...the events depicted in “The Grapes of Wrath” are the result of ill-conceived government enforced property rights, government distortion of the markets, and corporatism, which can all be applied to current poverty issues.
The “Grapes of Wrath” is a fictional account inspired by terrible plight of Oklahoma Sharecroppers during the “dust bowl” period that also coincided with America’s “Great Depression.” The actual causes of the circumstances, outside of the natural (drought, wind, crop failure), are barely hinted at in the film which instead presents the bewildered outlook of the tenant farmers who have no idea why the events of the movie are occurring, while implying the culprits are the rich and “well to do”, and also simultaneously presenting government as both co-conspirator and savior. The one-sided nature of the film and its contradictions regarding government are merely symptoms of it being fiction and presenting the image its author, or director, desired and while it is excellent in helping us understand the personal trials of the sharecroppers and highlighted an obvious failure in the system it did not provide clear understanding of what the failure was or why it happened. The best way to understand the hardships of the “Okies” and apply those lessons today, then, is to look at the actual history of that time period. After a brief study of the history it becomes apparent that the events depicted in “The Grapes of Wrath” are the result of ill-conceived government enforced property rights, government distortion of the markets, and corporatism, which can all be applied to current poverty issues. In addition to the causes of poverty that effected the “Okies” today we also have inflationary monetary policy, heavy regulatory burdens for entrepreneurship, and the drastic expansion of the size of the federal government that has led to its ever growing consumption of otherwise productive resources.
Terry Anderson and Peter Hill in “The Not So Wild, Wild West: Property Rights on the Frontier” describe how in the late 1800s, the federal government pursued an aggressive homesteading policy in the west. Advertising “free land” was politically popular and it was a way to quickly secure the nations expanding territory. However, in doing this the federal government ignored privately established property rights negotiated between Indians and ranchers or amongst early settlers of the lands and redistributed arbitrary plot sizes with residency and improvement requirements that were not market based. The result of this was a “race for property rights” that led to both land owners with insufficient capital to successfully use the land, they could only afford the “free land” and not the equipment, seed, etc. to profit from it, and to the landowner-tenant farmer system. Landowners from other regions and around the state of Oklahoma claimed stakes during homesteading land races and then rented the land to tenant farmers. Since the land was “free” and did not constitute the landowner’s primary residence or income he had less incentive in the maintenance or improvement of the land and the tenants often could not afford to make improvements or did not think of the land as their own and thus could not justify extra expenses to improve the landowner’s property.
This is in contrast to the three ways to acquire property according Murray Rothbard in “Man, Economy, and State,” which itself has a firm basis in Lockean principles: The first way that unused land or resources may be converted to private property is through the mixing of an individual’s labor with those natural resources. Second an individuals may voluntary exchange or gift property, that they either gained by mixing their labor with unused natural resources or through previous voluntary exchanges. Third individuals may inherit property from their ancestors that previously acquired the property through mixing their labor with unused natural resources or through voluntary exchange. In this case, either the ranchers who voluntarily exchanged with the Indians with the property or possibly the tenant farmers who mixed their labor, if the land was otherwise not in use, would be the actual property owners. Approaching property rights from this perspective would have prevented arbitrary homesteading by the government, premature settling, misallocation of capital, and increased investment by the eventual settlers of the land due to a sense of ownership. This applies today because much of the accumulation of current wealth began with the unjustified appropriation and redistribution of property rights in ways contrary to these principles that have protected and ensured continued growth of wealth for the few against the rightful claims of the many. Also, eminent domain, zoning, and regulations of “private property” continue to erode our sense of ownership and undermine the benefits of a system based on property rights.
In “The Grapes of Wrath,” a representative from the Shawnee Land and Cattle Co. informs a sharecropper that he has to leave his land. The sharecropper inquires into who has made the decision. The representative informs him that it would be no use to talk to the Company as it is not a person, not that it would matter because it is following orders of the bank which itself is answering to auditors in the East. He also mentions the benefits the landowner will receive in hiring wage earners instead of splitting the crops with tenant farmers. However, the movie does not give the context to all of these aforementioned parts working against the interest of the sharecropper. In article titled, “Boom, Bust, Dust” by Doug French, he explains that from 1917 to 1919 “the government guaranteed $2 per bushel” for wheat to help win World War I. As a result, “the number of acres put into wheat production increased 70 percent…But when the war ended, the price collapse…The debts incurred to buy equipment and property still had to be paid…But farmers could only sell the wheat for half of what it cost to produce…if they could find buyers at all.” This distortion in the market created by war and government price intervention led to an artificial boom in the wheat industry followed by a disastrous bust that left farmers and landowners with debt they could not repay and many lost their property. Government further distorted the markets with legislation such as the Agricultural Adjustment Acts of 1933 and 1938 and the Soil Conservation and Domestic Allotment Act of 1935. They allowed landowners to receive federal dollars for not growing on their land in order to lower supply and raise prices of crops. The landowners were supposed to provide a percentage of these funds to the tenant farmers but instead found it in their interest to hire wage earners and kick the tenant farmers from the property so they could receive all federal funds and the full yield of the crop. This legislation probably explains much of the beginning of “The Grapes of Wrath” and why the farmers were being removed from the property.
Government distortion of the markets is a very big player in modern poverty as well. The whole boom-bust cycle is the result of the Federal Reserve Fractional Banking system that allows for continuous credit expansion. The most obvious recent catastrophe this has caused is the Housing Crisis. The quasi-public Fannie mae and Freddie mac corporations guaranteeing home loans severely distorted the markets, as well as legislation that provided incentives to make sub-prime mortgages. The subsidies and hard push towards ethanol in 2007 that pushed the price of corn from “$2 per bushel in January 2005 to over $6” in 2008. (Boom, Bust, Dust) This also resulted in a world wide food shortage as farmers shifted their resources towards the guaranteed money, corn, and sold it for fuel instead of food.
Another prevalent them throughout “The Grapes of Wrath” was law enforcement working on behalf of corporations to ensure their profits and snuff out any “agitators.” However, many confuse this with being a symptom of capitalism when it is truly the nature of corporatism. A system can no longer be called capitalism and a market can no longer be called free when coercion, which government usually maintains a monopoly on, is used to choose winners and losers. The direct coercion to achieve desired ends for favored groups, classes, or companies is only the most obvious form of corporatism. The plethora of regulations, advertised as reigning in corporations, actually remove their competition as small business and individual entrepreneurs can not afford to comply, leaving only the large corporations as the only ones who can afford to do business. This is still very much the nature of our current economic system and that is why people’s distrust or criticisms of capitalism are misplaced since the government has used their monopoly on coercion to influence the market since the very beginning.
Finally, in addition to the causes of poverty for the “Okies” in the late 1930s there are additional factors causing poverty today. The federal government has instituted a much more interventionist monetary policy where during recessions they intentionally create inflation through lower interest rates and printing money. This increases prices at the worst time, when there is high unemployment. Their hope is to lower the real wages of workers while maintaining the same or higher nominal wages, in other words keep the dollar amount the same but make the dollar worth less so they are actually getting paid less with the illusion they are getting paid the same. Also, since the early 1900s government spending has gone from less than 10 percent of GDP to 35-40 percent of GDP over the last 30 years. (USgovernmentspending.com) As the government consumes more of the nation’s resources there is less left to grow the economy.
1. Anderson, Terry L. (2004). “The Not So Wild, Wild West: Property Rights on the Frontier.” Stanford, California: Stanford University Press
2. French, Doug. Mises Daily Article, April 07, 2008. “Boom, Bust, Dust.” http://mises.org/daily/3181. Accessed on 16 October 2011.
3. Rothbard, Murray N. (2004). “Man, Economy, and State, Third Edition, Scholar’s Edition.” Auburn, Alabama: Ludwig von Mises Institute.
4. Usgovernmentspending.com. “Spending as a Percent of GDP from 1900-2010.” http://www.usgovernmentspending.com/downchart_gs.php?year=1900_2010&units=p&title=Spending%20as%20percent%20of%20GDP. Accessed on 16 October 2011.