April 13, 2022 - 10:31am
It is no secret that food prices are rising – and rising fast. As of today, the global wheat price stood at $1122 per bushel. That is around double what they were in 2020 and well ahead of the previous peak in early 2008.
Rapid food price inflation is a recipe for political instability, especially in the developing world. Last time we had high food prices we saw the Arab world descend into chaos. Commentators at the time were quick to point to the role food price inflation played in the Arab Spring uprisings.
Food price rises leading into political revolutions is a tale as old as time. The French Revolution, for example, was in part caused by grain and bread shortages. The Russian Revolution too was precipitated by persistent bread queues in St Petersburg. Hungry people have a marked tendency to revolt.
The Arab Spring revolutions were seized on by the Western powers to destabilise important strategic regions allied with our enemies. Most famously, they eventually led to the Syrian Civil War. Assad’s government in Syria was a close ally of Moscow and many hoped the civil war could be used to overthrow him and install a leader who would align with the West. President Putin’s military intervention on the side of Assad foiled that plan.
This time, however, there is reason to think that potential revolutions might work in Russia’s favour, not ours. And unlike when the Arab Spring kicked off, we are currently in a world where geopolitical realignment is already taking place, with Russia and China forming an alliance with the seeming intention to create a new world power bloc.
Already Peru has descended into chaos – with the government imposing curfews as protestors erect barricades in the cities. The country’s current president, Pedro Castillo, is widely cast as a centre-Leftist. This is no doubt true. But his party, Free Peru, are not remotely moderate. Free Peru is a radical Marxist party that supports “anti-imperialism”, meaning that they prefer Cuba and Venezuela to the United States and Europe.
Something similar is happening in Africa, with US-trained militaries engaged in a series of coups in its regions. The Wall Street Journal notes that many of these new governments threaten to give ‘Russia an opening to gain sway’.
The food price rises are in part due to the sanctions that we are imposing. I have long been pointing out that these sanctions hurt us more than they do Russia. Now that the rouble has returned to its pre-war levels, this point is being widely discussed. But with food price-induced revolutions threatening to take place, the sanctions threaten not just to hurt us economically, but to shake the world up in such a way that will allow the emerging Russia-China axis to add to its list of allies.
Philip Pilkington is a macroeconomist and investment professional, and the author of The Reformation in Economics
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SubscribeWith Russia tying their currency to gold (of which they own a lot), they will probably have one of the most stable currencies in the world, which is worth a lot in times of high inflation. The thing is that if you print 30% of all money in existence within one year, it doesn’t mean that automatically everything will get 30% more expensive. So long as wares are still freely available, inflation will not become a noticeable problem. Unfortunately, we are now seeing supply chain squeezes due to COVID regulations, that are made even worse by the Ukraine war and rising energy prices due to sanctions. Rising energy prices, in turn, affect things that need to be transported, which is literally everything.
Even if many people don’t realize it, we have heavily overplayed our hand by printing money and locking down the economy like it’s going out of style. And the unfortunate truth is that no matter how one views the war in Ukraine, we the people cannot afford sanctions. This isn’t about gas or bread getting a little more expensive. It’s about our entire system of currency imploding.
See the thing is, no matter how evil Putin may be, he sits on a dragon’s hoard of food and energy. Whereas we don’t. Western Europe practices much more land-efficient agriculture than does Russia, and we need a lot of fertilizer for that, much of which comes from natural gas. We have vast greenhouses that run at night, warmed, lit and atmospherically optimized by natural gas alone. None of that stuff will run without natural gas, and it will rise meteorically if the price tag on gas increases.
It’s essential to realize that with everything we have done in the last two years, we have been working hard to destroy all Western economies. And now with sanctions we are putting the final nails in the coffin.
Makes sense to me
Thank you for this comment. I enjoy Philip Pilkington’s articles because he provides a viewpoint underrepresented in the msm where anything that might undermine Biden’s anti-Russia agenda is suppressed. Yesterday we learned inflation hit its highest level in 40 years and still the msm are reluctant to tie this to lockdowns or money printing or the emerging effects of sanctions.
I remain disappointed with Unherd’s commitment to covering economic issues. Mr. Pilkington’s short (though excellent) articles appear to be as far as Unherd will go in covering economics, yet I sincerely believe the coming economic disruptions will dwarf all other issues we currently face. I recognize that economics isn’t necessarily everyone’s preferred subject and there are more clicks to be had by writing about the culture wars, but part of a good journalist’s job is to educate readers about which subjects are important and why.
Come on, Unherd, please give us more full-length articles about economics. Don’t mimic the journalism profession after the 2008 financial crisis: one percent of economic journalists predicted it but 100 percent spent the next several years analyzing it after the fact.
Agreed, people may put economics in the ‘too hard basket’ but the reality is that economics effects every aspect of our existence – so the sooner we get our heads around it the better – the better to be able to plan ahead to better manage tough situations etc etc . That being the case something pertaining to global/local economics should be on Unherd every other day. I get the IMF daily blog which helps somewhat – but not so much in terms of best planning for the future, surviving retirement, real govt strategies etc
The West throws away food on an epic scale. Obviously you can’t flick a switch to stop this.
The law of unintended consequences strikes again and again. The consequence of shutting down the world’s economies to stop the spread of a virus will be the subject of discussion for centuries.
Agreed, but do we have centuries?
The question is, why do we still call them “experts’?
agreed and hence the need for different economic articles on unherd – see my commet above ..