Terms of Trade | It’s time to revisit Malthus, Marx and Keynes - Hindustan Times
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Terms of Trade | It’s time to revisit Malthus, Marx and Keynes

Jun 19, 2023 09:36 PM IST

Weaving in the ideas of the three is the only way to ensure food security in the world

A premature heat wave in March this year triggered a significant shortfall in India’s projected wheat output. While it is still early days, a shortfall of rains in the rice-growing eastern states has raised questions about the potential rice output this season.

The question to ask amidst all this is will the world be able to produce enough food to feed its people? (AFP)
The question to ask amidst all this is will the world be able to produce enough food to feed its people? (AFP)

Adequacy of food production and volatility in prices is hardly a question which is confined to one cropping season in India. Vegetable prices are the best example of this. Things are expected to get worse.

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The climate crisis is drastically changing rainfall patterns and increasingly making it skewed, which means that even for unchanged rainfall figures, it might not rain when the farmers need it and rain a lot when it does more bad than good. To be sure, India is not the only country in the world which is battling the adverse effects of the climate crisis on agricultural production. The unprecedented heat wave in Europe is another example of what is in store.

The question to ask amidst all this is will the world be able to produce enough food to feed its people?

To be sure, this is not the first time humankind is asking itself this question. The original doomsday proclamation on this front was issued way back in 1798 by an English cleric called Thomas Robert Malthus.

In his book, An Essay on the Principle of Population, Malthus warned that while food production could only grow in arithmetic proportion (1, 2, 3, 4, 5…), the population was growing in geometric proportion (1, 2, 4, 8, 16…) and therefore the world had a crisis on its hands. Malthus used this argument to oppose any kind of support to the poor because that would only worsen the overpopulation problem. In other words, he saw this balance as being maintained by the poor just perishing.

Malthus of course, has been proved wrong in hindsight. In fact, Malthus’s theory was called out even by his contemporaries.

Among the most influential and powerful critiques of his argument came from Karl Marx and Fredrick Engels who called out Malthus on mainly two points.

First was Malthus’s refusal to account for scientific progress in augmenting food production, which has played a huge role in making sure that it kept pace with the growing food requirements of the world. For example, the United States Department of Agriculture estimates that “total farm production nearly tripled between 1948 and 2017” and this feat was achieved “even as land and labour used in farming declined” as “innovations in animal and crop genetics, chemicals, equipment and farm organization have enabled continuing growth in farm output”.

The second point on which Marx and Engels criticised Malthus was what they described as confusing means of employment with means of subsistence.

“Too little is produced, that is the cause of the whole thing (disharmony between population growth and food production). But why is too little produced? Not because the limits of production – even today and with present-day means – are exhausted. No, but because the limits of production are determined not by the hungry bellies but by the number of purses able to buy and to pay”, Engels wrote in a letter to German philosopher Friedrich Albert Lange in 1865.

This is a principle which continues to remain relevant to date. For example, if India were to disband its food security programme overnight, both the demand for rice and wheat and therefore their production is likely to take a huge hit. The fact that the government was providing free food grain to more than 80 crore Indians during the pandemic only underlines the extent of economic vulnerability even when it comes to affording basic food.

While both these principles underlined by Marx and Engels have stood the test of history, there is good reason to believe that they could be re-entering a phase of conflict with the Malthusian principles in a slightly different way.

The growing use of chemical and energy inputs in agriculture has definitely increased production a great deal, but the side effects are beginning to show in terms of chemical contamination of natural ecosystems and rising carbon emissions contributing to global warming. In fact, the signs are already visible that modern farming as we know it might have to make changes to come to terms with these side effects. For example, farmers in the Netherlands have been protesting after the government has ordered the closure of farms to meet its emission reduction commitments.

Similarly, increasing incomes and purchasing powers have led to a huge increase in the demand for meat in food baskets. There is clear scientific evidence to show that the carbon footprint of meat-based food is significantly greater than what it would be if the same population were drawing its nutritional requirements from vegetarian diets — even though the meat-climate debate is still not as relevant in India as it for the rest of the world, as was argued by this author in an earlier piece.

To be sure, the future of food security could face greater jeopardy from humans than climate-induced events. This is due to the role speculators play in driving prices in commodity markets.

The Economist’s May 21-27 issue ran a cover story titled The coming food catastrophe. “Wheat prices, up 53% since the start of the year, jumped a further 6% on May 16th, after India said it would suspend exports because of an alarming heatwave…the high cost of staple foods has already raised the number of people who cannot be sure of getting enough to eat by 440 million to 1.6 billion…if, as is likely, the war drags on and supplies from Russia and Ukraine are limited, hundreds of millions more people could fall into poverty”, the lead editorial said.

However, there is reason to believe that change in food prices has got more to do with things than just demand-supply disruptions. A June 7 New York Times article drew attention to this point. “In a provocative new book, “Price Wars,” the anthropologist and filmmaker Rupert Russell traces the story through the commodity markets, noting, among other things, that at no point during those years was there anything like a real calorie shortfall — as Barrett says, in fact, global food production grew, year over year, every single year. But there were at several points food price crises — 2008, 2011 and now over the last several years — each the result, he suggests, of a rise in financial speculation in the commodity markets”, it said.

Other economists have argued that the power of speculative finance to add to volatilities in commodity markets has increased due to policy changes which have made such speculation easier and more deregulated.

“Speculators active on the Chicago Mercantile Exchange and New York Mercantile Exchange have the Clinton administration to thank for the gift of the Commodities Futures Modernisation Act of 2000. That ‘odious’ legislation to deregulate commodity markets was based on a report co-authored by the “Subprime Three”: Alan Greenspan, Larry Summers and Robert Rubin. It was a consequence of their crushing defeat of Brooksley Born, then chairman of the Commodities Futures Trading Commission”, British economist Ann Pettifor wrote in her newsletter on July 17.

While Summers and Greenspan “persuaded lawmakers that financialisation of the commodities market would, in fact, make the market more ‘efficient’”, other economists do not agree with such views.

“People who believe that financial markets are perfect and efficient will readily say that price is determined by stories about the future, but the difference is that they think of these stories as rational and optimal forecasts of the future. The Efficient Market Hypothesis says that the stock market or other speculative markets represent a vote of all the smartest people in the world about what the future will be. The other view of speculative markets that I’ve been pushing is a narrative view. Yes, the markets do respond to stories, but it’s not the optimal forecast. It’s the popular story, the one that is tellable and contagious that gets invited into market prices . . . The strength of these narratives does not correspond to scientific reality. It represents feedback and contagion of stories”, Nobel prize-winning economist Robert Shiller has argued.

As is obvious, views on speculators’ role in driving commodity prices are formed in an environment which is far from benign. Commodity traders like all financial market players hold tremendous wealth (and the clout which comes with it). Every episode of sudden volatility in commodity markets, notwithstanding the suffering it causes to the common people, also creates a big income opportunity for the speculators who manage to get their bets right. Because policy deregulation facilitates such volatility and income generation, there is a massive advocacy effort towards such policies, which, as is expected, is promoted under the excuse of efficiency gains.

With the climate crisis expected to add to crop production uncertainties, speculation-induced price volatility is likely to increase further. This will only make the task of finding and disseminating economically viable technological fixes to the problem more difficult. A given technological mix for producing wheat can be viable at a given price but cease to be so if input prices rise to double the normal levels.

It is on this note that one cannot but remember John Maynard Keynes’s misplaced optimism about the ability of capitalism to fix to own vices. Keynes, arguably the most admired economist of the 20th century, was confident that the rentier-class in capitalism – modern-day commodity traders and other speculators can be put in this category – would eventually lose its clout.

“I see, therefore, the rentier aspect of capitalism as a transitional phase which will disappear when it has done its work. And with the disappearance of its rentier aspect much else in it besides will suffer a sea-change. It will be, moreover, a great advantage of the order of events which I am advocating, that the euthanasia of the rentier, of the functionless investor, will be nothing sudden, merely a gradual but prolonged continuance of what we have seen recently in Great Britain, and will need no revolution”, Keynes wrote in the concluding chapter of his 1935 classic The General Theory of Employment, Interest and Money.

While the world had a brief honeymoon with Keynesian-style demand management, finance capital had its revenge when neoliberalism gained prominence across the world from the 1970s onwards. The power of the rentier class has only increased since then.

For the world to have a food secure future, it will have to adopt a policy which has a mix of urgency inspired by Malthusian style pessimism, commitment to science and equity which draws from the Marxian criticism of Malthus, and a political economy approach which borrows from Keynes – arguably the greatest intellectual defendant of free capitalism as we know it – to disarm capitalism’s speculative beasts from creating more chaos than the commodity markets can handle.

Every Friday, HT’s data and political economy editor, Roshan Kishore, combines his commitment to data and passion for qualitative analysis in a column for HT Premium, Terms of Trade. With a focus on one big number and one big issue, he will go behind the headlines to ask a question and address political economy issues and social puzzles facing contemporary India.

The views expressed are personal

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  • ABOUT THE AUTHOR
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    Roshan Kishore is the Data and Political Economy Editor at Hindustan Times. His weekly column for HT Premium Terms of Trade appears every Friday.

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