Tuesday, October 17, 2006

Agrarian capitalism vs. John Howard

Howard's statement that:
it is part of the psyche of this country, it is part of the essence of Australia to have a rural community...Not only would we lose massively from an economic point of view [but] we would lose something of our character. We would lose something of our identification as Australians if we ever allowed the number of farms in our nation to fall below a critical mass.
This is one in a long line of agrarian rhetoric from Australian politicians. But in the long run there seems no alternative. Increasing farm productivity means that fewer farmers are required to produce the same amount of output and demand for farm products does not increase along with income. In the long-run the drought is just a hiccup in this process. Western Victoria, and in particular the Mallee-Wimmera is now the heartland of commercial agriculture in Victoria with good land and land prices are kept down by the absence of alternative uses so farms can expand. But it is the wheat belt which is declining fastest in population and will continue to do so. When farmers can't sell (although blue-gum plantations provide a market) they might as well stay on the land but their children won't follow them and they end up as my students. On Victoria see the work of Neil Barr, in particular The Changing Social Landscape of Rural Victoria. Family farms are non-capitalist (score one to the poststructuralists), but in the long-run if they cannot provide a comparable standard of living to the capitalist non-farm economy, then people will leave them. People left non-capitalist East Germany for the capitalist West Germany. Capitalist innovation drives increasing living standards. The attached graph from the Productivity Commission on broad acre farm returns tells the story. Lenin and Kautsky in two of the great works of classical Marxism were right about capitalist concentration in agriculture.


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