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But the 21st century has since delivered<br />
good news, with an average growth rate<br />
of 7.6 percent from 2003 to 2009, even<br />
in the shadow of the largest sovereign<br />
default in history and a political leadership<br />
capable of unpleasant little tricks<br />
such as falsifying inflation figures and<br />
nationalizing pension funds to get at<br />
peoples’ savings.<br />
The fundamental reason for Argentina’s<br />
impressive rise from the ashes<br />
has been spectacular Asian demand for<br />
commodities, most of all soy. Simply,<br />
the country is back where it was at the<br />
turn of the last century, reaping magnificent<br />
profits by supplying the industrial<br />
world with food. As the Financial Times<br />
explained in a wonderful headline,<br />
“Argentina Is to Import South Korea<br />
Cars for Peanuts.”<br />
The Profit Picture<br />
What are the implications of high food<br />
prices for the development strategies of<br />
“peripheral” countries? It is important<br />
to recognize that there is good news.<br />
Although high food prices have certainly<br />
set off riots and reduced incomes<br />
in real terms, these countries are not<br />
just consumers. A half century ago,<br />
the protest was that low food prices<br />
systematically disadvantaged peripheral<br />
countries, and more recently we have<br />
witnessed bitter and justifiable objections<br />
that Western agricultural subsidies<br />
price the developing world’s farmers out<br />
of the market. What is it to be? Is there<br />
any price for agricultural goods that is<br />
not a threat to developing countries? We<br />
need to recognize that rising prices are a<br />
sign of extra demand, which is good for<br />
producers, many of whom are or could<br />
be in developing countries.<br />
There are also, however, two important<br />
problems with growth based on<br />
agricultural products. The first and<br />
simplest is that monoculture economies<br />
are vulnerable to shocks, which<br />
may also have ruinous political consequences,<br />
as Côte d’Ivoire has shown<br />
in its fall from breadbasket to basket<br />
case, which began in the 1980s with a<br />
crash in cocoa prices. The second is the<br />
connection between agriculture and<br />
inequality. If a Jeffersonian model of<br />
yeomen farmers is viable, this need not<br />
be the case. But if economies of scale—<br />
or crude power politics—dominate, we<br />
should expect rising agricultural prices<br />
to enrich a small land-owning minority.<br />
Why should capital get the rewards and<br />
not labor? As economist Arthur Lewis<br />
long ago explained, the reserve army of<br />
labor waiting in rural areas has a marginal<br />
productivity close to zero, which<br />
helps explain why so many people<br />
have flocked to cities. The combination<br />
of unevenly distributed land with<br />
plentiful labor and high food prices<br />
will drive inequality to extremes—just<br />
the mechanism the economic historian<br />
John Coatsworth used to explain the<br />
19th-century origins of high inequality<br />
in Latin America.<br />
We have returned to the world of<br />
the late 19th century, where growing<br />
food for export to industrial countries<br />
is a highly profitable endeavor. The<br />
intervening century has been marked<br />
by disdain for agriculture and a passion<br />
for industry, with results ranging from<br />
the heroic (South Korea) to the farcical<br />
(Nigeria). But perhaps figuring out the<br />
best way to industrialize is no longer<br />
the philosopher’s stone of development<br />
studies. Were a great dissident economist<br />
like Raúl Prebisch to be reborn, he<br />
would surely champion comparative<br />
advantage and agriculture—a mix that<br />
is once again working for his homeland,<br />
Argentina. n<br />
David Fowkes is a Ph.D. candidate in the<br />
African Studies Program and an instructor<br />
of comparative politics at <strong>SAIS</strong>.<br />
2011–2012 27