3. International trade theory
There is a profound tension at the heart of the dispute between environmentalists and trade pro-
moters that has received insufficient attention. The tension concerns the central underlying as-
sumption of modern trade theory and, indeed, of the modern system of production, exchange, and
consumption. The nature of this conflict can be grasped most clearly by contrasting the ecosystem
approach with classical and neoclassical theories of trade.
While there are a number of competing theories on why trade takes place between enterprises in
different countries Ellsworth and Leith, 1984; Lipsey et al., 1988; Caves, 1996, the central theo-
retical economic justification for trade, which also explains a considerable portion of what happens
in practice, can be traced back to David Ricardo and the subsequent development and elaboration
of the ‘law’ of comparative advantage. The Ricar- dian theory of comparative advantage states that
trade is both possible and beneficial between countries, even if some of them have an absolute
advantage in the production of all goods and services. According to classical theory, the basis
for trade occurs because of differences in the relative productiveness of labour in the domestic
manufacture of goods and services within a coun- try. Although Portugal may be able to produce
both wine and cloth at a lower labour cost than England, it still makes sense for England to trade
with Portugal. This is so because — under a set of assumptions that are not particularly onerous
— if Portugal switches additional units of labour from cloth to wine production i.e. to the product
that requires the least input of labour per unit of output and England does the converse, the total
volume of wine and cloth can be shown to in- crease. Consumers in England and Portugal can
benefit from this net increase in production through international trade, with England pro-
ducers exporting cloth to Portugal and Portuguese producers exporting wine to England for a de-
tailed ecological critique of this free-trade argu- ment, see Gale, 1999.
The practical consequences of the operation of comparative advantage are increased specializa-
tion in the production of goods and service in both countries. That is, if producers in Portugal
switch a portion of their resources out of cloth production and into wine production, the country
becomes less specialized in producing the former and more specialized in producing the latter. At
the extreme, producers in Portugal will cease to produce cloth, and produce only wine, and pro-
ducers in England will cease to produce wine and produce only cloth. While the operation of the
‘law’ of comparative advantage does not mandate that producers in different countries achieve com-
plete specialization and there are good theoretical reasons to believe that in many cases complete
specialization would not occur, it is clear that the gains from trade that are consequent on the oper-
ation of the law of comparative advantage occur through the process of increased specialization.
Nor is this merely a theoretical corollary: special- ization at the national level in the production of
certain goods and services to the virtual exclu- sion of others is clearly observable in practice. In
many Third World countries, for example, such as Cuba, Senegal, and Guyana, there is a very high
export dependence on the production of sugar, groundnuts and timber for sale in developed-
country markets. Specialization in the production of tradable goods takes place in developed coun-
tries as well, though: in Canada, for example, a highly capitalized forest industry specializes in the
production of commodity forest products such as softwood lumber, pulp and paper production for
export to the USA, Europe and Japan Burda and Gale, 1998.
4. Conflicting principles: ecosystem diversification versus trade theory specialization
At face value, there is at least a significant tension between the ecosystem principle of diver-
sification and the economic principle of specializa- tion. The ecosystem approach, as we have seen,
builds on the central insight that ecosystems, which produce the raw materials that enter into
production, are poorly understood, dynamic, in- tricate, multidimensional, interdependent systems
that evidence complex if not chaotic behaviour as
a consequence of endogenous and exogenous pro- cesses. Ecosystems are self-organizing or autopoi-
etic systems that require diversification of both components and processes to maintain dynami-
cally stable trajectories. According to the theory, ecosystems can, at best, only be partially man-
aged. Human interventions to generate use and exchange values, therefore, must respect ecosys-
tem parameters and maintain the diversity of ecosystem components and processes.
From a trade theory perspective, on the other hand, countries with abundant natural resources
and relatively little capital have a comparative advantage in the production of relatively unpro-
cessed commodities such as logs, lumber, pulp, fish, water, and basic ores. In order to capitalize
on their comparative advantage in commodity production, producers in such countries should
specialize in the production of primary commodi- ties, channelling labour, capital, technology and
RD resources into those sectors, and trade the produce for more capital-intensive imports from
other, capital rich countries. The key question here concerns the nature of the specialization that
occurs as a result of increased opportunities and pressures to trade. Thus, for example, one form of
specialization might involve the purchase of more dedicated capital equipment a feller-buncher, for
example, to harvest logs more efficiently than more labour-intensive yarding methods. Or it
might involve importing know-how to eliminate waste and increase labour productivity in the
work place. However, and this is critical, it may also and frequently does involve manipulating
ecosystems directly to produce a particular, de- sired, commercial product more quickly and with
less variation than occurs naturally. In many parts of the world, forest, prairie, river and ocean
ecosystems have and continue to become special- ized to increase the production of commercially
desirable goods and services.
The application of the principle of specializa- tion to ecosystems for the production of products
is most clearly visible in the agricultural and forest sectors of modern economies. Modern in-
dustrial agriculture invests capital, labour and technology resources to transform natural range
and forested lands, which previously generated a large range of values, into specialized ecosystems
devoted to the almost exclusive production of exchange values. The specialization of ecosystems
for the generation of exchange value is seen in the planting of monocultures of genetically modified
hybrids dependent on huge systems of irrigation and chemical fertilizers, herbicides and pesticides.
Not only has agricultural production sought to create specialized ecosystems, but such specializa-
tion endures over time and extends out across space as these specialized ecosystems demonstrate
their ‘economic’ capacity to generate income. Farmers who try to resist the logic of specializa-
tion eventually find themselves economically mar- ginalized and dispossessed by those who embrace
it.
In the forestry sector, complex, multifunctional, old-growth forests that provide habitat for a huge
range of animals, plants and micro-organisms are being simplified into specialized ecosystems de-
signed to provide a few species of fast-growing trees to maximize the production of exchange
value. Around the world, old-growth forests are being replaced by single-species tree farms that
require significant inputs of fertilizers, herbicides and pesticides. The entire rationale of modern
forestry, whether it be practiced by proponents of sustained-yield, multiple-use, or sustainable forest
management, is to replace complex, uneven-aged, multispecies, biodiversity-rich forest ecosystems
with simplified, even-aged, single-species, biodi- versity-poor, tree farms Maser, 1990; Gale,
1998.
That ecosystems are becoming increasingly spe- cialized should not be surprising. It is one logical
consequence of modern trade theory, a central requirement if the gains from trade from the
operation of the ‘law’ of comparative advantage are to be achieved. While much economic litera-
ture assumes that such specialization is possible through the restructuring of work schedules, the
employment of new technology, and the training of workers, it is also becoming clear that it in-
volves creating specialized ecosystems that pro- duce the required goods and services faster and to
a higher quality. It is here that the principle of ecosystem diversification and economic specializa-
tion conflict. And it is here that we are seeing
some of the most intensive struggles, between those who promote ecosystem specialization the
better to produce economically valued goods and services and those who promote ecosystem diver-
sity, the better to safeguard the system’s capacity for autopoesis.
5. Trade and exchange
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