The Asian Miracles: Free renewables made it all possible

By Tom Abel

I recently visited China for the first time. I saw that scholars are still trying to understand the China economic miracle and predict its future growth / stagnation / decline. Some time ago I considered this issue in the context of the previous Asian miracles and from the view of economy as ultimately a product of ecology. With a simple model that focuses on the need of households to provision family members, an answer becomes clear.

In the 1970s-1980s it was Japan, in the 1980s it was Taiwan (and others), and in the 1990s-2000s it has been China (and Vietnam). Each of these countries urbanized quickly as rural migrants streamed into new factories for the manufacturing of first simple products and later high-tech. In the case of Japan and Taiwan, growth peaked and has since stagnated. China’s growth may be slowing.

Abelrural
A rural farm in Guilin, China (source)

Something that connects them is this. Previously rural countrysides supported large populations in each country. That meant that much, if not most of the energy/emergy that supported the households was from free, renewable sources, primarily household gardens, but also the other free natural resources of the countryside that process human waste, clean drinking water, and cool households.

Why do households matter?

The era of nuclear families in the West is a historical outlier. Traditionally, children, parents, and grandparents, have depended upon each other, in a perpetual cycle of birth, growth, and death. In rural communities, the individual, or the married couple, are not the isolated unit that they are now in the West (yet, changing in many Western countries where jobless young adults are staying  home with aging parents, a sign of stagnation there too). Traditionally, extended families were the unit of reproduction, and thus the unit that requires inputs and maintenance. In rural communities, a large proportion of those inputs were from free renewables.

Diagram of a farm household subsisting entirely on free-renewable energy sources (sun, wind, rain, uplift, and topsoil). While this is possible, in recent centuries rural households were typically parts within larger society wholes, from which they received some additional imports. But the majority of flows of inputs to these households have continued to be free from nature.

In each of these countries, as rural teenagers made their ways to the urban factories they left their aging parents and younger siblings at home. Their extended family continued to be supported, or at least subsidized, by large, free, renewable inputs from nature. The wages sent home by workers merely topped-off those inputs. The workers in urban factories could be paid small wages because their parents or siblings needed so little.

China ‘empty stool’ photo. There are many such photos on the web. The stools signify the offspring that have migrated to urban jobs.
China ‘empty stool’ photo. There are many such photos on the web. The stools signify the offspring that have migrated to urban jobs. (source)

However, 5 to 10 years after migration, the new workers are starting families of their own. Those new families are purely urban families and the subsidies that families had received from nature are now lost. Unsurprisingly, the workers now demand more wages, as they and their offspring must be supported together from those wages in an urban environment. Higher wages mean that the economy must produce the higher-tech products, and the low-tech and heavy industries move elsewhere (first to Taiwan from Japan, then to China and Vietnam from Taiwan). Farmer families can live reasonably without much cash because of the free work from nature. But when that disappears, in new urban environments, so does the cheap labor. And stagnation begins.

 

An urban household in Taiwan. While some inputs from nature remain (sun, tide, uplift), the great majority of inputs must be purchased.

So the answer to this riddle is not found in consumption, or raised aspirations, or even worker greed. It is simply about a new minimum level of support that is required as extended families leave the countryside and try to live in urban environments.

Why do economists not see this?

Why do traditional economists not see it this way? Because they look at the countryside and see only poverty. They have no way to judge the value of free inputs from nature. They see farmers with little cash and lament their sad state. But in a way, urban worker families are just as ‘impoverished’ as their country ancestors. They have more money, of course, but they must now buy all of their supporting inputs. After those purchases, few workers today have remaining income for savings. And risk increases, as they typically lack the social safety nets provided by community life, that allow families to buffer the inevitable large perturbations that hit any household.

Admittedly, this is just a verbal model, not an analytic result, it is based only on first principles of environmental accounting. It needs to be tested with data and perhaps in simulation. But as an argument or hypothesis, to me at least, it deserves consideration.

  • cognizantfox

    Thanks for drawing attention to what’s happening in China. You might appreciate a new report from the Global Footprint Network on China found at http://www.footprintnetwork.org/documents/2016_Guizhou_Report_English.pdf.

    • tom

      Thanks for that link. I took a quick look and will read more carefully. I have some motivation to learn more about the obviously improving work surrounding ‘footprint’ research since I just returned from a conference in Beijing where Mathis and I were speakers and we got some time to chat. I learned the footprint idea in the early days, but have not kept up with the kinds of new work that I see in the report you linked. Thanks again for that.

  • Brian

    Well played Mr/Dr Abel, I thought you were going to make a post on solar panels or wind turbines based on your title. Interesting idea. My critiques would be mainly:
    -The words renewable and sustainable seem to have lost their meaning. From my time in the early naughts in China, the underlying fossil fuel usage even in remote country sides, where the whole town showed up to see westerners with blonde hair, was apparent. Lots of scooters and trucks running here and there. Is 1 billion people in a country the size of China ever sustainable and built on renewable energy? Which leads me to….
    -What if it is more about appropriate power matching? Though admittedly that would be a much harder blog post/message to get out there. Like a little bit of high quality fossil fuels mixed with a lot of low quality sunlight can do some crazy stuff in highly ordered societies for a lititle while. And at some point the societies can’t resist the switch because of social factors created from inflexible biology (like in situ reproduction) to just high quality fossil fuels, which leads to a passing of the baton to another ordered society that hasn’t in earnest tried development.

    • tom

      Renewables, slow-renewables (topsoil, timber, groundwater), and non-renewables – that’s how I learned it. And of course, wind and solar are not truly ‘renewable’ if they cannot be built and maintained with renewable energy from sun, wind, rain, etc. But your first point is very good. It might have made a better argument if I started with a diagram from a more realistic farm household rather than the abstract, total renewable household. The conclusions would have been the same, rural households in China are running on ‘a lot’ of free renewable energy.
      Your second point is also good. Odum would call that ‘matching energies’ and it is a basic principle of self-organization that large quantities of emergy typically attract smaller amounts of high-quality emergy in the production of some new product. What you describe as the steps of transformation and very good. That’s how I would conceive it also. When large quantities of fossil fuels are available there appear relentless push-and-pulls that lead societies to make use of it. Another post I have on this site goes in that direction: http://prosperouswaydown.com/abel-sociocultural-boundaries/#more-7699

  • Why do traditional economists not see it this way? Because they look at the countryside and see only poverty.

    Another point-of-view is that it is industrial education at the core of the rural migration.

    In the film Schooling The World, the filmmakers show how a zero-income, happy rural family sends their kids to the local “western” school, which teaches them urban skills, then they all run off to be unhappy (but much higher income) factory workers, living in tenement slums.

    Rural people have an education! They learn from their elders what crops to grow, how to care for animals, and how to get their basic needs from the land.

    • The Alaska Native elders have a name for this–“losing focus.” Mainstream jobs come to the village, a select few get them and make money and start adopting western ways . . . .

      • Steven Harper wanted to grant individual natives title to individual plots of reserve land, which would allow them to get mortgages, so that they would have funds to “develop” the land. That would have been the beginning of the end for native lands.

        Talk about “losing focus!”

        (Currently all native land in Canada is held in common by the band, and so individuals can’t get loans against it.)

        • William Wanklyn

          Freed and abandonned slaves in Barbuda have a similar common ownership of the island. I think it works well. Developers hate it.

  • Tom Abel

    Reading Ian Morris’s book, Why the West Rules – For Now. I see that he has a general name for the type of processes that I am describing here, ‘the advantages of backwardness’. Throughout history, there have been many similar cases, where falling behind gives one region the time, in my terms, to charge important storages, which can later be consumed in a pulse that propels growth. Of course, only for a time. Thank you Ian, for that.

  • Tom Abel

    The theory of ‘economic backwardness’ comes from this economist, Alexander Gerschenkron in 1951, intended to explain the growth of the German and Russian economies. According to Wikipedia, his predictions are listed below. Let’s see how he did in the case of China.

    More rapid rates of industrial growth (true)
    A greater stress on producer or capital goods as compared to consumer goods (false)
    More rapid growth spurts rather than gradual growth rates (one large growth spurt?)
    Larger scale of plants and firms and a greater emphasis on up-to-date technology: backward countries are able to purchase machinery from early producers, for example Russia (most backward country) would import Britain’s (least backward economy) machinery and transportation equipment (mixed success, did not know about commodity chains at that time)
    A greater emphasis on capital-intensive production rather than labor-intensive production (false)
    A lower standard of living (still lower than the US? true, for now)
    Less role played by agriculture (mixed, they still need to feed their one billion people)
    A more active role by the government and large banks in supplying capital and entrepreneurship (true)
    More “virulent” ideologies of growth”. (hard to be more virulent than the US)

    Not bad. But he likely did not appreciate the value of free inputs from nature.

  • Tom Abel

    A recent new story related directly to backwardness in China, ‘China – the Advantages of Backwardness’
    http://www.financialtrading.com/investing/china-economy/

    They do refer to cheap labor as being one factor. But as usual, there is no explanation of why labor can be ‘cheap’, and why it will not be cheap forever. In fact, why is it that, in many developing countries, people can live healthy and productive lives without high wages? Because they are living from free renewable energy. This question is never asked by economists because their only ‘currency’ measure of value is money.