A Statist and I had a debate about Food crisis. He tried to explain how structural adjustment programs work to ‘liberalize’ the third world countries making them poorer. I then say that the third world countries resources are taken over by state-protected transnational corporations so there isn’t a free market. Statist then argues that even though the problem is brought about by state protection we should still enact protectionist measures or heavily subsidize our own industries so we can compete with the foreigners heavily subsidized industries. I run into a problem here because(from a certain nation’s perspective) its true that structural adjustment that removes subsidies of Mexican corn will result in the economic massacre of Mexican corn by subsidized American corn. Statist blames it on capitalism because of a nationalist perspective that fails to see the problem lies in the government intervention in America and not the trade liberalization in Mexico. Moreover, Mexican food security now depends on American corporate farming because the Mexican farmland has been converted into industrial facilities(thereby wasting rich soil) and it is very hard to convert it back to compete with the corporate farmers again should they ever raise their prices. I respond in saying that division of labor has made Mexico part of the US economy yet they have no say in US politics. I think this is one issue where Free market economics fails from a normative standpoint because if your a Mexican you cannot affect policy in the US so you have to support protectionism in Mexico. Finally, the nature of farming serves the statist argument because land once used for farming(but converted for other uses because of foreign compettion) is very hard and expensive to rehabilitate.
Well, any free-market approach to the agricultural issue should incorporate attacks on U.S. subsidization of domestic food crops (not only does it hurt other farmers, who don’t receive these subsidies, and the taxpayers who pay for the subsidies, but it also hurts generally because it does allow the market to allocate land more efficiently to different crops—my family are farmers in Spain, and our subsidies protect our crops which would otherwise be unprofitable).
Now, using the example of Mexican corn and American corn, in the case of Mexico given that their production costs are too high to successfully compete with subsidized American corn cultivators, it seems to me that this is an indication that these same farmers should diversify into fields which are profitable. How is the division of labor supposed to increase the utility of each individual if the State is consistently imposing handicaps on it? Either Mexican corn producers will have to lengthen the structure of production, assuming capital is inexpensive enough, and invest capital-goods to increase marginal revenue, or else they will have to switch to a different product. Yes, it’s unpleasant to have to learn a new trade, but it makes no sense to limit your utility (which is why they try to compensate through subsidies).
If the market was allow to develop, and the division of labor allowed to evolve in both Mexico and the United States, what you would find is a case of comparative advantage. Sure, Mexico may become dependent on American corn imports, but the United States would be dependent on Mexico for something else. It’s true that this dependency is a threat in an age where relations between States can go awry at any time, but the drive towards autarky is what Ludwig von Mises describes as one of the main roads to war in Human Action.
In regards to that final point, it may be true that it can be more difficult to go from industrial plant to farm, than vice versa, but I’m not sure why that would matter. Given greater output per energy input in farming, it seems unlikely that we would require a massive return to farming at any given time, and it’s not wholly impossible. You can even grow foods in less nutrient-full soil, while replenishing nutrients, so it’s not as if a people will be starving while farmers try to “rehabilitate” their land. It happens without switches in land use; farmers deplete soil nutrients all the time, which is why crop rotation was invented during the agricultural revolution.