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Bad market, good market

A few notes on markets and food security

by Thomas Schellen

Markets were the first places where food security was achieved in a commercial context. It can be philosophically presumed that the other conduits of prehistoric food security consisted of charitable sharing, in the context of group solidarity and religious belonging, and of the intra-familial or tribal organic sharing economy which existed millennia before idle intellectuals and ambitious wordsmiths ever coined terms like “sharing economy”.

The rest of what can be said about individual subsistence living and group living in prehistoric human communities is mostly conjecture and speculation. The entire narrative of the “agrarian revolution” is endlessly suspect in view of recent archaeological discoveries and anthropological theses. The relationship between markets and food security has been acknowledged in research as a component of societal existence whereby the former is empowering the latter, by providing availability of food and making food accessible on the terms of the market. In this regard, the principle of competition and the need for market actors to woo customers by meeting their demand helps people access and afford food.

The Food Aid Convention of 1999 and the World Food Assistance Convention of 2012 set standards for food security support for vulnerable populations, but referred to markets more by a way of negative delineation from markets. The 2012 Convention’s second article, on principles governing food assistance, includes stipulations that food assistance must not negatively impact markets. Food assistance must be provided in a way that does not “adversely affect local production, market conditions, marketing structures and commercial trade,” states Article 2a. It is also a principle that the parties to the convention abstain from using food assistance for their “market development objectives,” as per Article 2b.

After the Great Recession of 2007-09 shook the world out of free-market complacency for a while, the moral impulse for seeking recovery from a man-made financial crisis, in combination with then-thriving international enthusiasm for global development goals and species-wide concerns, led to new international declarations and programs that expanded on the work of the four United Natoions (UN) world food and food security summits of the 1990s and 2000s.

In the 2010s, markets were acknowledged as contributing systems in food security. The United States (US), in the context of the Obama administration’s commitment to a global response against hunger and food insecurity, established the 2010 Feed the Future initiative, aimed at assisting 19 food insecure countries in the Global South. Concepts for the use of markets under food security objectives were developed in correlation, one of which was laid out in a study by the Washington DC-based Center for Strategic and International Studies (CSIS).

As a compilation of policy trends and thoughts at the time, the CSIS study advocated in strong support of the US’s determination to fight hunger through market-relevant policies and actions. This was despite that it was at a time, when in hindsight the world was financially challenged, but yet comparatively unperturbed by massive challenges like a health pandemic, wars, or climate trouble, all of which have made this decade much more costly. One recommendation was for reducing supply-side constraints by implementing trade agreements with US partner countries and also lowering protectionist barriers. Other recommendations called for the US to be fostering regional integration in other parts of the world, pushing for reform of international agricultural trade systems, and acting towards the improvement of hard and soft infrastructures in countries which are ridden with corruption, inefficiency, and excessive trade costs.

In the recent peak attention to food security issues in context of the crises of the 2020s, the UN issued the Roadmap for Global Food Security–Call to Action which advocated for seven points of action, four of which were directed at “member states with available resources” and three addressed to all UN member states. These three points included references to the roles and responsibilities of governments in food markets, beginning with an appeal for states “to keep their food and agricultural markets open,” and further calling for states to increase their investments in relevant research and development, and “closely monitor markets affecting food systems, including futures markets, to ensure full transparency, and to share reliable and timely data and information on global food market developments.” It may read somewhat abstract and state-centric, but at least markets were mentioned under a global list of priorities.

The forces of the market, however, are neither known for obeying governments nor are they social per se. Markets appear to have forever (certainly since their conceptual discovery by economists), worked in favor of the resourceful. This makes for a complicated relationship with food security because of the fact that wants are served well in markets if the wants are backed by purchasing power, but needs without the presence of such means, are not.

Rights, as a category of human self-definition and philosophical debate, have been entering markets as an evolving moral category for less than one hundred years. Not inherent in markets, economic rights have gradually been codified from principles of freedoms of conscience and broad economic imperatives, such as the freedom from want into a series of moral and economic rights, like the right to labor and the right to food.

The new millennium’s expansion of moral concepts with economic relevance, such as the Sustainable Development Goals and the UN Global Compact, today provide a joint mental framework with the economic concepts of stakeholder capitalism and corporate citizenship. Forward-looking companies with long-term profit perspectives as well as defined social agendas have become beholden to sustainability and the responsibilities that determine the societal embeddedness of a business.

Notes informed by the Lebanese market dilemma

Lebanon has a peculiar system of societal organization that combines entitlements of quasi-dynastic or familial, tribal, and religious-based entitlements. This combination produces a predilection to maximize economic opportunities through social networking and the exchange of goods. The system’s immersion in the recent crisis illuminates many aspects of the market system which have implications beyond the very painful crisis experience. In this sense of abstract evaluation, the crisis has demonstrated impressively that markets react to all interventions. They can be distorted by well-meaning subsidies, but also by charitable interventions that in turn create black secondary markets.

On a very important, constructive note, markets are extremely resilient and the lingering crisis emphasizes how markets, from regulated to gray, and the blackest of black markets, favor not only those who are financially resourceful – in the form of purchasing power – but they also smile on those who excel in negotiations and the uncovering of new opportunities. Markets in this way have self-regeneration capacities which can be indifferent to state actions, and extend far beyond governmental intentions and inferences.  

It is a lesson from the global experience with inflation –  a novel shock for the G7 economies in comparison to their experiences of the past forty years – which shows that concentration of corporate market power in times of inflation makes it easier for the strongest to set prices at will. Customers lose sight of the price logic and are confronted with information deficits on the validity of price increases. High-powered market players can use bouts of inflation to pass own cost increases onto consumers and even increase prices further than justified by cost hikes.

In this regard, in a comparison with developed markets’ far more intense inflation rate, and the complex inflation shocks exposed to Lebanese consumers shows on one hand how severely weak public controls and ill-managed, understaffed consumer protection systems will amplify the market power of the dominant players. In the markets of food security, it will worsen the divergence between powerhouses and lower-powered stakeholders, but also cause a widening of the societal market sphere through the entrance of non-commercial and social orientation.

On a general level, Lebanon is a prime example to show that markets will be stifled in artificial complacency under conditions of imbalanced monetary and market distortions from cronyism. While the departure from such a situation becomes more painful the longer the distorted system has been practiced, freeing the market from illogical and unsustainable restraints, such as the removal of subsidy schemes and forced abandoning of artificial monetary stability, opens new windows for the rebalancing of market shares, product availability and prices.

This removal of stability under a construed status quo can be marginally beneficial to new entrants and detrimental beyond measure for too many stakeholders in food markets. But in decentralized and informal markets, the beneficial effects of entrepreneurial market forces in the essential good markets might come to play out more quickly than in centralized, highly supervised, or concentrated markets – up to a point.

Markets can incur inordinate divergences in the ability to satisfy wants, but markets in the context of an intact social fabric and a tradition of mutual solidarity can perform better than economic models in the satisfaction of needs. Moreover, as crises reshape the economic playing field, markets seem to have the capacity to eventually produce unexpected benefits for the realization of economic rights and unleash new and socially constructive, economic energies.

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Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years. Send mail

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