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This article was commissioned for Is Greater Than
In this year’s May Day address to the nation, Egyptian President Hosni Mubarak promised government workers a 30% salary increase. This came a day after the Muslim Brotherhood, Egypt’s largest parliamentary opposition group, unexpectedly called upon its members to participate in a May 4th general strike initiated by Facebook members in protest against rising prices and a lack of political avenues for a solution to the country’s problems. Among those problems is the bread crisis I wrote about last week in Is Greater Than.
President Mubarak also took the opportunity to hold forth about the challenges facing the nation as it continues irrevocably on its path toward increased economic liberalization: a message which—unlike the salary increase—was not featured prominently in local front-page headlines. The speech was a sort of “Economic State of the Nation” address more than it was a commemoration of a holiday dedicated to the memory and honor of workers’ struggle to improve their lot through organized resistance to capitalism. In fact, despite congratulatory noises coming from Hussein Megawer, head of the ruling-party-controlled General Federation of Trade Unions, Mubarak’s oratory was clearly aimed at subverting independent labor activity. Mubarak addressed himself first and foremost to the textile workers of Mahalla al-Kubra, who have been at the forefront of such activity in the country, singing their praises and lauding their contributions to “the economy”. This is the general trend, and has been at least since US President Eisenhower declared May 1st to be “Loyalty Day” in 1958: to take the opportunity of Labor Day, whatever day it may fall upon, to eulogize workers as contributors to the nation’s Gross Domestic Product, but by no means as a source of organized political and economic power.
As an indication, in his 44 minute speech (one local daily newspaper obliquely marveled that he was able to stand upright so long just a few days before his 80th birthday), Mubarak uttered the word “economy” (إقتصاد, iqtisad,) a total of 17 times, about as often as he used the word “workers” (عمال, ‘umaal). Iqtisad is a more-or-less direct translation of “economy”, with a similar history. It was previously used in the sense of “frugality” or “thrift” and went through the same transformation as in much of the rest of the world, wherein economists began to speak of a realm of human activity, somehow separate from “non-economic” activity and possessing its own logic, historical trajectory and demands. Adam Smith’s “invisible hand” of the market has been taken more and more literally since the 1930s. Mubarak used the word “market” (سوق, suuq) a further five times, twice making reference to “the labor market”, and urging the youth and the unemployed to better accommodate its demands. This is a clear response to the uppity youth on Facebook, who frequently complain of a lack of employment—as well as political or cultural—opportunities. It is also a directive to the vast portion of the population who receive their scant income from the “informal sector” to get right with “our economy” (an odd possessive that Mubarak used six times) and enter the formal workforce “without shame or hesitation.”
I draw attention to the ideological twist that informs the prevailing modern use of the phrase “the economy”—and to its use by Egypt’s head of state—to demystify much of what will follow. The economy is not some awesome self-aware organism, the demands of which we resist at our own peril. It is a statistical abstraction (reaching its ultimate expression in the Gross Domestic Product—GDP), formulated by economists and the heads of industry for whom they work. But the economy is not only an imaginary construct of economists and statisticians, it is a very real reorganization (“rationalization”) of human life to make it sensible through the lens of economic analysis.
And by these measures, Egypt’s economy is doing quite well. As Mubarak is eager to point out, “the economy” (here he means GDP) is forecast (as if it were a weather system) to grow by 7% this year. “Our exports,” he says, “are still growing at rates of about 30% a year, and private sector investments are growing at rates of about 40% a year”. And President Mubarak is sure to be happy about this development, since, given his position near the center of a vast patronage system, he and his government benefit greatly from this influx of foreign capital. Nonetheless, “it is true,” Mubarak admits, “the fruits of the economic reforms achieved have benefitted many citizens, but have not yet reached some others.”
This would be something of an understatement. The national minimum wage hasn’t been amended since 1984, and there doesn’t even seem to be a consensus on what it actually is—some say as low as £E 35 (US$6.52) per month, while others say it’s £E 115 (US$21.42). Whatever the case, it is nowhere near the £E 1,200 (US$223.50) that workers at Mahalla al-Kubra demanded last month, and that would still leave a family of four under the IMF’s poverty line of US$2.00 per day. Nor does Mubarak’s 30% salary increase for government workers come close, especially for the majority of the population to whom it will not apply in the private and informal sectors. Nor does that salary increase compare to the 70%–150% increase in prices in the past year, based on figures estimated by labor expert Talal Shukr in an interview with al-Badeel newspaper. In fact, it doesn’t even match the 38% increase in food costs in the past year estimated by the government itself. Outside of government-controlled unions and ruling National Democratic Party (NDP) strongholds, the raise has been greeted with derision. Dr. Ali Hafiz, professor of economics at the Faculty of Economics and Political Science in the National University described the announcement of a raise as “empty talk.” Labor leader Abu Kamal Aita said the President’s decision to increase the allowance came as aspirin at a time when people need surgery.
Mubarak stopped short of declaring “I feel your pain,” but ensured his listeners that he does “follow up, around the clock, on the bread queues, the rising prices and the concerns of the Egyptian family in general and those of the poor and limited-income brackets in particular.” But while President Mubarak and the NDP government generally have taken certain palliative steps domestically, they continue to blame Egypt’s foremost economic and social problems on a global crisis. “Brothers and Sisters,” he says for the second time out of five, “we are faced with the challenges of the current leg of a journey. A new challenge, with conditions imposed by the current international economy, ranging from the repercussions of the US recession on the economy of Europe and the world to the unprecedented rise in world prices for oil and food commodities, and its direct impact on all states—developing nations in particular.”
And there are indeed significant global economic issues that negatively effect Egypt’s poor. Most significantly for our original focus on the bread crisis, global wheat prices have risen 180% over the last three years. There are myriad reasons for this, including, as I mentioned in my last post, financial speculation in commodities markets. In layman’s terms, this refers to the practices of financial brokers fleeing to commodities—stuff that actually exists and that people use on a regular basis—as a safe haven from mortgage derivatives, hedge funds and leveraged investments—stuff that economists conjured up without proper attention to underlying fundamentals (i.e., stuff, people and relationships between them that actually exist). Having suddenly discovered what anyone waiting in a bread line could have told them—that the value of actually-existing things, especially stuff you need to survive, exceeds that of monetized “market ingenuity”—they flocked to invest their money in stockpiles, warehouses and container ships of these things, thereby bidding up prices and sending them through the roof.
At the same time, large agribusiness corporations such as Cargill and Archer Daniels Midland (ADM) discovered that they could make a handsome profit off of fear over the coming scarcity of one of these commodities—petroleum. With oil at over $100 per barrel, due in part to the “geo-political uncertainty” that surrounds most of the world’s sources of petroleum, converting food crops into fuel for automobiles suddenly seemed like a good idea. And, for them, it certainly was. Cargill raked in US$2.34 billion in profits in 2007, up 36% from the previous year, while ADM netted US$2.2 billion, up 67% from the previous year. The manufacture of these so-called “biofuels” or “agro-fuels” has gotten a lot of bad press lately. UN expert Jean Ziegler called biofuels a “crime against humanity,” and citizens and heads of state of developing nations attacked the industry for diverting food to fuel and pricing the poorest consumers out of their basic nutrition needs. President Mubarak, for his part, promised in his May Day speech to direct his concerns to the leaders of western nations at the Davos World Economic Forum to be held in the Egyptian coastal tourist hub of Sharm elSheikh in a few weeks. Incidentally, the South Sinai security directorate was apparently keen to make sure that none of the booming resort town’s 17,000 construction workers added their voices to the chorus of anger over the biofuels industry, ordering their employers to kick them out of town by May 10th (the Ministry of Interior was sufficiently embarrassed by news of the “deportation” that it rescinded the order of the South Sinai directorate).
But residents of developing nations were by no means lacking for reasons to blame the West for its food security problems prior to the emergence of biofuels as a drain on global grain supplies. Previous complaints, which were serious enough to scuttle the Doha round of World Trade Organization talks, centered around US and European subsidies for their agricultural producers, often in the form of payments to NOT plant wheat. The latter, according to Joel Beinin, Director of Middle East Studies at the American University in Cairo, resulted in inflated wheat prices higher than what they would be “if the US abided by its own neoliberal prescriptions for markets determining prices.”
More recently, agricultural imports—raw materials like petroleum, fertilizers and pesticides that are used in large-scale agriculture—have also grown increasingly expensive. Petroleum is increasingly necessary to get agricultural goods “from farm to market” in an increasingly liberalized, “rationalized” world food system. Fertilizer has also become more dear, with increases this year between 85% and 180%. Even in Egypt, where fertilizer is subsidized, the government raised the price by 100% in February (still 40% below international market rates).
Additionally, world wheat stocks have diminished considerably as population and demand has increased in developing countries, particularly in places like China and India where residents have become more prosperous and consequently eat more meat, which requires as much as six tons of grain input for each ton of meat, as well as more western-style diets that center around wheat. These shortages, together with increasing prices, have pushed some countries to withhold wheat stocks that they would previously have exported, partly to maintain the security of their own supply, and partly to take advantage of likely higher prices in the future.
Meanwhile, there have been massive crop failures in the major wheat-producing regions of Australia and Canada. In Australia, this was due to several consecutive years of drought and in Canada to a stretch of cold, rainy weather in the middle of the wheat-growing season. Next year could be even worse, depending on the extent to which a plant disease, a wheat-stem rust aptly named Ug99, spreads across Iran and the Central Asian bread basket. The unseasonably stormy weather in Canada, the years of drought in Australia and the unusual storms which blew Ug99 from Africa across the Red Sea to the Middle East may all be indications of what can be expected in the future with global climate change.
But let us not lose track, amidst this “perfect storm” (or is it a “silent tsunami”?) of threats to world food security, of the common element that brings this all together. Yes, that’s right: it’s the economy, smart-ass. It’s that set of political, cultural and social relationships to which economists would like to impute an irresistible will and a nearly-divine logic inscrutable to the layman. It is the Wall Street traders investing in mile-long tanker trains filled with grains, corn syrup and biofuel. It is the directors of companies like Cargill and Archer Daniels Midland “making a killing off hunger”. It is the United States Department of Agriculture, artificially propping up domestic large-scale industrial agriculture. It is the practice of eating meat as a mark of prosperity. It is neoliberal hacks praying, as economics professor John Salevurakis puts it “at the altar of pure market fundamentalism,” and insisting on a globally-integrated industrial food chain. And it is a belief that there are no limits, ethical or natural, to the pursuit of profit.
May Day is traditionally an occasion to celebrate the turning of the seasons, a natural process that “the captains of industry” do their utmost to work around, spread out or otherwise rationalize. It is also an occasion to oppose those captains of industry and their quest for profit, to deny the inevitability of the economy and the supremacy of the market. Happy May Day!
