Posts Tagged ‘Development Economics’

Introducing Kuznets Waves: How Income Inequality Waxes and Wanes over the Very Long Run

The Kuznets curve was widely used to describe the relationship between growth and inequality over the second half of the 20th century, but it has fallen out of favour in recent decades. This column suggests that the current upswing in inequality can be viewed as a second Kuznets curve. It is driven, like the first, by technological progress, inter-sectoral reallocation of labour, globalization, and policy. The author argues that the US has still not reached the peak of inequality in this second Kuznets wave of the modern era.

In 1955 when Simon Kuznets wrote about the movement of inequality in rich countries (and a couple of poor ones), the US and the UK were in the midst of the most significant decrease of income inequality ever registered in history, coupled with fast growth. It thus seemed eminently reasonable to look at the factors behind the decrease of inequality, and Kuznets famously found them in expanded education, lower inter-sectoral productivity differences (thus the rent component of wages would be equalized), lower return to capital, and political pressure for greater social transfers. He then looked at (or rather imagined) the evolution of inequality during the previous century and thought that, driven by the transfer of labour from agriculture to manufacturing, inequality rose and reached its peak in the rich world sometime around the turn of the 20th century. Thus, he created the famous Kuznets curve.

The Kuznets curve was the main tool used by inequality economists when thinking about the relationship between development or growth and inequality over the past half century. But the Kuznets curve gradually fell out of favor because its prediction of low inequality in very rich societies could not be squared with the sustained increase in income inequality that started in the late 1970s in practically all developed nations (see the long-run graphs for the US and the UK). Many people thus rejected it.

The Upswing in Current Inequality as a Second Kuznets Curve

In a new book (Milanovic 2016), I argue however that we should see the current upswing in inequality as the second Kuznets curve in the modern times, being driven, like the first, mostly by a technological revolution and the transfer of labour from more homogenous manufacturing into skill-heterogeneous services (and thus producing a decline in the ability of workers to organize), but also (again like the first) by globalization, which has both led to the famous hollowing out of the middle classes in the west and to a pressure to reduce high tax rates on mobile capital and high-skilled labour. The elements listed here are not new. But putting them together (especially viewing technological progress and globalization as practically indissoluble, even if conceptually different) and viewing this as part of regular Kuznets waves is new. It has obvious implications for the future, not the least that this bout of inequality growth will peak like the previous one and eventually go down.

But  before I address that part, let us consider recent important work done by economic historians such as van Zayden (1995); Nogal and Prados (2013); Alfani (2014) and Ryckbosch (2014), who have documented periods of waxing and waning inequality in pre-modern Europe. The interesting part is that Kuznets cycles in pre-modern societies basically replicate the Malthusian cycles because they take place in conditions of quasi-stationary mean income. The pre-modern Kuznets cycles are not driven by economic factors but by epidemics and wars. Both lead to a decrease in population, an increase in mean income, higher wages (because of labour scarcity) and thus lower inequality, that is, until population growth in a Malthusian fashion reverses all these gains.

Thus, we can observe Kuznets waves over some six or seven centuries of European history. In pre-modern times, they are observable against time because mean income is more or less constant (it is just one point on the x-axis). After the Industrial Revolution, however, we see the waves responding to economic factors (e.g. technological change, transfer of labour), and can plot them as Kuznets thought against mean income. This is shown here in the graphs for the US and the UK (Figure 1 and 2). In addition, I show in my book long-term inequality cycles for Spain, Italy, the Netherlands, Germany, Japan, Brazil, Chile, and over a shorter period for China.

Source: Ginis: 1774, 1850, 1860 and 1870 from social tables created by Lindert and Williamson (2013); 1929. Radner and Hinricks (1974);  1931 and 1933: Smolensky and Plotnick (1992). From 1935 to 1950 from Goldsmith et al (1954); After 1950, from US Census Bureau, Income, poverty and health insurance coverage in the United States (various issues); gross income data adjusted to reflect disposable income. GDP per capita from Maddison project 2014 version.
Source: Ginis: for 1688, 1759, 1801, and 1867 from social tables for England/UK (as reported in Milanovic, Lindert and Williamson, 2011); for 1880 and 1913, from Lindert and Williamson (1983, Table 2); from 1961 to 2010, official UK data (disposable income per capita) kindly calculated and provided by Jonathan Cribb, Institute for Fiscal Studies. GDP per capita from Maddison project 2014 version.

While Kuznets’ explanation was focused almost entirely on economic and thus ‘benign’ forces, he was wrong to overlook the impact of ‘malign’ forces (especially wars) that are powerful engines of income equalisation. I find this somewhat puzzling because Kuznets himself, having worked during World War II in the US Bureau of Planning and Statistics, must have noticed how the war led to the compression of income through higher taxation, financial repression, rationing, price controls, and even sheer destruction of physical assets (as in Europe and Japan).

Inequality May Not Be Overturned Soon

Which leads us to the present. How long will the current upswing of the Kuznets wave continue in the rich world, and when and how will it stop? I am skeptical that it will be overturned soon, at least not in the US where I see four powerful forces that keep on pushing inequality up. I will just list them here (they are, of course, discussed in the book):

  • Rising share of capital income which is in all rich countries extremely concentrated among the rich (with a Gini in excess of 90);
  • Growing association of high incomes from both capital and labour in the hands of the same people (Atkinson and Lakner 2014);
  • Homogamy (the educated and the rich marrying each other); and
  • Growing importance of money in politics which allows the rich to write rules favourable to them and thus to maintain the inequality momentum (Gilens 2012).

The peak of inequality in the second Kuznets wave should be lower than in the first (when in the UK, it was equal to the inequality level of today’s South Africa) because the rich societies have in the meantime acquired a number of ‘inequality stabilizers’, from unemployment benefits to state pensions.

The pro-inequality trends will be very hard to overturn during the next generation, but eventually they may be – through a combination of political change, pro-unskilled labour technological innovations (which will become more profitable as skilled labor’s price increases), dissipation of rents acquired during the current bout of technological efflorescence, and possibly greater attempts to equalize ownership of assets (through forms of ‘people’s capitalism’ and workers’ shareholding).   

Now, these are of course the benign factors that, I think, will ultimately set inequality in rich countries on its downward path. But history teaches us too that there are malign factors, notably wars, in turn caused by domestic maldistribution of income and power of the elites (as was the case in the World War I), that can also do the job of income levelling. But they do it at the cost of millions of human lives. One can hope that we have learned something from history and would avoid this destructive path to equality in poverty and death.


Alfani, G (2014), “Economic inequality in the northwestern Italy: a long-term view (fourteenth to eighteenth century)”, Dondena Working Paper No. 61, Bocconi University, Milano.

Alvarez-Nogal, C and L Prados de la Escosura (2013), “The rise and fall of Spain (1270–1850),” Economic History Review, vol. 66(1), pages 1-37. 

Atkinson, A and C Lakner (2014), “Wages, capital and top incomes: The factor income composition of top incomes in the USA, 1960-2005”, November version.

Gilens, M(2012), Affluence and Influence, Princeton University Press.

Kuznets, S (1955), “Economic growth and income inequality”, American Economic Review, March, pp. 1-28.

Milanovic, B (2016), Global inequality: A new approach for the age of globalization, Harvard University Press.

Ryckbosch, W (2014), “Economic inequality and growth before the Industrial Revolution: A case study of Low countries (14th-16th century), Dondena Working Paper No. 67, Bocconi University, Milano.

van Zanden, J L (1995), “Tracing the beginning of the Kuznets curve: western Europe during the early modern period”, The Economic History Review, vol. 48, issue 4, pp. 1-23. November. 



Wealth and Income Distribution: New Theories Needed for a New Era

Growth theories traditionally focus on the Kaldor-Kuznets stylised facts. Ravi Kanbur and Nobelist Joe Stiglitz argue that these no longer hold; new theory is needed. The new models need to drop competitive marginal productivity theories of factor returns in favour of rent-generating mechanism and wealth inequality by focusing on the ‘rules of the game.’ They also must model interactions among physical, financial, and human capital that influence the level and evolution of inequality. A third key component will be to capture mechanisms that transmit inequality from generation to generation.

Six decades ago, Nicholas Kaldor (1957) put forward a set of stylized facts on growth and distribution for mature industrial economies. The first and most prominent of these was the constancy of the share of capital relative to that of wealth in national income. At about the same time, Simon Kuznets (1955) put forward a second set of stylized facts — that while the interpersonal inequality of income distribution might increase in the early stages of development, it declines as industrialized economies mature.

These empirical formulations brought forth a generation of growth and development theories whose object was to explain the stylised facts. Kaldor himself presented a growth model which claimed to produce outcomes consistent with constancy of factor shares, as did Robert Solow. Kuznets also developed a model of rural-urban transition consistent with his prediction, as did many others (Kanbur 2012).

Kaldor-Kuznets Facts No Longer Hold

However, the Kaldor-Kuznets stylized facts no longer hold for advanced economies. The share of capital as conventionally measured has been on the rise, as has interpersonal inequality of income and wealth. Of course, there are variations and subtleties of data and interpretation, and the pattern is not uniform. But these are the stylized facts of our time. Bringing these facts centre stage has been the achievement of research leading up to Piketty (2014).

It stands to reason that theories developed to explain constancy of factor shares cannot explain a rising share of capital. The theories developed to explain the earlier stylized facts cannot very easily explain the new trends, or the turnaround. At the same time, rising inequality has opened once again a set of questions on the normative significance of inequality of outcomes versus inequality of opportunity. New theoretical developments are needed for positive and normative analysis in this new era.

What sort of new theories? In the realm of positive analysis, Piketty has himself put forward a theory based on the empirical observation that the rate of return to capital, r, systematically exceeds the rate of growth, g; the famous r > g relation. Much of the commentary on Piketty’s facts and theorizing has tried to make the stylized fact of rising share of capital consistent with a standard production function F (K, L) with capital ‘K’ and labour ‘L’. But in this framework a rising share of capital can be consistent with the other stylised fact of rising capital-output ratio only if the elasticity of substitution between capital and labour is greater than unity, which is not consistent with the broad  empirical findings (Stiglitz, 2014a). Further, what Piketty and others measure as wealth ‘W’ is a measure of control over resources, not a measure of capital K, in the sense that that is used in the context of a production function.

Differences between K and W

There is a fundamental distinction between capital K, thought of as physical inputs to production, and wealth W, thought of as including land and the capitalized value of other rents which give command over purchasing power. This distinction will be crucial in any theorizing to explain the new stylized facts. ‘K’ can be going down even as ‘W’ increases; and some increases in W may actually lower economic productivity. In particular, new theories explaining the evolution of inequality will have to address directly changes in rents and their capitalized value (Stiglitz 2014). Two examples will illustrate what we have in mind.

  • Consider first the case of all sea-front property on the French Riviera.

As demand for these properties rises, perhaps from rich foreigners seeking a refuge for their funds, the value of sea frontage will be bid up. The current owners will get rents from their ownership of this fixed factor. Their wealth will go up and their ability to command purchasing power in the economy will rise correspondingly. But the actual physical input to production has not increased. All else constant, national output will not rise; there will only be a pure distributional effect.

  • Consider the case where the government gives an implicit guarantee to bail out banks.

This contingent support to income flows from ownership of bank shares will be capitalised into the value of these shares. Of course, there is an equal and opposite contingent liability on all others in the economy, in particular on workers — the owners of human capital. Again, without any necessary impact on total output, the political economy has created rents for share owners, and the increase in their wealth will be reflected in rising inequality. One can see this without going through a conventional production function analysis. Of course, the rents once created will provide further resources for rentiers to lobby the political system to maintain and further increase rents. This will set  in  motion a spiral of increasing inequality, which again does not go through the production system at all — except to the extent that the associated distortions represent a downward shift in the productivity of the economy (at any level of inputs of ‘K’ and labour).

Analysing the role of land rents in increases in inequality can be done in a variant of standard neoclassical models — by expanding inputs to include land; but explaining increase in inequality as a result of an increase in other forms of rent will need a theory of rents which takes us beyond the competitive determination of factor rewards.

Differences in Inequality: Capital Income versus Labour Income

The translation from factor shares to interpersonal inequality has usually been made through the assumption that capital income is more unequally distributed than labour income. Inequality of capital ownership then translates into inequality of capital income, while inequality of income from labour is assumed to be much smaller. The assumption is made in its starkest form in models where there are owners of capital who save and workers who do not.

These stylised assumptions no longer provide a fully satisfactory explanation of income inequality because: (i) there is more widespread ownership of wealth through life cycle savings in various forms including pensions; and (ii) increasingly unequal returns to increasingly unequally distributed human capital has led to sharply rising inequality of labour income.

Sharply rising inequality of labour income focuses attention on inequality of human capital in its most general sense:

  • Starting with unequal prenatal development of the foetus;
  • Followed by unequal early childhood development and investments by parents;
  • Unequal educational investments by parents and society; and
  • Unequal returns to human capital because of discrimination at one end and use of parental connections in the job market at the other end.

Discrimination continues to play a role, not only in the determination of factor returns given the ownership of assets, including human capital; but also on the distribution of asset ownership.

  • At each step, inequality of parental resources is translated into inequality of children’s outcomes.

An exploration of this type of inequality requires a different type of empirical and theoretical  analysis from  the conventional macro-level analysis of production functions and factor shares (Heckman and Mosso, 2014, Stiglitz, 2015).

In particular, intergenerational transmission of inequality is more than simple inheritance of physical and financial wealth. Layered upon genetic inequalities are the inequalities of parental resources. Income inequality across parents, due to inequality of income from physical and financial capital on the one hand, and inequality due to inequality of human capital on the other, is translated into inequality of financial and human capital of the next generation. Human capital inequality perpetuates itself through intergenerational transmission just as wealth inequality caused by politically created rents perpetuates itself.

Given such transmission across generations, it can be shown that the long-run, ‘dynastic’ inequality will also be higher (Kanbur and Stiglitz 2015). Although there have been advances in recent years, we still need fully developed theories of how the different mechanisms interact with each other to explain the dramatic rises in interpersonal inequality in advanced economies in the last three decades.1

High Inequality: New Realities and Old Debates

The new realities of high inequality have revived old debates on policy interventions and their ethical and economic rationale (Stiglitz 2012). Standard analysis which balances the tradeoff between efficiency and equity would suggest that taxation should now become more progressive to balance the greater inherent inequality against the incentive effects of progressive taxation (Kanbur and Tuomala,1994 ).

One counter argument is that what matters is not inequality of ‘outcome’ but inequality of ‘opportunity’. According to this argument, so long as the prospects are the same for all children, the inequality of income across parents should not matter ethically. What we should aim for is equality of opportunity, not income equality. However, when income inequality across parents translates into inequality of prospects across children, even starting in the womb, then the distinction between opportunity and income begins to fade and the case for progressive taxation is not undermined by the ‘equality of opportunity’ objective (Kanbur and Wagstaff 2015).

Concluding Remarks

Thus, the new stylised facts of our era demand new theories of income distribution.

  • First, we need to break away from competitive marginal productivity theories of factor returns and model mechanisms which generate rents with consequences for wealth inequality.

This will entail a greater focus on the ‘rules of the game.’ (Stiglitz et al 2015).

  • Second, we need to focus on the interaction between income from physical and financial capital and income from human capital in determining snapshot inequality, but also in determining the intergenerational transmission of inequality.
  • Third, we need to further develop normative theories of equity which can address mechanisms of inequality transmission from generation to generation.2


Bevan, D and J E Stiglitz (1979), “Intergenerational Transfers and Inequality”The Greek Economic Review, 1(1), August, pp. 8-26.

Heckman, J and S Mosso (2014), “The Economics of Human Development and Social Mobility”Annual Reviews of Economics, 6: 689-733.

Kaldor, N (1957), “A Model of Economic Growth”, The Economic Journal, 67(268): 591-624.

Kanbur, R (2012), “Does Kuznets Still Matter?” in S. Kochhar (ed.), Policy-Making for Indian Planning: Essays on Contemporary Issues in Honor of Montek S. Ahluwalia, Academic Foundation Press, pp. 115-128, 2012.

Kanbur, R and J E Stiglitz (2015), “Dynastic Inequality, Mobility and Equality of Opportunity“, CEPR Discussion Paper No. 10542.

Kanbur, R and M Tuomala (1994), ‘‘Inherent Inequality and the Optimal Graduation of Marginal Tax Rates”, (with M. Tuomala), Scandinavian Journal of Economics, Vol. 96, No. 2, pp. 275-282, 1994.

Kuznets, S (1955), “Economic Growth and Income Inequality”, The American Economic Review, 45(1): 1-28.

Piketty, T (2014), Capital in the Twenty-First Century, Cambridge Massachusetts: The Belknap Press of Harvard University Press.

Piketty, T, E Saez, and S Stantcheva (2011), “Taxing the 1%: Why the top tax rate could be over 80%”,, 8 December.

Roemer, J E and A Trannoy (2014), “Equality of Opportunity”, in A B Atkinson and F Bourguignon (eds.) Handbook of Income Distribution SET Vols 2A-2B. Elsevier.

Stiglitz, J E, et. al. (2015) “Rewriting the Rules of the American Economy“, Roosevelt Institute.

Stiglitz, J E (1969), “Distribution of Income and Wealth Among Individuals”, Econometrica, 37(3), July, pp. 382-397. (Presented at the December 1966 meetings of the Econometric Society, San Francisco.)

Stiglitz, J E (2012), The Price of Inequality: How Today’s Divided Society Endangers Our Future, New York: W.W. Norton.

Stiglitz, J E (2014), “New Theoretical Perspectives on the Distribution of Income and Wealth Among Individuals”, paper presented to the International Economic Association World Congress, Dead Sea, June and forthcoming in Inequality and Growth: Patterns and Policy, Volume 1: Concepts and Analysis, to be published by Palgrave MacMillan.

Stiglitz, J E (2015), “New Theoretical Perspectives on the Distribution of Income and Wealth Among Individuals: Parts I-IV”, NBER Working Papers 21189-21192, May.


1 For early discussions of such transmission processes, see Stiglitz(1969) and Bevan and Stiglitz (1979).  

2 Developments in this area are exemplified by Roemer and Trannoy (2014).


The Surplus Approach to Rent

Theories of rent are wide-ranging. However, whether neoclassical, Marxist, or Proudhonist, they tend to neglect evolutionary institutionalist theorising. Increasingly dominated by the income approach, rent theories need to be expanded, partly to correct existing work, partly to break persistent intellectual monopoly and oligopoly, and particularly to develop institutional theories of rent. In this paper, I attempt to do so by presenting and evaluating the surplus approach to rent, particularly R.T. Ely’s, highlighting its power and potential and stressing its critiques and contradictions. Drawing, among others, on the original writings of Ely, it is argued that, while the emphasis on property rights, land as a ‘bundle of sticks’, and rent as surplus rather than income help to advance heterodox approaches to rent, the surplus approach is severely limited in its analysis of inequalities and how they can be addressed, especially in extractivist and rentier societies. To unravel long-term inequalities that characterize rent and rentier economies, it is crucial for surplus theorists to engage stratification economics which, in turn, can drive the surplus approach to rent.

1. Rent: Beyond Income

Neoclassical economists define rent as the price paid for the use of land obtained in a competitive market (see, for example, O’Sullivan, 2012, p. 157-161). Therefore, rent is an open-market price paid for the use of land – much like interest is income for the use of capital. In this income approach, rent functions as a driver of growth. Also, rent – like price, more generally – becomes a mechanism for allocating land as a scarce resource.

The surplus approach to rent is rather different. Advanced by a wide range of classical and other economists, including the physiocrats, Smithians, Ricardians, Georgists, institutionalists, Marxists and the French Régulationists, rent is not simply the return price for the use of land; it is also surplus (Ely, 1922, 1927; Haila, 1990, 2016; Fine, 2019; Faudot, 2019). Every surplus approach offers a critique of approaches in neoclassical economics and their related policy prescriptions, but the surplus approach also provides a comprehensive and coherent alternative framework to analyse extractivism and other socio-ecological problems (Butler, 2002). In practice, the surplus approach also offers a springboard for developing practical transformative steps and policies to change the world.

Beyond these generalities, the surplus approach has many nuances. Various theorists have debated what land rent is, and what it is not. Many analysts focus on regimes of growth, particularly the French régulationnistes (See, for example, Faudot, 2019, the work of Robert Boyer, and its extensive discussion, including Vercueil, 2016; Harada & Uemura, 2019). When determining how to address inequality, they deal with the question of rent as a surplus, but how to deal with that surplus and whether to emphasise growth or inequalities, land or capital varies widely. Generally, in the surplus approach, a critical question is whether to re-invest the surplus “to expand and transform the existing economic system”, whether the surplus should be ‘wasted in luxury consumption, leading to economic decline’ (Martins, 2018, p. 41), or whether to redistribute the surplus for inclusive economic development. What proportion of land rent should be returned to the landowner? Should a landowner whose labouring activities help to improve land rent be compensated or should all land rent be given back to society?

Richard T. Ely, a pioneering institutional economist, sought to provide new answers to these questions. He did so by emphasising land, especially redefining land, reintegrating economics and law through land, and bringing in the courts as arbiter to the land rent question. Accordingly, Ely’s focus was not so much on growth, but rather on how land rent is an instrument for creating and maintaining systemic inequality and in what ways inclusive prosperity or wellbeing might be nurtured in an ecologically sound society.

These contributions are of continuing importance. Three reasons help to make the point. The first is that the Revue de la régulation1 is seeking to bring back the rent approach to the political economy of the régulation school at a time when the study of extractivism is at the crossroads on whether to give any place to ‘earlier’ rentier state analysis pioneered by Hossein Mahdavy (see, for example, Mahdavy, 1970).

The second is that the rent approach to the study of inequality has been marginalised in political economy, which is increasingly centred on labour and capital, and their growth (Obeng-Odoom, 2020a; 2021), rather than on land and its place in redistribution (Sheil, 2015; Asongu, 2016). In the USA, Piketty (2014) shows that inequality levels have reached 1910/1920 levels of between 45-50 percent wealth concentration in the hands of the top 10 percent of the population in that country (also, updates in Piketty, 2020). OXFAM (2014) reports that 85 people now have the same wealth as half of the world (3.5bn people). The attempts to explain this inequality has typically focussed on capital and labour. For example, Piketty’s contributions have largely focused on the capital-income ratio (see, for example, Piketty, 2014, p. 8, p. 18, p. 40, p. 42). In general, a careful analysis of land and property rights has largely been ignored, as Robert Rowthorn (2014) pointed out in his review of Piketty’s work for the Cambridge Journal of Economics. Much like Piketty’s work, the OXFAM report focuses on total wealth and the proportion going to the class of capitalists, while others demand attention to labour, but only make superficial or rhetorical comments about land-based inequality.

A third and final reason for the continuing importance of Ely’s contribution is that he has been overlooked as an institutionalist.

Ely gradually disappeared from American social sciences after the early twentieth century […] neoclassical thought […] made every effort to limit his place in the history of thought, granting him only a few mundane lines in the New Palgrave. (Rocca, 2020, p. 11)

Institutionalism is well developed in modern political economics, but its relationship to land and property rights especially as echoed in the work of Richard Theodore Ely, is poorly understood. The entries on ‘institutionalism’ in the Encyclopedia of Political Economy make no reference to Ely (see Waller, 2001, p. 523-528; O’Hara & Waller, 2001, p. 528-532; Hutton, 2001, p. 532-535; Hodgson, 2001, p. 535-538), although he is the “progenitor” of institutional political economy (Vaughn, 1994, p. 28), “founder of land economics” (Weimer, 1984; Malpezzi, 2009), “dean of American economists” (Vaughn, 2000, p. 239) and the founding editor of the field’s pre-eminent journal, Land Economics, initially called the Journal of Land and Public Utility Economics (Salter, 1942).

The existing work on Ely is so little that it can easily be summarised. One type is biographical, looking at the life and contribution of Ely (see, for example, Rocca, 2020). Another is laudatory of his proposals, while the third is entirely dismissive of the political proposals of Ely about war, and unions, for example (see a review in Bradizza, 2013, p. 13-16). Bradizza’s (2013) book and Rocca’s (2020) book chapter are some of the rare recent contributions on Ely seminal interventions on property rights, but these studies do not address Ely’s surplus approach to rent. It seems Ely’s work on rent has largely been forgotten.

Demonstrating the continuing importance of Ely, I draw on his original books and papers, along with existing wider analyses of his work, including reviews of his books published around the time his books were first released. In doing so, in this paper I seek to explain and evaluate Ely’s distinctive approach to rent and to reflect on its significance in modern institutional economics and political economy more widely at the time of a resurgence in extractivism and rentierism.

Like other surplus theorists, Ely rejected the income approach to rent common in neoclassical economics. However, unlike other surplus theorists, Ely recognised that landowners bear substantial costs, so not all the rents going to them should be socialised. He contended that the rent going to landlords was justified so long as they put their private property to social uses. If they failed to do so and, hence, inequality continued to increase or remained entrenched, again Ely broke ranks with other surplus theorists by refraining from the use of revolutionary political processes. Instead, he preferred evolutionary transformation in the form of changes in laws and, notably, appeal to the courts to intervene in addressing growing inequalities. This emphasis on law and rules also distinguishes Ely’s approach to land, which other surplus theorists considered as a unity. For Ely, land was not only a ‘bundle of sticks’ with diverse interests and tenures; land rent also differs based on use, type of land, and change of use and land type, along with all the typical surplus approach emphasis on, say, location and fertility (see, for example, Ely, 1940, p. 76, p. 80-81). In this sense, like Marx’s theories of rent (Munro, 2022), Ely’s surplus approach is historically specific, against absolutism, and crude determinism (Rocca, 2020, p. 4). However, unlike Marx’s theorising, Ely’s approach was evolutionary, rather than revolutionary, and his ‘bundle of sticks’ approach, far more granular. In general, Ely’s specific surplus approach created a “Golden mean”, with three defining features (Rocca, 2020, p. 3), namely: offering a critique of the status quo, providing the principles undergirding evolutionary alternatives, and providing concrete practical steps or policies for creating an inclusive society.

Ely contemplated the limits of his surplus approach. For instance, he suggested that if the courts failed, new judges could be appointed. Concurrently, commissions of enquiry could be established and used to pursue reform (Rocca, 2020, p. 9). However, he was less successful in foreseeing the tendency for property rights to entrench inequality and how that inequality itself gives power over the courts. Also, he overlooked the various ways in which the courts are stratified and racialized. The difficulties of simply appointing new judges in such a racialised environment was not carefully analyzed either. More fundamentally, Ely paradoxically endorsed the global intersections of national inequalities, and entrenched stratification.

To flesh out these arguments, the rest of the paper is divided into three sections. Rent and surplus explains Ely’s conceptualization of rent, stressing how it differs from other theorizations of rent. Rent and distribution discusses how Ely’s surplus approach to rent is applied in the analysis of property and maldistribution. Critiques and contradictions shows the limitations of Ely’s approach.

2. Rent and Surplus

Rent features prominently in Ely’s political economy. While many political economists equate rent and surplus, Ely considered some, but not all, rent to be surplus. In his article, “land income” (Ely, 1928), he clarified how his three-part contribution relates to neoclassical economics, classical economics, and institutional economics. For both neoclassical and classical economics, he offered critiques, paving the way for his attempt to make a positive contribution to institutional economics.

Neoclassical economics regards rent as a payment for the use of land, itself a gift of nature whose value is determined through the interaction of supply and demand. According to Ely, none of these is accurate (Ely, 1928, p. 409). Ely (1917, p. 20, p. 28; 1928) considered rent to be payment for more than land use. Rent reflects privilege for the use of a multiplicity of property rights in land, which is itself made up of several rights together, not a unity. Ely was one of the early exponents of the notion that property is a ‘bundle of rights’ (see, for example, Ely, 1940, p. 76, p. 80-81), not the singular view of property so commonly held in neoclassical economics. This emphasis on rights and economics also made Ely a pioneer of the economics approach to law or the law approach to economics, the combination of which is much bigger than the total of the various parts. For instance, the ‘bundle of rights’ metaphor for Ely also signified an evolutionary approach to social inclusion, not simply a meme of laws and rights (Rocca, 2020, p. 7). In Ely’s political economy of rent, therefore, the courts are clearly central in settling questions of rent and social injustice. In neoclassical economics, too, property rights need to be guaranteed by the courts of law, but in the case of Ely, “they are not absolute rights of an abstract or isolated individual but social arrangements to be justified because they serve definite social-economic ends” (Cohen, 1917, p. 388). The courts in Ely’s surplus approach do not simply favour the landlord, but they consider the social good of private property.

Ely’s approach differs from other surplus approaches, at least in three respects. Firstly, land is not a free resource of nature. Secondly, not all rent is surplus. Thirdly, although contingent rather than categorical, Ely’s proposed solution to the surplus problem is to be found in the courts. Explaining these three differences is crucial for appreciating the essence of Ely’s surplus approach. Starting with whether land is free for Ely is fundamental. Unlike in the classical economics tradition of surplus value which considers that land is a gift, neither land nor land-use is free in Ely’s surplus approach to rent. There are waiting and ripening costs to be borne by the user of land. For these reasons, land income, Ely’s preferred expression for land rent, is not simply the product of supply and demand. He recognises location advantages, the role of public investments, luck, and uncertainty in determining rent, but how they influence rent is shaped by both land-use type, land-use form, and the change between land uses, ranging from mineral land, agricultural land, urban land, and forest land, to many other types of land (Ely, 1922, p. 39-42; 1928).

The second difference between Ely’s approach and other surplus approaches relates to whether all rent is ‘surplus’ (Ely, 1914, p. 400-411). In many of the surplus approaches, rent is an extra payment received over and above what non-privileged people receive; or rent is the extra payment received over subsistence levels. Alternatively, rent could be seen as anything that is owed to labour after it has been paid an exploitation wage. There is also rent as “economic surplus”, which Ely considers the most similar to his approach. According to him, this rent or economic surplus is the “excess over and above what is required to secure the application of the requisites of production” (Ely, 1914, p. 401). What sets Ely apart is that his reading of ‘surplus’ was unlike most classicals who contended that any payment that exceeds what is socially necessary for the factor of production to be used is to be considered as rent or surplus. Karl Marx used ‘surplus value’ to denote anything in excess of what is paid to labour. Henry George, on the other hand, generally considered all land income to be unearned increment and, hence, postulated that the annualised rental value of land should be taxed away, while removing taxes on labour and capital.

Ely’s proposed solution to rent-based problems also set his approach apart from other surplus frameworks. Ely recognised that privilege and interests, even insider group-trading and information can pave the way for extraordinary advantages to accrue to individual landlords. That is, that society creates the conditions for rent. He called this influence of group characteristics a “‘group relationship’ theory of land income” (Ely, 1928, p. 421, italics added). However, he maintained that the broad-based surplus approach is problematic. It is not the privileges per se that generate the increases in value, but the public facilities. However, even these so-called ‘unearned’ incomes are earned because individual landlords incur costs. Ely points to waiting costs and ripening costs as examples (Ely, 1928, p. 409-414). Accordingly, he contended that landlords must be compensated for the cost of waiting and of deferring the use of land to a future date.

To the charge that speculative investments should be discouraged, Ely argued that such speculation is justified because often land investors need to acquire adjoining parcels of land, if they consider that other uses to which such lots could be used would hamper the realisation of the full potential of the land. So, speculation is socially necessary (Ely, 1928, p. 414-416). Ely also argued that land can suffer decrements. If rents can increase, they can also fall. In Ely’s expression, there are both “unearned increments and likewise unearned decrements” (Ely, 1928, p. 426). For all these risks, landlords should not be assumed to always benefit from “unearned income”. “It is suggestive of serious mistakes”, wrote Ely, “that the consideration of land rent and land income has not been closely connected with the consideration of costs. […] The classical view of the rent of land is that it is income without cost” (Ely, 1922, p. 33).

Still, Ely’s approach to rent is based on the surplus approach in a narrower sense. In Outlines of Land Economics, under “Definition of surplus used in this work”, Ely wrote, “The economic surplus is that which is paid over and above such a return to those who are engaged in production as will induce them to do their part fully and efficiently in the work of production” (Ely, 1922, p. 23). Of the five forms of surplus, Ely names “rent of land” as the first, the rest being interest, personal surplus, monopoly gains, and gains of conjecture (Ely, 1922, p. 26). Contrary to the classicals, Ely makes a distinction between surplus and socially useful surplus. The latter is surplus which, when taken back from rent via tax (for example), the land investors will be so demoralised that they give less than optimal contribution to land investment (Ely, 1922, p. 26-27).

Finally, Ely’s preference is to use the courts to address problems of surplus and rent. However, unlike others who were more categorical about such claims, Ely insisted that his position of rent was not cast in stone. Rent was one of the fields of research he set out in his course about, and vision of, land economics (Ely, 1917, p. 28-29). There were three aspects in these endeavours: Description, Definition, and Determination of the claims about rent. In terms of description, he argued that the field of land economics should focus on evolutionary changes in the use of the terms, to analyse the significance in the use of the term and to evaluate how rent is used both in science and in the market. In terms of Definition, he insisted on rent as power or privileged position. Both of these percolate his third charge: to offer empirical assessments of rental theories continuously (including the effects of custom and competition on rent). Reflecting the influence of the German Historical School on Ely (Rocca, 2020, p. 2), his surplus approach is historically specific, against determinism, and absolutism. These features also Ely’s approach to extractivism and distribution.

3. Rent, Extractivism, and Distribution

To examine how Ely’s surplus approach is applied to the analysis of extractivism, structural or long-term inequality, examining his book, Property and Contract in Their Relations to the Distribution of Wealth (hereafter Property and Contract, Ely, 1914) is critical because of its use of “wealth” as “weal” or “that which produced well-being” (Ely, 1914, p. 19) – a central issue in the analysis of global social problems about extractivism. Wealth, as a concept has many intertwined aspects, namely: economic wealth and social wealth. Private wealth, Ely explains, “means economic goods which yield utilities to the individual, and it may even mean something which detracts from social wealth”. Even though private wealth includes “legitimate and proper claims on others”, private wealth “is a concept which belongs primarily to a discussion of individual distribution, while social wealth is a concept which receives special emphasis in production” (Ely, 1914, p. 23). Public and social wealth may be similar (e.g., a post office), but not all public (state) wealth is social wealth.

It is from this formulation that Ely develops his approach to distribution. In Property and Contract (Ely, 1914), he sets out to build on this formulation. In doing so, he argues that distribution is more about ownership than location. While Ely’s questions such as “in whose hand do they rest as property?”, that is “who has the right to consume them, to sell them, to give them away?” (Ely, 1914, p. 1) have a Marxian ring, his question: what are the “underlying economic institutions upon which the economic structure rests” (Ely, 1914, p. 5), takes the analysis one step beyond the Marxist ‘structuralist’ perspective.

Ely’s approach to the study of inequality is based on three questions. First, what is the distribution of income and wealth among ‘the various units of the social organism?’ (Ely, 1914, p. 2). Next, what portion of this wealth produced is derived from or given back to land, labour, capital, or entrepreneurship? Then, what institutions support the present economic structure? Marxists typically leave their analysis at the second level in the enquiry, while for Ely, the third aspect constitutes the ‘fundamental’ issue: “The third line of enquiry […] is concerned with the underlying economic institutions upon which our whole economic structure rests. The fundamentals have been much neglected […]” (Ely, 1914, p. 5). On page 6, Ely also equates institutions with “foundation”. Figure 1 is a schematic presentation of Ely’s approach.

Figure 1. Ely’s approach to analysing the distribution of wealth

Source: author’s illustration based on Ely (1914)

Figure 1 is an annotated diagram of Ely’s analysis of distribution. The institutions in the figure are the fundamentals of the system. They come in the form of collective social forces that consciously or unconsciously shape inequality. Unconscious social forces are those that are not directed at distribution per se (e.g., some laws) but end up having an impact on the question of distribution (e.g., through the unequal application of these laws). The self-conscious forces, called “social self-consciousness”, are rather different. They are aimed at affecting the question of distribution. They may come in the form of legislation, action (judicial, police, executive/government), and public opinion (through praise, criticism, punishment, and reward). Social self-consciousness can also come in the form of social and interest group activity that lobby to change the distribution of incomes and wealth. Such lobby groups can be associations, labour organisations, consumer leagues, and religious groups. There is a relationship between the social self-conscious and the unconscious social forces in the sense that the unconscious may become affected by the conscious with the effluxion of time just as the conscious may evolve into unconscious forces with time.

Individuals are not regarded as institutions in Ely’s approach, but their actions interact with institutions. Individual actions can be conscious, or individuals can unconsciously shape their proportion of wealth. Conscious actions such as planning and training may improve the individual’s proportion of income and wealth. Unconscious actions such as being disciplined, staying out of trouble, and study that is not aimed at improving the individual proportion of incomes and wealth may all contribute to a bigger stake in incomes. However, whether conscious or unconscious, such individual actions interact with institutions such as the media (Ely, 1914). Overall, it is the interaction of all these factors that shapes the distribution of income and wealth. As Ely notes:

We have the incomes which come to us partly because we work for them, in part also we have them because society has decided that we should have them, and not infrequently we have them because certain social forces, operating more or less unconsciously, have cooperated with our own efforts to secure them, or have even procured them for us without any efforts on our part. (Ely, 1914, p. 14)

Institutions, then, are the key forces for Ely. The institution of inheritance and the movement of property values are given by Ely as classic examples of what society does for us in terms of getting a proportion of the incomes and wealth. These considerations lead to the question of how institutions are formed. For Ely, they are collectively created, not individually devised. In his own words: “Passing over to an examination of the fundamentals in the existing socio-economic order, the first truth to note is that they are established not by individuals, nor by nature, but by human society” (Ely, 1914, p. 16).

While institutions are crucial in this approach, it does not mean that institutions themselves are built by individual action. Institutional analysis consciously veers away from beginning with individual characteristics, not only because it is institutions that matter but also because individual actions have been constrained/enabled/influenced by institutions over time and they are still being moulded by institutions. Of all the institutions of analysis, however, Ely centres his case on property, especially private property. In his own words: “The first fundamental institution in the distribution of wealth is the sphere of private property” (Ely, 1914, p. 58, capitalization in original quotation removed).

To illustrate this point, consider oil extractivism, rentierism, or (re)primarisation. A range of scholars and activists and scholar-activists reduce the process to mere extraction of oil in which case every extraction of oil is extractivism and hence, the demand to leave oil in the ground (Obeng-Odoom, 2014, p. 33-36). Others, notably Marxist scholars, consider extractivism as linked to the system of transnational extraction of oil (Nwoke, 1984a, 1984b; Cooney, 2016; Barkin, 2017; Cooney & Freslon, 2019). Thus, the ownership structure along with the international division of labour in which the Global South is consigned the role of raw oil production and the Global North supplies the tools needed to do the extraction and processing are all extractivist, meaning they come with little or no structural transformation in the economy, for example, through local-centred industrialisation. In this sense, colonialism was an extractivist regime because it transferred oil rents from the Global South to the Global North by disinvesting in oil and other infrastructure to ensure socio-economic transformation of oil economies. With the growing power of transnational corporations, Marxists argued that it would be impossible to bargain with them (see Nwoke, 1984b). In this respect, since it is difficult to bargain with transnational-colonial-imperial state complex for rent, Marxists advocated the nationalisation of oil resources. This highly influential position inspired many postcolonial oil economies to create national oil companies to socialise the rents from oil. Examples of such national oil companies are Iraq, Iran, Saudi Arabia and, until recently, Mexico (Sarbu, 2014, p. xii, p. 35). Yet, as is now well known, even when oil wells have been nationalised, oil institutions have still transferred resources into the hands of private entities.

Perhaps, the issue is not so much capital, or not solely capital, industrialisation, and state based-growth, it is also land, wider socio-ecological transformation, and inclusive change (Ely et al., 1917, p. 3-18). “Conservation policies are then land policies” (Ely et al., 1917, p. 54). “Conservation means three things: viz (1) Maintenance as far as possible; (2) Improvement where possible; (3) Justice in distribution” (Ely et al., 1917, p. 3). Ely points to a tendency for concentration through private property rights (Ely et al., 1917, p. 60-69). “Conservation is considered […] to show that it is first of all a problem of property relation” (Ely et al., 1917, p. 3). Yet, ‘property’ is a poorly understood concept. Even in property economics – supposedly the centre for the study of the economics of property – ‘property’ is confusingly regarded as a ‘thing’, often real estate and ‘possession’ of property confused with the ‘ownership’ of property (cf. Steiger, 2006; Griethuysen van, 2012). Property rights analysts add a layer of ‘rights’ to explain ‘property’ by demanding that property be regarded as a ‘bundle of rights’ exercised over a thing, often real estate and land.

Ely also uses the ‘bundle of rights’ metaphor (see, for example, Ely, 1940, p. 76, p. 80-81), but he shifts the emphasis from property relations to social relations. According to him: “the essence of property is in the relations among men arising out of their relations to things” (Ely, 1914, p. 96). For the purpose of rent theories, Ely’s focus suggests a double shift, first from individuals to property and, second, from property to society. Therefore, property, connotes class, status, and position. Property is not merely individuals having a bundle of rights, individuals exercising certain rights over things, or “the category of legal doctrines concerned with allocating rights to material resources”, as legal and new institutional economics perspectives hold (Alexander & Peñalver, 2012, p. 6). If property implies class, subclasses and inter-group differences, then so does rent: its payments could vary according to group position and its very existence is a spark for and maintains inequality and social stratification in an environment in which different groups pay different types of rent. In this sense, Ely delves into the workings of property, notably its (a) characteristics (b) mode of transfer, and (c) how it is established among various groups.

Ely refers to the ‘sphere’ of private property. This notion connotes two main features of property: its extensivity and intensivity. The extensivity of private property refers to how widespread is property which is individually owned. Intensivity refers to how many sticks are in the ‘bundle of rights’ (see, for example, Ely, 1940, p. 76, p. 80-81). Therefore, to consider property, the analyst must dig into both the breadth (extensivity) and depth (intensivity) of private property. Ely also recognises other types of tenure, namely public property (exercised by a political unit such as a city or a nation-state) and common property (exercised by a social grouping such as a community). While Ely’s attention is centred on private property, to investigate property as a driver of inequality, all types must be analysed. In doing so, the conditions under which property is held, the laws about the transfer of property (e.g., taxation or no taxation; extensive or limited transfer taxes), and the evolution of property in both its intensivity and extensivity must be studied. Property itself may be classified as ‘subjects’ (classification according to actors) and ‘objects’ (classification according to objects over which rights are exercised). Property subjects may be classified into common, private, and public property, while property objects may be human beings, land, and capital (Ely, 1914, chap. 10, book 2). It is also possible to classify property according to duration (e.g., freehold). That being said, Ely points to the crucial test of being in the propertied class: ownership as distinct from possession. Mere possession of property does not confer ‘property’ class status. According to Ely, this is why anarchists have strongly advocated that tenants in possession would rather have their possession commuted to ownership (Ely, 1914, chap. 4, book 2). Ownership confers the right of exclusivity, alienation, and appropriation (Ely, 1914, chap. 5, book 2), while possession does not necessarily confer these property rights. Applying his approach to the distribution of wealth as it relates to property and property rights in the twenty-first century illustrates the point further.

Figure 2. Key argument about the tendency under the social theory of property

Source: author’s illustration based on Ely (1914)

The process of growing rent itself is disempowering for the poor because they are forced to move away from central areas to the margins. For some landlords, the process of concentrating property rights works through the advance of risky loans. In this process, there is much dispossession aided by both state and market rules interacting with customs and mores. Two examples of how this works are the non-application of land taxation and the removal of all taxes that constitute a brake on the private acquisition of land.

This argument and the approach on which it is based is substantially different from neoclassical or new institutional economics (mainstream economics in this paper) typically based on general equilibrium analysis and Kuznets’ ideas of inequality (see an extensive review by Asongu, 2016). For mainstream economists, inequality is not necessarily considered to be bad because it can be an incentive to hard work. Second, inequality is the result of individual effort or sloth such that the difference between the incomes and wealth can be attributed to hard work or laziness. Otherwise, in general, inequality tends towards disappearance in the form of a spatial equilibrium. The neoclassical approach to the study of wealth and income concentrates largely on the economic aspects of wealth, not its social aspects.

When land is studied, the primary assumptions are that private property motivate its owners to work hard, invest, and trade in land which in turn, will improve the social conditions of landowners and support national economic growth. However, this approach suffers conceptual bias because for most land in the Global South (e.g., Africa and the Pacific), neither of these assumptions is valid. Instead, land and property are communally held, managed, and used such that even when individual kith and kin pursue personal aspirations with ‘their land’, the use must be governed by and in pursuit of the collective good broadly defined (Anderson, 2011; Elahi & Stilwell, 2013). So, there is no congruence between neoclassical assumptions and the real land economy of customary landowners. New institutional economics (NIE), on the other hand, accepts that neoclassical economics is in error in making methodological individualist assumptions about customary land tenure, however, NIE assumes that such customary systems will ipso facto evolve to Western land tenure systems (see, for example, Yoo & Harris, 2016; The Economist, 2019) – without acknowledging counter ‘hegemonic’ forces that resist such evolution and the autonomous development of customary land tenure (Moyo & Yeros, 2005). The argument in this paper, drawing on Ely’s approach, runs against both neoclassical and new institutional economics for these reasons.

The argument in this paper is also quite distinct from Marxian analysis and claims. For Marxists, inequality is reprehensible, and under the capitalist mode of production, is persistent, and expansionary. The source of inequality, for Marxists, is the capitalistic exploitation of labour. A rich body of Marx’s work on land has recently been analysed (Munro, 2022), but in general Marxist political economy, land is of secondary importance. So, Marxists tend to seek changes in the distribution of surplus-value and the economic structure. Ely’s approach is much wider. Focused on institutions that support the economic structure, land is of particular interest. In this sense, Ely’s pursuit of just distribution is akin to that of Henry George, but his approach differs from that of George in many respects (for a review of the work of Henry George, see Gaffney, 2009; 2015). For instance, in terms of the weight Ely gives to other institutions and their relationship with property rights, in terms of how inequalities need to be addressed, and in terms of whether all rent is to be regarded as surplus. Nevertheless, Ely’s institutionalism complements other heterodox approaches rather than demolishing them. Therefore, Ely’s surplus approach to rent is one more scaffold not only to build a heterodox alternative but also to more deeply mark the terrain and intellectual apparatus of original institutional economics and political economy in general.

Critiques and Contradictions

Ely has been widely criticised. Concerns have ranged from his apparent support of propertied interests to his non-commitment to the founding ideals of the United States. Some have pointed to “his handling of legal material” as being of “a slip-shod character” (Cohen, 1917, p. 399). Others point to his overly optimistic view about the neutrality of judges (e.g., Hand, 1915). Ely himself suggested many ways to overcome such challenges, either by using existing legislation or creating new legislation. As noted by Swayze (1915, p. 825): “the right of taxation, the right of eminent domain, the right to exercise the police power, the right to control transfers, especially by way of inheritance, the right to exempt certain property from education and distress in order that a man [sic] may not be deprived of the means of doing his part in the world by working at his trade or calling”. Ely also suggested a flexible system in which new judges are appointed to overturn archaic judicial philosophies and practices (Swayze, 1915, p. 828), but these positions have been criticised. For example, “It is far better to wait until public opinion is finally settled on a disputed question, and time makes it possible to determine whether proposed changes are real reforms or not” (Swayze, 1915, p. 828). With respect to his surplus approach to rent, these criticisms need to be extended in at least two respects centred mainly on questioning his theorising of inequalities and his trust in “police power”. The surplus approach to rent locates inequalities primarily at the national level where race, gender, class, nor other identities are considered seriously. Yet, as a large body of research has shown, the rise in inequalities is not only at the national level, but can also be seen at the subnational, regional, and global levels (e.g., Bush & Szeftel, 2000; Cahill & Stilwell, 2008; Gaffney, 2009, 2015; Plack, 2009; Obeng-Odoom, 2021). Whatever the scale, inequalities have taken particular identity lines, ranging from caste, colour and class, to gender, disability, and sexuality, among others.

These inequalities and social stratification arise from different underlying institutions and historical periods, and they have entirely different geographical forms. However, they have all tended to lead to similar outcomes: Dispossession, Discrimination, and Concentration. In the United States, this privatization of land has had a distinctive racial orientation. As we see in N.D.B Connolly’s (2014) book: A World More Concrete: Real estate and the remaking of Jim Crow, the process of instituting private property was also the process of establishing white supremacy. Not only have Zoning laws, the use of state power of eminent domain, and so-called campaigns to improve housing for African-Americans in ghettoes ended up dispossessing and displacing African Americans of their land but also these forces of stratification have locked them into the rental market as renters or subprime mortgagors and associated them with undesirable features (e.g., crime, grime, drugs, and dereliction) that drive down property values, while white Americans have made millions off them in rent and mortgage payments.

While there have been black property owners, and these have collaborated with white property owners, for example, by lending each other money to pursue propertied empires, the institutions in that country have made it increasingly difficult for them to expand their property holdings for example by making it much more difficult to obtain the types of loan that white property owners can access to surge ahead (Connolly, 2014, p. 1-16). Such Jim Crow barriers matter, but as Darity and Mullen (2020) have shown recently, these processes of racialised wealth inequalities extended from the era of slavery through Jim Crow to modern multiples of discrimination and privilege. In Africa, the number of sticks in the bundle of private property rights has significantly increased. Common water is now being fenced off and being parcelled out as part of the sphere of private property, as we see in the recent book by John Anthony Allan and his colleagues: Handbook of Land and Water Grabs in Africa (2013). In Ely’s terminology, then, both the extensivity and intensivity of private property have been substantially widened, but they have concentrated wealth in private and racially privileged hands.

None of these engaged Ely’s attention in his time. It is not that Ely was unaware of persistent stratification. He was, but he thought it was deserved, often canvasing a particular type of eugenics in which so-called inferior races would be oppressed to such a level that they would be exterminated: “we have got far enough to recognize that there are certain human beings who are absolutely unfit and should be prevented from a continuation of their kind” (Ely cited Leonard, 2016, p. 74). “Negroes”, Ely noted, “are for the most part grownup children, and should be treated as such” (cited in Leonard, 2016, p. 121). Ely campaigned to exclude immigrants from opportunities because he considered them to be racially inferior (Leonard, 2016, p. 8). He campaigned against giving work to the disabled, to pave way for the worthy poor (Leonard, 2016, p. 131-132), while he deemed white people to be of the “superior classes” (cited in Leonard, 2016, p. 52).

Ely, in short, echoed the dark illiberal side of progressive institutional economists who also sought protection for women, but not equality with them (Leonard, 2016, p. 182-185). Ely, for example, deemed women to be biologically weaker and hence in need of protection (Leonard, 2016, p. 170 & 174). Accordingly, Ely’s surplus approach overlooks, even reinforces, the colour of rent, and the multiple identities of those marginalised by the extraction of rent across the uneven landscape of global political economy both in terms of analysis and proposed ways of addressing the problem.

Yet, in these processes, it is the majority poor peasants, migrants, politically marginalised, blacks, women, nomads and others of minority identities who give up or are made to give up their land and from whom community water is taken. Research published in Feminist Economics establishes that women’s land is often the first and easiest targets. Established plantations disrupt long-standing gendered roles that guarantee certain jobs for women by employing men, often from different communities, to take up women’s jobs (e.g., Daley and Pallas 2014; Poro and Neto, 2014). Mining and drilling activities surged at the height of land grabs Cooney, 2016; Barkin, 2017; Cooney & Freslon, 2019).

41Often the ‘winners’ do not control land forever, but the process can range from 50 to 99 years. People are hardly consulted, as powerful groups take unilateral decisions or government officials even in clear contravention of the law are over-excited about the social benefits the project will bring and, hence, the social theory of this private property movement is that enclosures are good for society. Jobs, technology, knowledge transfer, foreign exchange, and modernisation, development and positive social change have all been promised as a justification for these enclosures – albeit they have remained just that: promises (Obeng-Odoom, 2013a; Elhadary & Obeng-Odoom, 2012; Obeng-Odoom, 2020a). In effect, these multiple transformations have transferred rent from the Global South to the Global North, from blacks to whites, from men to women, from weaker classes, castes, and colours to more powerful groups.

The outcomes have been changing property relations in favour of the rich, wealthy, and mighty. That is, Polanyi’s (1945) “great transformation” has generated stratified hierarchical property relations characterised nearly always with the weaker groups taking the lower and more precarious position in the property ladder. In the case of real estate, indebted mortgage recipients live with the myth that they are property owners when in fact, they only possess property and hold conditional rights that can easily be terminated by the real property owners: banks, doubling as speculators, and landlords who double as bankers, supported by a wide range of professional valuers and real estate organisations (Obeng-Odoom, 2020b). In the case of agrarian relations, proletariats become converted into wage labour sometimes for 50 years, others for much longer. So, while the land will ultimately return to the land-owning communities, community members will have long passed on – especially in countries where the life expectancy is less than 70 or they become much more wretched than they were prior to the process.

By country, the top 10 appropriators as of 2012 were the USA, Malaysia, the UK, China, the United Arab Emirates, South Korea, India, Australia, and South Africa (Land Portal, 2012), while countries in Sub-Saharan Africa provide 70 percent of all land captured (World Bank, 2010). Leon’s (2015) more recent work suggests that these figures are accurate: most of the land purchased has been located in Africa and most of the centres from which the purchases have been financed are the world’s super-rich or rich cities, most notably New York, London, Singapore, Seoul, and Kuala Lumpur (Leon, 2015). Seventy-five percent of the time, the land acquired in such processes is put to the cultivation of biofuel plants, being a change of their previous use (food/non-food uses).

The rest is put to food cultivation, but mainly for export purposes (Borras & Franco, 2012; International Land Coalition, 2012). In turn, access to local food consumption has become insecure or expensive for those in weaker property relations. So, the increase in global food security is mainly for the so-called ‘developed regions’ for which both the number and percentage of people who are undernourished are on the decline. As shown in Table 1, such regions have consistently recorded a decline in undernourishment problems – “A state, lasting for at least one year, of inability to acquire enough food, defined as a level of food intake insufficient to meet dietary energy requirements” (FAO, IFAD & WFP, 2014, p. 50)

Africa (Sub-Sahara and North Africa), where most parcels of land have been taken up in the ongoing global process of private enclosure, is the region with the worst trends in feeding its people. While the causes of undernourishment are many and certainly not simply restricted to the loss of land, the trend in Africa is not a mere question of ‘correlation’. Rather, the reduction of land available for food production is a major contributor to the maldistribution of the burden of food insecurity which in turn, feeds into the problem of undernourishment. As noted in the Africa Agriculture Status Report, “large acquisitions by nationals and foreigners in other countries have greatly increased inequality. From the seller’s point of view, there is concern about distress sales where poor households have no alternative for meeting emergencies than to sell their land at very low prices” (AGRA, 2013, p. 36). Land taken is typically used for agribusiness. As Timothy Wise has shown in his latest book, Eating Tomorrow (Wise, 2019), such a regime of agriculture undermines ecologically sustainable agriculture with its emphasis on genetically modified seeds, excessive emphasis on the use of agro-based fertilizer and other chemicals, and the insistence on viewing agriculture as a for-profit business.

Wise’s work is revealing. Most farmers he has interviewed in Africa are opposed to agribusiness. He refers to his interviews with female farmers in Mozambique who reject agribusiness because, for the farmers, such food system only serves the interest of the West and the local landlord class (Wise, 2019, chap. 1). “Seeds of opposition”, to quote The Economist (2019, p. 32-33), were sown in Mozambique eventually. Prosavana, a corporate initiative, aimed at turning 107,000 square kilometres (a large tract of land analogous to the size of Bulgaria) into a food basket, was launched in 2009. By 2019, not much progress had been made. Rather, plans had been afoot to raise $2bn private equity funds for another agri-business in 2013. By 2019, such was the opposition that The Economist (2019, p. 32-33) described the situation as “stony ground”. Stefan Ouma (2020) has offered a more systematic, more up-to-date account. The financialisation of land and resulting dispossession and deprivation have become even more serious today. The question, then, is no longer whether such inequalities exist but what institutional forces or in the terminology of régulationists, “institutional forms” (Vercueil, 2016), drive, sustain, and mould the trends in the distribution of wealth in relation to property.

Whether the ‘police power’ intended to ensure that such privatisation and private capture of value is an effective check requires careful analysis. In his tome, Legal Foundations of Capitalism, J.-R. Commons, Ely’s student, carefully documents the changing meanings of ‘police power’ in the American and the English courts (Commons, 1924). The courts will often take a larger view of ‘value’ and the ‘economy’ than neoclassical economists would because the courts consider the economy as constituted by the interaction or transaction between two people (plaintiff and defendant), constituting electrons in motion (see Commons, 1924, p. 7-8): not individuals, atomistic individuals, whose actions are static as in neoclassical economics.

Yet, even the courts cannot ipso facto confirm what is ‘reasonable value’ and how the police power might be used, as the use depends on the particular location, time, and constitutional provisions (Commons, 1924). Nowhere is this contingent interpretation better demonstrated than in India where judicial decisions on the question of public and private space have been shifting dramatically from pro-marginalised groups interests to business interests. The state and its agencies even in the days of pro-hawker judicial decisions had always found ways around court decisions to pursue their own interest (Schindler, 2014). Elsewhere, in many cases, courts have used the police power to favour the rich. In one case, this police power was exercised in favour of investors who had been misled into investing in a private land venture in Togo, West Africa (Obeng-Odoom, 2016). Lyn Ossome has conducted a detailed analysis of police power, which seeks to answer the question: “Can the Law Secure Women’s Rights to Land in Africa?”

After considering the evidence, she notes:

There is still no conclusive evidence of the viability of customary law’s efficacy in securing women’s rights to land. Rather, contemporary land deals take place in the context of a legal, political, and economic terrain that requires constant negotiation and reinterpretation in line with the lived realities of communities and women within them. This study demonstrates that customary law is not yet exhausted as an avenue for redress. It exposes the colonial fallacies upon which the customary was based, the attempts to put it aside, and the assumptions that underlay these attempts. It also examines the problematic nature of formalisation in the contexts of land acquisitions, which in essence pits the state against itself. (Ossome, 2014, p. 172)

While this evidence relates to customary law, the research findings about constitutional law and courts follow similar patterns. John Mbaku’s (2018) research on constitutional protection of minority rights in Africa makes the point. According to him, constitutional structure and constitutional making are contingent on socio-historical context. Forcibly united under colonialism, countries such as Cameroon have tried to build constitutions, but such documents are exclusive not only in their rules, but also in their application and enforcement. The Supreme Court of Ghana might be much more inclusive both in how the Ghanaian constitution was drafted and is interpreted (Date-Bah, 2015). But both the US Supreme Court and the South African Supreme Court have been exclusive and ideologically biased against minorities. Typically, the rules of court, constitutional provisions, the complicity of judges and lawyers, and the wider political economies of the two countries combine to concentrate land in the hands of white, wealthy and powerful landlord classes (Bonica & Sen, 2020; Ngcukaitobi, 2021).

Fundamentally, whether inclusive or exclusive, long-term inequalities, social stratification, and property concentration have increased in Africa (Obeng-Odoom, 2021) and elsewhere in the world (Stilwell, 2019; Piketty, 2014, 2020; Darity & Mullen, 2020). Indeed, in the US, research (Maclean, 2017) shows that James Buchanan, the leading theorist behind the public choice school of economics, conceived of the Supreme Court as an institution to support white propertied interests, rather than as an instrument of harmonious arbitration between the landlords and ordinary members of the American society. Not only are black judges in the minority, research shows that their decisions are more likely to be overturned on appeal (e.g., Sen, 2015).

That said, this contingency does not amount to a concerted attempt by lawyers and judges to create what Marxists perceive to be a deliberate institutional framework to encourage extractivism for foreign interests (see, for example, Freslon & Cooney, 2019, p. 26-27). Nigerian courts, for instance, have tried to constrain extractivisms of various kinds when seeking to bring transnational oil companies under their jurisdiction (Obeng-Odoom, 2020a, p. 195-196).

International law itself has been complicit in creating concepts such as terra nullius which have been used to justify extractivisms and many imperial courts like those in Britain still make decisions on many occasions to favour the transnational corporations from the imperium. (For a discussion of concepts and international law, see Amin, 2020). While the Prosecutor at the International Criminal Court (ICC) has promised to prosecute land grabbers at the ICC, no such action has taken place (Surma, 2021). If it does, there is no guarantee of success. It follows that the police power is no guarantee, as suggested by Ely’s surplus approach to rent.

Conclusion: Rent and Reconstruction

Rent is central to political-economic discussion of long-term inequality and social stratification. However, rent is largely neglected in neoclassical-economic analysis of inequality. The surplus approach to rent tries to rectify this problem. The social theory of property, advanced by Ely, offers a distinctive contribution to the surplus approach to rent. Not only does it differ from other surplus approaches in terms of its analysis of how rents arise, Ely’s surplus approach is also distinctive in emphasising land as a ‘bundle of rights’ and reform, not via the socialisation of rent for wider social policy or for workers’ liberation, but through revisiting and revamping the courts (see, for example, Ely, 1940, p. 76, 80-81).

Yet, as the evidence in this paper has shown, the social trust bestowed on private property owners has long been broken and the police power offered as a check on the excesses of private property ownership is way too limited to serve as an effective constraint on the propertied class. The concentration of land-wealth has dramatically normalised, and pre-transformation property relations have been moulded in diverse, different and differentiated ways across scales and over time, particularly in the extractivist forms of accumulation.

Not all these are surprising. Ely’s surplus approach is more strongly focused on national, not multi-scalar global inequalities and global social stratification. Inherent in the social theory of property rights is structural bias against racial and other minorities. As discussed in this paper, the surplus approach also places too much categorical weight on the police power which, in practice, is clearly contingent. Marxian revolutionary alternatives are similarly uncertain. Other evolutionary surplus approach alternatives – including Georgist political economy – are a bit more certain. Drawing on multi-level state power, community, and global institutions, a Georgist alternative can more reliably socialise rent as surplus.

The trouble with all the surplus approaches is that they are either race blind or racist. At the same time, it could be analytically useful to bring Ely ‘back in’ to the debate about the social theory of property and distribution of wealth in extractivist and rentier societies, and link inequalities to institutions, notably the courts. In this way, Ely is one antidote to Buchanan in the sense that he sees institutions as one set of ways to transform society in an evolutionary inclusive way. But, like Buchanan, Ely’s theorizing also explicitly sought to subjugate minorities, especially black people.

If Ely’s theorizing can succeed in this role, therefore, then his theory has to be emptied of its problematic underpinnings which can helpfully be replaced by stratification economics, pioneered by black political economists to become the most advanced school of institutional and evolutionary political economy on inter-group inequalities, analysis of which is a story for another time (for further reading, see Darity, 2009; Darity et al., 2015; Darity, 2021). What can be stressed even now, is that the surplus approach to rent can benefit from the broad approach offered by the régulation school. This group of thought seeks an historical approach that links previous socio-economic and ecological processes to present ones (e.g., rentier processes to new extractivist processes). This school of thought also provides the canvass for an open-ended approach to uniting or amalgamating diverse forms of institutional and evolutionary alternatives. The aim is usually to question orthodoxy, more deeply understand, and more comprehensively change uneven and unequal global political economy. Clearly, one way for stratification to advance is for it to take the driving seat in the surplus approach to rent.


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Driving Deep Decarbonization

As green energy costs drop, we should shift the emphasis from economy-wide carbon pricing to sectoral policies

World leaders have accepted the warnings of scientists that global temperatures must increase by no more than 1.5 or 2 degrees Celsius to avoid severe damage to the Earth’s ecosystems and to human health and welfare. According to recent surveys, the general public increasingly agrees on the need for climate action.

As a result, many countries and some subnational entities have set ambitious targets for reducing greenhouse gas emissions. This past spring, the United Kingdom adopted a target of 78 percent emissions reductions by 2035, relative to 1990 levels. In the United States, the Biden administration announced a (nonbinding) goal of reducing net greenhouse gas emissions by 50–52 percent by 2030, relative to 2005. At the subnational level, several US states, including California, Colorado, Massachusetts, and New York, have legislated targets to approach or reach net zero emissions by 2050.

The climate crisis is too important to let these goals turn into failed promises. What policies are needed to turn these ambitious targets into action?

Economists’ standard prescription is to implement a robust economy-wide price on carbon. A carbon price that starts at a moderate rate and grows predictably will incentivize individuals to use lower-carbon sources of energy than fossil fuels and will induce firms and power generators to switch away from fossil fuels to low-carbon primary sources of energy. An economy-wide carbon price efficiently obtains emissions reductions from sectors or uses where they are least costly while keeping costs manageable in applications difficult to decarbonize. Moreover, depending on how it is implemented, revenues from a carbon price can be used to reduce distortionary taxes elsewhere or to provide needed public investment.

A frequent response to this prescription is that it ignores the political reality that carbon pricing, especially through a carbon tax, is unpopular. Despite considerable efforts over decades, only a small fraction of worldwide carbon emissions is covered by a carbon pricing program, and among those programs that do exist, the carbon price is typically low.

Now there is an additional reason to question this focus on economy-wide carbon pricing: it was developed when green energy was expected to remain far more expensive than fossil fuels. In many parts of the world, however, green energy, especially wind- and solar-generated power, is either less expensive than fossil fuel generation or is likely to become so soon. Costs of technologies to use green electricity—electric vehicles, for example—have also fallen dramatically. How does climate policy advice change for a world where it could be cheaper to be green?

Three externalities

Policies for the energy transition confront (at least) three externalities: the greenhouse gas externality; the innovation externality; and, in some cases, network (or chicken-and-egg) externalities. The greenhouse gas externality arises because the cost of damages to others, now and in the future, is not borne by those who burn fossil fuels. The innovation externality arises because the financial gains from innovation generally cannot be fully appropriated by the innovator. This externality justifies public financial support for basic research but also extends to other aspects of innovation, such as non-appropriable learning by doing in production and management. In the context of the energy transition, the network externality typically stems from built infrastructure. An example is electric vehicles (EVs) and charging stations: a lack of charging stations holds back demand for EVs, but a lack of these vehicles holds back the private supply of charging stations. In this case, there can be two stable equilibria: one with few EVs and charging stations and one with many EVs and charging stations.

Environmental economists have historically focused on the greenhouse gas externality, and with good reason: for the past hundred years, it has been significantly cheaper to emit carbon dioxide than not to when producing and using energy. When that is the case, the goal of climate policy is to encourage efficient self-restraint through policies such as carbon pricing and energy efficiency standards and to encourage changes in behavior, such as flying and driving less.

But two things have changed. First, the cost of producing clean electricity by wind and solar power has fallen dramatically, to the point that, in some parts of the United States, building new grid-scale solar and wind systems is less expensive than running existing coal and natural-gas-fired generators. Second, for some applications the cost of using clean energy may soon be lower than that of using fossil fuels, although this varies a good deal depending on the sector.

Making it cheaper to be green

The prospect of cheap green energy requires a fundamental shift in how we think about climate policy—from how we can make it more expensive to be dirty to how we can make it cheaper to be green. Whether we actually reach a low-cost green equilibrium is far from certain, however: whether we get there, and how quickly, hinges on policy.

With multiple market failures, efficient policy needs multiple policy instruments. Because all sectors and all countries are different, there is no single elegant one-size-fits-all combination of instruments. Rather, the most efficient suite of policies for one sector is generally not the most efficient suite for other sectors. An efficient mix of climate policy instruments must be crafted to address market failures, technological status, and institutional challenges at a more nuanced level.

Consider, for example, light- and medium-duty vehicles. The price of a new EV is on track to fall below that of comparable conventional internal combustion engine vehicles during this decade. This price decline is driven by the ongoing, remarkable decline in battery prices, manufacturers’ increasing experience in producing EVs, and improved battery technologies on the horizon. Moreover, EVs are less expensive to operate and maintain than conventional vehicles.

But the transition to EVs is not a sure thing, and in any event it can be expedited and supported by policy. In particular, the chicken-and-egg externality of charging stations poses some significant challenges. Absent adequate slow (level 2) charging stations, EV owners must provide their own charging capacity—which means a dedicated parking space where they are able to install a charger. Not surprisingly, EV purchases heavily skew toward higher-income families with their own garages, which in turn affects the types of EVs produced. Policy to support reliable widespread overnight or at-work charger availability could help overcome this chicken-and-egg problem, thereby accelerating the transition and ensuring a larger EV share.

On the other hand, a moderate carbon tax is likely to have little effect on EV purchases, because the cost impact is small (a $40/ton carbon tax implies $0.36 for a gallon of gasoline). In fact, there is a substantial literature that investigates whether car buyers properly take into account fuel prices when they purchase a vehicle; that literature tends to find that purchasers only partially account for fuel prices. For light- and medium-duty vehicles, addressing the network externalities and innovation externalities for advanced batteries is more effective and impactful than carbon pricing. Because those policies aim to facilitate the transition from the current low-EV equilibrium to a stable, low-cost high-EV equilibrium, those transitional policies have a limited duration and one-time costs.

In contrast, aviation is a major and growing source of carbon dioxide emissions and appears quite difficult to decarbonize. Currently there is enthusiasm about low-carbon sustainable aviation fuel. Such fuel can be produced through conventional pathways such as conversion of waste vegetable oils and oil crops to renewable jet fuel or through advanced pathways—for example low- or negative-carbon alcohols, such as ethanol from energy grasses, converted to jet fuel.

In its 2021 Annual Energy Outlook, however, the US Energy Information Administration projected the price of petroleum jet fuel to be $2.77/gallon in 2050 (2020 US dollars). The prospect of sustainable aviation fuel competing with petroleum jet fuel at $2.77/gallon, unaided by an implicit or explicit carbon price, is daunting. A switch to sustainable fuel depends on robust funding to address the innovation externality and, when those fuels become available at scale, a high carbon price (either an explicit price or a clean fuel standard for aviation). Especially if the carbon price is implemented through an aviation fuel standard, this phasing could be critical: implementing a fuel standard too soon runs the risk of preferencing first-generation fuels without adequate support for scalable fuels with zero or negative carbon footprints, as has been seen in the failure of the US Renewable Fuel Standard to promote second-generation low-carbon ethanol. Sustainable aviation fuel works in standard jet engines and uses much the same infrastructure as petroleum jet fuel, so network externalities matter less. For aviation, this suggests policy that strongly supports the development and commercialization of advanced, scalable, and truly low-carbon sustainable aviation fuel now and a credible commitment to a high sectoral carbon price in the future.

In the power sector, all three externalities figure prominently in the transition. In the United States, new wind and solar power generation is less expensive than coal and natural gas in some but not all parts of the country. As a result, US power sector modeling suggests that a national policy that effectively puts a price on carbon—such as a clean electricity standard—is necessary to achieve substantial near-term decarbonization, say 80 percent by 2030. Deeper decarbonization will likely require significant innovation-driven cost reductions in storage technologies. In addition, the infrastructure of the US power sector restricts the ability to transmit green electricity from regions with high renewable resources to demand centers.

The power sector also faces serious institutional challenges, such as the regulatory and physical ability to use time-of-day pricing and load management and the institutional and political problems of siting new transmission capacity. For the power sector, supporting research and development of long-term storage technologies and addressing multiple infrastructure and institutional limitations are essential. The necessary first step, however, is a sectoral policy, such as a clean electricity standard, that has the effect of placing a price on carbon.

This is not to say that an economy-wide carbon tax is undesirable: the decarbonization from a clean electricity standard, and its limited effect on power prices, could be accomplished by an economy-wide carbon tax combined with government subsidies for renewable power, and that tax would yield some decarbonization from other sectors as well. For aviation, an economy-wide carbon price could, two decades from now, support the use of still-expensive low- or zero-carbon alternatives to petroleum jet fuel. But this reasoning suggests that pursuing an economy-wide carbon price is a lower priority today than it was when it was expensive to be green. Economy-wide carbon pricing, while desirable, by itself is neither efficient nor, at politically plausible prices, sufficient to drive deep decarbonization.

How can economists help?

I have focused on the economic case for shifting from economy-wide pricing to sectoral policies. That case is strengthened by the evident aversion of the political system to explicit pricing. But the political benefit of sectoral policies—their less visible costs than economy-wide pricing, in part because nonexperts often do not fully understand them—also exposes them to inefficiencies. Given the scale of the decarbonization challenge, it is critical that such policies be as cost-effective as possible. We cannot afford to spend trillions of dollars on policies that fail to achieve deep decarbonization.

Given the scale of the challenge, it is critical that such policies be as cost-effective as possible.

Sectoral climate policy design questions are often nuanced. How can a charging station policy be designed to maximize electric vehicle adoption and use instead of simply providing inframarginal transfers for stations that would be built anyway? Is investing in green industrial policy—for example, subsidizing domestic battery production—a cost-effective way to reduce emissions in the long run? Are subsidies for purchasing electric vehicles likely to be passed through to the consumer and thereby stimulate sales? What policies will most efficiently support the robust development of low-carbon sustainable aviation fuels?

Economists are good at disentangling incentives, anticipating unintended consequences, and assessing the costs and benefits of candidate policies. One practical challenge for economists working on sectoral policies is that those policies can become highly detailed; another is that policy is evolving on a time scale faster than that of academic economists. This is where the world’s economic policy institutions, like the IMF, can play a critical role by enhancing and providing nuanced, sectoral expertise to promote the transition to a greener—and in many cases, cheaper—energy future.


Things to Know about Carbon Pricing

Carbon pricing shows serious promise as a tool in the fight against climate change

Deterring the use of fossil fuels, such as coal, fuel oil, and gasoline, is crucial to reducing the buildup of heat-trapping greenhouse gases in the atmosphere. Carbon pricing provides across-the-board incentives to reduce energy use and shift to cleaner fuels and is an essential price signal for redirecting new investment to clean technologies.

Here are five things to know about carbon pricing.

1. Carbon pricing can be readily implemented. Carbon pricing, implemented through a tax on the carbon content of fossil fuels or on their carbon dioxide (CO2) emissions, is straightforward to administer as an extension of existing fuel taxes. Carbon taxes can provide certainty about future emissions prices, which makes a difference when it comes to mobilizing clean technology investment. Revenue from carbon taxes can be used to lower burdensome taxes on workers and businesses or to fund investment in climate technology.

Carbon pricing can also be implemented through emissions trading systems—firms must acquire allowances for each ton of greenhouse gases they emit, with the supply of such permits limited by government. Businesses can buy and sell allowances, thus establishing a price for emissions. Emissions trading programs can be designed to mimic the advantages of taxes through price-stabilizing mechanisms like price floors and revenue-raising measures such as permit auctions.

2. Carbon pricing is gaining momentum. More than 60 carbon tax and emissions trading programs have been introduced at the regional, national, and subnational levels. In recent months major pricing initiatives have been launched in China and Germany, the emissions price in the European Union has risen above €50 a ton, and Canada announced its emissions price would rise to CAN$170 a ton by 2030.

Nonetheless, only about one-fifth of global emissions are covered by pricing programs, and the global average price is only $3 a ton. That’s a far cry from the global carbon price of about $75 a ton needed to reduce emissions enough to keep global warming below 2°C.

3. Carbon pricing should be part of a comprehensive mitigation strategy. This strategy should contain supporting measures to enhance its effectiveness and acceptability.

The incentives generated by carbon pricing can be reinforced with regulations on emission rates or feebates, whose fees and rebates for products (for example, vehicles, appliances) or firms (for example, power generators, steel producers) depend on the intensity of their emissions. These reinforcing instruments have a narrower impact than carbon pricing—for example, they do not encourage people to drive less—but they may be an easier sell politically because they avoid a significant increase in energy prices.

Using carbon pricing revenues to boost the economy and counteract economic harm caused by higher fuel prices can build support for the strategy. Just transition measures are needed to assist low-income households and vulnerable workers and regions; for example, through stronger social safety nets and retraining. These measures would require only a minor portion of carbon pricing revenues.

Public investment is needed for the clean technology infrastructure networks the private sector may not provide, like electric vehicle charging stations and power grid extensions to accommodate renewable energy sources such as wind and solar.

And carbon pricing must eventually be extended to other sectors, like forestry and agriculture.

4. Carbon pricing must be coordinated internationally through a carbon price floor. Aggressively scaling up carbon pricing remains difficult when countries are acting unilaterally because they fear for their industrial competitiveness and are uncertain about specific policy actions in other countries. The IMF staff has therefore proposed an international carbon price floor to complement and reinforce the Paris Agreement, with two key components.

First, to facilitate negotiation, the price floor should focus on the small number of countries responsible for the majority of global emissions. For example, an arrangement among China, the European Union, India, and the United States would cover 64 percent of future global CO₂ emissions. An agreement among the Group of Twenty (G20) large economies would cover 85 percent of emissions.

Second, the price floor should focus on a minimum carbon price each country must implement, an efficient and easily understood parameter. If major emitting countries were to simultaneously scale up carbon pricing this would be the most effective way to address concerns about competitiveness and uncertainty about policy in other countries. Countries would still have the flexibility to set a higher price than the minimum if this is needed to achieve their mitigation pledges under the Paris Agreement.

The price floor must, however, be based on pragmatic design. Developing economies could have lower price floors and simple mechanisms for financial and technological support. In addition, the price floor could be designed flexibly to accommodate countries where carbon pricing is a political hard sell, so long as other policies achieve the same emissions reductions.

An international carbon price floor can be strikingly effective. A 2030 price floor of $75 a ton for advanced economies, $50 for high-income emerging market economies such as China, and $25 for lower-income emerging markets such as India would keep warming below 2°C with just six participants (Canada, China, European Union, India, United Kingdom, United States) and other G20 countries meeting their Paris pledges.

5. A pragmatically designed price floor is more promising than other regimes. An alternative regime might require all participants to impose the same carbon price. This approach, however, does not allow questions of equity to be addressed through differentiated floors, and it does not accommodate countries where carbon pricing is difficult for domestic political or other reasons.

Another possibility is a regime in which participants agree on annual, and progressively tightening, emissions targets. This approach involves agreement on a larger number of parameters, however. And it is a zero-sum game: if one country pushes for a laxer target, others would need more stringent targets. It also leaves uncertainty about what policy actions each country would take.

Without an international carbon price floor or similar arrangement, countries will likely act on their own to impose tariffs on carbon-intensive imported goods—so-called border carbon adjustments. From the perspective of scaling up global mitigation, this regime would be far less effective than an international carbon price floor, however. This is because border carbon adjustments would price only emissions embodied in traded products and not the huge bulk of non-traded emissions (for example, from power generators, manufacturers selling domestically, buildings, and transportation).


The Uneven and Combined Emergence of “Capitalism with Chinese Characteristics”

February 22, 2022 Leave a comment

The People’s Republic of China’s (henceforth named China) development over the past decades has been nothing short of extraordinary. While undergoing constant transformation and recording the world’s second highest GDP ($) in 2017[1], the socialist past appears a distant memory. Put bluntly, since the start of economic reform in 1978, China is booming with a “unique blend of planned economy and unbridled capitalism”.[2] Meisner even contends that the self-proclaimed Chinese Communist Party (CCP) has evolved to become the guardian of Chinese capitalism.[3] At a glance this may appear as a paradox, due to the apparent zero sum game between communism and capitalism that has been continuously perpetuated by the rhetoric of the Cold War.[4] Conversely, this essay will argue that the emergence of specific ‘Chinese characteristics’ within the country’s manifestation of capitalism, can be understood as an outcome of uneven and combined development (U&CD). Through applying Trotsky’s framework of U&CD to China’s development since 1978, the aim is to show that the Chinese economy is not paradoxical in itself, but rather possesses distinct features which materialized as an amalgamation of pre-existing internal socio-political structures and international influences of Western capitalism. The argument will be structured in the following manner. Firstly, an outline is provided of the advantages that are adherent to the theory of U&CD in explaining the particular elements of Chinese capitalism, followed by a section on the important impact of socialist policies on the peasantry under Mao. Next, the essay shifts focus to Trotsky’s theory of U&CD before applying it to the nexus of 1978. Finally, the argument will be sharpened through detailing some of the precise combinations in the context of labor relations and enterprise management that have resulted from the interaction of China with the global capitalist economy. In sum, this essay will show that conceptualizing China’s economic development through the lens of U&CD allows for a specific understanding of the peculiarities in China’s socio-economic spectrum and ultimately elucidates the allegedly paradoxical synthesis of a self-proclaimed communist party adopting a capitalist mode of production for economic gain.

Challenges in Conceptualizing China’s Development

The rather vague nature of the term ‘capitalism with Chinese characteristics’[5] illustrates the difficulty to conceptualize China’s economic development. The extensive reforms throughout previous decades were far from universal in their implementation and thus, some sectors such as Chinese industry were thoroughly reformed, while privatization of land is still largely impossible.[6] Here, we find both bold restructuring as well as rigid attachment to Maoist policy.[7] Huang uses the terminology ‘capitalism with Chinese characteristics’ to refer to a “factual observation of China’s economic and institutional processes”[8]. His work is a detailed analysis of the elements that constitute the special Chinese characteristics. But as Huang himself implies, his work is an analysis aimed at determining the extent to which China is capitalist.[9] While the insight he develops in his work is very valuable, this paper argues that it largely neglects the dynamics of interaction between domestic and international factors in the shaping of specific particularities within Chinese capitalism. Importantly however, an understanding of the international as a performative element and thus as constitutive of development itself, is essential to any notion of developmental processes.[10] Therefore, in order to investigate the origins of distinctive Chinese characteristics, a different approach is required, which factors in the influence of external forces in the developmental process. This endeavor will be undertaken in the last substantive part of this essay.

Maoist Origins of a Strong Peasantry

Before engaging with the capitalist transformation and the economic reforms after 1978, this section will take a closer look at Maoism and identify special features that laid the basis for later rapid capitalist reform. What was perhaps the most distinguishing trait of Maoism as opposed to Stalinist ideology in the Soviet Union, was Mao’s focus on the peasantry’s revolutionary agency.[11] With the absence of a revolutionary proletarian urban working class, following the effective deindustrialization of the coastal regions by the Japanese invasion, Mao famously declared that the Chinese socialist revolution would be “carried from country to town”[12]. In addition, the Chinese Civil War was fought before the revolution and thus, the latter appears as the conclusion of the former and the initial improvements for peasants could be framed as the success of the CCP.[13] Isaac Deutscher further details that during the 1950s, the state commenced an investment policy, aimed at improving the life-expectancy and literacy of the rural communes.[14] An example is the healthcare available to peasants that was offered under Mao, to counterweigh the rigid constraints on rural-urban migration that will be discussed later.[15] One of the resulting initiatives was the ‘barefoot doctors’ programme, which involved the training of health workers to meet the medical requirements of the peasants.[16] Despite challenging circumstances, the programme was widely considered successful in increasing the prompt availability of cheap healthcare and was acknowledged by the WTO for its positive impact on health levels in rural areas.[17] Overall, the improvements in literacy and healthcare under Mao were unquestionably significant and gave China a distinctive position among in comparison to other developing states.[18] What is important to note is that the high health standards posed a critical factor in the immediate availability of the peasants to take on low wage labour, which in turn was a primary reason for the pull that China exerted on foreign industry to invest so quickly, following the reforms of 1978.[19] In short, the origins of China’s ability to instantaneously sustain an ‘army’ of surplus labour can at least partly be traced back to the influence of socialist policies on the peasantry.[20]

The Framework of Uneven & Combined Development

As we have now arrived at the period within which this paper aims to apply the framework of a Trotskyist dynamic of development, a brief introduction to the theory of U&CD is paramount. Leon Trotsky was grappling with a crucial issue when he formulated the basic premises of his theory. Societal development in Russia was drastically diverging from the path that was predicted by Karl Marx and despite the absence of an established bourgeoisie; revolutionary currents in Russia were extremely powerful compared to England, where Marx had anticipated the initial proletarian revolution.[21] On the basis of this observation, Trotsky established two fundamental features of human development. The first of the two is unevenness, which he identifies as the “most general law of the historic process”.[22] Specifically, Trotsky argues that there is an inherent unevenness in development among the various social entities that constitute the world.[23] Secondly, the core dynamic of all human development is the interaction among these uneven formations, which produces particular dialectical developmental trajectories and is therefore a combined form of development and thus, the “key driver of historical development”[24]. Crucially though, combination is not mere repetition by one society of another societies development.[25] Rather, it is the result of an amalgamation of a society’s internal characteristics with external geopolitical pressures and social forces. Moreover, there are two key features that are integral to this procedure. Firstly, Trotsky identified the “privilege of historic backwardness”[26]. In this, he refers to the possibility for a society to skip specific developmental processes by adopting and further enhancing certain features from more ‘advanced’ societies through the aforementioned interaction, thereby accelerating their development.[27] The second factor refers to the social and geopolitical pressure that a more ‘advanced’ society exerts on others through their respective interaction. In turn, this compels a society to accelerate development under said pressure, hence Trotsky labelling this as the “whip of external necessity”[28].

The Conjuncture of 1978

Let us now locate the existing unevenness between China and the so-called advanced capitalist countries (ACCs) of the global economy at the conjuncture of 1978, out of which the powerful ‘whip of external necessity’ arose. Mao’s initial improvements for the rural peasantry that were discussed earlier, quickly faded and the burden of growing international isolation, a devastating famine and the atrocities committed during the totalitarian ‘Cultural Revolution’ became increasingly visible and took their gruesome toll on the Chinese people and the country’s socio-economic structure.[29] Despite the clear focus on heavy industry under Mao,[30] China’s workforce was comprised of about 70% agrarian labor.[31] However, total productivity stagnated and the agricultural output was relatively low, which further aggravated the concern for food security.[32] What added to the urgency of the Chinese situation was the rapid economic development by the so-called East Asian Tigers, all situated in direct proximity to China, thus generating geopolitical pressure as it became clear that China’s economic development was diverging from that of its industrializing neighbors.[33] This also prompted the leadership to acknowledge the necessity of economic reform, which was launched to overcome economic stagnation.[34] There was an explicit sense of importance attached to economic reform among China’s developmental planners, in the sense that “a big effort to catch up [was necessary to] move to the front ranks of the world”.[35] What fostered this visible unevenness and thus the ‘whip of external necessity’ between China and the capitalist countries of the global economy was the fact that at this very same point in time, global markets were at an unprecedented level of openness.[36] Consequentially, disregarding reform, especially in conjuncture with the ‘neoliberal turn’ of the global economy was equated with political and economic decay.[37] Having situated China in an international context, the following section will show how the ‘Chinese characteristics’ of capitalism originated in the process of combined development.

Identifying the Particularities of Chinese Capitalism through U&CD

Davidson argues that China started to experience U&CD most drastically after its incorporation into the global economy in 1978.[38] The analysis by Dunford and Weidong already applies the theory of U&CD to the historical development of China.[39] Yet, this is conducted in a different manner. Rather than searching for specific combinations within China’s economy, their study takes a broader approach and situates China in a wider context of international unevenness. In contrast, the subsequent analysis aims to provide a more specific account of how the internal and external currents formed distinct fusions in China’s economy. Subsequently, this part will examine some specific results of Chinese capitalist development, following the reforms that were initiated by Deng Xiaoping in 1978. Having previously established the existing unevenness between the largely agrarian Chinese economy and the so-called ACCs or the surrounding East Asian Tigers, now the aim is to illustrate the peculiarities within Chinese capitalism that emerged as a result of the interaction between internal factors particular to China and external influences of a westernised market; thereby merging into a combined form of development, aligning with the principles of unevenness and combination of U&CD.

Impact of Hukou and Danwei

The first analysis will focus on labour relations with a specific emphasis on the influence of hukou, (the household registration system), as well as the danwei, (traditional urban working units), on the structure of Chinese wage labour. Both the household registration system and the danwei were institutions that were developed as Maoist policy in the 1950s.[40] However, the following section will outline how both customs still remain an important factor in Chinese capitalism and therefore illustrate its combined nature.

The danwei was a publicly owned unit, integral to urban employment because it served as a lifetime employer, provided housing within the compound and was linked to the distribution of benefits, thus being labelled the “provider of iron rice bowls”[41]. Yet, these values are mostly incompatible with those of a market economy, which was introduced through China’s increased adoption of capitalist relations of production after 1978.[42] As a result, economic reform and the increasing influence of global capitalism have fundamentally altered the makeup of Chinese employment and have effectively ended customs such as lifetime employment or the comprehensive multitude of benefits that previously characterised the danwei.[43] Nevertheless, Xie et al. argue that the danwei continue to be influential.[44] This is apparent through their positive impact on workers’ wellbeing, especially in terms of equal earnings.[45] Given that some of China’s privately owned companies have adopted structures similar to those of the danwei,[46] it is plausible to argue that what remains of the danwei, following the marketization of social services, is still a powerful factor in the alignment of the class structure within China’s urban working class. Importantly however, the impact of the danwei is reliant on low labour mobility and thereby directly linked to the hukou system.[47]

Through the use of a hukou, the second unique trait within Chinese labour relations, the state effectively controls where people work or live and is thereby able to monitor and restrict rural-urban migration.[48] Set up under Mao for exactly this purpose, migration control still remains the central feature of today’s hukou system, despite having undergone liberalisation and restructuring during the period of reform.[49] The system encapsulates the administrative power of the state, as the firm restrictions on transferring permanent residence persist.[50] In addition, the results of market reform have led to the commodification of the urban ‘blue stamp’ hukou, which remains under state control but can now be purchased, thus essentially turning the right to move into a market good.[51] Although the possibility of a temporary residence was introduced by the aforementioned capitalist reforms, any commodified mobility within this system privileges workers with the appropriate financial means or desired qualifications.[52] In fact, the Chinese government is seen to favour temporary migration, as this has a lesser impact on the overall social makeup of cities and in addition reduces the necessary infrastructure requirements for workers.[53] What makes the hukou system such a distinct feature of Chinese capitalism is that it upholds a low wage labour force consisting of migrant workers, who are unable to go the route of formal migration and are compelled to take on jobs in precarious conditions.[54] The difficulty of the official transfer of residence and work rights, combined with diminishing prospects for agricultural employment has resulted in the “largest migration in world history” of peasants into the cities.[55] Thus, what emerges as a product of the remaining hukou system, as well as the economic reforms that attempt to create a capitalist labour market, is a vast number of urban migrant workers without residential rights, often referred to as the “floating population”[56]. This practically indefinite resource of labour made extremely low cost manufacturing on such an unprecedented scale possible.[57] Here, we can clearly observe the element of combined development. On the one hand, we find the introduction of a capitalist mode of production based upon large scale low wage labour, influenced by economic reform and interaction with ‘advanced’ capitalist economies. On the other hand, the hukou system eliminates the most fundamental characteristic of capitalism in itself, namely the “personal independence”[58] of the worker, who, through the hukou system is subject to political subordination, regarding their independence to choose where to work or live. What is more, the control exercised by the state extends much further into personal lives through the repressive measures of censorship and surveillance[59], thereby “disciplining the workforce and keeping social conflicts within bounds”.[60] A recent proposal by the Chinese government exemplifies this approach. Newly planned legislation would require all drivers of the taxi service Didi Chuxing to acquire urban residency permits.[61] In general, many of China’s internet titans such as Ali Baba rely on migrant workers to absorb the demand for low wage labour[62], yet the deliberate obstacle of the hukou system pushes migrant workers further into perilous conditions through essentially limiting workers’ freedom of movement within capitalist labour relations.

Organisational Structure of Enterprises

Chinese enterprises have undergone large reforms and restructuring, mainly aimed at increased privatization.[63] However, the most profitable state-owned enterprises (SOEs) remained under state control.[64] Nevertheless, the privatization of state-owned companies is not necessarily anything unique to China. What is more interesting in this case in the shift of organizational structure in Chinese companies, which will be demonstrated in the following. As we will see shortly, Western education of Chinese management has had an impact on the organizational structure of Chinese enterprises and thereby constitutes another example of combined development. The starting point to this process is the aftermath of the Cultural Revolution, which left China with a significant lack of trained Chinese mangers and staff to facilitate the technology transfer from the West and Japan that accompanied the open door policy of China toward the global economy.[65] Accordingly, especially during the 1990s, managers of SOEs were encouraged to complete Western-style management degrees and frequently visit companies in the West.[66] In their study, Ralston et al. trace the development of organizational structures in SOEs both before and after economic reform. They claim that prior to reforms, SOEs are generally best characterised by a ‘clan’ and ‘hierarchy’ culture, which implies a workplace environment similar to a family, with superiors acting as mentors and a high regard of loyalty trust and tradition, while upholding strong hierarchical structures.[67] However, they also trace a substantial shift in their comparison and argue that the integration into the word economy has led SOEs to embrace a more ‘market’ oriented organizational structure based on the aim to maximize productivity and profits.[68] Importantly however, a majority respondents still selected ‘clan’ culture as the most prominent type, with ‘market’ in second place.[69] Thus, rather than a complete restructuring of enterprise organization, there has been a particular convergence between pre and post reform management styles, which is likely to have been caused by the influence of Western training of Chinese management.[70] Another aspect of this are the vast numbers of Chinese students, who study abroad either in high school and later on at a university. By 2015, over four million Chinese students have studied abroad since 1978.[71] What makes this number even more impactful is the fact that the share of students returning from abroad with graduate degrees is continuously rising, amounting to 79% in the year 2016.[72]

Overall, the examples above illustrate the existing combinations in the Chinese socio-economic landscape. While the marketization of labour power was borrowed from Western capitalism[73], both the hukou and the danwei are notable Chinese characteristics that have undergone reform but remain influential and thereby shape today’s Chinese labour market into an amalgam of internal and external influences. Similarly, the new forms of SOE management also signify a form of combined development, which surfaces through the interaction of a previously dominant ‘clan’ enterprise organisation and Western management education. These examples show that far from posing a paradox, the peculiarities of Chinese development emerged as a result of the process of uneven and combined development.


Before drawing the final conclusion, let us briefly consider a crucial point. This essay has set out to understand the specific impact of U&CD on China. Despite not being the focus of this essay, it is important to keep in mind that by default, the same interaction between China and the global economy has also caused combined forms of development in the latter. In conclusion, this essay has presented the argument that the theory of U&CD provides an effective way to conceptualize the particular outcomes of Chinese economic development. Further, through applying U&CD we can resolve what first appears as a paradox – capitalist development under a self-titled communist regime. This is possible through examining the specific forms of combined development that are a manifestation of the interaction between China and the capitalist world economy, driven by the ‘whip of external necessity’ that was exerted on China in 1978. This was exemplified in this essay through the examples of the impact of the hukou and danwei on capitalist labour relations, as well as the impact of Western education and market integration on Chinese SOE management structures.  In sum, we can derive from this analysis that an understanding of ‘capitalism with Chinese characteristics’ requires a thorough examination into the internal and external forces that initially led to their development.


Boyle, C.; Rosenberg, J. (2018). ‘Explaining 2016: Brexit and Trump in the History of Uneven and Combined Development’. (Unpublished Manuscript, University of Sussex).

Chan, K.; Zhang, L. (1999). ‘The Hukou System and Rural-Urban Migration in China: Processes and Changes’. In: The China Quarterly, Vol. 160, pp. 818-855. Online, available at: [Accessed: 26/04/2018].

Clover, C.; Sherry, J. (2016). ‘Didi Chuxing to be hit by rules on migrant drivers’. In: Financial Times. Online, available at: [Accessed 05/05/2018].

Cohen, M. A. (2012). ‘Argentina’s Economic Growth and Recovery: The Economy in a Time of Default’. New York: Routledge.

Davidson, N. (2017). ‘Uneven and Combined Development: Modernity, Modernism, Revolution’. Online, available at: (page numbers taken from PDF) [Accessed: 20/04/2018].

Deutscher, I. (1984). ‘Marxism, Wars and Revolutions’. London: Verso.

Dunford, M.; Weidong, L. (2017). ‘A Century of Uneven and Combined Development: The Erosion of United States Hegemony and The Rise of China’. In: Вестник Мгимо-Университета, Vol. 5(56), pp. 7-32. Online, available at DOI:10.24833/2071-8160-2017-5-56-7-32 [Accessed: 23/04/2018].

Fan, C. (1995). ‘Of Belts and Ladders: State Policy and Uneven Regional Development in Post-Mao China’. In: Annals of the Association of American Geographers, Vol. 85(3), pp. 421-449. Online, available at DOI: 10.1111/j.1467-8306.1995.tb01807.x [Accessed 01/05/2018].

Huang, Y. (2008). ‘Capitalism with Chinese characteristics: Entrepreneurship and the State’. New York: Cambridge University Press.

Hung, H. (2013). ‘Labor Politics under Three Stages of Chinese Capitalism’. In: The South Atlantic Quarterly, Vol. 112(1), pp. 203-212. Online, available at DOI:10.1215/00382876-1891341 [Accessed: 26/04/2018].

Hung, H. (2016) ‘The China Boom: Why China will not rule the world’. New York: Columbia University Press.

ICEF – Data taken from:

IMF – Data taken from: World Economic Outlook Database 2018

Kerr, D. (2007). ‘Has China abandoned self-reliance?’ In: Review of International Political Economy, Vol. 14(1), pp. 77-104. Online, available at DOI: 10.1080/09692290601081178 [Accessed 05/05/2018].

Knight, J.; Song, L. (2005). ‘Labour Policy and Progress: Overview’. Chapter 2 in: Towards a Labour Market in China. Oxford Scholarship Online, available at DOI:10.1093/0199245274.003.0002 [Accessed: 28/04/2018].

Lin, J. (2011). ‘The comparative advantage-defying, catching-up strategy and the traditional economic system’. Chapter 4 in: Demystifying the Chinese Economy. Cambridge: Cambridge University Press. Online, available at DOI:10.1017/CBO9781139026666.005 [Accessed 01/05/2018].

Lorenz, A.; Wagner, W. (2007). ‘Red China, Inc. – Does Communism Work After All?’. In: Der Spiegel. Online, available at: [Accessed 02/05/2018].

Meisner, M. (1996). ‘The Deng Xiaoping Era – An Inquiry into the Fate of Chinese Socialism, 1978-1994’. Toronto: HarperCollins Canada Ltd.

Oi, J. C. (1999). ’Two Decades of Rural Reform in China: An Overview and Assessment’. In: The China Quarterly, No. 159, Special Issue: The People’s Republic of China after 50 Years, pp. 616-628. Online, available at: [Accessed: 26/04/2018].

Ralston, D., et al. (2006). ‘Today’s State-Owned Enterprises of China: Are They Dying Dinosaurs or Dynamic Dynamos?’. In: Strategic Management Journal, Vol. 27, pp. 825–843. Online, available at DOI:10.1002/smj.545 [Accessed 05/05/2018].

Rosenberg, J. (1994). ‘The Empire of Civil Society’. London: Verso.

Rosenberg, J. (2013). `Kenneth Waltz and Leon Trotsky: Anarchy in the mirror of uneven and combined development’, In: International Politics Vol. 50(2), pp. 183-230. Online, available at DOI:10.1057/ip.2013.6 [Accessed 25/04/2018].

Rosenberg, J., (2016). ‘Uneven and Combined Development: ‘The International’ in Theory and History’. Chapter 2 in: Anievas, A. & Matin, K. (eds.), Historical Sociology and World History: Uneven and Combined Development over the Longue Durée. London: Rowman & Littlefield International.

Trotsky, L. [1932(2007)]. ‘History of the Russian Revolution’. Chicago: Haymarket Books. Online, Available from: ProQuest Ebook Central [Accessed 01/05/2018].

Walker, R.; Buck, D. (2007). ‘The Chinese Road: Cities in the Transition to Capitalism’. In: New Left Review, Vol. 46, pp. 39-66. Online, available at:  [Accessed: 26/04/2018].

Wang, F. (2004). ‘Reformed Migration Control and New Targeted People: China’s Hukou System in the 2000s’. In: The China Quarterly, Vol. 177, pp. 115-132. Online, available at: [Accessed: 26/04/2018].

Warner, M. (1987). ‘China’s Managerial Training Revolution’. Chapter 5 in: Management Reforms in China, Warner, M. (ed). London: Frances Pinter.

Xie, Y. et al. (2009). ‘Danwei and Social Inequality in Contemporary Urban China’. In: Res Social Work, Vol. 1(19), pp. 283-306. Online, available at doi:10.1108/S0277-2833(2009)0000019013 [Accessed 05/05/2018].

Zhang, D.; Unschuld, P. (2008). ‘China’s barefoot doctor: past, present, and future’. In: The Lancet, Vol. 372, pp. 1865-1867. Online, available at DOI:10.1016/S0140- 6736(08)61353-7 [Accessed: 28/04/2018].


[1] IMF – World Economic Outlook Database 2018

[2] Lorenz, A.; Wagner, W. (2007). ‘Red China, Inc. – Does Communism Work After All?’. In: Der Spiegel.

[3] Meisner, M. (1996). ‘The Deng Xiaoping Era – An Inquiry into the Fate of Chinese Socialism, 1978-1994’. Toronto: HarperCollins Canada Ltd, p. xii.

[4] Cohen, M. A. (2012). ‘Argentina’s Economic Growth and Recovery: The Economy in a Time of Default’. New York: Routledge, p. xvii.

[5] Huang, Y. (2008). ‘Capitalism with Chinese characteristics: Entrepreneurship and the State’. New York: Cambridge University Press.

[6] Oi, J. C. (1999). ’Two Decades of Rural Reform in China: An Overview and Assessment’. In: The China Quarterly, No. 159, Special Issue: The People’s Republic of China after 50 Years, p. 627.

[7] Ibid.

[8] Huang, Y. (2008), p. xviii.

[9] Ibid., p. 8.

[10] Rosenberg, J., (2016). ‘Uneven and Combined Development: ‘The International’ in Theory and History’. Chapter 2 in: Anievas, A. & Matin, K. (eds.), Historical Sociology and World History: Uneven and Combined Development over the Longue Durée. London: Rowman & Littlefield International, pp. 18-19.

[11] Meisner, M. (1996), p. 18.

[12] Deutscher, I. (1984). ‘Marxism, Wars and Revolutions’. London: Verso, p. 195.

[13] Ibid., pp. 205-06.

[14] Hung, H. (2013). ‘Labor Politics under Three Stages of Chinese Capitalism’. In: The South Atlantic Quarterly, Vol. 112(1), p. 205.

[15] Hung, H. (2016) ‘The China Boom: Why China will not rule the world’. New York: Columbia University Press, p. 47.

[16] Zhang, D.; Unschuld, P. (2008). ‘China’s barefoot doctor: past, present, and future’. In: The Lancet, Vol. 372, p. 1865.

[17] Ibid., pp. 1865-66.

[18] Meisner, M. (1996), p. 194.

[19] Hung, H. (2016), p. 48.

[20] Boyle, C.; Rosenberg, J. (2018). ‘Explaining 2016: Brexit and Trump in the History of Uneven and Combined Development’. (Unpublished Manuscript, University of Sussex), p.11.

[21] Rosenberg, J., (2016), pp. 21-22.

[22] Trotsky, L. [1932(2007)]. ‘History of the Russian Revolution’. Chicago: Haymarket Books, p. 5.

[23] Rosenberg, J., (2016), p. 17.

[24] Ibid.

[25] Trotsky, L. [1932(2007)], p. 4.

[26] Ibid.

[27] Rosenberg, J. (2013). `Kenneth Waltz and Leon Trotsky: Anarchy in the mirror of uneven and combined development’, In: International Politics Vol. 50(2), p.196.

[28] Trotsky, L. [1932(2007)], p. 5.

[29] Fan, C. (1995). ‘Of Belts and Ladders: State Policy and Uneven Regional Development in Post-Mao China’. In: Annals of the Association of American Geographers, Vol. 85(3), p. 422.

[30] Meisner, M. (1996), p. 199.

[31] Lin, J. (2011). ‘The comparative advantage-defying, catching-up strategy and the  traditional economic system’. Chapter 4 in: Demystifying the Chinese Economy. Cambridge: Cambridge University Press, p. 102.

[32] Meisner, M. (1996), p. 201.

[33] Boyle, C.; Rosenberg, J. (2018), p. 12.

[34] Hung, H. (2013), p. 205.

[35] Kerr, D. (2007). ‘Has China abandoned self-reliance?’ In: Review of International Political Economy, Vol. 14(1), p. 83.

[36] Boyle, C.; Rosenberg, J. (2018), p. 8.

[37] Knight, J.; Song, L. (2005). ‘Labour Policy and Progress: Overview’. Chapter 2 in: Towards a Labour Market in China. Oxford Scholarship, p. 20.

[38] Davidson, N. (2017). ‘Uneven and Combined Development: Modernity, Modernism, Revolution’, p. 82.

[39] Dunford, M.; Weidong, L. (2017). ‘A Century of Uneven and Combined Development: The Erosion of United States Hegemony and The Rise of China’. In: Вестник Мгимо-Университета, Vol. 5(56), pp. 7-32.

[40] For Hukou see: Chan, K.; Zhang, L. (1999). ‘The Hukou System and Rural-Urban Migration in China: Processes and Changes’. In: The China Quarterly, Vol. 160, p. 819. For Danwei see: Xie, Y. et al. (2009). ‘Danwei and Social Inequality in Contemporary Urban China’. In: Res Social Work, Vol. 1(19), p. 283.

[41] Knight, J.; Song, L. (2005), pp. 26-27.

[42] Ibid., p. 41.

[43] Ibid.

[44] Xie, Y. et al. (2009), p. 283.

[45] Ibid., p. 294.

[46] Ibid., p. 286.

[47] Ibid., p. 294.

[48] Chan, K.; Zhang, L. (1999), p. 830.

[49] Wang, F. (2004). ‘Reformed Migration Control and New Targeted People: China’s Hukou System in the 2000s’. In: The China Quarterly, Vol. 177, p. 116.

[50] Knight, J.; Song, L. (2005), p. 25.

[51] Chan, K.; Zhang, L. (1999), p. 839.

[52] Wang, F. (2004), p. 129.

[53] Knight, J.; Song, L. (2005), p. 22.

[54] Walker, R.; Buck, D. (2007). ‘The Chinese Road: Cities in the Transition to Capitalism’. In: New Left Review, Vol. 46, p. 44.

[55] Davidson, N. (2017), p. 85.

[56] Chan, K.; Zhang, L. (1999), p. 831.

[57] Hung, H. (2013), p. 209.

[58] Marx, K., quoted in Rosenberg, J. (1994). ‘The Empire of Civil Society’. London: Verso, 144.

[59] Hung, H. (2013), p. 204.

[60] Meisner, M. (1996), p. 523.

[61] Clover, C.; Sherry, J. (2016). ‘Didi Chuxing to be hit by rules on migrant drivers’. In: Financial Times.

[62] Ibid.

[63] Walker, R.; Buck, D. (2007), p. 55.

[64] Oi, J. C. (1999), p. 625.

[65] Warner, M. (1987). ‘China’s Managerial Training Revolution’. Chapter 5 in: Management Reforms in China, Warner, M. (ed). London: Frances Pinter, p. 73.

[66] Ralston, D., et al. (2006). ‘Today’s State-Owned Enterprises of China: Are They Dying Dinosaurs or Dynamic Dynamos?’. In: Strategic Management Journal, Vol. 27, p. 833.

[67] Ibid., p. 831-32.

[68] Ibid., p. 839.

[69] Ibid., p.  838.

[70] Ibid., p.  838-39.

[71] Boyle, C.; Rosenberg, J. (2018), p. 14.

[72] ICEF: Increasing Numbers of Chinese Graduates Returning Home

[73] Meisner, M. (1996), p. 493.


What Do We Mean by… Uneven and Combined Development?

February 21, 2022 Leave a comment


The radical novelty of what Trotsky meant by uneven and combined development is often underestimated. The most common mistake is to reduce it to, or confuse it with, the longstanding theory of uneven development. The most famous (and certainly the most often quoted) passage in Trotsky’s The History of the Russian Revolution (1932) is an expression of this position: “The privilege of historic backwardness – and such a privilege exists – permits, or rather compels, the adoption of whatever is ready in advance of any specified date, skipping a whole series of intermediate stages”. But if all that Trotsky had proposed was a schema in which the “advantages of backwardness” allowed less developed nation-states to adopt the most modern available technologies he would have remained within the established limits of unevenness and, indeed, would not have distinguished himself from Stalinist usage of the same concept. What is the distinction?

Uneven Development

Until the First World War uneven development had been a largely descriptive concept, without specific political implications. In Imperialism: the Highest Stage of Capitalism (1916) Lenin wrote, “The uneven and spasmodic development of individual enterprises, individual branches of industry and individual countries is inevitable under the capitalist system”. Essentially, he argued that by the beginning of the 20th century uneven development had acquired three main aspects.

The first was the process by which the advanced states had reached their leading positions within the structured inequality of the world system. During the late 19th century the “skipping of stages” had been the experience of several states, notably Germany, Italy and Japan. The pressure of military and commercial competition between the actual or aspirant Great Powers forced those which were still absolutist states based on the feudal mode of production – or at least those which were capable of doing so – to adopt the current stage of development achieved by their capitalist rivals. This was necessary if they were to have any chance, not only of successfully competing, but of surviving at the summit of the world order. In very compressed timespans they had been able to adopt the socio-economic achievements of Britain to the extent that they became recognisably the same kind of societies, without necessarily reproducing every characteristic of the Anglo-Saxon pioneer. Where backwardness remained it tended to be in the nature of the political regimes led by monarchs or emperors supported by a landowning aristocracy.

By the outbreak of the First World War membership of the dominant states was essentially fixed. What remained was the second aspect of uneven development: the ongoing rivalry between the great powers which involved them constantly trying to “catch up and overtake” each other in a contest for supremacy that would continue as long as capitalism itself.

This rivalry led in turn to a third aspect: the developed imperialist states collectively, but competitively, asserting their dominance over two other types of state, described by Lenin as “the colonies themselves” and “the diverse forms of dependent countries which, politically, are formally independent but, in fact, are enmeshed in the net of financial and diplomatic dependence”, like Argentina and Portugal. Colonial expansion prevented some of the societies subject to colonialism from developing at all, and in the case of the most undeveloped, the people involved suffered near or complete extermination and their lands were taken by settlers. More often the peoples survived, but their social systems were immobilised by imperial powers interested in strategic advantage or plunder, or both.

Trotsky certainly took uneven development in these three senses as his starting point – as is suggested by the word order in the title of his own theory: “I would put uneven before combined, because the second grows out of the first and completes it”. How then does the concept of uneven and combined development differ from uneven development as such? The main difference is that it takes account of the internal effects of uneven development. To explain the link between the advanced nature of Russian industry on the one hand, and the militancy of Russian workers on the other, Trotsky had to transcend the theory of uneven development, a process he did not complete until the early 1930s. The inability of uneven development to fully encapsulate these phenomena is what appears to have made Trotsky search for a new concept with which to supplement it. It took a political crisis to provoke this conceptualisation.

During the Chinese Revolution of 1925-7 the emergent Stalinist regime in Russia ordered the local Communist Party to subordinate its own organisation and demands to those of the bourgeois nationalists in the Guomindang. The ultimately disastrous outcome for the Chinese working class movement was the catalyst for Trotsky to generalise the strategy of permanent revolution from Russia to sections of the colonial and semi-colonial world. This was not done indiscriminately – since some were still untouched by capitalist development and had no working class of any size – but applied to those places where conditions similar to those in Russia prevailed. Due to a common set of circumstances, the working classes in these countries had far greater levels of both consciousness and organisation than the proletariat in the more developed countries where Marxists had traditionally expected the socialist revolution to begin. Trotsky claimed that “the prediction that historically backward Russia could arrive at the proletarian revolution sooner than advanced Britain rests almost entirely upon the law of uneven development”. But uneven development was not the sole basis for this prediction, as we can see by contrasting actual Russian development with two possible alternatives.

One of these was the path of the advanced capitalist states. The pace of development was relatively faster in most of the countries that followed Holland and England, partly because of the urgency of acquiring the attributes of capitalist modernity, partly because the long period of experiment and evolution, characteristic of the two pioneers, could be dispensed with. In the case of Scotland in the 18th century or Prussia in the 19th century, this led to enormous tensions which resolved themselves in moments of class struggle, foreshadowing the process of permanent revolution. But because these societies did make the transition to the ranks of the advanced societies, either as the centre (Prussia/Germany) or a component part of another national formation (Scotland/Britain) these moments passed with the tensions that caused them.

The other alternative was the path of the colonies or semi-colonies. Colonial rule could even throw societies backwards, as in the case of British-occupied Iraq. Ruling through the Hashemite monarchy after 1920, the regime deliberately rejected any attempts at modernisation, except in the oil industry. Instead it reinforced disintegrating tribal loyalties and semi-feudal types of land tenure over the peasantry.

Tsarist Russia neither emulated the process of “catch up and overtake” among the advanced countries nor suffered that of “blocked development” within the backward ones, but instead experienced a collision between the two.

Combined Development

It was in relation to developments in China that Trotsky finally moved beyond uneven development. He continued to employ the term between 1928 and 1930, most importantly in the articles collected in The Third International after Lenin, and in Permanent Revolution and its various prefaces. In these texts his main emphasis is still distinguishing his use of uneven development from that of Stalin, for whom countries developed at different tempos and must therefore advance through a series of stages – including that of socialism – at their own individual pace.

Trotsky highlighted instead, the “unity” of the world economy and the “interdependence” of the imperial powers and the colonial and semi-colonial world. Unevenness in this sense means simultaneously that individual countries could leap over the capitalist stage of development, as Russia had done and as China might have done, but would still be unable to complete the transition to socialism while the world economy as a whole remained dominated by the capitalist mode of production. The international system was both a spur at one moment and a block at another. Yet these important insights still did not address the question of how the first part of this process, the revolutionary moment, was possible. Trotsky needed a new concept, incorporating uneven development, but deepening its content.

It was in the first volume of The History of the Russian Revolution that he first outlines this new concept:

From the universal law of unevenness thus derives another law which, for want of a better name, we may call the law of combined development – by which we mean a drawing together of the different stages of the journey, a combining of separate steps, an amalgam of archaic with more contemporary forms.

The precise forms which combination took obviously varied depending on whether the country involved was a formal colony controlled by a single imperial power, like India, or one nominally independent, but actually subdivided between several warlords and imperial powers, like China. Clearly there were differences. Unlike Tsarist Russia, neither Imperial nor Republican China was in a position to stimulate capitalist industrial growth. Where similarities did exist, was in the role of foreign capital and imported technology together with the limited geographical implantation of capitalist industry. Nevertheless it was possible to generalise in relation to these effects.

Historical backwardness does not imply a simple reproduction of the development of advanced countries, England or France, with a delay of one, two, or three centuries. It engenders an entirely new “combined” social formation in which the latest conquests of capitalist technique and structure root themselves into relations of feudal or pre-feudal barbarism, transforming and subjecting them and creating peculiar relations of classes.

Uneven and combined development affects the totality of a national society, not merely the economy. Trotsky was not saying that forms characteristic of different stages of development simply coexist alongside each other in striking or dramatic contrasts, although that could be true. Nor was he just emphasising the existence of transitional modes of production, although he recognised that these could exist. A process that permeates every aspect of society, ideology as much as economy, must involve more than this. The “articulation” of capitalist and pre-capitalist modes had, after all, been progressing slowly in the Russian countryside since the abolition of serfdom in 1861, and had led to many complex transitional forms, as Lenin documented. None by themselves led to the type of situation Trotsky was seeking to explain:

At the same time that peasant land-cultivation as a whole remained, right up to the revolution, at the level of the 17th century, Russian industry in its technique and capitalist structure stood at the level of the advanced countries, and in certain respects even outstripped them.

The detonation of the process requires sudden, intensive industrialisation and urbanisation, regardless of whether the pre-existing agrarian economy was based on feudal or capitalist relations. Here too the Chinese experience was important. Trotsky was quite insistent – perhaps over-insistent – on which mode dominated the Chinese social formation. He rejected the Communist International’s claims that feudalism predominated in the Chinese economic base and political superstructure: “Of course, matters would be quite hopeless if feudal survivals did really dominate in Chinese economic life,” he wrote in 1929. “But fortunately, survivals in general cannot dominate.” Instead he emphasised the extent of market relations and influence of different forms of mercantile and banking capital. Rural social relations “stem in part from the days of feudalism; and in part they constitute a new formation”, but within this formation: “it is capitalist relations that dominate and not “feudal” (more correctly, serf and, generally, pre-capitalist) relations. Only thanks to this dominant role of capitalist relations can we speak seriously of the prospects of proletarian hegemony in a national revolution”.

Whatever the extent of Trotsky’s exaggerations here, it is important, not least in relation to modern China, that uneven and combined development can take place where the capitalist mode was already dominant. The archaic and the modern, the settled and disruptive, overlap, fuse and merge in all aspects of the social formations concerned, from the organisation of arms production to the structure of religious observance, in entirely new and unstable ways, generating socially explosive situations in which revolution became what Georg Lukács termed “actual”.

Implications for the Class Struggle

These new combined formations gave rise to conflicts unknown in earlier historical periods. On the one hand: “The [backward] nation…not infrequently debases the achievements borrowed from outside in the process of adapting them to its own more primitive culture”. From 1861 Tsarism established factories using manufacturing technology characteristic of monopoly capitalism in order to produce arms with which to defend a feudal absolutist state. On the other hand, by doing so they bring into being a class more skilled, more politically conscious than that faced by any previous absolutist or early capitalist states. All subsequent non-Marxist theories of “the advantages of backwardness” assumed that technological transfers had a limited, or at least delayed, impact on other aspects of social life. Against this Trotsky argued that these transfers could in fact quicken the pace of change more generally, so that they attained higher levels of development than in their established rivals. As an example of this he drew attention to the greater implantation of Marxist theory among the working classes of Russia and, later, China than in that of Britain. Thus, for Trotsky, the most important consequence of uneven and combined development was the enhanced capacity it gave the working classes for political and industrial organization, theoretical understanding and revolutionary activity:

When the productive forces of the metropolis, of a country of classical capitalism…find ingress into more backward countries, like Germany in the first half of the 19th century, and Russia at the merging of the 19th and 20th centuries, and in the present day in Asia; when the economic factors burst in a revolutionary manner, breaking up the old order; when development is no longer gradual and “organic” but assumes the form of terrible convulsions and drastic changes of former conceptions, then it becomes easier for critical thought to find revolutionary expression, provided that the necessary theoretical prerequisites exist in the given country.

But uneven and combined development can also work, as it were, in reverse: “debased adaptation” is not only a feature of backward societies. Here too the opening of the age of imperialism is decisive. Between 1870 and 1914, for example, imperial Britain, Germany and Japan all consciously emphasised the role of their monarch-emperors. In each case, the pre-existing symbolism of the crown was used to represent national unity against two main challenges: external imperial rivalry and internal class divisions. Trotsky saw this as a much more general phenomenon, necessarily caused by the need to maintain bourgeois hegemony over the exploited and oppressed in an era of revolution and which reached its peak in the US: “It is considered unquestionable that technology and science undermine superstition. But the class character of society sets substantial limits here too. Take America. There, church sermons are broadcast by radio, which means that the radio is serving as a means of spreading prejudices.”

The theory of uneven and combined development explained what occurs when the process of “overleaping” takes place in the colonial or neo-colonial world, where it is impossible to fully “catch up” with, let alone “overtake” the developed West, so “overleaping” occurs instead in a fragmentary or partial way. But the resulting combined forms, because of their inbuilt social instability, paradoxically made revolutionary outbreaks more likely than in the developed world, with its greater levels of stability and reformist traditions. In other words, the presence of uneven and combined development made it possible for a strategy of permanent revolution to be pursued with greater likelihood of success; its absence made it, not inevitable, but less likely that such a strategy would be pursued in the first place, thus leading to the process of “deflection” highlighted by Tony Cliff in his 1963 article.

Uneven and Combined Development Today

Permanent revolution, and consequently deflected permanent revolution may now be historical concepts, but uneven and combined development is not. This has important implications for the possibility of socialist revolution beginning in the Global South. The relentless expansion of neoliberal globalization, and the consequent devastating effects of industrialization and urbanization into areas they had previously bypassed, often under conditions of intense state repression, means that the same responses are being reproduced in places as distinct as China and Dubai. But these are only the most extreme examples of a general trend that is the most characteristic of the current phase of capitalist development. Two points need to be made in relation to the process.

One is that it is not limited to the Global South, but to the relatively undeveloped parts of the First and former Second Worlds. Take, for example, the Italian Mezzogiorno, where Italian unification was followed by a pronounced process of deindustrialisation, which led to a steady drain of capital to the North, with a long-term reservoir of cheap labour-power, cheap agricultural products and a docile clientele in the South. Here the process of uneven and combined development led to similarly high levels of militancy to that seen in countries characterized by more general backwardness. The key episode was the revolt of the Italian immigrants against their living conditions and low pay during the “industrial miracle” of the late 50s and early 60s, culminating in 1969. What is interesting about the Italian example, however, is that the process has continued, in different forms until the present day.

The other is that, in the Global South proper at least, the process is still unable completely to transform those societies. The state “containers” within which the process of uneven and combined development unfolds, including China, will never achieve the type of total transformation characteristic of the states that formed the original core of the capitalist world system, at least in any foreseeable timescale. Uneven and combined development is therefore likely to be an ongoing process, which will only be resolved by either revolution or disintegration. But in the meantime, China, and other states like India and Brazil where growth has been less dramatic, remain both inherently unstable in their internal social relations and expansive in their external search for markets, raw materials and investment opportunities. As we have recently seen in the Arab Spring, it is in this inherent instability that provides one of the preconditions for revolution.

Neil Davidson


Metabolic Rift and the Human Microbiome

Metabolic rift theory has been applied to understanding various instances of our society’s disruption of ecological processes. Capitalism, with its ever-expanding production to realize profits on an ever-growing market has created innumerable rifts between natural and social “metabolic” processes. Both as an analytical approach and a metaphor, metabolic rift theory also sheds light on the forms of disruption of human microbial ecosystems, with consequences for human health. Human microbiota, comprised of the microorganisms living on and in humans, has been shown to be essential for a growing list of physiological, metabolic, and developmental processes, as well as to mediate between environmental and physiological processes. Alterations of microbial biodiversity that result in disruption of microbial ecosystem functions (collectively referred to as dysbioses), have been associated with many non-communicable and autoimmune conditions that are increasingly prevalent in industrialized and developing nations. Major factors favoring these dysbioses include diets high in processed foods and extensive antibiotic exposures.

These factors cannot be divorced from the practices of respective industries that see profits and capital accumulation as their primary goals. These goals favor production that is divorced from ecological networks and respond to a reductionist paradigm that conceives of complex processes in terms of simplified causal chains. Capitalist production results in cascades of unforeseeable consequences, which must then be met by magic-bullet solutions, setting the stage for further undesirable consequences. While practical health measures arising from emerging knowledge of the microbiome are important, they do not address the underlying cause of the disruptions that cause dysbioses. We can expect to continue to see disruptions of the microbiome until we are able to re-conceptualize and transform our engagement with ecosystems large and small, and with the assistance they provide to humankind.

“Metabolic rift” is the concept popularized by environmental sociologist John Bellamy Foster, following Marx and others, to describe the disruption of ecological processes and the tendency to sever the connection between ecological and social realms.1 Foster attributes the metabolic rift to the intrinsic dynamic of capitalist production, with its private ownership of the means of production, drive for profits, ever-expanding markets, and continuous growth. Marx employed this idea to describe the effects of capitalist agriculture on the degradation of soil fertility. Foster and his co-thinkers have employed the concept in analyses of climate change, biodiversity, agriculture, fisheries, and many other aspects of human interaction with our biosphere.2

There is perhaps no more appropriate use of this concept than in reference to the microbial ecosystems of which we are a part, and which are part of us—the human microbiota, organisms living on and inside of humans—and the disruptive impact the prevailing mode of production and consumption has had on them, with serious consequences for our health.

Our Own Ecosystem

Over the past decade and a half, advances in DNA sequencing technology and bioinformatics, as well as theoretical advances in other areas of science, particularly ecology, have favored paradigm-shifting research on what is popularly called the human microbiome. In the literature, “microbiota” is generally used to denote the totality of microbial communities inhabiting different body regions, and includes bacteria and viruses, as well as eukaryotes (organisms with nuclei), such as fungi and amoebas. The microbiome refers to the collective genomes of these organisms. Biologists are now able to sample the genomes of entire microbial communities, particularly those living on and in us, allowing us to identify many thousands of new microorganisms, which had previously been unknown largely because they did not grow on culture dishes.3

Based on this research, together with subsequent progress in identifying key genes and their products, as well as metabolic pathways and metabolic byproducts, researchers have identified a host of vital functions and networks involving these microbial communities and their hosts. Informed by ecology, investigators of human microbiota realized that they were looking at entire ecosystems, of which we are but one (albeit crucial) species.4

Our body ecosystems are integrated by a high degree of mutual dependency, the result of millions of years of coevolution. For example, a primary function of maternal milk, beyond infant nourishment, is the formation and development of the immune system of infants. Breast milk contains a vast, species-specific array of relatively small bioactive carbohydrates (human milk oligosaccharides), indigestible to human babies but accessible to bacterial enzymes. A single variety of bacterium called Bifidobacterium longum infantis has coevolved with Homo sapiens from related bacteria in our primate ancestors.5 This bacterium contains all the enzymes necessary to process these carbohydrates.6 It is a critical early colonizer of the human gut, and is involved in various aspects of infant nutrition and organ system development.7

There are approximately as many microbial as human cells in our bodies.8 Our gut microbiomes alone consist of up to a hundred times more distinct genes than those possessed by our own cells and perform a host of metabolic functions of which our cells are incapable.9 Several distinct microbial ecosystems cohabit our bodies. These are characteristically found in our oral cavity, respiratory, gastrointestinal and vaginal tracts, and our skin. The largest, most complex and best-studied microbial communities form the gut microbiome. This comprises some 39 trillion bacterial cells (and large numbers of other organisms).10 Many of these microscopic symbionts, living in a mutually beneficial relationship with humans, are integrated with our body systems through intricate food webs. Some bacteria consume the metabolic products of other bacteria, and so on down the chain, finally producing small molecules that have important effects on human physiology.11 Some bacteria and their cell components engage more directly with our cells, while others engage in forms of competition, predation, and other interactions with other microbes.12 Some biologists conceive of our microbiota as a hitherto unrecognized organ or organs fulfilling important physiological functions and networking with other organ systems, while many microbial ecologists propose that we are not “individuals,” but collective organisms comprised of the person (mammal) and its entire microbiome. Many other species are also collective organisms, termed holobionts, tightly bound by evolution ever since the earliest eukaryotic cells arose from fusions of independent prokaryotes (non-nucleated cells, such as bacteria).13

Accustomed to seeing microbes as deadly enemies subject to a “war on disease,” scientists and health professionals have begun rethinking the microbiota as essential components of our health, and indeed our development and evolution. Many disease states are being reconceived as the result of disruptions of normal ecological states caused by changes in microbiological diversity in the same way that alterations or loss of biodiversity can give rise to susceptibility to invasion, decreased community productivity and ability to adapt to change, and loss of other ecological functions and services.14 Just as monocrop farming systems favor proliferation of pests, facilitated by evolved resistance to pesticides, changes in gut biodiversity as a result of antibiotic use seems to favor invasion by pathogens, such as the often deadly gastrointestinal pathogen Clostridium difficile.15

Like other ecosystems, our microbial ecosystems develop from colonization through a series of successions, with each stage contingent on previous ones. And like forest ecosystems, for example, disruption of early stages can have far-reaching consequences for the host and ecosystem.16 If a cleared field is subject to ongoing disturbance, normal stages of succession will not occur. Instead, the field will be colonized by an assortment of opportunistic species. Something similar happens when the natural process of colonization and normal successional stages of microbiota are disrupted.17 Studies have confirmed that successional states of babies’ microbiota can be retarded and loss of function can occur following disturbance at early stages.18

Some evidence suggests that our bodies are initially colonized in utero via the placenta and amniotic fluid.19 Most studies confirm that the major surge of colonization occurs at childbirth, as the baby passes through its mother’s birth canal. This initial microbiota comes from the mother’s vagina.20 Another major microbial succession develops through breast-feeding, with colonizers like B. infantis possibly introduced through the milk and/or proliferating from populations already present pre- or post-partum on the basis of milk carbohydrates.21 These initial successions are critical to our future health. They are involved in the formation and development of a number of body systems.22 Initial, healthy microbial communities are not established in cases of pre-term births, caesarian sections, or formula feeding. Normally, our microbiota assume an adult configuration by about five years of age, although they continue developing through adolescence.

While there are certain taxonomic commonalities at given successional stages at given body sites among different individuals, individual hosts vary greatly in terms of microbial species. Yet core sets of major taxonomic groupings and metabolic functions seem to be conserved across individuals at given body sites, absent disruption. As is the case with macro-ecosystems, healthy microbial communities possess a high degree of functional redundancy: various, even unrelated, bacteria fulfill the same functions, and fill the same metabolic “niches” in different individuals.23 This functional redundancy is facilitated by horizontal gene transfer from one organism to another (unfortunately, including pathogenic genes) as well as by convergent evolution.24 And such redundancy enables microbial communities to restore or retain metabolic functionality following disturbances, ecological properties known as resilience and resistance. But it is not infallible in the face of systematic ecological disturbance and biodiversity loss, which can compound across generations, which is what we seem to be experiencing at both macro and micro levels in our industrialized and industrializing societies.25

Microbiota-Physiological Interactions

The human microbiota engages in interactions with all body systems in which both the body and microbiota benefit (a “mutualistic” relationship), often as critical modulators of developmental, metabolic, and physiological functions, including roles in the formation of the vascular system, formation of bone tissue, and brain and neural development and modulation.26

The most important roles of microbial interaction involve development and modulation of the immune system. Recent microbiome research has reframed our understanding of the very role of the immune system from a defensive bastion to a gardener, cultivating a healthy microbiota.27 Symbiotic microbes, especially in the gut, are thought to play crucial roles in mediating the body’s critical inflammatory response. Inflammation is vital for coping with pathogens and antigens; its dysfunction is implicated in a host of chronic metabolic and autoimmune diseases epidemic in modern societies. One set of mechanisms involves bacterial regulation of the balance between immune system cell types.28 This mediation may be carried out by way of various products of bacterial metabolism, such as short-chained fatty acids. The equilibrium between pro- and anti-inflammatory immune functions may be disrupted by various environmental inputs, including diet and antibiotics, via alterations to the microbiota. In turn, changes and breakdowns in microbial communities have been linked to several chronic and pathogenic disease states, such as allergies, asthma, and inflammatory bowel disease.29 Symbiotic microbes also play more direct roles in blocking pathogen colonization, by outcompeting or destroying them.30

Interactions between the microbiota and the digestive system are among the earliest and best known. Beyond producing human nutrients through vitamin synthesis and breakdown of complex carbohydrates, gut microbiota play a mediating role in carbohydrate and lipid uptake, storage, and metabolism. They do this through metabolic products and secretions that allow them to interact with the intestinal lining, adipose cells in body fat deposits, and cells in the liver, including cells which produce the “hunger hormones,” leptin and ghrelin.31 They also play a critical role in the development of the child’s intestinal lining and mucosa, including growth of the finger-like villi vital for nutrient absorption, and the intestinal vascular tissue.32

The gut microbiota is also believed to play a role in nervous system development and function. According to Stephen M. Collins and others, various mouse studies indicate that the microbiota affects “the development of neuronal circuitry that is relevant to a broad spectrum of activities, including anxiety­-like behavior, motor control, memory and learning.”33

Bacteria mediate a series of pathways known as the “gut-brain axis.” This axis involves biochemical cross-talk between the dense complex of neurons associated with the gastrointestinal tract, the vagus nerve, the neuro-endocrine and immune systems, and the brain.34 It is a two-way superhighway, which not only affects digestive and immune functions, including secretion of pro-inflammatory substances, but also affects mood and behavior. The Hypothalamus-Pituitary-Adrenal axis (HPA), which regulates the stress response, is one component of this “gut-brain axis.” A number of gut microbes are known to enhance or suppress the release of stress hormones by the HPA axis.35

In addition, the microbiota can interact via other mechanisms with various regions of the brain, including the emotion-regulating limbic system, possibly through products formed by the workings of cells (metabolites), such as lactic acid, or through secretion of known neurotransmitters, such as acetylcholine or GABA.36 Microbial metabolites and cell products also impinge on the vagus nerve and enteric nervous system.37 Microbiota-induced changes in immune system function can also affect neurological function through pro- or anti-inflammatory mechanisms.38 Shifts in bacterial communities may factor into a number of mental disorders, including depression, autism, and schizophrenia.39

Our bacterial communities are important modulators of our energy metabolism, operating through various mechanisms, such as direct interactions with intestinal cells or stimulation of neuroendocrine or inflammatory pathways. Distinct microbial communities can either facilitate energy uptake and storage as fat, or efficient use of energy sources by muscle and other cells. Thus, different microbial communities are associated with types of obesity and overweight, as well as the suite of disorders related to the metabolic syndrome. In particular, some microbial suites are thought to favor insulin resistance, a pivotal condition of metabolic syndrome, associated with type 2 diabetes and cardiovascular disease, during which both serum insulin and glucose levels increase, as muscle and other cells cease taking up glucose in response to the insulin. Early studies showed that transfer of microbial communities from overweight humans to germ-free mice fed lean diets can induce obesity and fat storage in the mice. In contrast, germ-free mice fed high-sugar and high-fat diets showed resistance to obesity. Moreover, in both humans and mice, gastric bypass surgery (RYGB) shifts microbiota from obesity-associated states to lean-associated states. What is more, when these gastric bypass microbiota are introduced into germ-free mice, they show reductions of serum triglycerides and body weight. As Kristina B. Martinez and colleagues explained, “taken together these data suggest that the microbiota following RYGB in humans and mouse models elicits a direct functional impact on host energy balance, resulting in restoration of metabolic homeostasis and resistance to diet-induced obesity.”40

Microbiota Disruption and Disease

In macro-ecosystems, persistent disturbance can compound and lead to state changes in the ecosystem, shifts in species and populations of organisms and ecosystem functions.41 Biodiversity decline can lead to the loss of ecosystem functions and services, such as productivity, nutrient cycling, resilience, and resistance to invasion.42 This is why monocrop farming is particularly prone to pests, for example. Ecosystem functions constitute the “metabolism” of a community. The loss of ecosystem functions and services is due to the loss of both redundant and complementary functions of organisms.43 For example, pesticide use can result in loss of beneficial predatory insects and pollinators or nitrogen-fixing symbiotic bacteria.

Just as is the case in macro-ecosystems, the microbiota shows a degree of resilience in the face of stressors. However, dramatic or persistent stressors can induce changes from healthy community composition and functionality to degraded communities (dysbiotic states), or can even cause the collapse of the microbial communities.44 Moreover, previously adaptive states might be rendered maladaptive under altered environmental conditions.45 These appear to be occurring at present, particularly in industrialized societies, but increasingly in developing nations. Residents of industrialized societies show reduced microbial biodiversity compared to members of agrarian or hunter-gatherer societies, as well as a shift to bacterial communities with enhanced energy storage functions—production of metabolites that favor inflammation and other manifestations of a rift between symbiont-host relationships.46 At the same time, global societies are in the throes of an epidemic of non-communicable, chronic, and autoimmune diseases that have been linked to the “western lifestyle.” Moreover, these diseases show a socioeconomic gradient.47 Industrializing societies increasingly present these same dysbiotic states, while continuing to manifest other dysbioses associated with malnutrition.48

Two related theories, both supported by experimental and epidemiological data, may help explain these observations. The better-known of the two, the “hygiene hypothesis,” affirms that lack of childhood exposure to microbes limits normal development of the immune system and leads to susceptibility to allergic and autoimmune conditions.49 The second, known as the “disappearing microbiome” (or more generally, biodiversity) hypothesis, links social and environmental factors such as diet, rampant antibiotic use, and current medical practice to the loss of microbial biodiversity and ecosystem functionality.50 One recent study demonstrated that a diet low in fiber and high in fat and protein produced a decline in gut microbial diversity that compounded across generations.51 Nor could these losses be corrected simply by restoring high-fiber diets to experimental subjects, indicating that some deficiencies were permanent, barring benefits from transplants of microbiota.52

Microbial community disruptions have been associated with a growing number of both pathogenic and non-communicable illnesses. These include metabolic syndrome (discussed above), as well as Irritable Bowel Syndrome, Inflammatory Bowel Disease, necrotizing colitis, asthma, Kwashiorkor, Parkinson’s Disease, allergies, various types of cancer, Autism Spectrum Disorder, multiple sclerosis, chronic depression, dermatitis, periodontal disease, and candidiasis, among others.53

Environmental Impacts on Microbiota

Many factors shape the development and functioning of the human microbiome. However, two seem to play inordinately important roles in shaping community composition and inducing dysbioses: host nutrition and exposure to antimicrobials and other pharmaceutical compounds.


Diet and dietary change are thought to have the single greatest impact on our gut and possibly all other microbiota, as a result of both nutrient availability and the effect of what we consume on local environmental conditions, such as pH, secretion of bile, and so on. Studies on the coevolution of mammals and intestinal microbial communities have shown that characteristic microbiotas are associated with herbivorous, carnivorous, or omnivorous hosts, independent of host taxonomic group. And humans favoring herbivorous or carnivorous diets possess microbiota similar to other mammals that rely on these diets.54

Gut communities differ strongly between individuals who consume diets high in simple sugars, animal fats, and processed foods—i.e., the “Western diet” or “industrialized diet,” and consumers of diets rich in vegetable fiber and other complex carbohydrates, sources of vegetable protein and fish.55 People consuming diets rich in fiber have greater diversity of gut microorganisms, reflected in greater diversity of genes and functions of microorganisms.56 Such diets favor a preponderance of types of organisms (taxa) and functions associated with production of a number of beneficial metabolites and favorable interactions with our immune and other systems.57 Diets rich in certain fats and simple sugars, in contrast, are associated with diminished diversity at various levels, seem to favor taxa that support greater energy extraction and storage functions, and tend to produce a number of harmful metabolites that favor inflammation.58

Short-term dietary variations can produce alterations to the microbiota. Generally, a healthy, resilient microbial community can rebound from such disturbance. Consecutive short-term changes and long-term dietary shifts can have profound, continuing, even permanent impact on the microbiota.59 Studies directly comparing diets provided over different durations indicate that long-term consumption of the Western-type diet favors distinct microbiota types with functions associated with detrimental health outcomes.60

Marit Zinöcker and Inge Lindseth argue that “the Western diet promotes inflammation that arises from both structural and behavioral changes in the resident microbiome. The environment created in the gut by ultra-processed foods, a hallmark of the Western diet, is an evolutionarily unique selection ground for microbes that can promote diverse forms of inflammatory disease.”61 They then point to a large number of studies linking food additives—including emulsifiers and artificial sweeteners, low fiber content, high fat and sugar content, and chemical byproducts of food processing—to both shifts in bacterial communities and inflammation.

High-fat diets and specific fat types have been linked to alterations of the microbiota and various metabolic markers. Research by Lawrence David and colleagues demonstrated that shifting from a diet rich in vegetable fiber to one based on animal fats produced a dramatic change in human gut community structure and functionality, with a decrease in beneficial classes of bacteria and bacterial metabolites and concomitant increases in detrimental bacteria and gene products.62 A similar study on mice also pointed to the overwhelming impact of high-sugar/high-fat (saturated animal fat) diet on microbiota.63 Studies comparing omega-6 polyunsaturated (vegetable) fats with animal-based saturated fats, and omega-3 rich polyunsaturated fish oils, showed different bacterial groupings and functions in the experimental mice, which, in turn, correlated with physiological changes in the animals. The first was associated with inflammation of fat tissue, the second with factors leading to colitis, and the third with reduced adipose-related inflammation.64 Another study indicated that diets rich in omega-3 polyunsaturated fatty acids favored enhanced neurobehavioral development in mice “closely associated with comprehensive alterations in gut microbiota composition” and other factors.65 Recent research also demonstrated bacterially mediated reduction of metabolic syndrome in mice given omega-3 fatty acids, and provided a possible mechanism for this in microbially mediated anti-inflammatory signaling.66

Simple sugar consumption is implicated in both microbial community alterations and metabolic syndrome. Work in Yael Nobel’s laboratory showed that simulated soft drink sugar combinations significantly altered the gut microbiome in infant and juvenile rats, favoring some groups associated with type 2 diabetes and reducing groups associated with beneficial bacterial metabolites.67 Another study found that a diet enriched with fructose induced symptoms of metabolic syndrome in rats, including insulin resistance, elevated plasma lipid levels, glucose intolerance, and inflammation.68 When the animals given this high-fructose diet were treated with antibiotics, microbial community composition shifted and metabolic syndrome markers disappeared. This suggests a mediating role for these groups in fructose-induced metabolic syndrome. Research by Fang Liu and her laboratory found that a seaweed-derived antioxidant reduced obesity, metabolic syndrome, and inflammation in mice on high-fat and sucrose diets, and tracked these ameliorative effects to alterations in the gut microbiota.69

In a review of existing research, Benoit Chassaing and colleagues attributed a dominant role in the proliferation of inflammatory metabolic syndrome disorders to the loss of fiber from our diets, noting that it is “the macronutrient whose levels have changed most” since the 1950s.70 A recent investigation by a member of Chaissaing’s lab found that the soluble fiber inulin suppressed metabolic syndrome in mice given high-fat diets, and delineated the mechanism involved, which was disruption of the gut microbiota by the high-fat diet, consequent loss of a protective layer in the small intestine, and infiltration of the intestinal lining by bacteria, producing systemic inflammation.71 The inulin restored the microbes and protective layer.

The global population confronts a nutritional dichotomy. While industrialized nations appear to suffer from epidemics of obesity and associated disorders, a large portion of the world’s population faces malnutrition and hunger. Both manifestations are associated with alterations to the microbiota.

While malnutrition is unequivocally due to insufficient uptake of nutrients, it can alter the microbiota, which, in turn, may mediate a number of malnutrition-related conditions or further hinder nutrient absorption. Several studies have shown that malnutrition reduces and restructures microbial diversity, and has a particular impact on bacterial communities during the postnatal period.72 In turn, this altered microbiota has been found to have a causal role in conditions like Kwashiorkor, a type of protein deficiency associated with severe malnutrition.73 A series of studies conducted in Bangladesh, Malawi, and several other countries, based on clinical data as well as mouse and pig models, found that both diet and microbiota influence growth in body mass and height, affect the ability to metabolize various nutrients, and influence susceptibility to pathogens in infants.74 One key element in this equation is the familiar presence in maternal milk of human milk oligosaccharides. Researchers in Malawi and Bangladesh found low levels of these human milk oligosaccharides in breast milk of mothers with severely stunted six-month-old children as compared with healthy children.75

Researchers transferred fecal microbiota from growth-stunted children and normal children to germ-free mice and piglets. These studies showed that severe malnutrition hinders normal microbial community successions, producing immature gut microbiota with respect to the age of the child. This, in turn, was associated with reduced growth rates in children.76

In another set of studies, germ-free mice were given microbiota from either healthy or stunted human infants and then mixed together. Mice are coprophagous, meaning that gut bacteria are shared through ingestion of feces. The age-normal microbes spread to the mice with immature microbiota, ameliorating the growth-stunting effect, as compared with control mice that were just given the immature microbiota. Researchers examined the mechanisms involved in these effects and found that the gut organisms can modulate the response to growth hormone.77

Finally, researchers used targeted antibodies to identify pathogenic strains of bacteria from severely malnourished children that weakened the intestinal lining, permitting infection and producing inflammation. These pathogens, normally inhibited by a healthy microbiota, could be temporarily blocked by transplanted microbiota from healthy hosts.78

In summary, diet plays a profound role in shaping human microbial communities. At the same time, our “industrial diet,” with its emphasis on cheap, processed foods consisting of low fiber, high salt, fat, sugar, and chemical additive ingredients, has increasingly been associated with a host of chronic and non-communicable conditions epidemic in industrialized countries and increasingly sweeping developing countries. And of course the apparent opposite of this surfeit of cheap, industrial food—the absolute lack of nutrients endemic to many regions of the world—also produces pathological health issues. Numerous studies indicate that these dual forms of malnutrition disrupt the gut microbiota. And considerable evidence is accumulating, particular in the case of the “Western diet,” that this disruption is playing a causal role in that epidemic.


Antibiotics are not human inventions, but have instead always been part of the microbial biochemical repertoire, produced by microorganisms not only to defeat competitors, but as a means of intercellular communication. Antibiotics have also undoubtedly been of enormous benefit to human health, principally for those who have had access to them. However, their market-driven proliferation has led to persistent exposures far beyond those normally experienced by microorganisms. Broad-spectrum antibiotics in particular have been favored, precisely due to their ability to control a broad range of pathogens, but these have had especially pronounced effects as both disruptors of microbiota and stimulators of antibiotic resistance.

Overuse of antibiotics on humans and farm animals has given rise, through natural selection, to antibiotic resistant pathogens, and then “superbugs,” bacteria that are resistant to several, or even all currently used antibiotics. And genes that confer resistance—together with other factors that enhance pathogenicity—are transferred, even between different bacterial species via horizontal gene transfer, converting normally minor members of the microbiota into opportunistic killers.

Martin Blaser, a leading authority in microbiome research and originator of the disappearing microbiome hypothesis, considers antibiotic use to be a “four-edged blade.”79 The first two blades are the benefits to individual and community health. The third edge is the long-predicted problem of antibiotic resistance, and the fourth is the damage antibiotics inflict on individual (and community) health through impact on the microbiota. There are many important elements to this impact.

First, although there are differences in the specific effects of different antibiotic types, in general, these drugs have been shown to alter microbial communities and their functional capabilities. In a survey of antibiotic impacts on microbiota, sixty-eight antibiotics affected abundance of forty-two major bacterial genera, some only impacting one or a few taxa, while others affected up to thirty-two genera.80 The main phyla affected include the principal phyla in the human microbiome: the Bacteroidetes, Firmicutes, Actinobacteria, and Proteobacteria. These include many important symbionts. In fact, several of the genera associated with important positive health-related functions are among the most antibiotic-sensitive types of microbes.81 Change or loss of community metabolic attributes due to antibiotic treatment can be drastic and persistent, and may result from the loss of only a few keystone taxa. Treatment by different antibiotics and combinations can result in changes in the relative abundance of bacterial metabolites in fecal samples by up to 87 percent, producing imbalances in many bioactive compounds.82 A long-term study of Finnish school children showed that administration of commonly prescribed antibiotics produced extensive losses and sharp changes in microbial taxonomic and functional composition, and correlated increases in some chronic health issues.83 The authors concluded that a major class of commonly prescribed antibiotics “may have undesired effects on the developing microbiota of children, which may compromise the development of a healthy immune system and metabolism.”

Second, many studies point to impacts of both short- and long-term administration, of both sub-therapeutic and therapeutic exposures, on our microbial ecosystems. Clinical and laboratory studies link persistent antibiotic use with enduring or permanent diversity loss, including loss of keystone taxa critical for the microbial ecosystem and human health. As a result, antibiotics may represent a major causal factor behind the “disappearing microbiome” hypothesis.84

Third, antibiotic usage also correlates with human physiological changes and a growing number of communicable and non-communicable pathologies. Studies on mice have provided evidence of causal links between antibiotic usage, alterations to the microbiota and pathologies.85 Health practitioners and researchers have long known about the phenomenon of anemia in patients given certain antibiotics. A recent mouse study showed that red blood-cell formation in the bone marrow is mediated by gut microbes via interactions with the intestinal immune system, which, in turn signals stem-cell differentiation in the marrow. Antibiotics suppress this “cross-talk” by depleting the gut microbiota.86

Fourth, as with nutrition and other factors influencing the microbiome, antibiotics appear to exercise their most profound impact during the critical developmental window during early life stages. Asthma, types 1 and 2 diabetes, obesity, celiac disease, allergies, and inflammatory bowel disease are all linked to antibiotic use via dysbioses in young children. A large cohort study of more than 28,000 mother-child pairs in Denmark found that antibiotic administration during the child’s first six months of life was associated with heightened risk of overweight at seven years of age.87

Fifth, not only does antibiotic treatment reduce biodiversity and alter community composition, but it has been shown to enhance transfer of antibiotic resistance genes between bacteria by several mechanisms. The human gut has been compared to a bioreactor, with billions of bacteria in close proximity. This means that bacteria favored with antibiotic resistance can readily transfer the respective genes to other bacteria. Antibiotics have also been shown to increase expression of bacterial genes involved in horizontal gene transfer and virus-mediated transfers of bacterial genes.

The impact of antibiotics commonly used in treatment of gastrointestinal infections is illustrative. Antibiotic administration as prophylaxis following gastrointestinal tract surgery reduces symbiotic microbes, particularly species that hold Clostridium difficile in check, resulting in loss of colonization resistance and serious infections.88 Treatment of C. difficile infections with vancomycin, the drug of choice, also eliminates normal microbiota and favors the spread of antibiotic-resistant pathogens.89 In particular, treatment with streptomycin or vancomycin leads to infection by Salmonella strains, due to loss of immune system-modulating and/or colonization-blocking species, as well as by stimulating intestinal cells to produce a food source that gives the Salmonella a competitive advantage over other bacteria.90

Social Determinants of Microbiota

Public health researchers have long known of the close relationship between social conditions and inequities and health outcomes. A large body of public health literature documents causal relationships between noncommunicable diseases—such as types 1 and 2 diabetes, cardiovascular disease, colon cancer, breast cancer, and asthma—and socioeconomic status, race, and gender. Other studies have shown how social conditions facilitate the spread and virulence of pathogens, often to the disadvantage of those who are most powerless. More recently, researchers have implicated the loss of microbial diversity and dysbiotic states in many of these diseases. Keisha Findley and her colleagues proposed a mechanistic model involving the immune system for the interaction between social environment, microbiome, and many chronic conditions:

The host immune system is extremely sensitive to changes in the environment and the microbiome. Consequently, perturbations of any kind may result in an aberrant immune response and increased susceptibility to chronic disease. We speculate that a bidirectional interaction exists between the microbiome and psychosocial indicators, and both change in response to the health status of the individual. We recognize that the microbiome may possibly change in response to the immune system, and conversely, the immune system may respond to changes in the microbiome. Furthermore, the same bidirectional relationship observed between the microbiome and psychosocial indicators exists between overall health status and psycho-social indicators.91

In the past few years, scientists have begun exploring the impact of social and economic conditions and the consequences of inequity on the microbiome itself. The relationship should not be surprising, given the impact of factors such as diet, medical practices, or environmental exposures on the microbiota. Tao Ding and Patrick Schloss observed distinct bacterial communities in vaginal and colonic sites in women depending on educational level, a common surrogate for socioeconomic status.92 Ricardo de Mello and associates found greater proportions of Lactobacillus and Bifidobacterium—both associated with beneficial health impacts—in fecal samples of Brazilian children from wealthy backgrounds, compared to children from favelas.93 And they noted the association between these microbes and the Body Mass Index of the children. Another study found a positive correlation between gut biodiversity and neighborhood socioeconomic status.94 A recent study established that the vaginal microbiota of white women as compared with African American women is dominated by Lactobacillus species, which establish a more acidic pH, favorable to vaginal health, a possible consequence of dietary factors.95 African Americans also have much higher rates of colorectal cancer than whites. A study by Goyal and colleagues examined the relationship between dysbiosis and colorectal cancers in African Americans.96 They observed that African Americans with colon cancer show lower levels of butyrate than other racial groups. This compound is a beneficial metabolic product of bacteria associated with high-fiber, low-fat diets. In addition, microbiota have been found to diverge markedly between residents of industrialized and developing nations, urban and rural populations, and between adult and elderly populations.97 Among the latter, it has been shown that gut microbiota is more diverse and healthier among elderly living in communities than in residential facilities.98 To what degree many of these microbial differences respond to socioeconomic conditions or covariates or even genetics, or whether they cause or reflect health conditions has not yet been established.

Capitalism and Micro-Ecological Disturbance

Why would we consider this pattern of disruption of the microbiota and consequent dysbioses to be a manifestation of dynamics intrinsic to the capitalist mode of production and consumption, rather than excesses related to more general tendencies of the “human condition” or more specific and unrelated tendencies of modernity (say, urbanization)? It is worth noting that a burgeoning literature, borne of the looming planetary ecological crises—including climate change, biodiversity loss, introduction of toxic and carcinogenic materials into the biosphere, and disruption of biogeochemical cycling—has increasingly drawn out the connection between these transgressions of planetary ecological boundaries and capitalist production, particularly the inherent tendencies to unending and ever-expanding capital accumulation and its corollary, rampant consumerism. The major environmental influences on the human microbiome all exemplify the tendency of capitalist production and consumption to disrupt ecosystems and attenuate or destroy ecosystem functions and services.

The Food Industry

As mentioned previously, the so-called Western diet has been implicated in a growing number of chronic, noncommunicable diseases (NCDs) associated with modern industrialized societies. In fact, most public health experts express concern about the soaring incidence rates of such conditions as obesity, coronary heart disease, hypertension, stroke, diabetes, certain types of cancer, asthma, chronic hepatic diseases, and chronic renal diseases in developed countries over the past decades. However, these NCDs have now reached epidemic proportions in developing countries as well, with 80 percent of NCD-related deaths now occurring in the lower and middle-income countries, and with two-thirds of global deaths due to NCDs.99

The Western diet is perhaps better characterized as the “industrial diet,” as Anthony Winson calls it in his book of that title, which develops a detailed analysis of the role of the food industry in our nutritional crisis and epidemic of NCDs.100 Winson shows how the proliferation of this unhealthy diet is largely the result of investment and marketing decisions made over the past century by key players in the food industry in the global North, particularly in the United States. These trends have extended to developing countries over the past four decades of neoliberal economics and globalization. As we have shown previously, the microbiome is a crucial mediator between diet and health, with dysbioses implicated in a growing number of these diseases.

The industrial diet is dominated by highly processed, nutritionally stripped and degraded foods, containing excessive amounts of unhealthy fats, refined sugars and simple starch, salt, and various other additives. This diet represents a dramatic departure from the nutritional components that humans consumed during the better part of our history as a species, which shaped our biological evolution and that of our coevolved microbiota. Various lines of research indicate that we are adapted to an omnivorous diet consisting of significant portions of vegetable fiber derived from roots, leaves and shoots, various types of animal protein obtained by foraging, hunting, fishing, or scavenging, and various seeds, nuts, and fruits, as seasonally available. The modern Western diet upends these proportions, adding foodstuffs and nutrients that were scarce or unavailable to our ancestors, while drastically reducing fiber and vitamin-rich fruits and vegetables.101 Nutritionist Loren Cordain and her coauthors note that “although dairy products, cereals, refined sugars, refined vegetable oils, and alcohol make up 72.1 percent of the total daily energy consumed by all people in the United States, these types of foods would have contributed little or none of the energy in the typical preagricultural hominin diet.”102 Furthermore, combinations of those products make up the overwhelming majority of confected, processed foods in the industrial diet.

According to Winson, this diet was largely birthed in the United States in the nineteenth century, when specific conditions of territorial expansion, agriculture, economic development, and processing technology favored the industrialization of food production and processing.103 Through the late nineteenth and twentieth centuries, it expanded throughout the global North. Production of refined white flour, made possible with the invention and proliferation of roller-milling, was an early example of this tendency. Mass cultivation of hard spring wheat in the expanding U.S. agricultural frontier was coupled with the new roller-milling and sifting technology to feed a growing market for flour. Contrary to the older stone-milling methods, roller-milling strips the wheat grain of the nutrient and fiber-containing germ and bran, and leaves only the starchy endosperm, which may be further processed through various bleaching methods. The white flour produced in this way can be stored and transported longer and further, but is nutritionally worthless except as a source of calories.104

The transition from free-range, grass-fed beef to feedlot production, another early example, was the result of declining availability of open range lands, the development of feed grain (corn, sorghum, and barley) production, as well as the integration of meat-packing and grain trusts. Feedlot husbandry using increasingly cheap corn allowed the rancher to produce the favored “marbled beef” and to speed up cattle growth from four to five years with grass-feeding to some sixteen months under the feedlot system.105 Turnover time was subsequently shortened further through the use of selective breeding, hormones, and antibiotics. Today, livestock production, sometimes referred to as an Industrial Livestock Operation, is carried out as an enormous factory process, highly monopolized and integrated with other agricultural and processing industries. Corn-fed beef, raised under conditions of inactivity and extreme overcrowding, has a quantitatively and qualitatively different fat content from free-range beef, including far greater overall proportions of fat and skewed proportions of saturated and unsaturated fats, containing distorted proportions of omega-6 and omega-3 fatty acids.106

During the same latter half of the nineteenth century, advances in industrial techniques and transportation allowed producers of refined cane sugar to begin to mass market that product, particularly in England, where consumption rose from some 18 pounds per year per capita in 1840 to 90 pounds by the turn of the century, while the United States followed a similar pattern.107

Further technological advances followed favoring processing, storage, and preservations of produce and livestock products. Industrial food production soon expanded into canned goods, soft-drinks, breakfast cereals, a proliferation of snacks, desserts, and confections, and then the various categories of fabricated, processed, adulterated, and simplified foods that dominate our diets today. Winson explained the profit-driven dynamic of these processed foods:

Generally, more highly processed foodstuffs—goods with more “value added”—have more attractive rates of return for retailers and processors. Foodstuffs that have undergone little or no transformation—for example, table potatoes, fluid milk, eggs, flour, and tomato paste, referred to in the food business as “commodity” products—typically have rather thin profit margins, and indeed some, like fluid milk, are often sold below cost by supermarkets as loss leaders primarily to attract customers to the store. On the other hand, products that have been created out of inexpensive, and often subsidized, raw commodities such as sugar, potatoes, wheat, and corn, with some processing and the addition of inexpensive chemical additives to create “value added,” can be processed into very profitable branded commodities. Their success in the market will depend heavily on expensive advertising, however, and market control.108

Winson characterized processed food commodities bereft of natural nutrients and fiber, and loaded with fat, sweeteners, and salt, as “pseudo foods.”109 He describes three processes that underlie the nutritional degradation of the Western diet: simplification and homogenization of whole food items, such as flour or fruits and vegetables; speedup of turnover time of capital invested in food production, as occurs in livestock production; and production of processed food commodities loaded with “macro-adulterants”—sweeteners, salt, and fats—as well as other additives. Like the adulteration of old, macro-adulteration aims to lower production costs of food commodities. However, these macro-adulterants are also employed to increase consumption of products through appealing appearance, taste, or smell, and by stimulating hard-wired behavioral responses and creating cravings for the food items containing them. And food manufacturers employ these products knowing their detrimental impact on human health.110

The massive expansion of the industrial diet was facilitated by the equally prodigious expansion of mass marketing techniques and product placement by an oligopolistic food industry.111 Branding and name recognition played early and important roles in the expansion of the “industrial diet,” and were key to the success of such well-known early products as Kellogg’s corn flakes and Coca-Cola soft drink. In 2006, alone, the nine top processed food vendors invested over $9 billion in advertising in the United States, the vast majority of which promoted pseudo-foods.112

In the latter part of the twentieth century, supermarkets and fast-food chains, together with chain restaurant establishments and convenience stores, emerged and grew explosively to become the primary purveyors of the industrial diet. The top ten U.S. supermarkets, controlling 80 percent of supermarket grocery sales, realized over $400 billion in sales in 2006. In a survey of shelf space in supermarkets, Winson found that

The average linear footage devoted to pseudo foods ranged from 26 to 37 percent of the total of linear footage devoted to edible goods in the stores we surveyed. For the twelve stores sampled in our study, the average proportion of pseudo foods of all foods measured was 31 percent. Pseudo foods are more likely to be found on the shelves that constitute the central area of each store, where they range from 35 to 44 percent of all edible products. This, of course, is the part of most supermarket food environments where entire aisles are devoted to bulk candies and chocolates, to cookie displays, and to soft drinks and high-fat and high-sodium potato- and corn chip products.113

In his analysis, Winson calculated that some 70 percent of shelf space in convenience stores is dedicated to pseudo foods.114

Turning to fast-food chains, the same author cited a study that noted that their menu offerings “typically contain approximately 1,100 calories per 100 grams, whereas the average British diet is estimated to contain 670 calories per 100 grams. The caloric load of the fast-food meal, moreover, is noted to be twice the energy density of a healthy diet (considered to be 525 calories per 100 grams).”115 Another study cited assessed the excessive amounts of salt, trans and total fats, and sugar in popular fast-food combo meals.116

During the last quarter of the twentieth century, prompted by tightening markets in the developed countries and lured by cheap labor and land in developing markets in the global South, the global food giants began outsourcing production, and marketing their products on a massive scale to the developing world, facilitated by neoliberal financial policies and trade agreements. Consequently, foreign direct investment (FDI) by major food corporations in the global South has rapidly expanded. In particular,

Initial entry into markets focuses on packaged and highly processed foods that are marketed as exotic, convenient, and modern. Such investment has become so successful that food processing now has the highest amount of FDI compared to other parts of the food system. Most astonishing is the fact that FDI in the global processed foods market is more important than FDI in global trade. This fact is extremely important because it reiterates just how much market power is involved within the global food industry—particularly the sector that markets the most unhealthy, nutrient-poor food. Such extensive investment by transnational Big Food companies has created food systems that are increasingly influenced by external forces, rather than forces within the domestic country.117

FDI in food production and sales in developing countries has increased access to and promotion of unhealthy processed foods, fostered the spread of global supermarket, fast-food, and restaurant chains, facilitated penetration of the market and displacement of local food items by pseudo-foods, and increased control over local food systems by transnational corporations.118

Consequently, FDI has favored the substitution of nutrient-rich local produce and diets with industrial diets poor in nutrients and rich in fat, sugar, and salt. In addition to affecting consumers, FDI has led to severe impacts on local producers who cannot compete with the technological advantages and economies of scale of large corporations, and who are thus displaced from agricultural or food preparation activities, and driven into rural or urban poverty. As Winson explained, “The long-standing unity of production and consumption characterizing peasant production in most parts of the world for millennia is being broken today on a phenomenal scale.”119 The overall effect has been to adversely impact nutritional status and give rise to the duality of rising chronic metabolic disorders side-by-side with starvation, both symptoms of malnutrition.

Various writers discuss the impact of urbanization on the adoption of the Western diet. Urbanization is “not, of course, some natural process but is itself in large part the product of the expropriation of masses of rural smallholders in country after country.”120 More than 54 percent of the global population currently lives in cities, and this is expected to grow to 66 percent by 2050, with the bulk of this growth occurring in Asia and Africa.121 Urban expansion paves the way for dietary change, in conjunction with other aspects of the neoliberal program, in a number of ways. The rural-urban migration deprives migrants of access to agricultural production, as does the increase in lands occupied by big investors. It throws masses of people—and increasingly, women—into the low-wage urban labor force (or unemployment), thus imposing both financial and time constraints on household food preparation. It brings these masses into contact with cheap processed foods, and particularly, fast- and street-foods, and immerses them in an increasingly market-driven culture favoring these items.122 For example, in Tanzania, low-middle-income groups derive 70 percent of their caloric intake from street foods.123

Winson elaborates on the ways these changes paved the way for supermarket and fast-food chain expansion into developing country markets:

Recent research has documented the unprecedented pace by which the supermarket form of retail food selling is transforming Latin America, Asia, and Africa. A series of changes in the structures of economies in these regions have opened up new opportunities for the supermarket retail form. Among the most important of these changes are rapid urbanization; expansion of the middle class and with it a rise in disposable incomes for this segment of the population and the ability to purchase refrigerators; significant increases in female labor force participation; and the rapid growth of car culture and access to public transport.124

While such expansion is uneven in the global South, in Latin America both supermarkets and convenience stores have expanded as much in ten years as they have in five decades in the United States, to the point where supermarkets control up to 80 percent of retail food sales in Brazil and close to 60 percent in Argentina, Mexico, and Panama. While local entrepreneurs may have launched the first supermarkets, this sector is increasingly dominated by transnational chains, with some 70 to 80 percent of Latin American supermarket chains in the hands of the top five global firms.125

In the developed countries, supermarkets have responded, to some degree, to increasing public nutritional awareness and healthy food movements, with a greater diversity of healthier food items, at least for certain social classes. But in the developing world, “supermarkets have another role here from a nutritional standpoint: introducing large numbers of people among the newly emergent middle classes to ready-to-eat breakfast cereals, processed cake mixes, reconstituted and artificially sweetened fruit juices, industrial baked goods, processed meats, and other goods of the industrial food system with which they may have only passing familiarity.”126

Similarly, fast-food chains have rapidly spread into the expanding urban markets in the global South. By 2008, McDonald’s, the largest global fast-food chain, “could boast that it had a thousand restaurants in China alone, and over thirty thousand restaurants worldwide.”127 Of the Yum! Brands megafirm, which includes KFC, Pizza Hut, and Taco Bell, Winson writes:

Worldwide sales for this transnational were in the $30 billion range in 2007. This rival firm has itself a strong global presence, with restaurants in over a hundred countries by 2005. Indeed, it opened 780 restaurants in that year alone, boasting a total of an astounding 34,000 restaurants around the globe by 2005, outnumbering McDonald’s in number of restaurant units…. Yum! Brands is especially strong in rapidly colonizing the world’s fastest growing markets in the global South, with China being its priority target…. Yum! Brands reported 22 percent annual growth in its China business in 2005, along with franchise business sales growing 10 percent in the Caribbean and Latin America, 17 percent in the Middle East and North Africa, and 20 percent in South Africa.128

A massive public health, nutritionist, and food justice literature confirms that in both developed and developing nations, class and other social relations between dominant and subaltern groups determine diet and nutrition.129 Numerous studies have also documented the relationship between socioeconomic status, access to nutritional foods, and chronic metabolic disease states, in addition to the classical diseases of malnutrition, although some controversies rage over the modalities through which forms of oppression play out in diet and NCDs.130 And it is increasingly apparent that disruption of our microbial ecosystems via the normal functioning of capitalist production and marketing is a critical link in these relationships, just as it has shown itself to be in macro realms. Moreover, the micro- and macro-ecological domains are inseparably interconnected, as Rob Wallace shows in his book Big Farms Make Big Flu.131

Big Pharma

There are two major pathways through which antibiotics gain access to our microbiota. First, there is the rampant use of antibiotics in health care. The second is the even more profligate use of antibiotics as growth stimulants and prophylactics in the livestock industry. While the latter use is of great importance for the proliferation of antibiotic resistance in bacteria, the former has a greater known impact on the human microbiota, and so I will focus on human antibiotic use. However, it is worth noting that, globally, twice the amount of antibiotics are used for livestock as in human health applications.132 Antibiotic residues have been found in animal products for human consumption, including meat, milk, farmed and wild fish, and honey, in many cases above allowable limits, and these have the potential to disrupt human microbiota, as has been shown in studies of subtherapeutic doses.133

The pharmaceutical sector is the world’s most profitable, alongside banking. The ten largest pharmaceutical corporations made a combined profit of $90 billion in 2013, for a net profit of 19 percent.134 In 2009, global antibiotic sales were worth $42 billion, equivalent to 5 percent of the pharmaceutical market.135 This figure rose to $43.55 billion in 2012, and is expected to grow to $45.09 billion by 2019.136 And, although antibiotics are cheaper than other pharmaceuticals, a report by the Center for Disease Dynamics, Economics and Policy observes that “antibiotics are still very profitable. In 2004, they were the third highest earning drug class behind central nervous system and cardiovascular drugs, bringing in $26 billion to $45 billion per year…. Despite shorter courses, many more people take antibiotics than they do other types of drug, and antibiotics can even become ‘blockbusters.’”137

However, while antibiotic sales have continued to increase, the major drug companies have halted research and development on new classes of antibiotics needed to combat emergent antibiotic resistant bacteria, citing low returns on investments and tight regulatory requirements for bringing antibiotics to the market.138

As old patents lapsed, the major drug firms outsourced or contracted much of antibiotic production to generic manufacturers in countries with relatively low sale prices and low costs of production for existing antibiotics, particularly China and India.139 As one indicator, by 2010, generic antibiotics represented over 80 percent of global prescriptions.140 India currently hosts a major part of the world’s production of bulk drugs, while China produces the major share of active pharmaceutical ingredients used in global antibiotic manufacture, supplying much of India’s bulk drug production.141 Major health care and pharmaceutical corporations and pharmacy chains then work up or simply market the final products.142 Discussing the shift to generic antibiotic use in both human and veterinary medicine, Pierre-Louis Toutain and Alain Bosquet-Melou noted that, “competition between generics and also between generics and branded antibiotics (usually forced to lower their prices in order to remain competitive against the cheaper generic versions) leads to more aggressive promotion for the use of antibiotics both in human and veterinary medicine.”143 In turn, according to these authors, the inundation of these markets with cheap generic antimicrobials has led to increased consumption.

Today, antimicrobials are the most frequently prescribed drugs in the pharmaceutical arsenal. Per capita human consumption of antibiotics remains highest in industrialized countries. India, China, and the United States were the largest overall consumers in 2010, with total use at 12.9 x 109, 10 x 109, and 6.8 x 109 standard units, respectively.144 Global antibiotic consumption increased by an estimated 36 percent between 2000 and 2010, to over 63,000 tons.145 Approximately three-quarters of the increase in global consumption was in the BRICS countries of Brazil, Russia, India, China, and South Africa.146 In the United States alone, antibiotics were prescribed at a rate of 842 courses per 1,000 people in 2011, for a total of 262 million courses.147 However, although global antibiotic use is increasing, it should be noted that there is a global disparity in antibiotic consumption, with much of the population of the global South denied access to necessary antibiotics, where “no access and delays in access to antibiotics kill more people than antibiotic resistance.”148

According to the Center for Disease Dynamics, Economics and Policy report, “from 20 to 50 percent of total [human] antibiotic use is estimated to be inappropriate,” which is defined as “the use of antibiotics when no health benefit is possible” and “the suboptimal use of antibiotics for responsive conditions.”149 The report noted that in U.S. hospitals surveyed, “broad-spectrum antimicrobial therapy was commonly prescribed to inpatients even when clinical signs of infection were not present, and this treatment was not de-escalated or discontinued even when cultures did not show evidence of bacterial infection.”150

What has led to the massive overuse of antibiotics that is driving both the scourge of antibiotic resistance and disruptions of the human microbiota? Over-prescription and irrational consumption are aspects of the market-driven health care model that dominates in almost all parts of the globe. Under the prevailing form of health care, most countries have come to place a heavy focus on clinical medicine, and particularly secondary and tertiary care, rather than upstream prevention, that is, by addressing aspects such as the environmental and social determinants of health. “Taken together, the evidence indicates that prescribing medicines has become a dominant, if not the dominant, form of health care in western societies and its role in middle-income countries is growing rapidly,” writes medical sociologist Joan Busfield.151

Our market-based health care model has long been dominated by the pharmaceutical industry. According to Busfield, direct marketing and promotion of their products represent important mechanisms employed by the pharmaceutical industry to drive that market.152 In the major industrialized nations, marketing expenditures represent roughly twice the amount as research and development expenditures.153 Medical sociologist John Abraham observed that, in the 10 years prior to 2005, British pharmaceutical companies cut research personnel by 2 percent, while marketing staff grew by 59 percent.154

Through promotional activities directed at consumers and providers, the pharmaceutical industry has encouraged consumers to expect pharmacological answers to health problems and to demand medications from providers.155 Further, according to Abraham, pharmaceutical companies encourage “collaborative” or “active” consumerism, including through funding for patient organizations.156 In addition, he notes that “consumerism has an ideological dimension, namely the discursive appropriation of the health needs of patients as the demands of consumers in a market…such discourse is distinct from patients’ actions and needs, and may not even be derived from them.”157 He further observed that “the ‘expert patient’ discourse needs to be put in the context of the interests of those planning to provide the ‘information’ intended to construct ‘patient expertise,’ namely a profit-seeking industry with a record of promoting its products with misleading information to doctors.”158

For their part, physicians are targeted by promotional literature through the mail, in journals, and via other venues. They receive visits by business representatives and are invited to industry-sponsored conferences. Various studies indicate that these promotional efforts pay off in recommendations and prescriptions by physicians.159 Physicians are funded to participate in product development or invited to promote specific products at symposia.160 Medical practice, together with patient demands, facilitates excessive pharmaceutical dissemination, as physicians are prompted to prescribe medications in order to show efficacy even in absence of need.161 In addition, in a number of countries, including China and India (where prescriptions are not required), drug companies offer financial incentives to doctors to push their products, particularly antibiotics.162

The processes known as “medicalization” or “pharmaceuticalization” are deeply imbricated in our medical model.163 The terms signify slightly different aspects of the social construction and delimitation of what constitute medical issues, which then become amenable to the proper medication, or even the extension of drug therapy outside of the domain of clinical medicine.164 According to Busfield, the drug companies are the “active drivers” in this process.165 Contrary to the pharmaceutical industry’s portrayal of its efforts “to support medicine’s therapeutic endeavors,” Busfield stated, “the evidence indicates that the industry plays an active role in shaping those endeavors.”166

Medicalization received its initial impetus as a result of the postwar expansion of consumerism. Elizabeth Siegel Watkins observes that “aspects of postwar culture fostered an appetite for prescription drugs: specifically, a fascination with technological solutions.”167 As she explains, “consumers eagerly adopted new drugs in much the same way that they adopted TV dinners and cake mixes.” In the postwar years, industry, government, and the media pointed to Alexander Fleming’s discovery of penicillin and Jonas Salk’s polio vaccine as heralding final victory in the war on infectious disease.168 The pharmaceutical industry then proceeded to pump out antibiotics, proclaiming their low cost and safety. All of this was in spite of the warning Fleming issued about the danger of antibiotic resistance at his Nobel Prize award ceremony in 1945.

The processes of pharmaceuticalization and medicalization gained further momentum with the deregulation, commodification, and privatization of the neoliberal era. According to Jill Fisher, “neoliberalism extends the commodification of health in new ways; under its governing logic, consumption is not only a right but also an obligation if one wants health care at all.”169 She noted that

Patients as consumers have embraced the neoliberal logics of health care so that they too see illness in reductionist terms and seek pharmaceuticals as targeted magic bullets. This orientation toward health and medicine has been referred to as the pharmaceuticalization of health care, in which the conditions of health and illness are ever more cast in terms of products that can be purchased by health-engaged consumers. A medical system that revolves around pharmaceuticals contributes to a culture of medical neoliberalism. It ties together the commodification of health care with the fragmentation of the body where illness is treated in terms of discrete systems for which there are tailored products.170

In the United States, European Union, and United Kingdom, government regulatory agencies have favored the interests of the pharmaceutical industry and facilitated market development and pharmaceuticalization, despite their ostensible mandate to regulate the industry on behalf of public health. Simon J. Williams and colleagues cited various studies showing “corporate bias and privileged access” of the pharmaceutical industry to the U.S. Food and Drug Administration and its British counterpart, the Medicine and Health Care Products Regulatory Agency.171 The results include deregulation of pharmaceuticals, relaxation of safety standards and review requirements, and reduction of review times on patentable drugs.172 In addition, Western regulatory agencies have undertaken joint initiatives, such as the International Conference on Harmonisation, which seek to standardize regulatory frameworks to accommodate development of markets and outsourcing of research and development and production to developing countries.173

Of particular relevance to the overuse of antibiotics, Abraham described the drivers and significance of pharmaceuticalization:

increased pharmaceuticalization is not fuelled primarily by growth in pharmaceutical provision to meet, and advance, health needs. Rather the sociological factors of consumerism, deregulatory state policies, industry’s commercial priorities and product promotion, and medicalization have been expanding pharmaceuticalization in ways that are largely outside such provision. It may be that marketing does not necessarily create false needs…but it may create false claims and expectations about the capacity of pharmaceuticals to meet those needs. Moreover, the ideological appropriation of patients’ needs as consumer preferences in a market means that public health requirements, which are poorly expressed in marketing processes such as antibiotic development and protection from drug injury, are inappropriately neglected by an industry supposed to advance health.174

Medicalization and pharmaceuticalization have directly and indirectly favored the excessive and irrational use of antibiotics. The use of antibiotics as growth stimulants in animal feed, or their prescription for viral diseases or even as placebos, represent clear instances of pharmaceuticalization. Furthermore, these processes have forged a social-psychological framework that encourages profligate consumption of antibiotics. Within that framework, the industry’s expanded and outsourced production of cheap and easily accessible generics, aggressive marketing to both consumers and providers, and control over pharmaceutical research and its dissemination have driven antibiotic overuse and wasteful consumption.

Our current medical model relies on the much-touted “miracles of modern medicine,” on magic-bullet cures for diseases. In this sense, capitalist medicine follows the pattern evident in capitalist agriculture, capitalist energy production, and indeed, the capitalist mode of production in general, of disaggregating complex ecosystems to tease out marketable, profitable commodities, and then offering magic-bullet solutions to the environmental problems such production engenders. Infectious diseases are not merely products of pathogens but of social and ecological disturbance, including those at the level of microbial ecosystems. Our form of economic development has disrupted these ecosystems at both macro and micro levels. Antibiotics are necessary, but cannot substitute for a more ecologically integral approach to human health. In turn, such magic bullets, themselves, are disconnected from ecological or biological contexts and offered without integral consideration of consequences, producing further disruptions, for which new magic bullets are devised.

The proliferation of antibiotic-resistant bacteria and the now desperate search for new antibiotics, or the epidemic of potentially dysbiosis-induced noncommunicable diseases and the booming literature on pre- and probiotics to address them, are both further expressions of the failure of the current medical paradigm.

This reductionist model is expressed as “war on pathogens.” This war, with its exclusive focus on “bad microbes” and therapeutic agents aimed narrowly at exterminating them, was initiated by Louis Pasteur, Robert Koch, and others at the turn of the century. It pushed aside the equally robust microbial ecosystem narratives traced out by biologists such as Theodor Escherich, Arthur Isaac Kendall, and Elie Metchnikoff. Kendall offered the view that the gut was the “perfect incubator” for innumerable mutualistic bacteria, some of which might even defend their hosts against pathogens. Even Pasteur believed that many gut bacteria were beneficial.175


The antibiotic resistance crisis and the Western diet problem have been on the public health radar for some time. But the potential pharmaceutical and industrial food effects on the microbiome have received little attention. While a few authors have addressed the public health implications of microbiome research and dysbiosis, they have not been taken up in any systematic way.176 Nevertheless, there are far-reaching conceptual and practical implications of these phenomena for human health and ecology.

For the most part, the microbiome as a health-related phenomenon has been approached within the framework of the prevailing pharmaceutical industry-driven medical model, in yet another example of medicalization. Almost every journal article dealing with microbiota and dysbiosis notes the potential for the pharmaceutical industry to develop probiotics or prebiotics, or standardized microbial assemblages for transplant, or genetically modified symbionts to enhance gut function or block pathogens, or other marketable therapies derived from deeper knowledge of the microbiome.177

All of these therapies, in themselves, are of potential benefit to human health. However, if history is any guide, in the hands of the for-profit pharmaceutical industry, the market will guide their development and production and their full benefits will either be economically inaccessible to the majority of our populations, or they will fail to garner the investment interest of the major research firms. However, this approach fails to address the underlying reasons for dysbiosis. To address those causes requires major social and economic shifts, which, if climate change is any indication, are not achievable within our current social order.

In the first place, dysbiosis must be dealt with ecologically, recognizing that our own bodies are ecosystems, integrated at ever larger scales with our biosphere. Concretely, this means that our “ecosystem functions and services”—principally our health—depend on specific qualitative and quantitative states of biodiversity; that is types, functions and numbers of, and interrelations between, microbiota. Altered environmental factors—social and economic—can tip these states into dysfunctionality.

Our food is the major environmental influence on microbiota health. Under the impetus of the market, diet has radically changed in industrialized nations and is rapidly changing in industrializing nations. Instead of the ancestral diets that our species and our microbial communities coevolved to assimilate, we now consume highly processed diets bereft of sufficient fiber and complex plant carbohydrates, and overwhelmingly rich in fats, salt, and simple sugars. These changes have favored alteration or disruption of the microbiota that coevolved as mediators for a host of metabolic and physiological functions. These alterations and disruptions do not represent “adaptations” to new dietary regimes, but rather literal metabolic rifts with negative consequences for our health. Thus, a radical reorganization of our food production, supply, and promotion, as well as our nutritional education, is in order.

Neither our dominant agricultural system nor the food industry is geared toward producing an appropriate balance of diverse and nutritional items that are affordable to all. Agriculture focuses primarily on producing competitively marketable, profitable commodities for the food processing industry and the consumer, with a concomitant loss of diversity and nutritional value. Beyond producing commodities that fail to fulfill nutritional needs, our current large-scale capitalist agriculture is ecologically unsustainable and relies on inputs that are also destructive of human and ecosystem health. Therefore, production decisions should not be left in the hands of agribusinesses, but should be socialized and placed in the hands of councils of associated farmers, agricultural workers, and the general public. Production itself should be assumed by small farmers, worker cooperatives, or publicly owned farms, according to crops, geography, local tradition, and needed economies of scale. Production of agricultural inputs, as well—such as fertilizers and pesticides—should be taken out of the hands of the agrochemical conglomerates and placed under the control of accountable public entities. Their use can be minimized and in many cases eliminated if farming is approached ecologically, to improve field and soil habitat that promotes healthy soils, the presence of beneficial organisms, leading to healthy plants and animals.

The food industry has geared its production to dysbiosis-inducing, food commodities, larded with addictive salts, fats, and sugars. Class and race play a role in the investment decisions of the food industry, whereby nutritionally poor foods, whose detrimental impact is mediated by the microbiota, are disproportionately marketed to low-income and marginalized populations. Meanwhile, better-off groups, while still subject to unhealthy market items, have access to a greater variety of healthy dietary choices. A healthy diet must be seen as a human right, and dietary recommendations must begin to take into account impact on the microbiome. Food processing and distribution must be under the control of the public (community) while food production decisions are made by associated production workers using ecological principles, in accordance with nutritional frameworks that provide for our integral needs.

As for the pharmaceutical industry, we have presently reached the absurd contradiction in which mass production of antibiotics by the drug corporations, together with the consumerism they engendered, has produced a crisis of antibiotic resistant bacteria and disruption of human and other microbial ecosystems. Yet, citing low rates of profit, they refuse to develop new antibiotics that can cope with the onslaught of multiple resistant bacterial strains. Industry proposals to undertake research represent little more than efforts to extort relaxation of safety and testing regulations and subsidies from taxpayers.178 In contrast, the pharmaceutical and health product giants continue to reap profits through outsourced production of present generation antibiotics in generic or branded form. As long as a profit is to be made, they will continue to expand production and drive a market based largely on excessive and irrational antibiotic use. Together with the obscene costs of many vital pharmaceuticals, this bespeaks the need to socialize the pharmaceutical industry and subject it to a national plan to produce necessary medications at prices accessible to all, by placing it under the democratic control of its workforce, health professionals and consumers, and by subjecting its research and ledgers to public scrutiny.

As amply shown in the foregoing discussion, the human microbiota is a critical mediator between social determinants and physiological states and health outcomes. Access to adequate nutrition, income, education, health services, and reliable sanitary infrastructure, as well as exposure to environmental hazards, reflecting existing social power relations, all shape the microbiota. These power relations—social class, race, and gender—loom in the background as upstream environmental modulators of dysbiotic states. Insofar as the field of public health has long recognized that oppression and exploitation are causal to health disparity and poor health outcomes, and strives for their elimination, the human microbiome provides further compelling evidence of negative health impacts and motivation to struggle to abolish racism and sexism, and the exploitative relationship between capital and the majority of our populations.

Social, economic, and health inequity, like the ability of capital to profit at public expense, rely on the power of the state, whether through tax policy, laws and regulatory regimes, financial subsidies and incentives, or trade policy. Recent studies provide additional evidence in support of an increasingly widespread public perception of corporate domination of government, and the latter’s divorce from public needs. It is reasonable to ask how economic and social policy might be structured by criteria of human health, life quality, and ecological sustainability, instead of market share and profitability. How might society as a whole democratically decide and plan how to invest its productive resources to best serve those needs? What types of public control are needed to assure that regulatory agencies are free of corporate interests, accountable and transparent? And how might research and development of drugs, foods, and other necessary goods and services also be removed from corporate control and rendered subject to public scrutiny? How might our institutions be changed or what kinds of institutions must be forged to pursue the elimination of power differentials in society, particularly those inhering to oppressive relationships between groups, and exploitation of the majority by a minority, all of which produce adverse health outcomes and ecological disruption?


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Envisioning a Successful Steady-State Economy

December 24, 2020 Leave a comment

There are two interacting types of argument for a steady-state economy: its biopyhsical necessity, and its ethical desirability. The first argument is made in terms of the finitude, entropy, and physical maintenance requirements of “dissipative structures” (populations of human bodies and their exosomatic extensions). The second argument considers that the evolution of the human species is now purpose-driven, no longer random, if indeed it ever was. Purpose introduces value judgments of right and wrong regarding how our economy should relate to the rest of creation – judgments ignored by both neoclassical economics and neo-Darwinist naturalism.

How Do You Envision a Successful Economy Without Continuous Growth?

It helps to consider a prior question: how do you envision a successful Planet Earth without continuous growth? That is easy to envision because it exists! The Earth as a whole does not grow in physical dimensions. Yet it changes qualitatively, it evolves and develops. Total matter on Earth cycles, but does not grow. Energy from the sun flows through the earth coming in as low-entropy radiant energy, and exiting as high-entropy heat. But the solar flow is not growing. Nearly all life is powered by this entropic throughput of solar energy. There is birth and death, production and depreciation. New things evolve; old things go extinct. There is continual change. But the Earth is not growing.

The economy is a subsystem of the Earth. Imagine that the economy grows to encompass the entire earth. Then the economy would have to conform to the behavior mode of the Earth. Namely, it could no longer grow, and would have to live on a constant solar flow, approximating a steady state – an exceedingly large steady state to be sure, well beyond optimal scale. The economy would have taken over the management of the entire ecosystem – every amoeba, every molecule, and every photon would be allocated according to human purposes and priced accordingly. All ‘externalities’ would be internalized, and nothing could any longer be external to the all-encompassing economy. The information and management problem would be astronomical – central planning raised to the thousandth power! Long before such total takeover and complexity, the human economy and the civilization it supports would have collapsed.

To arrive at a vision that promises success we must discard some dead-end dreams – especially the just-mentioned dream of internalizing all biospheric relationships into the monetary accounts of the economy. To keep the economy manageable we must limit its physical scale relative to the containing ecosystem. The way to do that is to leave a large part of the ecosphere alone, to limit our absorption of it into the economic subsystem – to keep a large part of the earth ecosystem in natura – as a source for low-entropy matter/energy inputs and as a sink for high-entropy waste, and as a provider of life-support services, including services to non human species. Laissez faire takes on a new meaning – it is the ecosystem that must be left alone to manage itself and evolve by its own rules, while the economy is carefully constrained in aggregate scale to stay within the limits imposed by the ecosystem. Environmental sources and sinks necessarily must be used to support life and production, but the rate of use must remain within the regenerative and absorptive capacities of the ecosystem. The metabolic throughput from nature cannot keep growing. Limiting the physical throughput to sustainable levels will, by lowering supply, effectively internalize the external costs of excessive scale. Resulting higher resource prices will improve the microeconomic efficiency of allocation.

Every encroachment of the economy into the ecosystem is a physical transformation of ecosystem into economy. Growth means less habitat for other species, with loss both of their instrumental value to the ecosystem, and the intrinsic value of their own sentient life. Clearly, in addition to a maximum scale of the economy relative to the ecosystem, there is also an optimal scale (much smaller), beyond which growth becomes uneconomic in the literal sense that it increases environmental and social costs faster than production benefits. We fail to recognize the uneconomic nature of growth beyond this point because we measure only production benefits and fail to measure environmental and social costs. We ignore the fact that ‘illth’ is a negative joint product with wealth. Examples of illth are everywhere, even if usually unmeasured in national accounts, and include: climate change from excess carbon in the atmosphere, radioactive wastes and risks of nuclear power, biodiversity loss, depleted mines, deforestation, eroded topsoil, dry wells, rivers, and aquifers, sea-level rise, the dead zone in the Gulf of Mexico, gyres of plastic trash in the oceans, the ozone hole, exhausting and dangerous labor, and the unrepayable debt from trying to push growth in the symbolic financial sector beyond what is possible in the real sector.

Growth all the way to the very limit of carrying capacity has an unrecognized political cost as well. Excess capacity is a necessary condition for freedom and democracy. Living very close to the carrying capacity limit, as on a submarine or spaceship, requires very strict discipline. On submarines and spaceships we have a captain with absolute authority, not a democracy. If we want democracy, we should not grow up to the limit of carrying capacity – better to leave some slack – some margin of tolerance for the errors that freedom entails.

The spatial boundaries across which we measure migration, and within which we measure natural increase (or decrease) are principally nation states. For some purposes it is the natural increase of the globe as a whole that is most relevant, and we can neglect migration, both international and “inter-planetary”, even though the latter (e.g. terraforming Mars), while non-existent, is hailed by some as the future solution to overpopulation.

The Beatles musically longed for a “world without boundaries”, and we all know what they meant – a world of human solidarity, peace, and cooperation. Conflicts and war usually involve disputes over borders. So why not just get rid of these troublesome boundaries? Let’s have globalization – deregulated trade, capital mobility, and migration – only let’s bless them each with the adjective “free” rather than “deregulated”. Economists assure us that this will lead to peace and prosperity among rational utility-maximizing individuals, minimally governed by a benevolent World Democracy, dedicated to the post-modern values of secularist materialism, eloquently communicated in Esperanto. This vision has its serious appeal to many, but not so much to me. The anomaly of this cosmopolitan globalism, is that it is really individualism writ large – corporate feudalism in a global commons. Economic and political boundaries are necessary to achieve both national community, and a global federation of national communities living in peace and ecological sustainability.

Boundaries are both biologically and logically necessary. Skin and membranes are organic boundaries. Within-skin versus outside-skin is a basic boundary condition for life. The skin boundary must be permeable, but not too permeable. If nothing enters or exits the organism it will soon die. If everything enters and exits, then the organism is already dead and decaying. Life requires boundaries that are neither completely closed nor completely open. A nation’s borders are in many ways very different from the skin of an organism, yet neither permits complete closure or complete openness. Both must be qualitatively and quantitatively selective in what they admit and expel, if their separate existence is to continue rather than be dissolved entropically into its environment.

Logically boundaries imply both inclusion and exclusion. A world without boundaries includes everything and is often therefore thought to be warm and friendly. But “everything” must include the cold and the unfriendly as well, or it is not everything. Also, without boundaries, B can be both A and non-A, which makes definition, contradiction, and analytical reasoning impossible. So both life and logical thinking require boundaries. While “a world without boundaries” may be a poetic expression of a desired unity, and while it is possible to reason dialectically with overlapping boundaries, it is a major delusion to think that boundaries are not necessary.

It is understandable, yet ironic, that the most fundamental and dramatic boundary of all – that separating the earth from outer space – made clear in the iconic photo of the earth from the moon – seems to have led to a reaction against the very concept of boundaries on our spherical planet, since it is so obviously one whole and unified thing. Yet that beautiful and powerful vision of overall unity hides a world of diversity and difference. And we live on the earth, within that complex living diversity, not on the dead moon with no need for life-defining boundaries.

We need a non-growing economy that strives to maintain itself in a steady state within the boundary of its optimum scale. How to do that? Basically it is as simple (and difficult) as going on a diet. Cut the matter–energy throughput to a sustainable level by cap–auction–trade and/or ecological tax reform (taxing resource throughput – especially fossil fuels – rather than value added by labor and capital). We should cap or tax fossil fuels first. Then redistribute auction or eco-tax revenues by cutting income taxes for all, but first and mainly for the poor. A policy of quantitative limits on throughput (cap–auction–trade) raises resource prices and induces resource-saving technologies. The quantitative cap will also block the erosion of resource savings as induced efficiency makes resources effectively cheaper (the Jevons effect). In addition, the auction will raise much revenue and make it possible to tax value added (labor and capital) less, because in effect we will have shifted the tax base to resource throughput. Value added is a good, so we should stop taxing it. Depletion and pollution are bads, so we should tax them.

Along with a physical diet, we need a serious monetary diet for the obese financial sector, specifically movement away from fractional reserve banking toward a system of 100 percent reserve requirements. This would end the private banks’ alchemical privilege to create money out of nothing and lend it at interest. Every dollar loaned would then be a dollar that someone previously saved, restoring the classical balance between abstinence and investment. This balance was abandoned by the Keynesian–neoclassical synthesis after the Great Depression because it was thought to be a drag on growth, the new panacea. But in the new era of uneconomic growth the classical discipline regains its relevance. Investors must choose only the best projects, thereby improving the quality of growth while limiting its quantity. This idea of 100 percent reserve requirements on demand deposits was championed by the early Chicago School in the 1930s, as well as by Irving Fisher of Yale, and probably first proposed in 1926 by Frederick Soddy, Nobel Prize-winning chemist and underground economist. Also, a small, so-called ‘Tobin tax, on all financial trades would reduce speculative and destabilizing short-term trading (including algorithm-based computer trading on fraction of a second price differences) and raise significant revenue.

What about population growth? If I can manage to live for a few more years the world population will have quadrupled in my lifetime (from 2 to 8 billion), and the populations of other ‘dissipative structures’ (cars, houses, livestock, cell phones, and so on) will have more than quadrupled. Limiting the populations of artifacts by capping the metabolic throughput (“food supply”) that sustains them seems a good policy. However, limiting food supply to humans is nature’s harsh limit, Malthus’ positive check. There is also Malthus’ preventive check (celibacy and late marriage), and the more palatable neo-Malthusian preventive check of contraception. Contraceptives should be made easily available for voluntary use everywhere.

More people are better than fewer, but not if all are alive at the same time. Population has a temporal as well as a spatial boundary. We should strive to maximize the cumulative number of people ever to live over time in a condition of sufficiency. That means no more people alive at the same time than could enjoy a per capita resource availability that is enough for a good (not luxurious) life, and sustainable for a long (not infinite) future. Exactly how many people at exactly what per capita standard would that be? We do not know, but we do know that it is not more people at a higher per capita consumption, and that is enough to get started in the right direction. For a nation’s population not to grow necessarily requires that births plus immigrants equal deaths plus emigrants. A further condition, not logically necessary but politically desirable, is that every birth be a wanted birth and every immigrant a legal immigrant.

The population problem should be considered from the point of view of all populations of the human world – populations of both us humans and our things (cars, houses, livestock, crops, cell phones, etc.) – in short, populations of all “dissipative structures” engendered, bred, or built by humans. Both human bodies and artifacts wear out and die. The populations of all organs that support human life, and the enjoyment thereof, require a metabolic throughput to counteract entropy and remain in an organized quasi-steady state. All of these organs are capital equipment that support our lives. Endosomatic (within skin) capital – heart, lungs, kidneys – supports our lives quite directly. Exosomatic (outside skin) capital supports our lives indirectly, and consists both of natural capital (e.g., photosynthesizing plants, structures comprising the hydrologic cycle), and manmade capital (e.g., farms, factories, electric grids).

In a physical sense, the final product of the economic activity of converting nature into ourselves and our stuff, and then using up or wearing out what we have made, is waste (Georgescu-Roegen, 1971)[1]. Ultimately that is our “ecological footprint”. What keeps this from being an idiotic activity–depleting and polluting, grinding up the world into waste–is the fact that all these populations of dissipative structures have the common purpose of supporting the maintenance and enjoyment of life. As John Ruskin said, “there is no wealth but life.”

Ownership of endosomatic organs is equally distributed among individuals (absent slavery), while the ownership of exosomatic organs is not, a fact giving rise to social conflict. Control of these external organs may be democratic or dictatorial. Our lungs are of little value without the complementary natural capital of green plants and atmospheric stocks of oxygen. Owning one’s own kidneys is not enough to support one’s life if one does not have access to water from rivers, lakes, or rain, either because of scarcity or monopoly ownership of the complementary exosomatic organ. Therefore all life-supporting organs, including natural capital, form a unity with a common function, regardless of whether they are located within the boundary of human skin or outside that boundary.

Our standard of living is traditionally measured by the ratio of manmade capital to human beings–that is, the ratio of one kind of dissipative structure to another kind. Human bodies are made and maintained overwhelmingly from renewable resources, while capital equipment relies heavily on nonrenewable resources as well. The rate of evolutionary change of endosomatic organs is exceedingly slow; the rate of change of exosomatic organs has become very rapid. In fact the collective evolution of the human species is now overwhelmingly centered on exosomatic organs. We fly in airplanes and rockets, not with wings of our own. This exosomatic evolution is goal-directed, not random. Its driving purpose has become “economic growth,” and that growth has been achieved largely by the depletion of the earth’s resources and pollution of its spaces.

Although human evolution is now decidedly purpose-driven, we continue to be enthralled by neo-Darwinist aversion to teleology and devotion to random processes. Economic growth, by promising more for everyone, becomes the de facto purpose, the social glue that keeps things from falling apart. But what happens when growth becomes uneconomic, when it begins to increase environmental and social costs faster than production benefits? How do we know that this is not already the case? Studies suggest that it is.[2] If one asks such questions, as Pope Francis is doing, one is usually told to talk about something else, like space colonies on Mars, or unlimited energy from cold fusion, or geo-engineering, or the wonders of globalization, and to remember that all these glorious purposes require growth, in order to provide still more growth in the future. Growth is the summum bonum – end of discussion!

In the light of these considerations, let us reconsider the idea of demographic transition. By definition this is the transition from a human population maintained by high birth rates equal to high death rates, to one maintained by low birth rates equal to low death rates, and consequently from a population with low average lifetimes to one with high average lifetimes. Statistically such transitions have often been observed as standard of living increases. Many studies have attempted to explain this correlation, and much hope has been invested in it as an automatic cure for overpopulation. “Development is the best contraceptive” is a related slogan, partly based in fact, and partly in wishful thinking.

There are a couple of thoughts I’d like to add to the discussion of demographic transition. The first and most obvious one is that populations of artifacts can undergo an analogous transition from high rates of production and depreciation to low ones. The lower rates will maintain a constant population of longer-lived, more durable artifacts. Our economy has a GDP-oriented focus on maximizing production flows (birth rates of artifacts) that keeps us in the pre-transition mode, giving rise to low product lifetimes, planned obsolescence, and high resource throughput, with consequent environmental destruction. The transition from a high maintenance throughput to a low one applies to both human and artifact populations independently. From an environmental perspective, lower throughput per unit of stock (longer human and product lifetimes) is desirable in both cases, at least up to some distant limit.

The second thought I would like to add is a question: does the human demographic transition, when induced by rising standard of living[3], as usually assumed, increase or decrease the total load of all dissipative structures on the environment? Specifically, if Indian fertility is to fall to the Swedish level, must Indian per capita possession of artifacts (standard of living) rise to the Swedish level? If so, would this not likely increase the total load (ecological footprint) of all dissipative structures on the Indian environment, perhaps beyond capacity to sustain the required throughput?

The point of this speculation is to suggest that “solving” the population problem by relying on the demographic transition to lower birth rates could impose a larger burden on the environment, rather than the smaller burden hoped for[4]. Of course indirect reduction in fertility by automatic correlation with rising standard of living is politically easy, while direct fertility reduction is politically very difficult. But what is politically easy may be environmentally ineffective.

Even if we limit quantitative physical throughput (growth) it would still be possible to experience qualitative improvement (development), thanks to technological advance and to ethical improvement of our priorities. Some say that we should not limit growth itself, but only stop bad growth and encourage good growth. However, only if we limit total growth will we be forced to choose good growth over bad. And furthermore, we can also have too much ‘good’ growth, or as it is often called ‘green growth’. There is a limit to how many trees we can plant as well as to how many cars we can make. Growth beyond optimal scale is uneconomic growth, and we should stop the folly of continuing it.

If you are an optimist regarding ‘soft’ technologies (for example, conservation, solar) please have the courage of your convictions and join in advocating these policies that will give incentive to the resource-saving technologies that you believe are within reach. You may be right – I hope you are. Let us find out. If you turn out to be wrong, there is really no downside, because it was still necessary to limit throughput and consequently the ‘hard’ resource-intensive technologies (for example, fossil fuel, nuclear) that are currently pushing uneconomic growth.

Our strategy so far has been to seek efficiency first in order to avoid frugality – to keep the throughput growing. But ‘efficiency first’ leads us to the Jevons paradox – we just consume more of the resources whose efficiency we have increased, thereby partially or even totally cancelling the initial reduction in quantity of resource used. If we impose ‘frugality first’ (caps on basic resource throughput), then we will get ‘efficiency second’ as an induced adaptation to frugality, avoiding the Jevons paradox. Blocking the Jevons paradox is an advantage of the cap– auction–trade system over eco-taxes, although taxes have the advantage of being administratively simpler. Both will work.

Is this vision of a developing but non-growing economy not more appealing and realistic than the deceptive dream of an economy based on continuous growth? Who, in the light of biophysical reality, can remain committed to the growth-forever vision? Apparently our decision-making elites can. They have figured out how to keep the dwindling extra benefits of growth for themselves, while ‘sharing’ the exploding extra costs with the poor, the future, and other species. The elite-owned media, the corporate-funded think tanks, and the kept economists of high academia, Wall Street, and the World Bank, all sing hymns to growth in perfect unison, deceiving average citizens, and perhaps themselves. Their commitment is not to maximize the cumulative number of people ever to live at a sufficient standard of consumption for a good life for all. Rather, it is to maximize the standard of resource consumption for a small minority of the present generation, and let the costs fall on the poor, the future, and other species.

Some of the elite do not realize the cost of their behavior and will change once they are made aware. Others, I suspect, are already quite aware and do not care. The former can be persuaded by argument; the latter require repentance and conversion – or revolution, as Marxists would argue. Probably this line of division in some way runs through each of us rather than only between us. Intellectual confusion is real and we need better understanding, but that is not the whole story. The elite may already understand that growth has become uneconomic. But they have adapted by learning how to keep the dwindling extra benefits of growth, while ‘sharing’ the rising extra costs.

Indeed why not, if we believe that Creation is just a purposeless happenstance, the random consequence of multiplying infinitesimal probabilities by an infinite number of trials, as taught by the reigning worldview of naturalism? I say Creation with a capital ‘C’ advisedly, certainly not in denial of the established facts of evolution, but rather in protest to the metaphysical naturalism widespread among the intelligentsia, that all is purposeless happenstance. It is hard to imagine, under such a vision, from where the elite, or anyone else, would get the inspiration to care for Creation, which of course naturalists would have to call by a different name, say, ‘Randomdom’. Imagine calling on people to work hard and sacrifice to save ‘Randomdom’ – the blind result of Epicurus’ atoms swirling and swerving in the void! Intellectual confusion is real, but the moral nihilism logically entailed by the naturalistic scientism uncritically accepted by so many, may be the bigger problem.

The working hypothesis of scientific materialism, because it is so fruitful and widely accepted, is also constantly tempted to imperially morph into an Ultimate Metaphysics – albeit a metaphysics of Chance. However, explaining everything by chance is close to having no explanation at all. Simply adding Darwinian natural selection to Mendelian random mutation does not really mitigate the dominance of chance, because the selective criteria of environmental conditions (other organisms and geo­physical surroundings) is also considered to be a random product of chance. Mutations provide random change in the genetic menu from which natural selection picks accord­ing to adaptive survival odds determined by a randomly changing environment. Many of us would insist that purpose is also causative in the physical world, and is non-random. Given purpose, change in the environment is not entirely random, and given modern genetics even mutation is no longer entirely random. However, a historical animus against teleology of any kind leads Neo-Darwinsts to affirm that purpose or free will is reducible to deterministic biophysics, and that any direct subjective experience of purpose , or reasoned decision-making in pursuit of a purpose, is an “illusory epiphenomenon.” It is hard to square empiricism with such a cavalier rejection of our most immediate and direct experience, that of purpose. If reason and purpose are illusory, then so is policy. Logically Neo-Darwinist biologists must be even more laissezfaire than Neo-Classical economists. Economists at least recognize purpose as causative, but traditionally refuse to pass ethical judgment (the individual consumer’s purposes are sovereign). Biologists, or at least Neo-Darwinist materialists, deny the independent causality of purpose and therefore must consider it meaningless to pass ethical judgment on “choices” that from their perspective could not have been otherwise.

When contemplating the meaninglessness implicit (and increasingly explicit) in their materialist cosmology, some scientists seem to flinch, and look for optimism somewhere within their materialism. They invent the hypothesis of infinitely many (unobservable) universes in which life may outlive our universe. They were led to this extraordinary idea in order to escape the implications of the anthropic principle—which argues that for life to have come about by chance in our single universe would require far too many just-so coincidences. To preserve the idea of chance as reasonable cause, and thereby escape any notion of Creator, they argue that although these coincidences are indeed overwhelmingly improbable in a single universe, they would surely happen if there were infinitely many universes. And of course our universe is obviously the one in which the improbable events all happened. If you don’t believe that Shakespeare wrote Hamlet, you can claim that infinitely many monkeys tapping away at infinitely many typewriters had to hit upon it someday.

Such a Metaphysics of Chance precludes explanation of some basic facts: first, that there is something rather than nothing; second, the just-right physical “coincidences” set forth in the anthropic principle; third, the “spontaneous generation” of first life from inanimate matter before evolution can get started; fourth, the creation of an incredible amount of specified information in the genome of all the irreducibly complex living creatures that grew from the relatively simple information in the first living thing (neglecting that random change destroys rather than creates information); fifth, the emergence of self-consciousness and rational thought itself (if my thoughts are ultimately the product of random change, why believe any of them, including this one?); and sixth, the innate human perception of right and wrong, of good and bad, which would be meaningless in a purely material world. Explaining these facts “by chance” strains credulity even more than “by miracle”.

It seems that a sustainable steady-state economy, as a policy of Creation care, will not get far in a world dominated by naturalism. Naturalism denies the premises underlying policy of any kind, namely that our purposes are causative in the physical world, that Creation is not random, that our reason is capable of understanding its order, and that we can distinguish good from bad. There are many political roadblocks to a steady-state economy, but the most fundamental barrier is the metaphysical dogma of naturalism that logically, but blindly, aborts the possibility of policy of any kind.


[1] Waste is too neutral a term. In fact annual production of goods that accumulate into a stock of wealth requires the joint production of “bads” that accumulate into a stock of “illth”. The negative terms are absent from the indexes of economics textbooks, and unsubtracted in national accounts. A stock of wealth requires the joint production of “bads” that accumulate into a stock of “illth”. The negative terms are absent from the indexes of economics textbooks, and unsubtracted in national accounts.

[2] See concepts of Index of Sustainable Economic Welfare, Genuine Progress Indicator, Global Footprint (Daly, 2015). More recently The Lancet Commision on Pollution and Health finds that the financial costs from pollution are some $4.6 trillion annually, about 6.2% of the global economy (Landrigan et al 2017). If annual growth in Gross World Product is around 2.2%, and cost due to pollution is 6.2%, then with reasonable accounting we would have a net financial decline of some 4% annually. If that financial decline represents welfare loss, and it surely does since we are talking about reduced health and life expectancy, then the benefits of production growth are being more than cancelled out by the costs of the pollution generated by that growth. In other words, so-called “economic” growth has become uneconomic at the present margin. So far that seems to have escaped the notice of most economists!

[3] An earlier writer, defined standard of living as “the number of desires that take precedence in the individual choice over the effective desire for offspring” (Carver, 1924. p. 34) , thus anticipating the basic idea of the demographic transition.

[4] This is an empirical question. Is fertility being reduced to make room mainly for cars and refrigerators, or for parks and leisure?


Carver, T. N., 1924. The economy of human energy, New York: Macmillan

Daly, H. 2014, From uneconomic growth to a steady-state economy, Cheltenham: Edward Elgar.

Daly, H., 2015. Economics for a full world, [online] Available at: <; [Accessed 20 August 2018].

Georgescu-Roegen, N., 1971. The entropy law and the economic process, Cambridge MA: Harvard University Press

Landrigan, P.J. et al., 2017. The Lancet commission on pollution and health [e-journal] S0140-6736(17)32345-0

Herman Daly


The Mandala of A Market: A Study of Capitalism and the State in Murang’a District, Kenya

November 7, 2020 Leave a comment

This is a study of the development of capitalism and the state in Kenya. The study is centered in a rural marketplace in Murang’a district which is a Kikuyu speaking area in Central Province and is located about 80 kilometres from the capital, Nairobi. The dynamics of the market-place provide a lattice through which to understand the distinctive developments of state and capitalism in Kenya and, more importantly, to see how these have shaped and are shaped by the lives of the people therein. The study is both descriptive and theoretical where the theoretical models are developed with reference to the ways in which the state and capitalism have been constructed in a particular spatial and temporal context; in this case with reference to Kikuyu speaking peoples. In uncovering theoretical models of the state and capitalism as they have emerged at a micro level from the ontological engagements of persons in their lives, the study also proposes a general theory of action and suggests that this may be brought to bear on an understanding of human relationships to their worlds.

To be Kenyan is, from the start, to be part of a plural identity where plurality has become a distinguishing feature of Kenyan nationalism which is expressed among other things through the politics of ethnic difference. Increasingly, especially in metropolitan cultures, people must deal with a plural sense of themselves which is integral to their identity defined in relation to the great force-fields of our age which include nationalism race and ethnicity. At the same time as the experience of plurality at the heart of identities such as nationality (Black-British, Asian-Canadian and so forth) there is a corresponding quest for what might be termed ‘authenticity’. Authenticity is an experience of wholeness, of rootedness, of depth, of power and empowerment. It is all the more consciously sought because of the way in which plurality is often experienced as fragmentation’. The question of how we can reconcile our sense of ‘routes’ with our sense of ‘roots’ (Gilroy 1992) is a burning issue of the contemporary age.

Homogeneity and Difference in the Globalization of Modernity

It was in relation to the experience of plurality and the quest for authenticity in the context of being Kenyan that I decided to focus on the nation-state and capitalism. The globalisation of state and capitalist development situated Kenya within a discourse of ‘modernity’ which described at once that which connected a newly imagined ‘Kenya’ to the rest of the world and at the same time illuminated the manner in which Kenya has asserted its difference. Thus to focus on nation-state and capitalism provided an axis from which to look at experiences of difference and holism in relation to being Kenyan and in relation to the world. In the context of ‘modernity’, the relationship between difference and universality addresses itself among other things to the extent to which the globalisation of structures such as the nation-state and capitalism have subsumed local societies and have led to cultural homogenisation. This is not only of relevance to Kenya in terms of its situation within a global political economy, but also of relevance to anthropology which has traditionally constructed itself as a study of cultural difference (see Parkin 1993). In this context the question must be addressed of whether or not the globalisation of ‘modernity’ has led to the homogenisation of cultures. If on the contrary, difference can be seen to be proliferating in direct relation to the structures of capitalism and the state, then what implications does this have not only for our understanding of the nature of capitalism and state development, but for our understanding of ‘modernity’ itself? Several theorists, including Harvey (1989) Miller (1987), have argued that the proliferation of difference in relation to globalisation is a direct product of capitalist development. Miller for instance looks at the way in which a shift in global capitalism from production to consumption leads to a proliferation of cultural difference as a result of the proliferation of commodities. The emphasis of cultural difference is an off shoot of this because of the specific relationship which capitalism engenders between persons and things: the act of consumption, argues Miller, involves a definition of personhood in terms of an identification with a series of reference points which are embodied in the thing consumed. Thus, in the dialectical relationship between goods and persons, ever-expanding ranges of goods generate everdiversifying expressions of social identity and vice-versa; capitalism itself produces diversity. Others argue that the plurality of ‘modernity’ results from the fact that capitalism itself is “inherently conflictual and changeful, incapable of realising or of stabilising itself” (O’Hanlon and Washbrook (1992) cited in Vaughan 1993). Vaughan continues; “Unable to pervade or exhaust all human experience, modern capitalism then produces strategies of ‘resistance emancipation and difference’.” Marshal Sahlins on the other hand, argues that it is the interaction between global capitalism and local culture which produces difference. It is not culture which is subsumed but rather capitalism itself: For Sahlins, of key importance is the way in which “indigenous peoples strive to integrate the world system into something which is logically and ontologically more inclusive: their system of the world.” (Sahlins 1988). The interaction of capitalism with culture according to Sahlins would explain why capitalism has taken root with such speed in some parts of the globe whilst it has been staunchly resisted in others.

Beyond this, the proliferation of cultural difference in relation to the hegemonic power of the state and capitalism raises questions as to the power of social systems to constitute social subjects and of the capacity of agency and action, often structured through cultural forms, to transform social constructs such as capitalism and the state. This issue is of central relevance to the Kenyan experience of state and capitalism where the assertion of difference and the mobilisation of cultural constructs become the means through which individuals transform and control the hegemonic structures of capitalism and state which otherwise threaten to subsume them.

Center and Periphery in the Globalization of Modernity

In the context of ‘modernity’, the tension between plurality and authenticity both within and between nations is compounded by the tension between ‘centre’ and ‘periphery’ to produce a global discourse of power. Dominant discourses turn easily into discourses of dominance thus rendering the experience of plurality again into one of disempowerment or fragmentation rather than the opposite. In the constructs of ‘First’ and ‘Third’ world’ for example, the plurality of historicity and of the inter-relationships between nations is negated (see Haugerud 1995 and Bayart 1993). These two charicatures which have emerged in the definition of centre and periphery, dominance and subordination, have come to assume global proportions. The projection of dominance and subordination as binary and global, negates the reality and importance of difference in the operation of material and political power and certainly negates a discussion of individual empowerment. One illustration of the subsumption of plurality within dualisms of dominance is that the image of the starving woman and child has come to define half the globe: as Vigdis Broch-Due remarks “This is an image which resonates within a longstanding European tradition of poverty imagery in which women and children are powerless, dependent and therefore innocent- absolute victims worthy of our pity and aid…It goes without saying that in many African contexts, women are not the poorest of the poor and may in fact have central roles in the local economy.” (Broch-Due 1995;1)

Concepts of power defined in relation to the dominant fictions of our age are rife with paradox in relation to the experiences of individuals. Furthermore they may often engender the inequalities which they seek to define. In relation to gender for example there is a paradox which became evident to me in a discussion with Sheila Wamahiu, a lecturer at Kenyatta University. We were both struck by the fact that Kenyan women are often conceptualised in (Western) academic discourses as ‘exploited’. However many of these women, particularly Kikuyu women, seem on the contrary to exhibit a strong sense of empowerment. Dubisch comments on a similar situation in Classical Greece; “many Greek women seem to possess a strength of character and a firm sense of self in what to the outside observer seems a restrictive society.” (Dubisch 1986:31).

Images of the so called ‘oppressed’ defined in relation to dualistic categorisations of experience, far from exposing the pernicious injustices of power serve rather to mask a real understanding of power and even to contribute to the ‘powerlessness’ of those who are portrayed in this way. Patricia Stamp comments on this again in relation to perceptions about women and the ‘Third world’: “Especially in the third world, women have been treated as passive targets of oppressive practices and discriminatory structures. Such a conceptualisation, far from contributing to women’s emancipation, colludes with existing ideologies that construct women as naturally inferior, passive, and consigned to a private apolitical world.” (Stamp 1991;825).

These paradoxes call into question a consideration of power based solely on material or political parameters. People may become more individually ’empowered’ when they are economically or politically oppressed, and indeed the opposite may also be the case. This is not to deny considerations of power as imposition of force and so forth, it is rather to provide a broader understanding of power which redeems the quality of experience even when it is subject to isubjection’ 3 . In this light I felt it necessary to attempt an understanding of power which transcended the dualism of dominance/subordination and to address a more general notion of power and empowerment in the context of human action. I went back to looking at questions of being and authenticity. What is it that empowers individuals and societies in relation to their experience of the world? Or at what moments are they empowered? These questions are of central importance, especially when considering the nature of material and political inequalities. They may also help to explain how individuals who are categorised as ‘exploited’ may yet possess the capacity for powerful and radical forms of action and may possess a greater sense of dignity and personal empowerment than those who are supposedly in positions of dominance over them. This has applicability not only to the situation of women in many parts of the world but also to the construct of First/Third world and its concomitant realities.

In providing a broader understanding of power it may be possible to challenge some of the ways in which inequality and injustice are in fact perpetuated through ascribing to a dualistic model of power. The essentialisation of difference in the context of a dualistic understanding of power is not simply a conceptual process. It has become a destructive and operational reality of our world. It is within a discourse of dominance/subordination for instance that the Aid game between ‘West’ and ‘Third World’ is engaged. (Aid incidentally, in the layman’s terms, is deliberately conflated in Kenya with the scourge of AIDS, both of which are seen to stem from the West and to be debilitating of Kenyan people.) In the context of Aid, the palliatives offered through governments and Non Governmental Organisations to remedy the realities of exploitation do nothing to address political and economic difficulties which continue to persist, and in fact these may mask the real mechanisms of exploitation which are inscribed in ‘First’ and ‘Third’ worlds alike. “The alternative to development politics is not debates about ideological questions but individualism and despair. Apathy is found especially in areas where highly centralised patronage systems coincide with low levels of agricultural surpluses and is connected to the experiences of dependence upon purely external resources and over reliance on a handful of patrons to capture them and distribute them. Contrary to what might be expected from much of the academic literature, the role of NGO’S has probably strengthened rather than weakened these tendencies.” (Kanyingi in Gibbon (ed) 1992;118) By contrast, addressing issues such as control of global investment and terms of trade among what must be considered as ‘co-subjects (Fabian 1991) could work both for the mutual benefits of the partners involved and in the process alleviate a situation which has worsened through a discourse of domination/subordination, the remedy for which has all to easily been accepted in the form of a dubious philanthropy. It is hoped that a project which aims to address pluralism and authenticity and the nature of power, especially in the context of the globalised structures of nation-state and capitalism, will not only serve to de-centre some of the cruder fictions through which the experiences of individuals in places such as Kenya are currently understood, but will also open up potential avenues to challenge the power of these fictions to constrain the lives of individuals therein.

Holism and Difference in Action and Empowerment

It is out of the experience of pluralism and authenticity in the context of ‘modernity’ that I have been led to look at the importance of both relationality and holism as fundamental components of human action and of the relationship between the two as generative of power. Power may be seen to emerge in the antagonistic and differentiating nature of constructions (this is explored in the work of Michel Foucault). Once difference itself is essentialised and subsumed into dualistic antagonisms power becomes a totalitarian force which is negative not positive. However power may also be seen to also emerge in the ability to engage with that which transcends the differentiating nature of construction; to engage with the horizons of being wherein difference is resolved in relation to the principle of the whole. In this light, the quest for authenticity may be viewed as an attempt to engage with experience of holism.

In dealing with power I was led to ask the question of what, if anything, motivates or compels human action and how is this constitutive of and constituted by the constructs which form the realities of our worlds. It is to this end that I am concerned with the concept of holism. Engagements with the whole may be seen to be operational in the ‘transcendent’ dimensions of human action. At the level of the social, these dimensions present themselves in the form of ontologies. Ontologies are constituted through social interaction and may be understood as dynamic models of the relationship between holism and difference.

Along with Kapferer, I view ontologies to be fundamental to the nature and power of human action in the world. In this study, I explore relationships to the state and capitalism in terms of four ontological dynamics. In engaging ontological dynamics in their lives, individuals actively transform and are transformed by constructs such as capitalism and the state. Thus an exploration of ontology is fundamental not only to an understanding of the nature of state and capitalist development and the significance which these have achieved in peoples lives. It is also fundamental to an understanding of agency and power.

Ontologies encode foundational dynamics which are realised in both people’s ideational and practical realities. Ontologies thus inform people’s theoretical understandings of their worlds as well as being engaged through action. This is true of anthropological practice and theory as much as it is true of the practices and theories which anthropologists study. Thus rather than imposing on my data theoretical constructs which have derived from ontological models that have developed elsewhere, I have based my analysis of the state and capitalism in Murang’a district upon ontological models which have emerged from the situation wherein they were explored.

Thus this thesis has two overall aims. Firstly it understand state and capitalist development through theoretical models which emerge engagements of persons in a particular attempts to convey the power which individuals attempts to organically ontological Secondly it may command from the context. through the transcendent dimensions of action of which engagements with ontology form a part. In both these respects, the thesis aims to re-centre an analysis of state and capitalist development in Kenya with reference to theories and practices which have emerged in the Kenyan context rather than those which are imposed from outside. In so doing, the thesis aims to contribute to a global understanding of ‘modernity’ and to propose a general theory of action and power in the context of humanity.

The universality of capitalism and the structure of the nation-state have often been cited as the key parameters which make possible a global discourse on ‘modernity’. This study which focuses on Kenya with particular reference to the development of the state and capitalism, places Kenya within a global discourse and at the same time challenges the parameters of this discourse in relation to the distinctiveness of the Kenyan context. The study highlights the contradictions which have emerged from the relationship between capitalism and the state in Kenya and suggests that these contradictions have structurally connected capitalist and state development to other factors such as communal identity, gender, and micro-level relations of kinship and alliance. These latter now form an integral part of the manner in which both capitalism and the state are structurally operational in society at large. In looking at these factors, the study aims to understand the workings of capitalism and state at a more general level and to highlight the importance of individual agency in the transformation of these structures.

Amrik Heyer (1998) The Mandala of A Market: A Study of Capitalism and the State in Murang’a District, Kenya