MIDWESTERN AGRICULTURE IN US FORDISM: From the New Deal to economic restructuring

MIDWESTERN AGRICULTURE IN US FORDISM

From the New Deal to economic restructuring

MARTIN KENNEY‘, LINDA M. LOBAO,, JAMES CURRY** and W. RICHARD GOE* * *

INTRODUCTION

US agriculture has undergone fundamental restructuring in the past sever- al decades and is currently in the midst of a profound crisis. While Marxian political economists have developed various explanations for structural changes in agriculture, a holistic theory has yet to emerge. This not only limits the resolution of current debates about restructuring but provides no vision of the future, post-crisis agricultural structure.

In this paper, we outline a general framework for understanding recent transformations in US agriculture. While we by no means present a fully articulated theory, we believe that our framework treats agricultural change from a more comprehensive vantage point in that it subsumes many of the debates on restructuring, and most importantly, that it offers a starting point for a new political economy of agriculture. Our framework is derived from the French school of ‘regulation’ theory which has been mainly applied to the analysis of the non-agricultural economy. Building upon regulation theory, we generate key observations about agricultural restructuring that provide the foundation for a more comprehensive theory. In brief, our argument is poised on the following points. First, the motion of the non-agricultural economy largely determines the shape and structure of agriculture. Second, the current crisis in agriculture parallels the current crisis of American capitalism and the origins of both crises are to be found in the institutions built during the New Deal and immediate post-war era. Finally, the linkages forged between non-agricultural industries and agriculture have resulted in a present day political economy in which the two have become entirely intertwined and inseparable.

In the first section, we review classical and contemporary theories on the transformation of agriculture and situate the regulation framework in the context of this literature. The second section introduces regulation

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** ** * Center for Urban Studies, University of Akron, U.S.A.

Department of Agricultural Economics and Rural Sociology, The Ohio State Univer - sity, U.S.A. Department of City and Regional Planning, Cornell University, U.S.A.

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theory and the concept of Fordism, the regime of accumulation which has characterized American capitalism from the post-war period. We then use regulation theory to show how the Fordist logic of accumulation has been played out within a distinct segment of American agriculture, the corn- soybean-meat and wheat complex of the Midwest, describing how this process has led to the present crisis in agriculture. Finally, we explore possible solutions to the crisis as they are manifest in agricultural restructuring and political interventions.

POLITICAL-ECONOMIC APPROACHES TO THE TRANSFORMATION OF AGRICULTURE

The classical political economists clearly recognized the influence of the larger economy on agriculture. Taking England as a model, Marx assumed that industrial capitalism presupposed the destruction of the peasantry and the development of a capitalist agriculture, reflected in a three tiered agrarian structure of landless labourers, tenant farmers, and landowners (Man 1967). Marx saw capitalist development in agriculture lagging behind that of non-agricultural industry because of the particular depend- ence of the former upon land. He also noted other disincentives to capitalist investment which stemmed from the biological nature of agricultural production (FitzSimmons 1986). Despite these barriers, Mam saw the tendencies toward concentration and centralization as so compelling that agriculture would follow industry, eventually becoming orga- nized along capitalist lines.

Marx’s model of agrarian change ultimately proved to be unique to the English case. Later political economists attempted to revise Marx’s assumptions by explaining the apparent persistence and evolution of independent commodity production under capitalism. For Lenin, the pene- tration of capitalism into Russian agriculture involved a process of ‘de- peasantization’ in which most peasants were on a path toward proletarianization while a few emerged as an agrarian bourgeoisie (Lenin 1974). Extending his analysis to the United States, Lenin reported a similar disintegration of independent producers and growth of capitalist farming. H e concludes that a comparison of industry and agriculture ‘. . . shows that despite the incomparably greater backwardness of the latter, there is a remarkable similarity in the laws of evolution, and that the displacement of small-scale production occurs in both branches of the economy’ (Lenin 1934:69).

Kautsky also noted a similarity between the development of industry and agriculture in terms of the concentration and centralization of capital and proletarianization of independent producers. However, Kautsky ar- gued that these general tendencies met resistance in agriculture and attempted to show that agriculture operates according to its own principles

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of development (Newby 1986). According to Kautsky (Banaji 1980) as capitalism progresses, non-farm capital comes to penetrate farming. Large producers, increasingly linked to the agribusiness chain, capture market advantages over smaller producers. As holdings become centralized and as technology develops, smaller units fail to absorb available household labour: producers seek off-farm employment and thereby emerges the ‘worker-peasant, peasant-worker, or part-time farmer’ (Newby 1986:14).

On balance, Marx, Lenin, and Kautsky were concerned with broad theoretical issues, the integration of agriculture into the larger economy and how the economy transforms agriculture, and with prospective rather than retrospective insights on agricultural transformation. However, their theories were developed during specific historical periods, focused on particular national examples, and were formed in the context of late nineteenth century debates and agendas. Capitalism was in its competitive stage and the role of the state was assumed to be minimal. As a consequence, the classical theories cannot be used unequivocally to analyse modern US agriculture.

In general, the twentieth century literature lacks the vision of the early theorists in that there has been little attempt to develop a broad, prospective account of agricultural change under advanced capitalism. Many current debates centre on the persistence of simple commodity production, particularly on the ways in which capital subsumes farmers and on the barriers to capitalist farm investment. Mann and Dickinson (1978) argue that, due to the biological nature of farming, the amount of time that capital is constrained in production generally exceeds labour time or the amount of time labour input is needed. This disjuncture results in a lower average rate of profit and problems of labour recruitment which dis- courage capitalist investment except in those commodities where production and labour time more closely coincide. While this position has been challenged empirically (Mooney, 1982), it has spurred much related work (e.g. Pfeffer 1983; FitzSimmons 1986). Land has been considered another barrier to the real subsumption of farmers by capital (Goodman & Red- clift 1985).

Other features facilitating the persistence of simple commodity production have been underscored. Friedmann (1981) argues that simple commodity producers may be more competitive than capitalist farmers because of their capacity to self-exploit or adjust consumption levels according to available surplus. Simple commodity producers are also said to engage in investment and productive activities that are unattractive to capitalists (Mottura & Pugliese 1980). Finally, Davis (1980) views the family farmer as a ‘propertied labourer’, exploited in the sphere of circu- lation or in input and product markets.

Another approach to structural change centres on mapping farmers’

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locations in the class system, as in Mooney’s (1983; 1987) schema. Mann and Dickinson (1987:281), however, challenged such approaches for their failure to incorporate ‘factors extraneous to the model’ without which ‘we get no sense of the dynamic character of developments in the rural sector, nor can we necessarily predict or even establish the direction of change.’

Two other approaches are more closely aligned with the broader issues and linkages addressed by the classical theorists. The commodity approach (Friedland et al. 1981) demonstrates how the particular biological exigencies of crop production and related external factors, such as labour supply and control, industrial structure, technological changes, and state policy, constrain the organization of production. Friedmann’s (1978; 1987) work is also distinguishable for integrating changes in the world market to the social organization of commodities.

The review of the literature points to shortcomings and new directions for a political economy of agriculture. First, much of the contemporary literature is built upon a narrow and retrospective theoretical agenda focused on the persistence of family farming rather than its transformation and on the dynamics of the farm unit. While the classical theorists examined how the exigencies of wider economic forces were played out in agriculture, current theorists have tended to focus on the factors that move agriculture from within. The literature also reflects an over-concern with the uniqueness of farming as a production system and a tendency to ignore theoretical developments outside agricultural sociology. Further, there has been little effort to understand the current farm financial crisis from a political economy perspective.

A new political economy of agriculture must return to the substantive issues addressed by the early theorists while incorporating an understanding of the evolution of capitalism. The structure of agriculture is historically specific, mirroring at any particular point the larger economic environment. Understanding agricultural change therefore depends upon whether the organization of accumulation in the wider economy has been adequately characterized. However, virtually all of the social science literature on agriculture is based upon assumptions about capitalism that may no longer hold. As we will show in later sections of this paper, there is a good deal of evidence that advanced capitalist societies have moved to a new stage of capitalism in which the operating principles of the monopoly era have broken down. As a consequence, it has been difficult to resolve ongoing debates as well as to explain recent agricultural developments such as the farm crisis.

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REGULATION - A FRAMEWORK FOR UNDERSTANDING CAPITALIST ECONOMIC EVOLUTION

Regulation theory studies the institutions and structures with which a society organizes and conducts its production and reproduction (Aglietta 1979; DeVroey 1984; Lipietz 1987). As Noel (1987:311) puts it: ‘Regu- lationists . . , see capitalist development as a succession of periods, each period having a specific institutional framework with corresponding social norms. These frameworks are called ‘regimes of accumulation’.’ There have been only two important regimes of accumulation in capitalism: The ‘extensive’ regime which lasted until World War I and an ‘intensive’ regime which has only existed since the end of World War 11. The earlier regime corresponded to the period when the capitalist political economy was expanding into new areas and economic sectors. In US agriculture this was the period of the conquering of the frontier.

The post-World War I1 period was characterized by high productivity growth and increasing real wages or what the regulation school terms an ‘intensive regime of accumulation’. The term ‘intensive’ refers to the fact that surplus is extracted not by merely lengthening the working day (i.e. increasing absolute surplus value) or the numbers of workers. Rather, the production process is intensified through the use of the semiautomatic assembly line and the amount of production per worker (i.e. relative surplus value) is radically increased. These developments were paralleled in agriculture by the yield increases achieved with fewer farmers.

The Fordist regime of accumulation was the outcome of the particular struggles and class compromises sparked by the Great Depression and stabilized in the late 1940s. Fordism refers to the fundamental linkage developed in the US economy between mass consumption and mass production and given formal expression in the 1948 General Motors/ United Auto Workers pact which connected wage and productivity increases (Piore & Sable 1985). Implicit in these new arrangements was that worker productivity would continue to increase, thereby increasing social surplus. Class bargaining would be over this incremental growth rather than a zero sum struggle.

Fordism created an enormous consumer market consisting of relatively undifferentiated workers. US agriculture responded to this market by producing masses of commodities at uniform quality. Fordism both made possible and called forth a fundamental revolution in the food delivery system marked by the spread of the supermarket and the fast food chain restaurant. Food prices fell in real terms, occupying an ever smaller portion of the consumer budget. And the form in which food was deliver- ed to consumers resembled that of the other consumer industries.

As a result of the crisis of the 1930s, the farm producer also became a consumer of mass produced inputs, ranging from petrochemicals to farm

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machinery. Similarly, after World War 11, the farmer became a consumer of both consumer durables and processed foods and was no longer even partially self-sufficient. Thus, the farmer was integrated into the circuits of capital, in a double sense, as producer and consumer. From the 1940s through the early 1970s this system operated effectively in decreasing food costs while providing relatively high secure incomes for many fanners.

Regulation theory underscores the key factors important for an understanding of agricultural transformation: the ways in which the farmer is integrated into wider circuits of production and consumption; the effects of external economic processes, such as the development of new technology and markets, on the agricultural system; and the role of the state in and farmers’ political responses to agricultural transformation. An historical account of US agriculture must necessarily deal with the simultaneous occurrence of all three sets of factors, each superimposed upon and determining the others.

Agriculture and the New Deal: State policy and farmers’ political responses

The ‘Golden Age’ of agriculture from 1910 to 1919 had seen prices pushed high by wartime demand. But by 1920, the economic and agricultural recovery in Europe and weak domestic demand resulted in an agricultural downturn. Within a year the price of wheat dropped over 50 per cent and the prices of other grains experienced similar declines (Co- chrane 1979:123). The response by farmers to the overproduction crisis was to expand and over 46 million new acres were brought into production between 1910 and 1932. By 1932 more acres were harvested than at any other time in US history (Cochrane 1979:llO).

There was little response by the State to the agricultural crisis of the 1920s. It was assumed that the natural workings of the market would resolve the situation. However, the recovery was slow and uneven. Nu- merous proposals were debated by the land grant universities, the Depart- ment of Agriculture, the emergent congressional ‘Farm Block‘, and such officially sanctioned farmers’ organizations as the American Farm Bu- reau. Despite the seriousness of the crisis, the lack of unity among farm organizations prevented the creation of a comprehensive policy (Saloutos 1982).

It was not until the entire economy joined the agricultural sector in the Great Depression that significant action became possible. With the onset of the Great Depression demand for agricultural products spiralled lower and prices followed inexorably. Farm prices, already low, dropped even further so that many farmers were forced to default on their mortgages. The rural social structure of the Midwest was drastically affected as

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dispossessed farmers moved west in search of work, some ending up as agricultural wage labourers in California (Lowitt 1984). Not only was there economic disaster for agriculture, but also ecological disaster as topsoil from over-farmed land was blown away in the gigantic dust storms of 1933-1934 (Reisner 1986).

The dimensions of the agricultural collapse combined with the industrial-financial collapse created a fundamental political crisis for American capitalism. The severity and duration of the crisis is indicated by the fact that in Iowa nearly 25 per cent of the farms were either foreclosed or went into bankruptcy (Shover 1965:16). Radical farm organizations gained strength and began actively agitating for relief through government intervention using acreage limitations, production controls or price supports. By 1932 the idea of a ‘farmer’s strike’ had spread throughout the Midwest (Shover 1965 :44). Increasingly pitched battles were fought between deputies and farmers. In 1932, an election year, unrest threatened the ability of the Midwest governors to maintain order (Luoma 1967). Ed O’Neil, president of the powerful (and conservative) American Farm Bureau Federation, summed the situation up at a Senate hearing in 1933 thus: ‘Unless something is done [about the farm crisis] we will have a revolution in the countryside in less than twelve months’ (Saloutos 1982 :43).

The election of Franklin Roosevelt in 1932 brought a significant shift in US agricultural policy and set the framework for the inclusion of the agricultural sector in the emerging Fordist economy. The severity of the crisis was indicated by the first important New Deal legislation Congress enacted, the Agricultural Adjustment Act (AAA) of 1933. The goal of the AAA was to raise farm prices relative to the prices farmers were paying for inputs (Skocpol & Finegold 1982). The legislation authorized the imple- mentation of various price supports and production controls for the ‘basic crops’; corn, wheat, cotton, tobacco, hogs, milk, and rice (Saloutos 1982). The overall impact of the AAA should not be underestimated: a total of over $ 1 billion was paid to farmers in 1934 and 1935 (Cochrane 1979). This provided an important stimulus to the farmers’ ability to consume.

In addition to the AAA, other New Deal programmes stimulated the agricultural sector. The Commodity Credit Corporation (CCC), created by executive order in 1933, established a system of government ‘non- recourse’ loans to farmers. These loans financed planting and provided insurance against price drops. The Government ‘held’ the farmer’s crop as collateral. Farmers had the option to sell their produce on the market and pay off the loan, or, if conditions were unfavorable, turn the crop over to the Government while retaining the money advanced. The CCC has had a major long-term effect, providing an important underpinning for the entire price support system (Schickele 1954).

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The Farm Credit Administration (FCA) provided low-cost credit for non-crop inputs and farm household consumption and was credited with saving half a million farmers’ homes from foreclosure in the period between 1933 and 1936 (Saloutos 1982). Other organizations, such as the Farmers Home Administration and the system of Production Credit Corporations also were created by the Roosevelt Administrations (Moo- ney 1986).

The AAA successfully moved the struggle from the farms and highways into the legal and legislative arena and provided farm organizations such as the Farm Bureau and the Grange an opportunity to influence the agenda. In effect, the Farm Bureau, largely a creation of the land grant universities and the Extension service, came to play an important role in defusing the potential for agrarian unrest as a sort of legitimized farmer’s advocacy organization. The AAA obtained many of its personnel from the land grant universities and endeavoured to develop a good working relation- ship with the local Extension and Farm Bureau organizations (McConnell 1953).

The policy and institutional initiatives, which were implemented during the New Deal and revised in the immediate post-war period, fall into four general areas: First, they tended to regularize the farm production system, smoothing out fluctuations in farm income and removing a cer- tain amount of the risk thereby making farming a viable occupation. This also guaranteed stable demand for input producers and relatively stable prices for food processors. Second, the policy actions sought to incorporate the rural and farming sectors into the national consumption norm. Besides direct agricultural initiatives, programmes such as the TVA, the Rural Electrification Administration and New Deal revisions of the Reclamation Act of 1902 provided the infrastructure necessary to integrate farmers into the Fordist consumption ethic (Selznick 1949; Reisner 1986). Third, the acreage set-aside programmes combined with high floor or ‘parity’ price supports encouraged intensive production. Set-asides ensured that the least productive land was taken out of production and that the remaining land was farmed more intensively. Fourth, the effects of the above, when combined with the siphoning off of rural labour (especially tenants and sharecroppers), legitimated politically non-radical farmers’ organizations and guaranteed a conservative rural population.

The role of technology in the development of Fordist agriculture

The Great Depression and the New Deal transformed an agriculture dependent upon extensive growth using relatively low levels of manu- factured inputs into a commercial agriculture prepared to adopt any innovations that would improve profitability. In the 1910s and 1920s there were a series of socio-technical innovations which would revolu-

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tionize agriculture. The first was Henry Ford’s Fordson tractor, the first mass produced, gasoline-powered tractor. The success of Ford meant that ‘mass production and the Ford-Harvester price war lowered the price of tractors to the point where a tractor cost less than the price of a good team of horses’ (Williams 198755). From 1924 to 1960 tractors almost totally replaced draught animals (Williams 1987:119).

Biological and chemical innovations also played an important role. The development of hybrid maize was fundamental to Midwestern agriculture. Yields increased from 20.5 bushels per acre in 1920 to over 120 in 1986 (Berlan 1982). Hybrid seed corn was articulated symbiotically with the diffusion of tractors by providing a crop that was far more uniform than the earlier farm-bred seeds (Kloppenburg 1988). This uniformity greatly simplified machine harvesting. Further, hybrids were bred to respond to the cheap nitrogen fertilizers that became available after World War I1 as the Government disposed of its surplus nitrogen explosive manufacturing plants. Thus commercial fertilizer use increased from 16 billion pounds in 1930 to 36 billion pounds in 1950, reaching 98 billion pounds by 1980 (US Department of Commerce 1976:469). The intensifi- cation of agriculture also required greatly increased amounts of crop protection chemicals (Achilladelis et al. 1987). The final advantage of hybrid maize is that it is reproductively unstable, compelling farmers to return to the marketplace annually for new seeds. This irrevocably linked the farmer with the marketplace and created a vibrant hybrid maize seed industry.

For Midwestern (corn) agriculture one of the most important socio- technical innovations was the development of soybeans as a plant that could be profitably rotated with corn. Soybeans replaced the forage crops that were no longer needed because tractors had replaced animals (Berlan 1987). The soybean was a low-input crop; it replenished soil nitrogen as the forages had, and it had the same handling requirements as grain. Soybeans also provided capital an opportunity for profit because they must be processed before they can be used. Processed soybean oil was used to make margarine and cooking oil, replacing butter and animal fats. Soy- bean protein with maize was also an ideal feed for animals, particularly cows and poultry (Bertrand et al. 1984). The equation of maize and soybeans fed to animals allowed meat production to become a central pivot in Midwestern agricultural Fordism.

The post-war stability, 1948-1972

The years from 1950 through 1973 were the Golden Age of US Fordism. US industry was a model for the world, producing 40 per cent of the world’s gross national product. US consumers had steadily increasing incomes and formed the largest mass market in the world. In this unparal-

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leled growth all sectors of the economy were integrated and drastically transformed. A new phase in US agriculture was inaugurated as the technologies developed in the pre-war period rapidly diffused throughout the economy. This enabled farmers to achieve economies of scale and absorb their weaker neighbours. Concomitantly, there was a gradual increase in the average farm size from approximately 200 acres in 1945 to 420 acres in 1982 (US Department of Commerce).

Shortly after World War 11, demand for agricultural products which had been boosted by the crisis situation in Europe and Japan, slackened (Matusow 1967). In the 1950s farm price supports became the norm and congressional debates centered on adjusting these programmes. The central premise in the post-war farm legislation was the maintenance or increase of farm income (Cochrane 1979). Two key factors ensured sufficient demand so as to prevent the recurrence of crisis: First, the increased income of the US workers ensured an increased demand for meat. Second, the Federal Government created agricultural commodity disposal programmes for the domestic urban poor and PL480 distributed excess in friendly developing countries.

In addition to the effects of technology on inputs, new technologies and marketing strategies affected the farmer’s role in the economic system. The importance of processors increased drastically (Martinson & Camp- bell 1980). The favourable economic conditions of the 1950s and early 1960s spurred product innovations such as food additives and processed foods.

The agricultural chemicals such as DDT developed before and during the war were rapidly adapted for farm use and were enormously successful. This period was one of tremendous innovation as innumerable new chemicals and compounds were developed and sold with little or no government regulation. Farmers, increasingly enmeshed into purchasing pesticides, became further linked to the large agrochemical companies such as DuPont, Monsanto, Rohm and Haas, and American Cyanamid (Achilladelis et al. 1987). The growth in the average farm size also contrib- uted to a growth in tractor size and horsepower and made US agriculture a fossil fuel energy intensive production system (Humphrey & Butte1 1982). In effect, the entire US agricultural system came to be undergirded by fossil fuels, a fact that would become painfully obvious during the first oil crisis of 1974.

O n the international level, US agriculture dominated global production and reaped the benefits of a hegemonic market position. The US diet (lifestyle) was initially exported to Europe, then Japan and, eventually, the Newly Industrializing Nations (NICs). In the NICs, this was expressed by a shift to wheat consumption in the form of bread. PL480 was a spearhead in this evolution as the ‘gift wheat’ undermined high-cost local producers, created a demand for wheat products, and encouraged an

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infrastructure based on wheat. US wheat became the global standard and increasingly became the grain of choice of NIC consumers. So, during the period from 1945 to 1985 US exports of wheat tripled (USDA, various years). As NICs moved up the income ladder, beef and dairy consumption tended to increase among the middle classes. This led to increased demand, and once again US farmers were prepared to supply the corn and soybeans necessary for the Fordist diet. However, the developed countries remained the largest market for US grains and soybeans.

Internally, farms became increasingly specialized, growing only a few crops such as corn and soybeans in rotation. In many cases, dairy farmers withdrew from grain production and vice versa with the grain producers. This was encouraged by lenders who demanded specialization and also because government support and loans were not available for crops such as oats and barley. Put in another way, pre-war diversity (and thus flexibility) was radically diminished.

To recapitulate, the US developed an agricultural system that became suitably integrated with the industrial production system. As long as the Fordist system could continue to provide the incomes necessary to repro- duce the American lifestyle, the system could expand and grow. The period from 1948 to 1972 was one in which agriculture experienced steady growth in yields, farm income declined from 1950-1960 and then stabilized, government subsidies were manageable, and the cost of food declined as a percentage of the worker’s income. During this period agriculture appeared to be an ‘island empire’ as it had its own poiitical system including the congressional agricultural committees and the USDA (Lowi 1979). A stable coalition of farm legislators and urban legislators (voting for surplus commodity distribution) ensured that subsidies were approved and that all agricultural interest groups were mollified. Never- theless, this system was building up contradictions internally and would fall victim in a series of exogenous shocks.

The crisis of American Fordism: agriculture from 1973 to the present

The crisis of US Fordism perhaps began in the late 1960s as the overheated Vietnam War economy began to lag and other strains appeared. It was however the 1974 oil crisis which radically undermined Fordism. From 1974 onwards real per capita incomes decreased, rates of productivity growth declined and excess capacity became endemic to the economy. There has been a general secular upward trend in unemployment and wages in Fordist manufacturing have come under steady and prolonged attack. The economy became increasingly unpredictable with oscillating bouts of inflation and serious recession. By the 1980s US industry had become seriously uncompetitive, and the heart of traditional Fordism, steel and motor vehicles, had to seek protectionist shelter from the Japanese.

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The crisis of US agriculture did not manifest itself in the same way as it did in the industrial sector. Farm income, after remaining stable from 1960 through 1972, hit an alltime high from 1972 to 1974. Further, from 1972 to 1976 farm income actually exceeded the rate of increase of national income (NCATEP 1985). This was largely due to weather disturbances and a significant shortfall in grain production in the USSR, while Soviet domestic policy sought to increase the role of beef in the national diet. Soviet purchases drove prices up radically and masked the impacts of the more long-term trend toward higher oil prices.

Another important factor in increasing global food demand was the development of what Lipietz (1987) has termed the growth in ‘peripheral Fordism’. The strong economic performance of the NICs, i.e. Brazil, Mexico, Korea and Taiwan, encouraged increased food imports as their growing working classes abandoned traditional diets and demanded bread and meat. The NICs were joined by the oil states such as Iran, Saudi Arabia and Nigeria in importing grains and ignoring traditional agriculture. Thus, the general economic crisis was experienced in agriculture as a (temporary) boon.

The unexpected global food shortfall led US leaders to discuss the use of the ‘food weapon’ against the Arabs, the USSR, or any other country that would not accept US foreign policy goals and required food imports. The high prices encouraged Earl Butz, then US Secretary of Agriculture, to advise farmers to plant fencerow-to-fencerow. Agricultural economists predicted increased global food demand and likewise advised farmers to expand their holdings. The international market provided a vital compo- nent of US agricultural income. Crop exports as a percentage of crop receipts increased from 24 per cent in 1960 to a peak of 53 per cent in 1983 before dropping slightly (NCATEP 1985).

The increased grain prices in the 1970s were quickly capitalized in agricultural land values in the Midwest (USDA 1986). Three factors fuelled this inflation. First, there was a general belief that grain prices could only increase because development in the LDCs was expected to increase their food demand. Second, banks were actively recycling billions in OPEC petro-dollars and finally, agricultural land was perceived to be an excellent hedge against inflation. For farmers, the situation was too good to be true - they could borrow, repay loans in inflated dollars, and have appreciated land which could be leveraged for more land purchases.

And yet, even as the situation looked bright for agriculture, the underlying fundamentals steadily worsened from the mid-1970s onwards. First, agricultural earnings never again approached the level of the early 1970s. Second, the massive grain price increases and the increased burden of oil imports brought about redoubled efforts by importing countries to re- duce agricultural imports. Third, other countries such as Argentina and Brazil began to enter the world market as competitors. Increasingly, US

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production would experience severe competition in the marketplace due to EEC subsidies, high US target prices and increased LDC export of grains and other non-traditional exports such as vegetables and orange juice concentrate. Fourth, the US increasingly became viewed as a suppIi- er of last resort with a reputation for low quality. Fifth, the crisis of the political economy affected agriculture by creating drastic swings in ex- change rates which made US exports uncompetitive in the early 1980s. Sixth, real interest rates moved up and farmers were contracting debt at nominal interest rates as high as 20 per cent. Finally, the US Government for political reasons implemented embargoes against Japan in 1974 and the USSR in 1980, thereby calling into question the reliability of the US as a supplier.

The spending spree of farmers in the 1970s was to end quite abruptly as the Reagan presidency took office and the fight against inflation (through monetarism) was launched. The monetarist defeat of inflation removed the hedge factor, thus placing downward pressure on the price of land while real farm incomes declined. This was extremely serious because the collateral for high interest bank loans contracted in the high inflation environment of the 1970s had been agricultural land. As this occurred the banks saw their collateral shrink, while simultaneously the farmers’ cash- flow slackened. The result was a drastic increase in non-performing loans in rural bank portfolios and waves of farm foreclosures (Green 1984). The failure of the small banks, however, was not as dangerous as the insolvency of the New Deal-created Farm Credit Administration, which had so many problem loans in its portfolio that the entire system teetered on the brink of insolvency in 1986 and 1987 and the FCA had to approach Congress for a $ 6 billion subvention,

The 1970s also saw agriculture drawn into an increasingly serious debate regarding environmental pollution. Rachel Carson (1962) in a pathbreaking book identified numerous commonly-used farm chemicals as carcinogenic and harmful to the environment. By 1970 the crescendo of public concern about the environment had grown so great as to prompt the establishment of the Environmental Protection Agency (EPA) which tested and approved new chemicals. Agriculture’s role in environmental degradation through agricultural runoff and pollution of underground water sources was amply documented. The increasing cost of pest control also became a problem as insect resistance increased and demands for safer chemicals increased.

BEYOND FORDISM: WHERE DOES AGRICULTURE FIT?

Crises in capitalism unleash what Schumpeter termed ‘gales of creative destruction’ during which old social forms and institutions are transformed or destroyed and new ones are built. This implies two things about

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the current period of economic transition: First, numerous social experi- ments are now underway, some of which may survive, grow, and under- gird a new mode of regulation. Second, pfedictions are particularly haz- ardous during crises because of the volatility of the political economy. As a final caveat it must be recognized that these ‘solutions’ are generated through a process of class and intraclass struggles and compromises on the social, economic and political levels.

There are essentially two important models put forward by regulation- influenced theorists concerning the future of the capitalist political economy. The first is global Fordism and envisages the generalization of the mass production-mass consumption model to the LDCs. The developed countries would be expected to evolve to a ‘neo-Fordism’ in which the information technologies allow mass production techniques to be applied to the services such as restaurants, medical care and banking which were formerly not amenable to full automation. The future is expected to auger a continued move toward homogeneity and predictability.

In agriculture the homogeneity perspective leads to the conclusion that the foods of the future will be, for example, single cell proteins produced in large scale fermentation plants possibly using genetically manipulated fungi or bacteria (see, for example, Goodman et al. 1987). In effect, the argument is that biotechnology and advanced processing can take the corn-soybean-meat complex even further by producing an undifferentiated protein which could then be reconstituted in numerous configurations. Food from the factory is the vision underlying this model. A less drastic version of this line of thought is that biotechnology will increase product uniformity and that agriculture will continue the Fordist movement towards greater homogeneity.

A strikingly different scenario has been proposed which sees a ‘post- Fordist’ era or a recrossing of the industrial divide (Piore & Sable 1984) in a move away from mass production towards a system of greater flexibility and diversity of products. The essence of these arguments is that the new information technologies permit more production diversity at nearly the same cost as mass produced items. Further, the crisis of Fordism and the changing characteristics of the labour force are fracturing demand in a manner not conducive to long production runs of identical products (Roobeek 1987; Kenney & Florida, forthcoming; Florida & Kenney, forthcoming). This implies that large-scale production of any commodity product will be a low-value-added business always threatening to move to low labour and low land value environments. Probably only the largest scale, most technologically advanced producers will be able to survive in such a market, and even these will be subject to market fracturing with the more lucrative elements being exploited by speciality producers.

The significance of post-Fordist theories for agriculture seems to be very suggestive of both research agendas and political interventions. The ex-

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plosion of diversity in demand for food products in Europe and US seems to be driven by two trends. The first trend is the increasing diversity of ethnic and social groups - the explosion of Thai, Chinese, Indian, Mexican and other ethnic restaurants. These ethnic restaurants require non-traditional foods as inputs - many of which are imported but also increasingly are being grown in the US. The second trend is that for the middle class in the developed countries, food is no longer merely sustenance, but rather has become an experience. The traditional US cuisine of large (in quantity) portions of uniformly mediocre-quality fare is no longer viable for independent restaurateurs. This trend resonates with the growing health and environmental movements which are restructuring demand and encou- raging a movement away from canned goods and chemical additives.

Most discussions of biotechnology and the new information technologies understand them to be creating greater uniformity (Kenney et al. 1982; Kenney 1986; Goodman 1987; Mooney 1983; Goe & Kenney, forthcoming). This drive to uniformity is only one tendency or possibility. These new technologies also permit far greater diversity. Thus, new plants with desirable traits can be more quickly developed. Or, for example, dairy cows with different milk fat levels might be genetically engi- neered for specific market segments. The unifying principle of information permits the management of diversity.

In addition to the economic aspects of post-Fordism there are also political ramifications. It is becoming increasingly clear that the govern- ments of the developed countries will decrease the enormous subsidies now being received by agriculture. This is especially true because of the declining political strength of the rural sector. For example, in the US not only are farmers weaker politically (in sheer numerical strength), but also the power of the entire infrastructure consisting of rural banks, equipment dealers and even extension agents is waning.

In this environment new allies must be found, but the question remains, what can agriculture offer? Certainly, the offer to labour and capital of increasingly inexpensive food is a possibility, but food costs are currently only 15 per cent of disposable income (NCATEP 1986). Decreasing the costs of food at the expense of continued destruction of the environment and more health risks to both the farmer and the consumer with the benefits accruing generally to the farm input producer and the food processor seems problematic at best. The farm sector could advance avery different agenda to society, slightly increased food prices being offered in return for the drastic reduction in chemical use (and abuse) thus benefiting the environment and producing healthier food. The lines of struggle would then be farm groups and environmental and consumer groups against the agro-input industries and food processors. We have presented scenarios for resolution of the current crisis in agriculture. There can be no doubt that a successful resolution will depend upon the overcoming of the

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global economic crisis. Whether US agriculture can adapt to these historical exigencies remains unclear.

In this paper, we have explored the linkages between agriculture as a production sector and the movement of the wider US economy. We have attempted to return to the issues introduced to the political economy literature by the classical theorists while incorporating a recognition of the evolutionary development of capitalism. The discussions in this paper are admittedly brief as we have tried to synthesize a myriad of historical trends. Currently, theory on agricultural change appears to be at a stand- still. Political economists have become bogged down in debates over issues of limited, retrospective scope and involving assumptions about the nature of the economy that may be unwarranted. There is a critical need to move beyond these debates. We believe the only way to understand agriculture is to place it into the context of the evolution of US capitalism. This implies that our research net must be more broadly cast than the narrow confines of our colleges of agriculture and that the separate social sciences must be united into a more encompassing approach for a new political economy.

NOTE

The authors would like to thank Jean Pierre Berlan, Richard Florida, Todd Stockwell and Brigitta Young for their comments.

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MIDWESTERN AGRICULTURE IN US FORDISM: From the New Deal to economic restructuring

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