Will the Free Market End Hunger?

Food First

Text extracted from

World Hunger 12 Myths

by Lappe, Collins, and Rosset, 1998

Free Market

• Free Market responds to money not people

• As poor get poorer and are pushed from land– they have even less impact

on markets

• Their needs for food do not register

• The market responds to the needs of the wealthy – to produce luxury goods

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The Market• Is blind to social and

environmental costs• Example: U.S. Ag export boom

– Loss of small farmers, rural communities

– Soil erosion– Aquifer depletion– Ground water contamination– Fossil Fuel waste, global

warming

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Concentration of Wealth

• The Market leads to a concentration of economic power

• Those with greater economic power gobble up those with less

• Food flows from the hungry to the well fed

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Inequity

Reward for Hard Work?• Theory:

– Market rewards hard work

• Reality:– Market requires hard work and

production

– Market rewards those who have wealth

– Wealthy can withstand market swings

– Wealthy have better access to credit• better risk

– Wealthy can invest in more land to offset low grain prices

Donald Trump

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Distribution of Purchasing Power

• “The more widely dispersed purchasing power is,

• the more the market will respond to actual human preferences and needs

• and the more power the market will have to end hunger”– Food First

Mexico

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Structural Adjustment Loans• Loans given in 1980s-90s

– International Monetary Fund (IMF)– World Bank

• Condition of loans = Structural Adjustment Rules – imposed on governments

• Goal: make developing countries – Efficient– competitive

• Involved– deregulation, – privatization of state institutions – removal of trade barriers

IMF loans

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Effect of Structural Adjustment

• Benefits of institutions and resources transferred from public to private business

• Gap between rich and poor widened as economic power concentrated

• Poverty and hunger escalated• Free market increased import

of luxury goods• Cheap imported grain drove

local farmers out of business

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Costa Rica• After a decade of

Structural Adjustment:– Trade deficit rose 100%

– 76,800 cars entered country in 3 years

– 42,000 farmers growing corn, beans and rice staples went out of business

Costa Rica Market

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Need Government and Market

• Government and Market must work together to end hunger

• Market by itself will lead to concentration of wealth– and increased hunger

• Government by itself without market leads to – inefficiency, – lack of motivation– low production

• Example: Soviet Russia

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Role for Government

• Government policies can help to spread the wealth and means of wealth – so that the market can serve

more people

• Government can help insure that people have the means to support themselves – and thus eat

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