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	Capitalism Beyond the Crisis by Amartya Sen New York Review of Books   Mar 2009   2008 was a year of crises. First, we had a food crisis, particularly threatening to poor consumers, especially in Africa. Along with that came a record increase in oil prices, threatening all oil-importing countries. Finally, rather suddenly in the fall, came the global economic downturn, and it is now gathering speed at a frightening rate. The year 2009 seems likely to offer a sharp intensification of the downturn, and many economists are anticipating a full-scale depression, perhaps even one as large as in the 1930s. While substantial fortunes have suffered steep declines, the people most affected are those who were already worst off.   The question that arises most forcefully now concerns the nature of capitalism and whether it needs to be changed. Some defenders of unfettered capitalism who resist change are convinced that capitalism is being blamed too much for short-term economic problems—problems they variously attribute to bad governance (for example by the Bush administration) and the bad behavior of some individuals (or what John McCain described during the presidential campaign as "the greed of Wall Street"). Others do, however, see truly serious defects in the existing economic arrangements and want to reform them, looking for an alternative approach that is increasingly being called "new capitalism."   The idea of old and new capitalism played an energizing part at a symposium called "New World, New Capitalism" held in Paris in January and hosted by the French president Nicolas Sarkozy and the former British prime minister Tony Blair, both of whom made eloquent presentations on the need for change. So did German Chancellor Angela Merkel, who talked about the old German idea of a "social market"—one restrained by a mixture of consensus-building policies—as a possible blueprint for new capitalism (though Germany has not done much better in the recent crisis than other market economies).   Ideas about changing the organization of society in the long run are clearly needed, quite apart from strategies for dealing with an immediate crisis. I would separate out three questions from the many that can be raised. First, do we really need some kind of "new capitalism" rather than an economic system that is not monolithic, draws on a variety of institutions chosen pragmatically, and is based on social values that we can defend ethically? Should we search for a new capitalism or for a "new world"—to use the other term mentioned at the Paris meeting—that would take a different form?   The second question concerns the kind of economics that is needed today, especially in light of the present economic crisis. How do we assess what is taught and championed among academic economists as a guide to economic policy—including the revival of Keynesian thought in recent months as the crisis has grown fierce? More particularly, what does the present economic crisis tell us about the institutions and priorities to look for? Third, in addition to working our way toward a better assessment of what long-term changes are needed, we have to think—and think fast—about how to get out of the present crisis with as little damage as possible.   What are the special characteristics that make a system indubitably capitalist—old or new? If the present capitalist economic system is to be reformed, what would make the end result a new capitalism, rather than something else? It seems to be generally assumed that relying on markets for economic transactions is a necessary condition for an economy to be identified as capitalist. In a similar way, dependence on the profit motive and on individual rewards based on private ownership are seen as archetypal features of capitalism. However, if these are necessary requirements, are the economic systems we currently have, for example, in Europe and America, genuinely capitalist?   All affluent countries in the world—those in Europe, as well as the US, Canada, Japan, Singapore, South Korea, Australia, and others—have, for quite some time now, depended partly on transactions and other payments that occur largely outside markets. These include unemployment benefits, public pensions, other features of social security, and the provision of education, health care, and a variety of other services distributed through nonmarket arrangements. The economic entitlements connected with such services are not based on private ownership and property rights.   Also, the market economy has depended for its own working not only on maximizing profits but also on many other activities, such as maintaining public security and supplying public services—some of which have taken people well beyond an economy driven only by profit. The creditable performance of the so-called capitalist system, when things moved forward, drew on a combination of institutions—publicly funded education, medical care, and mass transportation are just a few of many—that went much beyond relying only on a profit-maximizing market economy and on personal entitlements confined to private ownership..   * Amartya Sen is currently the Lamont University Professor at Harvard University. He was a winner of the Nobel Memorial Prize in Economic Sciences in 1998, "for his contributions to welfare economics" for his work on famine, human development and the underlying mechanisms of poverty. Visit the related web page
	Food for thought by Mail & Guardian Online South Africa   Mar 2009   Even in South Africa, which is usually used as a model country for the Southern African Development Community (SADC) region, 39% of the population is vulnerable to food insecurity, whereas 22% of children under the age of nine are stunted because of chronic malnutrition, according to the National Institute for Economic Policy.   Food security is one of the biggest hurdles for SADC, where all member countries populations face malnutrition and famine.   Agricultural experts blamed high oil prices, lack of investment in agriculture, unfair trade policies and inequitable distribution of produce for continually increasing food insecurity when they convened for the International Fund for Agricultural Development (Ifad) governing council in Rome last week.   They said if the trend persists, food security levels will plummet -- especially in the long term. "If agriculture continues to be doneas business as usual, productivity could decline a further 10% to 25% by 2080," warned Hans Herren, president of the Washington DC-based Millennium Institute, an NGO promoting long-term, integrated, global thinking.   "Such trends clearly threaten the possibility to achieve the Millennium Development Goals."   In some regions, such as Southern Africa, the decline in yield could reach up to 50% because food production, donor aid flows andgovernment budgetary allocations to agriculture and rural development have declined in the past 13 years, whereas food imports, food aid and populations have substantially increased.   So far efforts to boost agricultural production have yielded little. Most increases have taken place in developed countries, although agricultural production in developing nations has risen by less than 1%, according to Ifad.   Development aid for agriculture shrank to 2.9% in 2006 from 18% in 1979, Ifad researchers noted. As a result, the annual growth rate of agricultural productivity, particularly in developing countries, dropped from 3.5% in the 1980s to 1.5% today.   But in Southern Africa agriculture is key to the economy. It contributes about one-third of the region"s gross national product and accounts for 20% of total foreign exchange earnings. About 80% of the 240-million people living in the region depend on agriculture for food, income and employment.   "Paradoxically, most of the world"s hungry are those who produce food," said Laurent Thomas, director of the emergency operations and rehabilitation division of the United Nations Food and Agriculture Organisation (FAO).   "To address the root cause of the food crisis, we need to support small-scale farmers and livestock owners."   African governments have not done their share to promote sustainable, local agriculture, said Ides de Willebois, director of Ifad"s eastern and Southern Africa division.   "They have hampered agricultural development through export taxes and restrictions and import subsidies."   What"s more, Southern African countries reinvest only 4% of their agricultural gross domestic product, whereas the rest of the world ploughs back 10% of its GDP into food production, De Willebois said.   But Tanzanian ambassador Wilfried Joseph Ngirwa, however, insisted "the political will to invest in agriculture [in Southern Africa] is there". Yet, nothing much has changed since heads of the SADC member states acknowledged "that the major underlying reasons for the prevalence of hunger in the region include inappropriate national agricultural and food policies and inadequate access by farmers to key agricultural inputs and markets" as part of the 2004 Dar es Salaam Declaration on Agriculture And Food Security.   At the end of the 2007-08 agricultural season, for example, Lesotho and Swaziland announced huge shortfalls in food production, relying on its neighbours to supply them with surplus yields, although serious flooding in many low-lying areas destroyed crops in Mozambique, Zambia, Zimbabwe, Malawi and Madagascar.   According to SADC deputy executive secretary Joao Caholo, the region suffered a cereal deficit of 4.35-million tons in 2007-08, twice as much as in the previous farming season.   Experts agreed that, technically, the world could be fed if governments fixed the relationship between smallholder food production, distribution channels, equitable access to food and policy regulation of agriculture instead of supporting international conglomerates, mono-cropping and biotechnologies.   "Governments should be the representatives of the people, but they actually represent private industry and let business dictate agricultural policies," said Herren. "They continue to practise unfair agriculture."   Ifad president Kanayo Nwanze agreed that "our challenge is to make agriculture the central focus of governments, particularly in the developing world. "Policies should prioritise community-driven development with farmers at the centre."   Apart from food production, a key reason for food insecurity and upward spiralling food prices has been the high cost of oil and other forms of energy.   "Paradoxically, "real" food prices have been falling for a long time. What determines the end price of agricultural produce is the energy market," said Dr Josef Schmidhuber, head of the FAO"s global perspectives study unit.   The cost of energy needed to produce and transport food adds heavily to its price, he said, and so the world"s food prices are directly linked to the global price of oil.   "The entire chain of food production, food prices and, ultimately, poverty and hunger will hinge on the energy market."
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