope enlargement. From an ecological perspective the increase in world trade over the last few centuries has in a manner of speaking allowed local populations to escape the tyranny of Liebig’s Law of the Minimum. In the mid-19th century, Justus von Liebig observed that plant growth was strictly governed by the least available of a plant’s necessary nutrients. Adding other essential nutrients simply wouldn’t overcome the limitation imposed by the least available one.
In the absence of trade, Liebig’s Law acts like a brake on a local community, preventing it from expanding beyond the carrying capacity afforded by its least available essential resources. In dry areas, it might be water. In others it might be arable land. In yet others farmland might be plentiful, but a lack of metal mines might prevent the widespread use of metal tools that could enhance agricultural and manufacturing productivity.
All of this can be overcome if, for example, dry areas rich in mineral deposits trade with agriculturally endowed areas that have plenty of water. In essence, the dry areas are importing water and fertile soil in the form of food in exchange for minerals needed to make metal tools. Something like this goes on today. Countries rich in oil but poor in farmland trade their oil for food to supplement inadequate supplies grown domestically.
This type of illustration will seem familiar as a standard explanation for the wisdom of trade. But Liebig’s Law does not cease to apply because we have global trade. It now applies to global carrying capacity rather than just local carrying capacity. Because this carrying capacity depends heavily on trade in finite energy sources, that is, fossil fuels, its stability cannot be guaranteed indefinitely. Without a substantial replacement of fossil fuels, which supply more than 80 percent of the world’s energy, the current system will collapse into a lower state of organization with far less carrying capacity.
Collapse or at least a partial collapse can also happen if the scope available for obtaining essential goods and services shrinks due to political or economic circumstances. During the Great Depression the decline of global trade was magnified by measures designed to protect domestic industries from foreign competition, mostly through import tariffs adopted by many countries. The effect was a reduction in scope that created even more unemployment through the destruction of occupational niches associated with trade.
We may now face something like this—though whether it becomes severe depends on how far the Trump administration proceeds in withdrawing America from the world trading system and whether other countries retaliate.
Regardless of the Trump administration’s trade policy choices, the ecological perspective allows us to see that almost all of the modern world’s trade-oriented occupational niches are temporary rather than permanent. In the short run, they depend on a general agreement among nations not to engage in trade wars that result in a reduction of scope, that is, nations forced to live on their own resources. This would, for example, be problematic for the American electronics industry that is heavily dependent on China which produces more than 80 percent of the world’s rare earth metals. Those metals are necessary for the production of computers, cellphones or other communications and computing devices. And, this is but one example in our highly interconnected world.
In the long run the limiting factor for trade-oriented occupations is energy because so much of our energy comes in the form of fossil fuels. Those fuels are central to every economy and are critical to sustaining the global logistics system. To assume that world trade at the scale it exists today can continue far into the future without a dramatic reshaping of the world’s energy system is a failure to understand that the laws of nature, in this case Liebig’s Law, cannot be overcome by optimistic pronouncements about our energy future.
On our current energy trajectory the human race is likely to be headed for a reduction in scope as fossil fuel resources ultimately decline and renewables fail to expand quickly enough in type and scale to address the mismatch between our desires and the supply of energy needed to maintain global networks of exchange.
According to the International Energy Agency, despite the rapid growth of renewables in recent years, combined geothermal, solar, wind, and tide/wave/ocean energy output provides less that 1.5 percent of total world energy. Hydroelectric power makes up another 2.5 percent but is growing quite slowly. Percentages for renewables would have to rise dramatically and soon if we are to avert the twin crises of climate change and fossil fuel depletion.
Ideas for changing our current trajectory abound. But they will not matter unless they are shown to be both technically and economically feasible and until they are widely deployed. A felicitous outcome is by no means assured within a time frame that avoids a reduction in scope and its attendant effects.
This piece draws heavily from William Catton’s book Overshoot, the relevant section of which has been reproduced
Image: A political cartoon showing Free trade represented as a woman: half is a skeleton being cursed by unemployed workers; half is a beautiful young woman who is giving gold to importers of foreign goods. “One Sided Free Trade” Lithograph 21 November 1885 By: Tom Merry. St Stephen’s Review. Via Wikimedia Commons.