Introduction

It is indeed a privilege to have been asked to share with you some thoughts on the agrarian question in this, the momentous 50th year of the achievement of effective self-governance. The leader of Tanzania's freedom struggle, Mwalimu Julius Nyerere, was a towering personality who left the imprint of his egalitarian and socialist ideas not only on Tanzania but on Africa and the developing world. I feel doubly privileged to be with you during the Julius Nyerere Intellectual Festival Week. The struggle that colonised people waged was not for political independence alone, but also for a more just and egalitarian society, without which sovereignty cannot be sustained in the long run and in a real sense. That sovereignty is once more under attack in the current era of neoliberalism, and a new phase of struggle is necessary to preserve and enhance the gains of freedom.

The ascendancy of finance capital since the 1980s means that financial interests have come to dominate policymaking in the present era, both at the global level and through international financial institutions directing pliant governments, in almost all developing countries as well. The major pillars of neoliberal policies are: first, the imposition of deflationary cut-backs in state spending in nation states; second, openness of developing countries in particular to trade and capital flows through dismantling trade barriers; third, the dismantling, in developing countries only, of all price support mechanisms which existed earlier for stabilising prices for peasant producers, who constitute a large or major segment of the population; and fourth, a sustained attack on peasant-owned or -occupied land in the name of 'development'.

These policies have been adversely affecting the livelihoods and access to basic needs of millions of poor people, who make up the majority of the population in the global South. The agrarian depression, which has turned into a crisis in many areas, is hardly mentioned in the critiques mounted of the neoliberal agenda, even by progressive writers. There is a deep theoretical failure in understanding the links between the agenda of finance capital, on the one hand, and the agrarian crisis in developing countries, on the other.

Yet history tells us that a deep financial and economic crisis has never occurred without a prior agrarian crisis, which tends to last even after the financial crisis abates. Consider the great depression of the inter-war period: it started not in 1929 as the conventional dating would have it, but years earlier from 1924 — 25 when global primary product prices started steadily falling. The reasons for this, in turn, were tied up with the dislocation of production in the belligerent countries during the war of inter-imperialist rivalry, the First World War of 1914 — 18. With the sharp decline in agricultural output in war-torn Europe there was expansion in agricultural output elsewhere which, with European recovery after the war, meant over-production relative to the lagging growth of mass incomes and of demand in the countries concerned. The downward pressure on global agricultural prices was so severe and prolonged that it led to the trade balances of major producing countries going into the red.

Then, as now, the wrong policy advice was given by the centre of financial power, the British Treasury, that the way to tackle external imbalance was to deflate the economy — to reduce the level of activity by strongly cutting back budgetary spending by governments (Kindleberger 1987). We know today, after the theoretical labours of Keynes and Kalecki, that if one country does this it might benefit, but if all countries do it then it simply reduces aggregate demand in each country, reduces each country's demand for other countries' exports, and creates a deflationary spiral in which unemployment rises and the level of activity measured by output, as well as the extent of trade, reduces. The deep crisis this caused in the capitalist system, particularly in the late-industrialising countries such as Germany, Italy and Japan, led to belligerent militarisation as a 'solution', in which the size of armies ballooned and resources of other countries were forcibly seized for industrial 'development', leading to atrocious massacres and genocide. 'Civilised' Europe descended to a level of barbarism on a scale that the world had never seen before.

In the current era, it seems that no lessons have been learnt from history. In the last 40 years, global primary product prices saw one episode of sharp decline in the first half of the 1980s, exactly at the time that many African as well as Latin American countries started on IMF -guided 'stabilisation' and debt-conditional 'structural adjustment' programmes. Once again, recalling the 1920s and the British Treasury, the modern centres of financial power, the US Federal Reserve, in close consultation with the Bretton Woods institutions, misguidedly advised developing countries to strongly follow expenditure-deflating macroeconomic policies combined with free trade. The results have been extensively documented: owing to public expenditure cuts, there was decline in growth rates of investment and social sector outlays; stagnation or even — as in many African countries — absolute decline in per capita GDP took place; there was a big setback to campaigns for improving health and literacy; and food security was severely affected (Cornia et al 1987, Baker et al 1998).

After a period of rising primary product prices from the end of the 1980s to 1995, the capitalist world saw a second episode of sharp, primary price declines, this time a few years after India embarked on the same neoliberal policy path from 1991, and a decade after Africa and Latin America had already done so. This period, from the mid-1990s to the present, marks the agrarian crisis in Asia, which continues to immiserise large segments of its population. In India alone police records show that in the decade up to December 2008, 198,000 farmers had committed suicide, well in excess of 'normal rates' and mainly driven by debt. This is merely the tip of the iceberg. The agrarian crisis has contributed to the global financial and economic crisis and, in turn, has been further aggravated by it; but the existence and importance of the current agrarian crisis is not conceptually recognised by even progressive analysts in the...