Rural Soaology 57(3), 1992, pp. 305-382 Copyright © 1992 by the Rural Sociological Society Addictive Economies: Extractive Industries and Vulnerable Localities in a Changing World Economy! William R. Freudenburg Department of Rural Sociology, University of Wisconsin—Madison, Madison, Wisconsin 53706 AssTracr Raw material extraction once offered an effective route to economic development, but societal relationships with environment and technology have changed so fundamentally that extractive industries today appear more likely to lead rural regions to economic addiction. Key char- acteristics of addictive activities include rising costs of operation at most extractive facilities, combined with downward trends in world commodity prices. Key characteristics of vulnerable communities and regions include increasing geographic isolation, imbalances of scale and power with respect to extractive industries, and the absence of realistic alternatives for di- versified development. Key pressures toward addiction are created by ambiguities that mask the addictive tendencies, including ambiguities of price signals, of employment and development possibilities for remote regions, and of resource exhaustion. The net result is that, while the encouragement to develop extractive industries is often coupled with ad- vice to avoid developing an excessive dependency on a single economic sector, the very regions and nations having the greatest need to hear such advice may also have the lowest realistic ability to respond to it. Introduction At least since Cottrell (1951) recorded a small community’s loss of railroad employment, social scientists have offered mixed advice to isolated or less developed regions, particularly those that happen to possess natural resources. On one hand, there has been considerable encouragement to seek the development of nearby natural resources; on the other hand, there have been numerous warnings about the dangers of becoming too heavily dependent on any one economic sector. Over roughly the past decade, both the encouragement and the warnings have been joined by growing consternation about many of the basic assumptions about development that had been widely accepted in the past (for a recent review, see Portes and Kincaid 1989). While the mixture of advice and consternation can be inter- preted as evidence of a search for balance, I argue that it may also reflect a search for comprehension, with problems being particularly ' This is a revised version of the paper presented in response to the 1991 Award of Merit from the Natural Resources Res#arch Group of the Rural Sociological Society. Helpful suggestions were provided by Stephen Bunker, Emery Castle, Robert Gram- ling, Thomas Rudel, and reviewers of Rural Sociology. All interpretations and conclu- sions, however, are those of the author alone.306 ~— Rural Sociology, Vol. 57, No. 3, Fall 1992 acute in the failure to comprehend the changing complexities of natural resource development. In the 18th and 19th centuries, development of extractive indus- tries such as coal mines helped to lead to industrial development in extractive regions, but to hope for similar experiences at the end of the 20th century or the beginning of the 21st is to ignore fundamental changes that have since taken place in societal relationships with environment and technology. These changes have significance well beyond the recognition they have received to date; while they have been more gradual and less visible than the single change from steam to diesel locomotives that destroyed the economic base for Cottrell’s community of Caliente, the broader changes may ultimately create social consequences that are no less dramatic. Given the cumulating historic changes that have already taken place, contemporary efforts to build the economies of remote or peripheral regions on a base of extractive industries may be less likely to lead to economic develop- ment than to economic addiction. The terminology reflects not a desire to editorialize, but the fact that the mnemonic metaphor of addiction provides a straightforward approach for organizing the discussion; the parallels are sufficiently striking that little point would be served in using alternative or eu- phemistic terms. In many cases, individuals report that they find their early experiences with narcotic or other drugs to be pleasurable or even exhilarating, but the longer-term consequences are debilitating; efforts to discontinue use can be associated with negative reactions such as withdrawal symptoms (see the fuller discussion in Goldstein and Kalant 1990). Analogously, at the community or regional level, the issue is not one of whether residents initially seek to attract ex- tractive activities, whether experts warn against the potential danger of becoming too heavily dependent on those activities, nor even whether, having once moved in the direction of an extractive em- ployment base, affected communities and regions will tend to show a desire for more of the same. The question, instead, is whether the consequences will have more in common with development or de- bilitation and, if the latter, whether a community that wishes to move away from such an economic dependence will be able to do so—or alternatively, whether “resource-dependent” communities will show more than just a linguistic resemblance to an individual’s “‘depen- dence” on drugs. A discussion of traditional forms of addiction might be expected to devote attention to three broad topics—the types of substances and activities having the greatest addictive potency, the types of per- sons having the greatest susceptibility, and the nature of the causal mechanisms involved. This paper, similarly, will be divided into three sections. The first discusses addictive activities, noting economic and technological changes in extractive industries that may cause theirAddictive Economies — Freudenburg 307 effects to be more addictive than advantageous. The second section discusses characteristics of communities and regions that appear most susceptible to addiction. The final section identifies exploitable am- biguities that appear to have special significance in creating tendencies toward addiction. Addictive activities: extractive industries and the cost-price squeeze Extractive industries, as the name implies, involve removal of raw materials from nature; this category thus excludes agriculture, but it includes a significant fraction of the other forms of employment that have traditionally been seen as rural (Flora 1990). These activities are sometimes called primary industries (as opposed to the secondary industries that involve the transformation of raw materials into fin- ished products, or tertiary industries that involve working with hu- mans or information rather than with physical materials). Along with lower-level transformative industries, such as mills and smelters that produce not-quite-raw materials (e.g., boards, metal ingots) out of raw materials such as logs and metallic ores, extractive industries share at least the historical experience with Cottrell’s railroads in being traditionally rural activities; new strip mines are more likely to be proposed for Montana or Mozambique than for Minneapolis or Milan. Particularly given the steady, long-term declines that have taken place in agricultural employment over the past century, at least in the United States, extractive industries have come to be seen as rep- resenting the potential for economic advantages (and high wages) for rural regions that often have few other competitive strengths. In newly industrializing nations, similarly, extractive activities are seen as having the potential to open up entire regions to economic de- velopment. Perhaps because the issue has simply not been made problematic by the theoretical perspectives used in the past, little in the way of systematic empirical evidence on the topic is currently available; what evidence exists, however, suggests that the reality may be less rosy than the expectation. Weber et al. (1988), for example, found that three different categories of rural extractive counties—those depen- dent on energy, on other forms of mining, and on forestry and wood products—had unemployment rates that were higher than the un- employment rates in agricultural counties in every one of the ten years studied (1976-1985)—even during the “farm crisis” years of the 1980s. While it is commonly known that extractive regions can experience economic difficulties once the exhaustion of resources leads to the loss of employment, the few available empirical studies have found