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ECONOMIC POLICY AS A HISTORICAL PROCESS: THE MEANING FOR AGRICULTURE AND NUTRITION John Kenneth Galbraith To understand the current problems of agriculture and nutrition in the poor countries, more gently called the Third World, and to appreciate the causes of present deprivation and famine, we must first be aware of a major error in our view of economic development in recent decades. Next only to our failure to perceive fully and to act on the consequences of nuclear conflict, it is the most compelling error in social perception in our age. Our mistake is in believing that the advanced industrial countries, socialist or capitalist in their developed form, are a guide and model for the poor countries. whose economic development and social development are less advanced. It is an error that arises from the failure of the older industrial countries to understand their own history or to appreciate the sources and well-springs of their own development and modern well-being. We must recognize before all else that economic life is a process. It has its own dynamic and sequence with an appropriate policy--an appropriate course of public action for each stage in the long sequence. There is also a need to avoid wrong action resulting from policies that are relevant only to the later stages of the development process. In all the early stages of economic development, the appropriate, efficient, and necessary emphasis is on agriculture. This was true in Europe before the Industrial Revolution, in the United States in the last century, and in imperial Russia. The reason for this agricultural emphasis is simple and forthright: the first essentials of life are food and textiles, and agriculture provides these. (There is still, apart from the oceans, no other considerable source of food.) In the last century, when public minds in the United States turned to economic development, they turned to agriculture. Speci- fically, they turned to the best design for the tenure : to education emphasizing rural schools and to agricultural experimentation. This educe tional emphasis led to the legislation that produced the country-wide network of agricultural experiment stations and agricultural and mechanical colleges. Eventually a and use of public lands 15

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16 canal and later a rail transportation system were developed largely in the service of agriculture. This required extensive borrowing that was not always repaid. Later came the agricultural extension services. From Alexander Hamilton on, thought, but no comparable thought, was given to manufacturing--th industrial development. It was not that industry was believed unimportant; rather, at that stage in the development process, agriculture was rightly seen as having the highest claim. ~ The example of the United States is cited not to suggest our superior wisdom in this matter; the early emphasis in the other industrial countries differed in detail, but not in substance. ~ - ~ Agriculture--not least in Britain--was called and treated as "the basic industry." The older industrial lands have now largely forgotten this part of their own experience. When the question of the design for economic development in the new countries is raised, developed industrial countries look at their present industry, not at their past concern for agri- culture, as their guiding example, and they stress industrialization. The growth of urban industry is thought to be the true test of economic development; agriculture is assumed to be already developed. This is greatly at variance with the real requirements of the historical process. There is another, more recent and more important error. Much of the advice flowing from the older industrial countries reflects the modern ideologic attitudes toward economic development. From the western d~morrAri e~ Tomes the case for tree enterprise, St111 called "capitalism" by the courageous; notably this is upheld by the present American administration. From the socialist world comes word that development should be in a socialist frame of reference. Proponents of each system look at what they have, reflect favorably on its merits, and recommend and sponsor its export to predom- inantly agricultural lands. Again there is neglect of history. The case for capitalism or socialism was not seriously debated before the arrival of urban industry. It was not a compelling issue in eighteenth-century Europe or nineteenth-century Russia or post-colonial America. It was recognized,

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17 instinctively if not explicitly, that agriculture has its own particular social and economic patterns, problems, and tensions. The methods of agricultural cultivation, the scale of holdings, cultivation by independent proprietors or tenants, and the form of tenantry were the basic questions. These last (in France, later in Mexico, to a marked extent in Russia, China, and Cuba, and now in Central America)--and not the question of capitalism or socialism--have provided and still provide the seeds of revolution. They, not the question of capitalism vs. socialism, are the issues relevant to the agricultural stage of economic development. In these last decades nothing has been more futile and on occasion nothing has been more costly and dangerous in national effort and lives than the concern as to whether the new, predominantly agricultural countries emerging into nationhood after World War II should have a capitalist or a socialist pattern of development. I propose that, to the agricultural country, both patterns are irrelevant; agriculture has its own, different system. In the Vietnam years, my experience in that part of the world gave me occasion to admire the accomplished American ideologist who, on passing through an Asian jungle, could tell whether it was a capitalistic or Communist jungle. He exercised a similar skill when he came to an agricultural village. In reality, agriculture has its own design, given not by ideology, but by the practical accommodation to agricultural need and circum- stances. We make a grave and foolish mistake when we carry over to agriculture the ideological concepts and debate relevant to the mature industrial world and in doing so delay or abort the very development we seek. As Marx himself urged, the debate between socialism and capitalism must be left until there is capitalism. We must accept the existence of an earlier third system--the agricultural system--and identify and pursue the policies relevant to it. Perhaps but for an accident--or error--of history we would have done so. In France in the late eighteenth century, a group of French philosophers--Francois Quesnay, Anne Robert Font de Nemours--joined Jacques Turgot, Pierre Samuel Du ~ ideas that has since physiocratic system. - to produce a set of econom~c known as the agricultural or been It did

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18 not survive and develop as a separate course of economic thought relevant to agriculture, but instead was swept into discard by the Industrial Revolution and the rise of urban capitalism. It was unfortunate that a current of economic and social thought relevant to agriculture did not endure and develop, withstanding the great competi-- tive prestige of the industrial system. Let me now consider what the essence of a modern agricultural system would have been if it had developed. We would agree, I think, that the agricultural system has one basic design that is both socially stable and economically efficient. That is the cultivator-operated land holding--the farm unit. Responsibility for this unit lies with the woman or man who works it and is related in scale to what the operator can accomplish with her or his own labor and intelligence. It is the only agricultural structure that, if it exists, no one seeks to change. Nothing over the centuries has been more persistent and eloquent than the efforts of landlords to make the case for large and personally rewarding hold- ings. To this end they have proclaimed their affection and compassion for workers, share-croppers, and tenants and the need of the latter for a superior guiding intelligence. On none of these points--efficiency, stability, or intelligence--have they made the case. Nothing, as I indicated earlier, has been more conducive to social tension or revolution. The cultivator-operated land holding must be central to any discussion of an agricultural system. From the case for the cultivator-operated farm unit there comes, in any discussion of an agricultural system, the question of land reform. Land reform is widely celebrated in principle in our own day, but it is wonderfully resisted in practice. In recent decades, there have been far more land reforms in legislation than in fact, especially when the political power structure that reflects the landed interest has remained intact. In talking of land reform, we must always be careful to distinguish between the theoretical and the actual; it is the second that counts. One of the clear lessons of modern socialism is that it does not easily pre-empt the self-motivated farm proprietor. There are serious problems of efficiency and motivation in the large-scale state farm or collective,

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19 landed holdings. and it is incorrect to assume that what is relevant for industry is relevant for agriculture. What is needed is for new and poor countries not to burden their agricul- ture with the ideological baggage of the developed lands. Again, we must recognize the separate character of the agricultural system. The next characteristic of the agricultural system, as distinct from the modern industrial system, is the important role of education. This is particularly evident in the basic owner-operated proprietorship, which requires more educated and intelligent workers than large The situation is no different for tenants or share-croppers. Landlords have rarely been diligent proponents of education. They might be better off if tenants are not too inconveniently intelligent. The independent proprietor, however, must be intel- lectually competent, so there is a compelling need in agricultural development for a good educational system. The mature industrial countries especially have gravely misunderstood their own history. In the eighteenth and particularly the nineteenth centuries, when these countries thought of the instruments of progress and development, it was the educational system that came immediately to mind--not steel mills, but schools. Schools were rightly taken to be the natural counterpart of improving agriculture. No error in the advice given to the new countries in recent decades has rivaled that which places investment in industrial apparatus ahead of investment in human capital. Educa- tion, needless to say, is important also for acceptance and use of better agricultural methods and technology. There is much in the modern agricultural practice of the older industrial countries of the United States, the Soviet Union, Canada, Australia, and western and eastern Europe that is useful or applicable to the new lands: such technologies as grain hybrids, fertilizer, soil and water management and pest control methods. There is also much that is not useful, and a difficult distinction must be made here. In my years in India, I struggled with the assumption of American agricultural advisers that, if something was used successfully in Iowa, it was appli- cable, sari passu, to the Punjab. Attention that was given to horticulture, home economics, or poultry husbandry was thus diverted from the absolutes of cereal

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20 production, pest control, and soil and water management. For the appreciation and use of the aspects of the new technologies that can be applied, the agricultural system requires, above all, a well-educated and well-motivated farm population. I do not suggest that the agricultural system--this- agricultural stage in economic development--excludes industrial investment. In its early stages, this investment must have a strong agricultural orientation. Roads and transportation facilities, storage facilities, irrigation works, and fertilizer plants are examples of such agriculturally required investment. Such investment must be given the appropriate priority, as was recognized by the older industrial countries. Their early invest- ments, in turnpikes, canals, railroads, dams, and grain elevators had, as a matter of course, a primary service to agriculture. In the new countries, it matters little whether this investment is under public or private auspices. In earlier times, this was not a great issue in the industrial countries either. The important thing then, as now, was to obtain the requisite facilities in the most efficient and expeditious manner possible. There is one investment, which is shouldered these days by many agricultural countries, that the industrial lands did not have to make in their agricultural stage: investment in a military establishment and in expensive military hardware. The United States in a comparable stage of development was blessed by having virtually no military expenditures at all. We must surely agree that the industrial countries should be persuaded not to sell such weaponry to the new and poor agricultural lands and that these lands should renew their determination not to buy such weaponry. Nothing is less consistent with the agricultural stage of development than a complex and costly military apparatus. I strongly urge the abandonment of the present practice in numerous new countries of keeping agricul- tural prices low as a concession to urban workers and dwellers or to gain political rewards from stable prices. The Food and Agriculture Organization of the United Nations recently has drawn impressive attention to this policy (FAO, 1985~. In the developed countries, price controls must sometimes be part of an anti-infla- tion strategy, acting better and less painfully than

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21 unemployment and recession spiral. A strong case can ~ for price-support policies to ensure a stable and predictable return for the producers on their efforts and investment. This is a standard, indeed universal practice in the industrial countries and has rendered major service in some countries, such as India. One must react -- = ~ - ~ - - -I countries to keep food inexpensive through public action. This type of policy produces current advantages at the cost of long-term shortages; it would be preferable to PaY hither Prices now as an encollr~ cement to ares her as a brake on the wage-price also be made in agriculture W' ~t unite co one numerous errorcs In tne new . . ~ . . . ~ . _ production later. Although the food problems of many new countries, notably those of sub-Sahara Africa, challenge the conscience and compassion of such countries as the United States and Canada, which have food to spare, I strongly urge resistance to any policy intervention that denies local cultivators the full market return for their products--that sacrifices the future to the present. Finally, as we consider the agricultural system and its improvement, let us not forget that this development must be for all who are engaged in agriculture, speci- fically that is, for both women and men. All who are familiar with agriculture in the new lands know the problem--that women, in great and often insupportable measure, do the hard farm work, and men enjoy social and political recognition and whatever preference in education, living standard, and leisure can be afforded. In my years in Asia, I could never help noticing that it was the men who attended and gave instruction at meetings on better agricultural methods. On the way to and from such meetings, we could see the women doing the hard work in the fields. It has long been recognized emphasized in principle, if not equality of the sexes must be a agricultural system. It is not , norm: it is also an eronomir Hi c; ~- by theoreticians and in practice, that primary goal in the only a compelling social ~_~ . Only when women are fully and intelligently a part of the agricultural system does development proceed efficiently. In former times, slavery, peonage, and serfdom were brakes on agricultural development and supporting technical progress, and today women are the source of subordinate, abject, and unenlightened toil. One should not think _

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22 that improvement will be easy; changes in familial relationships can be more readily discussed than achieved. The availability of women as a working class is far from unpleasant for men, and educated women are much more difficult to subdue. Economic life is a continuing process of transfor- mation. Although we can hardly fail to recognize this, we systematically deny its practical implications. Countries in the later stages of development, whether socialist or capitalist, look at their own achievements and their own ideologic design and urge their model on countries in the earlier stages. Countries in the earlier stages look with envy at those in the later stages and assume that they also can adopt the policies and actions they see. To overcome this conspiracy of error, we must recognize that the more developed economic systems were preceded and anticipated by agricultural systems. REFERENCE FAO (Food and Agricultural Organization of the United Nations). 1985. Agricultural Price Policies. Report C 85-19. Rome: Food and Agricultural Organization. DISCUSSION OF PROE.ESSOR GALBRAITH ' S PAPER DR. ROHDE: Some countries would claim that our apparent wisdom in following the agricultural paradigm rested on the unavailability to us of the industrial or military one and that this was simply a happenstance of history. How would you respond to them? Some have argued that it is possible to telescope all the progress of time and jump over the difficulties of development. Must every country recapitulate the process through which other countries developed? DR. GALBRAITH: I certainly did not mean to suggest that one country's process has to be recapitulated. As I said, some technical achievements in the developed countries, notably here in the United States, are trans- ferable and lead to, for example, the "green revolution''

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23 in India; but there is no easy answer At the earlier stages of economic development, countries are only slightly removed from hunger, and food production is the center of agricultural development. Nothing is accomp- lished by expenditures for steel mills, machinery, fancy airports, and arms. Governments must be encouraged to avoid responding to these kinds of demands. MR. BUTZ: In your summary, you regretted the export from socialist countries of the organizational structures of their agricultural economies and also the export from capitalist countries of technological approaches to development. Would you comment on the export from capitalist countries of their economic organization for agriculture? DR. GA~LBRAITH: The owner-operated farm is an agricultural design that combines efficiency with social tranquility. I do not consider this the exclusive possession of the United States or of the capitalist world; however, it does resemble capitalist norms more closely than does the collective farm. DR. KIM: In Ethiopia, I believe expenditures in the military sector are not insignificant. . . . . ~. . Are we being ypocrl~lca1 my giving mlllcary equipment, as well as cash, to Ethiopia when the government Itself considers internal strife (such as that involving the Eritrean Liberation Front), and some of the problems in neigh- boring countries to be major aspects of resource allocation? DR. GALBRAITH: You have a point. There is an unhappy quality to giving food while governments are using needed resources for military budgets or operations. But let us not be too particular in these matters. It is impossible to look at those scenes of starvation and say, "We are going to withhold grain until the governments reform." I think we cannot do that. . -

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