Tyler Cowen writes in his latest column:

Lately, it’s become fashionable to assert that, in this time of financial market turmoil, the market-oriented teachings of Milton Friedman belong more to the past than to the future. The sadder truth is that when it comes to food production — arguably the most important of all human activities — Mr. Friedman’s free-trade ideas still haven’t seen the light of day.

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The more telling figure is that over the next year, international trade in rice is expected to decline more than 3 percent, when it should be expanding. The decline is attributable mainly to recent restrictions on rice exports in rice-producing countries like India, Indonesia, Vietnam, China, Cambodia and Egypt.

However, even if we were to free up trade, this would likely irritate urban domestic consumers. Governments that want to stay in power are not likely to annoy this demographic. This is the opposite problem to Europe, where democratic governments have had to rely on the rural vote to stay in power throughout the 20th Century, although we only refer to the former as populism, despite the justifiability of domestic consumers’ grievances. As Dani Rodrik points out:

Freer trade would reduce prices of food (relative to other prices) only in countries that are food importers.  Food exporters would experience a rise in the relative price of food, and there is simply no way of escaping that reality.

These dynamics played themselves out in the Pakistani elections. Shaukat Aziz paid off the trade deficits with agricultural primary commodity exports, the result of which was huge hikes in the price of rice (can’t find a reference for the moment).

Daniel Davies, forcefully makes the argument against Tyler’s:

As Raj Patel correctly notes on the Guardian blog, we are shaping up for a fairly substantial risk of a free market democide. . There was certainly no shortage of people pointing out at the time that removing fertiliser subsidies and dismantling strategic grain reserves was a hell of a risky thing to do, but the neoliberals pushed it anyway, under the assumption that deregulated food markets would encourage investment and improve productivity. Which, given a very long run of good weather indeed, might have worked, but that was hardly the way to bet, and it really does not appear to be the case that anyone did a huge amount of detailed research into how this green revolution might have been carried out and financed. Beware, always beware, of long term solutions to short term problems.

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It really is hard to see what qualitative difference one might draw between the way in which the World Bank and IMF have fucked around with the food security systems of third world countries in the name of “free markets”, and the way in which Stalin and Mao did more or less the same thing in the name of “collectivisation”. Peter Griffiths’ article and book refer. The great thing about the market mechanism, of course, is that when it kills a million people, it doesn’t leave fingerprints.

It’s time we went back to studying political economy, and ask more questions rather than proposing ideological solutions. Here’s your starter for ten: As far as agriculture goes, democracy and free trade is not an easy fit. Does anyone have reasonable solutions to this, which aren’t of the “let’s remove economics from democratic participation” variety?

PS: I mentioned in the comments an article, which suggested that the end of EU subsidies on dairy exports played a role in Japan’s butter crisis. Aaron Schiff points out however that there’s a 802% import tariff on butter imports. However, I don’t think this completely undermines the major point, but adds yet another complexity.