[Robin McAlpine Blog] The second reason our food system is unreformable

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The second reason our food system is unreformable

First published by Common Weal

Well are they not just utterly petrified of Zohran Mamdani? There is probably no politician in the US who has currently got more powerful forces lined up against them and who is facing more money being spent to prevent them getting elected. Yet it still looks like he is going to become Mayor of New York.

His opponents are flummoxed. They have been certain they have identified his giant glaring weakness, ones that will make him unelectable, and they have gone after those remorselessly. You will be familiar – he’s an antisemite for opposing Israel’s genocide. He’s an inexperienced amateur no-one should trust. (His response was brilliant; "What I don't have in experience, I make up for in integrity. And what Andrew Cuomo lacks in integrity, he could never make up for with experience").

He will cause an exodus of wealth (yawn). And of course he has crazy policies which are not for grown-ups. Except all this is bouncing off him and his opponents are flummoxed that their usual attack lines aren’t working. There was one policy issue they were convinced was a winner – Mamdani’s plan to create public grocery stores.

Mad, they say, mad. Absolute communism. No-one will accept that madness. And then they checked – 66 per cent support among New Yorkers. They literally don’t know what to attack next.

Do you remember that earlier in the year I argued that our current food system is unreformable? I argued that I first needed to explain in detail why tweaks can’t work (basically it is a system of addiction and you can’t tweak addiction). I argued that once you realise that it can’t be reformed using usual methods, you need to look at unusual methods.

What I’m asking you to look at in this article is the role of monopoly and the gap between what political insiders think is possible and what the public is ready to support to understand the only possible means of reform I can see. We need to socialise the distribution of food.

The political and media classes reflexively saw Mamdani's socialisation of the distribution of food as breaking the natural order of free markets. Before considering the policy or its merits, they dismiss it as ridiculous because it breaks the rules they operate by. They believe the public operates by those rules too. And the public does – if they think the rules are working for them.

Currently the public thinks no such thing. They’re absolutely sick of being ripped off and are the victims of utterly outrageous food price inflation. In fact it is food price inflation and rising housing costs which are creating a really unsettling phenomenon in the US – all the economic indicators are looking pretty positive, but the public appears to believe they are in a deep recession.

This article explains why – there are two economies in the US (in fact almost certainly more) and the politicos only measure one of them. The majority of Americans inhabit the other and it really probably is effectively in recession. Food prices, housing and interest payments are rising much faster than wages, even now.

This gap, this vulnerability, is really, really important. It is a giant, uncolonised space where it is possible for social reformers to actually build a different political offer. It is a tool to achieve big things, if politicians have the courage to do big things and are able to recognise this space.

Now can I encourage you to see this through the lens of ‘the danger of monopoly’. In the case of Mamdani, he is responding to monopoly-based price gouging. If you’re not in the US you may not completely understand this. We had/have the cost of living crisis, they got it twice over. I don’t have space to explain it here but there was monopoly-driven price gouging at every layer in the US economy. If you want to understand this more, I’m afraid you’re going to have to get into the weird economics of chicken genetics. The US is a nest of monopolies, worse even than Britain.

The key players in our food system are no longer food producers but food distributors

But what I’m trying to get you to focus on is that price is not the only abuse that comes from monopoly. Quality is a victim too, and so are labour rights and economic development. Monopoly always wants to sell more for as much money as it can while paying the least possible for the thing it is selling and paying the least possible in wages for those doing the work.

So while Mamdani is focussed on the cost of food, I’m initially focussed on the impact on health of the food system we have. Mamdani wants to fight rip-off eggs, I want to fight Industrially Produced Edible Substances (you think of it as ready meals). Go look at graph of the week this week…

Yet these are the same fight. They are the fight against monopoly. The key players in our food system are no longer food producers but food distributors. They haven’t monopolised food production, they’ve monopolised (and monopsonised) the ability of anyone in the public to get food. They decide what food producers get paid, and they decide how much you then pay for that food.

They have achieved this through what for you might be completely obscure means; they have vertically integrated distribution. It used to be that there was a distribution industry (people you phoned to move cargo around). Anyone could get their produce to market if their business was viable.

But once the supermarkets reached a certain scale, they created their own internal distribution networks, available only to them. It has made it almost impossible for independent producers to get their products to market. The supermarkets don’t charge you for food (that’s the producers), they charge you and producers for access to their distribution networks.

This is a very specific category in traditional economics; it is known as rent-seeking. Rent seeking is treated with a very specific kind of contempt by classical economists (Adam Smith hated it above most things). Rent seeking is "gaining personal wealth without contributing to societal wealth, often by manipulating political systems".

The old model used to be simply using your existing wealth to purchase an asset others need and then making them pay over the odds to access it (rent). Now, rent seeking has been expanded to mean all the many ways people make themselves wealthy without creating wealth.

There are two forms you will now be very familiar with, even if not by name – ‘economic termites’ and ‘infrastructure dominance’. The former is the process of inserting a new entity between the consumer and the producer to extract maximum wealth from both. Think Uber in between you and your taxi, Google in between you and the newspaper you want to read, those shitbags at Ticketmaster in between you and culture…

Infrastructure dominance just means investing heavily in critical infrastructure until others can no longer compete – think Amazon and retail delivery, Amazon Web Services and web servers, those shitbags at Ticketmaster again and the fact that their parent company has bought half the world’s music venues and will no longer sell tickets to anyone else’s venues.

We can't make an addiction problem go away by regulating it, and we can't tweak a monopoly to stop it being a monopoly

In both instances what they are doing is following the evil Peter Thiel playbook – "competition is for losers". The goal with all these initiatives is to make sure that you cannot cannot, cannot escape, that there is no alternative, that you are trapped. And then they exploit you ruthlessly.

If you don’t know the ways that Amazon is utterly, utterly screwing your then you’ll feel really silly when you find out. Amazon is categorically not saving you money any more… I know you won’t believe me so read this.

The big supermarket chains are effectively termites now. They sit between you and groceries and manipulate you as to what products you buy, what version of a product you buy, therefore what you eat and how much you end up spending. It is a form of social control of which the Chinese Communist Party must be jealous.

This is the second aspect of why our food system is unreformable – because it absolutely has been reformed, and reformed radically. In the wrong direction. In food the way the supermarkets maximised the value of their distribution monopoly was to replace food with food substitutes.

As I explained in the last article, supermarkets realised that they could sell animal food to humans (literally) if they processed it enough, if they put enough additives in. This achieved three crucial things; reduced the cost of nutritional inputs (by dispensing with them), increasing exponentially the shelf life of food (because it’s not really food), and they got you addicted to it.

Corry Doctrow explains this process as having three phases. First, be nice to your customers by being horrible to your investors (in the sense of running at a loss on their money). Then, when you’ve trapped the customer base, be horrible to your customers and investors so you can be really nice to your suppliers. Then, when you’ve got them trapped, be horrible to your customers and your suppliers and be incredibly nice to your investors. That is the end state.

And it is shit. It has broken the rules of capitalism. It is not competing with others on the basis of price or quality or innovation but monopoly rent. Mamdani is fighting the cost implications, here I’m fighting the health implications. It’s the same fight.

Now you must have realised by this point that I haven’t actually explained how to fix the food system (again). It is for the same reason I didn’t fix it in the last article – there is so, so much you need to understand before you’re going to accept what I am proposing.

What I am proposing is one of my pet concepts – what I’ve called ‘Platform Socialism’. I do not believe it makes sense (on the whole) to try and nationalise the means of production other than in natural monopolies like energy.

Rather what I think we should do is nationalise the means of distribution. Basically we don’t have a productive economy any more so trying to socialise production just doesn’t make much sense. What we have is almost wholly a rent-seeking economy, and that we can socialise.

If we created a genuinely competitive market in food production based on quality and price, then we could regulate a food system in a way that makes it work for us. But we can’t make an addiction problem go away by regulating it, and we can’t tweak a monopoly to stop it being a monopoly. Those things are impossible. Even standard theory recognises you can’t regulate addiction or stop monopolies acting like monopolies.

You have to understand this and accept it before you can solve this particular problem. It is only when you understand this space between political orthodoxy and public will and you understand the moving parts of this dysfunctional system that you can redesign it.

Which I promise I will actually, finally do in a forthcoming article…

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