Reduction in demand for primary commodities due to technological change

Production of synthetic substitutes for primary commodities
Competition between synthetics and primary commodities

Nature

The demand for many primary commodities, particularly those produced by developing countries, has been seriously eroded by the evolution of man-made substitutes. Half the world requirement of rubber, for example, is now met by synthetic products. Pulp-based rayon and acetate, and petroleum-based noncellulosic fibres are rapidly increasing their share of the total fibre market, thus restricting the rate at which cotton and wool sales can be expanded. In almost every field technical advances are resulting in economies in use. Leather produced from animal hides is replaced by plastic materials produced from natural gas; aluminium is substituted for wood; the products of the chemical industry for the output of the farm and the forest. The market share of natural products is falling steadily, which has the side effect of raising world price-elasticity of demand to at or near the level of synthetic prices.

Incidence

The reduction in demand for primary commodities due to technological change has been observed across various sectors, particularly in agriculture and mining. For instance, advancements in synthetic materials and alternative energy sources have led to decreased reliance on traditional commodities like cotton and coal. According to the World Bank, global demand for coal has dropped by approximately 30% since 2012 in many developed countries, reflecting a significant shift in energy consumption patterns. This trend is particularly pronounced in regions with strong renewable energy policies, such as Europe and North America.
A concrete example of this phenomenon occurred in the United States in 2015, when the demand for coal plummeted as natural gas and renewable energy sources gained traction. The U.S. Energy Information Administration reported that coal production fell to its lowest level since 1981, with many coal mines closing in states like West Virginia and Wyoming. This shift was largely driven by technological advancements in hydraulic fracturing and wind energy, which made these alternatives more economically viable and environmentally favorable.

Claim

The reduction in demand for primary commodities due to technological change is a critical issue that cannot be ignored. As automation and alternative materials advance, traditional industries face existential threats, leading to job losses and economic instability. This shift not only jeopardizes livelihoods but also exacerbates inequality, as vulnerable communities bear the brunt of these changes. It is imperative that we address this challenge proactively, ensuring a just transition that supports affected workers and promotes sustainable development.

Counter-claim

The notion that technological change leads to a reduction in demand for primary commodities is overstated and misdirected. In reality, innovation often enhances efficiency and creates new markets, driving demand for raw materials in unexpected ways. As industries evolve, they adapt, finding new uses for commodities rather than abandoning them. Focusing on this supposed problem distracts from the real challenges we face, such as sustainable practices and equitable resource distribution. Let's prioritize genuine issues over unfounded fears.