Organic trade: food, money, and global economic democracy
The political economy of food in an unequal world.
A New York Times oped piece claimed that the failure of the Cancún talks mentioned above gave a great boost to terrorism, just to line the pockets of some US cotton-growers. It pointed out that Third World producers were being excluded by American and European subsidies to agriculture from selling to the West. This echoes the World Bank's emphasis on exports to the rich countries as the solution to underdevelopment. But what matters more to poor farmers is being priced out of their own home markets by the dumping of cheap subsidized food there. The market for food is the key to solving unequal development: how to promote exchange between producers and consumers in the city and countryside when cheap imports from abroad can so easily undercut this trade.
According to classical thinkers, development starts, if at all, in a rural world dominated by agriculture. Sir James Steuart, a Jacobite exile, brought the term ‘political economy’ from France to Britain in the mid-eighteenth century.[1] The economy becomes more differentiated with the growth of cities and commerce activates exchange between the two. So why is it so difficult today to bring commerce and division of labor to the poor countries of our world? In the twentieth century, even the most backward regions experienced massive urban growth. Why would it take nothing less than a world revolution, according to the Caribbean economist, Arthur Lewis, for poor countries to build up their home market through local rural-urban exchange?[2]
For 5,000 years, the Eurasian land mass was dominated by urban elites ruling agricultural societies. In the last 200 years, the human population has increased eight times and the rate of growth of energy production has been double that of the population. Many human beings work less hard, eat better and live longer today as a result. Whereas about 97% of the world's people lived under rural conditions in 1800, half of humanity lives in cities today. This hectic disengagement from the soil as the chief object of work and source of life was made possible by machines, converters of inanimate energy for useful purposes. As a result, humanity has come together as a single social network, mainly as markets on which everyone's livelihood now depends in some degree. Increased human connection has gone hand in hand with escalating inequality, as we all know.
The unequal institutions of agrarian civilization are still with us. Consider what happened to all the wealth siphoned off as taxes by western states since the second world war, the largest concentrations of money in history. It went on subsidizing food supplies and armaments, the priorities of the bully through the ages, certainly not those of the urban consumers who paid the taxes. No, we have never been modern.[3] We are just primitives who stumbled recently into a machine revolution and cannot figure out how to get beyond the inequality of a society built on agriculture. This is why agriculture must lie at the core of any attempt to bring about general economic development and world peace.
Steuart believed that national economies prospered under a regime of high food prices. These stimulate the bulk of producers, the farmers, to realize a portion of their output as commodities. They need a market of local consumers, protected from cheap imports, and the money they earn will be spent on the products of local industries, if they too have some respite from foreign competition. When the infant commodity-producing sectors grew stronger, they could be exposed to the downward spiral of prices and costs that Adam Smith favored. Then the cry would legitimately be for low food prices, reducing the cost of local wage labor and enhancing the competitiveness of some firms in world markets. This transition is very hard to achieve; but it begins with high agricultural prices.
Adam Smith branded Steuart's brand of political economy as 'mercantilism', because he assumed that national commercial interests come before free trade.[4] Classical liberalism downplayed the protectionist role of states, preferring a system of free trade that encouraged each country to specialize according to its comparative advantage. For a century after the victory of the free trade movement, Europe and especially Britain were fed by the temperate lands of new settlement.
The Second World War interrupted Atlantic food supplies and devastated the granaries of the East. Starvation was commonplace during and after the war. When the Europeans began to form an economic and political union, regional food security came first on the agenda. The Common Agricultural Policy has notoriously absorbed the bulk of the European budget ever since. Subsidized food surpluses were augmented by the coming at last of the machine revolution to agriculture—not just mechanization, but pesticides and genetic engineering, culminating in GMOs. What had still been largely a peasant activity in 1945 now became a hi-tech industry combining large amounts of capital with a dwindling, but highly productive labor force.
Whether sold or donated, cheap food from the West has repeatedly frustrated the development of commercial agriculture in poor countries by pricing local farmers out of the market. Third world urbanization since the Second World War in% principle offers an opportunity for local commercial food producers. All they need is a temporary regime of high agricultural prices for rural-urban division of labor to develop. But food is already available from overseas at giveaway prices. The governments are weak and dependent on foreign creditors, so they have no chance to play the benevolent far-sighted role envisaged by Steuart. They cannot protect their own farmers because Western farmers are so heavily protected by their own tax-rich states. All of this was made obvious in Cancún.
There is a great lie at the heart of modern politics. We live in self-proclaimed democracies where all are equally free; and we are committed to these principles on a universal basis. Yet we must justify granting some people inferior rights, otherwise functional economic inequalities would be threatened. This doublethink is enshrined at the heart of the modern nation-state. Nationalism is racism without the pretension to being as systematic or global. As a result, western farmers and agriculture more generally carry a political weight far beyond their contemporary economic importance. This prevents finding a global solution to food markets.
World markets for food constitute the main obstacle to the development of poor countries. Their farmers need some measure of protection, so that a regime of higher producer prices might be established, without substantially increasing costs to consumers and non-agricultural producers. World markets have to be radically reorganized in the interests of the poor. Ideally the subsidies made to western farmers by tax-rich states should be diverted to the governments of poor countries for similar purposes. Why ever would the world's powers do that? Another deflation like the 1930s might concentrate minds. Fear of violence and mass emigration from poor countries might persuade the rich that something drastic had to be done to improve their economies back home. If international movement were made a human right, the rich countries could no longer rely on the power of their states to keep the others out.
Humanity's inability to solve the problem of development is due to a nationalism that divides us into so many competing tribes. This is now being eroded by globalization. Territorial states will persist as building blocks of world society; but their powers ought to flow upwards into global and regional federations and downwards to local and more diffuse associations. Nor is it good enough to denigrate capitalism as such. The production of cheap commodities by profit-making firms is intrinsic to economic progress. The markets, transport and communication systems on which we depend cannot function without them. The classical liberal revolutions against the old regime were funded by sections of capital; and capitalists could play a similar role in future. If all those excluded from the digital revolution are to join it, the corporations of rich countries will be needed to develop the required infrastructure. We cannot afford to be anti-capitalist, nor can we do without nation-states at present. Even less should we turn against markets and money as medieval natural theology did.
Faced with what often seems a runaway world, where remote forces threaten to overwhelm our fragile claims to identity, the idea that natural things are good for us finds fertile ground, especially when it comes to food. Of course, after 10,000 years of domestication, the idea of something being natural is highly relative. The appeal to nature was already incorporated into nationalism as a sort of reaction to the speed of modern change. The current wave of resistance to GMOs echoes this Luddite rejection of machine civilization.
Even so, my arguments do not preclude growth of movements promoting organic agriculture. They can provide a measure of local protection from global producers; they are often small-scale and more compatible with existing peasant practice; they avoid the excesses and risks of hi-tech production; and, as IFOAM demonstrates, they encourage grassroots democratic politics. A new coalition of poorer countries emerged at Cancun; but, if global economic inequality is to be tackled seriously, it will take a broadly-based alliance of popular democratic interests everywhere. There are several precedents for this in the history of struggles against inequality—the abolition of slavery, the anti-colonial revolution and the anti-apartheid movement, to name only the most notable examples. If the western middle classes embrace organic food out of concern for their own health and security, poor farmers will gain an important ally in their struggle for economic equality at the global level.
Only a world revolution can address the common interests of producers and consumers, urban and rural areas, rich and poor. But would-be revolutionaries first must decide which is the greater enemy of human progress, the persisting legacy of agrarian civilization or market capitalism built on machines. National capitalism is a hybrid of both. To target one element while turning a blind eye to the other is a recipe for political failure. State socialism in the twentieth century tried to outlaw markets, with ruinous consequences. Neoliberals, in the name of universal private property and free trade, promote the interests of the strong over the weak by emasculating states of rich and poor countries alike.
[1] Steuart, Principles of Political Oeconomy (1767).
[2] W.A. Lewis, The Evolution of the International Economic Order (1978). By far the best version of this story is V.I. Lenin, The Development of Capitalism in Russia: Formation of the Home Market for Large-scale Industry (1899).
[3] Bruno Latour, We Have Never Been Modern (1993).
[4] His own “free market” version, as advocated in The Wealth of Nations (1776), has disguised the power of strong countries over the weak ever since.