Free markets cause food shortages, and philanthrocapitalism does nothing to solve the problem, argues Elaine Graham-Leigh

In 2007, the price of staple foods around the world began to soar. In less than twelve months, the price of cooking oil more than doubled, cereals went up by over 80%, dairy products by just under 50% and Thai rice by an astonishing 200%. The result for the world’s poorest people was catastrophic, with an estimated 75 million newly-malnourished people in 2007 and another forty million in 2008. Prices came down again towards the end of 2008, but the spike happened again in 2010-2011 and yet again in 2012-2013. Food-price crises are now, it seems, the new normal.

Mainstream discussions of food prices, and of the food shortages which are assumed to cause them, have a tendency to blame the problem on overeating in the West. The statistic that there are a billion overweight people in the world while another billion are starving is often repeated (albeit with variations in the actual numbers). As David Rieff argues, however, this is to miss the real significance of the food-price crises and what they tell us about the workings of the global market.

Rieff is careful to concede some basis in reality to the argument that our problems with food prices are a result of growing meat consumption, particularly on the part of the burgeoning middle class in India and China. While he accepts that a large-scale switch to a more resource-hungry diet is likely to have some effect on the world food system, just as the effects of population growth cannot be completely ignored, in essence this is not an issue of individual consumption. The problem is neither that there are too many of us, nor that we eat too much.

One factor in the 2007-2008 spike in cereal prices was clearly the diversion of crops previously used to feed humans and animals to biofuel production. It seems obvious that diminishing the global supply of cereals for food would increase the price, and to an extent this does seem to have happened. It is also the case however that biofuels provide a handy scapegoat to distract from more important factors in food-price volatility.

Rieff notes that Hilary Benn, as the former Minister for International Development, ‘pointed out somewhat bitterly [that] some of the same NGOs that began to decry biofuels in the early 2000s had demanded in the early 1990s that what was then widely seen as a clean-energy alternative to continued reliance on fossil fuels be rapidly adopted’ (Rieff, p.88). The bitterness, as described here, carries a whiff of exasperation at the perennially unreasonable demands of green campaigners, but it also places the blame for price rises squarely at the door of a shift to biofuels. Gruma, Mexico’s chief tortilla producer, used a similar argument in 2007 when protestors attacked it for hoarding corn to increase prices, responding that it was US demand for corn for ethanol that had caused the problem. In 2008, the World Bank agreed, reporting that 75% of the increase in cereal prices could be ascribed to biofuels.

The effect of this rush to blame biofuels was to conceal the commodity speculation which was at the bottom of the increases in food prices. As the World Development Movement pointed out, the 2000s saw a huge increase in trading in derivatives, resulting in such price volatility that, for example, wheat prices on the US markets leapt by 25% in a single day in early 2008. It is difficult to make a convincing argument that these sort of price swings could be caused by anything other than speculation. Even the World Bank recanted on its earlier, biofuel-blaming position in 2010 and admitted that financial speculation was a significant cause of the 2007-2008 food-price crisis.

As Rieff points out, the effects of speculation on food prices and therefore on global hunger illustrates Amartya Sen’s well-known insight about the nature of famines. Famines, Sen saw, are not periods where there simply isn’t any food for people to buy; they are situations in which large numbers of people cannot afford to buy the food that there is. In 2007, just as in 2010 and 2013, there was sufficient food produced globally to feed everyone, it was simply that for increasing millions of people, the prices at which it was being sold were too high.

The way in which food-price increases are driven by speculation also underlines the fact that they are not set by simple supply and demand. We’re supposed to believe that the market is straightforward and responds to consumer requirements, but with food as with everything else, this is clearly not the case. It is therefore something of an issue that major attempts to end poverty and hunger worldwide rely on that very same market, acting as if the root cause of the problem was an insufficiency of capitalism. It’s also remarkable that the proponents of this view of the causes of and solutions to food poverty are so optimistic about their chances of solving it, but for some poverty and hunger across the world is indeed a problem in the process of eradication. By 2035, Bill Gates wrote in 2014, ‘there will be almost no poor countries left in the world’ (Rieff, p.230).

Gates’ views on this are significant because of the increasingly prominent role which philanthrocapitalists in general, and the Gates Foundation in particular, play in development programmes, disease eradication and even in the delivery of social services across the world. Global philanthropy is booming, with nearly half of the 85,000 private foundations in existence in the US alone being created in the last fifteen years. Some of these will be modest in size but others command significant resources: the Gates Foundation provides 10% of the World Health Organisation’s annual budget and is the single biggest donor to the UN Health Agency, giving more than the US government (McGoey, p.8).

Bill Gates himself put $28 billion of his own money into the Foundation between 2000 and 2013, and runs a campaign called the Giving Pledge with Warren Buffet to encourage other billionaires to give at least half of their wealth to charity (Rieff, p.301, McGoey, p.24). This, Rieff points out, is admirable behaviour compared to the rich people’s toys on which Gates could have decided to fritter his billions. Charitable donations certainly signal personal virtue more effectively than mansions and helicopters (although it’s not as if Gates has not retained sufficient billions to have all the large houses and bling anyone could possibly require). The effects of this philanthropy, however, are not necessarily as positive as laudatory coverage of the Gates Foundation in much of the mainstream media would have us think.

Linsey McGoey’s study of the Gates Foundation sets out the many areas where its interventions have been problematic. In education, an area of particular interest for the Foundation, it has been part of the increasing privatisation of education in the US, helping for example, to ‘position online technology giants such as Pearson and Microsoft to profit from the for-profit schooling bonanza’ (McGoey, p.133). It provided the bulk of the funding for a database of primary and secondary school children for use by for-profit education contractors, without parental consent, and launched and then closed down a small-schools initiative which involved and potentially disrupted the education of 800,000 pupils. It then moved on to developing tools to make it easier to track and fire ‘poorly-performing’ teachers, using the stack ranking system used for Microsoft staff. As a former teacher commented, the Gates Foundation’s initiatives were supposed to be about making teachers responsible for their performance, but no one was turning that same spotlight onto the Foundation itself:

‘We have “bad teachers” who must be held accountable. Schools and students that must be held accountable. But Bill Gates himself? Who holds him and his employees accountable for the devastating effects the reforms have had?’ (McGoey, p.146)

This lack of accountability, the ability of the Gates Foundation to throw its weight behind an issue in which it is interested, without reference to anyone else, is also apparent in its work on global diseases. One of Gates’ particular foci, for example, is the eradication of polio, a disease which was once endemic across the world but which now sees only a few hundred new cases each year. Efforts to eradicate it entirely at this point distract from diseases which kill and disable many more people. McGoey quotes villagers on the receiving end of an anti-polio vaccination campaign in Pakistan asking ‘What is polio? We’ve never seen it…our children are dying of measles’ (McGoey, p.158). A more sensible public health strategy would be to keep polio under control while vaccinating against other deadly diseases which are much more prevalent, but importantly, the decision of where the Gates Foundation targets its resources is the Foundation’s, not health professionals or public-health officials.

Another area of particular interest for the Gates Foundation is agriculture, given Gates’ commitment to eradicating poverty, but here too, their influence appears more malign than helpful. McGoey points out the close connections between the Gates Foundation and Goldman Sachs, involving not only significant investments but ‘a revolving door of expertise’ between the two. The Gates Foundation is also invested in Monsanto and has a close relationship with Coca-Cola. Pointing this out is not to tar the Foundation by association but to establish the role the Foundation’s endowment plays in the speculation which drives the successive food-price crises of the last decade. At the same time, the relationship with Monsanto can be seen as part of an attempt to ‘export US-style industrial agriculture to Africa…[which] threatens to price African producers out of their own domestic markets’ (McGoey, pp.216-7). The push to marketise African agriculture might benefit those invested in global food markets, but despite the beliefs of people like Bill Gates, it is more likely to increase rather than to relieve poverty.

As Rieff points out, Bill Gates himself appears to be a technocrat, which is perhaps unsurprising in someone who has made his fortune from tech. His belief that philanthrocapitalists like him can move quickly and decisively to ‘get shit done’ because they are above politics however seems typical of the type, as does the belief that their money means they know better than everyone else. The presentation of this view is that it is unideological, but that of course is itself an ideology, arising from the capitalist dictum that there is no alternative to a society based on the market.

Faced with criticisms of his Foundation’s interventions in international aid, Gates has hit back strongly: ‘Having children not die is not creating a dependency, having children not be so sick they can’t go to school, not having enough nutrition so their brains don’t develop. That is not a dependency’ (McGoey, p.205) The general argument here seems to be that even if the Gates Foundation does not always do the best thing, what it does still improves people’s lives and we should take it and be grateful. If the two hundred new cases of polio identified worldwide in 2012 fell to 199 in 2013, that would still be an advance.

This may be so, but the real point is that the money that Bill Gates and his fellow philanthrocapitalists are spending on their ideas of how to eradicate hunger and disease is not free. Gates’ fortune is a product of the generous corporate tax regimes from which Microsoft benefits and government policies which favour private companies at the expense of the public sector. Gates’ earnings as a Microsoft shareholder would have been considerably lower if Microsoft had, for example, been compelled to pay more taxes. As for himself, Gates is an outspoken opponent of the wealth tax proposed by Thomas Piketty as a way of tackling the widening gap between the super-rich and the rest of us. According to Piketty, Gates told him, ‘I love everything that’s in your book, but I don’t want to pay more tax’ (McGoey, p.24).

Gates’ justification for his stance on tax, personal and corporate, is that he gives the bulk of his personal fortune away to his Foundation. This, in his view, is preferable to it going to the state, which would waste it in bureaucracy, and enables it to be used most efficiently. The efficiency point is debatable, but the key consideration is that Gates’ financial model is a way of removing resources from democratic control. If Gates and billionaires like him simply paid more in tax, and if their companies were compelled to do likewise, those resources would belong to the democratically-elected government and we would all have a say in how they are used. The only people who have a say in how the Gates Foundation spends its resources are its trustees: the role for the rest of us is solely to shut up and be grateful.

Philanthrocapitalism is not the solution to food-price crises, nor is it an answer to inequality. The only answer to the increasing wealth and influence of Gates and his ilk is to defend public services and oppose the further encroachment of the private sector into service delivery across the world. When Gates protests that he should be immune to criticism because he is giving his wealth away, the only possible response is:

‘We don’t care. Pay your taxes!’