Interesting post from the LEAP blog regarding the latest bank bailout. I liked the conclusion.
Profit-motivated growth has brought us to an historical crossroads. The capitalist road leads to economic destruction, warfare and the collapse of life-support systems. If the historical process could speak to us directly, it would surely urge humanity to move forward to a co-operative social set-up where a financial system that serves only shareholders and speculators is put out of its misery and corporations that plunder the planet become the property of the people as a whole.
November 5, 2009 at 6:56 pm |
And where, with reference to the former Soviet Union and 1970s Britain, does the socialist/communist road lead us? Economic destruction and the collapse of life-support systems for sure. Not war – the pursuit of socialism makes war unafforable along with more desirable things like
– food
– healthcare
– education
Furthermore, how is your unequivocal support for trades unions consistent with a “co-operative social set-up”?
There are many lessons to be learned from the credit crunch – none of them spell the end of capitalism (which, unlike socialism, has as its basis the ability to innovate and reinvent itself). Best leave those lessons to those who actually understand economics.
November 6, 2009 at 11:19 am |
I feel that I let you off very lightly yesterday. Where in the world has the financial crisis resulted in “the loss of life-support systems”?
Let’s recall that 38 million people died of starvation alone under Mao’s “Great Leap Forward” (before even glancing at the number of people murdered for political reasons).
Then let’s look at the Winter of Discontent, where the socialists created a situation in which
– Ports and roads were picketed, freezing the supply of essential goods
– “practically no ambulance services operated”
– bodies were left unburied
– piles of rotting rubbish were dropped in public spaces, attracting rats and posing massive health risks
Then come back and tell us about “lessons from history”.
The only parallel worth drawing is that some funeral parlours (in the pay of the State) are delaying burials until paid by the DWP. This is because there’s not enough cash in the government till. Why? Not because of capitalism, but because the socialist state wasted so much money (for so little reward) during the fat years.
November 6, 2009 at 11:30 am |
If you are calling New Labour a socialist party then you are very much mistaken Richard.
November 6, 2009 at 11:37 am |
I accept your point on NL as a not particularly socialist party.
I look forward to your response to my critique of the “lessons of history” and “the loss of life-support systems”.
November 8, 2009 at 5:06 pm |
“Where in the world has the financial crisis resulted in ‘the loss of life-support systems’?”
“United Nations food agencies report more than one billion people, or one sixth of the world’s population, are going hungry.”
“The report pinpoints several factors, which make the current crisis particularly devastating. It says the economic crisis has cut the amount of foreign aid and investment going to poor countries. It also has reduced remittances from people working abroad.”
“It says high food prices are causing families to fall deeper into destitution and the hunger-poverty trap. It says an across-the-board drop in trade and financial inflows has resulted in lower earnings from exports.”
http://www.voanews.com/english/2009-10-14-voa28.cfm
“It is likely the FAO figures significantly underestimate the number of people suffering from hunger. A study published earlier this year found that 12 million children are at risk of inadequate food in the United States (see, “US: 12 million children face hunger and food insecurity”). FAO figures estimate the total number of hungry people in the entire ‘developed world’ (including the US and Europe) at 15 million.”
http://www.wsws.org/articles/2009/jun2009/hung-j20.shtml
No middle class starvation in rates yet. Although I believe there was a shortage of asparagus reported at a Waitrose in Surrey .
November 8, 2009 at 5:07 pm |
That should have read:
No middle class starvation rates in yet. Although I believe there was a shortage of asparagus reported at a Waitrose in Surrey .
November 9, 2009 at 11:45 am |
Thanks for this Sean. I agree that high food prices are a huge problem, but I don’t agree that the unaffordability of food is a direct consequence either of the financial crisis, or of global markets in general.
High food prices are attributable largely to government-imposed supply-side inefficiencies
– massive subsidies for domestic food production in rich countries, which restrict the attractiveness of investment in food production in poor countries (e.g. Europe)
– massive subsidies for non-food production (notably, ethanol), which are driven by lack of political will to introduce universal and appropriate economic solutions to carbon emissions (e.g. USA)
– weak governments in poor countries that allow individuals to dismantle market-facilitating institutions for their personal gain at society’s expense (e.g. Zimbabwe)
http://www.independent.co.uk/opinion/leading-articles/leading-article-soaring-food-prices-should-lead-to-the-end-of-subsidies-831477.html
http://www.timesfreepress.com/news/2009/apr/16/ethanol-subsidy-hurts-food-programs/
http://news.bbc.co.uk/1/hi/business/4567158.stm
Food prices were high, and hunger was a problem, long before the financial crisis hit – despite unprecedented levels of international trade and remittance. The long-term solutions lie in reversing the policies outlined above in order to help food markets work better – more capitalism, not less.
November 10, 2009 at 10:17 am |
Interesting Richard. Still there does seem to be significant evidence, not just from the report I cited above, that the financial crisis has impacted upon a large number of people – causing great hunger across the world at present. The high price of food before the global economic turbulence was caused by a number of things, but partly by speculators sending the price of oil soaring as I remember.
Also we seem to both share a common idealism and internationalism. However, the chances of seeing the sort of libertarian global trade reforms you wish to see, or indeed the internationalist socialism I wish to see – with production based upon need not profit – appear remote at present.
In the meantime, how do we deal with a billion hungry people? A dose of the shock treatment of market fundamentalism cannot work in the short term – surely. Recent experience has shown that. What, then, would you suggest?
Furthermore, in light of the iniquities of food subsidies, should, for instance, the low paid and unemployed in rich, developed countries such as the USA be relieved of their food stamps? This would seem to be the sort of intervention by the state into the natural order and regulation of the market that you so abhor. By the way there are currently believed to be around 30 million Americans in receipt of food stamps. Not much evidence there of the trickling down of the enormous wealth generated by Wall Street prior to the credit crunch – or indeed the subsidies handed to these financial institutions on behalf of the people, by the state, to keep those same institutions afloat.
“More capitalism, not less” – indeed.
November 10, 2009 at 4:51 pm |
Certainly, high oil prices drive high food prices.
Price instability in the oil market results from a near-vertical supply curve. All oil investments (extraction, refining, transport, distribution) are very long-term in nature – unfortunately a large amount of the world’s oil reserves are under the control of “bullies” like Putin and Chavez, not to mention OPEC, which means that supply is very price-inelastic. The oil-price run up to $150 a barrel was attributable to demand expectations in the face of limited supply, not purely down to speculative gambling.
People in poor countries are “worse-off” as a result of the financial crisis only to the extent that they were “well-off” before, under capital availability and global growth that turned out to be unsustainable for a whole host of reasons. But as I’ve noted, food prices were very high before the crunch.
Sure, I’d love a solution to the world’s starving. We spend a lot of time debating how much support should be given to the poorest members of UK society – sometimes we should be reminded that the worst-off in UK are still in the top 10% of global material well-being on virtually every measure. But the efficacy of aid programmes is highly questionable – as Dambisa Moyo has written, they tend to prop up the very institutions that hinder the functioning of markets and they therefore fail to encourage efficient agriculture. What starving people in Africa really, desperately need is better government and free trade.
Can’t claim much knowledge of US food stamps. But if they are a pure transfer payment to be freely spent(like unemployment benefit) then it’s just a question of how you want society to deploy its resources within its own borders. The world’s starving don’t care what sort of welfare state we operate over here.
If, on the other hand, they carry “buy America” provisions, that constitutes subsidy to domestic production that artificially drives down the price available to worldwide producers, therefore discouraging optimal production.