Friday, June 1, 2007

Jeffrey Sachs: back to the future

Columbia University professor Jeffrey Sachs is now one of the most internationally respected development economists. He is the head of the Earth Institute at Columbia, which is responsible for the UN's 'Millenium Villages', where efforts to co-ordinate and concentrate activities and interventions to achieve the Millenium Development Goals within a feasible time span are undertaken. In doing this work, Sachs has recently written about the need for state intervention in the development process, drawing upon the example of Malawi.

Malawi has a long history of food insecurity and shortages during the 'hungry season'. To combat this, the government has introduced a farm input subsidy scheme. For a cost of US$5 per Malawian, or US$60 million in total, seed and fertilizer are provided to farmers at less than the cost on the market. Farmers can buy up to 2 50 kilo bags of fertilizer at subsidized prices. High yielding maize seeds are also available. The results of this intervention has been a huge increase in farm production, with good crops being helped by unseasonably good rain. Yields too have soared. The result is that Malawi has, for the first time in years, a grain surplus of around a million tonnes. The country is planning to export some grain.

That subsidizing seeds and fertilizer increases farm production and farm productivity could only be surprising in a neoliberal world. Enabling poor farmers to improve their livelihoods has always required working against markets, rather than working with markets, as markets do not respect the asset-poor, they respect the asset-rich, who can affect the terms and conditions by which market activities take place.

What is surprising about this welcome change of course in Malawi--would that it were replicated across sub-Saharan Africa--is the way in which Sachs has learnt the lesson that this 'investment in famine prevention' demonstrates how intervening in markets can generate improvements in food security for millions. This is surprising because Sachs was, in an earlier life, the godfather of structural adjustment in eastern Europe and the former Soviet Union. It was Sachs that advocated the 'big bang' approach to transition, in which all prices were liberalized as quickly as possible, assets privatized, and markets created, in order to rapidly build capitalism. It took eastern Europe years to recover from Sachs' 'shock therapy'. Yet Sachs now seems to believe that the very things that he did not advocate in eastern Europe and the former Soviet Union should be applied to sub-Saharan Africa. It is all very peculiar. I only wish Sachs had learnt this lesson a long time ago. Countless lives would not have been ruined by him.

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