Economy

World food crisis

www.socialistworld.net, 23/04/2008
website of the committee for a workers' international, CWI

Around the world, strikes, demonstrations and protests have erupted as millions upon millions of workers, peasants and poor face the horror of rapidly rising food prices.

Robert Bechert, CWI, London

Haiti, Cameroon, Egypt, Indonesia are just some of the countries that have seen angry mass protests.

The price hikes are shocking, but only give a glimpse of what of what is happening, as millions struggle to feed their families. Numerous media outlets keep reporting what is happening: the enormous jump in rice, up 75% in two months, and wheat, up 130% over the last year, and how the world price of rice rose 10% in one day.

The human results are clear; millions forced to cut back on what they eat and millions starting to go hungry. In El Salvador, the poor are eating half as much food as they did a year ago. Already the World Bank has estimated that an extra 100 million people have been pushed into "extreme poverty". Even in the ’developed’ countries, prices are jumping. In Britain, a survey of 24 basic food items found that their prices had increased 15% in a year.

The impact of this crisis has shocked even the tops of capitalist institutions like the International Monetary Fund and World Bank, mainly because they fear the consequences. World Bank president Zoellick recently said that 33 countries face "social unrest" because of rising food prices. But "unrest" is a gross understatement; food shortages and inflation can provoke revolutions.

But it would be a mistake for working people to look to these institutions, or philanthropists, for a way out. Sure, they may organise some emergency supplies but it is their system, the market economy, which produced the crisis.

Demands for action are growing, but what is the cause of this crisis?

Clearly a big factor in this crisis is the chaos of the "market" and the speculation which goes with it. Far from being the "hidden hand" that guides human progress, the market mechanism is now immediately worsening food price inflation. As the worldwide economic crisis spreading out from the USA has produced a severe collapse in current possibilities for financial speculation, the capitalist speculators have switched to food and raw materials. Still awash with funds from the super-profits made during the last boom, they have started buying up food, knowing that people need to eat to survive and they think, therefore, they have a good chance of making more money by gambling on food and other raw material prices. Since the start of this year, the number of daily financial deals made on the Chicago CME Group market has risen by 20%. Ethiopia has tried to act against such speculation by banning deals in "futures", which increasingly have become bets on price movements in food and raw materials. But action by a single country, particularly in the neo-colonial world, can only have a very limited impact.

However, speculation is not the only cause of the jump in food prices. Some of the other causes, like growing demand for food, climate change and demand for bio-fuels, have been widely reported. Lester Brown, director of the Earth Policy Institute in Washington, said, in early April, that just the land turned over to bio-fuels in the US, during the last two years, would have been able to feed 250 million people their average grain needs. The right wing weekly magazine, the Economist, has involuntarily reported another factor in the fast rising food prices - the neo-liberal offensive since the early 1980s.

The Economist explained that yields of new crops tend to naturally decline and it is only by producing new varieties that yields can be maintained or improved. However "most agricultural research is financed by governments. In the 1980s governments started to reduce ... spending ... they preferred to involve the private sector. But many of the private firms brought in to replace state researchers turned out to be rent-seeking monopolists ... Spending on farming as a share of total public spending in developing countries fell by half between 1980 and 2004. This decline has had a slow, inevitable impact ...In developing countries between the 1960s and 1980s, yields of the main cereal crops increased by 3% to 6% a year. Now annual growth is down to 1% to 2%, below the increase in demand. ’We’re paying the price for 15 years of neglect,’ says Bob Zeigler of the International Rice Research Institute in the Philippines" (April 19, 2008).

Really, it is not "neglect" but neo-liberal dogma and search for new areas of profit that has added to this food crisis.

What can be done?

In many countries, there are calls for controls on food prices, introduction or defence of subsidised food prices and demands for higher wages. Trade unions should demand that wages increase in line with inflation, there should be a sliding scale of wages linked to a price index that genuinely reflects rises in the real cost of living. However, such measures, while welcome, would only provide a temporary relief.

Immediately control of the food supply has to be taken out of the hands of the speculators, international traders and big food companies. The workers’ movement must demand these institutions are nationalised to allow for plans to be drawn up for the distribution of food, at reasonable prices, to all.

But such nationalisation would have to be democratically controlled or else it could be used by governments to enrich themselves and their allies. In many countries, controls on food exports or imports have been major sources of corruption or profiteering. Already Argentina, India and Vietnam, have either banned some food exports or placed export taxes upon them. But such measures do not automatically lower the cost of food and can drive small farmers into rebellion. Only workers’ control and management, combined with open accounting, could ensure that food supplies are distributed equitably and without a black market developing. Small farmers and retailers, including market traders, have to be given secure incomes and a place in food distribution. If rationing has to be imposed then it has to be under the democratic control of working people, not left in the hands of corrupt governments serving elites.

Action must be taken to boost the supply of food. The companies producing seeds, fertilisers etc also need to be nationalised under democratic control. Then new crops can be developed to meet needs rather than simply to make profits, and fertilisers can be made affordable. Banks, many of which are currently surviving only because of state support, should also be nationalised and their resources used to supply small farmers with cheap credits. The big agricultural producers should also be nationalised. On this basis, it would be possible to start to plan the increase in food production, helped by irrigation and other projects, to meet need rather than the market.

To "rescue our planet capitalism must be removed"

Fundamentally this means challenging the capitalist system itself. The financial crisis has seen bankers running to governments demanding financial aid and help. The neo-liberal argument that the market should be left to function on its own has collapsed, stabbed through the heart by the capitalists themselves.

However, the state is not neutral. The state in capitalist countries, at the end of the day, acts to protect the interests of the capitalists, as a whole. While welcome and a demonstration of the limits of capitalism, nationalisation of individual companies or even sectors would not, on its own, mark a break with capitalism. Public ownership, with democratic planning of the key economic sectors, is the real alternative to the market system that produces regular convulsions.

Already in a number of countries it has been workers’ organisations, like trade unions, that have been forced to take the lead in defending living standards. The workers’ movement has the responsibility to act to prevent hunger and to offer an alternative. Part of this will be showing that there is a worldwide alternative to the brutalities of capitalist globalisation; namely the possibility of working people internationally owning and deciding the use of the world’s resources.

However, it is not just a question of popularising the socialist alternative; it is an issue of what is done. This week, Bolivian President Morales told a United Nations conference, in New York, that in order to "rescue our planet capitalism must be removed". This is absolutely correct! But such verbal calls have to lead to concrete conclusions or they will just be hot air. If Morales is serious, his government can set an example in mobilising the Bolivian workers and poor to break the power of capitalism, and show, in practice, what can be done, and appeal to workers and the poor in the rest of the world to follow the same course.

The brutal impact of the food price rises will, as the World Bank fears, open up a new period of revolutionary struggle and new possibilities to create the mass socialist force that can end the miseries of capitalism, thereby freeing humanity from the fear of hunger and poverty.