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Romancing the Afghan Dragon

By       Message Matthew Ward       (Page 1 of 3 pages)     Permalink    (# of views)   2 comments

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Capitalism is based on the free exchange of goods between people, where each has a unique value he attaches to the good being traded. Where the trade is advantageous to both the exchange occurs, a market is made, and capitalism is created out of thin air.

Such is the market for heroin, a product of simple manufacture from the opium of the poppy plant, 70% of which is grown in the ideal conditions of Afghanistan. Heroin is a narcotic, a substance that is a personal and individual consumer good - it is consumed in very small amounts by individual end users based on the unique value each attaches to it. For a very substantial part of the human world, heroin has enough value to create a lively and fluid global market with a value added chain that stretches from a strung out junkie in Portland Oregon - the end user in more ways than one - to the father of 15 scraping out an existence under biblical conditions a half a globe, and many worlds away.

That value chain, the capitalism that allow it, and the inherent contradiction between free markets and liberal democracy, are at the root of the quagmire that is Afghanistan.

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Afghanistan is the political creation of an era long past, with a climate and land suitable for almost nothing. Human beings have eked out enough of an existence to sustain a "civilization" there stretching back to the earliest days of recorded time. Sparsely populated and spread thin across the barren landscape, a pragmatic people got on by reaching an accommodation with reality. They still do.

The industrial era was a boon(doggle?) for humanity, but particularly cruel to the unassuming subsistence societies of Afghanistan. Competing western states - flush with infant nationalisms and burgeoning global interests - closed in and around the scattered tribal extended families of the Pashtu, Tajic, Uzbek, and a multitude of others. English aristocrats crayoned out borders to fit their scattered global interests, and Afghanistan the nation state was born, ephemeral as it was, existing only in the minds of those who wanted - or needed - to see it.

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One of those British interests was the opening of the small Afghan opium trade to international markets. Properly irrigated, the plains of southern Afghanistan made for the perfect strategic location for Britain's huge opium business with the Far East, specifically China. The British found that it was possible to block Russian expansion, provide a land buffer to India, and use the otherwise useless real estate of Afghanistan for mercantilist design. It was thinking like that which sustained one of the world's truly great empires.

Thus was born in Afghanistan the opium business, a gift of free markets and capitalism. Still operating from fields established along British engineered irrigation systems, the opium trade has grown with international changes in global markets and geopolitics. Suffering from the loss of the Eastern markets at the close of the British era, and then arriving again at the opening of American markets in the American era, Afghanistan has clung doggedly to a pragmatic crop throughout. Opium alone can provide enough surplus for an Afghani farmer - bereft of capital - to feed and clothe himself and his family in near prehistoric conditions. Ideology, rhetoric, and politics never fed a single child, a deep set cultural understanding of the practical Afghani.

A full two thirds of the entire economy of modern Afghanistan is based on the opium business, every tribal family depending entirely on its markets in some way. Only once since its inception has the British installed opium system collapsed. In the decade preceding the rein of the Taliban, both opium market prices and Afghani hectares under production remained stable under the controlled market philosophy of the Soviets, who put the markets to work for the collective under a sweeping series of agrarian reforms. However, on the ascension of The Taliban regime, religious dogma collapsed the opium trade in Afghanistan by a full 97% by 2001, wiping out the Afghan economy in a single stroke. Dogma turned out to be a poor source of calories, and subsequently, the Taliban regime collapsed like a house of cards.

With the introduction of the world's greatest capitalists to Afghanistan, opium production not only returned, but thrived. Under the Americans, the combination of access to the massive US heroin market, a vicious "War on Drugs" that kept prices high, and international finance structures to handle the money, Afghani production soared from the anemic Taliban era where only 8 thousand hectares were under production, to a prodigious 193 thousand hectares in 2007. Clearly a triumph for free markets and capitalism, as the best the Soviets could manage was 91 thousand hectares in 1999.

Left to its own devices, Afghanistan is a very stable place. It has a simple, agrarian market economy which functions seamlessly with its diffuse, decentralized tribal hierarchy. It is a system so simple it confounds the minds of western thinkers, where they attempt to think about it at all. More often than not they don't, and the simple existence of the Afghani is shackled with the problems of the complex western world. The humble Afghani can lay legitimate claim to the bitter epithet, "nasty, brutish, and short".

The nut of the thing is this; there is no Afghani "state", and what social cohesion that does exist, exists because of the agrarian nature of the Afghan economy and its most rational economic resource, opium. Afghanistan has two thirds of its national productive capacity invested in a sole commodity, and it is precisely because Afghanistan has this singular productive capacity, that markets exist to fill that capacity. Smack addled high school kids in Toledo (Spain or Ohio) keep the economy of Afghanistan afloat, and allow the meanest of existence for some 70 million of the planets most wretched people. A symbiotic convenience of human agony.

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Onto this landscape walked a series of successive geopolitical interests - Empires, Communism, the Soviet Union, the Cold War, Fundamental Islam, democracy, and chaos. Not one of which is indigenous to the local populations, and not one of which understood the primitive simplicity of the local economies, or even cared to.

In Afghanistan, a farmer raises poppy plants over any other for three principle reasons. First, there is a ready and liquid market for the product. Second, opium is not capital intensive, and what capital is necessary is provided by each farmer's purchaser. Finally, opium is community intensive, and well suited to the social structure of the local tribal systems. Growing Poppy plants and harvesting their opium is a delicate, touchy-feely process that is very labor intensive, not unlike rice production in many ways. Large Afghani clans - where schooling reduces the labor necessary to increase the family surplus - are ideally suited for the maximum production of opium.

The clan/farmers raise their crops and sell them to the regional "Strong Man" - sometimes warlord, sometimes politician, most times...both. The Strong Man guarantees the purchase of the farmer's entire marketable crop, provides seed capital and security, and demands in return loyalty and a price that will sustain the farmer and the system. Given their visceral connection to an entire regional population, these "drug lords" are de facto law and order in their regions. The "State", for its part has a different, western, democratic liberal set of laws. Under this set, drugs are illegal. This effectively nullifies the respect for these laws in the local Afghan communities. However, it also leaves the local strong men in monopoly position, and awards to that monopoly the entire contract for opium in his region.

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Matthew Ward is a retired CEO and Entrepreneur with interests in History, Economics, and Accounting.

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