‘Why markets are to blame for global inequality’
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When the journalist Rupert Russell landed in Caracas with $10,000 stuffed into his underpants, his aim was to circumvent Venezuela’s hyperinflation and tough currency controls while reporting on the survival tactics of the local population.
He saw a street vendor updating a makeshift sign multiple times each day bearing the price of his lemonade, and was presented with a 45mn bolivar bill after a restaurant meal that required two international bank account numbers: one to pay for the food, another for the tip.
He saw desperate children fighting over discarded chicken bones; and interviewed a woman who earns extra money queueing up for hours to buy scarce rationed goods at official prices, then marking them up (her commission) and selling them on.
In a supermarket, he found empty shelves occasionally interspersed by others lined with identical mayonnaise, ketchup or bottles of mineral water “like an Andy Warhol lithograph, the pattern of consumer products repeated in all directions”. These full shelves were a response to edicts to deflect negative perceptions.
Such anecdotes are among the best parts of Price Wars, Russell’s book, which provides a colourful description of the economic pain inflicted in some of the globe’s exotic regions. However, despite the quality of some of the storytelling, Russell fails analytically to meet the promise of his subtitle: how chaotic markets are creating a chaotic world.
The author describes, with a rightfully critical eye, much hardship and inequality across the globe, from orphaned children in post-Isis Mosul to the inhabitants of bombed-out Mogadishu. He is justly scathing of the swelling bonuses of the financial elites after 2008 while so many other people, including many disillusioned supporters of Trump and Brexit, suffered.
Yet, despite fulsome praise on the back cover from personalities as curiously diverse as Liaquat Ahamed, author of Lords of Finance, and Griff Rhys Jones, the British comedian, his attempt to find a common thread lacks coherent argument.
His book is primarily a compilation of sketches from fly-in, fly-out journalism, with occasional bursts of self-revelation and somewhat over-dramatised personal danger as he projects the odd encounter with officialdom, or distant military conflict, with imagined threats of persecution, imprisonment or worse.
The structure is essentially a travelogue of multiple short assignments, with a final chapter seeking to distil nearly a century of political economy thought with critiques of neoliberal policies, International Monetary Fund austerity measures and financial speculation.
At times — unsurprisingly for someone seeking to cover such a range of complex topics — there are outright errors. Russian President Vladimir Putin was not, as he states in a chapter on the conflict in Ukraine, formerly the mayor of St Petersburg, for example. Nor was he chosen “by chance” by Boris Yeltsin as his successor because of a poll suggesting he resembled most closely a fictional spy hero.
Elsewhere, he skims over detail or nuance in favour of reductionism, seeking explanatory equivalence for very different scenarios: “Is Venezuela really more corrupt, authoritarian or centrally planned than other cursed petro states such as Russia or Saudi Arabia?” he asks rhetorically, shifting responsibility for the country’s chaos from Chavez to US policy, the free market and fluctuating oil prices.
Periodically, Russell highlights some interesting work by analysts: how far Brexit support was inversely correlated with house prices; that high food prices are not always related to food shortages but do tend to spark riots; and that conflicts in Africa often occur in times of unusually low or high rainfall.
He has some perceptive examples of how markets work, or fail to work. For instance, hedge funds have successfully arbitraged food prices based on the differences between insights from satellite imagery on likely crop yields and inaccurate government forecasts that drive consensus views. Meanwhile, algorithmic trading apparently mistakenly drove up the price of Berkshire Hathaway shares after confusing the company with the actress Anne Hathaway, who made news by presenting the Oscars.
His overall thesis seems to be that “prices” — implicitly, markets — are the primary driver of human suffering. Yet there is little attempt to tease out cause and effect, interpret contradictory outcomes in different circumstances, or place recent trends into historical context. Prices, after all, are reflections of complex underlying factors.
His dismissal of the threat of inflation — itself a driver of high “prices” and poverty — looks overtaken by events. So, too, does his analysis of Putin’s escalating war against Ukraine. The conflict may have been enabled in part by high oil and gas prices, but there were clearly other reasons behind his aggression.
There is little doubt that the growing volumes and interconnections of trade, finance and information increase the scope for market manipulation and global repercussions of once-isolated effects. A deeper investigation might have explored more closely the extent to which prices are, in other circumstances, mismatched with commercial realities and the shifting factors driving their fluctuations.
Finally, Russell provides no clear proposals for mitigating the worst effects of this system, let alone for an alternative. As Oscar Wilde almost said, focusing on price alone is of little value in itself.
Price Wars: How the Commodities Markets Made Our Chaotic World by Rupert Russell, Doubleday, $29.00
This article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment