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Occupying Wall Street

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The immediate area around the New York Stock Exchange, “Wall Street,” has been closed to the public and protestors who are encamped at a nearby park, chanting, singing and dancing along with marching and bugling on surrounding streets accompanied by phalanxes of cops and motor scooters, to cheers and thumbs-up from tour buses and hand shakes from passersby and street workers.

There has been no sign of the commercial media. Mainstream media in the Asia-Pacific region have ignored the historic occupation entirely, not because of their failure to see the beginning of an American democratic awakening, but because the channels of cross-holding and control are now well-established.

These mercantile cables are tightly wound around the “emerging economies” and their growing middle class populations whose consumption patterns are seen as replacing those to be lost by social movements such as this in the West.

“On the 17th of September, we want to see 20,000 people to flood into lower Manhattan, set up beds, kitchens, peaceful barricades and occupy Wall Street for a few months. Like our brothers and sisters in Egypt, Greece, Spain, and Iceland, we plan to use the revolutionary Arab Spring tactic of mass occupation to restore democracy in America. We also encourage the use of nonviolence to achieve our ends and maximize the safety of all participants.”

According to their website, the mission of the leaderless resistance movement is to flood thousands of people into lower Manhattan, set up beds, kitchens, peaceful barricades and occupy Wall Street for a few months in order to persuade President Barack Obama to establish a commission to end “the influence money has over representatives in Washington.” Demonstrators gathered to call for the occupation of Wall Street, Saturday, Sept. 17, 2011, in New York.

Occupy Wall Street is a leaderless resistance movement with people of many colors, genders and political persuasions. The one thing we all have in common is that We Are The 99% that will no longer tolerate the greed and corruption of the 1%. The original call for this occupation was published by Adbusters in July; since then, many individuals across the country have stepped up to organize this event, such as the people of the NYC General Assembly and US Day of Rage. There’ll also be similar occupations in the near future such as October2011 in Freedom Plaza, Washington D.C.

This is from their statement:
“We agree that we need to see election reform. However, the election reform proposed ignores the causes which allowed such a system to happen. Some will readily blame the federal reserve, but the political system has been beholden to political machinations of the wealthy well before its founding. We need to address the core facts: these corporations, even if they were unable to compete in the electoral arena, would still remain control of society. They would retain economic control, which would allow them to retain political control. Term limits would, again, not solve this, as many in the political class already leave politics to find themselves as part of the corporate elites. We need to retake the freedom that has been stolen from the people, altogether.”

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The stranglehold of finance capital over the state

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Women collect coal scraps from an overburden dump for a nearby open pit coal mine. Overburden is the fertile soil (formerly used for agriculture) that has to be removed to get at the coal underneath. In the process small pieces of coal are also picked up which are scavenged by local villagers to be sold for cash. Photo: Panos Pictures/Robert Wallis

Is ours the age of the struggle between the state and the market? Or is it the age in which the state bowed to financial control over it? From a perspective which integrates labour, environmental stewardship, cultural safeguarding and a just human development, the state is firmly in the grip of finance and its liberalisers.

What has come to be called neo-liberalism is in short the expression used to describe the relentless and growing control of resources of every sort, be they mineral, human or environmental. If there has been a problem of neoliberalism it is that it failed to increase the rate of profit consistently and never achieved levels comparable to those of the ‘Golden Age’ between 1948 and 1973. The series of ‘booms’ of various kinds, which caught the attention of investors, bankers and speculators, have had much to do with the seeking to replicate the conditions of those years (in Deutschland they called the period ‘die Fette Jahre’, the fat years).

Boys carry large lumps of coal that they have scavenged from an open pit mine near Dhanbhad. They will carry this coal several kilometres to sell in a local market. As mining has displaced agriculture, scavenging for coal on the edge of mines has become one of the means of survival for those who have been displaced from an agricultural life by mining. Photo: Panos Pictures/Robert Wallis

The essence of financial liberalisation, seen in its totality, is to ensure the stranglehold of finance capital over the State, Prabhat Patnaik has explained in a commentary in People’s Democracy (the weekly organ of the Communist Party of India Marxist). This may appear paradoxical at first sight: as the term ‘liberalisation’ appended to ‘financial’ suggests, the basic aim of the process is to liberate finance from the shackles of the State, ie, to ensure not the control of finance over the State but the negation of the control of the State over finance. But the remarkable aspect of financial liberalisation consists precisely in this: what appears at first sight as the liberation of finance from the shackles of the State is nothing else but the acquisition by finance of control over the State.

In his short essay, ‘Neoliberalism: From One Crisis to Another, 1973-2008’, Neil Davidson has explained that these booms were the result of the following factors which he enumerates as under:

The first and most fundamental was simply greater exploitation of the workforce, by increasing productivity on the one hand (making fewer workers work harder and longer) and decreasing the share of income going to labour on the other (paying workers less in real terms).

The second was the expansion of private capital into two new areas: first through the expropriation of the remaining ‘commons’ in the Global South, releasing value which had previously been embedded in nature and hence unavailable for the purposes of accumulation; then through privatising state-owned industries and public services, providing resources which-potentially at least-could be used directly for production rather than in the process of realisation or as part of the social wage.

The third was the emergence of new centres of capital accumulation outside the established core of the world system in East Asia and above all, in China, which contributed to a partial restoration of profitability as a manufacturer of cheap consumer goods for Western and, above all, US import markets, and as the source of loans to the US through Treasury Bonds, which are then loaned again to American companies and consumers.

The fourth, itself a result of profit rates failing to consistently reach what capitalists considered acceptable levels, was a fall in the proportion of surplus value being invested in production and the rise in the proportion being saved, to the point where the latter became greater than the former. The need to find profitable uses for surplus capital, where productive investment was insufficiently attractive, tended to draw industrial capitalists towards financial speculation. This did not mean that industrial capital became subordinated to financial capital – rather, their interests converged.

A series of murals painted by the Tribal Women's Artist Collective from Hazaribagh. The collective attempts to keep tribal artistic traditions alive in the face of population displacement from tribal areas due to the spread of mining and the conflict between the India army and Maoist guerillas. The designs and styles are unique to each individual artist and were traditionally passed down from mothers to daughters through the generations. Photo: Panos Pictures/Robert Wallis

The turn to finance had implications beyond a shifting focus of investment, which tends to be compressed into the term ‘financialisation’. But among all the complexities of arbitrage, derivatives, hedge funds and the rest, there are two essential points about financialisation which need to be understood. One is that, financial speculation, like several of the factors discussed here, can increase the profits of individual capitalists at the expense of others, but cannot create new value for the system as a whole. The other is that, in so far as profits were raised, one aspect of financialisation became more important than any other and consequently needs to be considered as a factor in its own right.

This, the fifth and final factor, was a massive increase in consumer debt. Credit became crucially important in preventing the return to crisis only after the post-1982 recovery had exhausted itself. In so far as better-off working class people have spent borrowed money on commodities which are above the minimum needed to reproduce their labour, it is a response to their situation under neoliberalism. But the main reason for increased debt has been the need to maintain personal or familial income levels.

Men transporting baskets of coal onto railway carriages at Sauanda railway yard. Most of the workers have migrated to work in the area having been displaced from their traditional livelihoods in the countryside. Lacking title deeds for land on which they have farmed and hunted for millennia, the rural adivasi communities are being displaced to make way for new industrial developments planned to capitalise on the land's mineral wealth. Photo: Panos Pictures/Robert Wallis

The points that Patnaik, Davidson and several others have been making, with increasing urgency in recent years, is that the freeing of finance capital from all social obligations like priority sector lending targets and differential interest rates, not only increases its profitability, even while pushing petty producers and small capitalists deeper into crisis, but also allows it to pursue its own profit-seeking ways over a global terrain, which has the effect of subjugating the State to the thralldom of internationalised finance capital.

In short, financial liberalisation is the process through which a fundamental change is enforced on the bourgeois State: from being an entity apparently standing above society and intervening for the ‘social good’, which means keeping in check to some extent the rapacity of big capital, even while promoting it and defending its monopoly privileges, the State becomes exclusively dominated by financial interests (with which big corporate interests are closely enmeshed) and loses its relative autonomy vis-a-vis such interests. We have not the ‘rolling back’ of the State as neo-liberal ideologues suggest, but State intervention in the exclusive interests of finance capital.

[‘Neoliberalism: From One Crisis to Another, 1973-2008’, Neil Davidson, Senior Research Fellow at the University of Strathclyde and a member of the Editorial Board of the journal International Socialism.]

Gauging China’s influence on the world-IMF

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Salesperson in a textile shop in Beijing, China. Photo: IMF/Finance & Development

In an article in the International Monetary Fund magazine ‘F&D’ (Finance & Development), Vivek Arora and Athanasios Vamvakidis discuss the ramifications of China’s opening-up policy. They said that the effects are well documented but even so, “the facts are astonishing”. From relatively poor beginnings three decades ago, the authors have said, China’s economy is now second in size only to that of the United States of America.

“Real gross domestic product (GDP) has grown by about 10% annually, implying a doubling every seven to eight years. The resulting 16-fold increase in a major economy’s national income during a single generation is unprecedented.”

China’s opening up has meant increasing linkages with the rest of the world, as reflected in its rising share in world trade, global markets for selected goods, and capital flows. China’s stronger linkages with the global economy have also led to a growing use of its currency, the yuan, abroad, as well as closer correlation of market sentiment in China and the rest of Asia and, more recently, the world. China’s share in world trade has increased nearly tenfold over the past three decades, to about 9 percent, while its share in world GDP has risen to 13% from less than 3%.

“The increase in China’s share of world trade is particularly striking in the markets for certain products. China now accounts for nearly one-tenth of global demand for commodities and more than one-tenth of world exports of medium- and high-technology manufactured goods. China’s rising share in world trade over the past three decades is underpinned by a rise in its share in the external trade of every major region (chart). China’s share is, perhaps unsurprisingly, largest in the trade of other emerging Asian economies (13%), and this share has seen a striking increase over time. But its share of African trade is almost as large, and its share in trade with the Middle East, the Western Hemisphere, and Europe has increased several-fold in recent decades.”

To quantify the effects of China’s growth on the rest of the world, Arora and Vamvakidis conducted an empirical analysis using data from the past few decades (the details are to be found in the paper this article is based upon). Shifting to the longer term, they estimated the impact on the rest of the world of long-term changes in Chinese growth, smoothing over the short-term fluctuations associated with the typical business cycle and focusing on longer-term fluctuations. Their results, based on data for the past two decades, suggest that a 1 percentage point change in China’s growth sustained over five years is associated with a 0.4 percentage point change in growth in the rest of the world (coincidentally the same amount as for the short and medium term).

Written by makanaka

January 25, 2011 at 15:10

The ‘Religion of Capital’ revisited

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“We need religion to curb the masses. But what religion? It must be a new religion. Now, then, the only religion that answers the requirements of our days is the Religion of Capital. Capital is the true, only and omnipotent God.”

Those were the words, prophetic and terrible, uttered by the “notorious” Statistician Mallock, in Paul Lafargue’s remarkable satirical work, ‘Religion of Capital‘. Mallock has just risen from a “group of capitalists” – Vanderbilts, Goulds, Rothschilds among them – and lets loose with brutal simplicity to stop short the wranglings between the theologians, free-thinkers and philosophers. This is what he went on to say:

Cover of Religion of Capital, by Paul Lafargue (1916)

Cover of Religion of Capital, by Paul Lafargue (1916)

“He manifests Himself in everything. He is found in glittering gold and in stinking guano; in a herd of cattle and in a cargo of coffee; in brilliant stores that offer sacred literature for sale and in obscure booths of lewd pictures: in gigantic machines, made of hardest steel, and in elegant rubber goods. He is everywhere. Capital is the God whom the whole world knows, sees, smells, tastes. He is sensible to all our senses. He is the only God that has not yet run against an atheist.”

Lafargue tells us how the group of Capitalists rejoiced at hearing this, how they cheered and applauded loud and long at this clear and cold definition of the new creed.

“When Capital visits a country, it is as if a hurricane had broken loose, that tears down and destroys everything that stands in His way — men, animals, the quick and the dead. Capital seizes upon free and healthy, strong and happy people and immures them by the hundreds of thousands in the mills, the factories and the mines. There He pumps out their blood; when He lets them go again, they are prematurely old, scrofulous, anaemic, consumptive. The imagination of man has never yet been able to conceive a more fearful, cruel and pitiless God when enraged.”

Lafargue goes on to describe the Catechism of the new religion as an interrogation of a humble worker.

Q. What is your name?
A. Wageworker.
Q. Who are thy parents?
A. My father was called Wageworker; my mother’s name is Poverty.
Q. Where wast thou born?
A. In a garret under the roof of a tenement house which my father and his comrades built.
Q. What is thy religion?
A. The Religion of Capital.

It is a catechism whose tremendous power is found now (Lafargue would no doubt observe, were he amongst us today) in the financial skulduggery that has entrapped millions of families in the North and South alike and driven them to penury. His Statistician Mallock has made tens of thousands of converts in the banking system of the late 20th and early 21st centuries.

Q. What does thy religion order thee to do with thy savings ?
A. To entrust them to the savings banks and such other institutions that have been established by philanthropic financiers, to the end that they may loan them out to our bosses. We are commanded to place our earnings at all times at the disposal of our masters.
Q. Does thy religion allow thee to touch thy savings?
A. As rarely as possible; but it recommends to us not to insist too strongly upon receiving our funds back; we are told we should patiently submit to our fate if the philanthropic financiers are unable to meet our demands, and inform us that our savings have gone up in smoke.

Who was Paul Lafargue? Karl Marx’s son-in-law, Lafargue (1841-1911) was a leading member of the French socialist movement and played an important rôle in the development of the Spanish socialist movement. A close friend of Friedrich Engels in his later years, he wrote and spoke from a fairly orthodox Marxist perspective on a wide-range of topics including women’s rights, anthropology, ethnology, reformism and economics.

The advance guard of climate change

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Winter sky over the Deccan plateau, India

Winter sky over the Deccan plateau, India

From late 2003 to early 2005 I was part of a small group in south Nagaland (in India’s north-east region) conducting a study on natural resource management and the prospects for tourism in the region. The study was funded by a Indian central government ministry, was ‘supervised’ by the state government and was made possible by the village community of Khonoma, in the Naga hills.

At around the mid-point of our study, when the time had come for the paddy seedlings to be transplanted, that the convergence of climate change and scarce labour resources became obvious. The seedlings were not ready to be moved at the time of year they were usually expected to be. By the time they were, the extra labour each rice farming family had mobilised in preparation for the hard work ahead, had their regular jobs and occupations to return to. The hill villages were in turmoil. Practically every single family that had a plot of terraced rice field to attend to was caught in a dilemma.

If they insisted that those who had come to the villages to help them – daughters, sons, cousins or aunts – stay back to complete the work, those helpful souls would certainly lose salaries and wages. If they let them return, they would have to look for very scarce hired labour, whose per day wage was high and which would certainly rise given the scarcity of hands available and time. It was for most families a Hobson’s choice, and by either reckoning only made the socio-economic cost of rice cultivation dearer. This was the most dramatic impact of climate change that I saw at the time, for the shift in transplanting season was considered very odd indeed by the villages, almost unprecedented.

Extracting riverbed sand in North Goa, India

Extracting riverbed sand in North Goa, India

We know now that local observations of direct effects of climate change by tribal populations and indigenous peoples corroborate scientific predictions. In a very real sense, indigenous peoples are the advance guard of climate change. They observe and experience climate and environmental changes first-hand, and are already using their traditional knowledge and survival skills – the heart of their cultural resilience – to respond. Moreover, they are doing this at a time when their cultures and livelihoods are already undergoing significant stresses not only due to the environmental changes from climate change, but from the localised pressures and economic impulses of global trade and movement of capital.

The United Nations University’s Institute of Advanced Study has just released an advance copy of what promises to be a goldmine of such observation. The volume is entitled ‘Advance Guard: Climate Change Impacts, Adaptation, Mitigation and Indigenous Peoples – A Compendium of Case Studies’. The 402 case studies summarised in this densely packed volume mention a host of specific vulnerabilities and early effects of climate change being reported by indigenous peoples (and these include cultural and spiritual impacts): demographic changes, including displacement from their traditional lands and territories; economic impacts and loss of livelihoods; land and natural resource degradation; impacts on food security and food sovereignty; health issues; water shortages; and loss of traditional knowledge.

: Climate Change Impacts, Adaptation, Mitigation and Indigenous Peoples

The cover graphic of the UNU-IAS compilation 'Climate Change Impacts, Adaptation, Mitigation and Indigenous Peoples'

Impacts are felt across all sectors, including agriculture and food security; biodiversity and natural ecosystems; animal husbandry (particularly pastoralist lifestyles); housing, infrastructure and human settlements; forests; transport; energy consumption and production; and human rights. The entire range of effects on habitats and their biomes are supplied: temperature and precipitation changes; coastal erosion; permafrost degradation; changes in wildlife, pest and vector-borne disease distribution; sea-level rise; increasing soil erosion, avalanches and landslides; more frequent extreme weather events, such as intense storms; changing weather patterns, including increasing aridity and drought, fire and flood patterns; and increased melting of sea-ice and ice-capped mountains.

“In spite of these impacts,” states the UNU-IAS compilation, “indigenous peoples also have a variety of successful adaptive and mitigation strategies to share. The majority of these are based in some way on their traditional ecological knowledge, whether they involve modifying existing practices or restructuring their relationships with the environment. Their strategies include application and modification of traditional knowledge; shifting resource bases; altering land use and settlement patterns; blending of traditional knowledge and modern technologies; fire management practices; changes in hunting and gathering periods and crop diversification; management of ecosystem services; awareness raising and education, including use of multimedia and social networks; and policy, planning and strategy development.”

From Asia, I’ve picked out three cases which illustrate just how important it is to observe and learn from these responses:

BANGLADESH | Indigenous forecasting in Maheshkhali, using meteorological indicators and animal behaviour to predict cyclones. Maheshkhali Island is situated off the Bay of Bengal coast with an area of approximately 60 square km. Cyclones are the greatest disaster threat of coastal people. Research has revealed that certain indigenous prediction capacity possessed by the local people always helped them to anticipate cyclones and take necessary precautions. The indigenous cyclone prediction is even more important as it was revealed during interviews with the Maheskhali islanders that they do not understand the modern warning system with its different numerical codes (1-10) and elaboration on wind direction, as explained in the warning bulletins.

Buffalo at work, Kolhapur district, Maharashtra, India

Buffalo at work, Kolhapur district, Maharashtra, India

INDIA | Indigenous forecasting in India using meteorological indicators, plant features and animal behaviour. Researchers from Gujarat Agricultural University have evaluated eight indigenous forecasting beliefs between 1990 to 1998. For each year, the data was tabulated and analysed on the basis of Bhadli’s criteria. Based on the findings the researchers concluded that many of the beliefs are reliable indicators of monsoon. The study has helped to restore the people’s confidence in their own traditional knowledge and skills. As climate change occurs, these traditional forecasting indicators may change. Locals have to continue their observations and adjust their predictions accordingly to ensure that correct coping mechanisms will be applied.

INDONESIA | Customary Iban Community. This study examines the social and institutional practices of a sedentary Iban sub-tribe in the upstream part of the Kapuas system in governing their life. In 2008, the Sungai Utik community acquired a formal, recognition of their institutional capacity to live at the center of one of the most complex ecosystems that is the tropical rainforest of Kalimantan. The Indonesian Eco-label Institute provided the community logging practice of the Sungai Utik Ibans its “seal of ecological appropriateness”. The Sungai Utik life-space is part of the bigger climatic zone just north of the Equator that has been predicted to experience higher precipitation over the course of climate change in this century, particularly in comparison with the last three decades of the last century. It means that the community should learn to adapt to a transformed rainy season—the duration of which and the timing of its start and ending are also subject to change—for the crucial nugal (planting) rituals.

Concerning the Bank of Upper India, Meerut, 1915

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Old banking stats from 1915 show financial crisis back then too.You can see the difference when there is a certain kind of central banking cadre which is proud of the work it does. Take the Reserve Bank of India’s banking statistics. Although immensely useful to those in the banking and finance industry, and just as useful to those who draw the links between how money is spent and development programmes, hundreds and hundreds of rows and columns filled with numbers to the third decimal are – let’s face it – hardly as exciting as a Twenty20 game.

Enter a dash of history. The conservatively titled regular publication, ‘Statistical Tables Relating to Banks in India 2008-09’, reminds us stolidly that it provides “information on major items such as liabilities and assets, income and expenses, non-performing assets, financial ratios, spatial distribution of offices, number of employees and details of priority sector advances. It also provides bank group-wise monthly data on some of the major items such as aggregate deposits, liabilities to the banking system, assets with the banking system, investments, bank credit, and, sector-wise and industry-wise gross bank credit”.

And then it smoothly brings in the historical view (see pic left). “This publication had started prior to the establishment of the Reserve Bank of India. The first issue was brought out by the then Department of Statistics, Government of India in 1915 which covered data for 1914 and was brought out under the guidance of Mr. G. Findlay Shirras, the then Director of Statistics, Government of India. It is worth mentioning that Late Professor P. R. Brahmananda dedicated his book ‘Money, Income, Prices in 19th Century India’, published in 2001, to Mr. G. Findlay Shirras, among others. In order to commemorate the origin of this publication, the cover page of the first issue brought out in 1915 is reproduced in this volume.”

Reserve Bank of India digs out banking stats from 1915What an evocative cover page it is (see pic right)! The foreword continues: “The work relating to the publication was transferred to the Reserve Bank of India in 1939. The last issue, which incidentally was also the 25th issue, of the publication brought out by the Government of India was in 1941, with data pertaining to 1938. The first issue under the aegis of the Reserve Bank of India was brought out in 1941, with data pertaining to 1939 and 1940. The cover page of the last issue brought out by the Government of India and ‘Prefatory Note’ in the first issue brought out by the Reserve Bank of India as reproduced in Statistical Tables Relating to Banks in India 2005-06 are also given in this volume.”

“This is the 64th volume of the publication by the Reserve Bank of India,” say this issue’s authors. “If we count volumes published by the then Department of Statistics, Government of India, then this could be the 89th volume, marking the long history of continuity of this publication. This publication has continued for nearly a century underscores its relevance. It is also a tribute to the efforts and dedication of concerned officials first in the Government of India and now in the Reserve Bank of India.” Hear, hear. This volume has been brought out under the guidance of Dr. A. M. Pedgaonkar, Principal Adviser, and Dr. Balwant Singh, Adviser, DSIM, and for their historically sensitive presentation alone they deserve to take a bow.