November-December 1999

(This is the third, and last part of the article. The previous two parts were appeared in May and September issues. In this part we shall deal the neo-colonial form and moribundness of finance capital)

Neo-colonialism — Finance Capital’s Lethal Medicine

In this period of ‘globalisation’, in this decade of the 1990s, finance capital has turned more destructive, more ruthless, more treacherous than even in the colonial days. Smashing national borders, appropriating local industries, destroying national currencies, capturing raw material resources, controlling stock markets, dominating even culture, sports, entertainment...... such has been the merciless onslaught of finance capital not only against the third world but even against weaker capitalist/ imperialist countries. The ferociousness of its maniacal drive to conquer, which was most crudely visible in South East Asia, Russia and Brazil, is destroying country after country, strangulating the very life-lines of their existence.

In Russia, during the very first injection of " shock therapy in 1992, some $500 billion worth of Russian assets — including plants of the military industrial complex, infrastructure and natural resources — have been confiscated (through privatisation programmes and forced bankruptcies) and transformed into the hands of Western Capital.36 In Thailand, during the 1997 crash 56 banks and financial institutions were closed down on orders from the IMF and unemployment virtually doubled overnight. In South Korea the IMF ‘rescue operations’ unleashed a chain of bankruptcies, resulting in a shutdown of an average of 200 companies per day, throwing out 4,000 workers per day. With stockmarkets crashing the TNCs are moving in to take-over at throwaway prices, the huge South Korean chaebols. In Brazil the impact has been even worse with $30 billion leaving the country in just three months since July ’98, devaluation of the Real, massive inflation, closures of companies and banks, and huge lay-offs. In all the socalled bail-outs intended to ‘rescue the country’ not even a dollar entered South Korea, Thailand, Indonesia or Brazil; it was ed to reimburse the ‘institutional speculators’; to ensure that they would be able to collect their multi-billion dollar loot.

Never could even the colonialists dream of extracting such vast amounts of loot in such a little time, or so easily take over industry and finance at throw away prices. With capital markets (i.e., company’s value on the share markets) having crashed, the TNCs move in for the kill. Between June 30, ’97 and December 15, ’98 the fall in value of stock markets was: Russia 88%, Indonesia 85%, Thailand 54%, Brazil 52%, South Korea 45%..... Currency speculation in Asia and Latin America has led to the dislocation of even the local comprador bourgeoisie (let alone national capitalism) and the demise and greater subordination of the local business clites, leading to unprecedented concentration of global economic and financial power In the wake of the IMF sponsored bailouts, global corporations have acquired control over numerous local enterprises and financial institutions.

Besides, central banks of third world countries have been reduced to pawns of international finances, with little or no independent powers left. Privately held money in the hands of institutional speculators far exceeds the limited capabilities of the world’s central banks. The latter are no longer able to fight the tide of speculative activity. This was apparent on all occasions where the respective central banks in Thailand, Indonesia, Russia, Brazil, etc., first attempted to prop up their failing currencies by selling dollars, but finally gave up.

What has now been experimented with in South East Asia and Latin America is being institutionalised by the IMF in league with Wall Street Bankers. They are demanding and enforcing total deregulation of capital markets. A formal verdict to deregulate capital movements was taken by the IMF Interim Committee in Washington in April 1998. Also they are seeking to push through the highly dangerous ‘Multilateral Agreement on Investments’ (MAI) which defacto grants rights to Banks and TNCs to override national laws on foreign investments. What is more, the Wall Street Bankers are seeking greater control over the INW through their Washington mouthpiece, ‘The Institute of International Finance’. With a number of initiatives, their aim is to gradually transform the IMF from its present international status into a full-fledged bureaucracy which more effectively serves the interests of the global banks. Leading this initiative are the ‘big six’ Wall Street commercial banks (including Goldman sachs, Lelunan Brothers, Morgan Stanley and Salomon Smith Barney). Already there has been a close consultations between these Banks and the IMF during each crisis. Overshadowing the IMF, the US Congressional Appropriation Bill has identified precise loan conditionalities to be inserted in future aT bail-outs (including provisions which facilitate the dumping of US grain surpluses).

With the removal of all remaining barriers to capital movement and implementation of the MAI, the stranglehold of international creditors over the life-lines of the econon-des of sovereign countries will increase tenfold. The financial sharks of neo-colonialism seek to fully deregulate currency markets and dismantle all state control over monetary policy. Neo-colonialism in the present decade has acquired a far more lethal and rapacious characteristic than earlier and if not resisted at every step, it will swallow up every aspect of the economies of backward countries. Countries will be devastated, its people ruined and even its limited sovereignty crushed.

Moribund Capitalism

When the bulk of society is non-productive, capitalism has reached the epitome of its decadent, parasitical and moribund character. With the people of the world being pushed deeper into unemployment, poverty and destitution, with the shrinking of markets for commodities, with the diminishing opportunities for profitable investment, with the crisis resulting from an accumulation of surplus capital... greater and greater surplus capital gets deployed in speculative and pure financial outlets. This in turn further aggravates the crisis, as it further restricts growth of the market by not creating any new industry, involving labour power and only leads to militarisation and war. Yet it is labour and labour alone that is the source of all value and it is part of this surplus value which is looted through speculation. Like interest, rent, etc., this is the super-profits skimmed off the back of the toiling masses by the propertied classes. When billions were extracted by the speculators from the South East Asian crisis, the masses of entire countries were driven to pauperisation and unprecedented misery. This capital is more pernicious, more devastating and more lethal in its ferocity against the people, but creates nothing, no goods, no commodities, no industry – except gigantic wealth for a handful.

This characteristic of imperialist finance capital was pointed out by Lenin eighty years back when he said, ".... the development of capitalism has arrived at a stage when, although commodity production still ‘reigns’ and continues to be regarded as the basis of economic life, it has in reality been undermined and the bulk of the profits go to the ‘geniuses’ of financial manipulation. At the basis of these manipulations and swindles lies socialised production; but the immense progress of mankind, which achieved this socialisation goes to the benefit of .... the speculators...."

If this was the situation in the early years of the century, as we reach the end, it has become a thousand times more acute. In fact, in a country like Britain today a mere 21% of the workforce (or just 7% of the total population) are employed in manufacturing industries... and even of this, 10% are involved in the manufacture of armaments, a totally non-productive, wasteful occupation. The bulk of the population is involved in the service sector. But Britain is not alone in this, all the industrialised countries, and, now, even the third world, have the service sector dominating their economics. This is evident from the following table :

Note : ‘Industry total’ : comprises mining, manufacturing, construction, electricity, water and gas.

So, in the industrialised countries some 30 to 40% of the GDP goes towards productive activity in industry and agriculture, while the balance is in the unproductive service sector. In America a bare 28% goes to the productive economy, and this also includes the giant military-industrial combine. The huge service sector involves the entire banking, finance, insurance, real estate, tourism, transport and communicatins, entertainment, education, health care, etc industries, and also the running of the gigantic state machinery. The bulk of this is unproductive and lives like a leech off the productive economy. It goes basically to service the ruling classes, gather funds for them, provide them with leisure and entertainment, produce super profits for them, create a media that blinds and numbs the masses and develop a repressive structure that protects their interests. The situation is now much the same in the third world countries where anything from 40 to 60% comes from the service sector. Besides, even of the shrinking productive economy, a sizable section goes toward the armaments/space industries which is totally wasteful.

Can such a system have any rationale whatsoever ? It cannot... it can but go from one crisis to the next... and with each crisis, finance capital will push the burden of the crisis onto the masses of people, extricate itself, reorganise its capital and prepare for yet another crisis. The result : ever-increasing suffering of the masses, inhuman poverty and destitution, coupled with growing state-sponsored brutalities, to keep the people in check.

If society, on the other hand, were to really grow, prosper and flower, it would require that the minimum of people be maintained in the non-productive sector of the economy, with the bulk being involved in productive activity in agriculture and industry. But, this of course, is only possible if the profit motive is put to an end; if the leisure class ceases to exist; if the gigantic state machinery is smashed, and a peoples’ state is built with the bare minimum of a bureaucracy, and with a peoples’ militia, courts and armed forces, for defence and order; if leisure and entertainment is made part of the life and culture of the masses, which helps to build bonds between people rather than alienate them as with the present TV culture; and where only those (able-bodied) who work, will have the right to live decently. But this is a socialist system of society... which can grow and flower only on the graveyard of imperialism.

Notes

(36) Bob Djurdjevic, ‘Return Looted Russian Assets’, Phoenix, August 30,’98;

(37) Tata Year Book 1997-98; page 235.

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