Frequently we hear that the free market is the path to material prosperity and the laissez-faire paradise. All an impoverished nation need do is put its public services and properties (utilities, media, farmlands, transportation systems, hospitals, banks, factories) up for sale to rich investors. Along with this privatization of social capital, the destitute country should pursue a policy of deregulation, that is, “liberate” the entire private economy from the irksome constraints of government regulation, reducing government functions to a bare minimum. To make its economy truly laissez-faire, the country also must eliminate tariff protections and open its economy and natural resources to foreign investors and exporters.
This completely privatized and unprotected neoliberal economic model supposedly benefits all nations in all circumstances. “This gospel,” Gregory Elich observes, “is preached by the US and Western European nations and enforced through international financial institutions such as the International Monetary Fund, World Bank and World Trade Organization.”3 Their dazzling prognostications bear no resemblance to the actual experiences endured by working people around the world.
Consider what happened to Ghana when the free marketeers moved in on that West African nation. In accordance with agreements it had signed with the IMF and World Bank, Ghana enacted structural adjustment programs, consisting of cutbacks in government supports and services. “Subsidies to farmers were ended and the state-run seed company was closed down,” Elich reports. “State-provided tractor services and land clearing operations were halted. Government programs that actively supported farmers were ended. Import tariffs were dramatically reduced and in many cases eliminated altogether. This led to a flood of cheap imports from abroad.” Local farmers were forced into a highly unequal trade war not of their choosing, unable to compete against imports from heavily subsidized, large-scale western agribusiness.4 Deeply in debt to the IMF and World Bank, Third World governments are prohibited from spending on domestic subsidies and required to use their funds to meet IMF/World Bank payments.
In Ghana this one-sided arrangement has succeeded in driving many farmers into severest hardship. For example, the heavily subsidized tomato paste imports into Ghana from the United States and Western Europe have increased by more than five times in one decade and have driven out local tomato farming and processing plants. The local cannery in one farmer’s area, which had “made things easier for us,” was now closed. Being a state-run firm, it was no longer allowed to operate without a private buyer. “Selling our tomatoes is a game of chance,” the farmer said. “It’s heartbreaking to stand here and watch the fruit go rotten.”5
“Poultry imports into Ghana have increased so much,” reports Elich, “that many domestic farms are having to slaughter thousands of chickens a week due to market glut. Hatcheries are operating at under half their capacity.” In Senegal over a six-year period, poultry imports increased 33 times over, driving 40 percent of poultry farmers out of business. In Cameroon, a threefold increase in poultry imports eventually put 92 percent of poultry farmers out of business.6 Similar stories can be told about poultry farmers in Central America and elsewhere, undersold and driven out by the influx of frozen chemical-ridden chickens from heavily subsidized US factory farms.
In Mozambique, Senegal, and other parts of Africa, local farm and factory production was just about completely wiped out by corporate imports. In Côte d’Ivoire, “the ten rice mills that had been built by the state-owned rice company were privatized. Two years later, not one remained in business. Inevitably, the privatization drive closed down the rice company.”7 The same held true for state-owned seed farms.
Over the past two decades, Africa lost approximately $272 billion because of the corporate takeover of domestic food production. “That money did not vanish,” Elich notes. “It is being transferred to wealthy pockets in the developed nations.”8 Free trade means privatization for the few and privation for the many.