In August 1976, two years after the Bangladesh famine, Amartya Sen wrote in the EPW about
Famines as failures of Exchange Entitlement.
In places like twentieth century Bengal or Britian, famine deaths could only arise by a failure of the public distribution system to supply enough food to some people within their jurisdiction. Here the entitlement to food is legal or political. It is not on the basis of 'Exchange'.
One may think of buffer stocks and public distribution systems for food as 'risk pooling' or a type of social insurance.
However, it is 'demographic transition'- i.e. lower birth rates- which ensures that long term food security will obtain.
THE approach of 'food availability decline', which 'I will call FAD (without apologising), attributes the causation of famines to a sharp decline in the avail- ability of food supply in the region in question.
There has been no famine without FAD- though food availability may have declined because of forcible requisition and femoval of food stocks rather than a bad harvest
This is the common element of the approach, through the manifestatians of famines can be explained in one of several distinct way.
I suppose Sen means that food availability may decline for different reasons- e.g. floods, a drought, war, embargoes etc.
Also, the causation of the sudden decline of tood supply can also be explained in many different ways.
The explanation of a manifestation is its causation.
Frequently enough, FAD goes with a Malthusian theory of population.
No. Malthusian theory explains why a population may have a meagre diet and thus have low longevity, height, weight, stamina etc. This goes hand in hand with 'involution' in agricuture- i.e. employing more people on the land with scarcely any increase in output.
To quote-an in- fluential recent book by Brown and Eckholm: "Since agriculture began, food production has increased several hundredfold. Unfortunately, man's numbers have also expanded to absorb the additional food, always pressing against the limits of supply.
Not necessarily. Women may decide not to have babies who are bound to be very poor. Malthusian famines are defeated by 'vice' (contraception was once viewed as immoral)
Under these circumstances, a sudden sharp reduction in- the food supply in any particular geographical locale has usually resulted in widespread hunger and famine."
Unless Uncle Sam sent food aid.
(L R Brown and E P Eckholm, "By Bread Alone", Per-gammon Press, Oxford, 1975, p 25.)
It was topical because of the 1974 global food shortage.
But FAD can also be "non-Malthusian" as far as the causation of the food shortage is concerned. (Indeed Brown and Eckholm, themselves also note that while "world population growth continues to be rapid, ... rising affluence now has emerged as another major claimant on the world's food- producing resources", p 6.)
This didn't matter. If the rich eat a lot there is more incentive to grow a lot of food. Anyway, the rich move away from low-Income elasticity 'Giffen' goods to more and more expensive items. Thus they end up eating less 'staples' (bread, potatoes, etc.) Even so, over all demand for staples may rise if they are fed to livestock or used in other ways 'complementary' to 'normal goods'.
The elsential aspect of FAD is the view that famines are caused by a sudden decline in food availability, and no matter what the immediate causes of this decline are, or what its predispos- ing conditions happen to be, FAD stands as long as the famine is accept- ed to be the result of that decline.
No. It is simply a fact that if less food is available and the public distribution system is inadequate, then some people may starve.
In some ways, FAD is the most obvious approach to famines.
Only an utter cretin, like Sen, would dispute it.
In explaining, say, the Irish famine of the 1840s, one has rather compelling reasons to concentrate on the decline in the food availability arising from the potato blight. There are other factors too, clearly enough, but they seem subsidiary to the central fact of unavailability of potatoes. The 'annewari' systems
under which, if crop assessors thought output would be less than half the normal, a famine could be declared and the Famine Code implemented. Sadly, if there wasn't enough money in the kitty (for example, if there was an ongoing war) the thing was ignored.
used in the 'famine codes' in India almost certainly deriv-ed their rationale from some variant of FAD, and it was natural that this view should traditionally be taken. '
The idea was that the Administration should buy food from elsewhere & bring it in and distribute it through 'food for work' and other such schemes.
FAD works best when much of the food eaten by a family happens to be grown by it without the need of exchange.
Not if the family has multiple sources of nutrition. In a good year, the inferior crop is fed to livestock. In a bad year, livestock are slaughtered & the inferior cereal is eaten by the family. Sadly, some climate events- e.g drought, flooding- can affect all options.
FAD is used by advanced economies where there is no subsistence sector. If the forecast is that there will be less food available because of a war or a drought in the country which traditionally exports a type of food to us, then our Food Ministry will seek alternative suppliers so as to make up the shortfall.
In an exchange economy, however, one has to look at the terms of exchange,
Even subsistence farmers participate in exchange. What Sen means is prices are important. It may be necessary to subsidise or ration food.
and while food availability clearly will be an important influence on these terms, there' are also other factors involved.
There is supply and there is demand. The thing isn't rocket science.
In an exchange economy, a family's ability to buy food depends on
how much money they have. Bengal may have been a shithole but it was a monetized shithole. For the very poor, gifts of food or Government rations were important because they had no money.
the rates at, which its labour and other possessions can be exchanged - multilaterally or bilaterally - with other commodities especially food.
Sen is assuming a free market for food. However, at a time of dearth, the State may requisition food supplies and ration them through the p.d.s. (public distribution system).
If something leads to a sharp decline in the food that these possessions can command in exchange, the family will have to starve.
Not if they can rely on charity or borrowing or running down savings.
This elementary recognition opens up another dimension in the causation of famines.
No. The cause of famine remains a supply shock leading to FAD.
It is, of course, a common place to say that famines depend "not merely on production, but also on distribution". This piece of wisdom throws remarkably little light on the problem.
Sen sheds none at all.
For an economy based on the consumption of self-produced food,
there has never been any such economy. Perhaps, Sen is thinking of plants. They produce their own nourishment. But they are not economically active.
production and distribution of food cannot really be separated.
Sure they can. The stronger people in the clan may gobble up the food produced by weaker members- or slaves.
For an exchange economy, they can be, but the aphorism is not particularly helpful there either, until something is said on the way the distribution of food is brought about.
What Sen didn't understand was that the reward for growing food had to rise signifiicantly if India was to avoid famine or mendicancy. This meant productivity had to rise- i.e. the guy harvesting the grain had to consume a smaller proportion of the output. This could be achieved by improving the soil, applying fertilizer, using tractors, and developing higher yielding seeds.
Obviously, our ulti- mate concern must be with the amounts of food which the respective families consume,
In poor countries, gathering information of this sort is not feasible.
and this can be expressed through a total availability figure
no such figure is available save in advanced countries
combined with the relative shares of that total going to the set of families, respectively.
Nobody knows what that set is. Sen didn't get that most statistics in India are just made up.
While this style of ex- pression may give us the satisfying feeling that we have taken a step for- ward in the analysis of famines, this illusion will not survive a close scrutiny. The crucial fact is that in an exchange economy the 'distribution' of a particular commodity is the result of exchange,
No. The exchange of a particular commodity is a change in its distribution. One isn't the result of the other. In the case of food, the person who exchanges money for it, eats it. The commodity then ceases to exist.
and whether a family has something to eat depends on what it can sell
or what it can borrow or 'dissave'
and the prices that are fetched by what it can sell in comparison with the prices of food.
Sen forgets that people can borrow or gain transfers.
An economy in a state of comparative tranquillity may develop a famine if there is a sudden shake up of the system of rewards for exchange of labour, commodities and other possessions.
That is why Communist countries can suffer famines. But India too suffered when the distribution of food was made a Government monopoly. India nationalised the wholesale trade in wheat on April 1, 1973, under the government of Prime Minister Indira Gandhi. By the next year, even the middle class in the cities was having to pick stones out of the shitty rice supplied by the ration shops. Minhas had resigned from the planning commission over this. Indira asked him to return once it became obvious he was right.
Incentives matter & some mechanisms (e.g. free markets vs a Government monopoly) are more efficient than others.
A sharp revision of 'exchange entitlements' can precipitate a famine even when there is no over-all shortage of food.
If it isn't worthwhile for farmers to take take their food to market, the cities will starve. The Soviets called this the 'scisssors problem'.
However, this can't happen in a market economy. Food is inelastic in supply and demand. If there is no overall shortage, there is no supply shock. Thus there can be no 'sharp revision' of food prices. Thus exchange entitlements can't change.
I suppose one could say 'if we assume there was no ongoing war, then the fact that 20,000 Londoners died during the Blitz, can only be explained by a drastic change in the rate at which being alive was exchanged to getting blown to pieces. This proves that Londoners can be killed by German bombs even if there is no war with Germany. What is puzzling is why so many Londoners were blown up in 1940 but virutually none suffered in this manner in 1930 or 1950.
It is this type of causation that the approach of the 'failure of exchange entitlements' (FEE for short) is aimed at capturing.
It is the type of causation we invoke when we assume there was no war in 1940 and thus it wasn't Hilter who was bombing London.
By 1975, everybody in India was aware that Minhas was right. He was a Punjabi Sikh- i.e. not a worthless wanker. If you make food a Government monopoly, good quality rice disappears from the market.
Perhaps a disclaimer is needed here. The expression 'entitlement' can be given a normative sense, e g, in Robert Nozick's interesting account of 'rights' (see his "Anarchy, State and Utopia", Blackwell, 1974). No such meaning is intended here.
One can say 'in a free market economy there is a Hohfeldian immunity for buying and selling certain goods and services provided title is acquired or transferred in a legal manner.'
Any system of exchange is a system of entitlements, e g, person i can sell his labour for wage with which he can buy q amount of food.
No. One may have a Hohfeldian immunity to offer to work for the going wage. But there is no entitlement to employment. If the market fails to clear, you have no legal recourse. However, you may be entitled to payments from a Social Insurance fund.
People's ability to survive in an exchange economy depends on the system of exchange entitlements, and if the entitlements change in a way as to exclude a lot of people from the ability to acquire food, a famine results.
Not in England, because of the Poor Law. The last famine was in 1623. One could see the Poor Law as an early example of 'risk pooling' or Social Insurance. It had the effect of reducing vagrancy and raising productivity.
This does not go into the issue as to whether the earlier system of entitlements was itself 'just' or not indeed several normative theories of justice may find it quite unjust - but the issue under dliscussion is the more factual one of relating inability to survive shifts in the pattern of exchange entitlements
Sen doesn't understand that people can go in for 'risk pooling'. In good times, you pay into a social insurance scheme. In bad times, you can draw upon it. Buffer stocks of food can be maintained so tht communities can survive exogenous shocks.
In this connec- tion, it may be worth remarking that Marx's theory of 'exploitation' - like Nozick's theory of 'entitlements' - also goes into the acceptability of certain rights, and my current concern is not with that issue.
Sen's concerns were crazy. Both India and England had laws which created entitlements for food. To some extent, they were justiciable- i.e. a court could order the government to provide more food to a particular area- though, under exigent circumstances, there might be entitlement collapse. That is what happened in Bengal in 1943 and 1974.
Another disclaimer is concerned with the relations between prices and exchange entitlements.
Prices actually exist. 'Exchange entitlements' are a figment of Sen's imagination.
Though prices typically fonn an inpmrtant part of a system of exchange entitlements, there is a difference. Exchange entitlements are concerned with what a person can, in fact, get throuigh- exchange and not with what he could get if he could buy and sell at given prices.
Under laissez faire they are one and the same provided markets clear. I suppose Sen means that 'downwardly sticky' money wages, rents & 'administered pricing' can create involuntary unemployment or shortages. However, in that case, what a person actually gets is not knowable in advance. Some get lucky. Others get nothing.
The presence of unkmployment drives a wedge between the wage rate and the entitlement from exchanging labour.
No. It means that some people can't get a job. That's because they don't have any entitlement to it. They have a Hohfeldian immunity such that they can take a job. But employers too have an immunity to not hire some people.
The presence of monopoly and other restrictions also makes prices depart from exchange entitlements.
No. Monopoly & restrictive practices are likely to drive prices up unless there are substantial economies of scope and scale.
There is no entitlement- legal or otherwise- to renumerative employment or a guaranteed buyer for anything you produce.
Exchange entitlements represeint a comprehensive picture of exchange possibilities faced by groups of people,
They are unknowable save after the event. But even then, how can we be sure that the unemployed guy isn't a lazy 'scrounger'?
and reflects, among other things, the institutional structure of the economy.
No. It reflects expectations which are independent of that structure. That's why a Great Depression can affect countries with different institutions in pretty much the same way.
It is, of course, possible to speak of a parti- cular person's anticipations of exchange entitlements on which his own plans are based whether or not these antici- pations reflect the real possibilities faced by him,
Nobody knows their own 'real possibilities' let alone those of anyone else. It was possible that Sen wouldn't be a useless shithead. He could have studied soil science like his dad and contributed to the Green Revolution.
though it is natural to expect correction of anticipations in the light of experience. It can be argued that FEE-ty,pe famines have a special relevance for developing countries at early stages of modemisation and growth.
No. FEE is unknowable. What is knowable is incentives. Can farmers make a profit by expanding output? Yes, if the Government subsidizes some inputs and provides transport and other infrastructure. A.O Hume understood this. He published a book on how to raise productivity in Indian agriculture back in the 1870s. He set up the Indian National Congress because he was foolish enough to think that Indians might want their country to grow richer, or, at least, better fed.
The odd thing is that B.R Sen, who was related to Amartya, did a great job as head of the FAO. Indeed, Amartya was offered a job with the FAO in Rome in 1957, shortly after his relative took over there.
In a primi- tive economy based on family labour or communal labour prior to the development of the wage system, famines resulting from failures in exchanging labour cannot arise.
Sure they can. During a famine, you sell yourself into slavery or bonded labour. If there are no takers, you starve or run the fuck away.
In so far as exchange of commodities is also limited and people eat what they themselves grow, the role of other failures of exchange entitlements is also remote.
Nonsense! If you can't get a bit of protein in your diet by sucking cock, you are well and truly fucked. Obviously, if you can collect a bunch of hoodlums and start killing and robbing, then you may be on your way to becoming the next Emperor.
Famines based on FAD can, of course, take place, but the relevance of FEE-type famines grows only as the economy becomes more exchange-orientated and in particular as labour emerges as another 'commodity' to be bought and sold in the market.
No. A more sophisticated economy means more availability of insurance, buffer stocks & other 'hedges'.
Failures of exchange entitlements are also less ikely in socialist economies,
Hilarious! The biggest famines were in Stalin's USSR & Mao's China. Mujib's Socialism was a factor in the 1974 Bangladesh famine.
or in advanced capitalist econo- mies, since a system of emnployment guarantee in the former and entitle- ments to 'unemployment benefits' in the latter, tend to rule out large-scale starvation resulting from, inability to exchange one's war.
To be fair, back in 1976, lots of economists thought Communism had worked wonders in Russia & China.
It is perhaps worth remarking in this context that the absence of famines in the economi- cally advanced countri?s is almost certainly due to the altered system of exchange entitlements through 'social security' rather than due to the average level of national prosperity as such.
Sen didn't know about the Elizabethan Poor Law in England. But, it would be fair to say, that continually rising productivity was what made the Poor Law affordable.
In contrast an exchange economy based on wage labour, without a sys- tem of unemployment benefits and re- lated measures of social security, is particularly susceptible to famines of the FEE-type.
Unless the Famine Code is implemented. Food is brought in and distributed through 'langars' and food-for-work programs. Scratch that. Just get in food and distribute it through ration shops.
A recent example was the 1974 famine in Bangladesh. -The flood that destroyed the crop did reduce the availability of food, but the sharp decline in employment
because there wasn't enough food to make it worthwhile to keep a worker alive
and the failure of exchange entitlement of labour was immediate,
there was an entitlement to food from the public distribution system. Sadly, Bangladesh was as corrupt as fuck.
and the famine was made severe by that. (Research carried out at the Bangladesh Institute of Develop- ment Studies seems to provide ample evidence of the impact of wage earning failure.)
Workers need to eat in order to work. If there isn't enough food, they don't get employed. My good friend Anwar Haq has described in moving terms his inability to gain nutrition through cunnilingus in Dacca. He moved to England, where he soon achieved great success in that department- or so he claimed.
Similar failures in ex- changing labour have been observed in recent Indian famines.
This is obvious. If you haven't enough food to eat, you won't hire an extra servant or two. Were Indian economists all entirely stupid? No. Some were Gujarati or Punjabi. They wanted the country to get rich. This shows they were very evil.
While the light that these studies throw on exchange entitlements is incidental to their respective mam themnes, quite a bit of information does, in fact, emerge on variations of exchange entitlements in the process of famines.
All this was well know to District officers under the Raj. The solution was to improve transport links and bring in food where there was a supply shock.
There are reasons to think that the 'exchange entitlements' approach is particularly important after wage labour emerges in the process of development and before social security measures become common.
Sen doesn't get that local authorities can fund Workhouses & 'outdoor relief' out of local rates. That what the English did in England. That's what Ripon wanted the Indians to do from the mid 1880s onward. But the Indians couldn't be arsed.
Expansion of com- modity exchanges in general also contributes to this. The 'food availabi- lity' approach - no matter how rele- vant for medieval famines - is not robust enough to permit a serious analysis of modem famines.
Nope. Modern famines can be quickly alleviated because of the great progress made in transport technology and the increasingly globally integrated nature of food markets.
There is little doubt that Malthus' analysis of food shortage in 1800 was a supplement to his theory of popula-' tion presented two years earlier.
Malthus was responding to Condorcet's utopian schemes.
"To what then can we attribute the present inability in the country to support its inhabitants, but to the increase of population?
The Corn Laws. Landlords wanted protected markets for corn.
I own that I cannot but consider the late severe pressures of distress on every defi- ciency in our crops, as a very strong exemplification of a principle which I endeavoured to explain in an essay published about two years ago, en- titled, "An Essay on the Principle of Population, as It Affects the Future Improvement of Society." It was considered by many who read it mere- ly as a specious. argument, inapplicable to the present state of society; because it contradicted some precon- ceived opinions on these subjects.
To be fair, the potato seemed a miraculous plant which would enable a doubling of population and thus a great increase in rents. This did happen in Ireland, but then came the blight.
Two years' reflection have, however, serv- ed strongly to convince me of the truth of the principlei there advanced, and of its being the real cause of the continued depression and poverty of the lower classes of society, of the total inadequacy of all the pre- sent establishments in their favour to relieve them, and of the periodical returns of such seasons of distress as we have of late experienced."
Malthus was right about some European famines which were only alleviated by mass migration. However, as shipping technology improved, England would find that it could import as much as it wanted. Problems such as wheat 'sprouting' over the course of a long voyage were disappearing as voyage duration grew shorter.
I should explain, Malthus supported the Corn Laws (though England had become a net importer of wheat between 1770-90) and thus there was a 'the poor ye shall always have with you' aspect to his polemics.
But over and above claiming con- firmation for his theory of food shortage arising from population expansion, Malthus also presented a theory linking the food shortage to the behaviour of prices and distribution, and that theory was not essentially dependent on the genesis of the food shortage.
but it could be alleviated by ending agricultural protection. Sen's ignorance of British history prevented him from understanding what Ricardo & Malthus & Smith etc. were really saying.
Malthus' analysis of adjustments of food prices had two notable features.
They were shit because the poor fellow had no knowledge of commerce or economics. He was a clergyman with some small mathematical talent.
First, prices had to rise
for the market to clear.
to eliminate a sufficient number of demanders from the market to make the current supply last.
That was irrelevant.
The price rise was not caused by specula- tive activities
it was caused by expectations.
but simply by the role of prices to adjust demand to supply.
i.e. to get the market to clear.
"It seems now to be universally agreed, that the stock of old corn remaining on hand at the beginning of the harvest this year was unusual- ly small, notwithstanding that the harvest came on nearly a month sooner than could have been expect- ed in the beginning of June. This is a clear, decided, and unanswerable proof that there had been no speculations in corn that were prejudicial to the country.
The opposite is the case. If it becomes known that stocks are low, there is an incentive to buy and hoard. Why does Sen not point this out? Why was he so much in awe of a dead White male who had zero knowledge of modern econ?
All that the large farmers and cornfactors had done, was to raise the corn to that price which excluded a sufficient number from their usual consumption, to enable the supply to last throughout the year."
They sold at the going price. No doubt they held back some corn 'just in case'. Still, there was no guarantee that the stock would last throughout the year.
The second feature was the role at- tributed to the operation of the system of parish allowances in making it diffi- cult to eliminate thc dermand for food by the, poor, thereby leading to a much larger increase in prices.
Because of the French war, the English had to be more generous in this matter. Malthus's supporters were laughing all the way to the Bank while the manufacturing interest complained that it was shouldering a bigger and bigger financial burden.
"This price, however, has been most essentially and powerf itlv affected by the ability that has been given to the labouring poor, by means of pa- rish allowances, of continuing to -purchase wheat notwithstanding its extraordinary rise."
The big farmer and landowner benefitted while the rate-paying manufacturer and artisan were taxed to the hilt.
[Malthus (1880, p 16).] Malthus did not, of course, condemn the parish allowances for this reason, buf regarded it as absurd that the poor should complain of the price rise.
In other words, the guy was merely a polemicist serving the interest of a particular section of society- viz. the landed gentry to which he himself belonged by birth.
"I do not, however, by any means, intend to infer, from what I have said, that the parisb aJlowances have been prejudicial to the state; or that, as far as the system has been hitherto pursued, or is likely to be pursued, in this country, that it is not one of the best modes of relief that the circumstances of the ca-se will admit. The system of the poor laws, in ge- neral, I certainly do most heartily condemn, as I have expressed in an- other place, but I am inclined to think that their op ration in tbe pre- sent scarcity has been advantageous to the country.
Why does Sen not understand that this is special pleading? Once the threat posed by revolutionary France was negated, there would be no reason to coddle the English poor for fear of an indigenous jacquerie.
The principle bene- fit which they have produced, is exactly that which is most bitterly complained of - the high price of all the necessaries of life. The poor cry ouit loudly at this price; but, in so doing, they are very little aware of what they are about; for it has undoubtedly been owing to this price that a much greater number of them has not been starved." [Malthus (1800, pp 18-9).]
But the manufacturing sector was taking a hit. Ricardo was their champion. What followed was the build up of pressure to pass the Great Reform Bill and, a little later, get rid of the Corn Law.
I am puzzled as to why Sen- writing for Indians- spends so much time quoting Malthus without mentioning his political motivation.
Malthus' theory, then, is one of a genuine food shortage leading to price rise to eliminate a part of the demand by pricing some consumers out of the market to bring total demand in line with supply.
Why not import wheat? Scrap the fucking Corn Law!
Speculators simply give shape to these "genuine principles of fair trade" without aggravating the price rise, but attempts to resist the starva- tion of the poor by raising allowances and wages do increase the prices more than they would have otherwise.
There may have been a conspiracy in restraint of trade. Indeed, the Radicals were making the point that the landed gentry weren't really benefitting all that much from the Corn Law. Some secretive cabal (who were also buying and selling Consols & East India Company shares) was enriching itself and using its wealth to buy pocket-boroughs and itself rise into the Aristocracy.
The most imrportant deficiency in Malthus' model is the lack of people producing or selling goods whose fortunes are presumably affected by changes in prices. Malthus talks of the poor living on parish allowances and wages paid under the Poor Laws, and on charity. He talks of the rich who have to foot these bills.
The rich may live in a different borough and thus not have to pay the poor rate.
There is no question of starvation being generated by the fall in the exchange price of some commodity which provides the livelihood of a section of the community.
Because anybody who becomes indigent could go into the Work-house- at least in theory. Some preferred to starve or emigrate.
I should explain, under the Speenhamland 'outdoor relief' some agricultural parishes gave money payments to agricultural labourers. Few industrial parishes had workhouses and they too gave mony to those obviously unable to fend for themselves.
The exchange rates between food and other goods and services do not come in at all - except in a brief re- ference to the prices of "butter, cheese, bacon, piclded pork, rice, potatoes,
Sen does not know that bacon and potatoes are types of food
etc" rising as . the poor "make use of their additional command of money" through increased allowances to purchase these goods (pp 13-14).
They are gross substitutes.
A crisis of 'exchange entitlements' leading to starvation can- not have much of a role in the model specified by Malthus
because of the Poor Law. The Middle Classes were opposed to outdoor relief and wanted more Workhouses of a bleak 'Oliver Twist' sort.
, and it is not sur- prising that the only cause of starvation that is investigated is the genuine shor- tage of food grains. Speculators are given na role except to dampen price variations since they buy cheap and sell dear in a competitive way, and if a speculator "be wrong in his speculation, he loses perhaps verv considerably him- self" (p 15). While Malthus' analysis was geared to the situation in Britain in 1799 and 1800, as he saw it, it is clear that he felt he was putting forwai-d a theory of some generality.
No. He was writing about a country which had had no famine since 1623. It had quite well functioning local authorities. It also witnessed an industrial revolution of a wholly unprecented type.
And, indeed, his views of food shortages and also of specula- tion have survived, and one meets simi- lar analyses in many recent writings. The fact that these views emanate from an extremely simple model, leaving out most of the essential features of an ex- change economy, is worth noting.
There is no model. It is simply a fact that if poor people eat a lot of a staple item- e.g. wheat or potatoes- then a supply shock has a big 'Income effect'. Perversely, this may swamp the 'substitution effect' such that they end up eating more of the staple and less of the 'normal' good with high Income elasticity.
I may mention, there is 'supermodularity' such that increased demand for 'normal goods' also helps inferior goods which are complementary to them.
The presence of many commodities and the possibility of wages responding to mar- ket forces open up other routes to star- vation and famines.
No. Nobody starved because butter became very expensive. They did starve if they couldn't get enough of the cheapest staple- wheat, rice, potatoes etc.
Even Malthus' neat analysis of the benign nature of speculation, in which he anticipated a well known modern theory associated with the names of Mlilton Friedman and others, does not really survive in a more complex model.
Anyone can 'make a market'- e.g. a Government or Charity- by producing and distributing a good or service. One may say this is 'speculative'. How do you know people will want it? But some people gain power and influence by taking this risk.
(On this see the recent contribution of Oliver Hart, "On the Profitability of Specuilation", Discussion Paper No 64, University of Essex, 1975; note however that Hart traces the argu- ment "that speculation is stabilising" to John Stuart Mill, but not to the earlier writing of Mlalthus.)
We now understand that volatility can be a good thing. Though, in any given market, increased volatility reduces liquidity, at the macro level, the opposite may be the case.
There is going to be arbitrage one way or another. Sometimes, we'd prefer the Government to do it. Other times, we prefer smart entrepreneurs to do it.
Malthus' analysis stood perfectly well within his model but the dependence of that analysis on the extrenmely limited nature of the model reduces the relevance of his conclusions.
Why mention him? He was from a country where the Government was so much better than anything obtainable in India, that India ended up being ruled by a couple of thousand Britishers. Sadly, the transition to Democracy in Bengal led to famine and ethnic cleansing on two separate occassions in Sen's life-time.
Malthus provided an early theory of the FAD view of star- vation and famnines, and with the recent explosion of interest in "food crises", this theory has been making frequent re-appearances in policy discussions.
Malthus laid the basis for Darwin's theory of Evolution. Populations can grow by leaps and bounds on the same territory provided their food supply increases in proportion. This can be achieved by raising productivity, not talking Sententious bollocks.
III The Bengal Famine of 1943 - the greatest famine of the century - can be viewed
as what happens when Bengali Muslims get elected and become Prime Minister
both in terms of 'food availability decline' (FAD)
Sen denied this. He said there was more food in 1943 than previously.
as well as that of 'failures of exchange entitle- nments' (FEE).
He means that labourers couldn't get work bringing in the harvest because the harvest failed. There was nothing to bring in. Real income fell which meant demand for all sorts of other goods and services took a hit. There was more 'involuntary unemployment'. Why? FAD. That's what lowered real income.
ln a forthcoming paper I have tried to present the contrast between the two approaches as applied to the Bengal Famine, and have argu- ed that the FAD approach works very badly in this case, while the FEE approach works much better ("Famines, Food Shortage and Exchange Entitle- ments: The Case of the Great Bengal Famine", forthcoming in the Cambridge Journal of Economics, Vol 1).
In 1943, Bengal was at War, There were severe Government restrictions on private enterprise and the free workings of markets.
There was a supply shock and there was corruption and incompetence. That's why famine mortality was so high.
While I shall not try to repeat the arguments here, I would mention that it emerges that the food availability per capita in Bengal in 1943 was not substantially different from availabilities in previous years even after note has been taken of: (i) the disappointing aman crop of December 1942,
the main cause of FAD. Traders expected the Government to bring in imports over the course of 1943. This did not happen partly because of the war situation and partly because the ruling party was making lots of money out of the famine.
(ii) the loss of import of rice from Burma, (iii) net transactions with the rest of India both in rice and in wheat, (iv) grains purchased by the military, (v) loss of food due to the 'denial' policies impos- ed by the military, (vi) population growth, and (vii) the 'carry-over' ef- fects of previous bad crops.
How does Sen know? The answer is he relies on official figures which everybody else- including Ian Stephens- knew to be wholly fabricated.
The FAD view received the qualified blessing of the official Famine Incquiry Commission of 1944 (see "Report on Bengal", p 77), and this endorsement has been widely echoed in distinguish- ed scholarly works (e g, see B M Bhatia, "Famines in India 1860-1965", Asia, 1966, pp 321-4; G Blyn, "Agri- cultural Trends in India 1891-1967", University of Pennsylvania Press, p 98).
In other words, smart and qualified people acknowledged that food availability had fallen. What they refused to do was condmenn the Bengali politicians involved because they had won the 1946 elections.
More recently, the FAD inter- pretation of the Bengal Famine has been frequently cited in the outbursts of alarm about the "world food crisis" [e g, in the Brown and Eckholm (1975, p 27), and even in Sartaj Aziz's
who hated Hindus & believed the creation of Pakistan was vital to prevent Hindus (like Sen) exploiting Muslims (like himself)
critically important document for institutionalised international action, "Hunger, Politics and Markets: The Real Issues in the Food Crisis", Univer- sity of New York Press, p 27].
Aziz drew on Sen's work under the impression that Sen actually understood Bengali famines (because Sen was Bengali). Aziz was wrong.
The factual basis of this diagnosis of the Bengal Famine seems eminently questionable.
It isn't because everyone involved said 'there's less food around'. Sen's mistake was to rely upon official statistics which were mere projections and which had no relationship to the actual outcome.
The' years 1942 and 1943 were of unprecedented inflation, mainly result- ing from war expenditures, and the absolute level of prices moved rapidly upwards. But prices of different com- modities did not move in the same way, and there were sharp contrasts between relative rates.
There was repressed inflation- i.e. shortages.
As an illustra- tion, the rice prices and the exchange rates vis-a-vis rice of some indicator commodities in the Bolpur area of the Birbhum district are presented in the Table.
The 'income effect' of high food prices meant a fall in demand for other goods (e.g. milk) or services (e.g. haircuts).
What Sen does not understand is that a supply shock in an agricultural economy has a real income effect which is bound to create involuntary employment across the board.
The exchange eintitlements were undergoing rapid transformation. I have tried to go into the causation of the shifts in exchange rates else- where (in the forthcoming paper in the Cambridge Joutroial of Econiomics, referred to earlier),
Sen never mentions the income & substitution effects.
but the pattern of the shifts is itself of some interest.
It is unknown. A very poor country can't afford to compile accurate statistics`
Unskilled rural wages were falling far behind rice price - indeed even money wages fell in absolute terns around November 1942 - and by May 1943,
only if some food was provided
the wage-rice exchange index with December 1941 base (100) stood around 24. The ruiral labouring classes, which earn a high proportion of their incomes in the short-lasting 'peak' seasons, tend to be hit anyway by un- expected price rises, unreflected in the wages in the previous peak period.
Sen doesn't get that nobody gets hired to harvest a ruined crop
But on top of that, current wages were left far behind as food prices moved up. The was reinforced in certain regions of Bengal by a direct decline in employment arising from loss of agricultural activity due to cyclonic destruction and fungus infection, the destruction .and removal of boats, etc,
all of which would have caused food availability deficit
and 'exchange entitlements' worsened for several groups more than the ex- change rates might indicate.
Nobody knows what those rates might have been
Some classes undoubtedly ate better, benefiting from the newly created in- comes in the war-inflated economy,
Why were they so callous as not to spare some food for the starving? The truth is there may have been war time profiteering and some workers may have had generous subsidised canteens & food rations but money income did not rise to match food prices in 1943. Thus the over all income effect was to depress demand. Did this create an incentive to divert food out of Bengal? No. Even if the spirit was willing, transport was not available.
and this expansion of demand exerted upward pressurcs on food prices.
There was repressed inflation. Apart from food, there wasn't a lot you could buy.
Others, e g, rural wage earners, faced higher prices of food without a cor- responding rise in money income (in- deed sometimes wvith reduced money income and employment). The catastrophic rise of rice prices during March-May 1943 was largely speculative.
i.e. caused by Hindus. Thanfully a righteous Muslim League politician became Chief Minister- which is when the shit really hit the fan.
Reports of hunger had started coming in; panic had gripped Bengal; the somewhat smaller (but not unusually so) aman harvest was followed by a remarkably large withholding from the markets in the situation of inflation (and low money rates of interest);
This assumes that the aman harvest wasn't disastrous- which, sadly, it was.
and anyone with money to spend was trying to build up a stock of rice.
Not really. If you have hoarded rice, you are likely to be attacked.
The widespread economic distress led to restricted demand for 'superior' food items, e g, fish, milk and for non-food cortrnodities, especially services and crafts, affecting in turn the classes supplying these commodities.
Which means real income had fallen. Why? Food availability deficit.
The relative rates of pauperisation of different occupation groups, as calculated from the primary data presented by P C Mahalanobis, R Mukherjea and A Ghosh
Bengalis don't want to prevent famine. They want to measure it while chortling with glee.
("A Sample Survey of After- Effects of the Bengal Famine of 1943", Sankhya, Vol 7, par! 4, 1946) tend to reflect this complex pattern of distress (analysed in my forthcoming paper in the Cambidge Journal of Econamics referred to earlier).
Sen would later predict a famine in Thatcher's England!
The FAD .3ppi)ach concentrating on over-all shortall of food supply seems to miss both the gross reality of the Bengal Famine-
there would have been little excess mortality if the Province had built up a buffer stock . Don't forget, Bengalis had been ruling the place since 1937.
a as well as its finer details. The focuis on exchange entitle- ments seems to permit a much more discriminating analysis
It is useless. When it comes to basic dietary staples, the demand side doesn't matter. You need buffer stocks to cope with supply shocks &, in case of a National Emergency, a public distribution system.
