My Vineyard has been Turned into a Shopping Centre

One of the most beautiful things encountered in Lisbon during my recent trip was the of range citrus trees growing right in the heart of the city. Making cities productive - what is sometimes referred to as 'edible estates' or, in a more rural setting, 'edible landscapes' - will be key to our survival once peak oil begins to bite. Much as happened in Havana when food imports became too expensive we will be growing vegetables on verges and waste-ground.

As part of the Transition Towns initiative activists in Totnes have been planting nut-trees on spare ground, and Stroud's mayor has agreed that in future urban tree-planting will focus on fruit-bearing trees. Sweet chestnut is a particular favourite, since it is leafy and gorgeous, produces useful tasty food, and its wood is durable and excellent for a variety of uses.

Sadly, elsewhere Lisbon is not so friendly to urban production. Campo Pequeno and Campo Grande are areas of the city that were once wine-growing fields, small and large, and are now concrete oases and tube stations. My hotel was near Campo Pequeno, where I began to notice eerie echoes of an earlier post. Not only does it have a bull-ring (in this case the genuine article) but underneath it is another shopping centre. In contrast to Birmingham, the shoppers are underground, the sports' fans in the fresh air.

I also began to understand the true meaning of the theory of comparative advantage, a bogus economic justification for free trade that was originally outlined by David Ricardo in terms of trade between the UK and Portugal - we make woollen cloth and export it in exchange for Portuguese wine. Our climate favours one and theirs the other. Since the theory is about justifying trade in goods when one country is always more efficient it isn't really a very good example.

Except that I discovered from my guidebook that the reason there was free trade between these two countries is that it was bought some 50 years early at the barrel of a gun, or rather to allow Portugal to avoid the barrels of Spain's guns. Britain offered military protection under the Methuen Treaty but in exchange Portugal had to agree to let UK cloth in cheap, undercutting domestic production and putting thousands of textile workers out of jobs.

It is astonishing in how many corners of the world you encounter examples of our brazen, pro-capitalist, tread-on-your-face mentality in operation. No wonder my daughter says 'We are bastards aren't we mum?' Except that it wasn't the impoverished factory workers of Lancashire who benefited from this. But it does make us slightly more responsible for sorting the mess out. Tweet

What is trade really for?

If we think our way back to the earliest historical example of trade we can recall, the Vikings or the Hanseatic League, perhaps, the first thing you notice is that the trade was an exchange of exotic items that were not available in the locality. The Vikings brought Baltic amber to the Dark Age Britons, who sent back tin or gold in return. If the traders had had nothing we could not find at home we would not have involved ourselves with them. How simple life was in the happy days before capitalist exchange!

The early economists also theorised trade as an exchange of goods that could not be produced locally. In Ricardo’s theory British woollen goods are exchanged for Portuguese wine. The sleight of hand that underpins the ‘Trade is Good’ mantra is his theory of comparative advantage. It is clear that if you have a British climate, you cannot have an absolute advantage in the production of wine. There are inevitably going to be countries where the sun shines for more of the year whose citizens can produce better wine more cheaply. But what of the situation facing a country that is less efficient in the production of all goods than its neighbours? According to the theory of comparative advantage it will still gain from trade if it focuses on producing the goods it can produce most efficiently with its own resources.

The reason this is a sleight of hand is that there are assumptions built into the concept of ‘efficiency’ that are not politically neutral. For one, the trade that takes place is denominated in a currency, and that currency is owned and controlled by a nation-state which can therefore use it to gain advantage in the trade. This explains why the East Asian tigers and now China are benefiting far less from their trade with the USA than are that country’s citizens. It also explains why the USA is so keen to open up trade with the poor countries and persuade them that this is their best route out of poverty, rather than self-sufficiency.

The gains from trade, whatever one’s degree of productive efficiency, are determined by the terms of trade, which are always dependent on the relative levels of political or military power. The Vikings were traders, but they were also thieves. Some of their trading was always carried out in terms of offers people found it very difficult to refuse. The sorts of negotiation conducted today at the WTO are little different. The USA and EU use their political and military influence to achieve trade settlements that suit their interests, limiting the prices paid for the sorts of goods—raw materials and textiles—which the poorer countries have to offer.

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