The Wrath of Capital: Neoliberalism and Climate Change Politics

Alongside water, food is a fundamental human need. As of 2010, the number of undernourished people in the world was nearing the 1 billion mark, more than the estimated number of hungry people during the 2008–2009 food and economic crises.² If population numbers increase to more than 9 billion people as projected, and the demand for animal protein continues to grow along with the expanding middle class in China and India, then the global food system will be placed under tremendous stress. When we also factor into the picture growing water scarcity, rising temperatures, and very few sources of new farmland becoming available, the food system may very well enter crisis mode.

Adapting to climate change as it relates to the food system is viewed primarily through the lens of technological innovation and a political commitment to extending a rights-based framework into the realm of food-security policy and program development, all the while maintaining a neoliberal economic paradigm. The larger problems arising out of the liberalization of the agricultural sector that has tied food production to free-market forces, which in turn influences price hikes, tend to remain largely in the shadows of discussions of climate change and food scarcity. Furthermore, the concern is that as a “crisis” mode sets in, the food-production system will be further restructured to facilitate capital flows, and the deeper problems arising out of neoliberal economic policies in the global food system will remain unchallenged. New systems such as conservation agriculture might provide people with useful new strategies to deal with the havoc that climate change will wreak on the practice of farming, but remaining largely absent are the overriding questions of who owns the patents on the new climate resilient seed varieties and new seeding technologies as well as of the problems surrounding crippling farmer debt, declining biodiversity, and the monopoly that the economically powerful continue to hold over global prices of food staples and the system of food exchange.

It is a basic law of nature that food production is sensitive to climate, and one of the nastier effects of climate change will be the extent to which it will disrupt the global food system. Climate change will dramatically alter current water availability, increase the frequency and intensity of weather extremes, result in more acute precipitation, and lead to sea-level rises. As such, it will seriously impact how much food is produced, the quality of that food, and the availability of different food varieties. And although human beings have to a large degree developed the capacity to control the impact climate has on food production by building greenhouses, developing irrigation systems, using cold-storage mechanisms, introducing pesticides, establishing temperature-controlled houses for livestock, and so on, these adaptation techniques will be insufficient to deal with the breadth and depth of future environmental changes associated with increased CO₂ levels that scientists predict will accompany a 2°C (or more) rise in average global temperature. As Mark Lynas so vividly describes, just a 1°C rise will be enough to revert the food-productive areas of the High Plains states in the United States to sand!³

What can we expect? If the 2003 European heat wave and the subsequent 30 percent drop in agricultural yield Europe encountered is any indication, we are in for a rocky ride as the world heats up. Climate change will lead to greater weather variability and more extreme weather events, which will in turn lead to a decline in crop yields. For instance, what might currently be considered a very wet summer in the Asian monsoon region may be five times more frequent in the second half of the twenty-first century.⁴ During periods of fruit development and germination, changing rainfall patterns and higher temperatures will impede plant growth. The hotter temperatures predicted for tropical countries may completely wipe out entire crops. One study has found that temperature increases on rice production in farmer-managed rice fields in tropical and subtropical regions across the world will be upset.⁵ Given that Asia produces 90 percent of the world’s rice, these findings are alarming indeed. Although it was once believed that increased CO₂ levels in the atmosphere might increase the fertilization effect of C3 crops (rice, wheat, and soybeans) by speeding up the process of photosynthesis, recent studies show that the fertilization picture for C3 and C4 (maize and sorghum) crops has been far too optimistic, with only half of what was originally predicted for C3 crops being fertilized and minimal or no effect on the fertilization rates of C4 crops.⁶ Crop losses from pest infestation will increase as insect breeding seasons and rates of reproduction grow in warmer temperatures. And rising ozone levels will reduce crop yields further.

Increasingly warmer temperatures as a result of changes in climate will in turn increase the incidence of extreme climatic events, such as drought across the world. By 2025, two-thirds of Africa’s arable land is expected to be lost to drought.⁷ Although droughts are a standard feature of climate variation, computer climate models developed by scientist Aiguo Dai from the National Center for Atmospheric Research show that by the end of the twenty-first century the world’s land area will be significantly drier (less surface water and drier soils) than in the past. Dai reports that from 1950 to 2008 most land area warmed between 1° and 3°C, with the majority of warming occurring over northern Asia and northern North America. The future for agriculture looks grim indeed, with global aridity and drought areas significantly growing. His models project that the Western Hemisphere as well as Africa, Australia, and Eurasia will need to deal with extreme drought conditions and that the western two-thirds of the United States will become significantly drier by 2030. He is careful to point out that there is a window of variability within his findings because they are also contingent upon how many GHGs are emitted in the future and upon other climate cycles (variations in climate caused by El Niño or La Niña, for instance).⁸

In the past, the effects of drought have been devastating. In the 1980s, it killed more than half a million people in African nations and caused $40 billion in damages in the United States.⁹ Based on Dai’s projections and others, not only will the future be thirsty, but growing seasons will be permanently altered, ecosystems will be undermined, negatively impacting biodiversity, and social conflict will arise as the reliability of food supplies is compromised.¹⁰

The poor will once again bear the brunt of the food-scarcity burden. Hotter weather will cause food to deteriorate more rapidly, and although there have been tremendous advances in food storage since the onset of industrialization, poorer communities and households that cannot afford refrigeration and other storage facilities will be at greater risk of already low and scarce food supplies being spent. Agriculture currently provides 36 percent of the global workforce with a livelihood, but in poorer regions of the world this figure is expected to increase dramatically. For instance, 40 to 50 percent of people in Asia and the Pacific make their primary living from agriculture, and two-thirds of those living in sub-Saharan Africa depend on agriculture for their livelihoods.¹¹ Along with changing weather patterns, there will be increased changes in seasonality, which will place under stress rural farmers who depend on rain-fed and subsistence agriculture; these people also do not have the income to purchase imported food. Rain-fed crop yields in Africa may be reduced by as much as 50 percent by 2020.¹² Further, the traditional methods and knowledge rural farmers use to predict climate will become obsolete, placing these communities under even more strain. Farmers who depend on a single annual harvest are especially vulnerable to such seasonal changes, as are those who rely on seasonal foods to meet their basic survival needs. The World Health Organization (WHO) reports that “the traditional diet of circumpolar residents is likely to be impacted by melting snow and ice, affecting animal distributions and accessibility for hunting.”¹³

All in all, climate change is projected to compromise global food security seriously. The World Food Summit definition of food security, formulated in November 1996, states: “Food security exists when all people at all times have physical or economic access to sufficient and nutritious food to meet their dietary needs and food preferences for an active and healthy life.”¹⁴ The four dimensions of food security are: (1) food availability, (2) food accessibility, (3) food utilization, and (4) food system stability. The term food system refers to the interconnected processes of food production, processing, distribution, consumption, and waste. The UN Food and Agriculture Organization (FAO) explains that a “food system comprises multiple food chains operating at the global, national, and local levels,” adding: “Some of these chains are very short and not very complex, while others circle the globe in an intricate web of interconnecting processes and links.”¹⁵

The FAO has commissioned studies that examine how climate change will impact the global food system. It predicts that the amount of food and type of food will be affected by changes in climate, as will incomes tied to the effective functioning of the global food system. It also stresses that in addition to impacting the livelihoods of already vulnerable groups, the mounting cost of energy and the need to lower fossil fuel consumption may force local communities to take on more responsibility for their own food security. However, climate change is not going to be geographically neutral: wet regions are expected to be wetter, dry regions will become dryer, and temperate regions will fare better overall. Over the past fifty years, the average global temperature has increased twice as much as it did during the first half of the twentieth century, but these increases have not been regionally the same, with changes in the temperate climates of the Northern Hemisphere and Southern Hemisphere being greater.¹⁶

WHO has drawn attention to the myriad ways in which climate change and the connected problem of global food security will impact human health. It has also highlighted the particularly vulnerable position of the world’s poor, a population that is already suffering from malnutrition and hunger. Approximately 3.5 million people, mostly children, die from malnutrition and related diseases every year. This situation will most certainly be exacerbated if crop yields fail and already tenuous food supplies drop, leading to further hunger, malnutrition, and disease.¹⁷ In addition to decreasing crop yields from climate change, subsistence farmers and the poor who cannot afford food are especially at risk of hunger and malnutrition, which in turn increases their susceptibility to viruses and bacteria that spread in contaminated food and water. Malnutrition weakens the immune system, making a person more prone to getting viruses that cause illnesses such as diarrhea, which further weakens the body. But it should also be noted that not just low-income countries are at risk of food-borne diseases; WHO reports that climate change is also expected to “increase rates of Salmonella and other food-borne infections in Europe and North America.”¹⁸

How are governments and international agencies responding to these alarming predictions, and what solutions are being proposed and tested? The FAO insists that in order to meet the increased demand for food by a growing population and to offset the negative impact that changes in climate will have on food production, production should achieve a “higher yield per unit of input.” For the FAO, higher yield per unit of output means improving land-management practices, maintaining and improving plant and animal genetic resources, more efficiently managing livestock and fishery production, and developing better water-storage systems for agricultural use.¹⁹ Moreover, the FAO favors conservation agriculture, arguing that it not only has the potential to transform the agricultural sector into a more “sustainable” system but can also help lower the GHG emissions associated with current farming practices.

Conservation agriculture begun in Argentina and Brazil aims to protect and improve land resources while also using modern technologies to increase production. Conservation agriculture is not “based on maximizing yields while exploiting the soil and agro-ecosystem resources”; rather, it is “based on optimizing yields and profits to achieve a balance of agricultural, economic, and environmental benefits.”²⁰ Some of the primary features of conservation agriculture are zero tillage, the use of laser levelers (cuts water use), crop residue mulch (increases water holding in soil), dry seeding (uses less water), drill seeding (applies herbicides, fertilizers, and seeds together), green manure (reduces water loss through evaporation), and crop diversification.

Farmers who are employing direct seeding in Haryana’s Karnal region in India are reportedly using 20 percent less water. New seed drills are more precise and have smaller furrows, which helps stop seeds from drying out when the direct seed method is used. New seeders also have the capacity to plow through previous crop residues, and because fields are left untilled, this ability produces financial savings for farmers, who spend less on labor. Another conservation agricultural method is to plant sesbania (a legume) in with the rice. This combination suppresses weed growth, and Indian farmers who use the technique have reportedly saved 1,500 rupees on the expense of one hand weeding. When sesbania is killed off around thirty days later, it turns to mulch, providing approximately fifteen kilograms of nitrogen per hectare and reducing water losses through evaporation.²¹

Genetic engineering studies and trials are working hard to develop crops that have a stronger resistance to flood, drought, and salinity levels. More resistant rice varieties are currently under trial by the Stress Tolerant Rice for Africa and South Asia (STRASA) project. Phase 1 of the project focused primarily on crop breeding. It resulted in the production of 3,400 tons of seed of both popular and stress-tolerant rice varieties and the screening of more than 600 germplasm accessions for their tolerance to drought, salinity, iron toxicity, and changes in temperature, which together resulted in the selection of stress-tolerant rice varieties. In May 2011, AfricaRice, in collaboration with STRASA, launched Phase 2 of the project in Contonou Benin. The aims of Phase 2 are to develop Phase 1 initiatives further and to improve crop-management strategies.²²

In West Bengal, where losses to rice production due to environmental stresses are high, genetically modified stress-tolerant varieties of rice were introduced to farmers. Out of 5,780,000 hectares used for rice production, 1.03 million hectares are susceptible to flooding, and 1.46 million hectares are prone to drought, with 440,000 hectares suffering from salinity.²³ The new rice seed variety is quickly moving throughout the area, with more and more farmers using it with success.

In tandem with asking how new technologies and knowledge might enable the agricultural sector to adapt and even mitigate environmental changes as a result of land degradation, changes in climate, and water scarcity, the equally important question that needs to be posed is, Who will own the patent on the new seed varieties? Who is responsible for producing and distributing the new Swarna-Sub 1 (submergence tolerant) and IR72046 (salt-tolerant) rice varieties? Will farmers be going into debt to pay for the new machinery? And will the financial returns from conservation agriculture be enough to meet debt repayments? What happens if one farmer chooses not to use the genetically modified seed? Will he be penalized if winds blow across his fields and old seed varieties “contaminate” the new seed varieties? Moreover, what impact do new genetically modified varieties have on biodiversity?

Ecologist Debal Deb, chair of the Center for Interdisciplinary Studies in Kolkata, India, is the founder of Vrihi, a nongovernmental seed bank. He described to me the seed conservation work he has been doing on his small farm in Bengal for the past few decades. In an effort to save the few remaining folk varieties of rice in India, he keeps approximately seven hundred varieties of rice in production by growing and donating the seeds to farmers. The seeds are distributed through an informal exchange network among farmers. He explained that in order for rice seeds to germinate, they need to be cultivated within two years, so when farmers switch to modern varieties and chemical farming, both of which are the basis of conservation agriculture, along with other forms of Big Agriculture, the folk varieties simply die out from disuse.²⁴

Modern varieties of rice tend to be vulnerable to extreme environmental and climate conditions and changes. In contrast, folk varieties have adapted over time to survive weather and environmental extremes and are far more resilient. Deb described folk varieties in his seed bank that are flood resistant, salinity resistant, and drought resistant. When I asked him if he had spoken with officials in the Indian government about this wealth of indigenous knowledge, he gently smiled and said he had but added that the government is basically not interested. The reason why: there is no “market” for folk varieties; they are free, and as such the government cannot see the financial benefits from distributing rice varieties that do not contribute to India’s GDP. In light of this response, it is important to put STRASA’s work into a broader political context. The program claims that its “new” rice varieties can solve world hunger, but the gesture is nothing more than a cynical exercise in corporate promotion. There is neither nothing “new” nor nothing “innovative” about the rice varieties STRASA is trialing; the modern varieties it promotes are “copies” of folk varieties that exist free for all. The STRASA work is outright theft, pure and simple.

Raj Patel and Vandana Shiva amply demonstrate the negative effects of new technologies that bolster the power of the economic elites at the expense of local economies, ecosystems, and household economies dependent on farming for their livelihoods. Patel is clear that the problem does not lie with new technologies being used throughout the agricultural sector. Instead, the “problem is one of power and control.” He explains that when the biotechnology corporation Monsanto “created a craze for its GM [genetically modified] cotton seeds,” this craze “not only led to farmers becoming ‘deskilled’” but also to the “collapse of an entire farming system.”²⁵ Dr. Deb also told me that Monsanto has paid villagers to bully and intimidate him and his mother as a result of the work he does in folk seed conservation, and he has been harassed for years now by local government officials, who claim he is a terrorist insofar as they define a terrorist as a person who goes against the interests of the state.²⁶ Solving hunger is not in the best interests of the state. This issue is a prototypical example of institutionalized politics, corporatism, and militarism intersecting. In a similar vein, Vandana Shiva has warned of the debilitating effects of what she calls “biopiracy,” the patent on life that homogenizes the dynamic creativity of life and the sociality of knowledge production and dissemination.²⁷ So what can be done about this situation?

Organizations such as the UN and WHO adopt a rights-based approach to deal with the intertwined problem of food security and institutionalized inequities that make the problem of hunger and malnutrition more acute. WHO adopts this approach to solving the climate change, health, food, and water combination, underscoring that all people have a right to health, which by extension includes a right to water, food, and shelter. Furthermore, it recognizes the interdependency of all these rights—that no one right can be given priority over another.²⁸ The basic fundamentals of a rights-based approach to climate change adaptation begins with the premise that individual persons own certain entitlements within the social, economic, political, and cultural spheres. When rights are accorded an individual, they are expected to provide that person with basic security. The rights-based approach is at its core a political project that sets out to introduce new policies that can address the imbalances arising from poverty and socially exclusionary institutions and cultural norms, with a view to creating individual entitlements. It recognizes not only that vulnerable groups are marginalized at the national or local level, but that international policies and practices can also intensify preexisting forms of social exclusion (such as gender inequities). The limitations of a rights-based approach stem from the emphasis it gives to individual entitlements. The problem of starvation and food scarcity is a collective issue. The structures and institutions that stitch the global food system together and the asymmetries of power coordinating these structures therefore need to be more closely scrutinized.

First, climate change is projected to render the basic problem of supply and demand more acute. As crop yields fail, the amount of food available to feed the world’s growing population will drop. The Fundación Ecológica Universal (Universal Ecological Fund) succinctly summarizes the situation:

During March 2007 and March 2008, global food prices increased approximately 43 percent. Over the same period, the price of staple crops such as wheat and soybean increased 146 percent and 71 percent, respectively. Food-insecure populations currently spend anywhere between 50 and 60 percent of their incomes on food.³¹ The reasons for the increase in food prices are economic (rising energy costs as well as the increased demand for food, oil, and energy by consumers in emerging markets such as China and India), environmental (poor weather conditions thwarting crop yields), and developmental (the growth in biofuel production causing price of corn to spike). And how these factors connect are driven by neoliberal economics.

Oxfam has reported that the 2007–2008 food crisis, which was caused by sharp spikes in food prices, left an extra 150 million people hungry, and it projects that by 2030 food prices will double. Oxfam has made a plea to scale up and improve the management of food reserves, which since 1990 have basically been neglected. For instance, the food-price crisis could have been offset by means of a global grain reserve of 105 million tons, with the cost of maintaining such a reserve estimated at $1.5 billion, a cost that Oxfam puts neatly into perspective: “$1.5 billion or $10 for each of the extra 150 million people who joined the ranks of the hungry as a direct result of the last food price surge.”³² Basically, what Oxfam is proposing is the development of a much needed social food safety net to protect poor populations against upsurges in food prices.

Many are pointing the finger of blame for food scarcity and the concomitant problem of rising food prices at biofuel production, and rightly so. In the effort to become more energy independent and to shift to cleaner energy solutions, the switch from fossil fuel–based oil to biofuels such as biodiesel and ethanol is a popular alternative for some. In contrast to traditional petrofuels, biofuels do not contribute to climate change and release less particulate pollution. Although biofuel production might mitigate GHG emissions by providing clean energy, it has had the unfortunate consequence of diverting food grain–growing land to the production of crops used in biofuel.³³ In his briefing before the U.S. Senate on June 13, 2007, environmental analyst Lester Brown explained that the U.S. corn crop is a crucial ingredient in the global food economy, accounting for “40 percent of the global harvest” and providing approximately “70 percent of the world’s corn imports.” As the United States strives to solve its dependence on foreign oil by developing 35 billion gallons of alternative fuels that come from ethanol and coal by 2017, he warned that it might be cutting its nose off to spite its face. With the fuel value of grain exceeding its food value, Brown warns that “the stage is now set for direct competition for grain between the 800 million people who own automobiles, and the world’s 2 billion poorest people.”³⁴

Some critical realism needs to enter the policy equation here, however. Even if all the U.S. grain crop were turned into ethanol, it would fuel only 16 percent of U.S. automobiles, and the grain needed to fill a twenty-five-gallon tank with ethanol is enough to feed one person for a year, so the math for biofuel production does not compute.³⁵ Furthermore, according to a study completed by David Pimentel and Tad Patzek, the production of biofuels uses more fossil fuel energy than can be compensated for by the use of biofuels.³⁶ The math adds up only when placed in the context of neoliberal economic policy that pushes food into the muddy waters of investment, derivatives, speculation, and futures trading.

Data produced by the Earth Policy Institute show that the percentage of the U.S. corn crop used for ethanol has risen sharply since 2005. In 2005, 10.6 percent of the 2004 corn crop yield was used for ethanol; by 2009, this figure had jumped to 26 percent of the 2008 U.S. corn crop yield of 410 million tons.³⁷ In 2010, 35 million acres of U.S. farmland were dedicated to crops for ethanol production, heavily subsidized by the U.S. government at $6 billion a year. It therefore comes as no surprise to hear that the United States increased its ethanol production by 21 percent in 2010. So when bad weather hit the U.S. Corn Belt states the same year, the supply of corn fell sharply, and the price of corn responded accordingly. These figures seem to suggest a structural cause to the price hikes that can be neatly situated within the cycles of supply and demand: with supply going down and demand increasing, prices escalate.

Yet the Mexican corn crisis in 2006–2007 exceeds the structural analysis of supply and demand, and it helps shed light on the different threads that tie neoliberal economic policy together: the dynamics of supply and demand, speculation, food scarcity, and the broader threat to the biodiversity upon which all life on earth depends. When international corn prices shot up in 2006, Mexico was thrown into a food crisis as the price of tortillas, a staple in the Mexican diet, tripled and in some parts of the country quadrupled.³⁸ Many commentators blamed the inflated prices on the diversion of corn supplies in the United States to ethanol production.³⁹ A rise in demand for corn was to blame in part for the rise in corn prices, yet it is also too easy simply to fault ethanol for the price hikes. We must also be aware that neoliberal policies have gradually placed Mexican corn demand under the thumb of the free market.

The free-trade policies of the North American Free Trade Agreement (NAFTA) signed by the governments of Canada, Mexico, and the United States in 1992 (it came into effect in 1994) have skewed the Mexican economy toward corn imports from the U.S. corn market, slowly crippling the country’s corn self-sufficiency in the process. Prior to NAFTA, Mexico imported only 10 percent of its national corn needs; by 2007, it was importing 50 percent of its corn from the United States. In 2003, Mexican trade statistics show that U.S. corn exports to Mexico totaled 8.4 million metric tons.⁴⁰ In addition, the Compañía Nacional de Subsistencias Populare, a Mexican state organization responsible for regulating Mexico’s corn market and ensuring that local producers get optimal prices for their corn, was liquidated in 1999 as a result of neoliberal restructuring measures inflicted on Mexico after the debt crisis of 1982, which further weakened the Mexican corn economy. From then on, the Mexican corn economy was slowly handed over to multinational grain corporations. I say “slowly” because the Mexicans, realizing the negative social and economic impact that receiving U.S. corn exports was having on the livelihood of Mexican farmers, bargained to extend by fourteen years the transition period from a Mexican corn market in Mexico to a market dominated by U.S. corn (from January 1, 1994, to January 1, 2008).

In what would have to be a prime example of corporate opportunism at its best and most ruthless, Monsanto rubbed salt into open wounds when it used the corn price crisis to push for more genetically modified corn crops to be planted in Mexico, arguing that the country could no longer meet the national demand for corn because it had resisted using transgenic corn. Monsanto of course said nothing about how the introduction of genetically modified corn would also threaten the sixty-seven varieties of indigenous Mexican corn and potentially destroy the country’s corn diversity.⁴¹ Not just the different tastes that come from Mexico’s wide array of indigenous corn would be compromised by cross contamination with genetically modified corn, but the diverse characteristics that help make each species of corn more resistant under different conditions. It is these very qualities that make Mexican corn especially important to scientists as they work at developing hybrid corn varieties resistant to climate and environmental change.

There is another side to how free-market forces direct and shape the global food system: growing speculation on food derivatives. A large part of why the price of Mexican corn rose so dramatically and quickly was speculative corn trading. Indeed, speculative trading in commodity futures worsened the global 2007–2008 food-price hikes. With the fallout around financial derivatives since the 2007 global financial meltdown, food commodities speculation is becoming the new commodity in futures trading. One of the banks responsible for the meltdown—Goldman Sachs—is ironically also behind the growing trend in food speculation.⁴² In 2010, Goldman Sachs reaped $1 billion dollars in profits from speculation on food derivatives.⁴³ Food is included in the Goldman Sachs commodity index funds, which basically allows for bets to be placed against the price of staple foods. The role that long-only index fund speculation plays in the commodity market is certainly controversial, and it highlights an ideological clash: speculation versus the regulation of prices.

In testimony to the U.S. House of Representatives Committee on Agriculture in 2008, Scott Irwin, professor in the Department of Agriculture and Consumer Economics at the University of Illinois at Urbana-Champaign and Laurence J. Norton Chair of Agricultural Marketing, explained that after World War II, the price of U.S. grain futures skyrocketed, and President Harry S. Truman declared that “the cost of living in this country must not be a football to be kicked around by grain gamblers.” Truman responded to the great increase in prices by demanding that the Commodity Exchange Authority, a precursor to the Commodity Futures Trading Commission, raise futures exchange margins to 33 percent on all speculative positions, going on to say that “if the grain exchanges refuse the government may find it necessary to limit the amount of trading.” In 1958, the U.S. Congress banned trade in onion futures in an effort to curb extreme speculative price activity. Similar price increases between 1972 and 1975 prompted the U.S. government to introduce what Irwin described as “drastic measures”—namely, federal price controls along with an embargo on soybean exports.⁴⁴

Irwin brought to the committee’s attention the connection between speculative activity and commercial hedging from market risks in the recent past, explaining that the price hikes cannot be neatly blamed on long-only index fund trading. For instance, 500,000 contracts were sold in 2008 to commercial firms involved in corn production and processing, compared to the 250,000 contracts bought by speculative corn traders. In the first quarter of 2008, the “position of short hedgers” was “slightly less than 6 billion bushels.” Irwin concluded that “increases in long speculative positions tend to represent speculators trading with hedgers rather than speculators trading with other speculators.”⁴⁵

Yet what Irwin does not factor into his assessment is that speculators and hedge funds bet on the market together. In other words, they are part of the same system of free-market capitalism, so separating speculative activity from hedge fund activity is an artificial distinction that distorts the picture of how price fluctuations in the free market work. The jitteriness of the corn market from 2010 to 2011 suffices to make my point. In September 2010, the price of corn was at $4.50 a bushel, increasing steadily to $7.40 a bushel by March 3, 2011. From early to mid-March 2011, the price fell by $1 a bushel when, after the earthquake in Japan, speculators became nervous that the Japanese demand for U.S. corn would drop, prompting speculators, index, and hedge funds to quickly withdraw from the market, which caused prices to drop accordingly.⁴⁶