5 Comments
May 17Liked by Glenn Luk

I find the chip comparison faulty. Surely if it were "non-finite" and could be created out of thin air everyone would have been producing chips. But in reality it requires some of the most advanced and capital-intensive investments, which are only available to highly-industrialised countries. Not even China has the latest litography machines, since they're made by a couple of companies that can ARTIFICIALLY keep the designs (etc.) finite. Intellectual property is also doing the same.

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May 17Liked by Glenn Luk

Moreover, while there may not be a finite number of resources to produce all we need, there is also the constraint that comes from the C-M' part of the M-C-M' cycle described by marx for the reproduction of capital.

In plain words: it's not enough to produce the commodity, it also has to be sold on the market. Now, this is a space that is also kind of "full" and rather finite, since most of the finished goods that are consumed worldwide are overwhelmingly produced by highly-industrialised countries. For a country to "move up the value chain" it would need to not only compete in terms of prices, but also in terms of the captured market. The global necessities can also be overwhelmingly captured by a few countries, like China, which may indirectly prevent other countries from competing, since all the shares are already used up

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Thanks for your comment, Raul.

My point is that unlike oil which is finite/scarce and unevenly distributed, the physical materials involved in making chips are abundant.

Yes, of course you need expensive capital equipment to produce but that is very different from needing expensive equipment (oil and gas drilling rigs) AND access to proven oil and gas reserves.

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Thanks for the response.

I largely agree with the perspective you put forward, I also see a whole area of qualitative development being opened up through the integration of renewables + high-tech agriculture, but while the constraints of not having the raw materials disappear, others come to replace them: cultivating an educated workforce to do the R&D, having enough disposable capital to invest it as such, and finally having an available market to export to. A parallel may be the green revolution in agriculture a few decades back, which in practice didn’t really make the poor countries wealthier. It rathered attached to them displaced populations that could work in neither agriculture nor manufacturing. They were condemned to floating between informal service sectors and shanty towns.

I believe these barriers won’t be broken further and the gap will further widen

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I view "cultivating an educated workforce" as something that isn't limited physically. Of course this depends on execution, but it isn't dependent on luck in the same way sitting on (or discovering) a lot of oil and gas reserves is. That is a key difference to me. The sun shines and the wind blows everywhere.

Bcak on chips, remember that developing countries don't need the latest hundred-million-dollar capital equipment to produce chips for their own use. They can start with old/used equipment and learn how to make older chips. That's how Taiwan go its start.

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