Bioethanol and Farmland Investment and the Neoclassical Paradigm of Economic - Essay Example

The Economist’s “The Future of Biofuels” article: Unpacking the Neo ical Assumptions “Biofuels are back. This time they might even work.” Thatwas the running blurb in the article of The Economist dated October 28, 2012. A perusal of the article would immediately reveal what the authors had meant by “work” – they meant market efficiency and economic productivity. After several paragraphs explaining by biofuels had failed in the past because their production was too costly and American biofuels could not compete with the bioethanol production of Brazil, the article went on to explain the reason for the renewed enthusiasm: America had now mandated that biofuels be blended with fossil fuel. This was supposedly to help the energy independence of the United States and lessen reliance on countries in the Middle East. Because of that law, it has now become economically efficient to devote farms to biofuel production. The logic of economic efficiency is perhaps central to neo-classical discourse: the main objective being the allocation of resources (in this case, land) to its most efficient use, and by most efficient use, we mean that which will generate the highest profit margin. Milton Friedman was one of the most famous advocates of the free markets – keeping the market free and unencumbered by regulation from the government is the best way to achieve economic efficiency and development. That appears to be the underlying logic in the article by The Economist. Because it has now become economically-rewarding to engage in biofuel production, then the most rational option would be to turn investments in that direction. This in fact is the logic of outsourcing farming -- of leasing or buying landholdings in developing countries for the express purpose of agricultural cultivation, whether for biofuels, food production, feedstock production, and the like – gained traction. Another example of how economic efficiency is the barometer used to determine the viability of a proposition is in this particular excerpt of the article which refers to Brazil: “the country’s success shows that international trade in biofuels is a possibility.” If we unpack this statement, we see that success is only defined as the profits made by Brazil from exporting bioethanol production, completely blind to the actual outcomes on the ground and the impact on the lives of the farmers. The production of sugarcane (for ethanol) in Brazil has in fact been “shown to have caused an increase in the number of enslaved workers, water and air pollution and a decrease in the land available for agrarian reform.” (Fernandes, et. Al., 2010: 793.) However, the article did not delve into these incongruities. Capitalist assumptions res strewn throughout the text. Another line is: “If (biofuel production) brought economic development to less favoured lands, that would surely be welcome” – a statement imbued with the assumption that there is no dissonance between promoting economic development in the north and economic development in the south. This assumption of course traces itself back to Adam Smith, who uttered the famous line, ““By directing that industry in such a manner as its produce may be of greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.” Compulsive consumption and accumulation patterns in the Global North have been flushed out from the discourse, leaving behind a sanitized narrative of allocating resources to their most productive and efficient use. What this obscures is perhaps best articulated by Philip McMichael, writing in 2006, even before land grabbing in its new and “fashionable” form gained traction: Here corporate food regime dynamics are decisive, as agriculture moves offshore to escape degraded environments and exploit cheap land and labour... The outsourcing of food depends on the availability of cheap land and labour in the global South. Such resources are not naturally available, rather, they are made available by expelling rural populations from agriculture by importing cheap food and agro-technologies from the North (page 178). Important in neo-classical thought is the notion of “comparative advantage” which was made famous by David Ricardo. The theory of comparative advantage has been used as the underlying rationale for free trade, because it operates on the logic that if countries specialize in what they can get at a cheaper cost and import when will be expensive for them to produce, then everybody benefits. Using the comparative advantage principle on the issue of biofuel production, developing countries where agricultural land is plentiful and there is an abundance of labor power would have much to gain from encouraging biofuel investments from the first world. This logic is captured in another article entitled “Can Biofuels Save Sub-Saharan Africa?” appearing in the New York Times on June 28, 2011. It likewise follows the economic efficiency framework of the Economist article, with emphasis on the so-called comparative advantage of Africa by virtue of land resource that can be adequately used to plant biofuels. To quote the article: On marginal lands that cannot support agriculture in any case, they see great potential for biofuel crops, which require less water and nutrients. Africa’s vast land resources could also make the continent a competitive exporter of biofuels, which could bring in money for the basic infrastructure needed to transport and process food, they argued. It could also provide an economic incentive for rehabilitating degraded lands, the thinking goes. The neo-classical paradigm is blind to how it feeds into the dynamics between the profit-driven North and the dependent South. Increased access to land means an (even) greater access to the means of production, thus leading to an (even) greater control of the food and energy prices, thus entrenching corporate monopolies even deeper and making them harder to dismantle. In the end, this supports the “violent global encounter” of which McMichael (1997) speaks. A middle approach is taken by the article entitled “Biofuels Boom in Africa as British firms rush on land for plantations” which appeared at The Guardian on 31 May 2011, which appears to question the neo-classical paradigm of economic efficiency and comparative advantage. It quotes Oxfam and states that "One in seven people on the planet go hungry every day despite the fact that the world is capable of feeding everyone. The food system must be overhauled.". However, an interesting aspect of the article was that it acknowledges the possibility that investment will generate jobs for the poor local people –this is based on the assumption that transforming farmers into wage labor is a good thing. This essentially states that the transformation of small-holder farmers into wage labor can actually benefit them, provided that “advantageous opportunities” are made available to him or her – a very important ideological point that is central to Neo-classical analysis. Indeed, various organizations of different, even divergent, leanings have expressed their opinions on bioethanol and farmland investment. The fears that have been expressed revolved mainly but not exclusively around the themes of food insecurity and peasant dispossession. However, for the neo-classical perspective, there are benefits to be derived and whatever risks arise are birth pains of a new but promising phenomenon, manageable via a framework of corporate responsibility and efficient governance of land. For the alternative heterodox perspective, these are structural dysfunctionalities, the analysis of which must be done along class fault lines, as well as deal-breakers that demand the resistance of the land grab phenomenon and the paradigm on which it is foisted. References Carrington, D. and Valentino, S. (2011). “Biofuels boom in Africa as British firms lead rush on land for plantations.” The Guardian. Available at http://www.guardian.co.uk/environment/2011/may/31/biofuel-plantations-africa-british-firms. Fernandes, B., Welch, C. And Goncalves, E. (2010). “Agrofuel policies in Brazil: paradigmatic and territorial disputes.” The Journal of Peasant Studies. Vol. 37, No. 4. Page 793-819. Foster, J. (2011). “Can Biofuels save Sub-Saharan Africa?” The New York Times. Available at http://green.blogs.nytimes.com/2011/06/28/can-biofuels-save-sub-saharan-africa/?ref=biofuels McMichael, P. (2006). “Feeding the World: Agriculture, Development and Ecology” in Coming To Terms with Nature. L. Panitch and C. Leys (eds.) London: The Merlin Press. Smith, Adam. (1759). The Theory of Moral Sentiments. London: A. Millar. The Economist. (2010). The future of biofuels: The post-alcohol world. Available at http://www.economist.com/node/17358802 Read More