One expert's view: solar can perk sluggish US economy

Vigorous solar energy development could act as a powerful antidote for America's economic woes. This is the unconventional view of Avraham Shama, associate professor of marketing at the University of New York. He has conducted an in-depth study of "stagflation," and his report, "Marketing in a Slow-Growth Economy," has just been issued by Praeger Publishers Inc.

"Most economists won't agree with me," the marketing expert admits amiably. "but then the [conventional] remedies have not worked."

Most economists perceive the current combination of inflation and stagnant economic growth to be solely due to the interplay of economic forces. But Dr. Shama, along with a handful of economists and marketing experts, believes that the fundamental sources of this stagflation are social and political, as opposed to economic.

There are many possible sources of stagflation, Dr. Shama explains. These include: the monopolistic power of big business; the influence of labor unions, particularly in the incorporation of automatic cost-of-living adjustments in union contracts; the effects of the actions of the fedeal government, especially deficit spending and costly regulations; international forces, specifically the skyrocketing costs of imported oil and the declining of the dollar; and, finally so-called "secular forces," including decline in the population growth rate, decreasing innovation, and the lack of economic frontiers.

It has not proved possible to determine the relative influence of these factors, but the most inflationary appears to be the cost of imported oil. Some estimates attribute about 25 percent of the current inflation rate to the rising cost of energy.

This is where solar energy comes in. It represents an avenue for reducing US dependence on foreign oil and so decreasing the uncontrollable and international forces acting on the economy. OF course, a similar argument can be made about other technologies, such as coal and nuclear power, Dr. Shama admits.

Solar energy, however, is more consonant with a growing social trend which is in part a reaction to stagflation itself, he argues. This trend is "voluntary simplicity." It is a lifestyle based on the values of material simplicity, the "small is beautiful" philosophy, self-reliance, and econological awareness.

According to one estimate, as many as 15 million Americans are practicing voluntary simplicity to some degree. While this estimate is open to question, Dr. Shama points to a number of indicators that this is a rapidly growing social trend. For instance, a 1976 Roper poll found that the majority of Americans believes the nation "must cut way back" on production and consumption to conserve resources and strengthen the economy.

"It is perhaps significant to note that solar energy is substantially more costly than conventional energy, yet is preferred by a growing number of Americans," Dr. Shama writes. "Ironically, the growing solar market catering to the voluntary simplifying consumer, which many businessmen perceive as a threat, may pull the American economy out of the stagflation swamp because it represents a large-scale investment inducing innovation."

Solar technologies hold the potential for becoming a new economic frontier which cold stimulate vigorous growth, he says. Solar technologies tend to be more labor intensive than other energy technologies, so there is potential benefit for reducing unemployment as well.

Another potential benefit of solar energy, much stressed by its advocates, is that of decentralization. This is seen as a remedy for the monopolistic tendencies of today's highly centralized energy systems. The adverse effect of monopolistic business practices is one cause of stagflation, Dr. Shama says. For instance, it has been shown that the prices charged by concentrated industries rose 27 percent from 1973 to 1975 while those of nonconcentrated industries rose only 1.8 percent. Still, he discounts the decentralization argument.

"It is more likely that the solar industry will evolve with a considerable amount of centralization," Dr. Shama says. "After all, the major investors in solar technology today are the oil companies," he points out.

But even in a more centralized form, vigorous solar development could have substantial economic benefits not generally realized by businessmen, he maintains. The reason for this, Dr. Shama says he believes, is because most businessmen make their money by satisfying and reinforcing current social values rather than anticipating social change.