Capital & Competition

Three remarks on the "crisis in Japan"

The Japanese national economy is sliding into recession. It is shrinking instead of growing.

The facts of the case are rather banal, since recession is a periodically recurring "phenomenon" of a capitalistic economy. Capitalistic entrepreneurs, with their investment strategies, extend social production beyond the extent to which their commodity can be profitably sold, attempting to win the competition for revenue and profits. Investment is financed by credit in expectation of future returns. At some point, sales slump and traders and producers run out of cash. Capital advanced no longer yields a profit, credit granted and taken is no longer converted into capital, and debtors go bust, hurting creditors as well. By and large, financial difficulties increasingly occur among firms as well as between firms and banks, raising demand for credit, which is decreasingly met for exactly the same reason, so that difficulties to make payments become general. Production plants, which have been flourishing and expanding up to now, are closed down and the employees depending on them are laid off, because profit can no longer be realized.

Stock market crash and currency turbulence in East Asia: Thailand
The ups and downs of an "emerging market" and their basis in a worldwide over-accumulation

For years Thailand has been the subject of international admiration. "Sensational growth rates," a building boom sending Bangkok into the ranks of the great metropolises in the shortest period of time, a never-ending rise on the stock-market, the baht as one of the most stable currencies in Southeast Asia, and annual capital inflows of billions of dollars were taken as a proof of trust in the country. It was unanimously held that the success of this "emerging market" was owed to a government that had carried out all the correct policies demanded by the G7 countries and the IMF, namely, "liberalization," "free capital movements" and a market economy. Thailand was considered a "model" that not only other "developing countries" but even Germany could learn from, especially when it came to cheap labor ; so said German president Herzog during an Asian trip. During the spring of 1997, though, "worries in the kingdom of growth" suddenly grew. Foreign investors withdrew money, the stock market slid, and speculators bet on the depreciation of the national currency. The government tried to stop the trend by wasting some billions of dollars defending the baht's peg to the American currency. After surrendering to the money market, the Thai currency lost more than 35 percent of its value within three months. Internal demand collapsed, business and banks went bankrupt, foreign producers closed plants. Moreover, the worst was still to come, as the government had to face losses of 14 billion dollars from foreign currency exchange contracts expiring at the end of the year.

Old Hunger — New Hunger

The current flurry about the increasingly miserable food situation is kind of odd. After all, hunger has its permanent place in the modern world, is regularly brought into the headlines by humanitarian organizations on public holidays, is entrusted to private charity, and just as regularly taken off the agenda in favor of other topics. Nor has this particular conflict, which is centered on the price of food and arouses the current indignation, come into the world in the year 2008. Millions of people — redundant figures of the global market economy — have long since had trouble paying for their food. Statistical data exist aplenty, and are pulled out again in view of current events, as to how many millions of “households” in how many countries spend their “income” for the most part on food. Even the insight that “anyone who survives on less than a dollar can hardly feed himself, even in the face of smaller price increases” could have been had earlier.

“Land Grabbing” — News from International Capitalism
States buy up other states’ territories for the cultivation of ‘strategic agricultural goods’ — without being invited by the established global economic powers!

Political powers and the business people empowered by them “grab land” — this is hardly news. Tapping natural resources in any part of the world is a matter of fact. Developing and exploiting mineral resources requires land rights, on which claims are laid. The cultivation of crops in regions privileged by nature characterizes the modern form of agriculture practiced and propagated by North American and European multinationals. Running plantations requires a sufficient supply of water and extensive land, roads, and ports at one’s disposal. The transportation of liquid and gaseous energy resources to the centers of capitalism, which uses and markets them, requires a global system of pipelines, for which entire states are defined and treated as transit territories. “Land grabbing” takes place all the time for all these cross-border politico-economic needs. And as a further rule, money is paid whenever land under foreign dominion is acquired — proof of a ‘fair deal.’ The current “battle over the Arctic” and over sea beds that have a rich potential in natural resources but no owners also shows that intentions to annex territory politically are not dying out at all — they still belong to the national rights that states both claim and deny each other.

Taking stock of The U.S. real estate crisis
The rise and fall of mortgage lending

Five years after the crash of the housing market in the United States, the crisis has become somewhat permanent. Experts see in the conditions of this sector of the national economy either the worst crisis since the Great Depression or, when prices and sales figures temporarily rise again a bit, the famous light at the end of the tunnel. All the same, Fed chairman Bernanke’s summary of the devastation that the mortgage crisis has caused homeowners, the financial world, and the U.S. economy in general is sustained by his concern for how long the downturn will continue or whether land is at last again in sight. He is also quite clear about the social and human costs of the crisis, namely, the growing number of those who are homeless or about to join them.

The Crisis in Argentina
A Case of Innovative Dollar Imperialism

Argentina “is recovering.” It’s true that the population has been starving there for over two years now and will continue to do so to an extent never before seen in this — as the wantonly uncomprehending analysts report — “basically rich” country. Even today there isn’t a whole lot of production and trade taking place, not nearly as much as before the “major payments crisis” around the turn of year 2002. And the nation as a whole still hasn’t regained much international credit. However, the speculators are active once again. They are speculating within Argentina, on its stock exchange for example, which has apparently survived every economic catastrophe. They are speculating on Argentina, on its assets and government bonds that supposedly possess a bit of value again and could once again bring in some good money, even though the newly elected Kirchner administration has left much to be desired. Of course, the country must first of all fulfill a few conditions: the IMF and Argentina must agree to new loan guarantees and conditions; the country must newly resettle and service its national and international debts; some progress needs to be seen in the balancing of the national budget; in other words, the country must once again become ‘calculable’ and make a return to ‘normalcy’ in the eyes of the business world and according to its standards. The financial markets, in this sense totally unperturbed, are now handling the entire country as an object of their speculation that has become interesting again, a country in which the entire monetary system recently collapsed under their very direction.

Currency and its Value
The Competition of Nations for the Wealth of the World

It’s no surprise that the participants in the global financial business perceive its precarious state. It is more astonishing that nobody can be found willing to distance himself from the daily disseminated concerns about the latest “developments” on the financial markets, and to criticize the circus that plays itself out in elaborate contrast to unemployment and starving Africans. Especially as this circus arises from the antagonism between the various nations in which the free market economy is raging, and gives this antagonism a new impetus.

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