Thursday, April 17, 2008

Global Food Crisis: The Limits of Free Market Thinking?

I just hope everyone knows that there is a major upheaval of global proportions on the horizon. Here in the States public discussions and news reports regarding food riots in Bangladesh and elsewhere are scant at best. Despite the implications and emerging crisis, CNN has only done three reports thus far. One with Jeffery Sachs and another with about a 2 minute sound-bite.

Please take some time and look at these links:

Just do a search on food riots. This is real!

I just wonder if our economic model of global integration, structural adjustment policies that assert a one-size fits all approach to development, (perhaps more appropriately, the World-Capitalist System) coupled with the environmental/climate issues have finally backed us into corner.

Seriously, only in a world ruled by the abstract notion of value attributed to a piece of paper do we find such ridiculous realties. In this ridiculous world, floating currencies, financial speculations, massive capital investment into new market creation and so on rule the day, and apparently at the cost of billions of livelihoods. I'm sorry Mr. Thomas Friedman, but your Olive Branch is a sham and your damn Lexus is choking the world to a collective end.

I understand the needs for biofuels or at least some series of green-energy options to offset the decline in oil reserves and the rise in costs associated with a parallel energy demand. Yet, when market forces push production and futures speculation into the realm of food conversion to biofuel production at the present rate without opening doors for a series of complementary options (that could reasonably offset these problems) then we obviously have a serious problem on our hands.

A problem many people will not be able to escape from.

It is interesting to think about globalization in our modern world, where information, communication, finance, politics and culture are becoming integrated at various degrees, and yet we never considered the possibility that a global famine could occur. After the likes of Francis Fukiyama and others heralding the age of globalization (the End of History), the fall of the Soviet Union and the triumph of free-market capitalism, I find this emergent problem as a clear sign that the model we have been operating off of since the rise of the merchant classes in Europe several centuries back of has some fundamental flaws. Perhaps, even Karl Marx would have missed this, then maybe this is the type of catalyst he was thinking of when he envisioned a global uprising.

Regardless, the invisible hand of the market is choking the poor to death. The consequences of which are not just people starving, but global economic and political instability on a scale never before seen. If the crisis persists for longer than 6 months (yes Ray I do agree with you on this), then we could see a series of national and even a global political and economic meltdown.

I'm usually a pretty optimistic person when it comes to the ability of humanity to avert disaster and remake itself, but there is so much momentum that I have a hard time ignoring the freaking train-wreck hurdling before me.


yishaym said...

Hey Justin, have you seen the story of stuff? Gives you a lot to think about in this context.

The problem is not with the invisible hand, its with the hidden strong hand, which promotes over-consumption of non-sustainable goods, subsidizes meat production (which feeds much less people per hectare) and prioritizes bio-fuelled humvees over wind-farm powered powered public transport. The problem is not with the economic system (there's frankly very little difference between one and the other nowadays). The problem is with base values.

justingriffis said...

I certainly didn’t intend to reify the notion that the whole problem exists with the invisible hand. I absolutely agree that these problems are rooted in the values of over-consumption, which have spurred the sorts of policies that have brought us to this point.

Yet, over-consumption has been a function of the market and greedy "economic man". Self-interest run-a-muck where firms identify new commodities and artificially generate new markets to maintain growth.

And if I'm not mistaken, the ideal behind this system as described by Adam Smith was to leverage this self-interest in the pursuit of wealth. So while these base values are the problem, these base values have been promoted as fundamnetal elements of the capitalist system.

And well, we have lots of self-interest going on right now.

However, what I was really trying to get across was that at the local level (and in the context of the things you mention), it is the invisible hand that is setting prices based upon demand, scarcity and speculation. To let the market rule in the context of ongoing manipulation that is bringing families to their knees shows the limits of the system.

A part of the problem that I wanted to illustrate is that we have lived (here in the West) with this notion that growth and consumption are a given. People forget that the market produces inherent booms and busts, that resources are in fact scarce, and that the ideal of global capital is a precarious venture. These frightening problems of scarcity and inflation can be best remembered in the context of the Great Depression.

My point in faulting the invisible hand is to somehow think that the nature of the system will somehow magically correct itself. This is not the time to let it ride, so to speak.

Overall, it is my sense that all of these realities (over-consumption, misplaced priorities in subsidies, high demand on fuel, poor crop yields in many parts of the world, and the sense the invisible hand will set it straight) are conspiring at once to conjure up the perfect storm.