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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

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