Towards a Post-neoliberal Stabilization Paradigm: Revisiting International Buffer Stocks in an Age of Overlapping Emergencies Based on the Case of Food

Abstract

The neoliberal stabilization paradigm of interest rate hikes and austerity left economies around the world unprepared for the shocks to essentials experienced in the overlapping emergencies of war, conflict, climate change, and pandemic. This presents a window of opportunity for a paradigm shift. Neoliberalism became hegemonic through stabilization policy. Post-neoliberalism will require an alternative stabilization paradigm. In this paper we revisit the classic reasoning for buffer stocks by Keynes, Kaldor, Graham, and others as a starting point for this paradigmatic shift. At the core of the neoliberal stabilization paradigm are the assumptions that competitive markets are efficient and that relative price changes ought to be separated from macro-outcomes. In contrast, buffer stock reasoning starts from the inherent instability and inefficiency of commodity markets. Price volatility in essential commodities can lead to sellers’ inflation because of the interaction with administered prices in the industrial sector and can hamper growth and development prospects. We illustrate that the buffer stock reasoning can help understand the 2020-2023 world food price crisis and propose a multi-layered buffer stock system for food staples as a steppingstone in a gradualist transition to post-neoliberalism and a tool for a green transformation of agriculture.

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