The political economy of harvest failures

That the price fluctuations discussed in earlier chapters were triggered by output shocks is too obvious to dispute. But how big were these harvest shocks, and could stocks not smooth supply? Did market imperfections and changes in income distribution also play a part in the severe political repercussions and adverse welfare impact of harvest failures? This and chapter 4 will answer these questions.

Research on modern famines has shown that they can be provoked by a small decrease in the supply of food, and the important policy implication is that the food shortage is manageable, provided there is good government and in the absence of speculative bubbles. This has inspired some economic historians to similar conclusions regarding the extent of harvest failures in early modern Europe. Paradoxically, this view seems to revive the contemporary popular mistrust of markets, viewing the price movements as caused by man rather than nature. That merchants sometimes succeeded in cornering markets does not mean that collusion and insider trading were the main or even the pervasive element in markets – for one thing, because trade was closely monitored, especially during subsistence crises, by the public authorities. But markets still failed, for two distinct reasons. Although not much could be done by man to calm output shocks they were aggravated because inventories – that is, grain carried over from one harvest to the next – were small.