At this point we’re all more aware of shortages relating to COVID-19 than we’d like to be. But still another shortage looms: food. Yet even as the specter of starvation emerges, farmers in the United States are plowing under their crops and dairy farmers are dumping their milk.
We are seeing deep failures in the ability of the global economy to serve the needs of real people.
Rethinking Neoliberalism
When the Financial Times suggests we need a radical rethink of the economic policies that have prevailed over the past four decades, it’s code for revisiting the very model of neoliberalism. At its core, neoliberalism trusts markets to solve problems and eschews government intervention. Neoliberals often don’t know they’re neoliberals, because for them, market forces are akin to some sort of natural law, rather than the result of policy choices. Under this approach, the “people” are meant to be passive beneficiaries of market forces; they are not meant to influence them.
The neoliberal model as applied to trade has aggressively sought to remove “politics” from influencing policy. Congress, which represents the people directly, has been induced to believe it is too irresponsible to handle trade policy, and thus delegates much of its constitutional authority over trade to the Executive Branch. The Executive Branch in turn is deeply influenced – in part by design – by multinational corporations. Somehow we have come to accept as truth the view that “the people” interfere with markets, but MNCs don’t.
Yet the isolation of trade policy from the voice of the people is one of the reasons for the backlash against globalization. If you structure your decisionmaking to avoid being influenced by “the people,” “the people” will eventually reject the system itself. See: November 2016.
But there was a world before neoliberalism. So, let’s jump in a time machine and revisit what it looked like.
An Agricultural Policy Focused on Farmers and Workers
In 1969, the Joint Economic Committee’s foreign policy subcommittee began a series of hearings on “A Foreign Economic Policy for the 1970s.” The testimony is extraordinarily rich.
Among the most thoughtful witnesses is former Kennedy (and Johnson) Agriculture Secretary Orville Freeman. Freeman’s testimony focused on the nature of the problems besetting global agricultural policy.
in any country you go to, if you just say that the income of the people in farming is one-half of that of the people in other sectors of the economy, you will be just about right . . . . {E}very country has had a very difficult time to get the income of its farmers anywhere close to the other sectors of the economy. The result has been a whole host of Government actions to try to accomplish that . . . . Such measures have triggered a great number and variety of trade restrictions . . . . But the fundamental problem in . . . agricultural trade in the world today is surpluses . . . .
In Freeman’s view, countries were engaging in beggar-thy-neighbor trade policies because they were trying to boost the income of their farmers. It’s true today: we’ve just seen the Europeans impose tariffs on corn, sorghum, and rye in response to slumping global prices. (Yes, the same Europeans who told us that imposing tariffs was like shooting yourself in the foot.)
But he did not think that laissez-faire policies would solve the problem. In considering what developing countries might do, he reflected on the U.S. experience, stating that
we ought to try to help them avoid the serious mistake we made. In the United States we have literally driven millions of people off the farm. We have piled them up in the big cities by the millions, with resulting problems that seem insuperable.
Indeed, in considering development, he noted that
agriculture has been the key and the foundation for economic progress everywhere. This fact is generally, or at least has been generally overlooked. It has in the past been easy to look at the more prosperous countries, at the fact that the number of people in agriculture is dropping, the number in industry increasing, and conclude, therefore, that the way and the path to economic development is industry, ignoring agriculture in the process . . . .
There is an argument that this development – driving people off the land into cities, increasing inequality – contributed to the very fall of Rome.
Freeman was so concerned about the welfare of farmers all over the world that he openly prioritized labor over mechanization. Efficiency was not the goal – the wellbeing of real people was. The following statement would be unthinkable today:
Mechanization should be applied selectively . . . . The potential of using mechanization to even the peaks and valleys when there are labor shortages . . . has the potential of widely expanding jobs and useful occupation for a billion people in the less developed countries that today are landless, and live under the worst kind of poverty conditions. As matters now stand they have no future . . . . Already a city like Calcutta, India, has 100,000 people on the streets with no place to live. The jobs are not there and people are piling up worldwide in slums . . . . A thoughtful, consistent, and effective policy which sees to take advantage of the major breakthrough in agriculture around the world could find labor for a tremendous number of these people. Nothing is more important to the future of the world.
Free Trade =/= Laissez Faire
Because Freeman felt that laissez-faire policies would drive farmers off the farms and into the cities, he believed that some sort of government intervention was required. And because he believed that countries would feel compelled to engage in beggar-thy-neighbor policies to make it feasible for farmers to stay on the land, he said:
What I think we must do is to sit down and go about this tough task of developing orderly marketing and orderly production in a systematic manner. I repeat it is extremely difficult to do, but it is the only answer to liberalizing trade in an effective way, in my judgment.”
In his view, the way to do that was through commodity agreements. Commodity agreements seek to manage the amount of an individual commodity produced in each country, to avoid the surpluses and price fluctuations that had plagued farmers. There is a debate about whether such agreements work; but whether commodity agreements are the answer is less important than the fact that Freeman felt some sort of coordinated government action was necessary.
Indeed, Freeman considered such agreements a prerequisite to liberalized trade:
negotiated international commodity agreements . . . . {are a} condition precedent to trade liberalization is to negotiate agreements to remove the pressure of agricultural surpluses from world trade.
Freeman therefore did not consider trade liberalization to be synonymous with laissez-faire policies — a radical difference from the way trade is perceived today. When the goal is “efficiency,” any government intervention is perceived as distortive and thus inefficient. But Freeman separates the two, noting that if the government intervenes to stabilize prices, then the barriers to trade can come down. Liberalization of trade is not driven by some theoretical efficiency or consumerist ideal; it’s driven by the need to ensure that farmers can survive – and not flood the cities. It’s about a much bigger social picture than achieving the lowest possible price.
In 1969, a former Secretary of Agriculture was advocating that governments manage the amount of supply as a way of achieving a greater social good. In 2020, we’ve arguing that Canada must dismantle its supply management system because it’s market distorting. We assume that increasing American exports will be good for American farmers. But market liberalization hasn’t solved the problem of low farm incomes– nor the longstanding, tragic issue of farmer suicide, not just in the dairy industry, and not because of trade wars. The ability of farmers to survive, let alone thrive is a structural problem. “Market forces” that have increased concentration– in the hands of MNCs – have only made things worse.
What do Family Farmers Want?
According to Time, family farmers think the government is indeed the problem. But not in the way neoliberals might think. For these farmers, the problem is that there isn’t enough government.
As the Time article suggests, family farmers seem to agree on what led to their plight. In the years after the New Deal, the United States set a price floor for farmers, essentially ensuring they received a minimum wage for the crops they produced. But the government began rolling back this policy in the 1970s, and now the global market largely determines the price they get for their crops. Agricultural experts understand the reasons for it: those reasons are structural, and designed to clash with a laissez-faire approach.
To be sure, the old policies were not a panacea. They had problems of their own. But once we accept that laissez-faire policies are not going to resolve the underlying issues, we can then accept that government intervention is appropriate – and have a conversation over the nature of that intervention.
Freeman’s Priorities
The complexity and sophistication of Freeman’s testimony is remarkable. He simultaneously:
(1) Prioritizes the welfare of farmers;
(2) Values the welfare of society as a whole;
(3) Promotes development;
(4) Advocates for the removal of tariff barriers; and
(5) Recommends negotiating commodity agreements.
Neoliberalism would reject (5) outright, and blithely assume that (4) will produce (1) through (3).
Solutions
The problems besetting agriculture don’t lend themselves to easy solutions. Surpluses are an endemic concern because of the need to sustain farmer income; plowing crops under even as there are risks of food shortages is a manifestation of an inflexible distribution system; chronic hunger and even famine are often the result of political, not economic, failures; and concentration aggravates an already-flawed system.
From a trade perspective, the struggle to give family farmers a suitable income and, in the modern era, incentives to engage in sustainable agriculture, is what makes agriculture such a contentious issue. As the EU imposes new trade barriers, we can rail against protectionism – or we can understand the underlying problem and try to solve it, precisely because we face it too.
Could it be true that if we had followed Freeman’s advice, and factored into our policies the actual well-being of family farmers and society as a whole, we’d have more rational production today? We can dismiss his approach as inefficient – or we can value its humanity.
April 29, 2020
