This article got first published by Marc Chandler on marctomarket.com
Many recognize problems with market economies. The political right and left have different interpretations of what those problems are, and propose different reforms that would address the problem. Rarely do candidates running for office defend the status quo. Every one promises change and reform.
I see through a different lens. The most intractable problems do not come from capitalism’s weaknesses. After all it has shown an amazing ability to change, adopt, assimilate and appropriate. Instead, my work finds that the most profound problem emanates from capitalism’s strengths. Its strength lies in unleashing our productive powers like no other socio-economic system ever. We can produce goods and in volumes than prior generations could hardly even have fathomed. Indeed, we can produce more stuff than we can consume.
Therein lies the problem. Some economists will say what I am talking about is effective demand. We cannot afford to buy what we produce. However, there are some goods that we don’t want more of at any price. If I was informed that a store was giving away refrigerators, I would not take it. I have a refrigerator, what would I do with another?
Food is interesting in this context. The production of food, like the production of other goods, is more profitable if a producer can achieve economies of scale. In order to do this, demand must be strong. However, the slowing of population growth and more concern about health issues warns that absolute demand may slow. The production of food has outstripped population growth. In addition, the vast subsidies given to farmer, especially in the United States and Europe, keeps the price of food down.
Where food is accessible and cheap, what happens? It is wasted. That means that the inputs of food production–essentially energy, water and labor are wasted. This Cool Video from Visually is about 100 seconds long, and provides a quick engaging overview of food waste. It makes a stunning claim: Americans throw out around a quarter of all the food they buy.