Adam Smith: poverty and famine
My Besterman lecture was a highly critical assessment of Adam Smith’s views on famine. In The Wealth of Nations (1776) Smith claims that in a free market economy famines will never occur. The famines that do occur are, according to Smith, the result of misconceived government interventions to prevent famine – a striking example of unintended consequences. Smith’s argument is that grain harvests never completely fail (as potato harvests do – but Smith does not consider the potato, which was not yet the main crop in Ireland). In a year of relatively bad harvest, price rises serve to ration the consumption of grain, and thus make the limited supply last through the year. Famines occur when governments artificially lower prices and thus cause supplies to run out.
Two texts have stayed in my mind as I have tried to get a grip on Smith’s views on famine. The first is Edward Thompson’s extraordinary essay, “The Moral Economy of the English Crowd” (1971), which introduced the term “moral economy” which has taken on a life of its own. Thompson’s article was a vigorous defence of those who rioted in support of demands for reductions in grain and bread prices – he and Smith are, two hundred years apart, arguing on opposite sides of the question.
The other is Amartya Sen’s Poverty and Famines (1981). Sen argued that famines can occur when there is no shortage of food if particular groups within the population lack the resources to access food. His classic study was on the Bengal famine of 1943 where more than two million died, even though the harvest had been adequate. On Sen’s account inflation caused by the war economy was the primary cause of famine, but the famine could easily have been prevented if the government had distributed grain to the starving. Sen’s argument is directly opposed to Adam Smith’s in that it shows that markets do not work to produce the best possible outcomes when it comes to the distribution of food.
Smith claimed to know a good deal about famine, and he wrote when the question of whether there should be a free market in grain was being vigorously debated. In France the physiocrats had argued for a free market, a policy which had been tried and had failed. In England 1774 was a year of bad harvests, accompanied by food riots.
Smith was quite right to think that England, where there was a relatively free market in grain, had not seen anything resembling a famine in his lifetime. But he completely failed to consider Ireland, where severe famines happened frequently. Worst of all was the famine of 1740-42, which killed 10% of the population, or 300,000 people. Smith had every reason to be familiar with Irish famine, for Jonathan Swift was one of his favourite authors and he had surely read Swift’s Modest Proposal (1729 – there were two copies in his library), suggesting that the Irish poor should breed children as livestock, to be consumed by the wealthy. Swift’s solution to the problem of starvation in Ireland was (in appearance) a perfect example of free market economics in practice.
Why did the Irish starve? For reasons that would have been familiar to Sen: because neither the government nor landlords intervened effectively to prevent the famine taking hold. In England, on the other hand, there were elaborate interventions, not only to feed the feeble and the unemployed, but also to subsidise bread for the poor and to distribute it free. If we turn from Smith’s Wealth of Nations to a slightly later text, Edmund Burke’s Thoughts on Scarcity (written during the near-famine years of 1795-96, and published posthumously) charity is given a central role in preventing famine.
Burke, Thompson and Sen have very different views, but all acknowledge precisely what Smith denies, the need for intervention to prevent famine in years of bad harvest. Smith himself published tables showing just how extreme the movement in grain prices was in bad years. Smith was right – the harvest very rarely fell more than 25% below the average, and there was always just about enough food to go round. But Smith was also fundamentally wrong: the working poor could not afford to feed themselves in bad years, and were dependent on charity to survive. Why was Smith unwilling to acknowledge the role of charity in preventing famine? I am afraid the answer has to be that his commitment to free market arguments was so dogmatic that he was unwilling to look with an impartial eye at the evidence. Smith was wrong, and his mistake had extremely serious consequences as it influenced policy towards famine through the nineteenth century.
– David Wootton
The University of York
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