Food Crisis - The Failure of Capitalist Economics and Global Institutions

The spate of food riots seen across the developing world in recent months lays bare the fragility of globalisation and is an indictment on the World Bank and IMF and their dogmatic free market liberalisation agenda.

Several near term factors have combined to propel the price of grains including increasing food demand in industrialising China and Indian, droughts in Australia and Central Europe and perhaps more insidiously greedy market speculation as traders shift into food commodities and away from beleaguered equities due to the effects of the credit crunch in the West. The increasing use of ever greater amounts of vital land to grow bio-fuels to power apparently more environmentally friendly cars in the West has also contributed to tightening supplies.

World Bank and the IMF chiefs have been quick to absolve responsibility citing many of the above issues as the causes for the food crises. The doubling in grain prices has made vital staple foods inaccessible for the billions living in poverty in the developing world. Furthermore it has plunged millions more into poverty - living on less than a dollar a day, as defined by international economists.

Dominique Strauss-Kahn, IMF managing director, and Robert Zoellick, World Bank president, conveniently did not attribute blame for the troubles on the policies of their corruption ridden and failing institutions, however. The World Bank and the IMF have presided over the development agenda of developing countries for decades yet poverty levels in most "Third World" countries have worsened appreciatively.

This is evidenced by rising numbers in poverty in Africa, South Asia, Middle East and Latin America as recorded in the recently published World Development Report, 2008. Given the food crisis it is apt that the 2008 report focused on using agriculture to aid economic development. However, the report peddled the time-old agenda the World Bank and IMF have pushed for decades: poor economies need to reduce tariffs and taxes on agricultural imports and exports and to liberalise domestic markets. It did not matter to World Bank and IMF economists that these same policies have been unsuccessfully pursued by developing countries as part of structural adjustment programmes for decades. It did not matter to them that past crises in developing countries have resulted from over exposure to global commodities price crashes. It did not matter that rich North America and Western Europe heavily protect their agricultural sectors (note the recent rise in US farm subsides and the EU's continued support for its farmers using the Common Agricultural Policy). It also did not matter that the main direct beneficiaries of liberalisation will be net exporters of grain in the US (which accounts for up to 30% of world wheat exports) and Europe and the western multinational agrochemical corporations like Monsanto and Dupont.

Egypt, where people have been killed in several riots, has pursued the World Bank and IMF agenda in detail and has consequently increased dependency on wheat imports from 44% of total consumption in the 1960s to over 50% according to recently available estimates. Self-sufficiency in food supplies has been spurned even though Egypt has one of the highest per capita wheat consumption levels in the world and the majority of its poor households spend between 70-80% of income on food.

Egyptian economists bred of a diet of IMF and World Bank policies have argued that self-sufficiency is unimportant since access to imports will ensure supplies. However, access is meaningless if the price of vital food supplies is beyond the means of ordinary citizens. What responsible government would leave the feeding its people to be met by imports where false incentives can divert production to bio fuels or to feeding cattle or to price speculation from decedent traders siting in western capitals that see food commodity price inflation as a ‘nice earner'. Food supplies, where self-sufficiency is vital, are not like video recorders or cars where demand if not met by imports will cause a national emergency.

The roots of the current food crisis lie with the failed policies of the World Bank and IMF. Policies designed in Washington and London yet not implemented in the US or Europe - both of whom pursue a policy of food security, and therefore need open overseas markets to sell their overproduction. These policies bring the misery of harsh capitalism to the world's most vulnerable who have no welfare state to fall back on.

The ultimate blame though lies with traitorous degenerate rulers in the Muslim world, like Mubarak, who implement these policies wholesale and oblivious to the harm and despair that is being inflected on the weakest in society - those that a responsible state should be most concerned about. These rulers are the key instruments of the Western governments to guarantee their interests through liberalisation of markets and the suppression of the desire for the end of Western dominance and the reimplementation of Islam. The Islamic Economic system implemented by the Khilafah (Caliphate), with Egypt as a potential province (wilayah), has a number of economic Shariah instruments to address the current crisis. It could use land reforms, in the shape of redistribution of unutilised land, to create a vibrant and competitive domestic agricultural sector with investment from the state in developing and upgrading agricultural infrastructure including research and development in new seed technologies. Egyptian wheat consumption levels justify production at twice current levels. It is interesting to note that in the 1950s Korea and Taiwan (two thriving former ‘tiger' economies) built their growth paths on land reforms and rural investment that created an improvement income distribution from agricultural growth.