Effects of Transportation Price Hikes on Supply Chains

With an increase in the cost of transportation in the coming age of oil shortages, the delapidated rail system of the United States, it stands to reason that supply chains will tighten up. It will be more cost effective to obtain locally produced goods. This may create a new economic base, a new flurry of productive activity. But we should also be aware that increasing self sufficiency will be purchased at a great cost. The very engine of our economy has been the increasing trend towards globalization, towards free trade. Our productive capacities have been predicated upon far-flung supply chains, transoceanic transports, trucking companies larger than Alexander's army, etc. The Ricardian theory of comparative advantage has been the driving justification.

The opposite of free trade is called by economists 'autarky'. Self-rule. It has an interesting place in economic theories. The formation of trade barriers has been associated with autarky. Autarky is the place we don't want to be, because we may not enjoy the fruits of our comparative advantage. And, indeed, industrial society has been predicated upon the expansion of free trade. What happens when the barriers to free trade are no longer legislators dictating things from on high in the form of Tariffs and Incentives, but are intrinsic to energy costs associated with our oil-based transportation system?

Typically autarky is taken to be the sign of an economy in decline or stagnation. Without larger trade, new industries cannot emerge that support an elite of academic, technical, and bureaucratic classes. The culture is locked in time and does not evolve. Native economies are, in many ways, economic autarkies. Trade is primarily conducted over necessities such as food, lumber, clothing, etc. Objects of our material culture will be effected. A great levelling may occur.