SO Musings: Food Prices and Libertarian Solution

With the recent debates over the new Farm Bills; the concept of Minimum Support Price (MSPs) and state control over food prices has been brought into the limelight. This week’s SO Musings will explore the very origin of MSPs in India and government intervention in the agricultural sector. 

Below is an excerpt from an enlightening article by M.A. Venkata Rao in the august 1957 issue of The Indian Libertarian magazine; titled ‘Food prices and libertarian solution’, in which he gives suggestions for regulation in food prices that align with liberal principles:- 

In a predominantly agricultural country like ours, surplus in food grains and industrial raw materials (like jute and oil seeds) is the foundation of industrial advance. Unlike England we cannot pay for our imports with manufactured goods in export. Our exports of manufactures though growing in the postwar years (and can grow phenomenally if socialism will let it alone without meddling) are too meagre to support an industrial drive of the dimensions contemplated in the second Five Year Plan. 

Just a year ago, the authorities were spreading the illusion that the country had turned the corner in the matter of agricultural production and had ·raised it enough to meet the full needs of consumption with even a little to spare for export! They gave impressive figures of millions of tons of extra production achieved through the grow more food campaign, through additional acres brought under irrigation and through the impetus given through the community development projects etc. and the number of prices declined a little from around 420 to 390 and things looked promising. 

A DIFFERENT TALE 

But now immediately after the elections the authorities come out with a sadly different tale. They speak of the millions of tons of wheat and rice purchased from abroad which would tide over the acute scarcity everywhere and lower the rising prices which have again approached war-time records! Now the authorities shamelessly speak of importing more millions of tons, the foreign exchange for which would add to the almost impossible strain already placed on it by the greatly accelerated imports of machinery on account of the requirements of the second Five Year Plan! 

Confronted with this crisis of their own making, the authorities now speak alarmingly of fixing floor and ceiling prices for agricultural products at one and the same breath! Meanwhile, as an interim measure they have passed an Amendment to the Essential Commodities Act whereby the Government takes power to requisition stocks of food grains in the hands of hoarders at prices calculated at an average of three month preceding instead of at current rates. And so we move deeper and deeper into controlled economy and ourselves within the realm of communism without realising where we are! 

It is a vicious circle. The more the Government intervenes in the economy, the more the deleterious  consequences necessitating further interference will ensue until the private citizen loses all freedom of action and of initiative. What then is the remedy? What would a libertarian suggest in the circumstances for a way out of the labyrinth and return to a saner way out of the economic deadlock brought about by socialism or interventionism? 

LIBERTARIANS AND LIBERTARIANS 

There seem to be different types of libertarians. One type is that of libertarians committed to complete laissez faire .Thinkers of this laissez faire school advocate a “hands off” policy so far as the Government is concerned in matters of public economy. They want the Government to confine themselves to law and order, foreign affairs, defence and currency and leave all economic functions. production, exchange and distribution to citizens in their private capacity. They have their own answer to critics who complain that this policy would put the majority of the public at the mercy of capitalists. 

A more extreme school would go further and abolish the government itself as an institution. They are called anarchists who believe that the Government as an instrument of coercion is the source of all evil in society and that man is essentially so good that released from fear of the Government he would follow the star of justice and good will in all his relations and settle all affairs in society through peaceful negotiation. Such an anarchist society would be full of natural harmony! In such a society there is no meaning in controls and government price fixing, for government will have ceased to exist!

Read the full text which can be accessed here. 

IndianLiberals.in is an online library of all Indian liberal writings, lectures and other materials in English and other Indian regional languages. The material that has been collected so far contains liberal commentary dating from the early 19th century till the present. The portal helps preserve an often unknown but very rich Indian liberal tradition and explain the relevance of the writings in today’s context.

Read more: Do the farm bills benefit the farmers?