Whether markets help cause or exacerbate famines is one of the great questions of political economy. Cormac Ó Gráda’s recent book Eating People is Wrong, and Other Essays on Famine, its Past, and its Future, along with his earlier volume, Famine: A Short History, quietly, calmly, and unostentatiously undermines many of the key empirical observations about markets and famines made by Amartya Sen. Yet few seem to have noticed his disagreements with the Nobel laureate who transformed the thinking on the subject. This post includes remarks on the Bengal famine of 1943, the Great Irish Potato Famine, and some of the ‘Victorian’ famines of British India in the late 19th century.

In Diane Coyle’s review of Eating People is Wrong, she remarks Ó Gráda “broadly agrees with Amartya Sen’s famous conclusion [about the Bengal Famine of 1943] that it was a famine of policy rather than nature”.

I find that statement puzzling. Yes, Sen and Ó Gráda do agree that British war-time policies helped bring about the famine through intentional military choice, callous indifference, and unintentional blunders. But in Sen’s analysis, the prime mover behind the initial decline in food availability was not a major shortfall in grain output within Bengal, but a spike in food prices induced by speculation and hoarding in response to the perception of shortfall. There was enough food, but prices rose too high.

Ó Gráda, by contrast, observes that a combination of cyclone and blight (Helminthosporium oryzae) did actually cause a major drop in Bengal’s normal rice harvest. He finds the pattern of prices in Bengal over time inconsistent with hoarding and speculation. The man-made part is the impediments placed by British officials in the way of normal, peace-time functioning of markets which would have brought more food imports into Bengal from other Indian provinces.

To put it as starkly as possible, Sen cites ‘natural’ market forces and Ó Gráda cites man-made market failure. I must stress this point: both agree on the British response/nonresponse. But they disagree fundamentally on the ur-cause of the initial decline in food availability.

In his review Charles Mann at least says “Sen got it partly right and partly wrong” on the Bengal famine of 1943. But he then fails to trace O’Grada’s continuous divergence from Sen on the role of markets in famine.

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Sen famously argued that famines have never occurred in self-governing democracies, because the free flow of information and popular pressure induce governments to take steps to prevent harvest failure or other disasters from turning into actual famine. Today, very few disagree that many famines have had obviously political causes. Or that politics and ideology have in the past inhibited action to relieve the starving. Even fewer disagree that markets do not avert famines all by their magical selves. Thanks largely to Sen, famines are now routinely regarded as a result either of policy blunders, or inaction and indifference, or willful engineering.

But there’s more to Sen’s work on famine than that. Why, in the first place, do populations which in one period manage to feed themselves without relief, suddenly become in the next period unable to do so ? Before Sen turned his gaze on the subject, the culprit had usually been identified as “food availability decline” due to climate or war. But then he shifted the emphasis away from famine as natural disaster to “economic disaster”.

In Sen’s approach to famine, ‘entitlements’ are defined as the “set of alternative commodity bundles that a person can command in a society using the totality of rights and opportunities that he or she faces”. Famine occurs when entitlements decline; and in Poverty and Famines, Sen focused on “exchange entitlement declines”, e.g., when market incomes fall in relation to the price of subsistence foods. Food becomes not physically unavailable, but unaffordable.

In EPW Cormac Ó Gráda produces a convenient punnet square of the different possible attitudes toward famine:

Amartya Sen adopts 1,2 — market failure (due to poor information or uncertainty) is often the original cause of food insufficiency; and 1,1 — when markets are working, they often make famines worse.

But I want to be clear. I am NOT saying Sen=> markets=> evil nor Ó Gráda=> markets=> wonderful. Both treat as an empirical, case-by-case matter, how markets actually behave in specific famines. In Hunger and Public Action, for example, Drèze and Sen devote chapter 6 to both the positive and negative impacts of markets in famine situations, citing both theoretical reasons and historical evidence. But in practice, Sen’s interpretations of famines in history have generally had an anti-market bias. [Edit: Maybe the phrase ‘anti-market’ is too strong. But clearly for Sen markets have often worsened famine risk through hoarding, speculation, and food exports.]

By contrast, Ó Gráda’s empirical investigations generally find that unless a government or a war has disrupted them, markets usually function well in famines. Nor have well-developed markets, in practice, worsened famines. That doesn’t mean markets alleviate them all that much. They just don’t seem in practice to make things worse. (The full exposition of these views is found in the best and most technical part of EPW, chapter 3, whose analyses range from famines in the European past to contemporary Africa.)

Moreover, in Ó Gráda’s analyses, famines have not primarily ensued from “exchange entitlement declines” divorced from supply shocks. The pendulum had clearly swung too far in the direction of Sen’s approach, and there’s been too much emphasis on the market distribution of food during famines and too little on physical food availability. Even in famines which everyone agrees are man-made, such as Ukraine in the 1930s or Mao’s Great Famine, Ó Gráda finds that supply shocks have been underestimated. “The paucity of evidence for ‘pure’ entitlement famines–famines with no FAD dimension–suggests that modern scholarship may underestimate the role of food supply” (Ó Gráda 2007).

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Amartya Sen attributed the “exchange entitlements decline” that purportedly caused the Bengal Famine of 1943 to a combination of war-induced inflation, speculative profiteering, and market overreaction to perceived harvest failure:

…demand forces [leading to inflation] were reinforced by the ‘indifferent’ winter crop and by vigorous speculation and panic hoardings. The hoarding was financially profitable on the basis of even ‘static expectations’: rice prices had more than doubled in the preceding year, while the ‘bazar bill rate’ in Calcutta still stood around 7 per cent per year (the bank deposit rate was below 2 per cent per annum).108 There was a abnormally higher withholding of rice stock by farmers and traders from the winter harvest of 1942–3; the normal release following the harvest did not take place.109 A moderate short-fall in production had by then been translated into an exceptional short-fall in market release. The ‘current supply’ figures of the Famine Inquiry Commission no longer reflected supply to the market.

But against this view Ó Gráda is simply devastating, like a Mongol horde riding roughshod over Eurasia. Both quantitative and qualitative evidence strongly suggest hoarding was not a major factor in Bengal’s price fluctuations

First, a major campaign to search and root out illegal stockpiles failed to discover substantial grain hoards. Yet the Muslim League government of Bengal had every incentive to find them, having publicly blamed the food shortage on merchants and moneylenders in the cities (who happened to be mostly Hindus).

Second, if there was a lot of speculative hoarding of rice in 1943, then the market release of hoarded supplies in early 1944 (when there was a bumper crop) should have caused a much bigger price drop than was normal. Although the market price of rice converged with the official controlled price at the end of 1943, prices remained higher than before 1943. From Ó Gráda’s FSH:

Finally, a key implication of Sen’s “exchange entitlement decline” is the great inequality of suffering in times of food crisis, both in terms of mortality and financial distress. The landless labourers suffer. Consumers of food, not producers, suffer. In the Bengal famine of 1943, those classes did suffer the most, but the number of land-owning food producers who were forced to sell their land, or carried abnormal debts, or turned into wage labourers, or migrated to the cities as paupers, was simply too high to be consistent with the Sen interpretation of the famine. It was a general decline of food availability.

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A classic trope of well-functioning markets making famine worse is the export of food during famines. The most notorious instance comes from the Great Irish Famine, about which Drèze and Sen noted:

…as it happens, quite a few famines have taken place without much violation of law and order. Even in the disastrous Irish famines of the 1840s (in which about an eighth of the population died, and which led to the emigration of a comparable number to North America), the law and order situation was, in many respects, apparently ‘excellent’. In fact, even as the higher purchasing power of the English consumers attracted food away, through the market mechanism, from famine-stricken Ireland to rich England, with ship after ship sailing down the river Shannon laden with various types of food, there were few violent attempts to interfere with that contrary—and grisly—process. [Drèze & Sen pp 22-23]

However, this ignores the fact that Irish export of relatively expensive wheat and oats financed the import of relatively cheap maize. From EPW:

And from FSH:

Of course all of that was too late and took too long to happen. And it would have been much better if all the food produced in Ireland could have been requisitioned and provided to the starving. But it’s also an open question how much the British state in the 1840s was capable of doing that in time, if it had been as activist in its inclination toward famine relief as any modern government today is.

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In the second half of the 19th century, somewhere between 15 million and 35 million Indians (out of a population of 150 million or so) died in climate-related famines. A staple of Indian historiography has been to blame the introduction of railroads for making the famines worse — again, by facilitating the export of food grains from a famine-stricken region, not only overseas, but also to other regions within the country. Sen has frequently mentioned this in his works, e.g., Drèze & Sen [pg 90]. (Ó Gráda also addresses this issue, but below I rely on other sources.)

The food-exports-by-rail idea is plausible in the short run and in principle. But compare the extent of the railway network circa 1880, with the map of “famine intensity” in the 1870s when the Great Famine of 1876-78 took place. (Source; I don’t know why one map includes all of British India while the other only shows modern India.)

By the end of the 1870s there were still enormous swaths of India — the size of European countries several times over — which were completely unserviced by rail. Before rail access, Indian commerce naturally relied on roads and rivers, though most of the country is not as dense with waterways as Bengal, let alone China’s Yangtze valley; and food grains typically travelled to market by bullock carts. In the pre-rail era, therefore, prohibitive transport costs fragmented regional markets, so that prices for the same product could vary by double-digit factors even in adjacent regions.

So even if the British Raj had banned grain exports out of the country as soon as famine was noticed (usually when starving migrants started showing up in the cities), that would not have meant the grain shipments could have been transported to the most famine-stricken regions of India in time. In 1876-8, most districts in the northwest and the south would have been hundreds of miles from the nearest rail depôt.

However, a modest-sized literature does find that market integration did reduce India’s famine vulnerability in the long run. Over time, what had been a group of fragmented regions became a national market, as can be gleaned in grain prices from Studer 2008:

(You can also see wheat prices, as well as the coefficient of variation of grain prices over time.)

The above could imply that — over the long run — grains moved from surplus to deficit regions in order to exploit price arbitrage. But whether India’s famine vulnerability was ultimately reduced by railways development is more directly addressed by Burgess and Donaldson, “Can Openness mitigate the effects of weather shocks? Evidence from India’s famine era“. B&G found that, in the period 1860-1920,

“[O]n average over our sample period, a local rainfall shortage in a district would increase the probability of observing a severe famine in that district… In particular, prior to obtaining railroad access, rainfall shortages had a large ( i.e., statistically and economically significant) effect on famine intensity. But after a district obtained railroad access, famine intensity fell significantly… For a given reduction in rainfall, if a district were connected to the railroad network it faced a significantly lower probability that a food scarcity or famine would occur in that district. This is the key result of the paper. Indeed the ability of rainfall shocks to cause famines almost disappears after a district has been penetrated by the railroad.4”

The above is even though rainfall was not noticeably less volatile after 1900 than before. You can see map visualisations of changing famine intensity and railways mileage extracted from B&G’s slide presentation:

Postscript: Neither this post nor Ó Gráda addresses the claim argued in a well-received book called Late Victorian Holocausts: El Niño Famines and the Making of the Third World by Mike Davis. Davis argues that in 1850-1914 the coerced integration of developing countries, including British India, into global capitalism made their populations more vulnerable to catastrophic weather-related famines than they had been in previous eras. The claim draws on an older tradition in Indian historiography and has recently been reprised in Sven Beckert’s Empire of Cotton: A Global History. This thesis, though a favourite amongst western historians studying colonialism, has been mostly neglected by economists. But there is a small amount of economic history literature offering a different perspective on this question, which both Davis and Beckert have suppressed in their books. That is the subject of a blogpost coming in the near future.

PS #2: James Fenske is apparently now working on cotton, famine, & land tenure institutions in British India after 1850.