Types of economic systems and analysis

¶ … Economics

Most histories blame the conditions that created the Dust Bowl in the American Great Plains in the 1930s on climactic events. However, author David Cassuto argues that other factors were also to blame, and that the Dust Bowl was not created by nature alone. Nature, he contends, had lots of help from mankind.

In view of early assessments of the Great Plains, it is a wonder anyone thinks of the Dust Bowl conditions as an anomaly in the first place. The Spanish explorers deemed the entire Southwest an inhospitable wasteland, condemning it as unsuitable for human settlement. Only savages scraping an existence from hardscrabble ground or rock might succeed, they thought (Cassuto, 1993 p. 67+). Even the early American explorers, despite patriotic fervor, despaired that so arid a region could sustain settlements (Cassuto, 1993, p. 67+).

The first insult to the landscape that allowed conditions of ecological disaster to develop was the Homestead Act of 1862; this led to homesteading, which led to agribusiness in the twentieth century. Homesteading initially, but agribusiness thereafter, led to the misuse of water to accomplish the goals of each type of farming (Cassuto, 1993. p. 67+).

Because agribusiness has succeeded so well, the Great Plains were called upon during 1914 to supply grain for the international war effort, as well as to feed a nation whose population was growing exponentially. Cassuto argues that World War I opened the door to internationalism, and that opened the door to even more grievous misuse of scarce Great Plains water (1993, p. 67+). The economics of it all was fragile and fraught with the possibility of disaster. Cassuto notes:

As farmers poured their short-term profits back into land and seed, their fates became ever more dependent on the availability of water. When the climatic pendulum swung back toward aridity, Plains farmers had to declare hydrological bankruptcy, though neither they nor the federal government would abandon the myth of the garden. As the government scrambled to dam rivers and force water into the desert, farmers clung fast to their vision of uncountable abundance amidst a green world (1993, p. 67+).

The forces of nature and the forces of agri-economics were heading for a clash.

While the area could, in fact, support a bit more than subsistence farming, when it turned to high-yield monoculture, difficult even in regions blessed with abundant water, farming in the region became disastrous; as Cassuto notes, "The region could not, however, sustain the rigors of a capitalist-based agriculture" and, coupled with weather problems, the Dust Bowl developed.

Nature, in the form of water, was stretched about as far as it would go; farmers, however, needed it to be available, or they would lose everything. Because of its primacy in the economic structure of U.S. agriculture, water had already assumed, Cassuto notes, a primacy of place before climactic changes made it a sort of Holy Grail. Its scarcity in general in the Great Plains had already made those who had better access to water richer than those with lesser access did. Cassuto asserts that once something has been established as a commodity, as water had, it acquires symbolic value, "connoting power and wealth and thereby enhancing the prestige of its possessor. In this sense, water becomes not just a measure of economic value, but a culturally powerful symbol as well" (1993, p. 67+).

Cassuto's work traces the water symbology in the Grapes of Wrath. In fact, it is easy to see how it could underlie the economic symbology, if one accepts Cassuto's assertions regarding water as commodity and as a cultural symbol, like money.

However, in this novel, water creates economic divisions that are found in free societies generally. Cassuto notes that the primary difference between growers and migrants is in their relative relationships to water. "The growers -- owners of the irrigation channels, centrifugal pumps, and watertight mansions, control it -- while the Okies, starving and drenched, are at its mercy" (Cassuto, 1993, p. 67+).

The various types of economic conduct Steinbeck sprinkles throughout the Grapes of Wrath are predicated on the issue of having water, or not having it.

Perfect competition

Perfect competition is an economic situation in which multiple small producers are creating an identical product. In addition, market entry and exit are easy, and buyers and sellers have perfect information regarding the condition of the products and the condition of sales.

In the Grapes of Wrath, the Joad family, forced to leave its homestead during the Dust Bowl era, begins its journey to California -- painted by Steinbeck as a promised land of fruit and vegetables, water and work -- by engaging in some perfect competition. In Chapter Nine, eager to accumulate some money for the trip, "Okies" begin selling off their belongings. They sell to junk dealers, with Steinbeck explaining the process of selling in voices that might be the Joads' or any other tenant farmers trying to break free of the worn-out land. While describing the process, Steinbeck indicates that selling the used goods is pure competition. He writes:

Harness, carts, seeders, little bundles of hoes. Bring 'em out. Pile 'em up. Load 'em in the wagon. Take 'em to town. Sell 'em for what you can get. Sell the team and the wagon, too. No more use for anything (Steinbeck, 1939, p. 111).

A perfect competition market will not be restrained, except by the 'going price', certainly what is going on here. The tenants are free to offer their items elsewhere; the buyers are free to buy them, or not, and both sides are free to negotiate a price. It is true that the dealers know the farmers are in dire straights. However, it is also true that the farmers know a junk dealer is a junk dealer. In this situation, knowledge is about as perfect as it can be. That 'the market' in this case appears to be skewed in the dealers' favor it not true at base; it is only true because of the artificial situation and singular events of the migration west. In fact, the dealers are also taking a risk in that they may have no market in which to resell the goods; in this way, it is a very pure economic transaction, with market forces determining prices offered and prices accepted.

The economic effect of this market on the sellers ranges from not good to devastating; it remains to be seen what effect it will have on the buyers.

The real price in these transactions is the human price. "How can we live without our lives? How will we know it's us without our past?' The wives wonder. but, realists, they also admit they must "Leave it. Burn it" (Steinbeck, 1939, p. 114). And move on.

Monopolistic competition

Monopolistic is a market structure with some of the characteristics of monopoly and some of the characteristics of perfect competition.

There is reason to view the junk dealers as monopolistic competition, also, because they do hold the upper hand; the tenant farmers really cannot travel to sell their belongings anywhere on the open market. However, a better example is in the used car lots Steinbeck describes in Chapter Seven. The entire chapter constitutes a lesson for used-car salesmen in how to cheat the already impoverished families heading westward. A used car dealer in a small town would have a virtual monopoly, despite the putative ability for the tenant farmers to shop elsewhere. Moreover, although the tenant farmers nominally can buy any car from any salesman at any time, in fact, few know anything about cars, and are easily convinced that a cracked battery is not a big deal, for example.

Steinbeck once again assumes the voice of the class of people in question, only this time it is not the departing tenant farmers, but the used car dealers.

In a scene that demonstrates the monopoly character of the situation, Steinbeck explains what happens when a tenant farmer was unable to make payments on the 'new' car, a situation that also indicates monopolistic dealings by the car dealers and by the banks. Steinbeck writes:

don't give a damn if you don't make payments. We ain't got your paper. We turn that over to the finance company. They'll get after you, not us. We don't hold no paper.

Yeah? Well, you jus' get tough an' I'll call a cop. No, we did not switch the tires. Run 'im outa here, Joe. He bought a car, an' now he ain't satisfied. How'd you think if I bought a steak an' et half an' try to bring it back? We're runnin' a business, not a charity ward" (1939, p. 84).

The effect of this on the tenants is devastating. They have spent what little money they had on transportation that ends up being unreliable, at best. Society is then burdened with numbers of people with no income and no way to make payments; in short, the debt load of society increases dramatically, with virtually nothing to show for it except some enriched used car dealers. The effect of all of this is to drive away those who actually worked the land because they loved it, replacing them with hired hands running machinery, neither of which is likely to be kind to the land.

Monopoly

Perhaps the most familiar form of business except for perfect competition, monopoly situations result when there are many potential buyers for a product or service, but only one seller.

In the Grapes of Wrath, a monopoly situation is created as the banks decide to remove tenant farmers, preferring to sell the land to a single large conglomerate of landowners or even a single corporation.

Steinbeck could hardly have painted a harsher picture of this monopoly-in-progress, with scenes of huge bulldozers razing all evidence of the tenant farmers from the land. However, he also notes that the 'monopolization' of the Great Plains was seemingly an event bigger even than those landowners who stood to gain. Steinbeck wrote:

Some of the owner men were kind because they hated what they had to do, and some of them were angry because they hated to be cruel, and some of they were cold because they had long ago found that one could not be an owner unless one were cold. And all of them were caught n something larger than themselves. Some of them hated the mathematics that drove them, and some were afraid, and some worshiped the mathematics because it provided a refuge from thought and from feeling (1939, p. 40).

Steinbeck did not leave to the imagination what the effect of agri-business would be on the people it affected directly nor on society. He describes the owner men as half starved, their kids hungry, their families threadbare. Steinbeck painted the advent of agribusiness; "One man on a tractor can take the place of twelve or fourteen families. Pay him a wage and take all the crop. We have to do it. We don't like to do it" (1939, p. 42).

Oligopoly

In an oligopoly, control over the supply of a commodity is held by a small number of producers, each one of whom can influence the price of goods or services and affect the business of competitors.

In the Grapes of Wrath, the most vicious of oligopolies is portrayed in Chapter Twenty-One. Leading up to his description of that oligopoly, Steinbeck tells, in Chapter Nineteen, about the American squatters who wrested land from Mexico, eventually becoming wealthy and defending their own wealth by treating those who came later more miserably than even they had been treated. The workers camps for the current Okies are described, and the viciousness of deputies finding, and destroying, the tiny patches of garden they try to grown on their own also plays a part in the chapter. In fact, the description sounds much like the description of prohibitions in the old Soviet Union against individual farms.

Chapter Twenty returns to the Joad family, and the 'red' connection is made more clear; when Tom wonders why workers begin abused do not organize, he is told they will be thought of as "Reds" merely for talking about it.

In Chapter Twenty-One, the oligopoly is clear. Steinbeck wrote:

When there was work for a man, ten men fought for it -- fought with a low wage. If that fella'll work for thirty cents, I'll work for twenty-five.

If he'll take twenty-five, I'll do it for twenty.

No, me. I'm hungry. I'll work for fifteen. I'll work for food....(1939, p. 364).

Clearly, the oligopoly is the jobs. In fact, Steinbeck exposed that, too:

And now the great owners and the companies invented a new method. A great owner bought a cannery. And when the peaches and the pears were ripe he cut the price of fruit below the cost of raising it. And as cannery owner he paid himself a low price for the fruit and kept the price of canned goods up and took his profit. And the little farmers who owned no canneries lost their farms, and they were taken by the great owners, the banks, and the companies who also owned the canneries. As time when on, there were fewer farms....(1939, p. 364).