Neoliberalism and Global Food Crisis

Friends and colleagues, today, Sept. 1, 2008, the prestigious daily KOMPAS put a report on food crisis as its frontpage headlines. The report says that Indonesia has entered so called "rich countries and global capitalism's food trap". For us, Indonesian consumers, seven of our consumable non-rice agricultural products are now become import-dependent commodities; even worst, five of them (fluor, soybean, corn, beef, and milk) are in critical import-dependency condition. Dependency on agricultural products is unbelievable phenomenon for an agrarian country like Indonesia. But it's "a dark logical consequences" of global capitalism into which our country has been integrated itself into subordinate position to rich and powerful countries or multintional companies. The following abridged article from the Global Issues (http://www.globalissues.org/) may provide more understanding of the present food crisis, and its relation to neoliberalism.

Global Food Crisis
by Anup Shah
This Page Last Updated Sunday, August 10, 2008
http://www.globalissues.org/
The global food crisis that has made headlines in 2008 has been simmering for a while. The rise in food prices, affecting the poorest the most, has a variety of causes, mostly man-made. It has resulted in riots, an overthrow of a Prime Minister and many deaths, around the world. It has been common to attribute causes to things like overpopulation but that seems to miss the real causes as food levels continue to outstrip demand even in a growing population. While media reports have been concentrating on some of the immediate causes, it seems that deeper issues and causes have not been discussed as much.

The food crisis appeared to explode overnight, reinforcing fears that there are just too many people in the world. But according to the FAO, with record grain harvests in 2007, there is more than enough food in the world to feed everyone—at least 1.5 times current demand. In fact, over the last 20 years, food production has risen steadily at over 2.0% a year, while the rate of population growth has dropped to 1.14% a year. Population is not outstripping food supply. “We’re seeing more people hungry and at greater numbers than before,” says World Hunger Program’s executive director Josette Sheeran, “There is food on the shelves but people are priced out of the market.”

— Eric Holt-Giménez and Loren Peabody, From Food Rebellions to Food Sovereignty: Urgent call to fix a broken food system, Institute for Food and Development Policy, May 16, 2008

For example,

• A lot of land goes into producing products that could be considered unnecessary or excessive in their production (e.g. tobacco, sugar, beef, biofuels, urbanization, etc).
• Some 80% of the world’s production is consumed by the wealthiest 20% of the world suggesting an inequality in resource use due to social, economic and political reasons, and perhaps less because of Malthusian concerns about population sizes outstripping resource availability in most cases.
• Furthermore, while many go hungry an equally large number are considered obese.

These aspects are discussed in more depth on this site’s sections on consumption, hunger and population and poverty and hunger.

Deeper, long term causes of the food crisis

However, as Holt-Giménez and Peabody importantly add, all these causes “are only the proximate causes of food price inflation. These factors do not explain why—in an increasingly productive and affluent global food system—next year up to one billion people will likely go hungry. To solve the problem of hunger, we need to address the root cause of the food crisis: the corporate monopolization of the world’s food systems.”

What the authors are alluding to is the following:

The dominance of the richer nations and companies in the international arena has had a tremendous impact on agriculture, which, for many poor countries forms one of the main sources of income. A combination of unfair trade agreements, concentrated ownership of major food production, dominance (through control and influence in institutions such as the World Bank, IMF and the World Trade Organisation) has meant that poor countries have seen their ability to determine their own food security policies severely undermined.

Policies such as structural adjustment demanded by these institutions meant most developing countries had to not only cut back on health and education, but food stamps and other support for the very poor. Trade barriers and other support mechanisms for local industry were also often required to be removed, allowing foreign companies to more easily compete, often being at an advantage as they would typically be larger multinationals with more resources and experiences. By comparison, richer countries have hardly reduced their barriers in return. In addition, most poor countries were strongly encouraged to concentrate more on exporting cash crops to earn foreign exchange in order to pay of debts. This resulting reduction in biodiversity of crops and related ecosystems meant worsening environments and clearing more land or increasing fertilizer use to try and make up for this.

Increasing poverty and inequality thus fueled corruption making the problem even worse. Food dumping (while calling it aid) by wealthy nations onto poor countries, falling commodity prices (when many poor countries had to compete against each other to sell primarily to the rich), vast agricultural subsidies in North America and Europe (outdoing the foreign aid they sent, many time over) have all combined to have various effects such as forcing farmers out of business and into city slums. Meanwhile, crop biodiversity dwindled during the promise of the Green Revolution, which also increased chemical input, environmental degradation and felling of forests to bring more land into production.

Food security has reduced as a result and many countries are less able to do things if they want to. Holt-Giménez and Peabody are worth quoting again, this time on the impacts of concentrated ownership:

The expansion of industrial agri-foods crippled food production in the Global South and emptied the countryside of valuable human resources. But as long as cheap, subsidized grain from the industrial north kept flowing, the agri-foods complex grew, consolidating control of the world’s food systems in the hands of fewer and fewer grain, seed, chemical and petroleum companies. Today three companies, Archer Daniels Midland, Cargill, and Bunge control the world’s grain trade. Chemical giant Monsanto controls three-fifths of seed production. Unsurprisingly, in the last quarter of 2007, even as the world food crisis was breaking, Archer Daniels Midland’s profits jumped 20%, Monsanto 45%, and Cargill 60%. Recent speculation with food commodities has created another dangerous “boom.” After buying up grains and grain futures, traders are hoarding, withholding stocks and further inflating prices.

— Eric Holt-Giménez and Loren Peabody, From Food Rebellions to Food Sovereignty: Urgent call to fix a broken food system, Institute for Food and Development Policy, May 16, 2008

Education in Neoliberalism

Harvard MBAs - Naked Capitalism
April 4th, 2008 by jgoldstein · 1 Comment

This is from a blog called “naked capitalism” - my friend sent me this link because I always make fun of her for wanting to be an economist… pretty much for the sorts of reasons that this study shows…. It couldn’t be a more perfect example of the ‘professionalism’ we read about in class. Can’t decide if its hilarious or depressing.

The Ethics of Harvard MBAs via naked capitalism by Yves Smith on 4/3/08

Bloomberg had a odd article on the varying fortunes of Harvard MBAs (and some alumni of other Harvard graduate programs). It duly notes that they range from unquestioned successes like Lou Gerstner to more controversial figures, such as Jeff Skilling, Paul Bilzerian, Henry Paulson,, Stan O’Neal, and of course, George W. Bush

Generalizing about HBS graduates is tricky. It is the largest graduate school program in the world, turning out roughly 900 MBAs a year, which almost guarantees some heterogeneity in the population, Thus it might be more useful as an indicator of business behavior generally, in part because force of numbers gives Harvard MBAs some sway, in part because the program more so than others sets out to create CEOs, and finally because only a few MBA programs, such as Yale School of Management’s, are highly distinctive (Yale has a strong emphasis on not-for-profit management.

After the accounting scandals of 2002, where Skilling and other Harvard MBAs played high-profile roles, the school studied what it could do to improve the conduct of its graduates. It concluded that students’ ethical compasses were set before they got there, which one could view either as accurate or a way of punting. Thus, the school gave some motherhood statements about changing its admissions policies.

So what has happened? Consider this section of the Bloomberg article:
Harvard Business School’s two-year program instills confidence “to go out and aim high and to think you can work on the world’s stage,” said Scott Snook, an associate professor at the school. Yet, not all students mature psychologically while at Harvard, he said.

Snook studied 50 students from before they enrolled until they graduated in 2006. Using psychological tests and interviews, he found that one-third were still, in respects, stuck in adolescence, and had trouble empathizing.

Snook found another third inclined to define right or wrong in terms of what everybody else is doing. That might explain why even well-educated executives have fallen prey to the subprime- mortgage debacle, he said. Snook said the study will be published this year.

“They can’t really step back and take a critical view,” he said. “They’re totally defined by others and by the outcomes of what they’re doing.”

The subprime-lending spree shows that Harvard and other elite schools fail to mold managers who look beyond self- interest, said Rakesh Khurana, an associate professor at Harvard Business School.

“Business schools as an institution have not effectively addressed this issue of creating a profession that has the capacity for self-regulation,” said Khurana, author of “From Higher Aims to Hired Hands” (Princeton University Press, 2007).

Hhm. It looks that post 2002 study was wrong, or that Harvard did a lousy job of changing its admissions policies.

A final tidbit:
Bush, the first U.S. president with an MBA, has written that Harvard gave him “the tools and the vocabulary” of the business world. Now, in his final year in office, Bush faces a slumping economy and an unpopular war. His approval rating is 32 percent, according to USA Today/Gallup Poll research in March.