management: Hijacked by neoliberal economics*
© Copyright 2004 M. Ben-Yami
This is a story about a fashionable political-economic ideology that has taken over the management of many fisheries. It happened as a matter-of-fact offshoot, sort of by-catch, of the neoliberal or neoclassical paradigm.
In the beginning fish were aplenty and there were no rules upon the face of the deep, and the spirit of free access moved upon the waters. And the fishermen saw that it was good and fished as many fishes as they needed to feed their families and their neighbors.
But people were multiplying and replenishing the earth, and more and more fishermen had to catch more and more fish to meet the demand of the ever-growing humanity.
And governments said: let there be management, so that there would always be enough fish left in the seas to procreate. And they limited the gear, the vessels’ size and numbers, the duration of fishing seasons, and the access to some fishing areas, and they called it input or effort regulation.
But, the fishermen kept fishing and their fleets kept growing, and the governments saw that it was bad. So the governments made the licenses, and their scientists thought up the “maximum sustainable yield” (MSY), which was the amount of fish that could be safely extracted, and they made the “total allowable catch” (TAC) for each sort of fish in the sea. But the fishermen kept competing, and over-capitalizing, and the fish became scarce.
And the economists said unto the governments: let there be property rights. And they spawned “individual transferable quotas” (ITQs), which were rights to catch the given quota of fish that the fishermen could buy from each other. And they believed that it is good and said unto the fishermen: Behold, rights’ privatization is your salvation. And the governments sent the ITQs upon waters to replenish the seas and subdue all fisheries. And it was good.
This is more or less the gospel, which prevails throughout fisheries administrations in many countries. It made some people richer and so they became its devoted believers and supporters, while the many made poorer, or afraid to become so - its adamant opponents. And in almost every single case the consequence is continuing concentration of fishing rights in fewer and fewer hands, often enough in the hands of major corporate interests, at the expense of small-scale, family, and skipper-owned fishing operations of one or two small or even medium-sized fishing vessels.
Fisheries management is supposed to look after the health of the fish resources exploited by fishermen. This requires knowledge of fishery biology and ecology, population dynamics, and historical data of the fishery and of environmental and associated stock fluctuations in its area. As fisheries management can only manage people, it entails negotiations, legislation, technology, and enforcement. There's a whole catalogue of management systems and technical and administrative methods that managers can use to try to achieve their targets.
Traditional management replaced. Old-type management by tribal and community leaders and local fisherfolk’s organizations based on traditional knowledge of the resource and traditional justice, is now almost totally extinct. It has been replaced throughout most of the world by bureaucratic and technocratic mechanisms heavily influenced by political and economic considerations that, while interested in fish as marketable merchandise and a source of profits to the operators, have only little to do with safeguarding the resource as a source of income to fishing people. Fisheries management has thus become a power play over benefits from the resource. Stakeholders are many, starting with fishing people and local interests in fishing communities, through recreational fishermen, environmental lobbies and coastal development interests, and ending with powerful corporations and market forces, whether local, national, or multinational.
The political attitude of the powers in charge determines the choice of the management system and how it is applied through licensing that controls fishing capacity, quotas allocation, or limits set on effort. The system chosen determines the distribution of the benefits derived from the resource to the different stakeholders. For example, allocating fishing rights (and hence benefits) to a large number of small-scale fishermen would call for different management methods than allocating them to a large company.
Neoliberal economics invaded management of various commons and national resources as an extension of a dominant paradigm - though very much at issue - in the industrialized world. Its gospel is being spread over the world and its political, financial, and academic institutions by troops of disciplined economists, rewarded for devotion, and punished for dissent. So, what is this neoliberal or neoclassical teaching in economics that has also impinged on fisheries? And on what basis are its devoted adherents preaching that theirs is the only way society can take to utilize its fish resources in a feasible and efficient manner?
The old “classical” economic teaching has introduced the belief in the “invisible hand” 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. But this is a myth and a fallacious contention, if not an outright lie. It is 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. The “trickle down” theory can approach the real situation only in a few rich countries, where profits feel secure and investments promise further accumulation of capital.
Criticism. Recently, more and more economists and other social scientists started casting doubt on the neoclassical gospel, nicknamed by some “autistic economics”. Awarding the 2002 Nobel Price in economics to two professors, one of them a psychologist, who refuted the theory that, as a rule, individuals make rational economic decisions, reflected this growing criticism. Economic determinism inherent in the neoliberal theory doesn’t work; the markets’ reaction to prices, the prices’ reaction to the dynamics of supply and demand, and peoples’ reactions and economical activities don’t fit that theory’s assumptions. Hence, its weakness in economic analysis and forecasting.
Some economists and other social scientists argue that, contrary to its pretense to scientific, objective approach, neoclassical economics is in fact a social-political narrative and a methodology used by global economic and political interests to concentrate power in the hands of corporate national and multi-national institutions. Thus, individual businessmen and small and medium-scale private enterprises, not to speak of wage earners, are losing their influence on socio-economic decision-making to powerful commercial-industrial centres and their collaborators in governments.
This transfer of power is promoted, legislated, and executed through democratic processes occurring within the existing legal framework with the help of well financed journalistic and media campaigns and more or less biased scientific publications, with the neoclassical economic narrative serving as a tool for achieving explicit goals as well as hidden agendas of its promoters. Thus, the “invisible hand” has been transformed from the sum of the multitude of individual decisions into the sum of the political and economic decisions of powerful interests.
Profit maximization. Neoclassical economics are supposed to aim at and produce maximization of social and national benefits, which in fact are dollar equivalent measures of how economists value goods and services (including non-market goods and services). It preaches maximization of profits or rents often attained at the expense of heavy social costs. The big question is how these costs and benefits are defined and calculated; since social costs are very difficult to estimate, any portrayal of economics as an absolute, scientific methodology is simply fallacious, and honest economists admit that they cannot adequately calculate all social benefits and all social costs.
It is obvious that losses incurred through forfeiture of alternative actions, and due to various social, and other external costs, many of which cannot be evaluated in terms of dollars and cents are a part and parcel of any economy. As long as we are not taking into account all the costs and benefits resulting from production and market fluctuations, various management steps, defaults to act, social, economic, and cultural dislocations of people and their ramifications affecting coastal communities, as well as other "externalities" difficult to express in monetary terms, we are unable to calculate true net social costs and benefits.
Social benefits. Many people associate the term "social benefits” with how benefits derived from national resources are distributed across the society. They ask, for example, how many people make a living from a certain resource. A “less efficient” small-scale fishery that employs many more people than an “efficient” big-owner fleet, may feed less monies to the "national purse", but as a rule is directly and effectively more beneficial to people and their communities. Only an in-depth analysis can establish which option would produce truer national benefit values. Thus, it is quite consequential who defines national and social benefits, and how.
For example, calculation of net national benefits for an industrial shrimp fishery in a non-industrial country must include a deduction of the costs of all imports, such as expatriate manpower, fuel and lubricants, vessels, deck and propulsion machinery, processing and refrigeration equipment, and fishing gear, as well as insurance and maintenance costs incurred in foreign-currency. In some cases, the only net benefits from an industrial shrimp fishery in such countries are the revenues from license fees and the employment of nationals, while a major share of the proceeds for the shrimp exported is going abroad, along with the product.
Policy costs. Therefore, responsible resource managers along with responsible economists must openly account also for the values that are non-financial/commercial, and the diverse peripheral socio-economic, political and cultural costs, as well as the taxpayer's money needed for dealing with human problems resulting from management decisions. Only then would the society and its governments be informed of the true costs of any policy proposition leading to allocating their natural resources into the hands of a few. Nowadays, such transfers are facilitated by governments’ obsession with privatization as a panacea to all maladies of the economy.
The neo-liberal gospel preaches that practically nothing can work efficiently, if it is not somebody’s private or corporate property. The massive ideological privatization practiced in some countries has embraced also such natural resources, as water, forests, various energy sources, and public transport. Even economically viable, and efficiently run national resources are often falling victim to the privatization Moloch. How wrong this ideology can be has been recently well illustrated by a whole series of flops of some mammoth privatized and corporate companies, due to both, mismanagement and corruption, as well as by the rather disappointing results of the privatization of the British railway system. “Swissair”, “PanAm”, “Enron”, and other recent bankrupt giants have not been run by governments.
One consequence of the domination of neoclassical economics is the rather obscure struggle between free enterprise and corporate interests. In the past, the conception of capitalism and free market used to emphasize private initiative. Nowadays, however, it isn’t necessarily so. The neoclassical economics is leading to a regime in which major businesses and corporations are gradually displacing smaller-scale enterprises and businessmen, and which is indifferent towards the social conditions of working people. It is “happy” when supply of labour exceeds demand, because unemployment depresses wages and improves profits.
Sometime ago, after the demise of the Soviet system, one would think that free enterprise had won. One is not so sure nowadays. Like the Soviet monopolistic concerns, some of the giant companies of the "capitalist" world are run by exploitative bureaucracies supported by ideological economists, who seem to consider small and family-owned enterprises a noise and a nuisance in their concept of "economically efficient" world.
Invasion. The invasion of fisheries by the neoclassical economics has been a logical consequence to its domination of the global, and many national economies. Like many historical invasions, it was partly invited from inside the fisheries and given a friendly reception by large-scale interests and their proxies in the management mechanisms. Once in, it seems to be here to stay, especially in all those countries where, for various reasons, it is not met with strong opposition.
What brought this ideology into the fisheries is its claim that privatization is the most efficient, if not the only mode of exploiting a resource. This, even if the resource belongs to the whole nation, as is the case with water, forests and, for that matter, fish in the sea.
Input control. When, following the Second World War, the spiraling growth of fisheries brought about the need for management, it was initially based on, so called, “input control”. This implies regulation of fishing effort through such means as limited access, fishing time and areas, as well as other regulations that try to follow biological characteristics of the species involved. In some countries this management system still works well enough, in others it has been deemed, rightly or wrongly, inadequate. Fish population dynamics models have been used to estimate the biomass of fish populations and, consequently, the fixing of TACs. In some fisheries this led to highly competitive “gold rush” fishing operations and investment in excessively strong and fast vessels. The next step was dividing the TAC into quotas that were allocated to vessels, usually, according to their fishing history. And this was the moment when the neo-liberal economists stepped in with a new pattern: marketable fishing quotas (ITQ).
Property rights. They axiomatically promoted a theory that property rights and maximum benefit and efficiency spelled out in financial terms are a must for rational exploitation of fish resources. Since property rights are characterized by (i) security, or quality of title; (ii) exclusivity; (iii) permanence, and (iv) transferability, their application in fisheries boils down to ITQs. Thus, mere "fishing rights" have become "private property rights”.
But trade in fishing rights eventually must hit the weaker stakeholder. Initially, the richer vessel owners or their covert sponsors accumulate quotas by buying off the weakest boat owners. Governments enhance the process by allocating individual quotas too small to pay a single vessel owner’s way out of the red, on one hand, and by pricing licenses and quota entitlements above the value of his/her fishing boat and gear, on the other. A quota gone from a fishing community is gone forever, together with all the associated jobs, services, and income. If it were not for social opposition, a worldwide adoption of ITQs would have proceeded faster.
Concentration. Since marketable quota systems favour the financially stronger, they invariably lead to a gradual displacement of small-scale individual or family-owned fishing enterprises, and sooner or later to the concentration of fishing rights in the hands of a few, either specialized fishing companies, or large holding corporations for whom fishing may be only one branch of a multifarious business. Such concentration eventually would occur even where there are legislative attempts at stipulating acquisition of quota by some maximum values. Hence, there is a growing concern of "privatization by stealth".
It is incredible that managers introducing this system into small-scale or mixed fisheries would be unaware that its social, economic, and political ramifications favour large-scale business at the expense of local fisheries and processing industries, and small-scale operators, and threaten the survival of the small-scale fishing sector. ITQs tend to depress artisans and effectively exclude part-time participants in local fisheries, favour the owners, while disregarding crewmembers. Hence, selection of ITQ for such fisheries must reflect the political and social attitudes of the respective government.
Green non-governmental organizations (NGOs) have willy-nilly contributed to the privatization trend. Although some of them, as for example Greenpeace, have joined protests against the tradable quotas system, there have been NGOs’ with often-exaggerated and sometimes even fallacious alarmist publications as to the state of fishery resources painting fishermen as the main culprits, which fuelled the neoclassical economists’ fires. ITQ advocates have claimed that only management systems based on that or other forms of resource privatization would maintain fish stocks on sustainable levels.
Their main argument was: “If fishing interests are allowed to invest in a permanent share of the TAC, so that they’d be sure of their relative share in the landings of the respective species from a given area, they wouldn’t need to apply the “gold-rush” mode of operation, and would be interested in maintaining the resource in an everlastingly sustainable condition”. This argument, however, is irrelevant in the great majority of cases where the “gold-rush” condition is absent.
Notwithstanding, ITQs are a rather peculiar sort of property rights: fishermen must pay sometimes quite heavily for the right to catch a certain amount of fish, without knowing whether they’ll be able to get it and at what operational cost They don’t really control the resource and don't know whether by observing the rules and sticking to the quota they won’t be made suckers by others. Hence, the well-intended potential stewardship over the resources by quota-owners is, in fact, more often frustrated by high grading, fish dumping, and quota busting. While ITQs indeed mitigated the “gold-rush” fishing, and their contribution to stock conservation might have happened in a few fisheries, it has been proved so only in a couple of them. At the same time, many failures have been reported and documented.
Small under siege. The ITQ-system would be socially and nationally justifiable mainly on high seas, where the resource is technically not accessible to small and middle-scale operators based on coastal fishing communities, and where exploitation of the resource requires large-scale industrial fishing vessels and fleet-logistics. But small-scale operators, who traditionally exploit inshore and coastal resources, predominantly consider marketable quotas socially and also economically wrong. Harvesting methods that are most efficient in financial terms are often the ones with the worst collateral (including environmental) impact, while less capital-intensive and technologically and operationally sophisticated fishing methods normally allow wider and much more equitable access to benefits from the fishery, with less negative environmental and social impacts.
In Third World countries, for example, traditional and other coastal fisheries operate under many stresses, the main one being invasion of larger-scale fisheries into waters and stocks accessible to and fishable by small scale fishermen, often with official government support or high-circles’ well-paid “closing of the eye”. But, in such areas, large-scale operations are by most criteria less efficient than small-scale fishing. They consume several times more fuel per each tonne of marketable fish than the small-boat fishery, their capital investment in gear and vessels is much higher, and they produce fewer true national benefits. The same fish stock that can be fully and profitably exploited by 10 trawlers manned by 100 people, if allocated exclusively to coastal fisherfolk using nets, pots, and hooks-and-lines, may provide living to many hundreds, or maybe thousands of them, never mind how low their calculated profits are going to be.
In many areas, both recreational and small-scale commercial fisheries form the backbone of coastal communities whose economies revolve around fishing. It causes money to flow to equipment and bait, food and fuel suppliers, boatyards, and a variety of commercial and technical services in docks, harbours and marinas, as well as those sectors of the tourist industry that are centered on fishing communities.
Subsidies. Some governments, as well as most global, transnational, and intergovernmental financial institutions are driven by the neoclassical ideology, especially when it comes to economic relations with developing nations. Undeniably, some of the conditions of economic co-operation and assistance imposed by those institutions stem from their wish to protect their investments from misconduct, corruption, and mismanagement. But, only too often, under the hypocritical pretext of securing free market and economic liberalization, their conditions are simply a tool of protectionism. And here we come to fisheries subsidies. The USA, the EU and some other developed countries, in view of the heavy overcapitalisation of their fishing fleets, came to the quite appropriate decision to stop subsidizing construction of fishing vessels. They want, however, to have their new policies “globalized” to cover also the developing world.
A number of developing countries have had for many years too large national fleets, and they as well should not subsidize overcapacity. However, any international agreement involving fishery subsidies should take into account small-scale fishermen, who have to compete over their local fish resources against large-scale fishing fleets that are allowed to fish, or just poach on their native, traditional fishing grounds. Such fleets are subsidized, almost as a rule, whether directly or in a roundabout manner, as are the EU payments for access to fishing grounds of Third World nations. Small-scale fisherfolks operating under such conditions deserve support both on the part of their own respective governments, as well as of the international community. Would it be too much to ask WTO, EU, and individual governments of countries whose fleets are out to exploit coastal fish stocks of their own or other countries, as well as the governments who allow such fleets into their coastal waters, to give them a fighting chance?
Joining forces. Fisherfolk in the small and medium scale sectors both, owners and hired hands faced with dislocation from their traditional fisheries by management systems based on marketable fishing rights, should recognize that their main adversaries are the standard bearers of the neoclassical economics in national and transnational financial institutions and corporations, and their proxies in fisheries management. It is very difficult to resist such powerful interests in democratic societies without joining forces. For this purpose, provincial, national, and regional fishermen’s associations should organize under common umbrellas. Also international associations of fishing people should create a joint worldwide umbrella that without affecting their respective structure and character, would enable them to board the globalization train in weight and force.
*An earlier version of this are article was published under the same title in SAMUDRA Report (35), July 2003.