by William K. Tabb
This essay examines aspects of the global political economy that I hope
will inform progressive governments and movements for social change. It
evaluates the constraints and opportunities presented in the current
conjuncture of world capitalist development by analyzing four areas of
crisis in the contemporary world capitalist system. These are not the only
contradictory elements in the contemporary conjuncture, but they are, in
my view, the most salient.
The first problem is the financial turbulence that has gripped the economy
of the United States and has had widespread effects. It is a crisis that
further discredits mainstream Anglo-American economics. I do not know that
it is the crisis of capitalism. For this to be the case it would not only
have to become much deeper, but its impacts would have to be felt more
dramatically as a systemic failure. Most importantly, a party formation
capable of explaining how such crises are inherent in the nature of the
functioning of capitalism and of inspiring a socialist alternative would
have to mobilize a movement of the sort that ended apartheid in South
Africa. Without the last, even a deep and painful crisis will be, at best,
only the occasion for reforming and not abolishing capitalism.
A second crisis is that of U.S.-led imperialism, which has been
discredited both in terms of its regime-change-wars-of-choice and the
increasingly effective resistance to the international financial and trade
regime we know as the Washington Consensus. Because of the incalculable
harm neoliberalism has done, and continues to do, it is now ideologically
on the defensive. A third point of crisis is the rise of new centers of
power in what had been the peripheries of the capitalist system and the
tensions this has unleashed, providing room to maneuver for countries
wishing to break with the United States. A fourth area of crisis has to do
with resource usage, the uneven distribution of the necessities of life,
and a growth paradigm that is no longer sustainable. Here grassroots
social movements in South Africa and elsewhere are leading actors in
resisting privatizations and the imposition of a hyper-individualism that
brings disaster for the most oppressed and exploited.
Crisis One: Financialization and Financial Crisis
How much damage the current financial meltdown will cause remains to be
seen, but the harm is already extensive. At the level of systemic crisis
an important issue relates not just to the economic costs and the way
rescue operations are premised on tax payer bailout, but whether financial
capitalism can sustain itself. Martin Wolf, the Financial Times senior
economic columnist, writes about capitalism "mutating" from "mid-20th
century managerial capitalism into global financial capitalism."2 John
Bellamy Foster, editor of Monthly Review, argues "that although the system
has changed as a result of financialization...financialization has
resulted in a new hybrid phase of the monopoly stage of capitalism that
might be termed 'monopoly-finance capital.'"3 Finance has been able to
restructure productive capitalism, the economy that actually produces real
goods and services people consume. In a new way it appropriates more and
more of the surplus created in the processes of production, not only in
the core, but in what has been the periphery of the world system.
Taken as a whole the corporate profits of the financial sector of the U.S.
economy in 2004 were $300 billion, compared to $534 billion for all
nonfinancial domestic industries, or about 40 percent of all domestic
corporate profits. They had been less than 2 percent of total domestic
corporate profits forty years earlier, a remarkable indication of the
growth of financialization in the U.S. political economy. This was both an
economic and a political development, as the financial sector gained
leverage over the rest of the economy, in effect gaining the power to
dictate priorities to debtors, vulnerable corporations, and governments.
As its power grew, it could demand greater deregulation, allowing it to
grow still further and endangering the stability of the larger economic
system.
It seemed that finance had developed a new magical M–M' circuit, in which
money could be made solely out of money, without the intervention of
actual production. The new secret of accumulation was presumed to be
leverage and risk management, which allowed the purchase of assets that
promised higher returns even if they carried a higher risk, and the
borrowing of many times the amount the investor had in equity
capital—perhaps ten, twenty, thirty, or in some cases a hundred times as
much. When so highly leveraged, even a small rise in value could return
great profit on the initial investment. Given global markets, the money
might be borrowed at low interest rates in Japanese yen and invested in
high return U.S. financial assets, junk bonds, and derivatives of all
sorts.
So long as asset values rose, whether in bundles of mortgages in
collateralized debt obligations (CDOs), or more exotic products, investors
made a great deal of money. This encouraged others to copy these
strategies, to bid up asset prices. The increasing value of these assets
allowed even greater borrowing to purchase still more, further bidding up
prices, in an upward spiral producing bubbles that eventually popped.
Financialization as an accumulation strategy has brought not only severe
crisis with the failure of financial markets but has put the United States
in a position resembling that of a poor nation in debt to foreign
creditors—its currency declining, its trade policies favoring elites, and
its government demanding that some taxpayers pay more to recapitalize the
financial system while providing more tax cuts to the affluent and
corporations.
Toxic collateralized debt obligations are featured in most discussions,
but a central aspect of financialization is the growth in debt itself:
government debt (much of it the result of military spending and tax cuts
and other "incentives" for corporations and the rich), consumer debt of
all kinds, and corporate debt. The explosion in debt creation has powered
an economy that has strong stagnationist tendencies. The irrationality of
a class divided society is that profits accruing to corporations will not
be reinvested to produce things people and the society as a whole need and
want, because the purchasing power of the working class is kept limited
and the corporate rich will not pay the taxes needed by the state sector
to provide desired public goods.
There is an overinvestment in capacity to produce that cannot be utilized
within an irrational social structure in which the only effective demand
is that backed by adequate purchasing power. Overproduction in the midst
of unmet social needs characterizes the system, as does pressure on
workers everywhere to take lower compensation as a result of the class
power of capital and its ability to pit workers against each other. The
surplus produced and appropriated by capital cannot find outlets in
production and spills over into financial speculation where it is absorbed
in speculative bubbles that eventually collapse, spreading chaos and pain
through the economy.
Beyond these general tendencies is the connection between financialization
and rising inequalities and the declining economic fortunes of most
working-class people as prices for basics--home heating oil, gasoline,
health care, and food--have soared. In the United States, where the
victory of shareholder capitalism has been extreme (as opposed to
stakeholder capitalism in which workers, communities, and the public are
also considered interested parties whose views and needs must to a greater
extent be taken into consideration), workers have been squeezed the
hardest.
During the Bush presidency, the United States lost one in five
manufacturing jobs and that too is part of financialization and
globalization. Wages have been pushed down, pension benefits curtailed,
health care burdens shifted onto workers and their families, employees
made to work part-time or fired and hired back as "temporary" workers, and
so on--all in order to meet profit targets and to finance the huge debts
companies are burdened with as a result of widespread borrowing to finance
takeovers. More people are working part-time or as temporary workers and
are pessimistic about the prospects of their children. They see their
government captured by the corporations and the wealthy.
Widespread popular pessimism is justified because three trends interact to
make the prospects of the majority of U.S. workers bleak. The first is
continued globalization of the production of goods and services to
lower-wage venues. Less skilled work can be done more cheaply elsewhere.
Further, no amount of education can preserve many jobs that can be done by
well educated workers in India, China, Eastern Europe, and elsewhere.
Second, technology increases output per worker, meaning that each worker
can produce more, and when demand for output does not expand faster than
their productivity, fewer workers are needed. We see this in basic
industries such as auto and steel that once employed far more production
workers. Third, the jobs that are expanding are mostly low paid,
nonunionized McJobs. Furthermore, the unrelenting attack on unions
starting with Ronald Reagan's destruction of the air traffic controller’s
union set the precedent for using replacement workers to break strikes,
not to mention the ability of owners--thanks to National Labor Relations
Board connivance--to fire workers.
Anglo-American expertise in finance was presumed to be the lever that
would ensure the continued prosperity of these economies. Having pioneered
the growth of financialization in their own economies, promoting growth
through the creation of vast amounts of debt, and forcing its financial
regime and rules on the developing world through the mediation of the
International Monetary Fund and World Bank, capital has been expanding
financial operations into the so-called emerging markets. Now we see a
meltdown on Wall Street and the irony of foreign sovereign wealth funds
and other investors having to rescue the pillars of the U.S. financial
empire. How should we understand these contradictory developments? This is
a political question. It needs to be answered like any other economic
matter in which a small elite benefit at the expense of the many. Its
solution should not be how to allow them to continue to do so but how to
force social regulation so they cannot do so.
It is here that the loyal opposition, in the United States the Democratic
Party, in Europe the social democrats, and third-way triangulators
everywhere, by essentially accepting the power of capital, lose the
respect of working people, who now must self-organize by creating
anticapitalist parties if they are to defend their interests and change
the social relations that promise only a future of further exploitation.
In Die Linke, the German party formation far to the left of the Social
Democrats, we see a successful example of such a party, which is becoming
a force in that country's politics. As noted later in this essay, in Latin
America, the continent with the longest experience with the devastation of
neoliberalism, the masses have supported a variety of left parties that
promise to one degree or another to break with capitalist social
relations.
Crisis Two: U.S. Imperialism—Losing Hegemony
There have been two recent failures of U.S. imperialism: the discrediting
of the neoliberal Washington Consensus and the revulsion against the shock
and awe violence of Washington's arrogant militarism. The growing
condemnations qualify, I think, as a crisis for the continued easy
exercise of hegemony and for the ruling-class presumption that it has the
capacity unilaterally to run the world. After the failures of Iraq and
Afghanistan, the hubris of the Bush neocons has been discredited and their
program of wars and conquest has been questioned and perhaps now rejected
by most Americans.
One faction of this ruling class has seen international trade and finance
regimes favoring U.S. capital as key. The other wing has been quick to
threaten and take military action to reassert and impose U.S. hegemony.
The U.S. ruling class always employs both strategies, but the balance
between the two shifts with the state of the world and domestic politics.4
The two dominant ideological factions of this class can be characterized
by looking at the most powerful cabinet figures and policies of two recent
presidents. The key figure in Bill Clinton's administration was Robert
Rubin, the secretary of the treasury. Under Bush, Donald Rumsfeld, the
secretary of defense was the most powerful.
Of course, the dominant figure in the administration is Vice President
Cheney, a man of incomparable devious devotion to an imperial presidency
and the rewarding of a small elite, willing to use whatever means
necessary to intimidate and destroy opposition at home and abroad. With
Clinton, although the projection of U.S. power and use of violence were
important, the spreading of the Washington Consensus was the key foreign
policy. Under Bush it was shock and awe. Today both strategies are proving
unsuccessful to a remarkable extent. The failure of the Washington
Consensus to bring development is widely recognized, and despite its
imposition on dozens of countries in the 1980s and 1990s, it is now being
effectively resisted around the world. Again, this is not to say that both
policies have not done and continue to do great damage.
Let me comment briefly first on U.S. militarism and then more fully on the
demise of the Washington Consensus. Americans were led into a war in Iraq
on the basis of lies and are now unconvinced that the attack on Iraq was a
good thing. There is a dawning understanding that the United States not
only lost Iraq but that the situation in Afghanistan is further revealing
an inability to occupy and enforce regime change and imperialist
stability. The increased awareness that such adventurism is bankrupting
the country while domestic priorities like health care and jobs with
adequate pay need to be the priority is challenging imperial America from
within to an extent not previously seen.
Many Americans may still support the assertion of national power in easy
victories over weaker "enemies," but they have had their fill of long,
drawn out, costly misadventures. For many, the charade of "Mission
Accomplished" has produced reactions ranging from unease to hatred of
those who think them stupid and so easy to manipulate. U.S. imperial
ambitions in Iraq have led to much elite soul searching, and they have
promoted popular opposition not only abroad but increasingly at home where
the claim to be spreading democracy and fostering development are wearing
thin. Globally these pretenses are thoroughly discredited. The decline of
U.S. credibility and hegemonic power is a major part of what is new in the
world system.
Last year on the tenth anniversary of the East Asian financial crisis, two
points were widely made. The first was the acknowledgment that capital
market liberalization had brought instability and not growth. Even studies
by International Monetary Fund (IMF) economists came to this conclusion. A
paper coauthored by the chief economist of the IMF concluded that it is
difficult to make a convincing connection between financial integration
and economic growth once other factors are taken into account. The sudden
stop of capital inflow can be devastating. Second, neoliberal policies
were hardly mistakes. It is clear that neoliberal ideologues and Wall
Street interests pushed policies that harmed debtor countries while the
financiers profited from financial liberalization. It is not only radical
leftists who now hold this view.5
What took place in countries forced into accepting Washington Consensus
neoliberal policies was a process of accumulation by dispossession--a
construct introduced by David Harvey. This is a process in which working
people are divested of their assets and their rights. He has in mind the
privatization of water, health care, and education, goods that had been or
should be entitlements. The sale of these things in private markets
dispossessed those who could not afford what should have been theirs by
right. The term is a propos of what has happened in the aftermath of
financial crises. Global state economic governance institutions have
imposed structural adjustment programs and conditionalities that, in
privatizing public goods, dispossess people through debt repayment, the
loss of government benefits, and the liberalization of the local economy
to the benefit of foreign investors and domestic elites.
When the United States got in trouble in 2007, Washington rescued
financial institutions, rather than imposing the harsh medicine it
advocated and forced on others. Instead, it lowered interest rates and
bailed out those responsible for the crisis. Moreover, after decades of
denouncing the unsophisticated banking structures and practices and crony
capitalism of the third world, the United States financial system was
revealed as incompetent. The presumed sophistication of bank
risk-assessment models were shown as so much hogwash. The dishonesty
revealed in the subprime market was far more extensive than anything found
in any developing nation. Rather than letting the value of financial
assets find their equilibrium level in transparent markets, the U.S.
Treasury tried to organize a cartel to prevent this process and to shore
up the housing market and save the collateralized debt instruments from
collapsing, much at odds with what the Treasury Department had recommended
to others. As Martin Wolf wrote, "Not for a long time will people listen
to U.S. officials lecture on the virtues of free financial markets with a
straight face."6 Of course, countries like South Africa are left with
heavy debt burdens and the neoliberal policies embraced by the Mbeki
government, while the United States itself follows far different policies.
One impact of this unmasking of the interests that benefited from the
Washington Consensus policies was a rush by Western leaders to invite the
now more significant developing countries to take a greater role, to be
given greater voting rights, and to exercise more power in the Bretton
Woods institutions. By 2007, when the developing economies were accounting
for a far larger share of the world economy and many were growing
significantly faster than the richer economies that had long dominated
these regimes, we began to hear statements such as the one from Mervyn
King, governor of the Bank of England, that the IMF could "slip into
obscurity" without radical reform.7 That the developed countries with 15
percent of the global population hold 60 percent of the voting power at
the IMF and World Bank is perhaps finally no longer in their own
interests.
On the diplomatic front, there have been proposals to broaden the G-8.
Philip Stephens, the chief political commentator of the Financial Times,
proposes expansion to a G-13 by adding the IBSA countries (India, Brazil,
and South Africa), along with Mexico and China. The idea of such expansion
according to World Bank President Robert Zoellick is that they are being
invited to become "responsible stakeholders."8 It may be that the
reorganization of the world economy is producing a more inclusive
transnational capitalist class with a global interpenetration of ownership
most prominently through sovereign wealth funds but more commonly through
a diversification of ownership on a global scale and the increased
interaction among elites.9
At the same time, discontent with growing inequalities and the arrogance
of capital, local and foreign, has created local movements for fundamental
change and awareness through venues such as the World Social Forum that
another world is possible. There are conflicting pressures on the
governments of the South, from capitalists at home, the masses below, and
governments and international agencies representing foreign capital above.
While there is at the moment the expectation that these governments will
generally throw their lot in with the traditional imperial powers, there
has been increasing popular pressure against this.
There is of course the likelihood that financialization centered in the
North will continue to grow in the countries of the South, with banks and
other financial institutions (many foreign-owned) appropriating a larger
slice of the surplus. Such a repetition of the historic pattern of the
penetration of imperialist finance in these countries will undoubtedly
produce new and more severe crises and once again the people will have to
bear the cost. The alternative would have to be a fundamental shift to
social control over capital. We will have to use what we have learned in
opposing neoliberalism to say no to the growth of high-risk finance and
its depredations.
On the positive side, some third world governments have shifted in a
progressive direction, sometimes in an effort to strike a better bargain
for local capital, sometimes because of genuine commitment to a social
agenda, and often as the result of a compromised tension between the
interests at stake. In Latin America, after periods of military rule and
neoliberal policy dominance, Mercosur under Brazilian leadership has put a
crimp in the U.S. attempt to form a Free Trade Area of the Americas. As a
single market, it is the world's sixth largest economy. With 260 million
people and a combined Gross Domestic Product of over four trillion
dollars, it represents a formidable development.
The more radical Bolivarian Alternative for Latin America (ALBA) promotes
not only regional solidarity but social transformation based on socialist
goals and ideals. In 2007 the Mercosur and ALBA countries created a Banco
del Sur (Bank of the South) to offer an alternative development finance
instrument premised on solidarity and totally rejecting Washington's
thinking and controls.10 Some of the member countries have withdrawn from
the IMF and the World Bank. The Banco del Sur operates on a one country,
one vote principle and, building on the Venezuelan Bank for Economic and
Social Development priorities, favors cooperatives and community
ownership, offering below-market interest rates to public and social
enterprises. With a proposed capitalization of seven billion dollars, it
represents a serious challenge to the U.S.-controlled Bretton Woods
Institutions as well as the Washington-dominated neoliberal Inter-American
Bank.
The changes in the region have been dramatic as leftist governments have
come to power. In 2005 South America accounted for 80 percent of IMF
outstanding loans. Today the region's borrowing accounts for less than 1
percent of the IMF global loan portfolio. Along with the Banco del Sur
there is talk of a regional monetary system so that bilateral trade can
take place in domestic currencies with a goal of eventually creating a
common currency for the region.
Social movements are pushing the Banco del Sur to take a more grassroots
approach, to reject mega infrastructure (as pushed by Brazil) that
supports monocultures including agrofuels, and instead finance local
infrastructure to support food and energy sovereignty, produce generic
medicines, and extend membership to other countries of the South. Such
formations--always a mix of transformational and reformist
elements--illustrate important historical momentum. The failures of the
Washington Consensus and the increased strength of alternative centers of
power, both of the left and the national-developmentalist right, are
reshaping the global political economy. Also significant is the great
weakening of the U.S. dollar—its former strength having been both a result
and a source of U.S. power.
We are now witnessing the loss of what Charles DeGaulle once called the
"exorbitant privilege" of the United States, derived from its role as
issuer of the international currency. George Soros, speaking to the World
Economic Forum in January of 2008, suggested, "It's basically the end of a
sixty-year period of continuing credit expansion based on the dollar as
the reserve currency."11 The advantage the United States has enjoyed by
being able to borrow in its own currency has been undercut by abuse,
outsized current account deficits, and the buildup of dollars in foreign
hands. This has progressed to the point where the money creation and lower
U.S. interest rates implemented by the Federal Reserve to stave off
financial collapse have driven down the currency’s value and encouraged
further flight from the dollar.
Given the dollar's serious decline, there would be fear of free fall if
not for the fact that it is not easily replaceable in the short term.
While at present about a quarter of the world's monetary reserves are in
euros and two-thirds are held in U.S. dollars, there are predictions from
respected sources that the euro could be a more important reserve currency
than the dollar within a decade. These predictions are based on rising
inflation in the United States, its large current account deficits, the
costs of imperial overreach, and simulation models by leading
economists.12 Of course, the economic situation continues to deteriorate
everywhere; at this writing Europe is facing severe economic problems, and
there is a slow down in the "emerging economies" suggesting a larger
crisis than has heretofore been acknowledged. A renewed strength of the
dollar could be a reflection of greater trouble elsewhere rather than
economic recovery in the United States.
Finance capital has expanded in parasitic form. Not only have the masses
in the South suffered but the working people of the rich countries are now
being told they must bail out "their" banks and other financial
institutions. The class component of this redistributive model is becoming
more apparent. As the international political economy becomes more
multipolar U.S. hegemony will increasingly be challenged in other areas in
addition to the currency issue.
Crisis Three: The New Centers of Power
Let me turn then more broadly to the world historic phenomenon of the rise
of non-Western economic and political players. In 2006, for the first
time, emerging markets accounted for over 50 percent of global output. If
they continue to grow at the rate they have, forecasts project a very
different world by mid-century. Their rise will, I expect, prove as
significant as the emergence in the late nineteenth century of Germany,
Russia, and Japan. A 2006 study by PriceWaterhouseCoopers projected that
in the year 2050 the Chinese economy would be almost as large as that of
the United States in dollar terms, and that India would be the third
largest. A year later Goldman Sachs researchers predicted China would pass
the United States in 2027 and India's economy would become larger than
that of the United States before 2050. Investment bankers predict Brazil's
economy in 2050 will be as large as Japan's, and the Indonesian and
Mexican economies will be larger than those of the United Kingdom and
Germany.
PriceWaterhouseCoopers’ researchers expect the "E-7" (Brazil, China,
India, Indonesia, Mexico, Russia, and Turkey) will be about 25 percent
larger than the current G-7 and will be driving the growth of the global
economy. Whatever one may think of the details of such projections, there
is little doubt that momentous changes in relative nation-state economic
standing are in the offing. The role these new economic powers play in the
international political economy will matter significantly. Whether they
will be prone to new crises brought on by increased financialization of
the sort now plaguing the United States will also be important. Greater
financialization and fragility creates new dependencies and therefore new
possibilities for global crisis.
The importance of China is hard to overstate. It has already made advances
in a number of parts of the world. For example, at its recent summit with
forty-eight African leaders, Hu Jintao pledged to double assistance to the
continent, cancel debt owed by thirty-three countries, and provide five
billion dollars in concessional loans and credits. The Chinese president
has also been traveling in Latin America, which is increasingly orienting
its trade to Asia. Other developments in Asia, such as the move by the
region's finance ministers toward creating a common currency, also have
major implications for the dollar.
In Asia itself there are major historical changes underway. A recent
Foreign Policy essay begins: "Northern Asia is in transition. After 60
years of U.S. domination, the balance of power in the region is shifting.
The United States is in relative decline, China is on the ascent, and
Japan and Korea are in flux. The implications for Washington are
profound."13 What has been called a "Beijing Consensus" based on respect
for sovereignty and mutual economic benefit is widely appealing as an
alternative to Washington's version of spreading democracy and the "free"
market by cruise missiles and economic threats. Nonetheless, China is an
exploitative power repressive to its working class. It is a transitional
capitalist economy in which the children of high party officials have
appropriated the social wealth as a result of the defeat of socialism.
The point is not that these emerging state powers are progressive but
rather that a multipolar world offers other countries some space they did
not have when U.S. hegemony was unquestioned. There is emerging what Conn
Hallinan calls a "consortium of convenience,"14 the drift toward a
partnership among China, India, and Russia, which, if it matures, could
shift global power from Washington. Russia is selling advanced military
systems to both India and China and cooperating on energy. Daniel Drezner,
writing in Foreign Affairs, the publication of the establishment Council
on Foreign Relations, describes "a coalition of the skeptical," which
includes states ranging from Argentina to Pakistan and Nigeria, and a
revitalization of the nonaligned movement in an anti-Americanism that is
taking on renewed salience.15 It is possible then that we are entering a
period where there will be more room for progressive states to maneuver.
The need for access to energy on the part of India and China is a factor
in the Shanghai Cooperation Organization (SCO) formed in 2001, which
includes China, Russia, and the "stans" (Uzbekistan, Turkmenistan,
Kyrgyzstan). India has joined SCO and Iran, Pakistan, Mongolia, and
Afghanistan have been given observer status. (The United States was
pointedly denied observer status.) The SCO has declared that the United
States should leave the Middle East and is emerging as a counter to
NATO.16 While a country like India plays all sides in global maneuvering,
it has invested tens of billions in gas and oil interests in Iran. Such
actions, driven by the need for energy supplies, impact the prospects for
U.S. violence toward Iran and the future of U.S. military bases in
Turkmenistan, Kyrgyzstan, and Azerbaijan. China, which in a few years will
be the biggest consumer of energy in the world, has been exceedingly
active all over the planet in search of energy supplies and indeed other
commodities.
There is as well the emergence of a new "Seven Sisters," a term Enrico
Mattei coined to describe the seven Anglo-American companies that
controlled oil in the Middle East after the Second World War. Today it is
not ExxonMobil, Royal Dutch Shell, and the others but Russia's Gazprom,
CNPC of China, Venezuela’s PDVSA, Brazil's Petrobras, Saudi Aramco, and
Petronas of Malaysia that are the seven giant producers. Resource
nationalism is likely to grow in importance as these state-owned companies
squeeze the Anglo-American companies to force additional concessions. The
politics of the new Seven Sisters is, of course, diverse; the Saudis, a
staunch U.S. ally, are the most powerful. That Venezuelan oil is
controlled by the Chávez regime, which is trying to lead the nation toward
a twenty-first century socialism, is an important development, as are new
nationalizations in Ecuador, Peru, and Bolivia. Putin's takeover of
Gazprom symbolizes a reawakened Russian bear.
Crisis Four: Resources and Sustainability
The final and perhaps greatest crisis is that of the availability and
distribution of such critical resources as oil, food, and water. The
sustainability of human life is simply not consistent with inherently
wasteful capitalist growth.
The International Energy Agency's World Energy Outlook tells us that 50
percent more energy will be needed in 2030 than in 2005 (after adjusting
for efficiency improvements) and that almost three-fourths of this
increased demand will come from developing countries, with China and India
alone responsible for 45 percent of the increase in demand. After 2015,
China is expected to be the planet's biggest carbon dioxide emitter, ahead
of the United States, followed by India as the third largest emitter.
(Other studies show China is already the biggest contributor of greenhouse
gases.)
There are two political issues of some significance here. The first is
that the United States and other rich countries have used the lion's share
of the world's resources for a long time. Social justice requires not
simply that the developing countries help ration future use of
nonrenewable resources but that those who have long overconsumed bear a
greater than proportionate share of the cost of such a transition. Second,
there must be new patterns of human development premised on ecological
concerns as well as social justice and these must take a more prominent
place in the work of international councils, which now seem to accept that
the only important thing is terrorism. A sixth of the world’s population
enjoys an energy-intensive lifestyle. As the numbers aspiring to this type
of consumption grows, the planet's problems will increase. The American
Dream will become much more expensive and finally unsustainable. It cannot
be widely shared along present production and consumption patterns. Not
only are billions of people not benefitting from global capitalism, but
those who do are adding pressure to the resource base of the planet.
Today a quarter of all deaths in the world have some link to environmental
factors and most of the victims are poor people who are already vulnerable
due to malnutrition and lack of access to medical care. Malnutrition is
likely to become a more serious issue as food prices continue to rise.
Seventy-five percent of the world's poor people are rural and most of them
depend on agriculture. Since it is hard for them to make a living, there
is massive migration to the cities of the developing world. A billion
people now live in the slums of these growing cities where they scavenge a
living or eke out a marginal existence as street vendors. Agronomists tell
us that almost every country in the world has the soil, water, and climate
resources to grow enough food for its people to have an adequate diet.17
However, this would require serious land reform and technical and
financial support. In very few places are such policies practiced, and
food insecurity is said to affect close to half of humanity.
On the more hopeful side, we are seeing countries reject the World Bank's
insistence that they not subsidize agriculture. Malawi, which for years
hovered at the brink of famine, with five million of its thirteen million
people needing emergency food aid after a disastrous 2005 maize harvest,
decided to subsidize its poor farmers and was soon exporting hundreds of
thousands of tons of maize thanks to the help it gave the farmers, whose
yields grew dramatically. The United States, while willing to provide food
aid from its agricultural surplus (grown with huge federal subsidies to
U.S. farmers), refuses to assist farmers in poor countries. Even as it
insists that they follow the free market, the United States undermines the
ability of third-world farmers to compete by dumping free or low-cost
agricultural exports in their countries.
There is a growing use of maize to produce ethanol and soy beans for
diesel fuel, as well as an increased desire of large numbers of the newly
affluent to consume meat. Increasingly, grains feed animals and not
people. China's average caloric intake from meat consumption, for example,
has doubled since 1990, and given that it takes ten pounds of grain to
produce one pound of pork and double that for beef, such a growing demand
has consequences for those who find the staples of life becoming too
expensive for their own survival. The food-price index computed by The
Economist magazine went up by 30 percent in 2007 and will go up by far
more in 2008. Indeed, the United Nation's World Food Program issued an
extraordinary emergency appeal on March 23, 2008, to governments to
increase their collective donations by at least a half-billion dollars to
fund the higher cost of their feeding seventy-three million people in
close to eighty countries. They noted a 20 percent jump in food costs in
just three weeks along with the impact of the increase in oil prices on
shipping costs. Grain prices are rising at an annual rate of 80–90
percent. Rice prices surged 30 percent in one day in late March 2008,
having doubled in the less than three months since the start of the year,
provoking protests among the poor in some Asian countries where rice is a
dietary staple.
At the same time, what has been called the American diet of refined white
flour, corn sweeteners, and corn-fed animal fats is replacing traditional
diets for too many of the world's people. Refined sugars create obesity
and promote diseases such as diabetes by replacing the complex nutrients
of traditional foods. The uncontrolled profit motive is destroying health
and increasing medical costs dramatically as it poisons its customers with
adulterated and unhealthy foods. Each of these broad areas of crisis is
brought about by the normal activities of capitalists in a system that
accepts the right to profit at virtually any cost. The mass media and the
political system strive at all times to keep the public from understanding
the heavy burden on global humanity that these systemic priorities impose.
Conclusion
In my remarks I have stressed four areas of crisis of the contemporary
world system: the financial crisis, the loss of relative power by the
United States, the rise of other centers of accumulation, and resource
depletion and ecological crisis. The U.S. strategy remains to project
military power to control oil and other resources. The other wing of the
eagle is relying on appropriation of surplus through financial vehicles,
but this hardly exhausts its tactics. It also demands the enforcement of
protected monopoly rents by international patent and licensing regimes to
protect intangible property rights, from Microsoft Windows to Big Pharma
claiming ownership of the human genome. The extension of property rights
and the enclosing of the scientific commons need to be (and are being)
opposed by developing countries, which pay exorbitant licensing fees and
are not allowed to use what in the past would be common knowledge
inheritance.
Just as high-risk finance needs to be limited and socially controlled,
science should be liberated so that technological progress is not
artificially constrained and monopoly rents cannot be demanded. For the
developing world, the strategies of both wings of the imperial eagle have
been exposed.
The Washington Consensus has been discredited, and although the damage it
causes continues, it has not achieved Washington's goals. There has been a
uniting of much of the world into a coalition of the unwilling. If serious
left-wing governments took power in many countries of the South, there
could be dramatic reconstruction of the global political economy. However,
those who now run these countries are hardly revolutionaries. We can
expect elements of collaboration, cooperation, and contestation depending
on what pressures these elites are subject to. A progressive South Africa
could help shape an alternative to the Anglo-American capitalist world
system and influence new centers of power that claim to represent the
interests of the Global South and someday may have governments that
actually do so.
Notes
1. This section draws on William K. Tabb, "The Centrality of Finance,"
Journal of World-Systems Research, XIII (2007), 1.
2. Martin Wolf, "Unfettered finance is Fast Reshaping the Global
Economy," Financial Times (June 18, 2007).
3. John Bellamy Foster, "The Financialization of Capitalism," Monthly
Review (April 2007): 1.
4. William K. Tabb "The Two Wings of the Eagle," in John Bellamy Foster
and Robert W, McChesney, eds., Pox Americana: Exploring the American
Empire (New York: Monthly Review Press, 2004).
5. Kenneth Rogoff, Eswar Prasad, Shang-Jin Wei, and M. Ayhan Kose (2003)
"The Effects of Financial Globalization on Developing Countries: Some
Empirical Evidence," http://www.imf.org/research.
6. Martin Wolf , "Why the Sub-Prime Crisis is a Turning Point for the
World Economy," paper presented at the Globalisation and Economic Policy
Centre, Nottingham University, March 5, 2008,
http://globalisationandeconomicpolicy.org. The Powerpoint presentation,
which is available on the Web, has a number of useful graphs and tables.
7. Krishna Guha and Chris Giles, "IMF wants more say for rising
economies; Asian countries would have greater influence," Financial Times,
April 5, 2008.
8. Philip Stephens, "A Table for Thirteen," Foreign Policy
(January/February, 2008): 65.
9. Willaim K. Tabb, "Globalization Today; At the Borders of Class and
State Theory," Science & Society (January 2009).
10. Mark Engler "Latin America Banks on Independence," In These Times
(February 2008): 43.
11. Craig Karmin and Joanna Slater, "Dollar’s Dive Deepens as Oil Soars,"
Wall Street Journal, February 29, 2008.
12. Jeffrey Frankel, "The Euro Could Surpass the Dollar Within the Next
Decade," (March 18, 2008), http://www.voxeu.org. 2008.
13. Jason T. Shaplen and James Laney, "Washington's Eastern Sunset; The
Decline of U.S. Power in Northeast Asia," Foreign Policy
(November-December 2008): 82.
14. Conn Hallinan, "Challenging a Unipolar World," Foreign Policy in
Focus, January 21 2008, http://www.fpif.org/fpiftxt/4904.
15. Daniel W. Drezner, "The New New World Order," Foreign Affairs
(March/April 2007).
16. William K. Tabb, "Fumbling Through the Great Game in Eurasia: the
British and U.S. spreading 'Freedom' through Invasion, Occupation, and
Regime Change," Z Magazine (November 19, 2006).
17. Fred Magdoff "The World Food Crisis," Monthly Review (May 2008).
William K. Tabb taught economics at Queens College for many years, and
economics, political science, and sociology at the Graduate Center of the
City University of New York. His books include Economic Governance in the
Age of Globalization (Columbia University Press, 2004), Unequal Partners:
A Primer on Globalization (The New Press, 2002), and The Amoral Elephant:
Globalization and the Struggle for Social Justice in the Twenty-First
Century (Monthly Review Press, 2001). He can be reached at
william.tabb@gmail.com. This essay is adapted from a talk presented to the
Amandla Conference "Continuity and Discontinuity of Capitalism in the Post
Apartheid South Africa," in Cape Town, April 4–6, 2008.