24/07/2023
AGRICULTURE: from dirty to digital - an industry which evolve daily - one of my favourites, for sure.
Imagine a group of people wash out on an uninhabited island. There’s no infrastructure, technology, economy, or contact with the rest of the world. Chances are that many will succumb to illness and hunger, but a few may be skilful enough to survive by collecting eatable roots and fruits, and to fish and kill animals to eat. But even for the survivors, life will be tough, brutal and short.
The first step to get out of the predicament of being bogged down in a hunter gatherer society, is to start an economy, and the primary industries is the place to begin.
The primary industries, or dirty industries, consists mostly of mining and agriculture and is the first step in the process of establishing an economy. Unlike a hunter gatherer society where life is tough, and resources are mostly consumed and used as and when it is collected, or killed, a primary economy society differ in two important aspects.
Firstly, the concept of ownership and hence the development of the protection of private property rights becomes established. Unlike a hunter gatherer society where property over things only exist for a short while before it is consumed, once the primary sector takes hold, goods and things lasts longer and the concept of private property becomes more important.
Secondly, once the concept of private ownership becomes established, the exchange of private property or trade becomes possible which marks the beginning of a genuine “economy”.
Once the primary industries, ownership and trade are established, the next phase of economic development is not that far behind; the establishment of the secondary industries.
The secondary industries, primarily manufacturing, mostly adds value to the primary industries and generally follow when the primary industries are relatively well established.
The third phase in the development of our new economy typically happens when value is added to the secondary industries, that is when the tertiary industries evolve.
An example of the process is the following; a farmer produces wool from the sheep that the breeds – primary industry. The sheep and wool belong to him, his rights are protected, and he can and does trade his property, for example by trading his wool with the weaver.
The weaver, the new owner of the wool, now adds value to the wool by weaving a jacket – secondary industry - which he trades with the shop owner. The shop owner – tertiary industry – adds value to the jacket by sourcing jackets, providing a marketplace, and by letting consumers know about the importance of wearing jackets.
Eventually all the different industries come together to serve their goal of satisfying the final consumer. And all this happened because the different industries all play a role in the various processes of eventually dressing the consumer. And of the utmost importance, it happens in an environment of private ownership, the protection of private property rights and of trade.
The evolution of economies as described above are very clear to see even today. Poor(er) societies are typically societies where the secondary and tertiary sectors are not yet that well developed – very few societies are still hunter gatherer societies. Poor(er) societies are also typically societies where private ownership, the protection of private ownership and trade are not well established.
But everyday modern life also points to the next step in the evolution of economies.
Today the most successful and wealthiest economies are those where the tertiary industries are the biggest and fastest growing parts of their economies. In fact, in many cases the primary industries are so small that it has become irrelevant, while the secondary industries are gradually being overtaken or replaced by the tertiary industries!
However, within the tertiary industries interesting patterns and trends can be observed. The tertiary industries consist mostly of “invisible” goods – like trade, finance, tourism and the like. But since the digital revolution, a bigger and bigger slice of the tertiary industry now consist of digitized stuff. Think news, music, emails, even finance and even traditional services like trade are today delivered and available in a digital format.
The primary industries, as we know them, are all in terminal decline. Even the traditional tertiary industries are in many instances being replaced by the new digital industry!
But step back a moment and another trend become clear, agriculture provides a good example.
A hundred years ago a hectare of land produced only a fraction of what the same piece of land can produce today. Why is that? Why is that that the same piece of land today produces many times more than in the past?
The answer is twofold, firstly vastly improved skills today allow those that use land to produce far superior yields than in the past. Secondly, when incredible technological advances in recent years are added to the mixture of land and skills, agricultural production simply exploded!
And that is the answer to economic development generally, and to agricultural development in particular – skills development and technological progress! In fact, none of the increase in agricultural yields in recent decades can ascribed to the land! But all the increase in agriculture yields can be ascribed to improved skills and technological advances!
And here is the interesting thing about the dirty industries, they are converting themselves and are becoming part of the tertiary industry. In fact, the dirty industries are also becoming part of the digital industry.
Look at this example:
Ten thousand years ago the closest occupation to what we call a biologist today was called, you guessed it, a farmer! Farmers knew their animals and plants. They knew when to plant, harvest and they selected their animals and plants based on certain characteristics. And if it wasn’t for those farmers of thousands of years ago we wouldn’t have had all those different breeds of cattle, sheep, corn, rice chickens, you name it, today.
But who fills that occupation today? Today a geneticist can analyze and manipulate the genome of a living organism without setting a foot on a farm. And what is more, a geneticist can analyze a genome, can model a genome and can email the whole genome and all its modelling to anybody anywhere in the world if that person has a “connection”. We have digitized life! Agriculture, the dirty industry, has moved to become part of the tertiary industry and part of the new digital economy!
And that makes todays debate about land, about confiscation of private property, about wealth creation and about inequality so wrong and mostly irrelevant. Because if anybody wants to follow a career in agriculture today, you will be very wrongly advised to get a piece of land and to start farming. Instead, you should study to become a geneticist, personnel manager, financial guru, electrician, programmer, drone pilot or any other career. And if you should end up in agriculture, then it will be pure coincidence because agriculture, like all other industries, are turning digital and land is but one tiny and diminishing part of the agricultural equation.
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