Scarcity in an age of plenty

Dear Friend,

An article tltled "Scarcity in an age of plenty" appeared recently in The Guardian (http://www.guardian.co.uk/commentisfree/2008/jun/15/economics.food). A response to that article and some related issues, by Aseem Shrivastava, is attached herewith. You may read these if you have not.

With regards,
S. Purkayastha.
-----------------------------------------------------------------
Sumitra Purkayastha
Bayesian and Interdisciplinary Research Unit
Indian Statistical Institute
203 B.T. Road. Kolkata 700 108. INDIA
-----------------------------------------------------------------

Stiglitz and Sen, Food and MoralsReflections on intellectual cowardiceAseem Shrivastava1“An economic transaction is a solved political problem. Economics has gainedthe title of queen of the social sciences by choosing solved political problems asits domain.” – Abba Lerner, famous economist, Address to the American EconomicAssociation, 1972We continue to contribute to a world in which billions have to worry every day about wheretheir next meal will come from. And there are a noble (Nobel?) few who worry not about wheretheir own next meal will come from but about how the hungry half of the world will be fed nextweek. Joseph Stiglitz obviously belongs to the latter category.Stiglitz is especially concerned these days about mass starvation in the wake of the gallopingcourse being charted by food and energy prices around the world. One of the stars of theprofession of economists, he is also seen by many as being imbued with a deep moral sense, arare trait among his tribe, in whose scale of obsessions efficiency trumps equity each time. So,even if he is not in favour with Washington’s high offices any more, Stiglitz feels obliged to riseto the moral challenge that “the world” (there is only one, after all) must confront with urgency.So he expressed his mental anguish in Manchester’s The Guardian last month when he wroteabout “Scarcity in an age of plenty.”The Stiglitz diagnosisStiglitz traces the problem of the breakneck inflation in food and energy prices around the worldto the policies that have been enacted in the US and elsewhere during the past few decades. Inparticular, he finds fault with the massive financial deregulation and generous tax cuts for therich in the Anglo-Saxon world since the Thatcher-Reagan years, attributing to them rightly the“huge increase in inequalities in most countries”, the dramatic fall in household savings rate inthe US (to zero), significant declines in employment prospects for most people everywhere andmost worryingly, threats to nutrition standards even in the so-called developed world. A lessflattering catalogue of global failures would be hard to summon.The proliferation of opaque financial products in the wake of deregulation didn’t so muchmanage risk as enhance it, converting the entire world economy into a gambler’s paradise (sincemost countries were made to – by the Bretton-Woods institutions, the IMF and the World Bank– or voluntarily chose similar policies of deregulation), which has been systematically transferringwealth and real income from the poor to the rich globally, relying on the unerring precision of1Aseem Shrivastava is an ex-economist and now an independent researcher and writer. He writes on issuesemanating from globalization. References can be obtained from the author. E-mail: aseem62@yahoo.com1
--------------------------------------------------------------------------------
Page 2
market forces. Millions of poor and middle-class Americans (to pick just one out of dozens ofsuch horror stories emerging from around the world these days) are having to give up their homesnow as a result of the policies that only fed the creation of unsustainable bubble economies inhousing, finance and now, commodities (Stiglitz and most economists are audibly silent aboutthis last phenomenon though).Additionally, Stiglitz points to two significant policies of the Bush administration that haveexacerbated food and energy crises in recent years. He points to Washington’s war on Iraqas having contributed measurably to the recent, rapid rise in oil prices (once it became clearthat the war, far from making global access to Iraqi oil easier, was actually going to make iteven harder because of new dangers like sabotage of pipelines). Secondly, Bush’s foolish policieshave made the connection between food and energy markets even tighter, thanks to a misguidedbiofuels program during the past few years.Finally, to add yet more moral pungency to his case, Stiglitz makes it a point to underscorehow Third World agriculture has been put in severe jeopardy not just because of benign neglectby governments, international financial institutions and aid agencies, but also because of unfaircompetition from a systematically and heavily susbsidized agriculture in the rich world. Thislast is a criminal hypocrisy (the West being in the forefront of the messianic crusade for “free”markets all along after all) too banal to belabor. The powerful World Bank is once again slowlywaking up to the long abiding truth that there is simply no way to reduce (let alone eliminate)poverty in the world without paying special attention to agriculture.So far, not bad.The Stiglitz remedyWhere/how does Stiglitz find, as they say, “the way forward”?“Rich countries must reduce, if not eliminate, distortional agriculture and energy poli-cies, and help those in the poorest countries improve their capacity to produce food. But thisis just a start: we have treated our most precious resources – clean air and water – as ifthey were free. Only new patterns of consumption and production – a new economic model– can address that most fundamental resource problem.”Other than a euphemistic argot all too familiar to Orwellian times and the habit-boundeconomist’s search for the universally right “model” to implement everywhere, a technocraticallyenlightened formula for guaranteed success, the above words could have come from Jesus himself.So where does Stiglitz actually fall short?Stiglitz wants rich countries to “reduce, if not eliminate distortional agriculture and energypolicies.” (For a start, how do you reduce policies? Do you just mechanically reduce theirnumber?) But don’t we already know they will never do this? Doesn’t Stiglitz also alreadyknow this? He keeps appealing to a constituency he already knows very well has long been2
--------------------------------------------------------------------------------
Page 3
morally deaf: “the world” Stiglitz is keen to be heard by is not really the world. For someonesacked by the US Treasury from his plum position near the top of the World Bank not so longago, Stiglitz certainly knows this. Under the revolving door system the Americans have betweentheir highest public and corporate offices, it is a sure wager that it was precisely the annoyanceat Stiglitz on the part of the global investor class that prompted his sacking. Then why does hepretend otherwise?“The world” he appeals to for merciful economic policies in the future is in actual fact theworld’s tiny and shrinking class of corporate captains, precisely the bunch which sponsors thelobbies and the policy elites which have led the relentless, decades-long campaign for financialderegulation, the very phenomenon Stiglitz holds responsible for the mess growing around us.This band of global corporate czars lives better than the royalty of other ages of humanity.It takes a dozen flights on private jets every week and dines every evening on wine and caviarwhich have been flown half way around the world especially for their banquets. (This select groupcertainly does worry about where their next meal is coming from: is it Hungary or Thailand?They can know nothing of what it means to be hungry. Their families or girlfriends may noteven have heard of climate change or peak oil. Why should they listen to madmen like Stiglitz?)For at least half a generation some economists, social scientists, agricultural and tradeexperts, or just simply ordinary observers of public follies, have been trying to persuade the gov-ernments of the rich nations to remove the unjust agricultural subsidies which clearly constitutea good half of the reason for the crises now ailing so much of Third World agriculture. Whyhave the governments of the rich nations not followed this morally impeccable advice? It is notbecause they are controlled by transnational businesses maximizing profits globally? It is notbecause they are cynically Machiavellian?A little peek at the political economy of the real worldThe latter hypotheses can hardly be dismissed. Consider what US Senator Hubert Humphreysaid just 50 years ago:“I have heard that people may become dependent on us for food. To me that is good newsbecause before people can do anything, they have got to eat. And if you are looking for away to get people to lean on you and be dependent on you, in terms of their own cooperationwith you, it seems to me that food dependence would be terrific.”So the idea, far from helping “those in the poorest countries improve their capacities toproduce food” (as Stglitz continues to wish in vain) is to keep them permanently locked into astate of fundamental economic dependence on the West. (Did we ever get done with colonialism?Is the West really tired of it? – I don’t think so!) If Stiglitz and his panglossian followers thinkthat times have changed (and the West is more civilized after all these decades of folly uponculpable folly), they should listen to President Nixon chilling words of from a more recentdecade: “Let us remember that the main purpose of aid is not to help other nations but tohelp ourselves.”3
--------------------------------------------------------------------------------
Page 4
We could come even closer to the present date and cite John Block, the US AgricultureSecretary. In 1986, he said: “The push by some developing countries to become more self-sufficient in food may be reminiscent of a bygone era. These countries could save money byimporting more food from the US.”If Stiglitz thinks such an opinion is too off-the-wall, he might ask himself if it is fundamentallydifferent from the following view:“Food self-sufficiency is a peculiarly obtuse way of thinking about food security. There isno particular problem, even without self-sufficiency, in achieving nutritional security throughthe elimination of poverty (so that people can buy food) and through the availability of foodin the world market (so that countries can import food if there is not an adequate stockat home)The focus has to be on income and entitlement, and the ability to command foodrather than on any fetishist concern about food self-sufficiency ...”The words belong to Stiglitz’s illustrious colleague and fellow-Nobel laureate Amartya Sen.He gave an interview on the topic of world hunger to The Guardian in 2002.Prof. Sen writes as though trade, income and entitlement were there just for the asking!He surely knows enough history to know that food has always been a weapon of warfare. Hewrites:“There are situations in which self-sufficiency is important, such as during wars. Atone stage in the Second World War, there was a real danger of Britain not being able to getenough food into the country. But that is a very peculiar situation, and we are not in onelike that now, nor are we likely to be in the near future.”Iraq was invaded by Washington, London and Canberra within a year of Sen’s interview.Sen’s “trade fetish” (a global pandemic among academic economists) only indicates hisdeep-seated conditioning by the Economics profession as it has been shaped by a decadentintellectual culture in the Western world after World War II. The intellectuals of the ex-colonieshave never considered decolonizing their minds. Sen is the leading example.They might do well to read Tagore and Gandhi once more - that’s if they have read themat all (not a given for generations younger than Sen’s).The state of the dismal scienceAll this just about sums up the professional consensus within “the dismal science”. The realworld for most hungry people (we certainly know for sure after the food price inflation of thelast few months) is very different from what economists imagine it to be. In the latter’s world,poor nations, on the verge of industrial breakthroughs and massive transfers of labour away fromagriculture to more “productive” and lucrative occupations (in other words, events which havenot transpired yet in countries like India and China) can feed themselves much like Belgium4
--------------------------------------------------------------------------------
Page 5
or the Netherlands do - by importing food from abroad (from rich countries which do noteven necessarily have to have a comparative advantage in the production of food, but haveprofligate treasuries and ignorant, gullible taxpayers to fund the subsidies and can thus let theagribusinesses sell cheaper than anyone else in the world market). Innocent of the realities ofthe real world, where aggressive transnational agribusinesses lobby political bosses and influenceand manipulate agricultural and food trade, the economists imagine that their simple-mindedmodels of voluntary exchange are not so unrealistic after all.From the real world where the poor and the powerless live under hegemonies of forcedproduction and consumption along lines dictated by the megacorps, the latter’s “international”financial institutions, and also their state patrons, things couldn’t look more different. Globalmarkets could never seem so innocent of corporate manipulation and aggression to hungry,suicide-prone farmers in India or Africa, as they do to technocratic dreamers in the seminarrooms of Columbia or Cambridge.It is a telling comment on the thoroughgoing absence of any meaningful public communica-tion in our world that such unrealistic people as successful economists are put on the experts’pedestal, from where they prescribe policies to tackle the world’s most long-standing problems.There is more than just sad irony associated with such a state of affairs. We could not havedone worse had we chosen to appoint an elect board of arrogant, heads-in-the-sky omniscientgeniuses to write the economic policies of poor countries.Vinaasha-Kaal, Vipareeta-Buddhi, goes a well-known Sanskrit saying, a language AmartyaSen can well read and write.Why economists must continue to live in illusion and perpetuate misun-derstandingIn times as transparently and confidently unjust as ours, it’s either dim-witted naivete or outrightknavery for economists to continue to keep their technocratic heads buried in the “innocent”sands of social “science”. They keep pretending that economics and politics belong on differentplanets. Nobel-decorated Stiglitz, seasoned veteran of many a bout with the IMF and theUS Treasury knows better, but continues to remain faithful to the anachronistic ethics of hisguild of intellect-workers (for it would be too charitable to describe bread-butter-and-gravy-train economists as “intellectuals”, or even as “private intellectuals”, to resort to a desperatemalapropism).Economists are dispassionate thinkers practicing disinterested science. Economics is onits way to becoming a pure science. Society and human communities are irrelevant. Inany case, “there is no such thing as society.”Governments are a nuisance. They ought tostay away from markets. Markets are omniscient. They know everything that needs to beknown (and not just about prices). Markets are free of politics. (What have they got to dowith corporate power and influence?) They are the repositories of the best virtues in humannature. Therein rules liberal utopia and anyone who cannot see the gospel does not have the5
--------------------------------------------------------------------------------
Page 6
best interests of the poor at heart and will end up slowing down human progress.Thou shalt not doubt these time-tested verities.The policy-conclusion is that markets and profit-maximizing privatization (or the “rule oflaw”, as the World Bank puts it) – a word not often explored with any justice by economists –is the way to go, the best way to organize human affairs, just like Ole Adam Smith had it inone of his (deeply misunderstood) passages.These are the kernels of truth that adorn the seminar-rooms of the Economics professionaround the world today. America’s imperial conquests are more obvious in the “intellectual”realm than in any other, with an obviously unscientific bubble Economics (suitably insulated fromfacts) always leading the charge. Give or take a little here, some there, and you get the spectrumof opinions within the Economics profession. They all must have not human communities but the“free” market at the heart of their conformist meditations. Every economist – and Stiglitz andSen are iconic iconoclasts within the tribe – is career-habit-and-hide-bound to pay his homageto the wisdom of market forces, even when he is critical of them (as both Sen and Stiglitz are inmeasurable degree). Such are the touchstones of the theology that today provides the primaryjustification for the widespread ecological and social ruin being precipitated by globalized growtharound the planet.The world has been “liberalized”, privatized and “globalized” with a messianic passion overthe past few decades in the name of this putatively omniscient economics. It teaches the ancientvirtue of patience. A little pain for some now, so that everyone can gain more tomorrow. Aslong as the masters of the universe are allowed a free hand to invest anywhere from the MarianaTrench to the moon. Trickle-down truths. Stale air. They all have faith in it, even if they areSen or Stiglitz. That’s why they suck and stink so much today.But as always, the cash-strapped housewife or the woman slaving at the construction site(or the one waiting in queue for one of those employed to break an arm) knows better than thepundits.Shouldn’t it strike us as strange that the morally moved pundits fail to expose and discussthe premises of their thought openly and fearlessly? Isn’t it odd that the hectic privatizationover the past few decades – at the root of all the financial deregulation that Prof. Stiglitz dulycastigates – is left undiscussed by them? Are they afraid of the political implications of suchdiscussion? What happened to (liberal?) democracy? Why have the “liberals” fallen victim towell-known schemes of thought-control?Shouldn’t we as citizens of the so-called “global village” demand it of economists prominentin the public sphere - whose words of “wisdom” are often heard as gospel by their patrons ingovernments around the world - to show evidence of a deeper cognition of abiding realities?Shouldn’t we expect them to confront the politics behind the economics they end up preaching?Does it take that much imagination to comprehend that markets are only, as the great economistJoan Robinson once said, the most superficial phenomenon of economic life? That prices are6
--------------------------------------------------------------------------------
Page 7
shaped by power (even more than by the forces of demand and supply), that behind market“forces” are corporate forces, which seem to follow the elementary laws of push-and-shoveNewtonian motion, in other words, that they practice the age-old art and skills of pressure andpower politics, dancing and courting the State every cocktail evening? Is the need for seemingly“scientific” recognition among economists so deep that they are willing to seriously misconstruethe very nature of their discipline and artificially drain off all the significant and determiningpolitical content in it – for the sake of a Nobel? What happened to nobility? Is it so passe?Time was when writers lampooned economists for “knowing the price of everything butthe value of nothing.”Today, they seem to be unaware even of the price of things! They aredesperate to rescue their fading conscience after having long back traded it away for professionalsuccess and career advancement. Moral failure was always on the cards. Now the writing is allover the wall for anyone with eyes to read.Any priesthood of any society past or present would be envious of the power and staturethat our famed economists have achieved under the hypocritical banner of a secular society.In the holy name of doing “science” they have institutionalized and now practice and promotea destructive market fundamentalist dogma which has insulated itself with no inconsiderablesuccess from stark facts.It was never more obvious than today that modern economics is little other than the besttheology that a selfish, structurally unjust, technocratically driven world has been able to inventto hide and perpetuate its misdeeds and collective crimes.For inspiration to seek and find alternatives our gaze must be cast elsewhere, even as wekeep a rear eye trained on the mastermind profession of economists which supplies untiringly allthe favoured lies, deceptions and intellectual propaganda to mask the world we live in.7