Speculation, Global Crisis and Food

Abstract

The process of economic and financial globalization, today in rapid reversal, for decades established global economic structures that left Latin America and other regions of the world highly vulnerable to the ebb and flow of the US economy. Mexico is an exemplary country in the region. By strictly following the doctrines and practices of neoliberal globalization, Mexico today finds itself particularly dependent on the US economy. The gradual loss of national sovereignty in terms of economic policy and flows of credit and commerce has come to the forefront in the present crisis. This paper will focus on the determination of food prices. On the one hand, it will highlight the fact that Mexico has lost control over the supply and the price of its food, a similar phenomenon to the loss of other strategic sectors of its economy. On the other hand, the paper will emphasize the speculative nature of the formation of commodity prices in international markets. The financialization of the economy will be explored within the context of financial de-regulation, which has significantly altered the world’s pricing system, with financial markets, and in particular derivates markets, exercising a 2 considerable influence, therefore undermining the orthodox notion of determination of prices based on supply and demand.