the upside down world of neo-liberal economics:
Neo-liberalism assumes that wo/men are hardwired to follow self-interests and that our self-interests are ultimately collectively positive. One can't help thinking what a different vision neoliberal economics would've mapped out for us with its forbidding formulae and graphical illustrations had it begun from the assumption that wo/men are hardwired to cooperate and share. Unfortunately, it follows the same path as many of the early Enlightenment figures with its rather negative view of human nature and optimistic view of the competitive consequences of this negative human nature. Neo-liberalism pre-empts Gordon Gecko—greed is good. When all the wo/men in the market place are greedy together, a spontaneous and ideal order emerges. In this sense, all market places are the same. Pigs, bombs and currency are interchangeable. This private language of measurable movable quantities views the economy as a set of scales that tend in the natural order of things towards balance. As much greed as is possible is satisfied within the constraint of scarce resources. This (with a straight face) is called optimum social welfare. In the competitive nature of the marketplace one wo/man may triumph and accumulate far in excess of the others on the basis of his superior characteristics of greed. This (still with a straight face) is also called optimum social welfare. Everybody had a chance to participate and it is the total satisfaction of greed not the distribution that counts. Competitive greed is the given. Since it is innate it exists in all times and places. As a result, neoliberal economics marginalizes history, geography and institutional rules or rather turns the world of history, geography and institutions upside down.
(...) Neo-liberal individualism means we are free to be different so long as we all behave the same
Tuesday, July 15, 2008
Tuesday, July 8, 2008
the concentration of wealth in the world:
According to the study, for the world as a whole the share of the top 10 per cent was 85 per cent in the year 2000 and the Gini coefficient (a measure of inequality between 0 and 1) equalled 0.892 at official exchange rates. This is an extraordinarily high value of the Gini coefficient and indicates extremely high concentration of wealth. For comparison, it can be noted that a recent study by Branko Milanovic found the Gini coefficient of world income to be 0.795 in 1998.
(...) As expected, the US is found to be the richest country even in personal wealth terms. The average wealth per person in the US is estimated to have been $144,000 in 2000. This compares with around $6,500 per person (in purchasing power parity or PPP terms) in India, which is at the bottom of the list of countries with wealth data. However, this does not mean that this is actually the lowest per capita wealth of all countries. The data used in the study are not comprehensive, and so a number of poor countries have been excluded for want of adequate data. So the actual wealth inequality across countries is likely to be even higher.
(...) The study also finds that the concentration of wealth within countries is high. Typical Gini coefficients for wealth distribution within countries lie in the range of about 0.65 - 0.75, and there are several above 0.8. In contrast, the mid-range for the Gini coefficients for income distribution is from about 0.35 – 0.45. So the concentration of wealth has become more acute than the concentration of income.
(...) In 2000, the richest 1 per cent of adults alone owned 40 per cent of global assets, and the richest 10 per cent of adults accounted for 85 per cent of total world assets. In contrast, the bottom half of the world adult population owned barely 1 per cent of global wealth.
According to the study, for the world as a whole the share of the top 10 per cent was 85 per cent in the year 2000 and the Gini coefficient (a measure of inequality between 0 and 1) equalled 0.892 at official exchange rates. This is an extraordinarily high value of the Gini coefficient and indicates extremely high concentration of wealth. For comparison, it can be noted that a recent study by Branko Milanovic found the Gini coefficient of world income to be 0.795 in 1998.
(...) As expected, the US is found to be the richest country even in personal wealth terms. The average wealth per person in the US is estimated to have been $144,000 in 2000. This compares with around $6,500 per person (in purchasing power parity or PPP terms) in India, which is at the bottom of the list of countries with wealth data. However, this does not mean that this is actually the lowest per capita wealth of all countries. The data used in the study are not comprehensive, and so a number of poor countries have been excluded for want of adequate data. So the actual wealth inequality across countries is likely to be even higher.
(...) The study also finds that the concentration of wealth within countries is high. Typical Gini coefficients for wealth distribution within countries lie in the range of about 0.65 - 0.75, and there are several above 0.8. In contrast, the mid-range for the Gini coefficients for income distribution is from about 0.35 – 0.45. So the concentration of wealth has become more acute than the concentration of income.
(...) In 2000, the richest 1 per cent of adults alone owned 40 per cent of global assets, and the richest 10 per cent of adults accounted for 85 per cent of total world assets. In contrast, the bottom half of the world adult population owned barely 1 per cent of global wealth.
are we heading for global stagflation?:
That is because inflation in modern economies is essentially about two forces: the fight over distributive shares in national income by different groups, and the role of expectations about inflation. Thus, if there is a rise in commodity prices (that would increase the relative income share of commodity producers) then this will only lead to a rise in the general price level if capitalists insist on maintaining their margins over costs at the same level. If they are unable to do so for any reason, then the rise in commodity prices need not translate into a generalised inflation. Similarly, if the initial rise in prices pushes down real wages and workers are not in a position to demand increases in nominal wages that would maintain their real wages, then the inflation is controlled. Tight monetary policies are usually a way of enforcing this by allowing greater unemployment, so they work indirectly rather than directly to control inflation. So inflation reflects a wider fight over income distribution.
(...) Therefore, whether or not there will be stagflation depends ultimately on international political economy and the relative strength of different groups in the world economy. It may be argued that working classes and peasants have been so weakened by the onslaught of neoliberal policies of the past two decades that they are in no position to fight to maintain even their already significantly diminished shares of income. If this is true, then the likelihood for the immediate future is an economic recession with worsened conditions of living and higher unemployment across the world, albeit with lower rates of aggregate inflation.
That is because inflation in modern economies is essentially about two forces: the fight over distributive shares in national income by different groups, and the role of expectations about inflation. Thus, if there is a rise in commodity prices (that would increase the relative income share of commodity producers) then this will only lead to a rise in the general price level if capitalists insist on maintaining their margins over costs at the same level. If they are unable to do so for any reason, then the rise in commodity prices need not translate into a generalised inflation. Similarly, if the initial rise in prices pushes down real wages and workers are not in a position to demand increases in nominal wages that would maintain their real wages, then the inflation is controlled. Tight monetary policies are usually a way of enforcing this by allowing greater unemployment, so they work indirectly rather than directly to control inflation. So inflation reflects a wider fight over income distribution.
(...) Therefore, whether or not there will be stagflation depends ultimately on international political economy and the relative strength of different groups in the world economy. It may be argued that working classes and peasants have been so weakened by the onslaught of neoliberal policies of the past two decades that they are in no position to fight to maintain even their already significantly diminished shares of income. If this is true, then the likelihood for the immediate future is an economic recession with worsened conditions of living and higher unemployment across the world, albeit with lower rates of aggregate inflation.
manufacturing a food crisis:
Once regarded as relics of the pre-industrial era, peasants are now leading the opposition to a capitalist industrial agriculture that would consign them to the dustbin of history. They have become what Karl Marx described as a politically conscious "class for itself," contradicting his predictions about their demise. With the global food crisis, they are moving to center stage--and they have allies and supporters. For as peasants refuse to go gently into that good night and fight de-peasantization, developments in the twenty-first century are revealing the panacea of globalized capitalist industrial agriculture to be a nightmare. With environmental crises multiplying, the social dysfunctions of urban-industrial life piling up and industrialized agriculture creating greater food insecurity, the farmers' movement increasingly has relevance not only to peasants but to everyone threatened by the catastrophic consequences of global capital's vision for organizing production, community and life itself.
Once regarded as relics of the pre-industrial era, peasants are now leading the opposition to a capitalist industrial agriculture that would consign them to the dustbin of history. They have become what Karl Marx described as a politically conscious "class for itself," contradicting his predictions about their demise. With the global food crisis, they are moving to center stage--and they have allies and supporters. For as peasants refuse to go gently into that good night and fight de-peasantization, developments in the twenty-first century are revealing the panacea of globalized capitalist industrial agriculture to be a nightmare. With environmental crises multiplying, the social dysfunctions of urban-industrial life piling up and industrialized agriculture creating greater food insecurity, the farmers' movement increasingly has relevance not only to peasants but to everyone threatened by the catastrophic consequences of global capital's vision for organizing production, community and life itself.
Friday, July 4, 2008
Biofuels have forced global food prices up by 75% - far more than previously estimated - according to a confidential World Bank report obtained by the Guardian.
(...) It argues that production of biofuels has distorted food markets in three main ways. First, it has diverted grain away from food for fuel, with over a third of US corn now used to produce ethanol and about half of vegetable oils in the EU going towards the production of biodiesel. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher.
(...) It argues that production of biofuels has distorted food markets in three main ways. First, it has diverted grain away from food for fuel, with over a third of US corn now used to produce ethanol and about half of vegetable oils in the EU going towards the production of biodiesel. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher.
Tuesday, July 1, 2008
the principles of food sovereignty:
So, how do we traverse this jungle? Like all forest dwellers, it is important to equip ourselves with a set of simple guidelines before setting on the journey. In our view, there are five basic guidelines, or principles, that must form the basis of any food policy. These are:
1. The Principle of food sovereignty. This is not the same as “food security”. A country can have food security through food imports. Dependence on food imports is precarious and prone to multiple risks -- from price risks, to supply risks, to conditionality risks (policy conditions that come with food imports). Food sovereignty, on the other hand, implies ensuring domestic production and supply of food. It means that the nationals of the country (or at the very least nationals within the region) must primarily be responsible for ensuring that the nation and the region are first and foremost dependent on their own efforts and resources to grow their basic foods.
2. The Principle of priority of food over export crops produced by small farms sustained by state provision of the necessary infrastructure of financial credit, water, energy, extension service, transport, storage, marketing, and insurance against crop failures due to climate changes or other unforeseen circumstances.
3. The Principle of self-reliance and national ownership and control over the main resources for food production. These are land, seeds, water, energy, essential fertilizers and technology and equipment (for production, harvesting, storage and transport).
4. The Principle of food safety reserves. Each nation must maintain, through primarily domestic production and storage systems (including village storage as well as national silos) sufficient stocks of “reserve foods” to provide for emergencies.
5. The Principle of a fair and equitable distribution of “reserve foods” among the population during emergencies.
Sadly, and with dire consequences, the above quite commonsensical and, we believe, reasonable principles have not been followed by many governments in the South. They have been grossly violated through five main reasons, among other minor ones:
1. Distorted state policies on production and trade (e.g. removal of tariffs that made local producers vulnerable to imported food from rich countries that subsidized their own food production and exports).
2. Land grab by the rich commercial farmers, thus disempowering small producers and rendering them vulnerable to “market attacks.”
3. Effective loss of control over resources of food production, including land (even where nationals “owned” land) because of imported seeds, imported fertilizers, imported machinery, imported technical assistance, and imported banks, and also loss of control over water and energy through surrendering these to foreign corporations attracted by the lure of so-called FDIs (foreign direct investments).
4. Donor aid dependence, and bad advice that came with it from donors including the World Bank and the IMF during the heyday of the “Washington Consensus” (1975-2005).
5. Disruption of the infrastructure of food production (as described above) that came as a consequence of the above four factors.
------------------------------------------------------------------------------------
(...) It is estimated that up to 15 million Mexican farmers and their families (in particular indigenous peoples) may have been displaced from their livelihoods as a result of the North American Free Trade Agreement (NAFTA) and competition with subsidized American maize.
(...) Just 10 corporations, including Aventis, Monsanto, Pioneer and Syngenta, control one third of the $23 billion commercial seed market and 80% of the $28 billion global pesticide market. Another 10 corporations, including Cargill, control 57% of the total sales of the world's leading 30 retailers and account for 37% of the revenues earned by the world's top 100 food and beverage companies.
(...) In an increasingly liberalizing (globalizing) world, Transnational Corporations (TNCs) have increased their control over the supply of water, especially in the South. In many cases, private sector participation in water services has been one of the “aid conditionalities” of the so-called “donor assistance” (ODAs) from donor countries and the IMF and the World Bank. Just three companies, Veolia Environnement (formerly Vivendi Environnement), Suez Lyonnaise des Eaux and Bechtel (USA), control a majority of private water concessions globally.
(...) The biofuels industry is inherently predatory on land and resources, especially if it is generated out of food such as maize and Soya beans. It is estimated that to produce 50 litres of biofuels to run a car for one day’s long trip or three days city-run, it would consume about 200 kg of maize -- enough to feed one person for one year. This does not even take into account the cost of energy, water and other resources that go into biofuels production.
(...) The heavy production and export subsidies that OECD countries grant their farmers - more than $349 billion in 2006 or almost $1 billion per day - mean that subsidized European fruit, vegetables lower grade meat, and chicken wings can be found in markets all over West Africa at lower prices than local produce.
So, how do we traverse this jungle? Like all forest dwellers, it is important to equip ourselves with a set of simple guidelines before setting on the journey. In our view, there are five basic guidelines, or principles, that must form the basis of any food policy. These are:
1. The Principle of food sovereignty. This is not the same as “food security”. A country can have food security through food imports. Dependence on food imports is precarious and prone to multiple risks -- from price risks, to supply risks, to conditionality risks (policy conditions that come with food imports). Food sovereignty, on the other hand, implies ensuring domestic production and supply of food. It means that the nationals of the country (or at the very least nationals within the region) must primarily be responsible for ensuring that the nation and the region are first and foremost dependent on their own efforts and resources to grow their basic foods.
2. The Principle of priority of food over export crops produced by small farms sustained by state provision of the necessary infrastructure of financial credit, water, energy, extension service, transport, storage, marketing, and insurance against crop failures due to climate changes or other unforeseen circumstances.
3. The Principle of self-reliance and national ownership and control over the main resources for food production. These are land, seeds, water, energy, essential fertilizers and technology and equipment (for production, harvesting, storage and transport).
4. The Principle of food safety reserves. Each nation must maintain, through primarily domestic production and storage systems (including village storage as well as national silos) sufficient stocks of “reserve foods” to provide for emergencies.
5. The Principle of a fair and equitable distribution of “reserve foods” among the population during emergencies.
Sadly, and with dire consequences, the above quite commonsensical and, we believe, reasonable principles have not been followed by many governments in the South. They have been grossly violated through five main reasons, among other minor ones:
1. Distorted state policies on production and trade (e.g. removal of tariffs that made local producers vulnerable to imported food from rich countries that subsidized their own food production and exports).
2. Land grab by the rich commercial farmers, thus disempowering small producers and rendering them vulnerable to “market attacks.”
3. Effective loss of control over resources of food production, including land (even where nationals “owned” land) because of imported seeds, imported fertilizers, imported machinery, imported technical assistance, and imported banks, and also loss of control over water and energy through surrendering these to foreign corporations attracted by the lure of so-called FDIs (foreign direct investments).
4. Donor aid dependence, and bad advice that came with it from donors including the World Bank and the IMF during the heyday of the “Washington Consensus” (1975-2005).
5. Disruption of the infrastructure of food production (as described above) that came as a consequence of the above four factors.
------------------------------------------------------------------------------------
(...) It is estimated that up to 15 million Mexican farmers and their families (in particular indigenous peoples) may have been displaced from their livelihoods as a result of the North American Free Trade Agreement (NAFTA) and competition with subsidized American maize.
(...) Just 10 corporations, including Aventis, Monsanto, Pioneer and Syngenta, control one third of the $23 billion commercial seed market and 80% of the $28 billion global pesticide market. Another 10 corporations, including Cargill, control 57% of the total sales of the world's leading 30 retailers and account for 37% of the revenues earned by the world's top 100 food and beverage companies.
(...) In an increasingly liberalizing (globalizing) world, Transnational Corporations (TNCs) have increased their control over the supply of water, especially in the South. In many cases, private sector participation in water services has been one of the “aid conditionalities” of the so-called “donor assistance” (ODAs) from donor countries and the IMF and the World Bank. Just three companies, Veolia Environnement (formerly Vivendi Environnement), Suez Lyonnaise des Eaux and Bechtel (USA), control a majority of private water concessions globally.
(...) The biofuels industry is inherently predatory on land and resources, especially if it is generated out of food such as maize and Soya beans. It is estimated that to produce 50 litres of biofuels to run a car for one day’s long trip or three days city-run, it would consume about 200 kg of maize -- enough to feed one person for one year. This does not even take into account the cost of energy, water and other resources that go into biofuels production.
(...) The heavy production and export subsidies that OECD countries grant their farmers - more than $349 billion in 2006 or almost $1 billion per day - mean that subsidized European fruit, vegetables lower grade meat, and chicken wings can be found in markets all over West Africa at lower prices than local produce.
Those other “Singapore” issues (named after the site of a 1996 WTO summit) include investment protection (so future policies don’t hamper corporate profits), competition policy (to break local large firms up) and government procurement (to end programmes like South Africa’s affirmative action). These were removed from the WTO by African negotiators during the Cancun summit in 2003, but have re-emerged through EPA bilaterals.
According to Gyekye Tanoh of Third World Network in Accra, “The key thing for Mandelson is to gain exclusive preferential market access. Europe is gaining 80% of our markets in exchange for what is effectively just 2% of theirs.”
(...) Already, says Tanoh, “The effect of trade liberalisation on African agriculture is a disaster, with only one sector anticipated to grow: agro-processing. That’s the one that most easily invites European capital to scale up investments in joint ventures. Agricultural output would only increase by 1%, our studies show. But the big contradiction is in the export of cash crops, at a time of severe pressure on food products.”
(...) African farmers’ ability to sell on the local market will be undercut by rapid trade liberalisation that opens the way to surges of cheap, often subsidised imports. Women are most adversely affected.
(...) [delinking] As Walter Rodney observed, “It is typical of underdeveloped economies that they do not -- or are not allowed to -- concentrate on those sectors of the economy which in turn will generate growth and raise production to a new level altogether, and there are very few ties between one sector and another so that, say, agriculture and industry could react beneficially on each other.”
(...) Added Senegalese scholar Cherif Salif Sy, “Most of Africa has an electricity crisis, and yet to get economies of scale for European agro-processing companies if they locate in Dakar, they require vast amounts of electricity. And they come with the power to demand a lower price, which puts much more stress on our grid and causes the price to go up for local buyers, and the supply to be redirected.”
(...) African firms cannot compete in this sector, as they lack the brand names, skills and marketing structures that European companies enjoy. The same firms have also no access to EU support in the forms of straight subsidies, tax incentives, research and development funding or concessional credit.
(...) Rodney might agree, as he criticised “the minority in Africa which serves as the transmission line between the metropolitan capitalists and the dependencies in Africa ... The presence of a group of African sell-outs is part of the definition of underdevelopment. Any diagnosis of underdevelopment in Africa will reveal not just low per capita income and protein deficiencies, but also the gentlemen who dance in Abidjan, Accra and Kinshasa when music is played in Paris, London and New York.” (And now, with EPAs and the WTO, add Brussels and Geneva.)
According to Gyekye Tanoh of Third World Network in Accra, “The key thing for Mandelson is to gain exclusive preferential market access. Europe is gaining 80% of our markets in exchange for what is effectively just 2% of theirs.”
(...) Already, says Tanoh, “The effect of trade liberalisation on African agriculture is a disaster, with only one sector anticipated to grow: agro-processing. That’s the one that most easily invites European capital to scale up investments in joint ventures. Agricultural output would only increase by 1%, our studies show. But the big contradiction is in the export of cash crops, at a time of severe pressure on food products.”
(...) African farmers’ ability to sell on the local market will be undercut by rapid trade liberalisation that opens the way to surges of cheap, often subsidised imports. Women are most adversely affected.
(...) [delinking] As Walter Rodney observed, “It is typical of underdeveloped economies that they do not -- or are not allowed to -- concentrate on those sectors of the economy which in turn will generate growth and raise production to a new level altogether, and there are very few ties between one sector and another so that, say, agriculture and industry could react beneficially on each other.”
(...) Added Senegalese scholar Cherif Salif Sy, “Most of Africa has an electricity crisis, and yet to get economies of scale for European agro-processing companies if they locate in Dakar, they require vast amounts of electricity. And they come with the power to demand a lower price, which puts much more stress on our grid and causes the price to go up for local buyers, and the supply to be redirected.”
(...) African firms cannot compete in this sector, as they lack the brand names, skills and marketing structures that European companies enjoy. The same firms have also no access to EU support in the forms of straight subsidies, tax incentives, research and development funding or concessional credit.
(...) Rodney might agree, as he criticised “the minority in Africa which serves as the transmission line between the metropolitan capitalists and the dependencies in Africa ... The presence of a group of African sell-outs is part of the definition of underdevelopment. Any diagnosis of underdevelopment in Africa will reveal not just low per capita income and protein deficiencies, but also the gentlemen who dance in Abidjan, Accra and Kinshasa when music is played in Paris, London and New York.” (And now, with EPAs and the WTO, add Brussels and Geneva.)
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