Food, Politics, Economy: Today’s Food Crisis and Polanyi’s Great Transformation

Hi all. So I've been wanting to write about food and politics for a while, but it's been hard to motivate myself to get enough energy to be riled up about food and politics because I feel like most of my energy is being drained by cover letters, resumes, and interviews (Yes, interviews! I said interviews! ...Well, we'll see. When I get good news, trust me, the whole world will hear about it).

So, for those of you that don't know my eating habits, I don't eat beef anymore, and I try to eliminate high fructose corn syrup (so hard, you have no idea) from my diet. Sure, there are health reasons, but it started actually in large due to political and ecological reasons. I also try my hardest to try and buy fair trade chocolates, coffee (not that I drink coffee), etc. I haven't been able to bring myself to write a whole shpiel about all of the personal reasons why I don't or try not to consume such products. So, I've decided that a good start would be to post an essay that I wrote for one of my interdisciplinary studies classes. I apologize if it seems a little dry to some, but... well, too bad, I find the subject fascinating.

(This is where I become a little Berkeley hippie hate neoliberal globalization on you.) The assignment was to write a response to an article by Walden Bello titled "Manufacturing a Food Crisis" using various economists that were discussed in class. In a nutshell, Bello's article discusses how the food crisis that had developed by 2008 was "artificially created" (i.e. man-made) through political decisions that transformed the agricultural market. I chose to analyze Bello's article through Polanyi's The Great Transformation (Polanyi is amazing, by the way.) and his theoretical and historical account of the development of the capitalist "free market" economy. Polanyi wrote in his book, The Great Transformation, "Laissez-faire was planned; planning was not." Following this theory, economic decisions are heavily tied to politics and can have dramatic effects on society. Politics, economics, and society are all inextricably linked. The "free market" policies that the Global North (i.e. developed countries, first world countries, etc.) forces upon the Global South and other various political decisions affect the economy and society as well.

Why, do you ask, am I writing about this? I think it's important for people to be conscious of what they consume, whether it be food, electronics, what have you. And, since this is a food blog, I figure why not. That, and because I don't think many people, especially in the Global North, realize how much about the politics behind food and how much the food industry is tied up in the global economy.

Click below to read more (Please keep in mind that this was written for class back in the summer of 2008, and was, of course, therefore written all the night before/morning of. So I apologize for potential lack of coherency and poor writing... but I swear I did my research beforehand!!)  Any responses/thoughts/retorts highly encouraged!!

In 1944, Karl Polanyi’s The Great Transformation: The Political and Economic Origins of Our Time follows the development of the market economy growing alongside the Industrial Revolution in Europe and North America.  Although the Global North has developed beyond the Industrial Revolution and progressed to the information technology era, most of the rest of the world is still struggling through industrialization; many of Polanyi’s observations of the great transformation in the early 1900s can still be applied to today.  Walden Bello’s “Manufacturing a Food Crisis” in the June 2, 2008 edition of The Nation delves into the background behind the development of the current global food crisis.  Bello discusses the decisions and actions made in the 1980s and how this led to a disastrous transformation of the agricultural market in developing countries.  The market economy is an economy wherein society becomes “an accessory of the economy system.” (Polanyi 79)  In this type of economy, the market becomes the sole determinant of society, especially with respects to land, labor, and money.  According to Polanyi, the market economy required the commodification of land, labor, and money, resulting in the institutional separation of the economic from the political sphere; consequently, this separation, or dis-embedding, would give rise to social disruption and dislocation.  This social dislocation is presented not only by Polanyi in the 1940s, but also by Bello with regards to the twenty-first century.  Polanyi’s ideas about the linkage between the economic and political spheres, the inherent planning in a “free-market” economy, and the human cost of laissez-faire are embedded in Bello’s arguments as he discusses the creation of today’s global food crisis.

Polanyi argues that, before the rise of the market economy, trade relations were governed by principles of economic behavior that were embedded in society.  These social relations became secondhand as states began to deregulate capital and make other changes to create the unregulated market system.  The key point is that the market economy was created through state interventionism and the free-market economy was not a natural evolution that sprung into being as many neoliberalists argue it to be.  Polanyi states:

The road to the free market was opened and kept open by an enormous increase in continuous, centrally organized and controlled interventionism… While laissez-faire economy was the product of the deliberate State action, subsequent restrictions on laissez-faire started in a spontaneous way.  Laissez-faire was planned; planning was not. (146-7)

In other words, the market economy was a result of institutional creations and decisions made, and situations that arise out of the global economy are a result of these conscious decisions.  The current global food crisis is a direct result of neoliberal efforts to create a global market economy stemming back to the 1980s and 1990s.

Bello reveals that famine and high food prices are a result of “‘free market’ policies promoted by the International Monetary Fund (IMF) and the World Bank and Washington… designed to eliminate high tariffs, state regulations and government support institutions, which neoliberal doctrine identified as barriers to economic efficiency.”  The debt crisis in the 1980s, a result of industrialization and a jump in interest rates of borrowed money, resulted in many developing countries turning to the IMF and the World Bank for help.  The IMF and the Bank lent money on the condition that countries would agree to adopt neoliberal laissez-faire policies.  Trying to create a globalized capitalist industrial agriculture, neoliberal advocates are bringing developing countries into a system already dominated by large industrial farms.  Countries such as Mexico, the Philippines, and Ghana made structural adjustment and stabilization policy changes as requested by the IMF and World Bank, resulting in a breakdown of their agricultural sectors, and consequently, a shortage of food grains.

Yet, Polanyi points out that development of the market economy in the Global North was a result of anything but what the IMF and World Bank are pushing today—a laissez-faire, hands-off approach.  “There was nothing natural about laissez-faire; free markets could never have come into being merely by allowing things to take their course.  Just as cotton manufactures—the leading free trade industry—were created by the help of protective tariffs, export bounties, and indirect wage subsidies, laissez-faire itself was enforced by the state.” (145) He points out the incorrect assumptions that are the bases of classical economic theories that are unfortunately still upheld today.  Bello shows that the history of the global market leading up to the food crisis was the result of decisions of not only the countries themselves, but of pressure from the IMF, the World Bank, and other institutions such as the World Trade Organization (WTO) and the North American Free Trade Agreement.  These institutional creations to allow for a market economy to prosper tore at the fibers of society, leaving “little room for the hundreds of millions of rural and urban poor in this integrated global market.” (Bello)  As during Polanyi’s era of the Industrial Revolution of Europe and North America, the push for a free-market economy in the last 1900s and 2000s has led to a disruption in the fabric of society.

            Polanyi argues that the commodification of land, labor, and money—important to allow the market economy to function—left society at the whims of “the ravages of this satanic mill.” (Polanyi 77) Since people became appendages to the capitalist market, an institution that is not stable but is rather constantly being simultaneously created and destroyed, human beings are therefore subject to whatever ups and downs the market may experience.  Polanyi discusses the effect of the Industrial Revolution on the countryside.  Industrialization and privatization had uprooted many of those who had subsisted on farming and cottage industries, thereby increasing unemployment and pauperism.  (Polanyi 96-98) Industrialization and liberalization occurring in the 1990s and today have also uprooted much of society in the Global South.  Not only has government spending in the agricultural sector dropped, but due to trade liberalization, massive imports of cheap foods and pressure from the IMF and World Bank have caused farmers to replace food crops with “high-value-added” crops such as flowers.  This push from the Global North for the WTO’s Agreement on Agriculture was “to open up markets in developing countries so they could absorb surplus production in the north.” (Bello)  Since US products were often subsidized, foods imported into developing countries were often cheaper than domestic food products.  This led to a further deterioration of the agricultural sector.  Unfortunately, the degradation of this part of the economy was also the degradation of lives.  Not only has national food security eroded, but livelihoods were taken away as the countryside converted into a site for intensive capital accumulation.  In India, about 150,000 marginalized or displaced farmers have committed suicide as a result of this way of life. (Bello)

            Nonetheless, society also reacts against the disembedding of the economy in order to protect itself.  For Polanyi, the market economy consists of the “double-movement,” a back and forth between the economic sphere and civil society.  The double-movement consists of the movement, which is the push of market expansion, and the protective counter-movement, societal protection brought about through revolts and state interventionism to “[blunt] the action of this self-destructive mechanism.” (Polanyi 79)  Neoliberal policies have created a situation wherein formerly self-sufficient countries have become heavily dependent on imports from other countries through the destruction of the agricultural sector.  In response to the neoliberal policies pushed onto developing countries by the IMF and World Bank, peasants have organized to resist the globalization of industrial agriculture.  Via Campesina, an international farmer’s group, proposes an agenda that excludes the WTO and includes food sovereignty, protection of the domestic market from cheap imports, abolition of all export subsidies, profitable prices for farmers and fishermen, and removal of domestic subsidies that promote unsustainable agriculture. (Bello)

            Even over half a century later, Polanyi’s analysis of the capitalist free-market economy in the 1940s is still viable today as neoliberal economists continue to push for policies leading to a globalized market economy, regardless of the human cost.  In order to evaluate policies in attempts to ameliorate the food crisis and promote development, economic theorists need to look more carefully at the history of the growth of the market economy and its historically and geographically specific events.  Polanyi’s ideas of the industrial revolution in the first half of the 1900s are still relevant today and continue to be as a back and forth struggles between society and globalization repeatedly breakdown and recreate capitalism.