FACTS againest MYTHS V0L-Ii-1-APRIL-1995.pdf

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VIKAS ADHYAYAN KENDRA

April *95 VOL II # 1

"FREE TRADE" AND MARKET MYTHS
ible think means the power of holding contradictory
fs in one*s mind simultaneously, and accepting both
of them...To tell deliberate lies while genuinely believing
in them, to forget any fact what has become inconvenient,
and then, when it becomes necessaiy again, to draw it back
from oblivion for just as long as it is needed, to deny the
existence ofobjective reality and all the while to take ac­
count of the reality which one denies — all this is indis­
pensably necessaiy ”.

S

George Orwell, 1984

"The steady growth of state intervention has been spon­
sored and administered by political leaders who were all
the time proclaiming the virtues ofa free economy".
Gunner Myrdal. "Beyond The Welfare State”

The recent Mexican crisis followed by the ’Barings’ Crash
not only shell-shocked the entire world of finance capital
and investment but sent shivers down the spines of the pro­
ponents of the so-called free trade, and 'laissez faire ’ apch to the ills of the world. The SAP model that undered this crisis came as a massive blow as well Yet. the
whole crisis has been referred to as one more example why
SAPs are necessary. The Mexicans, it seems, failed to
implement SAP faithfully and thus the sudden sharp ’peso'
devaluation that triggered off the crisis! Until the crisis.
however, the country was being held aloft as the “show­
piece” of the “free trade” world. If a country succeeds, this
is attributed to SAPs and when it fails, reasons are manu­
factured to maintain that it did not implement SAPs cor­
rectly!
These critical developments have, however, seriously chal­
lenged the “free market” dogma and underscores the ur­
gency fora rc-cxaminalion of the cunent orthodox policies
promoted by World Bank/lMl* combine. Above all. the cri­
sis has highlighted once again the sway exercised by finan­
cial markets over the fate of especially the nations of the
South. When the post-war monetary systems was being
designed at the Bretton Woods Conference, J.M. Keynes,
had put forward proposals to regulate the market, but '‘those
were shelved in favour of a compromise which reflected

«

FACTS against ffiYTHS

INFORMATION BULLETIN

US financial concerns” cited in Third World Resurgence
#55, 1995. Since the collapse of the Bretton Woods system
in the 70s. the trend has been towards greater deregulation
and this has led to greater concentration of financial power
in the hands of a few' traders who control massive sources
of capital.
The “free trade” dogma, founded on various concepts and
formulae, are mostly hypothetical, partial, unrealistic.,sub­
jected to many factors of uncertainly and exceptions. Be­
sides. there is no such thing as ’’perfect competition”, “per­
fect equilibrium” or “perfect economic efficiency”. Eco­
nomic Stale regulation continues to exist albeit in a refined
and disguised form. Major countries of the North, swear­
ing by this doctrine, also maintain “protectionist trade poli­
cies. multi-bullion subsidy programmes to keep afloat in­
ternationally inefficient domestic industries'*.
'The doctrine may have worked well in Smith’s or Keynes
day but in today’s world it is largely an anachronism.
Today’s trading game, follows the rules of “absolute prof­
itability and greed” (Lang & Hines, New York, 94). The
theory simply does not apply where 'fNCs. with its enor­
mous financial power, can transfer its operations to lowerwage. less-regulated countries. 'They determine what can
be brought and sold, through monopolistic practices, mass­
advertising campaigns and even political patronage. Com­
panies today are loo few and too large to guarantee ’perfect

Finding
the ideally competitive
market is in reality
like hunting lor that
mythical creature,
the unicorn.
Legend has it that
only *a virgin without
blemish*
could capture the
unicorn.
No one pretends that
capitalism is a perfect, and
unblemished virgin.
But the point is, do capitalism's real imperfections make it
possible for the market to exist, or operate, as freely as it
is supposed to according to capitalist theory?
Gtaphka tram *CapitaliMn lot Bagmnara*; RLakachman: Unwin Papaibacka (London). 86

April *95
Page 1

L ^6

competition’ among small enterprises. Therefore, the in­
terplay between supply and demand’ that should regulate
the prices of goods, services and inputs is not “free”. Nei­
ther political, economic, military, or other pressure can
guarantee that “freedom”. As Fernando Garcia observes,
“Flow Much Freedom can a country- enjoy if it is depen­
dent, for instance, on the IMF or the World Bank? How
much opportunity does anyone have to become ‘competi­
tive’ in a ‘free’ market where there, is collusion between
giant TNCs and government bureaucrats, politicians or
military? What is that freedom worth that is dictated by
the competition?” Besides, an 'Open Sesame' to “free
tr ade” would result, especially today, in increased pressures
on natural resources as cash crops for exports are given
priority over those for domestic consumption,increased toxic
pollution and increased displacement of workers and un­
employment where TOCs will leave for cheaper havens.
'flie “free trade” proselytizing that is going on intensely is
indeed steeped in a great deal of mythology with claims
that, in reality, are false. It becomes imperative therefore
to not only scrutinize the hidden mainsprings of this whole
theory but more importantly to debunk the false claims
linked to it.

MYTH:
IF GOVERNMENT JUST GOT OUT OF THE WAY, THE FREE
MARKET COULD SOLVE THE PROBLEM OF HUNGER IN

THE SOUTH.

FACT:
This formula thalmarkelds-good-government-is-bad never
will solve the problem of hunger. Instead, it only misleads
people into believing that a society can opt for one or the
other when, in reality, all economies the world over is a
combination of the market and government in terms of re­
source allocation and distribution of goods. Even the divi­
sion between the so-called free-enterprise and governmentcontrolled societies is hardly clear-cut. In Germany’s "free”
economy, government expenditures are a significantly big­
ger share of the GNP than in what was then in socialist
countries. Following the revolution, Nicaragua’s economy
relied as much on the market as did Mexico’s. South Ko­
rea and Taiwan, — always held up as shining examples of
“free Trade” — owe much of their striking growth rate to
numerous government interventions, not the least of which
have been government-imposed land-reforms and support
for key industries.
For all its advantages, the market’s major limitations leads
directly to the causes of hunger in especially the South.
For instance, the so-called advantage that it responds to
individual preferences. In reality, the preference lor people
is to eat as and whenever they are hungry. Yet, millions of
people living in marketed economics have no access to
food with people actually dying as a result.
A major limitation of the market is that it does not respond
to individual preferences — or even needs. It responds to
money.
As is well known, the increasing concentration of deci­
sion-making power over all that it take to grow and dis­
tribute food — fewer and fewer people owning more and
more land, controlling credit, water, marketing channels,
and so forth. As the poor in ever greater number are pushed
from the land they are less and less able to make their de­

FACTS against MYTHS

mand for food register in the market. Likewise, in urban
development, small elite often controls banking ,indus­
try, and commercial institutions; as was the case in the
Philippines under the Marcos dictatorship.
Under such conditions the market begins to responds to
the tastes of those who can pay. namely, the privileged
minority rich, the Tatas. Birlas including the Susmila Sens
and Aishwariya Rais. They alone have the incredible
Wealth to make, what economists call, effective demand.
Production willy-nilly is shifted more and more to nonessential items of consumption like CDs, Johnny Walker
whiskey, etc. There is also the invisible food revolution in
which basic foods of the masses are increasingly displaced
by luxury crops for the minority. In international trade,
food flows from the hungry' to the well-fed.
Even in the US, the situation is not too rosy. Soup lines in
the early 80s for instance lengthened while the foodflh
dustry spawned a record number of fancy food items^2000 in 1982 alone — including varieties of new break­
fast cereals and even varieties of dog and cat food. Left to
its own devices, the market simply reflects inequalities in
wealth and income and should be seen for what it is: a
useful device and nothing more. That the market registers
the needs and wishes of all people including the hungry is
a myth.
The market is also blind to the social and resource costs
of the production engine it is supposed to drive. For in­
stance, during the 70s, US farm exports boomed to an
incredible extent, rising 6-fold in value in only a decade.
At its peak, in 1981, its farm exports brought in over $44
billion in foreign exchange. “What massive achieve­
ment... All that grain could pay for imported oil” it raved.
What failed be raved about and disclosed was that pro­
ducing all that grain needed an energy expenditure equiva­
lent to at least a third of the money generated; the topsoil
was eroding from prime farmland at an accelerated and
alarming rate, and that the push to export was pumping

April *95
Page 2

ground waler oul of the earth much faster than nature could
replenish it. The market also failed to reveal the social
costs: of fanners being made more vulnerable to the va­
garies of the international market. Hundreds of thousands
of livelihoods were wiped out: increased rural landlessness;
the decline of whole rural communities and the shocking
sight off fanners on food stamps — to all this devastation
the market is blind (op.cit)
Another drawback is that it undermines some of the most
held human values. It leads to the concentration of eco­
nomic power. Those with greater economic clout under­
cut and gobble up those with less. The 1980s “merger
mania” involving some of the largest American TNCs is
merely one of the many manifestations of this trend. In
1984 alone. $ 122 billion went into over 2500 mergers that
were unjustified. The resulting concentration of economic
power directly leads to hunger and seriously compromises
political democracy. (The link between hunger in India and
the fact that a few industries like the Talas., Birlas. Godrej.
etc., control as much land as a million fanners is obvious).
American farmers, for instance, in the 70s experienced an
" edible concentration of reward. By the early 80s. a mere
captured 60% of net farm income, (op.cit). Thus, mar­
ket theory alone docs not explain such a dramatic trans­
formation. “In theory, the market rewards hard work; in
reality it requires hard work and land — those who have
wealth. It is they who have easier access to credit and can
therefore better withstand the market’s- inevitable swings.
and only the wealthy can expand to make up in volume
what all are losing in profits per acre, as a production push
leads inevitably to price-depressing gluts” 4

MYTH:
THE FREE IMPORT AND EXPORT OF PRODUCTS WOULD

REDUCE PRICES, INCREASE EFFICIENCY AND ALONG

WITH COMPETITION WOULD ENSURE THAT EXORBITANT
PROFITS ARE NOT EARNED BY ANY COMPANY.

FACT:
Hence, the logic of this myth is that “free market” forces
should be given free rein! This is reinforced by illustrating
the case of sugar: '‘Take sugar out of the Essential Com^ulities Act (an anti-hoarding act) and let traders hold
Crocks. Create a futures market in sugar. Let traders de­
cide whether it will be profitable to import sugar al a later
date or maintain stocks. They will calculate the cost and
risk involved” (cited in Aspects of India's Economy,
# 14,1994)
In most elementary textbooks oh economics a fictitious
example is given, so as to understand the laws of market
i.e. the laws of supply and demand. A large number of
farmers wish to sell maize; a number of consumers wish
to buy maize. Everyone have all the necessary informa­
tion on the market for the crop. All fanners want to sell
exactly equal amounts of it and all consumers wish to buy
exactly equal amounts. So. no one — neither the seller or
the buyer — can influence the price of maize. There is
also no coordina tion between any of the fanners or any of
the consumers. No exorbitant profits can thus be made by
any farmer, and no consumer can use any in the market to
depress the price of maize.
At this point., however, the textbooks cautions that this is
merely a hypothetical exercise. For. after all. in the real

world such a market is non-existent. All markets in the
real world differs drastically from this mythical world.
Frequently, just a few producers or a few traders dominate
the market, and coordinate/colludc to set prices. Alterna­
tively. large companies which account for most of the
consumption of a particular commodity are also in a posi­
tion to fix prices when the producers are many and disor­
ganized. Thus, just a few TNCs. etc. control, for example.
the bulk of aluminium production in the global market;
their collective actions determine the prices received by
producers of bauxite (the raw material for aluminium). For
instance, in Kasipur in the Adivasi district of Rayagada.
near Bhubaneswar, bauxite is being exploited for an alu­
mina project in collaboration with the American TNC.
ALCOA. The same gang of'TNCs also control the market
in the technology to manufacture aluminium, and those in
need to buy this technology run up against an organised
cartel.

MYTH:
FREE TRADE WILL HELP THE SOUTH IN GETTING READY

ACCESS TO CONSUMER AND OTHER INDUSTRIAL
MARKETS OF THE NORTH.

FACT:
This is the carrot being dangled before the countries of the
South.! The rationale being that the main task is to reduce
tariffs in the North on all products of export-interest to the
South. In part, this means that the working class for in­
stance in the North should enter into direct competition
with low-wage working people in the South. The explana­
tion being that the movement in international capital along
with free trade of goods stimulates an international standards-lowcring competition to attract capital: wages can
be lowered, as can health insurance, workers safety stan­
dards. environmental standards, etc., — all in the name of
reducing costs. But reducing costs by increasing efficiency.
and reducing costs by lowering standards, are not the one
and same thing. Avoiding standards-lowering competition
needs more than free trade.
Northern capitalist have generously offered to share the
wages of the working class of their countries with the poor
in the South. This gesture is only made generous by the
prospect that the leveling of wages will be completely
downward due to the vast number and rapid growth of
under-employed populations in the South. The idea that
growth will raise world wages to the current country' level.
and that all can consume resources at the US per capita
rate, is a pipe dream and, more pertinently, in total conflict
with ecological limits that are already stressed beyond
sustainability. “Growth for the poor is indeed necessary,
but without making ecological room for it by a reduction
in growth of both rich and poor, it cannot happen” states
Goodland and Daly in "The Reason II hy Northern Income
Growth is Not the Solution to Southern Poverty
The impacts noted above are already evident not just in
the South where poverty' has certainly not been eradicated
and exacerbated in many countries in the wake of GATT.
but in the US too where real wages of workers ha ve been
sinking steadily over the past decade and how lower than
they were 25 years ago with more Americans living in
poverty today than they did in any year between 1965 to
1981. Thus, in short, the free trade strategy, fails in bailing

April *95

FACTS against MYTHS

Page 3

A

out the South. The Mexican crisis and the Barings col­
lapse vividly illustrates this point.

MYTH:
EFFECTIVE UTILIZATION OF THE STRATEGY OF COM­

MYTH:

PARATIVE ADVANTAGE WILL LEAD TO (I) EXPORTS (II)

MARKET-LED GROWTH CAN GENERATE SUSTAINED

FOREIGN EXCHANGE, AND (III) ECONOMIC GROWTH.

DEVELOPMENT FOR THE POOR COUNTRIES OF THE

fact:

SOUTH.

Ground realities do not fit the neat logic of comparative
advantage. While it is popularly assumed that a nation’s
comparative advantage lie in its geographic endowment,
the relative qualities of soils and climates turn out to have
virtually nothing to do with who produces what. Low wages
arc the real advantage of most of the people of the South.
In their book “World Hunger: !2 Myths'*, (op.cit) illus­
trate the case of the Philippine Government advertising in
the American Magazine: "H e Ilan/ You To Take Advan­
tage Of Us ”. A Filipino banana worker can however ex­
pect no more than about $ 1.50 a day; and a Sri Lankan tea
worker is lucky to bring in 72 cents. “Such wages reflect
business and landowner power to prevent collective bar­
gaining and circumvent whatever minimum-wage law may
be on lhe books. Mexico exports tomatoes, for example,
not because its climate is belter than Florida’^^r
California’s (except for a couple of weeks in late wiiWr)
but because Mexican farm workers make less in day than
their Californian counterparts do in an hour. Secondly,
TNCs are also keys in determining to what ends the South
put their land and other resources. After organised field
workers in Hawaii had achieved the most livable wages in
farmwork, land costs skyrocketed. Del Monte and Dole
shifted production of virtually all canned pineapples to the
Philippines, where labour organising was outlawed under
lhe Marcos’s dictatorship and land was obtained by taking
it from poor farmers. Pineapple field workers in the US
average $3 to $5 dollars an hour, but only a fraction of that
in the Philippines.

FACT:
Theoretically, yes. 'Flic theory claims that even the poor­
est countries can trade successfully in an undistorted mar­
ket. provided they exploit areas of advantage (e.g. lower
salaries, cheaper raw products, low rents, cheap transport)
and provided the currency is traded at its real international
value. In theory, any country can alwavs rind some com­
parative advantage.
'flic nature of ‘comparative advantage in contemporary
society has more to do with absolute price advantage then.
(say), the differences in climate etc..oilen cited in econom­
ics textbooks: those who can keep wages lowest and
minimise intrusive social and environmental regulations
will reap the highest profit and gain the greatest market
sharcX for their goods. In a world where markets have been
wrenched open to all-comers, such cul-and-thrust business
practices benefit those who own successful companies, but
leave workci's and the environment in a miserable condi­
tion. Besides, on the global market, it is not individual
buyers and sellers who set the national and international
rules that determine who benefits from trade: that role has
been take over by the most economically powerful gov­
ernments and their political allies, the TNCs who control
80 % of world trade. {Excerpts from Facts Against Myths
To support this claim the related myth of the so-called
Asian Tigers —Taiwan. South Korea. Singapore and Mong
Kong — is again readily cited. The economic transforma­
tion that has occurred in these countries is certainly an
achievement, but also, of course, a vivid illustration of how
poor countries can “develop" on the image of their colo­
nial and neocolonial masters. But very few countries can
expect to reproduce the post-war conditions which laid the
basis for East Asia’s growth.
The fallacy underlying the so-called theory of compara­
tive advantage is best explained by A. Lipietz (1984):
“Ricardo and the supporters of HOS theorem, for whom
the International Division of Labour seems to be the out­
come of some world Summit conference during which. after
proper assessment of relative productivities, collective pref­
erences and initial natural endowments, an optimal allo­
cation of production would have been computed. Each
participant goes home afterwards not only convinced of
the virtues of free trade but also delighted with the share
which has fallen to his/her country. The great merit of the
theorists of Imperialism and Dependency is to have swept
away the apologetic nature of this myth, to have under­
lined that the differences between economic areas, which
were undeniable in empirical terms, consisted of differ­
ences in wealth and power, and that those who had an in­
terest in the survival and domination of this state of affairs
had much more faith in the invisible hand of corruption or
in the rather more visible boot to the military than in the
invisible hand of the market. (Cited in "The PoliticalEconomy of
Globalisation :bU Oomnien. Institute ofSoc. Science, New Delhi, 93.)

FACTS against

Agricultural production can also appear lbw cost because
public
subsidies are hidden from view. Even as they promulgate
their allegiance to the free trade, governments beholden
to wealthy interests selectively subsidize their production.
For instance:
• Brazil’s soybean export boom reflected the advanlaa^
given to rich landowners by way of massive subsidised
government credit to plant soybeans - loans at 15 %
interest even when inflation rales hovered around 120.
The boom was not due to the so-called natural advan­
tage:
• Mexico’s massive growth in exports of fruits and
vegetable was due to heavy government investment
in irrigation — in some years accounting for over 90
% of all public expenditures in agriculture. The ben­
eficiaries were the countries rich farmers. The exports
were not there due to the area’s geographic advantage;
• Sri Lanka’s rise in sugar production was not due to
any ‘natural advantage’ but to partially-owned foreign
TNCs who were given a 10 year tax holiday.
■ This is seldom spelled out. The counter-evidence is
all-too evident. For instance, on being goaded by TNCs,
wealthy Filipino farmers went in a big way growing ba­
nanas for export, in place of a number of food crops they
had been growing earlier. The country rapidly became the
world’s fourth largest banana exporter. Bananas from the

April *95
Page 4

Philippines represent precisely the export success that free
trade advocates prescribe for the South. But the Filipinos
have not benefited!. The farm labourers earn just a little
over a dollar, live in concreted chawls, and arc regularly
exposed to pesticides. The foreign exchange does not re­
turn to areas where they work, to improve their lives and
their communities.
The displacement of essential food crops by cash crops is
often defended on the "rationale” that a more valuable
export commodity can earn enough foreign exchange to
finance imports of a much greater quantity of essential food
items. In theory, such advantages are vast, but in the real
world it is insignificant. To illustrate:
Export earnings in Mexico in the 70s rose a spectacu­
lar 12-fold but the portion used to import food fell from
12 to 9%. Of this, four-fifths consisted of imports of
luxury food — meat, food grains and premium alco­
holic drinks affordable only to the elites. In absolute
dollars, imports of food luxuries rose 55-fold over the
decade;
Export earnings in Kenya increased 4-fold during the
70s, yet by 1980 the share spent to import food re­
lined only 14 %. Of those food imports, the portion
spent on luxuries doubled to 40% — representing a 15
fold increase on dollars spent on imported luxury foods;
Thus, while undemutrition afflicts as much as half of the
rural poor in these countries, export earnings did little to
meet their needs.
Moreover, when a government pushes export crops, local
staples lose out in competition for land, farm credit, farm
inputs, and technical aid. For Brazil's urban population,
food supplies per person dropped by a fifth during the
1970s. With wage rising at only half the rate of food prices,
the poor majority in Brazil — even those who could find
work — undoubtedly found themselves increasingly hun­
gry ( Lappe & Collins)
Even when a substantial portion of export earnings is used
to import food supposedly to compensate for such declines
— in contrast to the illustration above — what gets im­
ported is less likely to reach the poor than locally produced
good. Furthermore, as countries import food, that cannot
be economically grown locally and the people are wheedled
il®tonsuming imported food, long-term dependency de­

«

velops. As Peru had imported more and more wheat, the
per person production of com fell by one-third and that of
potatoes by more than one-half since 1970. The drastic
transformation of Peruvian food and eating habits led to
this comment from the country’s President:
“The huge consumption of foreign food products has
caused...the people (to) lose faith in their ability to con­
trol their own geographical environment. Food imports are
notjust a foreign exchange problem; they also make a coun­
try lose touch with its sense of its own history and geogra­
phy... Mass consumption...has ended the usefulness of the
Andes. Peruvians...without moving from their land, are
exiled from their own country” ( Lappe & Collins)

As Lappe and Collins maintain: the “belief in exports as
the wealth generating answer to underdevelopment also
ignores how a shift to cash crop production — whether for
export or the domestic market — can undercut consump­
tion by altering decision-making within families. As evi­
dence is mounting from various countries, cash crops also
encourage the menfolk lo take over women’s land rights.
When cash crops are introduced, women often lose rights
to both cash and food. Little wonder therefore that women
in the South oppose cash.crops because they reduce the
amount of land available for food; they spend more time
cultivating their husband’s cash-crop plots than their own
foodcrop plots.
■ Given the current structure of international trade and
the so-called globalization process the exports of agricul­
tural products are not profitable for poor countries of the
South despite the Government earning foreign exchange.
First and foremost, very little of the value of their exports
stays within these countries. Of every dollar that consum­
ers in the North spend on products from the South, only 15
cents remains in the country of origin. The rest of the
amount goes to banks* traders, processors and distributors
based in the North. While most countries of the South lack
the industrial capacity to export anything but raw mate­
rial, the real profits lies in processing and marketing;
Moreover, the prices of agricultural exports in the South
are falling relative to the costs of imported manufactured
goods. By 1985 prices of primary products had dropped to
the lowest levels since estimates were first compiled in
1957. The impact on poor countries “begins to sink in when
we consider that if the prices of raw material had remained
at 1985 or even 1989 levels, most countries of the South
including India would face no debt crisis today.
Given the falling commodity prices, it is quite possible for
a country to increase its export volume yet end up with the
same or even less in foreign exchange earning. For instance,
between 1981 and 1983, Malawi managed to increase its
export of sugar, yet falling sugar prices shrank foreign
exchange earnings by more than half.
Apart from India over half of the countries in the South
get more than 50 % of their export eamings from just one
or two crops or minerals. When prices fall, many coun­
tries have no alternative source of foreign exchange earn­
ings; they cannot hold out for better prices. In fact, they
feel even more compelled to step up exports. As Lappe
and Colins maintain, “this response undercuts price still
further”.

To make matters worse, most agricultural exports in the

FACTS against MYTHS

•

April *95
Page 5

1

South are produced by just dozens of nations —62 coun­
tries produce coffee, for example — all competing for rela­
tively stagnant markets. Production of many important
commodities — sugar, coffee, and bananas to name only
three — typically exceeds world demand. Many of these
goods are also luxuries like cocoa, etc. which- means that
consumers in the North can always cut back if prices go
up. And whenever prices of some raw goods do rise, pro­
cessors and markets in the North invest massively in sub­
stitutes. Consider the proliferation of sugar substitutes.
Further advances in biotechnology are likely to further pro­
duce a* whole new wave of even more widely used substi­
tutes. While producers in the South face many competi­
tors. they have relatively few buyers, For each commod­
ity, a handful of TNCs control world trade and processing.
Unilever, for example, controls 80 % of world trade in
edible oils —fand they are fully capable of playing one
source of supply against another.
According to financial analysis Peter F. Drukcr. these many
trends (combined with changes in manufacturing processes
that drastically reduce the use of minerals from the South)
suggests that die relative prices for exports from these coun­
tries are likely never to pick up on their own. Given such a
structure of world trade, it is questionable whether these
poor nations can benefit from export promotion, no matter
how successful in increasing the volume. For example
Kerala, where fish along with tapioca was once the staple
diet. The protein in the lish made people immune to dis­
ease. Today all cuttie fish and prawns are exported— prices
are better. Fisherfolk eat less fish today and hence suffer
from malnutrition. Export or Eat has become the name of
“free trade” game.

MYTH:
A FAIR AND NON-HARMFUL TRADE IN TODAY’S WORLD
IS SHEER UTOPIA. THOSE OPPOSING FREE TRADE ARE

THEREFORE ADVOCATING AUTARCHY — EVERYBODY
EATING FROM THEIR KITCHEN GARDENSI SUCH
PEOPLE EVEN OPPOSE TRADE AS SUCH.

Facts Against Myths is a monthly
bulletin of factual information on
a number of development myths
and fallacies, etc, including infor­
mation against alien development
models, paradigms and false con­
cepts on caste, creed and gender.
Produced and Published by:

Vikas Adhyayan Kendra (VAK)
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FACT:
But what is more utopian than tenaciously following a
textbook model of comparative advantage, obstinately re­
fusing to look at ground realities? Undoubtedly, agricul­
tural exports are not in themselves the enemy of the poor
hungry masses. But in this real world of extreme power
differentials, export-led agriculture both reflects and fuels
the forces generating needless hunger in the South.
Food security for the poor does not mean food only. Or that
export crop production is in itself the enemy of the hungry.
Trade can contribute to development. The opposition to
“free trade” is mainly to warn against the uncritical notion
that trade per se represents progress: that exports in them­
selves generate resources for alleviating hunger and pov­
erty. In most countries of the South the poor are deeply hurt
by export-oriented agriculture. It
• allows local economic elites to ignore the poverty all
around them that limits the buying power of local people.
By exporting to buyers in higher-paying markets abroad.
they can profit anyway:
• provides incentives to both local and foreign elites to
increase their domination over agriculture in the Scdw
and fuels their determination to resist economic and s<T
cial reforms that might shift production away from exports:
• mandates subsistence wages and miserable working
conditions: poor countries compete effectively in inter­
national markets only by crushing labour, organising and
exploiting workers, especially women and children:
• throws the poor masses in these countries into competi­
tion with foreign consumers for the products of their own
land, thus making local staple foods scarce and more costly.
REFERENCES:

1. Shutt.. H. The Myth of Free Trade. Basil Blackwell, Ltd. 1985, U.K
2.
The
warped logic of‘Globalistion’: Aspects of Indian Economy, #
14,94, (Bombay)
3. Uippe. F.M. & Colins,J “World Hunger''. Earthscan Publication,
Iiondon. 1988,
4. Bracho. F, “Health. Environment & Economics” Better Living
Publications. Venezuela. 1992
5. Archer, R.”Markets & Good Government”, LIN NGO Liaison
Service. Geneva. 1994
6. Garcia F, “Really, How free is the Free Market?”, TWN Fea­
tures, Goa.

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