Hungry Capital reviewed on the Journal of Peasant Studies


Below is an excerpt from the review of ‘Hungry Capital’ appeared on the Journal of Peasant Studies. The full reference for the review piece is the following: Lawrence, G. (2014), ‘Financialization’, Journal of Peasant Studies 41(4), pp. 421-444.


In Hungry capital, Luigi Russi takes the reader through the highly complex world of finance, explaining, in a relatively uncomplicated manner, how a system that conventionally lent funds as a basis for regulating society’s scarce resources has emerged as a ‘hall of mirrors’ where monies traded have little or no connection with market fundamentals. In a financialized world, payments are generated by other payments, not the trading of goods and services. This is particularly so for derivatives (financial assets the value of which is derived from another underlying asset such as a commodity or currency) which ‘blend’ equity and debt to create products which are valued in relation to other derivatives: they effectively lose their connection with physical products. In this self-referential system where transactions build upon earlier transactions, things can go wrong. Russi notes that with the progressive deregulation of derivative commodity markets new instruments have emerged, including commodity index funds. These funds have been used in speculative ventures. And, because foodstuffs have become just one more asset in the mix, speculation in a commodity bundle can lead to food price inflation – as occurred, dramatically, in 2007– 2008 and led to political protest in over 60 nations.

Moving from speculation in agricultural products to corporate ownership and control of the food industry, Russi details what he calls the ‘finance-driven engineering of food’. In a chapter which explores how farming is being transformed from a peasant to an industrial form, he claims the casualty is nature. Yet this appears to be of little concern to the banks that are loaning to corporate farmers geared to production expansion and profit maximization. Similarly, the private equity and other firms purchasing food companies for asset stripping and subsequent release of ‘shareholder value’ view food as simply another product to be manipulated for profit-making purposes. Russi focuses upon two case studies, those of coffee and land grabbing. He explains that market liberalization has aided income generation for a highly concentrated segment of roasters while creating price volatility as a consequence of the speculative activities that have emerged with liberalization. The impact is felt most by the smaller coffee producers in developing nations. In relation to land grabs, he argues – in line with many critics of large-scale land acquisitions (McMichael, Cotula, de Schutter and others) – that it is part of the logic of a neoliberal- promoted, financialized food and biofuel system that lands will be identified as ‘idle’ and viewed as requiring capital injection as a prerequisite for wealth creation. This is despite the patent unsustainability of the forms of production that are taking place on the newly acquired lands. In a short, concluding chapter, he argues that the financialized agricultural and food economy of today is one bent upon, first, creating new assets and, second, turning those assets into forms that can generate further financial flows. Financialisation produces an addictive ‘hunger’ which will continue to produce undesirable outcomes for society and the environment. Is there a way out? Yes, according to Russi. It will entail a paradigm shift to envisage a form of ‘food as co-production’ – that is, a system which respects and nurtures food sovereignty as well as the organic connection between food producers and the natural resources they utilize.