Fishing about and about fishing

 

FINANCIAL COLLAPSE AND FISHERIES

 

The present world-wide financial crisis needs a coordinated response on a range of fronts in order to limit its impact on economic growth, jobs and small businesses - says the October resolution of EU summit. 

 

The crisis, says the EU Parliament, has implications beyond financial markets: for business viability, jobs, personal finance, etc., and  stresses the paramount importance of improved financial supervision and ongoing access to credit for citizens and small and medium enterprises. It calls to strengthen the EU regulatory and supervisory framework and EU-level crisis management on banks, credit rating agencies, securitisation, hedge funds, leverage, transparency, winding-up rules, clearing for over-the-counter markets and… you name it…

 

Also Sarkozy, the French President and the current EU Chairman thinks that what’s needed now is crisis management. He’s talking about "new global financial system" and "overhauling capitalism" through observing such principles, as: no tax havens for banks working with state money, regulation of all financial institutions and of bonus structures for traders' risking their clients’ money, and re-thinking the monetary system.

 

The consequences are hard to predict, but fisheries industries can’t escape what started with the implosion of the sub-prime balloon in the United States - an offspring of a deeper root. This crisis stems from the prevailing economic-financial system, fuelled by the extreme neo-liberal or neo-classical teaching that because of their self-adjusting capacity markets shouldn’t be regulated, but free of any interventions on the part of the state.

 

Neoclassical economics invaded management of commons and national resources in the industrialized world as an extension of this paradigm, and under pressure of World Bank and IMF, also beyond it. Troops of disciplined economists, rewarded for devotion and punished for dissent, spread their gospel over the world’s political, financial, and academic institutions. So, what is this neo-liberal or neo-classical teaching that has also impinged on fisheries? And on what basis its devoted adherents in the fisheries have been preaching that theirs is the only way society can take to utilize its fish resources in a feasible and efficient manner?

 

The old “classical” economics preaches that an “invisible hand” is guiding rational individual decisions driven by self interest eventually into an optimum economy, in which free market forces are taking care of all aspects of peoples’ life. An implied outcome of such “free play” is that any financial profit derived from a common, fully, partly, or quasi-privatized resource, would somehow trickle down and redistribute itself all over the society. This is fallacious contention. It is a common knowledge that, in most of the world’s countries, a big share of such benefits indeed trickles down, but to various investments abroad, and to imported luxury products and services. Prof. J.Stiglitz, the 2001 Nobel Price holder in economics wrote last October: “Growth is not just a matter of increasing GDP. Trickle-down economics does not work: an increase in GDP can actually leave most citizens worse off”. Naïve as many others, I used to think, however, that the “trickle-down” theory can express the real situation in a few rich countries, where profits feel secure and productive investments promise economic and social development.  Well, well… Secure investments? Not anymore.

 

The neo-liberal notion spread also throughout the fishery management establishment. On the basis of the concepts of “maximum sustainable yield” (MSY), and the “total allowable catch” (TAC), neo-liberal economists injected governments with the idea of private/corporate property rights in fishing. Only property rights and the right to trade them on a free market will save us from overfishing. And so they spawned various variants of individual quotas, and for years preached the gospel of free trading in quotas, claiming that fishing rights privatization is our salvation. This concept, wherever applied, makes some people richer and its devoted believers and supporters, while the many made poorer, or afraid to become so - its adamant opponents. And the consequences in almost every single case are eventual concentration of fishing rights in a fewer and fewer hands, often fishing rights in the hands of major corporate interests, at the expense of small-scale, family and skipper-owned fishing enterprises.

 

I have no doubt that much of the profits, derived from fishery resources by large owners and corporate interests that accumulated fishing rights on free market, have now gone with wind. Just ask in Iceland. And all this evaporating capital represents the “sustainable and economically desirable resource rents” that according to the neo-liberal doctrine can arise only, if fishery resources become a subject to this or other sort of privatization. For “only privately own resources can be sustainably and efficiently exploited.” Let’s hope that we’re not going to face financial collapses also of major fishing firms, including those, which grew and developed over the corpses of small-scale, family owned fishing enterprises “killed” by the ITQ” system.  

 

According to NY Times of October 23, Alan Greenspan, the former U.S. Federal Reserve chairman and a fervent proponent of deregulation during his 18-year tenure, “once considered the infallible maestro of the financial system, admitted on Thursday that he “made a mistake” in trusting that free markets could regulate themselves without government oversight”.  Also: “Mr. Greenspan conceded a more serious flaw in his own philosophy that unfettered free markets sit at the root of a superior economy”.

As long as both, the fishery industry and the management, don’t concede that for decades they “made a mistake” in trusting the unholy marriage of inadequate science with the now castrated neo-liberal economics, and instead, continue with haggling about TACs and DAS, they do nothing that can stop many fisheries from sliding into the pit of bare existence in the wake of the banking, housing, car and many manufacturing industries, or like some banks, to be practically nationalized or hope for government supplied credit out of taxpayers pockets. 

 

Five years ago I wrote an essay: "Highjacking of fisheries management by neoclassical economics". Published in SAMUDRA (35) and by the Journal of Post-autistic Economics, it can be read on: 

www.benyami.org/Samudra-Neoclas%20doc.pdf. I think it’s still actual.