I AM innocent of economics, but even I was gripped
by an analogy between agriculture and manufacturing
that I heard the other day.
Farmers produce an essential commodity: food. But
who makes the most money from that food? Not
farmers, but those who own the food industry, who
run supermarkets or who own restaurants. The same
holds true for fishermen and others engaged in making
it possible for people to eat.
Whether it is peanuts -- which farmers are paid
peanuts for, but which cost a great deal more when
they turn up salted in dispensing machines -- or some
humble fish, which the fisherman catches for a
pittance before it can arrive with an unpronounceable
name and an unspeakable price-tag at some fancy
restaurant, real money lies in adding value (cooking,
taste, the ambience of the setting, and so on) to a
product.
The value comes not from agriculture but from some
other part of the economy. That is why profits flow to
that part.
The same logic is transforming the place of
manufacturing in the economy.
Of course, it remains important, but what will matter
increasingly in the coming years is not the industrial
commodity itself, but the services which insert it into
the economy.
People will still earn a living from making things that
other people need, but the lion's share of profits will
go to those whose services clinch the deal and get
customers to actually buy a product.
By way of an illustration, take the mobile phone.
Hardly anyone will deny that the product is a crucial
part of mobile communication. But it makes eminent
sense already to give the phone away for free, so long
as customers agree to pay for the phone service for a
stipulated period of time and other conditions.
Computers, the anvils of the new economy, are going
the same way. Who knows, cars, too, might do so
one day. Great idea, is it not?
But think of what the shift entails. Workers in
manufacturing, which continues to be a substantial
economic activity, will move down the economic food
chain, like workers involved in agriculture have
already done.
Tomorrow's industrial worker will be the equivalent of
today's farmer.
That is how stark the reality is. Of course, it is the
natural result of the shifting of the centre of economic
gravity from manufacturing to services, but it
dramatises just how fundamental that shift is.
The upside is that, just as tomorrow's industrial
worker will be a farmer, tomorrow's services worker
will be the winner.
The downside? How many will be able to make it into
the economic vanguard? How many more will there
not be who will slip down the food chain, towards
economic disenfranchisement?
I am not thinking of over-populated countries with
low levels of literacy: Their problems in adjusting to
the new forces are gigantic; they are in a class by
themselves. Even the compact city-state called
Singapore will not be immune to the wrenching
consequences of the transition.
One of the factors responsible for Singapore's
remarkable growth is surely that it is an industrial
metropolis without a large agricultural hinterland.
Revenues earned from industry were not spent
subsidising farming, shackled by low productivity.
But as the country prepares to move from the old
economy to the new, there is a real danger that
"farmers" -- workers in manufacturing with no place in
the new economy -- might reappear here, even
though there is no agriculture.
And what will they do? To extend the metaphorical
link between agriculture and manufacture, will they
become the new landless peasants, the lowest of the
low in the hierarchy of inequity in agricultural
countries?
If they do, the irony of circumstance will indeed
triumph. Singapore, which took off as a peasant-free
economy, will not only have a reborn peasantry but
also a landless one -- thanks to the very absence of
agriculture that has helped its progress.
In agricultural nations, even landless labourers eke out
a living by working on other people's lands. Theirs is
a subsistence existence, but they exist. In a landless
economy, what can landless workers possibly subsist
on? HENCE, to say the obvious, the importance of
upgrading skills in order to be a part of the
Knowledge-Based Economy.
But the initials KBE are nowhere as dominant in the
popular consciousness as everyday realities such as
the PIE, CTE, ERP or COE.
Yet, without a foothold in the KBE, those realities will
grow remote. Instead, roads, lanes and by-lanes will
be filled with sharecroppers with no crops to share,
farmers farmed out to nothing, peasants without a
future.
If matters are this grave, why isn't everyone
embracing the KBE? There are many reasons, but
this one needs to be mentioned: Those who need to
embrace it and can, but will not, just do not believe
that they can be driven out of existence, given the
reassuring certainties of today's Singapore.
KBE is an official term, and this Government has the
habit of taking care of Singaporeans.
It has done so, and it will do so. Why bestir oneself,
then?
But the truth is that no government can protect people
in the new economy because no government has the
means to predict its outcome and calibrate policies
accordingly.
The best that the state can do is to provide working
tools to its people: useful knowledge, fertilisers to
make the soil responsive to hard work, and the
morale which comes from knowing that there is a
future in the new economy.
If industrial workers do not collect the tools they
need, is there any hope for the coming farmers?
What will workers eat? Memories of the departed
peasantry?
Adapted from The Straits Times, 8 Apr 2000.