Saturday, January 18, 2014

Champagne is a creation of London City

A few years ago, I spent a few weeks in Samoa, a paradise Pacific island country. Some things strike you in Samoa. The village and the extended family (still) have strong positions in Samoa, land is mostly still communal (some 90 percent) and leaders of the extended families, the mathai, assign land to the members of the family. Soils are mostly rich. In these soils Samoans have been growing coconuts, breadfruit, taro and bananas as well as a number of fruits. Traditionally, pigs played a big role. Later cattle, cocoa and coffee were introduced. Many products are not sold in the market but are distributed within then families and villages; the meat in particular is mostly consumed at big parties. Farming is still not integrated in the market economy. Like was the case in many places in Europe only hundred years ago.

Commercialization of farming means bringing more farmers into a mainly cash-based and market based economy, both on the input and output side. It means that farmers shall sell products in a market situation, but it also means that farmers use more inputs, both hard and soft inputs, ranging from credits, fertilizers, irrigation to advisory service and business planning. In this way they can increase productivity and their incomes –and outcompete other farmers. But the price is increased risk. But not only that. When traditional farming systems are brought into the market economy, the change is not only technical or economic and the effects are not only for the household. In effect the whole social context is disrupted. When farms are embedded in the local context there is trust and mutual dependence between them and the others. This was certainly the case for when farming was brought into the market economy in Europe and the same pattern is seen everywhere. Of course this disruption was not only a negative thing, it was also a pre-condition from breaking down crippling traditions, prejudice and discrimination.

When I grow food for myself and my family, I use good seeds, I avoid contamination of the produce, I take well care of the nature resources that are needed for the production, I take care of the soil. I process it in ways that produce good and nutritious food. There are incentives for me to do things right and in an efficient way. I might still overuse nature resources, such as ground water or wild bio-diversity, either as a result of ignorance or because I think the negative effects are so far away in the future and that is meaningless to try to mitigate those now. If I learn what harm I cause, the chance is high I will correct my behavior.

How does the (capitalist) market model compare with this? Does the market model produce good food? Does it produce quality? Does it promote land stewardship? Well, the market model certainly has produced cheap food, but not necessarily good food. True, the market can also supply you with exquisite organic foods which are fairly traded with small scale producers. The proponents of the free market as the best way to organize food production will argue that this is exactly the beauty of the free market. If people are interested enough they will put their money on such high quality items.

But this reasoning misses a whole lot of information. First, the externalization of costs in the market system still favors those actors in the food chain that can let the bill be paid by someone else, whether it is nature, coming generations or workers in distant countries. Second, the high quality life style of the rich is built on the backs of the poor. It is lousy work conditions in farms and restaurants that provide the rich with their excellent food. The waiter and dishwashers in the Guide Michelin and other fine dining restaurants can’t eat same as their patrons, far from it. In the same way as the attendant at the delicatessen desk in the supermarket can’t afford to eat any of the stuff the well heeled clients buy. Inequality is a precondition for the lifestyle of those that can enjoy exquisite food via the market. Champagne is created by Wall Street and London city. 

(Raw material to my coming book Global Eating Disorder - the Cost of Cheap Food)


  1. I live in rural Hawaii. Even though the vast majority of the food eaten by my family and my neighbor's families is procured through the market economy, large amounts of fruits and vegetables are produced in family gardens and exchanged with neighbors. Should the market economy fail to deliver food or the means to purchase it, I can imagine that it would be possible for our community to convert to nearly 100% local food production. The conversion process would be difficult, frantic and fear inducing, but doable.

    Now imagine the prospects for the residents of London or any other large city after a failure of the market economy to deliver food or the means to purchase food. Will food be brought to them by government entities and rationed out? Will they all move to the country, live under tarps and try to learn how to grow their own food? I believe that these are important questions the need to be answered soon. Once the market fails, it may be too late to cope.

  2. Hi Joe, I agree. I don't envision any dramatic (speedy) collapse of the oil-driven market economy though, even though I do think it will "collapse" in some sense. In times of crisis government or the people in some other way inevitably will take control over food supplies. Even extremely market liberal Britain took firm control over key food supplies during World War I. When the war started they were actually even more food import dependent than they are today, 60% of the food was imported. We saw with the food price hike 2008 that several countries imposed export bans and made bilateral food deals with other countries, as they didn't trust the market. I think we will see more of this in the future, for the better and the worse....

  3. As regards to big cities. I am quite convinced that the megacities will shrink once again. For a combination of economic and ecological reasons. Detroit already shrunk 60%. This will be a hard transformation and the depreciation of assets will be without precedence when people realize that, after all, inner city lands are not very valuable when centralized powers evaporate. In the end, while I think the underlying drivers will be ecological, I expect it to be the financial system that will "collapse" first, and its collapse will cascade through the system until we will have some kind of new plateus. Kind of. I am more in the "not so rapid descent" camp than in the "fast collapse" camp...

    1. Aloha Gunnar,

      My fear is also financial collapse. When overwhelming difficulties arise with the shrinking of the market economy, confidence in financial instruments could disappear overnight. I Therefore think that the tendency will be for rapid financial collapse.

      But surely our leaders in government know that even though the market may vaporize, the physical means of production will remain. Without the market, it would take a command economy to make it function on even a rudimentary level, but that would be the best hope for city dwellers. I do hope those command structure plans are in place.

      However fast or slow the financially driven market economy collapses, inexorable pressure will mount on all of the aspects of the "real" economy that depend on physical resources. Hard times are coming; how hard and how fast are probably impossible to know, but I am planning on a worst case scenario.