By Raymond Lotta
State of Nature (Winter 2006)
I was reading the conservative financial journal The Economist. [1] They were reporting on the acute and widespread hunger in Niger (pronounced nai-jer), and a phrase popped off the page: "the market respects demand, not need." What they were saying was that famine is stalking Niger not because there is too little food. No. The problem, and this was freely admitted in the article, is that the poor majority of people cannot afford to buy the grain they need. And that grain is available! In short, market forces are responsible for the critical levels of hunger now affecting 3.6 million people in Niger.
So here we have editors of The Economist defending the wonders of the market but coming up short in offering a solution to the horrific situation affecting millions in Niger. It's one of those moments when truth leaks out: "the market respects demand, not need."
Of course, this is elementary to Marxism's critique of capitalism. The market responds to profitability and monetary demand, not social need-whether we are talking about housing, health care, or any of life's necessities in capitalist society.
Background to the Food Crisis
Niger is a former French colony in the Sahara. It is landlocked and heavily dependent on agriculture fed by rain. It has a population of 12 million people. It is one of the poorest countries in the world, with one of the most fragile economies in the world. It has the highest infant mortality in the world; fewer than 20 percent of girls attend schools; and it continues to spend more on debt servicing than on education and health care combined. Niger is the world's third-largest uranium producer - but most of the revenues from this industry go to the large Western transnational corporations.
Niger suffered major natural calamities this past year. The seasonal rains ended early. Locusts besieged croplands. But Niger's production of millet and sorghum and other cereals that people count on for food fell by only 11 percent. In fact, production of these cereals was greater in 2004 than in the harvest of 2000-2001, when there was no food emergency.
So what is the difference this time? Why are people going without food? Again, it is not because food is unavailable, but because it is unaffordable. A poor harvest that caused suffering became a hunger crisis. Essentially, the hunger crisis revolves around two intertwined factors: market forces resulting in high retail prices and lack of purchasing power, and "free-market" policies imposed on Niger by the World Bank and the International Monetary Fund.
High Retail Prices and Lack of Purchasing Power
The people most affected by this food crisis are nomadic herders. They raise goats and other livestock, moving from one locale to another. They sell livestock and buy food with what they earn.
The problem is that the terms of trade have turned against them. The price of food has gone up some 75 percent this year over its average during the last five years, while the price for cattle has plummeted.
Why has the price of the millet and sorghum gone up? Part of the reason is that other markets, in neighboring Nigeria for instance, have more purchasing power. Food is being bought up in the region, and this is having the effect of driving up prices. Wealthy commercial traders based in the cities are selling grain to the highest bidders - in this case to other African countries.
But what about declining livestock prices? Part of the reason livestock prices fell is that pastures have been damaged and herds this year were not as plump as last year's. But a more important factor is the impact of the higher food prices. The rise in prices for cereals forced herdspeople to sell more of their livestock. But putting more livestock on the market had the effect of driving livestock prices down, which has forced people to sell still more of their herds to gain the necessary income to buy food.
By June, the sale of one goat bought half as much millet as it had six months earlier. In some areas, it now takes two to three animals to buy the same quantity of food that previously cost just one. And many people are subsisting on leaves because they cannot afford to buy millet but do not want to sell their remaining herds.
The IMF and World Bank's Program for Starvation
This is not the full explanation for high retail prices and lack of purchasing power. We have to dig deeper. Actually, we have to look outward to the role of the World Bank and the International Monetary Fund (IMF). These two Western-dominated financial institutions have a stranglehold on Niger's economy, along with many other Third World economies. Subsistence farming and local production of staple grains the poor majority depend on do not yield much profit. And so they do not receive Western financial backing.
Niger has foreign debt to pay back. Its pro-Western government has been locked into a dependence on the rich countries for aid and assistance. And under pressure from the IMF, Niger's government has agreed to a series of "reforms." These "reforms" are designed to create a more "market-oriented" economy. There is blackmail at work here. Niger cannot qualify for debt reduction unless it carries out these "reforms." Let's look at some of the "free-market" measures dictated by the World Bank and IMF and how they are contributing to the hunger crisis. [2]
REFORM: Eliminating government controls over gasoline prices. Imposing a tax on fuel. The gasoline tax is a main source of revenue to pay back the country's foreign debt.
EFFECT: Higher gas prices have increased the cost of transporting goods, including food. This has contributed to higher food prices.
REFORM: Promotion of commercial livestock exports in order to stimulate earnings to repay debt.
EFFECT: Export promotion has drained support away from local livestock production.
REFORM: Privatization of social and medical services.
EFFECT: Already meager health care in the cities is now even more beyond people's reach. Veterinary services have been privatized. This has contributed to loss of herds, since poor herders cannot afford these services.
REFORM: Privatization of irrigation systems. Allowing water systems to be purchased raises revenues to repay debt and allows private investors to turn a precious resource in a semi-arid country into a commodity to be bought and sold.
EFFECT: Small-scale agriculture is damaged. This is so because small producers cannot afford these services and because irrigation will increasingly serve commercial interests. The privatization of water was a major cause of famine in Somalia.
REFORM: Early in 2005, the government was required to impose a 19 percent tax on flour, milk, and sugar as a condition for IMF budget support. This tax was applied to basic grains as well.
EFFECT: Protesters carrying signs that read "We Are Hungry" marched in the streets of Niamey, the capital of Niger. The government backed off on the taxes.
At the recent G-8 conference of the rich countries, it was announced that a new era of social justice was before us. [3] Here we see the real agenda.
Conclusion
The market and "free market" policies are literally starving people to death in Niger. A rational economic system would operate very differently. It would ensure that production was geared to meeting social need. It would regulate prices so that they were in line with these social priorities. That's what socialism makes possible. But capitalism does not and cannot do that. Why? Because "the market respects demand, not need."
Raymond Lotta is a Maoist political economist. He has written extensively about trends in the global economy, conditions in the Third World, and the experience of socialist revolution in the 20th century. He is a contributing writer to Revolution newspaper. His books include America in Decline and Maoist Economics and the Revolutionary Road to Communism.
Endnotes
1. "Destitution not Dearth," The Economist, August 18, 2005.
2. Documents relating to the IMF and World Bank programs for Niger are online at imf.org and worldbank.org.
3. For a critique of reformist poverty reduction programs see R. Lotta, 'G8 and Their System: They ARE the Problem, But they ARE NOT the Solution', Revolution #008, July 17, 2005 (at revcom.us).
http://www.stateofnature.org/hungerCrisis.html