I love UMass economics professor emeritus Richard Wolff’s podcasts because they challenge me to think in ways that I normally wouldn’t. Consider these snippets from his broadcast of August 11, temporarily available for download at WBAI.org. The first quote begins at 4:26 into the broadcast:
[First, the story from the town of Girona in the north of Spain.] They are in the news this week for having decided to padlock the bins that the city has all around supermarkets. Those are the bins into which supermarkets are required by law to put all the food that has passed the date printed on it by which it must be sold. And the reasons the bins have been padlocked, the story explains, is because there are now fights among the many, many people who can only eat by raiding those bins on a regular basis and taking that food, which may not be healthy because it is older than it should be to be consumed by human beings, but it is a sign of what is going on in Spain, and in many other countries, that are suffering from the austerity programs that are being used as a way of shifting the cost of this crisis onto the mass of people. So the town there has padlocked the bins and urged the people who now can’t get the food anymore to go to food distribution centers, which other stores in Spain indicate can not begin to handle the demand for their services.
Emphasis added. Now, I’m no economics professor, but I have a hunch that I know what the problem is, here. I think it has less to with austerity, and more to do with the Girona government requiring by law that private business throw away food that people want so badly that they fight for it. This food should be in the stores, available to purchase at a discount, and protected by store security, should it not?
Now, Wolff doesn’t actually express an opinion as to whether the government is acting in the public interest when it forces stores to throw away food—although he seems tacitly to approve of this course of action by describing the food in question as “older than it should be to be consumed by human beings.” If one asked those who hold fight club in supermarket parking lots whether that food is fit for human consumption, I wager one would get a different answer.
In contrast, Wolff specifically identifies fiscal responsibility on the part of government as a cause of suffering. He also fingers food speculators as part culprits of rising food prices. In the previous week’s show of August 4, he explains the evils of speculation in the most curious words, especially as they come from one who touts himself as a professor of economics. The pertinent part begins at 16:38, and the quoted passage begins at 17:19:
What is interesting is that the research now shows that the booming [food] prices of 2008 and ’09, and again now, have nothing to do with supply and demand. There is no relationship between rising prices and a loss of supply. Keep that in mind when you read all these report about droughts in the Midwest, and so on. Climates come and go, and scientists have done the work to see if whether the rise in prices and falls in prices are correlated with supply and demand. They are not. What then is the explanation?
As finance finds it harder and harder to make money in manufacturing and in service industries—as a depressed economy keeps being depressed—bankers and other financial speculators have focused increasingly in on what is called commodities: basic things like meat and grain, wheat and corn and rice, because they can make money trading on the ups and downs in the price. That’s what’s shaping prices, and it’s again a sign that when you let private markets looking for profit invade basically needed products of the human community, like food, you can be in for massive injustice, waste, inefficiency and the cruelty of millions of unnecessarily hungry people. Because the supply is there, and the demand is not outstripping the supply. We have to prevent or control private capitalist speculation in the ups and downs of prices to deal with this problem, which is, of course, what a humane society would have done long ago.
… … … Riiiight.
So…um. Well, those who hear an econ professor speak so disparagingly of such a fundamental economic law might at first be liable to discard their old Econ 101 textbooks by bonfire and embrace instead Richard Wolff’s magical new economics of anti-capitalism, where there is “no relationship” between supply and demand on one hand and price on the other. I would advise against this.
I submit that Wolff’s reasoning fails because he applies an idiosyncratic definition of the word demand. In Wolff’s economics, only demand for purpose of immediate consumption is demand. Demand for other purposes, such a speculation, is not demand, in Wolff’s view. Rather, it is simply the diversion of food into inaccessible economic doldrums by people whose purposes Wolff wants us to believe are illegitimate . Well, no, Richard. I don’t believe their purposes are illegitimate. Demand for food is demand for food, regardless of the use to which the food is put.
Consider the sensible practice of pantry-building: Suppose I saved up a lot of my money and bought enough food not just for the week, but enough to last me the next two months. Is that really an awful thing to do? Does that sort of behavior need to be “prevented and controlled”? Now, suppose a tornado wipes out half of the town, including the supermarket, but spares my pantry. My stockpile can now potentially serve a great benefit not only to my self, but also to my neighbors. Now, suppose I didn’t just give the food away, but rather asked to receive something I needed in return for it, such as either tools, or gasoline. Would that really be a terrible thing to ask? Is it really so bad that I profit from my preparation? And what about my good neighbors who have stockpiled other useful things, such as tools and gasoline? Do they not also deserve to profit from their preparation?
Sure, one could object that my pantry-building increases the price of food for now, but the good effects of my pantry-building are twofold: First, higher prices encourage the production of more food, thereby increasing future supply. Second, my pantry serves to smooth out shocks in the supply of food caused by natural disasters, bad climates and other unforeseen circumstances.
What is speculation but large-scale, systematic pantry-building? Speculators buy the food now. This increases demand (yes, demand) for food, and thereby encourages the production of more food. When that price of that food falls relative to life’s other necessities, speculators release that food once again into the market where others may benefit from it at that lower price. Speculation is almost synonymous with preparation. See the Wikipedia article on speculation for quick run-down on some of the other economic benefits of food speculation, such as the insulation of farmers from risk.
Richard Wolff ignores these benefits at our peril. In the words of Dr. Emmett Brown, “he’s not thinking fourth-dimensionally”. Wolff would raid all speculatory stockpiles of food now. That would reduce prices, but it would also leave us all vulnerable to supply shocks and higher prices later .
Oh, but wait a minute. I already forgot: There is “no relationship between rising prices and loss of supply.” …. Right, right.
So….austerity is bad. Preparation is bad. Forcing stores to throw food in the trash is, well, inconclusive. What sorts of behavior would Richard Wolff consider helpful in these trying economic times? Let’s continue listening to his broadcast of August 11 to find out. The following quoted portion begins at 5:48:
The second story is, in a sense, the other side of the coin. It comes from this famous town in the south of Spain, Marinaleda, where workers, led by SAT, a local trade union organization that represents workers in the Andalusia region of Spain, where, by the way, official unemployment is now listed as 34%. Unemployment in Spain across the country is listed now as 25%, so Andalusia has worse unemployment even than that. Here’s what the people there did, let by the trade union and supported by the famous mayor of Marinaleda: They raided supermarkets. They carefully told the people who work in the supermarkets to stand aside. Nobody was hurt. Nobody was threatened. The people who worked in the supermarket stood aside as the unionists came in, filled many, many baskets with all kinds of food, and then, with cameras showing and the press invited, they marched out of the supermarket without paying, and took the food to a local food distribution center where poor people have the rights to come and get the food, and they explained that they were redistributing income in a way that people need, and they are not going to wait for the Spanish government or any other authorities to do what they should have been doing and haven’t been doing long enough. And they argued that the supermarkets they chose were part of international chains, for example, the Carrefour chain based in France, which owns one of them, and a big Spanish conglomerate that owns the other, that they chose carefully the large corporate outlets, carefully avoided hurting anyone, and solved the problem of an economic system that can not provide even basic food in this direct way. All the usual political and trade union leaders denounced this act on the basis that it was illegal. The people running it responded, “Illegal is nothing compared to what you are doing to the mass of people.” So the news from Spain covers both sides.
Again, Richard Wolff does not say in so many words that he endorses this behavior, but he takes care to leave a favorable impression of the marauders by describing them generally as peaceful and their raids as serene. As a professor of economics, his failure to challenge the union’s assertion that it has “solved the problem of an economic system that can not provide even basic food” could potentially be interpreted as a tacit approval of the said “solution”.
Regarding the serenity of the raids, CNN has posted a purported video clip of one of them:
IBTimes reported further that “three people were slightly injured“, so Wolff’s assertion that the mauraders “carefully told the people who work in the supermarkets to stand aside. Nobody was hurt. Nobody was threatened. The people who worked in the supermarket stood aside….” seems more a romanticization of thuggery than an unbiased account of the events of the day. But let’s let that pass.
Did the marauders really “solve the problem of an economic system that can not provide even basic food”? I rather doubt it. Normalization of this sort of behavior would discourage food production by ensuring an ever-diminishing return on investment to those who produce food and to those who stock store shelves with it. When fewer food is produced and sold in Andalusia, prices will rise, and this will necessitate more theft until food is too hard to come by, even to steal. That is no solution to the problem of high food prices, and Richard Wolff should say so, I reckon.
So let’s recap UMass economics professor emeritus Richard Wolff’s assessment of the food situation in Spain:
- Austerity is bad. Profligacy is good.
- Forcing stores to throw out food should not be opposed, and what a shame it is that the dumpsters must be padlocked.
- Encouraging the production of more food by buying extra food now for later use is unjust, wasteful, inefficient, and cruel, and should therefore be at least controlled if not prevented entirely.
- Discouraging the production and sale of food by stealing it in large quantities should not be opposed as a potential solution to the problem of an economic system that can not provide even basic food.
Interesting. Well, I’d like to thank Professor Wolff for his insight. Like I said, I enjoy the challenge of thinking about the world and about economics is ways that I’m not used to thinking about them. These broadcasts have certainly delivered. I’m not a Marxist quite yet, but he should keep at it, and I will continue to listen. Maybe one day it’ll click.