GMO Labeling: Why We Cannot Let the Market Decide

You’ve probably heard about the legislative battles raging over the labeling of genetically modified foods. Over twenty states are considering such legislation. Proponents of labeling believe that consumers have a right to transparency and to know just what is in their food. Opponents of labeling insist that GMOs pose absolutely no health risk and that there is no need to label them.

Maize

Immage courtesy of Wikipedia

Despite some excellent recent news, success for the pro-labeling camp been mixed. As of April 2014, Vermont has become the first state in the US to successfully pass a mandatory GMO labeling law. However, propositions submitted to voters have failed in states such as Washington and California. According to the website justlabelit.org, biotech and food corporations have spent over $45 million in California alone on anti-labeling campaigns.

My point here, however, is not to debate whether or not there exists a scientific consensus on GMO safety. Rather, I want to contest the ideological terrain on which the titans of the biotech and food industries rest their case. In particular, I want to question the underlying free-market narrative embedded within the anti-labeling discourse.

Take this for example. In an editorial critical of federal legislation mandating GMO labels titled “Let the Market Decide,” the LA Times took a very pro-market stance on the issue. It stated that it is up to the market, and not legislators, to decide which products appeal most to consumers. For the LA Times, the organic option (by definition GMO-free) is already available to us. If consumers do not want to purchase food containing GMOs they can buy organic, and “If there is a growing demand for such foods, the market will find a way to offer them.”

What the editorial is telling us is that we don’t need legislation regulating the food industry because the market is capable of responding to consumer preferences by itself. According to this view the market is simply self-regulating and requires no regulation imposed on it from without.

The idea that free markets are self-regulating is the cornerstone of the economic school of thought known as neoclassical economics. Economists such as Milton Friedman convinced the free world during the 1980s that markets free of governmental interference are capable of policing themselves. Government interventions such as subsidies, tariffs or taxes distort this otherwise self-regulating system.

Moreover, those in favor of some types of market regulation have often been portrayed by free market supporters as anti-business. Taxes and environmental standards, for example, are leading grievances in the neoclassical book and cited as primary causes for layoffs or for higher prices passed on to consumers.

In the works of Milton Friedman, the dynamism of energetic entrepreneurs and the rationality of informed consumers are contrasted with the lackluster central planning of socialist bureaucrats whom presume to know what is best for the economy and society. Friedman argued that it is up to consumers voting with their dollars, and not government, to decide which companies and products ultimately succeed or fail. He stated that individuals must have the “freedom to choose,” and that government interventions in the market actually limit our choices as consumers, thereby restricting our freedom as citizens.

Case in point, the mandatory labeling of GM foods is seen as an unnecessary regulatory burden on the free market because, after all, the options available to consumers are already there in the form of organic products.

Let’s take a closer look, however, at the underlying system which is supposedly generating this great wealth of choices and options for us.

Consider this.

  • In the food processing industry, the four largest companies control 82 percent of the beef packing industry, 85 percent of soybean processing, 63 percent of pork packing, and 53 percent of broiler chicken processing.
  • Six of the largest biotech and chemical companies, including Monsanto, Dupont and Syngenta, control 60 percent of the seed market, 100 percent of the GM seed market, and 76 percent of agrochemical sales.
  • And in retail the picture is similar: in the late 90s the four largest retailers controlled 22% of the grocery market. Ten years later, Wal-Mart, Kroger, Costco and Supervalu controlled more than half of all grocery sales.

In truth, our alleged “free” market is anything but. It is not a self-regulating sphere which curbs its excesses through healthy competition and consumer sovereignty. Rather, it is one characterized by monopolization and the awesome concentration of wealth and power.

Friedman’s famous statement “freedom to choose” rests on the existence of options available to the individual. Yet given the concentration of the food system in the hands of very few, those options are increasingly restricted. Real options arise out of healthy competition, not out of a monopolized marketplace. Moreover, less competition produces fewer options, and in neoclassical theory fewer options signify a net loss of freedom.  

“Letting the market decide” is therefore an empty statement, because those choices have already been made for us behind the closed doors of a handful of corporate headquarters.

 So if we ask ourselves who are the actual central planners deciding what is best for the economy, the answer is not big-government regulators but the few transnational corporations that have monopolized the alleged free market. And what is truly anti-business is not government regulation per se, but the ability of the powerful few to use their political clout to gain unfair advantage in the form of subsidies, tax breaks and deregulation.

Finally, what happened to the good old capitalist mantra of “customer is king?” Adam Smith himself, the alleged grandfather of neoclassical economics, stated that “Consumption is the sole end and purpose of all production and the welfare of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.” [1]

Let’s take a cue from Adam Smith and attend to the welfare of the consumer by labeling GM foods, we have a right as consumers and citizens to know what is in our food.

[1] Adam Smith, The Wealth of Nations, 1937 Modern Library edition, p. 625  

1 Comment

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One response to “GMO Labeling: Why We Cannot Let the Market Decide

  1. Pingback: How embracing sensible regulation can unlock opportunity | CFO TotalityCFO Totality

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