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December 3, 2001

Fight terrorism with more enlightened economic reform, says author

Sociologist spent six years studying the impact of markets in Bangladesh

By Jennifer McNulty

In the aftermath of September 11, international aid and economic reform programs need to be scrutinized for ways in which they unwittingly foster social tensions by increasing the gap between rich and poor, particularly in light of new evidence that U.S.-style market-based economic systems can have unpredictable consequences.

Ben Crow, above, and a team of researchers spent six years conducting fieldwork on markets in Bangladesh, studying peasant farmers, landowners, traders, and merchants. A farmer/peasant carries sacks of paddy (unhusked rice grain) to market, top photo. At a rice market in Northern Bangladesh, traders, peasants, and laborers test, sell, and store rice and paddy, middle photo. Bangladesh photos: Ben Crow. Photo of Crow: Jennifer McNulty
That is the conclusion of UCSC sociologist Ben Crow, author of the new book Markets, Class and Social Change (Basingstoke, England: Palgrave Publishers Ltd., 2001), which presents a detailed analysis of the mixed role markets play in Bangladesh, the largest of the world's very poor countries.

The collapse of the Soviet Union ushered in a decade of widespread support for markets, but Crow concludes that markets themselves are often implicated in the making of poverty and inequality.

"Markets are extraordinary social arrangements that have diverse consequences," said Crow, an assistant professor of sociology.

"Markets are not necessarily good or bad. Rather, it is the conditions in which markets operate that make them helpful or problematic for the poor, and economists have tended to overlook that fact."

To explore the impact of markets, Crow and a team of six researchers spent 18 months conducting fieldwork in Bangladesh. The result is a fine-grained picture of interactions among peasant farmers, landowners, traders, and rice merchants that reveals a lot about the feasibility of relying on markets to relieve poverty.

Specifically, differences in historical patterns of land ownership and access to financing emerged as determining factors in the success of market programs. In the south, a tradition of sharecropping has enriched landowners, financiers, and traders who extract most of the returns from the system and keep a "stranglehold" on the poor tenant farmers. "The market system in the south is associated with continued impoverishment and vulnerability," said Crow. "The poor are forced into sharecropping, and loan terms reduce the price they get for their grain by 25 to 40 percent."

In the north, a very different pattern of landownership in which larger numbers of poor peasants cultivate small plots of land has provided greater security and promoted innovation and agricultural investment in irrigation, drainage, and new forms of tilling. "Peasants in the north are able to keep more of their returns," said Crow, who attributes the regional contrasts to historical conditions.

"Different sorts of capitalism emerge in different regions, and local-level differences are very important," Crow said of his team's research findings.
"Economists have very powerful models for analyzing abstract markets, but they're not so good at doing fieldwork like this that produces nuanced findings," added Crow. The percentage of rice distributed through commodity markets in Bangladesh has soared from about 10 percent in the 1960s to about 50 percent in the 1990s, making the country an ideal subject of study.

Crow's work has significance for agencies like the World Bank that consider markets part of the solution to world poverty. His findings are also important for government policy makers and leaders of nongovernmental organizations (NGOs) that are fighting poverty by funding development in the Third World.

Given evidence that markets can have diverse effects, including contributing to poverty and economic disparities, Crow recommends that funding agencies and NGOs gather much more detailed information about the areas they plan to assist before they launch aid and economic reform programs, and that they track carefully the impacts of their programs as they unfold. "Social classes make markets, and markets make social classes," said Crow. "We need to be more vigilant about unintended impacts that accompany the growth of markets worldwide."

Finally, Crow's work may bolster the efforts of those seeking nonmilitary answers to the threat of terrorism.

"Economic inequality provides the context within which desperate acts emerge," said Crow. "There are more sophisticated ways of supporting economic and social alternatives to the Taliban in Afghanistan than bombing. That would be the more long-term approach to diminishing the threat of terrorism."

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