Food and the Fallacy of Functionalism
posted by Frank Pasquale
As food prices skyrocket, there is growing unrest in the developing world:
Food riots have already occurred around the world, and the World Bank predicts political and social unrest over food in 30 to 40 countries. The United Nations World Food Program spends $3 billion, but needs $500 million more just to keep up. With food prices increasing as demand goes up, we look at the “new face” of hunger worldwide and what the drive for bio-fuels has to do with it
As biofuel consumption rises in the developed world, we can only expect this problem to get worse. The Wall Street Journal raises the specter of a new Malthusianism, as does the BBC.
One class of public intellectuals has always been quick to dismiss these claims as alarmist. Harking back to Paul Ehrlich’s famously false prediction of famine due to overpopulation, techno-optimists assume that human ingenuity will always come to the rescue. Worries about resource constraints have also gotten tied up in complicated politics of birth control. Debates between the Club of Rome and its critics quickly degenerated into rival futurologies, with one side predicting scarcity and the other plenty. Since prognostication is a mug’s game, the academic debate on the issue became stale for a while. Advances in science made it easy to believe that that nanotech and a new “weightless economy” could rescue us from worrying about mundane things like food and water.
Now the rise in commodity prices and general scarcity of food and fuel are generating new interest in Malthusian arguments. Before public intellectuals again get bogged down in the fruitless tech-prediction game, I hope they consider another angle on the crisis. Perhaps it’s time to reconsider economics’ extraordinarily prominent role in public policy, and to complement it with other social sciences.
Given that economics is often defined as the study of scarcity, food and fuel shortages may seem like a particularly bizarre rationale for discounting it. However, there is a narrative component of economic analysis, and an explanatory style, that makes it particularly inapt here. Consider two broad schools of sociological thought: functionalist and conflict-oriented theories. Functionalists are apt to explain how all parts of a given social order fit together, like the organs within a body (think of Durkheim’s work on “organic solidarity”). Conflict theories emphasize times of crisis and change, underscoring the ways in which different classes, professional groups, ethnic groups or states challenge one another for scarce material or symbolic resources.
Economic thought is often unapologetically functionalist. As Hirschman described its origins in the doux commerce school, one of its basic ideas is the prevalence of mutual gains from trade given comparative advantage. As individuals and groups specialize, they become more expert at what they do and more efficiently produce goods and services used by others. Gains from trade become the foundation of an economic order that promises increasing GDP, health status, and comfort.
This story has broadly described much of North America, Western Europe, and Japan. Wealthier parts of China and India have also experienced a lot of growth. But what happens when critical resources–such as oil, timber, or wheat–are in short supply? Who gets to continue growing, and who has to stop–or, worse, fall further behind? Given how quickly general technological superiority can be converted into military superiority, the stakes here are very high.
Though economists have sometimes scoffed at a lack of rigor in sociology, I wouldn’t be surprised to see sociologists turn the table and claim that economics itself reflects only one half of sociology’s classic dual viewpoints of “conflict and functionalism.” Fortunately both evolutionary economists and theorists of positional goods (like Robert H. Frank) understand how zero-sum games can make classic characterizations of market efficiency obsolete. The question now is how far to apply their insights.
I’ve argued that Frank’s views on positional goods need to become a part of the economics of health care, in part because a relatively fixed supply of doctors can mean that any group that uses its buying power to purchase disproportionately time-consuming and unnecessary levels of care threatens to divert medical care from those with less purchasing power. (In Robert Kuttner’s words, care is being allocated to profit opportunities rather than medical need.) To the extent that commodities like oil appear to have a relatively fixed supply, the same analysis may apply.
April 7, 2008 at 3:07 pm
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Responses (3)
mulp - April 7, 2008 at 11:29 pm
Is economics the study of scarcity or of human behavior? Adam Smith was studying morality, which I think is behavior, when he went off on the tangent that most people know him for.
I would argue that sociologists are more connected to reality than current economists. Sociologists see the person in terms of the physical person, see human behavior as evolved from the other life around us. And they do debate nature or nuture, with genetics or the environment determines human nature.
Economists exist in their own world with their own rules. When demand requires more goods, labor appears to transform resources which appear to meet demand. When demand decreases, labor disappears .
What messes things up are those pesky externalities.
Lester Brown described the problem as
“Economists see the environment as a subset of the economy. Ecologists, on the other hand, see the economy as a subset of the environment.”
drawing the analogy to Copernicus
“Recognizing that the earth was not the center of the solar system set the stage for many advances. So, too, will recognizing that the economy is not the center of our world.”
See http://www.theglobalist.com/DBWeb/StoryId.aspx?StoryId=2234
Malthus did see the answer in Darwin’s survival of the fittest, but he assumed that those like him were the fittest and most adaptable, just as today’s economists seem to do, while the poor, sick, and old are the weak that don’t.
From observation, the law seems to recognize the constraints of nature, if only by calling the things that defy the law, acts of god.
Or more precisely, the law has evolved from the spiritual explanation of the events that reward or harm people into rules that embody some form of reciprocity expressed in religion into the secular common law. Common law is the result of taking real world experience and trying to “do what’s right” and over time developing a set of rules that handle most of reality.
For example, common law must have some case law for dealing with a glacier sliding off Greenland into the ocean and flooding private land from the sea level rise which secures a mortgage. Does the borrower need to repay the loan, and what does it mean to foreclose to recover the money secured by the property.
For the economist, at least the economists who are the most vocal, such events are not allowed. Or it is a case of the borrower failing to take responsibility for himself. Or the government caused the problem by interferring in the market. Or that the government shouldn’t interfere and create a moral hazard….
To the economist, land is a fixed resource. I suspect the lawyer has much case law that deals with land that disappears. For example, what is the case law for half of Florida being flooded? Certainly many lawsuits would be filed if such an event occurred, and I’m sure that at least some lawyers today can start citing case law.
For economists, that can’t happen. It violate one of the most basic axioms.
a young curmudgeon - April 8, 2008 at 3:21 am
“As biofuel consumption rises in the developed world”
Why does this rise? Because of government subsidies, tariffs and other manipulations of the market. If we subsidize using food to propel our cars instead of eating it, yeah, food prices will rise.
Nevermind the health care market, which is the mother of all government distortions.
And even though oil might be scarce, once it gets dearer, prices will rise, and we can switch to other fuels then.
“what happens when critical resources–such as oil, timber, or wheat–are in short supply? Who gets to continue growing, and who has to stop–or, worse, fall further behind?”
Isn’t it wonderful that prices are the signal we follow here? No central planner. When demand increases, prices will rise. People will try harder to supply. Prices provide the incentive. Timber and wheat are renewable, and rising oil prices in the far future will provide an incentive to switch oil or dig for harder to find deposits. Or use nuclear energy. Beautiful.
A.J. Sutter - April 11, 2008 at 11:13 pm
Thank you, Frank, for daring to voice such an heretical notion, namely that economics might be playing too prominent a role in public policy. It’s particularly scary considering recent applications of environmental economics, wherein it’s not only human nature that is shaved and simplified for the sake of 2nd-year-calculus-level models, but also most of physics, chemistry and biology. I hope that in 30 years or so we will be able to look back at this era as the benighted one it is — we should all live so long.
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