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