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Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts Issue No. 39 November 11 - 17, 2001 Quezon City, Philippines |
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Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts Issue No. 39 November 11 - 17, 2001 Quezon City, Philippines |
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Fix
It or Nix It? What went wrong? Once touted as the economic nirvana for both rich and poor countries, globalization has generated worldwide resistance as a result of the economic destruction, plunder and untold poverty it wrought on peoples particularly workers, farmers and other marginal classes. This three-part series, taken from the author’s long analysis of globalization written last week for the Kilusang Mayo Uno (May 1st Movement), takes the reader to the roots of the world capitalist system and how its crisis is leading into a collision with peoples across so many countries today. BY
PAUL QUINTOS Second
of Three Parts The much-vaunted “new economy” – purportedly immune to inflation and busts -- has since reared old ills with the bursting of the tech-bubble as early as last year. Between April 2000 to April 2001, some US$4 trillion in stock-market value in the US equities market evaporated. Even before the bombing of the World Trade Center (WTC), the US economy had already been deteriorating sharply with the US Treasury Department warding off recession with successive interest rate cuts. Industrial production had been on the decline for a year to September, capacity utilization had dropped to 75%, and profits of companies in the S&P 500 index had contracted by 60% in the year to the second quarter (The Economist, Oct.20-26, 2001). Unemployment had been inching closer to 5% and job losses were accelerating with half a million workers laid-off from March to just before Sept. 11. Many of the world’s leading corporations from various industries had announced job cuts even before the terrorist attacks including Sun Microsystems, Kraft Foods Inc., Sears Roebuck, Rolls Royce, not to mention every airline company in the world. The so-called Asian NICs have not fully recovered from the 1997 Asian financial crisis. With their heavy dependence on computer and other electronics exports, particularly to the US, the global slump in the electronics industry and US recession is dragging down their economies even further. The other “emerging markets” are not spared. Brazil and Mexico are in recession while Argentina is poised to default on its credit obligations anytime soon in what could turn out to be the biggest sovereign debt default in history. (ibid.) The WTC bombings merely accelerated a global downturn already in the making. In its wake, the global GDP growth is expected to slow down to 1.5% this year and next, or almost half of last year’s 3.8% growth rate and its slowest two-year period in the last 50 years (ibid). But the WTC bombings are now being used to rationalize a US-led “global war on terrorism” which conveniently frames the tried-and-tested strategy of stimulating the economy through arms build-up -- massive spending on military hardware, R&D for US President Bush’s missile “defense” shield and arms exports – apart from quashing real and imagined enemies of the American empire. Just for the remainder of this year, the US government is prepared to spend $40 billion on the “terror economy” on top of the “normal” programmed military budget which last year amounted to $343 billion. This includes at least $20 billion for the military; $7 billion for recovery and relief in New York and at the Pentagon; $3 billion to fight bioterrorism; $2 billion for more security within and around dams, power plants and federal buildings; and $600 million to secure US airports and aircraft (Reich, 2001). Apart from coursing public resources to the monopoly capitalists in the military-industrial complex, the US Congress is also proposing to grant $100 billion in tax cuts not to low or middle-income earners but to large corporations, purportedly to spur the flagging economy (ibid.) Fanning the flames At the same time, the US-led “war on terrorism” is propelled by fanning the flames of jingoism, racism and terrorist-baiting which plausibly prefigures a crackdown on civil liberties and legitimate protest across the globe. For instance, soon after the WTC bombings, Italian Prime Minister Silvio Berlusconi declared that Islam is attacking the West from outside and anti-globalization protestors are attacking it from within. An op-ed piece in the International Herald Tribune states, "While they are not deliberately setting out to slaughter thousands of innocent people, the protestors who want to prevent the holding of meetings like those of the IMF or the WTO are seeking to advance their political agenda through intimidation, which is a classic goal of terrorism." US Trade Representative Robert Zoellick painted critics of free-trade as un-patriotic, declaring "We will not be intimidated by those who have taken to the streets to blame trade -- and America -- for the world's ills." (Karliner, 2001). His inane proposal “to fight terror with trade” betrays the current desperation and dangerous mindset of globalization’s defenders. Yet all this is futile in countervailing the crisis of imperialism. For underlying this pattern of crisis in the global economy is a fundamental contradiction in the capitalist system itself: between the socialized character of production and private profit. On the one hand, socialized production (specialization, division of labor) enables great strides in the capacity of the productive forces -- people, technology and materials. The high-tech gadgetry found in transportation, communication and information technologies that have underpinned rapid advances in the production and circulation of commodities (even people) merely accentuate the already highly socialized character of production at present. It has allowed transnational corporations (TNCs) to disperse their operations across the globe. At the same time, it has enabled greater centralization of control in the national bases of these corporate giants. On the other hand, private profit - or capitalist appropriation of the product of social labor by virtue of private ownership of the means of production – leads to the accumulation and centralization of capital in the hands of a narrow class, the monopoly capitalists of a handful of imperialist countries, while the exploited classes in the world are left with deteriorating shares of the social product (wages) or thrown out of productive employment altogether. Monopolistic Concentration and centralization of capital in the hands of TNCs -- for instance in the form of mergers and acquisitions which are on the rise – is increasing the monopolistic or oligopolistic control of a few TNCs, especially in the crucial information and technology-intensive sectors as well as in international finance. The rapid increase in production capacity on the one hand, and the constriction in the purchasing power of the broader masses on the other hand, inevitably leads to crises of overproduction - a glut in commodities for which there are not enough people with the capacity to buy. When commodities aren't sold, profits aren't realized, and employers throw workers out of employment and exploit those that they retain even more intensely. This often worsens the contraction of the market and only deepens the crisis of overproduction, thus spiralling into a depression. In the era of monopoly capitalism or modern imperialism, this crisis of overproduction takes on ever wider and deeper dimensions - to which we bear witness today. As competition among big capitalists becomes even more vicious at the same time that markets are increasingly constricted because of the depressed incomes of the broad masses, the crisis of overproduction is manifesting itself in falling average rates of profits and the alarming increase in financial speculation which has become the catchbasin for surplus capital. This is impelling TNCs to seek ways to prop up their profits by further prying open and controlling foreign markets and intensifying the exploitation of working classes, especially in the non-industrialized South. Thus, the governments of the most advanced capitalist countries and the IMF-WB-WTO triad are aggressively peddling and imposing neo-liberal policies on all countries in behalf of monopoly capitalists. They are prying open new markets for the unrestricted entry of surplus goods and finance capital from the advanced capitalist countries and ensuring the unbridled operations of TNCs in client states. At the same time, the champions of neo-liberal globalization actively oppose redistributive policies (such as land reform) and the pursuit of sovereign industrialization programs in Third World countries for going against the logic of the free market. They are also forcing austerity on the people, cutting back on social services and public infrastructure in the name of containing budget deficits – while forcing them to devote substantial shares of the national budget to servicing debts to international creditors. The monopoly capitalists are restraining wages of workers in the guise of fighting inflation and maintaining global competitiveness. Indeed, they are playing workers and nations against each other in a race to the bottom – by restraining wages, whittling down labor rights, relaxing environmental standards, dismantling social security, providing tax cuts and subsidies all for the benefit of monopoly capital. Women, racial and ethnic minorities, immigrants, indigenous peoples and other objects of discrimination suffer the worst under this process. In short, neo-liberal globalization is an attempt to countervail the ever worsening crisis of the world capitalist system. But neo-liberalism per se is not the only way through which capitalists have attempted to cope with the crisis of overproduction. Bulatlat.com We want to know what you think of this article.
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