Michael Roberts – Stuff Matters

In a single year we extracted more resources than humankind did in the vast majority of its history – from the earliest days of mining to the industrial revolution, world wars and all.

Michael Roberts is an Economist in the City of London and a prolific blogger

Cross-posted from Michael Roberts’ blog

“For all that we are told we live in an increasingly dematerialised world where ever more value lies in intangible items – apps and networks and online services – the physical world continues to underpin everything else.”  So starts Ed Conway, economics editor at Sky TV, in his fascinating little book, Material World.

His underlying theme is that “when you glance at the balance sheets of our economies, which show that, for instance, four out of every five dollars generated in the US can be traced back to the services sector and an ever-vanishing fraction is attributed to energy, mining and manufacturing. But pretty much everything from social networks to retail to financial services is wholly reliant upon the physical infrastructure that facilitates it and the energy that powers it. Without concrete, copper and fibre optics there would be no data centres, no electricity, no internet. The world, dare I say, would not end if Twitter or Instagram suddenly ceased to exist; if we suddenly ran out of steel or natural gas, however, that would be a very different story.”

Conway’s division between material and immaterial is not correct, of course.  As G Carchedi and I have shown in our book, 21st century capitalism, the products of mental labour are just as material as things objectively outside our minds.  Ideas can be turned into material use and commodified for capital.  Indeed, as Marx argued, it is not that these key materials would cease to exist, they would still be there.  It is when no human labour is applied to using them, then that would bring the world to an end.

Nevertheless, when you read Conway’s book, it reminds you that all the talk about ‘intangibles’ now being the most important form of investment by capitalists, and that we can have ‘capitalism without capital’ is so much nonsense – or at least only has limited reality in the financialized world of the US and other G7 economies.  The vast bulk of the world economy is still built on the production of things, ‘stuff’ that can be commodified from the labour of billions.

“It is a rather lovely place, a world of ideas. In the ethereal world we sell services and management and administration; we build apps and websites; we transfer money from one column to another; we trade mostly in thoughts and advice, in haircuts and food delivery. If mountains are being torn down on the other side of the planet, it hardly seems especially relevant here in the ethereal world.” And yet, Conway points out that in 2019, the world mined, dug and blasted more materials from the earth’s surface than the sum total of everything we extracted from the dawn of humanity all the way through to 1950. “Consider that for a moment. In a single year we extracted more resources than humankind did in the vast majority of its history – from the earliest days of mining to the industrial revolution, world wars and all.”

While materials consumption is certainly falling in post-industrial nations like the US and UK, on the other side of the world, in the countries from whence Americans and Britons import most of their goods, it is rising at a breakneck rate.  And these resources are not just energy materials. Oil and other fossil fuels have only ever represented a fraction of the total mass of resources. For every tonne of fossil fuels, the world mines six tonnes of other materials – mostly sand and stone, but also metals, salts and chemicals.  Conway observes that ‘stuff matters’ for capital and the governments that represent capital.

The material world, as Conway calls it, is still behind the global economy.  “Mix sand and small stones with cement, add some water and you have concrete, quite literally the foundational material for modern cities. Add it to gravel and bitumen and you have asphalt, of which most roads are made – those that aren’t made of concrete, that is. Without silicon we would not be able to make the computer chips that support the modern world. Melt sand at a high enough temperature with the right additives and you make glass. Glass – plain, simple glass – is, it turns out, one of the great mysteries of material science; neither liquid nor solid with an atomic structure we still do not entirely understand. And the glass you have in your windscreen is just the beginning of it, for, woven into strands and accompanied by resin, glass becomes fibreglass: the substance out of which wind-turbine blades are made. Refined into pure wires, it becomes the fibre optics from which the internet is woven. Add lithium to the mix and you get a strong, resilient glass; add boron and you get something called borosilicate glass.”

Conway singles out just six key materials that drive the world economy in the 21st century: sand, salt, iron, copper, oil and lithium.  They are the most widely used and the very hardest to replace.  In the book, Conway takes us on a journey of history and technology surrounding these key resources.

From simple sand, we manufacture all sorts of products from glass to optical fibre: “it’s easy to convince ourselves that we have dematerialised the information age. Yet none of this – video calls, internet searches, email, cloud servers, streaming box sets – would be possible without something very physical indeed.”  And from sand comes cement.  “There are now more than 80 tonnes of concrete on this planet for every person alive – around 650 gigatonnes in total. That’s considerably more than the combined weight of every single living thing on the planet: every cow, every tree, every human, plant, animal, bacterium and single-celled organism.  Then there is silicon in sand.  It has unique properties that enable it to become a glass; not only is it strong enough to hold up buildings in concrete form; and it is the key material for semiconductors.”

And here the contradiction of raw material production by capital is exposed.  The ownership and control of sand, glass, cement and silicon chips is concentrated in a few companies.  For example, TSMC, a Taiwanese company, manufactures the processors dreamed up by Apple or Tesla, or ‘fabless’ chip companies like Nvidia and Qualcomm (‘fab’ being short for fabrication plant). It is now one of the world’s most valuable companies.  And there is only a handful of companies capable of making perfect silicon wafers and there is only one site in the world capable of making the quartz sand for the crucibles where those wafers are crystallised.

Not only does that lead to the concentration of wealth in a few hands but also to political conflict.  Spruce Pine in the US has a hegemonic position in the production of silicon for micro chips. “If you flew over the two mines in Spruce Pine with a crop duster loaded with a very particular powder, you could end the world’s production of semiconductors and solar panels within six months.”  And TSMC is at the heart of the chip war brewing between the US and China, one of the major features of US imperialism’s attempt to strangle China’s economy.

And then there is global warming, of which Conway does not hesitate to remind us.  “The curse of concrete is that it is one of the biggest emitters of carbon on the planet. For all the attention lavished on other sources of greenhouse gases such as aviation or deforestation, the production of cement generates more CO2 than those two sectors combined. Cement production accounts for a staggering 7–8 per cent of all carbon emissions.”

With salt, Conway shows that we make key chemicals like sodium chloride; caustic soda which is used in countless industrial processes, including in the manufacture of paper and aluminium, but perhaps most critically, it is what we use to make soap and detergents. The fruit of the chloralkali process with salt gives us clean drinking water and clean living conditions: soaps and detergents.  Without caustic soda, there would be no paper since we use the corrosive chemical to pulp wood into fibre.  And hydrogen chloride, without which there would be no solar panels or silicon chips. Then there is chlorine to purify our water.

Moving on to iron and steel, Conway reminds us that these are the ultimate metals that can be cast and hammered into shapes and, most essentially of all, into tools .  No other metal is quite so useful, with quite the same combination of strength, durability and availability. If you live in a developed economy like the US, Japan, UK or most of Europe, you have roughly 15 tonnes of steel per person in the cars, homes, hospitals and schools, in the paperclips in your office and the armaments of your nation’s military.  Indeed, Conway points out that steel is a good measure of living standards and technology differences. In contrast to rich-world levels of 15 tonnes per person, the average person in China today has roughly 7 tonnes of steel. The average person living in sub-Saharan Africa has less than a tonne of steel per capita. “We talk frequently about income gaps between nations but what about silicon inequality, fertiliser inequality, copper inequality and, yes, steel inequality?”

Then there is copper. “without it, we are quite literally left in the dark. If steel provides the skeleton of our world and concrete its flesh then copper is civilisation’s nervous system, the circuitry and cables we never see but couldn’t function without.”  We cannot make or distribute electricity without copper. Even solar panels still have large quantities of copper. In short, if it has an electrical current, that current will mostly exist because of copper.

Copper is mined in some of the poorest countries in the world and its vital use and production is controlled by companies based in the richest countries of the world, with the backing of the governments of the poorest.  The value-added chain from copper mining to the products of modern consumption remains. “Today’s iPhones are vastly more powerful than the computers on board the Apollo landers that took man to the moon, or for that matter those in your laptop as of a couple of years ago, but copper is still just copper.”

Conway notes two things that Marx’s value theory predicts – of course, without knowing that.  “As the amount of stuff we remove from the ground and turn into extraordinary products continues to increase, the proportion of people needed to make this happen decreases.”  Thus there is a continual rise in what Marx called the organic composition of capital.  And the other is that capitalist production takes no account of what mainstream economics calls ‘externalities’, the ‘collateral damage’ to the environment for humans and the rest of the planet. “There are no environmental accounts or material flow analysis, which count only the refined metal. When it comes to even the United Nations’ measures of how much humans are affecting the planet, this waste rock doesn’t count.”

Indeed, Conway returns to his observation of the contradiction between the drive for more material resources and its impact on the environment.  “Reducing our carbon footprint will mean increasing our copper footprint. The good news is that some of that can come from recycling. The bad news is that even if we recycled pretty much everything we possibly could from old pipes and wires, we would still run desperately short of what we need.”

The same issue applies to fossil fuels.  Conway points out that right before the pandemic struck just over 80 per cent of the world’s primary energy came from the burning of fossil fuels: coal, oil and gas. “The striking thing about this number is how stable it has been: just over 80 per cent at the turn of the millennium, just over 80 per cent in 1990 and only a touch higher – around 85 per cent – in 1980. Wind and solar, by contrast, provided just 1.5 per cent of our energy in 2019.”  This means that a kilogram of greenhouse tomatoes generates as much as 3 kilograms of carbon emissions. And “in the past 13 years we have produced more plastic than our entire output between its invention in the early twentieth century and 2010. Save for a few dips such as the COVID-19 pandemic in 2020 and the oil crisis of the early 1970s, plastic output has tended to carry on rising exponentially.”

Conway looks for technological innovation to overcome this contradiction.  But admits that “there is no point in pretending either that this will be easy or that it will come without some uncomfortable compromises.”  Or perhaps he should consider something more dramatic through a structural change in the social relations and ownership of the world’s resources?

Finally, there is lithium, the material base of 21st century production.  Lithium is essential to battery storage in electric transport and in a myriad of modern appliances that can do without mains electricity.  Again, lithium is at the centre of another battle for economic power: “reserves of this metal are concentrated in a handful of nations, so while the rest of the world panics about China’s dominance of the battery supply chain, many in Beijing are simultaneously panicking about China’s reliance on the rest of the world for their raw materials.

That brings to mind another aspect of Marx’s value theory in relation to raw materials. There is a tendency for the value incorporated in commodities to fall as the productivity of labour rises (ie the average labour time taken to produce commodities falls).  Conway refers to the Wright law: every time the production of an item doubles, its cost falls by about 15 per cent. And Wright’s law, as it is sometimes called, “has been eerily successful at explaining the fall in the price of everything from container ships to specialised plastics.”

But there is always the risk that prices of raw materials will rise and so disrupt the profitability of capital, leading to crises of production and hits to the living standards of billions.  Marx saw this as a key factor in the tendency of the rate of profit to fall in capitalist production. “The more capitalist production is developed, bringing with the greater means for a sudden and interrupted increase in the portion of constant capital, the greater is the relative overproduction of fixed capital and the more frequent the underproduction of plant and raw materials, and the more marked the previously described rise in their price and the corresponding reaction” ( Marx Capital Vol. 3)  The rate of profit is thus inversely proportional to the value of raw materials.

As Jose Tapia has pointed out, major transitions in technology in the use of new resource materials historically have accelerated capital accumulation and checked the falling rate of profit.  But conversely, any rise in the prices of key raw materials can also trigger crises, as we saw in the Oil Crisis of the 1970s.  In our book, 21st century capitalism, we show the high inverse correlation between fossil fuel and raw material prices in general and the rate of profit. (p17).

As Conway reminds us, “if the supply of these materials fails to keep up even as our demand for them rises, well, you know where that leads. In 2022, for the first time ever, the price of lithium-ion batteries – those prices which, thanks to Wright’s Law, have fallen consistently since the 1990s – stopped falling and rose. The explanation: concerns about supplies of raw materials, including lithium, had sent up the price of the ingredients.”  Here is one key cause of the inflationary spike since the end of the pandemic.

Conway ends his book with the great contradiction of the 21st century: global warming and climate change.  How can the world get to ‘net zero’ when it needs so many raw material resources?  Of course, Conway does not add that these are controlled by a few giant companies and that this is the major obstacle to meeting net zero.

Instead, Conway worries that even a switch to renewable energy will mean yet more mining of basic materials. “Consider what it takes to replace a small natural gas turbine, pumping out 100 megawatts of electricity, enough for up to 100,000 homes, with wind power. You would need around 20 enormous wind turbines. To build those turbines you will need nearly 30,000 tonnes of iron and almost 50,000 tonnes of concrete, along with 900 tonnes of plastics and fibreglass for the blades and 540 tonnes of copper (or three times that for an offshore wind farm). The gas turbine, on the other hand, would take around 300 tonnes of iron, 2,000 tonnes of concrete and perhaps 50 tonnes of copper in the windings and transformers. On the basis of one calculation, we will need to mine more copper in the next 22 years than we have in the entirety of the past 5,000 years of human history.”

Stuff matters.

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