Baha’i Perspectives

nadim December 7th, 2008

A few months back, in a piece discussing crop-based biofuels, I mentioned the correlation between the increased production of these petroleum alternatives and a spike in global food prices. At the time, some experts said they had solid evidence that a significant percentage of the increase was due to biofuel production. Naturally, biofuel advocates pointed to contrasting statistics and quite a debate ensued.

Well as it turns out, there’s more to the story.

Since the article was written we’ve seen the sub-prime mortgage crisis and feared credit crunch hit the light of day. And while companies are facing foreclosure or downsizing, and workers face the very real prospect of retrenchment, an odd thing has happened. Average food prices have actually gone down instead of up — the price of corn in particular – this without any real policy shifts in major biofuel-producing nations. Confusion reigns. The experts revise their figures and it turns out that while the correlation between the two factors still exists, it isn’t as great as previously estimated. So why have prices dropped?

Surprise surprise, all these factors are interconnected. As major investors and investing firms watched the housing bubble pop — so the explanation goes — they looked for other avenues to make a profit. With higher oil prices and a greater push to convert food crops to biofuels, it seemed a safe bet to assume that food prices would rise as a result (since there would be less of it). The frenzied investments around this assumption led to what is known as a speculative bubble, where the market value of a resource greatly exceeds its intrinsic value. Commodity prices rose dramatically, and kept on rising, until a point where it got ridiculous and the bubble burst, along with all the other speculative bubbles.

Without fail, this “bubble and pop” cycle has caused untold misery for the world’s poor. And while we would like to imagine that the worst is over, this NY times article predicts prices to rise again next year. So the question arises: is it acceptable for a handful of speculators, who are sitting on masses of wealth, to wreak havoc on the lives of millions of people living “downstream”?

Stephen Pearlstein, business columnist for the Washington Post, described the situation as it was happening:

this bubble is causing economic discomfort for households and businesses around the world, and misery for hundreds of millions of hungry people who suddenly cannot afford a bowl of rice or scrap of meat… the global food crisis has provided a grim reminder that the global economic ecosystem has become so interdependent that a drought in Australia, a tax credit in the United States, French farm subsidies and export controls in India can wind up forcing a desperate African farmer to eat his seed corn.

Shad Rowe, a Dallas money manager, remarked that the situation raises the bigger question of “whether people in a complex society ought to be allowed to make bets that affect other people and that have nothing to do with them.“

The insanity of 2008 has forced world leaders to finally sit up and take notice. At last month’s G-20 Summit aimed at combatting the financial situation, world leaders agreed “to a far-reaching action plan that, over the next 4 1/2 months, would begin to reshape international financial institutions and reform worldwide regulatory and accounting rules.” The plan included a joint statement:

We are determined to enhance our cooperation and work together to restore global growth and achieve needed reforms in the world’s financial systems.

Sounds good – and time will tell if the proposed measures lead to meaningful results. But then, given our chequered history with international reform, should there be any cause for optimism? Perhaps, perhaps not.

Let us, for a moment, dust off our magnifying glasses and take a closer look at the phrases “cooperation” and “work together”. Have our past actions always done them justice? What does it really imply when a determined group of previously separate entities work together in unity to fix a problem? Part of the answer lies in this quote. It starts by describing what unity is not, followed by what it is, and what tremendous effects it has had throughout history:

Unity is not… merely a condition resulting from a sense of mutual goodwill and common purpose, however profound and sincerely held such sentiments may be, any more than an organism is a product of some fortuitous and amorphous association of various elements. Unity is a phenomenon of creative power, whose existence becomes apparent through the effects that collective action produces and whose absence is betrayed by the impotence of such efforts. However handicapped it often has been by ignorance and perversity, this force has been the primary influence driving the advancement of civilization, generating legal codes, social and political institutions, artistic works, technological achievements without end, moral breakthroughs, material prosperity, and long periods of public peace whose afterglow lived in the memories of subsequent generations as imagined “golden ages”

(Century of Light, p. 41)

For a creative power which is essential to no less a cause than the advancement of civilization, isn’t it perplexing that the concept of unity receives no real thought or attention at any of these world showcases? Not a mere passing mention or goodwill gesture, but a profound grasp of what it is, what its implications are, and how to set about reconciling the complex misunderstandings and scattered beliefs that presently exist among nations.

For many, I suspect, achieving unity is seen as being incompatible with nationalistic priorities. Or perhaps it is dismissed as a pie-in-the-sky notion, too abstract and loosely-defined. Nothing at all like those big bad economic theories with the graphs and the formulas that make your head spin…right? Well, not really.

How’s this for a concise definition of what unity is all about:

For unity to exist among human beings — at even the simplest level — two fundamental conditions must pertain.
Those involved must first of all be in some agreement about the nature of reality as it affects their relationships with one another and with the phenomenal world.
They must, secondly, give assent to some recognized and authoritative means by which decisions will be taken that affect their association with one another and that determine their collective goals.

(Century of Light, p. 40)

A solid, scientific definition of unity, “at even the simplest level”. For a practical example of what this means, look here.

No guesswork required.

And herein lies the great paradox surrounding our scientific markets: for what is speculation, if nothing more than an educated guess?

Tags: economics, financial crisis, food, fuel, unity

• General Interest , News & Current Affairs , Society
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