What's that got to do with the price of wheat, rice, maize and ethanol?
As Raj Patel correctly notes on the Guardian blog, we are shaping up for a fairly substantial risk of a free market democide. . There was certainly no shortage of people pointing out at the time that removing fertiliser subsidies and dismantling strategic grain reserves was a hell of a risky thing to do, but the neoliberals pushed it anyway, under the assumption that deregulated food markets would encourage investment and improve productivity. Which, given a very long run of good weather indeed, might have worked, but that was hardly the way to bet, and it really does not appear to be the case that anyone did a huge amount of detailed research into how this green revolution might have been carried out and financed. Beware, always beware, of long term solutions to short term problems.
I think the underlying idea, in as much as there was one, was that international aid was a more efficient way of providing food security than domestic reserves and price controls. Which has a certain plausibility to it, as long as you only look at one country at a time and assume that food shortages will be caused by ecological famines, which are more or less uncorrelated between regions, rather than a global inflation in food prices which overwhelms the capacity of the food aid industry, and which arrives at a time of fiscal strain in donor nations. Of course, the general approach of assuming that one's risks are uncorrelated and manageable is one that has been causing all sorts of problems in the world economy of late. But I rather suspect that no such considered plan was ever drawn up and the real thinking behind the current disaster was the simpleminded and arrogant assertion typified by the dreadful Pollard's piece.
I wonder if, in fifty years' time, people will be writing nasty obituaries of recently dead neoliberals? I almost hope so. It really is hard to see what qualitative difference one might draw between the way in which the World Bank and IMF have fucked around with the food security systems of third world countries in the name of "free markets", and the way in which Stalin and Mao did more or less the same thing in the name of "collectivisation". Peter Griffiths' article and book refer. The great thing about the market mechanism, of course, is that when it kills a million people, it doesn't leave fingerprints.
Do you understand Pollard's argument that if the EU imports more food prices will fall in developing countries?
ReplyDeleteIn fifty years time, the neolibs will pretty much argue like communists today. Real free markets have never been tried because, as always, some civil servant has breathed onto the liberalisation process at some point, so don't blame us.
ReplyDeleteI get the feeling that Bollard's pretending to hold that opinion because he likes the sound of it, while not really understanding either his enemies' arguments, or his own.
ReplyDelete"The great thing about the market mechanism, of course, is that when it kills a million people, it doesn't leave fingerprints."
ReplyDeleteI think thats whats known in certain circles as 'plausible deniability' :-)
Isn't the problem with tariffs more that the rich countries have not dropped their own tariffs and subsidies quickly enough? So it's not necessarily free trade and neoliberalism at fault so much as its selfish and one-sided application?
ReplyDeleteIn fifty years time, the neolibs will pretty much argue like communists today. Real free markets have never been tried
ReplyDeleteNothing changes
I must admit, arthur, ejh, my first reaction on looking at the international soft commodity markets is not "gosh, aren't they terrifically free and unaffected by government intervention!" Pretty much the opposite, actually.
ReplyDeleteAnd so I am a bit more reluctant than DD to say that any large-scale famine must obviously be the result of a free market in food.
"Isn't the problem with tariffs more that the rich countries have not dropped their own tariffs and subsidies quickly enough?"
ReplyDeleteNo, no it isn't.
The spectacle of the free market loons claming "the fact that the EU and the US have cut agricultural production and no longer subsidise exports to the developing world has absolutely no bearing on, err, rocketing food prices in the developing world" would be hilarious, were it not for the people who are actually, not in some kind of hypothetical "free markets will make everything jolly" hypothetical world, starving.
Basically no. The EU at least doesn't have material food tariffs any more and obviously its subsidies lower the price of food, not raise it (actually in general the effect of tariffs on LDC food exports would be to lower local prices). LDCs do have a lot of their own tariffs on food and should get rid of them (yay free markets))
ReplyDeleteBut the problem of food security is one of sudden changes in the price level (too fast for wages to adjust), not the sort of long term equilibrium considerations that OECD tariff policy could affect. That's why the key issue is grain stocks and subsidies, which is where neoliberalism had its most baleful effect.
I can't make my mind up whether the people pushing countries to get rid of their grain stocks are stupid, or evil. One of the things that never ceases to astonish me about the free market nutjobs is that they have no understanding of resilience, or redundancy. There are good reasons to have excess capacity if you wish to die of old age.
ReplyDeleteI think because they assume - not, economically, without reason - that it constitutes wasted capacity and a disincentive to efficiency. All right, but not only can you produce nothing if you're dead, but there is (as often in economic commentary) an aspect by which comfortable people are telling poor people to undergo a process which they would never, ever, undergo themselves. (Also see: "people with inheritances and trust funds who declare welfare benefits a disincentive to work".)
ReplyDeletePerhaps neither stupid nor evil but just operating in a very different world (and very different mental world)from the one on which they wish to act.
And for such a consequentialist crew, it is galling to hear them appeal to their ever-benevolent intents whenever called out for another massacre.
ReplyDelete"It really is hard to see what qualitative difference one might draw between the way in which the World Bank and IMF have fucked around with the food security systems of third world countries in the name of "free markets", and the way in which Stalin and Mao did more or less the same thing in the name of "collectivisation""
ReplyDeleteYou can't say things like that in polite company, you simply can't.
Seriously though, great post. Perhaps another comparison would be what the British Empire got upto, causing unnecessary famines in Ireland and India.
Justin well only up to a point, because the same bloody stupid attitude extends to infrastructure. The electricity supply is inefficient, which is true, because you need a fair bit of slack if you are to minimise black outs caused by unexpected demand, or failures. Or banking, where the most "efficient" banks are always the ones that turn out to be overextended come the inevitable downturn. Now granted, when corporate raiders talk about efficiencies they're just being cynical as they expect to have sold their shares before the inevitable collapse caused by their restructuring, but free marketers seem to believe this crap.
ReplyDeleteIn contrast, engineers know that there's always a trade off between efficiency and reliability. Fail safe systems aren't exactly efficient, but they're damn useful if something goes wrong. But Free Marketoids live in a perfect equilibrium where nothing ever goes wrong - or if it does, its because of inefficient people.
It's not quite the same thing as Stalin because Stalin almost certainly knew he was pursuing a policy that was economically dicky (this is a euphemism) but was concerned to destroy a social class whose political potential he was afraid of. (Mao by contrast drew much of his support from landless peasants - whether he thought collectivisation would actually work is unclear to me.)
ReplyDeleteThere's not quite the same deliberate aspect about the free marketeers, although there is about what the British did to Ireland - not just the subdividing of the land but the export of food out of Ireland. Mind you, if you're telling governments whose people are vulnerable to starvation to elimate their food stocks, the difference may be a little hard to distinguish.
By the way, the relevant correspondent on Spanish state TV news last night was talking about the food-price crisis being down to climate change. Really?
No, it's not climate change, not yet. I heard Amartya Sen on Channel 4 the other day saying that per capita food production is higher this year than it was 25 years ago. This problem be man made.
ReplyDeleteI might just point out, I hadn't seen this by Conor Foley when I wrote my above post, but great minds clearly think alike:
ReplyDeletehttp://commentisfree.guardian.co.uk/conor_foley/2008/04/avoidable_hunger.html
"Really?" went with eyebrows raised...
ReplyDeleteIt's not quite the same thing as Stalin because Stalin almost certainly knew he was pursuing a policy that was economically dicky (this is a euphemism) but was concerned to destroy a social class whose political potential he was afraid of.
ReplyDeleteCould you elaborate here? What did Stalin do and what class was he trying to destroy?
What did Stalin do and what class was he trying to destroy?
ReplyDeleteAgrigultural Collectivization to destroy the Kulaks.
This comment has been removed by the author.
ReplyDeletebut the kulaks weren't actually a class, but an imagined class, right? The purpose of agricultural collectivisation was to mechanise agriculture and free up farm workers for urban labour, enabling Stalin to industrialise russia. Weren't the kulaks just a convenient excuse?
ReplyDeleteOr am I wrong again?
Tyler Cowen's written the complete opposite of your article (would anyone expect any different)...
ReplyDeleteBTW, when are you switching to Wordpress? There's a new version out that might import comments better.
but the kulaks weren't actually a class, but an imagined class, right?
ReplyDeleteI wouldn't have said so.
The purpose of agricultural collectivisation was to mechanise agriculture and free up farm workers for urban labour, enabling Stalin to industrialise russia. Weren't the kulaks just a convenient excuse?
I'm inclined to think it the other way around, though perhaps with Stalin it's hard to tell. I think he knew that private farmers were always likely to be a very anti-Communist section of society regardless of how well they actually did under the Communists, which in a huge country dominated by the countryside would have seemed to him - quite rightly, from his point from view - as a serious political threat.
So he had them wiped out.
I read some time ago a book called, I think, "architects of destruction", which took the view that some of Hitler's genocidal plans may have been driven by food distribution needs. It suggested that he learnt from Stalin about how to rapidly industrialise a country by forcing a particular group of people away from low-intensity agriculture into high-intensity agriculture or into the cities. The theory was that to make this particular omelette you need to break a lot of eggs, and people won't be happy about it unless you can find a way to justify the mess. For Hitler it was Jews, for Stalin kulaks.
ReplyDeleteAn interesting theory, but I'm not a historian so I couldn't judge the correctness of it.
Wow, that Tyler column is an impressive display of ignorance. I particularly like the bit where he states that only 5 to 7% of rice is traded across borders. Which is really amazing when you consider that the list of rice exporters includes the 1st, 2nd, 4th and 7th most populous countries in the world - for each of which rice is a staple food. Of course its not real trade if its domestic.
ReplyDeleteAs for this: The more telling figure is that over the next year, international trade in rice is expected to decline more than 3 percent, when it should be expanding. The decline is attributable mainly to recent restrictions on rice exports in rice-producing countries like India, Indonesia, Vietnam, China, Cambodia and Egypt.
Hmm, so the problem of shortages is because exporters who don't have enough rice for their domestic populations are limiting exports. Right.
Export restrictions send a message to farmers that their crops are least profitable precisely when they are most needed. There is little incentive to plant, harvest or store enough rice — or any other crop, for that matter — as a hedge against bad times.
Right, so those farmers who have rice to sell (as opposed to those farmers whose rice harvests have been wiped out), and are experiencing the highest demand for a long time, are going to decide that there's no incentive to plant because they're not getting even higher prices. Wow, prof, you're weally smart.
Still, I am vaguely impressed by his belief that governments should put free trade before domestic political survival.
Oh wow, his ignorance extends to oil. Its all down to inefficient and inflexible countries who should be more like silicon valley.
ReplyDeleteI wonder if Tyler realizes that there's a wheat shortage?
http://www.portfolio.com/views/blogs/odd-numbers/2008/04/25/questioning-the-link-between-commodity-wealth-and-oppression
ReplyDeleteDaniel, I assume you've seen this?
Cheers
Tom
While the findings don't mean that in individual cases a despotic ruler doesn't successfully use resource wealth to his advantage, it strongly suggests there is no such thing as an all encompassing Law of Petro-(or some other commodity)-politics.
ReplyDeleteI'm flabbergasted, I thought Thomas Friedman was the Isaac Newton of contemporary political thought...