2/17/2016

The 3th Monopolistic Depression


Spanish
http://isj.org.uk/the-global-crawl-continues/

The relationship between the current depression and monopolies seems to elude analysts. I  introduced "Monopoly Depression" in the Google searcher box and the only entries (a part of this blog ) refer to the game of Monopoly and som extrange  mental derangement.
Not a single reference elsewhere. Shocking. I tried "Monopolistic Depression". In this case Monopoly game did not apear but google continue to insist in a rare variety of mental depression. No one single economic reference.Finally I tried "Monopolist Economic Depression" and in this case only six results, all referred to Exit Capitalism. More shocking still. Well, whether we like it or not, there is a very strong relationship that closely links the two phenomena.

 Peter Thiel (Competition Is for Losers): "The opposite of perfect competition is monopoly. Whereas a competitive firm must sell at the market price, a monopoly owns its market, so it can set its own prices. Since it has no competition, it produces at the quantity and price combination that maximizes its profits....Actually, capitalism and competition are opposites. Capitalism is premised on the accumulation of capital, but under perfect competition, all profits get competed away...Only one thing can allow a business to transcend the daily brute struggle for survival: monopoly profits... Monopolists lie to protect themselves. They know that bragging about their great monopoly invites being audited, scrutinized and attacked. Since they very much want their monopoly profits to continue unmolested, they tend to do whatever they can to conceal their monopoly—usually by exaggerating the power of their (nonexistent) competition."

Depressions feel good to monopoly capital.
  • With depression monopolists gain market share at the expense of non-monopoly sector.
  • With depression the profits of monopoly sectors remain and even increase because only monopolists can maintain and even increase their prices in Depression.
  • According to the shock doctrine  (Naomi Klein), monopoly capital take advantage of disasters. In the shock and confusion generated by Depression monopolist take advantage to introduce neoliberal regulations to ensure their businesses and their monopoly rents.
  • Depression creates substantial opportunities for capitalist concentration: state borrowing difficulties facilitates the privatization of public enterprises and public services.
  • The crazy competition caused by the economic depression in non-monopoly industry (suppliers, subcontractors, workers, etc) implies the fall in prices, rents and profits (deflation), lowering costs for the monopoly sector and therefore increasing their monopoly rents. This means that the fall in rents and profits of some, the majority, increases the proffits of the minority, the monopolists. Monopoly sector increases its share of global income at the expense of the income of everyone else.
  • Depression means redistribution of rent and wealth in favour of the wealthiest. But this redistribution means proletarization. Monopoly capital  is the true esence of capitalism and the perfect machine of total apropiation or destruction of the means of production still not in their hands. Monopolistic depression means proletarization at a great scale.
    • Depression can be dangerous for monopoly capital if the people or the states react against their interests (economic nationalism, controls on capital movements, renationalisation, socialization, anti-trust regulations, etc.) Hence its diligence introducing regulations (bilateral free trade treaties, the Treaty of Maastricht, NAFTA, TTIP, TPP, etc.) to ensure perpetual depression and constitutionalising inability of democratic people and states to react in front of monopoly depression. The TTIP, TPP, and the like, constitutionalize the Monopolist Depression.
    • In 2011 I published an article entitled "Phase 4, Permanent Depression", where I promised the delivery of Chapter III, once finalized Chinese econòmic "miracle". Now that the Chinese econòmic "miracle" is up we are entering Chapter III of the Great Monopolistic Depression of XXIth century..

    I- The end of the disengagement of emerging countries


    Brad DeLong: "At some point we must stop calling this" The Great Recession "and start calling it "The Great Depression" ".

    The term "depression" causes chills and is forbidden in the media, but here and there, insistent timid warnings are arising  that we have something much deeper and more dangerous than a long recession, some thing like a "secular stagnation" (the term would be borrowed from Keynesian economist Alvin Hansen who used it in the forties. Krugman defines it as "a persistent situation in which a depressed economy is the norm, punctuated with increasingly sporadic episodes of employment recovery ")

    1.Chinese decoupling


    Chinese demand for raw materials, combined with speculation on the stock market and lax monetary policies, massive borrowing and massive rounds of debt monetization (Quantitative Easing) induced a temporary decoupling of raw materials exporting countries, and a brake on the overall demand downward trend, thanks to the increased demand of the BRICS. This stage is nearing completion. China will never replace the US or Europe as a global consumer locomotive, since the overall global monopoly structure excludes improving conditions for Chinese workers.

    China has been trapped at the end of the chain of the international division of labor. He will never evolve as a new Japan or a new South Korea. If in the 90s it seemed that the bureaucracy controlled the process of opening up to capitalism, in the next decade multinational capital took definitive control  of Chinese economy. Transnational and foreign capital controls the majority of the industrial sectors of the country (60% of all exports and 80% of exports of electronics and machinery sector). Most Chinese brands have succumbed one by one. Foreign companies not only control the export sector but are taking positions in the service sector (consulting, real estate, insurance, auditing, messaging, entertainment, refreshments, sport, supermarkets, etc.) and even in public services  (water supply, sewerage, sanitation, education, ...).

    After the 2009 economic and financial crisis, the huge public investment stimulus (thanks to the huge dollar reserves accumulated after years of trade surpluses with USA) has not resulted in a better distribution of income and wealth (domestic demand) but quite the contrary. China is the country with the highest inequality in the world (after Nepal). In addition, most of the new capacity has been installed in the export sector (subject to the multinational monopolies) counting on a strong recovery in global external demand. But the recovery in demand from the US, EU and Japan has been all but disappointing so China kept irrationally pulling and pulling, resulting in a  massive overcapacity crisis aggravated by heavy debt that threatens to lead to a great financial crisis.

    2. Export crisis


    Global growth since the crash of 2008 has largely been driven by Asia and Latin America; Only Asia accounted for almost 60% of global growth in the period 2009-2014.
    But growth in Asia prior to the 2008 financial crisis was driven by exports of large transnational corporations relocated there, the advanced capitalist countries, particularly the US.

    However, as a result of this relocation (fewer jobs) demand from developed countries was falling persistently, thus, Asian countries saw their exports were plummeting. The following chart shows the growth of exports every year of Asian countries.

    http://blogs.lclark.edu/hart-landsberg/2015/08/03/signs-of-global-slowdown/


    The inter-Asian trade (basically composed of parts and components) is also falling as shown in the following graph:

     http://blogs.lclark.edu/hart-landsberg/2015/08/03/signs-of-global-slowdown/


    The figure below shows the aggregate exports (China, Hong Kong, Korea, Singapore, Taiwan and Thailand). Declines in exports to Japan and the EU are particularly striking.

    http://blogs.lclark.edu/hart-landsberg/2015/08/03/signs-of-global-slowdown/


    The Wall Street Journal and the IMF itself recognized that this is an economic model (based exclusively on Asian exports to the West) that is failing everywhere.

    Spending massive investment in China has helped support exports and intra-Asian trade. After the collapse of exports in 2009, Chinese authorities launched a huge investment program to keep pace with activity and wait for exports recovering . The problem is that exports dit not sufficiently recovered. The recovery in so-called emerging countries, Latin America and Africa, proffiting from exports to China, was not enough given the continuing fall in demand in the core countries. With the fall in demand, now global, China has an unparalleled problem of overcapacity.

    But China is still in the same addiction (fearing uncontrollable riots?). Since February 2014, China has approved at least 2,300,000 million dollars in new infrastructure projects to counter the growing economic slowdown. But these infrastructures, apart from real white elephants, are not aimed at the needs of the domestic market but, as above, are aimed mostly at strengthening the export model (which requires low wages, resource depletion and environmental destruction), subject to the monopoly globalization.

    Governments across the Asian regions have similar strategies and launched a blind competition among them to attract and retain business investment monopoly at the expense of keeping lower labor costs as possible.

    3. Fall in the price of raw materials



    Gillem Tulloch: "China is consuming more steel, iron and cement per capita than any other industrial nation in history. All railways will never make money, roads where no one drives or cities where no one lives. "

    Another indicator of the overall fragility is the decline in prices of raw materials. Of course, this trend is largely a result of the above. The decline in exports from Asia has resulted in a decline in regional manufacturing activity and a drop in demand and in prices of most commodities (prices of copper, aluminum, platinum, oil, coal, iron, etc., are already close to 2009 levels and some have already fallen below)

    These sharp declines in commodity prices threaten to drastically reduce growth rates of African and Latin American countries, most of which depend on exports of these commodities to finance imports needed to support the production and internal consumption, threatening to further reduce Chinese exports (the vicious cycle of depression).

    4. Rising debt



    Since the 2008 financial crisis the world has leveraged further. The total global public and private debt has increased from $ 143 trillion in 2007 to 200 trillion in 2014. The overall debt rose from 258% of world GDP in 2007 to 270% of it in 2014. The capitalist world  never in its history has been so indebted.

    While Europe has seen a transfer of private debt to public debt through bailouts, in China, the total debt, including the financial sector, has almost quadruplicated since 2007, reaching the equivalent of 282% of GDP.


    Before the crisis of 2008, all European nations, apart from Portugal and Greece, were reducing their level of debt to GDP. Most of Europe was reducing public debt to manageable and historically very low levels. Irish debt, for example, was very low (27%). It seemed as if they were preparing for the subsequent massive bailout.

    The next financial crisis is going to be definitely another debt crisis. But once started, however, the crisis will be very different from the last since this time almost all nations are already heavily in debt and unable to take on a new wave of rescues.

    5. Deflation in the non-monopoly sector 



    E.J. Jobsbawm (Industry and Empire): "During the Great Depression the standard of living of the workers who still have jobs are maintained thanks to the fall in the cost of life".

    In the old cyclical crises of overproduction of the nineteenth century, it was strong competition between companies which depressed prices (deflation), less competitive companies went banckruptcy and the market soared from lower prices and fewer suppliers companies.

    The current weakness of most economies, combined with the sharp fall in energy prices, has raised the fear of deflation for the first time since the Great Depression. In December 2014 the Eurozone fell back into deflation (there was deflation also in 2009). Japan is in deflation and the US and the UK are increasingly close to deflationary prices rates.

    According to academic economists the problem of deflation (and expectations involved) it is that it is a spiral that feeds on itself. Deflation reduces the rate of corporate profits that in response lower wages even further, resulting in lower aggregate demand and a further back down of prices. Deflation means that the real value of families, businesses and public administrations debts increase, so that a slight rise in interest rates may lead all them to default or bankruptcy. In addition, widespread indebtedness retract state investment and household demand.

    One problem with this theory is that it does not explain  why the demand does not recover by lowering prices. In previous crises, with a less monopolized system, prices plummeted by lack of demand (deflation) and competition between companies. The disappearance of companies on the one hand and low prices on the other, ended finally with the overcapacity, unemployment and deflation of the crisis.

    Another problem with this interpretation is that it considers a general deflation as something that affects all sectors, both monopolized and the rest. Although there are sectors where prices do not depress, but even go up, in computing the aggregate data dissapears the resisting prices and profits of the heavily monopolized sectors (banks, electricity, gas, water, gas stations, drug, food, drink, toll highways, telecommunications, etc.).

    In the non-monopoly sector in crisis (houses for rent, bars, farmers, supliers, ...), who does not lower prices does not put their products or services on the market. In this case consumers are winners, and few of them are excluded. However in monopolized sectors, such as energy corporations, telecommunications, gas stations, privatized public services, etc., prices resist i even go up during the crisis and increase profits at the expense of customers who, in the absence of alternative suppliers, they can only choose between paying the bill or be excluded . Private monopolies can more than offset the drop in demand by raising their prices even if it means the exclusion and marginalization of many of the world's population.

    Another hole in the conventional theory is that it assumes that overcapacity is bad for the economy and bad for everyone. But actually monopolist has some interest in maintaining overcapacity since this constitutes a good entry barrier in defense of their enclousured markets. Wal-Mart keeps operating in certain areas huge shopping centers, totally superfluous, to deter potential opponents.

    6. More financialization


     Low interest rates and monetary helicopters (QE or massive purchase of bonds and debt by the Central Bank) in the US and now in the euro zone have not accomplished its supposed stimulating effect on investment. Large corporations, financial and non-financial, have captured this funds issuing bonds at bargain rates to invest in the stock markets.

    The "easy" money currently provided by central banks, supposedly to restore growth, is easy money for big business but not, of course, for labor or small businesses. It does not stimulate investment but only the financial and speculative sector, increasing inequality and negative redistribution increasingly detracting resources from the poor to give to the rich.

    One way to increase profits without investing in the real economy is to use the "stimuli" to buyback your own actions. Thus you achieves to lower the ratio beetwen dividents and the number of shares (the EPS - earnings per share - increased) ie, the rate of return of securities increases artificially  attracting more investors to the stock exchange and so increasing quotations. Only a small residual portion of these "stimuli" is used to invest in new technologies or more jobs.

    http://blogs.lclark.edu/hart-landsberg/2015/07/26/capitalism-at-work-profits-over-people/

    The green line with its scale data left, collects benefit payments to shareholders and shares buy-backs, while the red line, with its scale data on the right, collects funds for productive investment.

    Repurchase operations announced for 2015 will register a record never reached of 993,000 million dollars. Since 2009, large American corporations have spent 2.4 trillion in repurchasing its own shares.

    According to Bloomberg Businessweek, many analysts share the view that large corporations are forced to adopt this behavior due to, or lack of,  more "attractive" alternatives (weak aggregate demand and negative expectations of profit) for the use of their funds.

    7. Dismal prospects of growth



    In short, the outlook for growth in the core countries is poor and as a result, Asia faces the very exhaustion of its growth strategy driven by exports. And the same is true for sub-Saharan Africa and Latin America.

    And the prospects for growth in the core countries are bleak given the austerity policies imposed by the Troika and the German and Japanese strategies of growth through exports (sacrificing domestic demand). As for the US, despite the fall in oil prices (which as elsewhere takes its own laps of time in lowering the price of gasoline), it is difficult that the exuberance of Wall Street and the stock markets will translate or mirrow into a "wealth effect "enough to stimulate demand, recovering its former role of locomotive of last resort for the global economy.

    In conclusion, with no significant structural changes in most economies, changes that include policies to encourage improvements in the conditions of life and work and resolutely face the environmental disaster caused by monopoly neoliberalism, we are fully entering into a long period difficulties.


    II. Depression favors Monopoly 



    Shimshon Bichler and Jonathan Nitzan: " Economists generally agree that the share of capital income in total income of the advanced countries is procyclical, meaning that in times of economic boom and low unemployment their incomes increase more than proportionally . But this is not what happens in practice. According to data from the world war, the income share of capital has been counter-cyclical, rising and falling during crises during booms "..." In plain language: the capitalists are not at all concerned about the crisis but all otherwise. The love it."

    • With depressionMonopolists  gain market share at the expense of non-monopoly sector.
    • With depression the profits of monopoly sectors remain and even increase while monopolists are able to maintain and even increase their prices in the mids of depression.
    • According to the doctrine of shock (Naomi Klein), monopoly capital take advantage of disasters. The shock and confusion generated by the Monopolistic Depression make easy to introduce neoliberal regulations to ensure their businesses and their monopoly rents.
    •  Depression means redistribution of rent and wealth in favour of the wealthiest. But this redistribution means proletarization. Monopoly capital  is the true esence of capitalism and the perfect machine of total apropiation or destruction of the means of production still not in their hands. Monopolistic depression means proletarization at a great scale.
    • The Monopolist Depression creates substantial opportunities for capitalist concentration: unbearable state borrowing facilitates the privatization of public enterprises and public services.
    • With depression, crazy competition in non-monopoly industry (suppliers, subcontractors, workers, etc) implies the fall in prices, rents and profits (deflation), these fall resulting in lower costs to the monopoly sector and therefore increasing their monopoly rents. This means that the fall in rents and profits of some, the most, increases the benefits of monopoly minority. Monopoly sector increases its share of global income at the expense of the  reduced income of everyone else.
    • But depression can be dangerous for monopoly capital if the people or the states react against their interests (economic nationalism, controls on capital movements, renationalisation, socialization, anti-trust regulations, etc. something that occurred during the first Globalization)  Hence the earnestness in introducing regulations (bilateral free trade treaties, the Treaty of Maastricht, NAFTA, TTIP, TPP, etc.) to ensure perpetual depression, constitutionalising democratic inability of states to react to Monopolistic Depression. The TTIP, TPP and the like, constitutionalize the Monopolistic Depression.

    1. Theories about depression


    Supply side theories of depression:


    Technocratic explanation: Unlike other depressions in the current situacion there are not enough technical innovations covering a wide area of economic sectors that can mean the creation of new industries and redirect the system in the path of growth.

    Demand side theories of depression (Keynesian):


    Martin Wolf: "The world economy has been generating more savings that businesses want to use, even at very low interest rates"

    For Keynesians, depression is the result of increased hoarding combined with a lack of investment demand. Much hoarding and lack of demand for loans for investment involves the famous liquidity trap: real interest rates low, even negative, fail to stimulate investment and growth.

    Some unscrupulous suggest that the cause of hoarding would be the aging of population and the declining birth rate. Wolf, meanwhile, attributes the fall in investment to a change in the "corporate culture" that prefer to speculate in financial assets to invest in productive capital.

    .Marxist theories


    According to the classical Marxist theory, the phenomenon leading to depression is on the low rate of expected corporations profits from  their funds.

    Competition among capitalists force prices and therefore the rate of profit to fall, discouraging investment and creating unemployment.

    But the problem with that view is that large monopoly corporations continue to provide ample profit rates even in times of depression. In modern times does not occur a falling rate of profit in the large monopolist sector  but on the contrary. 

    Paul M. Sweezy and Paul. A. Baran, in his book "The Monopoly Capital" in 1966 argued that monopoly capital has a dynamic contradiction. Unlike under capitalism of small business in hard competition, in which there was a tendency to decrease the rate of profit, in the subsequent step, with the generalization of large monopolies, this trend disappears replaced by a growing  profits rate, at least for the monopolized sector.

    But, according to Baran and Sweezy the system displays a chronic inability to absorb the huge gains that can produce. Thanks to their monopoly positions they obtain gains in excess that they  invest in additional capacity. The problem is that aggregate demand does not follow and productive capacity becomes overcapacity so that future investments will not generate more profits. Why increase investment if the benefits continue to flow with the current installed capacity? Ie, monopoly capitalism dies of its own success. "It follows that the normal state of the monopoly capitalist economy is stagnation".

    And while financial speculation promise rates higher than the actual investment profits, the capitalists will run out from productive investment. Speculative financialization, although it can generate more business via financial bubbles due to the wealth effect associated with them, eventually generates more inequality and therefore lower effective demand.

    In what seems all agree is on that the Great Depression do not interest to their sufferers (workers and middle classes) but also do not interest all capitalists (the Keynesians particularly insist on it) and at this point they are wrong. There is a group of capitalists, the most powerful, who may be interested in depression. This is the big transnational monopoly corporation.

    2 Depression. Profits and proletarisation



    To create a simple job means an effort in fixed capital (organic composition of capital) that few investors are actually willing to cash. But with no additional jobs unemployement  force wages down. This keeps  increasings the profits of the monopolized industries (monopoly rents) but shrinks more and more global demand (vicious circle).

    We have to consider two distinct segments with respect to the rate of profit. We must dissagregate the profits of monopoly sector from profits of non-monopoly sector.

    The investment in the non-monopoly sector reacts directly to the profit rate, present and expected. However, the reaction in the monopoly sector to the rate of profits is by no means directly proportional. There may not be any reaction at all or may even be an inverse relationship. At more profits less investment.

    Monopoly capital resist very well great periods of crisis. You may notice that, paradoxically, they rather thrive when the non monopolist sector go down. Their share of total income increases countercyclical. A more depression greater inequality since the proportion of income they appropriate encrease. The tremendous increase in inequality as depression extends and deepens  reflects this paradox.

    The explanation for this apparent paradox is the result of the mad competition in non-monopoly sector (suppliers, subcontractors, workers, etc) involving the fall in prices, rents and profits (deflation), all that resulting in lower costs for the monopoly sector and therefore increasing their monopoly rents. This means that the fall in rents and profits of some, the most, increases the profits and rents of monopoly minority.

    With the crisis and depression the only ones who keep their profits are corporations with  greater degree of monopoly. Profit rates of big monopolistic corporations have doubled since 2008 due to reduced corporate tax, reduced employer contributions to social security and shrinking wages (policies of austerity and internal devaluation), while the rate of profits of non-monopoly sector collapses dragged by the decline of global demand.

    Really no one knows how much are the profits of multinational corporations. They declare what they want where they want. Its profits statements are part of its "creative accounting" to attract new capital or are simply part of their public relations policy. Hence the persistent asymmetry whereby profits appear only on the good side of the value chain that is usually located in a tax haven.

    Multinational monopolies, basically use three techniques to disguise their profits and evade taxes

    a) Moving "their" intellectual property (patents, trademarks, ...) to subsidiaries in tax havens. Subsidiaries located in tax havens do not pay (deductible expenses) for patents "owned" by the subsidiary of a tax haven.

    b) Transfer pricing. All subsidiaries in countries where taxes must be paid do not record any profit since commodities go in  at similar costs that the sales prices charged to end consumers . In the process of production, transportation and marketing are involved several subsidiaries that  bill between them. The only subsidiaries that record profits are these registered in tax havens.

    c) Profit stripping  is to offset profits in a country where you pay taxes with expenses payable to a subsidiary in a tax haven. A subsidiary in Bermuda lend money at interest to a subsidiary in France. The profits in France are kept down to pay interest to the subsidiary in Bermuda.

    Another advantage of depression for large corporations is that the contraction of demand generated overcapacity in the most affected sectors; but for the monopolists, overcapacity is an additional barrier to entry which strengthen their positions and favors expansion. Overcapacity becomes an intrinsic, desired and permanent feature of the monopoly Depression.

    Under deflation and overcapacity non-monopolistic businesses close and throw the towel, while central banks send up fleets of monetary helicopters that invariably end up in financial speculation, providing more and more powder for the concentration of capital. As in previous depressions, the crisis is the breeding ground for monopoly concentration and as can be seen, the day-to-day crisis do not stop mergers, associations, acquisitions, ... a race without obstacles to the Global monopolism.

    Indebted states, opting for austerity and internal devaluation soon are forced to give up companies, services and public monopolies, which are immediately absorbed by the jaws open wide of capital concentration.

    Thus, the monopoly would fatten with Great Depression. The Great Depression is good for the monopolists provided no sufficiently significant protests occur  to threaten your system.

    Depression and financial bubbles


    Financialization and speculative financial bubbles are inherent to monopoly capitalism.

    The growing monopolists surplus that do not find placement  in the real economy are diverted toward financial speculation increasingly generating more huge bubbles. A defining characteristic of the current phase of global monopoly capital 2.0 is the rising and growing of spiral financial bubbles that are dotting the geography of the last stages of the Great Depression.

    Bubbles act as a drug addiction. The absorption of a new dose seems to improve the feelings of the subject whose health is deteriorating with the rapid succession of increasingly stronger doses. But bubbles benefit monopoly capital since, thanks to its privileged information usually leave on time and unscathed from speculative successive rounds. Just in case, the size of corporations is such (too big to fail) that have assured the public rescue in case of bankruptcy.

    Public bailouts increase the indebtedness of states which are constrained to sell off public assets (public monopolies, utilities, etc.), which further increases the concentration of monopoly capital.

    The increase in public debt, facilitates labor and administrative "flexi-reforms" that contribute to further increase the monopoly rent and therefore the the next bubble speculation.

    But if all that were not enough, after bubbles major central banks launche monetary helicopters fleets (Quantitative Easing) to monetize debt, money that also ends in the hands of speculators inflating the next bubble further.

    4. Capital mobility and depression


    Hayek: "The ideal result would be the transformation of local governments and even of regional governments to quasi commercial corporations competing to attract investors".

    The global monopolist expansion requires, almost as a sine qua non, the freedom of movement of capital. That there is no such freedom for individuals may even be advantageous for big capital since the division and discrimination between workers provides higher rates of labor exploitation (labor arbitrage).

    Freedom of capital flows, while ensuring tax evasion, repatriation of profits and financial speculation, facilitates the ability of transnational monopolies for offshoring and relocating, thus achieving, despite nationalist obstacles to labor movements, the much desired reduction in labor costs in Western countries, in addition to considerable tax advantages and public subsidies.

    Hence the leitmotive of monopoly neoliberal capitalism discurse are the supposedly unquestionable benefits (sic!) Of the free movement of capital, free movement that brings more monopoly, more dependency, more poverty and more depression.

    The international mobility of capital (through liberalized financial markets and free trade) potentiates a disciplinary effect on states. Capital mobility requires states to compete for mobile transnational capital, providing the kind of neoliberal policies that investors and multinational companies demand.

    The mobility of capital, based on the "right to leave" creates a kind of "government policies market" in which firms claim to be located in jurisdictions that offer the most favorable mix of labor costs, environmental costs, taxes and services. That is, the mobility of capital globalizes the neoliberal austerity policies of impoverishment and carries a withdrawal of aggregate demand which translates into more depression.

    5. The theory of the "impossible trinity" and the impossibility of decoupling




    During the Great Depression of the thirties nations tried to decouple from depression taking a variety more or less sound economic policies.

    But actually monopoly capital is provided with a formidable theoretical arsenal to ensure their dominance and prevent any lasting and effective decoupling  of its Monopolistic Depression.

    The theory of the "impossible trinity" has been used to justify anti-democratic consequences of offshoring and capital flows associated with monopoly neoliberal globalization, constituting the main theoretical trick to force permanent "opening" of economies to transnational capital.

    The "impossible trinity" or "trilemma" said, according to the 1962 Mundell-Fleming model, that is impossible for a country to simultaneously maintain a fixed exchange rate, free capital flows and a separate and independent monetary policy.

    According to the famous theory, governments of "open" economies face an economic "trilemma" that "forces to resign" at least to one objective of economic policy. If they want to "enjoy"  free flow of capital (1), they must sacrifice the exchange rate policy of its currency (2) or give up to its own monetary policy (3). Ie they will only enjoy an autonomous monetary policy if they let the exchange rate float.


    That is, to give up a political control over the movements of transnational capital (open economy) implies, "for reasons of economic theory", to give up an autonomous exchange rates policy (currency devaluation for exemple ) or an independent monetary policy (lower interest rates). The give up of a certain economic policy for the benefit of the population would not be at all a cut of national democracy but a whimsical imponderable of economic theory.

    In practice, as has recently statetdhe economist Hélène Rey, the global financial cycle restricts monetary policies whatever the exchange rate regime. "Many believe that a flexible exchange rate can isolate ourselves from financial shocks and allow us to pursue an independent monetary policy ... But if there is a global financial cycle, as I think, the exchange rate can not separate us from what happens in the rest countries "(Finance and Development. June 2015). That is, if you want to continue "enjoying" the free flow of capital, so dear to monopoly transnational capital, you will have to give up any autonomous economic policy at all. That is, the free flow of transnational monopoly capital imposes a kind of straitjacket that prevents any democratic reaction to Monopolistic Depression.

    In addition, monopolists and financiers have imposed on the world a kind of "solidarity market". In the absence of capital controls and trade protectionism, and with most industries offshored , economic stimulus in some countries end up benefiting exports of others. In the Chinese case the beneficiaries have been Latin America and sub-Saharan Africa, the so-called emerging countries that managed to decouple for a few years of the Monopolistic Depression.

    It is precisely the quasi constitutional institutionalization of free mobility of transnational capital registered in bilateral agreements, regional agreements, integration agreements, or macro global agreements (TTIP, TPP), which is preventing the nations to resist the onslaught of the Great Monopolistic Depression.

    Even the giant Chinese nation, with huge dollar reserves, is experiencing that to continue "enjoying the free flow of capital" implies few if any autonomy in terms of policy exchange or alternative monetary policy to boost domestic demand. China will must, therefore, die insisting on the export model that will dictate transnational monopolies, polluting without restraint, squandering its resources, cutting wages and increasing the number of unemployed.

    So triumphant monopoly capitalism, with little opposition can finally show his true face, its intrinsic essence is to maintain human society in a permanent state of economic and environmental crisis to further increase their power and profits at any cost even if it means ending the human experience on the planet.



    Links:

    http://blogs.lclark.edu/hart-landsberg/2015/07/26/capitalism-at-work-profits-over-people/

    http://blogs.lclark.edu/hart-landsberg/2015/08/03/signs-of-global-slowdown/

    http://isj.org.uk/the-global-crawl-continues/

    2/12/2016

    Anthropocene or Capitalocene

    Spanish

    John Kerry (after the failure of the climate summit in Paris): "We are sending a key message to the global market", "market already have a clear signal," El País, 12/13/2015.

    James Hansen James Hansen (director of the NASA Goddard Institute for Space the world most famous climate scientist): "The climate agreements is worth less than the paper they are written" "The Paris agreement is a fraud"

    Abengoa, a world leader in renewable, presented the November 25, 2015, the largest suspension of payments of the ecomomic history of Spain, slumping the stock market.

    Kevin Anderson and Alice Bows (2012): "The mistaken belief that to avoid heating we can still put a carbon tax here, a little there, some emissions trading here or a voluntary agreement there will not be enough. The long-term objectives (for example, 80% of CO2 in 2050) have no scientific basis. What governs future global temperatures and other adverse climate impacts are emissions of yesterday, today and in inmadiate the coming years "

    Noam Chomsky : "The world we are creating for our grandchildren is bleak ... The level of destruction of species in the world today is about the level of sixty-five million years ago, when a large asteroid hit the Earth and had horrifying. ecological effects "" the same is happening now, except that now we are the asteroid "

    Richard Smith: "The problem with capitalism is tha the economy can not be taken a ballot on and today, the huge decisions that affect us all, to other species, and even the fate of life on earth, are all still private decisions made by the boards of transnational monopoly corporations. "

    Climate change go marching in



    The May 10, 2013 scientists Mauna Loa Observatory in Hawaii announced that global emissions of CO2 had crossed the threshold of 400 parts per million (ppm) for the first time in millions of years, which means that we are fast approaching the dreaded tipping points (points of no return from which the process automatically feeds back) - subarctic tundra thawing or thaw and release of vast amounts of methane still frozen in the Arctic ocean floor -. CO2 Concentration has increased more than 40% over the past 200 years, with a increase trend between 2 and 2.5 ppm each year. So, despite all the climate summits (Kyoto, Copenhagen, Cancun, Cape Town, Doha and the last of Paris) and subsequent promises of restraint and the infamous CO2 market, the growth of emissions and concentrations weather has accelerated ( Keeling Curve).

    The progress of CO2 concentration can be monitored on the Scripps Institution of Oceanography at UC San Diego website. There any one can observe how  we are marching with firm and decisive step toward disaster.

    During the Pliocene, the geological age 3 to 5 million years before the present, there was a concentration of CO2 in the atmosphere above the 400 ppm. Recent studies estimate that the maximum concentration reached 415 ppm, with global temperatures reaching between 3-4 degrees above current temperatures. Sea level was between 5 to 40 meters higher than in present day. Actually sea level has not had time to so much due to the high inertia in the reaction of the oceans absorbing extra heat.

    The report published in 2013 by the Intergovernmental Panel on Climate Change (IPCC is an institution of conservative design, drawing attention only on aspects where there is more scientific consensus) estimates that global temperatures will rise between 1.8 and 4 degrees Celsius by mid-century; The report notes that more than 2 degrees, humans could lose the ability to take action to remedy or substantially mitigate climate change, after which we would have entered a "danger zone" where the climate could become unpredictable and consequences unforeseen  in large measure.

    Global warming so far has been more or less linear. More CO2 = more warm. But according to the models with more consense among scientists, beyond the 2 ° C encrease, the level of uncertainty and the threat of global warming becomes uncontrollable due to crossing of successive thresholds (tipping points) as if we suddenly will put into operation hundreds of thousands of new coal-fired power plants. We do not know when we will come to this global turning point, but climate science today tells us that we are much closer to an increase of 2 ° C than it was thought when the limit was originally proposed.

    Capitalism, a border civilization


    The ecological and environmental disaster has been caused by a tiny and increasingly small minority of humans, the capitalist class, which has managed to impose on the entire planet a carcinogenic form of social organization based on a system of voracious appropriation designed to ensure all the power and concentrate the whole wealth in the hands of a small predatory elite.

    Capitalist cancer has its origins in the mid-sixteenth century when it began to spread, from Holland and England across the globe. Originally no one wanted capitalism (abominatin of destruction, misery and inequality unparalleled since its earliest babbling) and in their own original countries found enormous resistance. Capitalism has prevailed and expanded by brute force, gunboat diplomacy, shock therapies, etc. But it has also improved its ideological arsenal (A. Smith, Malthus, Ricardo, M. Friedman, Jayek, etc.) to be justified as "natural" as something rational and in line with human nature. Her mutant ability has allowed it to dress up itself as "communist" in the USSR, China, etc.

    Capitalism does not advance and has never advanced only from  the accumulation of capital gains extracted in the fully commodified  area under its control, but has advanced and has always expanded in leaps through successive phases of accumulation by appropriation. In fact the process of accumulation by appropriation of territory, natural resources, societies, etc., not yet commodified, is a fundamental and inherent spect of the system. Capitalism is a real free rider so that in each of their successive expansionist waves, frontier provided vast reserves of labor, food, energy and raw materials susceptible of appropriation without compensation. Accumulation by appropriation also involves outsourcing, without compensation, of waste and pollution beyond the border. But, free rider apropiation is so intrinsecally embedded in capitalism that if it fails,
    the system collapses.

    Capitalism System days as we have known it are numbered. Subsequent possibility of accumulation by appropriation of new border zones are being reduced to a minimum. The planet is not flat and infinite but spherical and finite. The remaining resources available are nearly exhausted or have been completely depleted. There remains almost any workforce whose  reproduction occurs outside the system (the latter were the 100 million Chinese peasants without papers -nongmingong - exploited by monopolistic multinationals ) and, moreover, the atmosphere, which has not turned out to be a  infinit dump, no longer supports more emissions and reacts with escalating violence.

    But today, with most of humanity in poverty and about to trigger a climate holocaust, capitalism presents itself, through its embracing media control, such as the lesser evil who will avoid, for the moment, at least in the short term,an immediate disaster, and in any case, to guide and accompany us into the abyss.

    Capitalist dichotomy between man and nature


    Engels (Dialectics of Nature).. "We must not presume too much of our human victories over nature. For each of such victories nature takes revenge on us. It is true that in every victory we obtain, in the first instance, the expected results, but in second and third instance, the effects are different, often unforeseen that cancel the first ... Nature is the foundation upon which we human beings, ourselves products of nature, have grown ... at every step it reminds us that in any way we rule over nature like a conqueror over a foreign people, or as someone who stands "outside nature" but that with the flesh, blood and brain, we belong to nature and exist in his bosom. "

    Kingsnorth (2011): "My feeling is that the environmental movement has been torpedoed himself with numbers. His obsession with climate change, and its insistence on considering it as an engineering challenge that must be overcome with technological solutions guided by the neutral look of science, has forced him to be integrated into a ghetto that can never escape. Most environmentalists now spend their time discussing whether they prefer wind farms or batteries tidal turbines or nuclear power to carbon sequestration. They even offer very refined predictions of what will happen if you do or not do this or that, all based on figures collected from one or another "study" as if the world were a giant calculation sheet wich requires only to be balanced correctly."

    Jason Hříbal: Animals of the working class

    Capitalism considers the man nature relationship from a pure Cartesian approach. Man is in a box and nature is i nanother. Thus the capitalist homo economicus uses nature and exploits it unceremoniously. It is about toconsider nature as an external object capable of being mapped, measured and regulated, to put it all at the service of capital accumulation. Thus the issue of climate change is considered, even by many militant environmentalists, as an engineering challenge that has to be solved by quantifiable technological solutions.

    No pre-capitalist social formation has approached things this way. Human beings have always felt part of the natural environment in which they lived except in capitalism, where the Cartesian dichotomy has reached gargantuan levels. Timothy W. Luke has published a book with a very explicit title: "The development of global accounting: making nature like a storable product, a service, and a system for ecological governance." And the tragic true is that botany, geology, geography and other geosciences are, in capitalism, not just "science" but above all, big business.

    Anthropocene or Capitalocene



    Geologists divide 4,500 million years of Earth history into a hierarchy of intervals (eons, eras, periods, epochs and ages) called the Geological Time Scale. We live in the Quaternary Period, the latest subdivision of the Cenozoic Era, which began 65 million years ago. The Quaternary in turn is divided into two epochs: the Pleistocene, which began 2.58 million years ago, and the Holocene, which began 11,700 years ago and extends to the present.

    The divisions are not arbitrary: they reflect significant changes in the prevailing conditions and forms of life on Earth. The Cenozoic Era is marked by the rise of mammals, after the mass extinction of the dinosaurs at the end of the Mesozoic. The Pleistocene was marked by successive "ice ages". The last glacial retreat marks the beginning of the Holocene, which has been characterized as a stable, relatively warm weather.

    The official boundaries of the eons, eras, periods and geological eras is defined by the International Commission on Stratigraphy. Every so often a new Chronostratigraphic International Table is published, an agreed list of the various geological periods . The geological age in which we find is the Holocene (which began only 11,700 years ago). The impacts of human actions on the planet in the last 300 years have been so profound that it can justify the definition of a new geological era of the earth, the Anthropocene (a term coined by Paul Crutzen, Nobel Prize for the discovery of the hole in the ozone layer). In fact it has been set a working group on the matter (which includes the Spanish Alejandro Cearreta) and has set the year 2016 to take a decision.

    The definition of Anthropocene trys to link capitalism with homo sapiens. In this sense continues with pro-system theorists mania to equate humans with their homo economicus . The human species was able to manipulate and control the fire which started out its career as manipulative and agent of climate. When humanity lit his first dead tree, that could only lead, a million years later, to start burning millions of barrels of oil ..

    The Anthropocene idea ​​trys to trivialize  that "humans" have created things that did not exist as synthetic mineral fibers, carbon fibers, plastics, concrete (that has spread on the surface of our planet at a speed of two million kilometers per year) , we have been able to burn about 200 million years of fossils, including coal, oil and gas, the that the digging for minerals and fossil fuels have drilled more than 50 million kilometers below the surface, etc.

    Systematically, it is presented as responsible for climate change to antropozoico abuse "fossil fuels" as if closing a few coal plants we will solve the problem. The truth is that capitalism is not a phenomenon that begins with the steam engine and the industrial revolution 200 years ago, but a degenerative malformation  that began in mid-XVcentury  in Europe and increasingly expanded rapidly with bold strategies of world conquest and endless commodification. If you turn off some coal plants can perhaps slow down global warming for a few days; if we turn off, however, the social relations that gave rise to irrational growth and waste, it will stop forever.

    The anthropocenic notion, in addition of avoiding responsibility, includes the fallacy of attributing the system the ability to manipulate the climate and the environment at will by sequestration emissions systems or geo-engineering experiments (design of planetary techno-structures  for the reduction and removal of greenhouse gases).


    Climate science, politics and discourse in general are constantly formulated according to the Anthropocene narrative: collective self-flagellation, recommending "consumers" to amend its consumer rules and other ideological tricks that only serve to mask the real driver, capital. The object is to naturalize and perpetuate a mode of production that is specific to a particular place and time. The classic strategy of ideological legitimation.

    In addition, Anthropocene, excluding capitalist causality, fosters confusion and fallacy proposing responsibility no in terms of system, of class, but in geospatial terms, with countries or geographical areas more responsible than others, dividing the world between humans still have "the right to pollute and emit toxic gases" and others who no longer have so many "rights". In this line it is stated that it is logical that the Chinese pollute more since they have come later development (when in fact the Chinese environmental disaster has been managed and led by industrial outsourcing of the major Western monopolistic corporations). I doubt that Chinese workers are thinking in these terms, and taking into account that China is especially vulnerable to  Climate change. A sea level rise of about 25 m rwould educe the habitable area of ​​the river basins so that 250 million people would become inland refugees.

    The new geological era in which we are living is not the Anthropocene but the Capitalocene, the age of capital (which has the advantage of naming the real culprit), the architect of enclosure of land, appropiation of communal lands, the commodification of life, colonialism, slavery, of irrational industrialization, the world wars, the atomic bomb, the cold war, the marketing and the planned obsolescence of production waste, irrational depletion resources, biogenetic manipulation, ozone depletion, exploitation and misery of their fellows to an inconceivable scale never experienced by any other species in the planet's history. Today, the largest and most representative portion of Capitalocene homo poor live a bad live in great misery in huge and unhealthy shanty slums without sewers and services of any kind. Almost half the world, more than 3 billion people subsist on less than $ 2.50 a day, 80% of humanity lives badly with less than $ 10 per day. These are numbers that qualify Capitalocene, not the Anthropocene.

    http://monthlyreview.org/2015/09/01/when-did-the-anthropocene-beginand-why-does-it-matter/
    It can be seen in the chart as acceleration from mid-1950 coincides with the beginning and the unstoppable deployment of monopoly globalization. During the short Capitalocene nuclear exterminism has always been a predictable outcome but it depends on a single button. The ozone hole has been reverse by changing the mix of  emissions that produced it. But with climate change occursthat there are too many switches to switch off and is inherent to the system not to turn them off, but conversely , to continue installing more and more to accumulate more and more capital.

    ¿Es posible la lucha contra el cambio climático en condiciones de capitalismo?


    Nicholas Stern: "The problem of climate change involves a fundamental failure of markets: those who damage others by emitting greenhouse gases generally do not pay" ... and "climate change is the result of the major market fault  the world has ever seen. "

    This is not a simple litle bug, but a tremendous failure of the market mechanism. But approach it mechanically as "fault" still implies the possibility of repair or tune the mechanism. Stern continues on this path. Thomas Friedman poses a future market for "green jobs" related to renewable energies, nuclear power plants and electric cars as "the next great engine of industrial growth" - the common perfect capitalist "win win" solution .

    Globally, power plants fueled by fossil fuels generate only 17% of emissions of greenhouse gases, heating is responsible for 5%, other forms of fuel combustion represent 8.6%, industry 19%, transport 14.3%, 13.6% agriculture, changes in land use (mainly deforestation) 12.2%. Production of millions of electric cars instead of millions of cars with petrol engine, would not be less environmentally destructive and polluting, even if they were to run on solar energy.

    James Jansen has proposed the creation of a system of "dividend-tax" per tonne of CO2 emitted to charge to corporations that peddle with fossil fuels. The tax should not to revert to government but directly to the entire population as dividends electronically transferred to the bank accounts of the beneficiaries. A tax of  $ 115 / mt would generate $ 670,000 million in dividends so that each resident in the United States would receive $ 3,000 a year.

    The problem is that capitalism is a system governed by "market signals", a perverse system subject to the undemocratic planning of large private corporations.

    The only way to stop climate change will impose a dramatic decline, and in some cases the total closure of industries, including whole sectors across the economy and across the globe - not only producers of fossil fuels, but all sectors that consume and produce emissions of greenhouse gases - cars, trucks, airplanes, airlines, shipping and cruise, construction, chemicals, plastics, synthetic fabrics, cosmetics, fibers and synthetic fabrics, synthetic fertilizers and animal fattening concentrated agribusiness. The vast majority - at least three-quarters - of all goods and services produced today simply do not need to be produced at all.

    All these changes are not simple and require to overthrow capitalism and replace it with a production-oriented to what we need economy,  while preserving resources for future human generations and other species with which we share this planet.

    We are entering the post-antibiotic era, where an infection after a scratch or through a catheter hospital could mean a death sentence. Increasing antimicrobial resistance is in many ways a more immediate threat to humanity even climate change. The reason: the refusal of the pharmaceutical monopolies to invest in antibiotics because they are not sufficiently profitable compared to medications for chronic diseases.

    In all economic sectors, the set of things that are profitable is much smaller than the set of those useful. Capitalism limits what we produce only to those things that allow the accumulation of capital. Capitalism can offer only a shadow of the potential innovation  that socialism could undertake.

    The alternative is to nationalize and socialize the big monopolistic corporations that are destroying the planet. Many would be simply closed, others thinned, and other converted. The alternative to capital has to be a combination of democratic planning and rationing. A collective democratic control over the economy to give priority to the needs of society, the environment, the other species and future generations. This requires concatenating national economic planning with world planing to organize the economy and redistribute the work and resources on a global scale.

    The market will lose the role of first performer and go back to the humble and residual role it had played in the history of societies before the big capitalist aberration.


    Links:

    Jason Moore:
    The Capitalocene Part I:
    The_Capitalocene Part_II

    Capitalism and the destruction of life on Earth

    The Anthropocene Myth

    2/01/2016

    Congo Rubber Monopoly

    Spanish original
    Chocolate hands in a Belgian pastry

       The rubber boom had its heyday between 1879 and 1912 because of the growing demand for manufacturing automobiles, bicycles, water proof boots, telegraph cables and other applications for an industrial revolution that entered its second phase of expansion. The rubber was only available in tropical forests, mainly in the basins of the Congo (a vast territory barely explored) and Amazon (the Lacandon Jungle was a no man's land covering Venezuela, Colombian, Ecuadorian, Brazilian and Peruvian territory). 

    The entire history of Congo has been marked by the naked capitalist exploitation of its natural resources - from rubber to "conflict minerals" - by international corporate business.The term “conflict minerals” is defined as columbite-tantalite, also known as coltan (from which tantalum is derived); cassiterite (tin); gold; wolframite (tungsten); or their derivatives.

    Armed groups in the Congo hire local villagers at gunpoint and physically force them to mine for these minerals. Villagers are often raped and beaten into submission, and so these villagers must mine in order to protect themselves and their families. The work conditions are horrendous – miners work in very hazardous locations, use makeshift tools, and wear no protection against the elements. Consequentially, many miners perish from these dangerous conditions. In fact, there are over 5.4 million Congo civil conflict-related deaths. The main  imports  are guns, ammution and bullets. Minerals are exported out of the Congo to Asia to be processed and shipped out as cell phones and similar to consumers around the world.

    K. Marx: (Theories of Surplus Value Part III.): "In general, forced work shows in the most brutal form, but with the most explicitness, the essential characteristics of wage labor"

    Malthus: “Production needs of the whip of hunger and the threat of starvation because the human race is by nature inert, slow, averse to work, if not compelled by neediness . 

    W.E. Hardenburg (1912): “The atrocities of the rubber industry in Peru, which have shocked public opinion and sparked widespread outrage and horror -atrocidades worse than that of the Congo - can not be considered simply as an isolated phenomenon. These incidents are the extreme manifestation of a condition that is expressed in different forms around the world, commercialism and industrialism, whose exponents to enrich deny a fair share of the fruits of the earth and its effort to workers who produce the wealth. The mechanism operates in almost every country in almost every industry; and although their methods are not the same as the savagery and barbarism applied to the Congo or the Amazon, they nonetheless generate untold sorrow to mankind

    The capital which got a virtual monopoly on rubber and ivory from the Congo was Belgian capital and had nothing to do with the British capital, French, German and Peruvian that was invested in the exploitation of rubber in the Amazon. However, in both cases, separated by thousands of kilometers, forms of business organization, incentive systems and the results, were identical. In the depths of the rainforests, without reporters or cameras, capitalism could operate free of the fetishism of the "labor market".

    Labor market?


    The capitalist system, to hide exploitation, disguised it as a commercial act, a contract of sale, in which the labor force appears as a commodity of a supposed "labor market" where it is freely "negotiated" between the "free" parties.

    In reality there is not such a market where such negotiation occurs. The labor market is a fiction. It is a fetish to confuse the exploited. There is nothing to negotiate. The worker can not subsist without work because they have no production means to do so. Therefore "accept" the wages the capitalist wants to pay. And accept it because is subject to capitalist terror, the devastating threat of unemployment.

    We could speak of labor "market" only if the deman side would have alternative means of production and subsistence. Is the case of peasants with enough land or self-employed. As both have their own means of production, and subsistence, there would be a real negotiation between them and the capital that would hire them.

     Cogo proletarians

    But capital is not interested in such negotiations. Since its inception capitalism produces its own working class, its own proletariat, its own unemployment, appropriating all the means of production or destroying those which can not be appropriated. The objective is none other than exploitation without any negotiation. The alleged "labor market" is nothing but perpetual competition among most of the population beset by fear of capitalist unemployment.

    Although most theories of capitalism try to separate it from slavery or forced labor as anachronistic and inefficient compared to the invention of the "labor market", actually, forced labor and slavery are chronic system factors from its earliest origins and when it has no other choice but to use the fetish of the labor market, capital seeks by all means, to maximize profits, making it as close as possible to forced or slave labor.

    For their part, the rubber companies spent most of their capital manufacturing a new rubber proletariat, systematically destroying the means of production of the Congolese and Amazonian tropical nations. Operating in an unexplored territory, away from the cameras and reporters, they did not need to hide with fake contracts or laboral markets the inhuman exploitation to which they would submit their new proletariat.


    The new rubber proletarians


    H. M. Stanley: “As we travel through the land of the Congo, making roads, lifting stations, trading privileges, surveying the vast area, teaching and preparing native to the near advent of a bright and happy future for them, win them over by our gentleness, soothing their passions, instilling commercial principles, showing the nature of the marketable products when the white man will came.”

    E.V. Sjöblom: “Then their rice fields are destroyed, and its reserves are delivered by force. His bananas are cut while they are still young and without fruit, and often they burn their huts, and, of course, take everything of value.”.

    Cónsul ThesigerEverywhere it was the same story: the supervisors forbade them to clear new land for cultivation or hunting or fishing. If they tried to do it their networks and tools were destroyed. In some villages the Indians secretly tryied to cultivate small gardens in the forest, where they were supposed to be out cutting rubber trees, but such an offense often was paid with their lives.”

    Adam Hochschild: “Obviously, this left no one to raise crops or bear healthy children, resulting in the death of an estimated 50% of the population’s, probably ca. 10 million people

    When Henry Morton Stanley first came to the Congo Basin he found that coastal areas were densely populated.  Stanley, after their long expeditions knew quite well the prevailing economic system in the Congo. They were relatively advanced societies. Most of the population was engaged in agriculture and animal husbandry as the basis for their livelihood. They hunted, fished and gathered in an extraordinarily gifted environment. They melted and worked bronze and iron. As usual, the land was a tribal common. They did not understand at all the concept of private ownership of land and evidently the chief of the tribe could not deal with land "property".


    Congo village before capital arrival

    There were Indian merchants who traded throughout the vast territory and there where also cities of traders. Stanley pointed this, referring to them:

    "These traders were familiar with many lands and tribes in the Upper Congo. From Stanley Pool to Upoto, at a distance of 600 miles, they knew perfectly each landing site on the banks of rivers. They were well aware of their environment, mastered the art of barter. All diplomatic tact arts were as familiar to them as is the Roman alphabet for us. It is not surprising that all this business knowledge had left their print on their faces; in fact, the same thing happens in our large cities in Europe. Do not you distinguish them by their military factions between a poet, a banker, an artist or a poet? The same thing happens in Africa, especially in Congo, with people engaged in trade."

    Marked was obviously a marginal and complementary business activity of a mainly agricultural society.

    While rubber companies had huge incentives from the world market, a huge business languished in the warm tropical forests waiting of capital knowing to transform it into value. Rubber employers needed specialized labor knowing the region, who could locate rubber trees, and basically that would be able to stay alive inside the jungle.

    Thus, obtaining an abundant labor force was essential to the expansion of the rubber companies, both for the production and for rubber transportation from collection centers to the port and then to the city.

    The companies needed the services of the indigenous but no European product interested natives enough to encourage them to collect rubber in the forest adjacent to their villages and even less in more remote territories.

    The first step for its forced proletarianization was to eliminate the modes of production of indigenous societies, destroying the means of production of the Central and Amazonian nations (as in eighteenth-century England) and snatching their communal lands.

    In the case of Congo, the natives will be urged to give up farming to return to the condition of hunter-gatherers. In the Amazon it was the same with the tribes who practiced agriculture.

    The most advanced capitalism returned humanity to the condition of Paleolithic hunter-gatherer.

    One of the first steps of Leopold II of Belgium as the new monarch of the Congo Free State was a 1887 decree declaring state property all the "vacant land", ie, all the land free of crops or settlements. According to this law only the small areas of settlements and small and few grain fields or manioc surrounding them, where to remain in indigenous hands. Everywhere beyond these tiny patches stretched plains and forests that had been until the arrival of capital the ancestral communal lands of indigenous.

    Nevertheless, the natives of both continents did not seem too willing to become capitalism working class. It was necessary to force them to work for capital. Capitalism set aside costumes and fetishes. The naked capitalism imposed the most inhuman and savage terror to subdue the working class and to convert them to rubber proletarians.

    The rubber business had fever but it was also in a hurry. After the sowing of seeds of rubber tree in Southeast Asia, the days of absolute monopoly, both for the Amazon and the Congo, were numbered.

    Thus, both,  fixed capital and human capital would be of a single use. The the companies forced labor to over-exploit native rubber trees so that they died from excessive loss of fluids. Some companies (like the cartel Kasai Company) resorted to cut and chop trees to extract all possible latex.

    The rubber capital produced a proletariat tailored to the needs of their business. The cost of reproduction of labor could be circumvented. Proletarianization of indigenous was radical. Plantations were destroyed and crops and warehouses burned, workshops tools and utensils, fishing boats destroyed, livestock killed. The rubber proletariat would be a throwaway proletariat. It is estimated that the number of indigenous people at the arrival of capitalism to the Congo area ranged between 20 and 30 million. According to the census conducted in 1911, twenty years later, the population of the Congo had been reduced by capital to only 8,500,000 people.

    Terror, productivity and efficiency


    The supposed free market became forced market.

    Cónsul Thesiger 1908: “The commodities where distributed delivering a hat to an Indian, a metal hoe to another, and so on. Each receiver was then at the end of a month responsible for collecting a number of kilos of rubber. The workers could not choose or refuse to acquire thise objects, no negative allowed. If anyone had any objections, the objects where throwed  at her door, and whether you take it or leave it, the worker should collect the rubber quantity stipulated by the other contracting  party"

    Mark Twain : " The baskets of severed hands at the feet of European commissioners, became the symbol of the Congo Free State ... The collection of hands became an end in itself. Soldiers of the Force Publique. brought them to the collection stations in place of rubber; even they went out to harvest them instead of rubber ... They became a sort of currency and came to be used to offset the deficit in rubber quotas, and the soldiers were paid their bonuses on the basis of how many hands they collected. 

    Both the rubber territory in the Amazon  (between Brazil, Bolivia, Peru and Colombia) and the Congo were true "no man's land", without witnesses or cameras. Under such circumstances the savvy CEOs of the operating companies resorted to unconventional and compelling incentives to increase the productivity of labor:

    1. The taking of family hostages  (wife and children) as currency of the workforce. The hostages could only be rescued by delivering certain quantities of rubber (the hostages were systematically raped and abused during their detention).




    Accounting Extract ABIR company. List of hostages..

     * contrainte par corps: Disposition qui consiste à appréhender un détenu dans afin qu'il s'acquitte de sa dette

    2. Both in the Amazon (endeude) and the Congo, peonage debt systems where used for enslaving and exploiting the Indians.

    3. physical punishment against the native population was regularly employed. The most widely used instrument was the Chicotte, a kind of whip that tore the flesh. The first news of its use dating back to 1888. This punishment was also applied to children to force their parents to work.

    4. Women were also forced to proletarianize. The rape was the usual penalty for poor performance.

    Force Public and two proletarian women

    5. Torture was systematically applied. If a proletarian man escaped, his wife and children were tortured until the man escaped back or his whereabouts were revealed.

    6. Bullets were the main incentive to boost productivity and punish strikes.

    As punishment for refusing to collect or failing to provide the amounts stipulated by the company  there were frequent mass killings. As evidence that the killings were carried out, the agents of the companies amputated a hand to the corpses. At other times they cut the heads or genitals to prove that those killed were male. The hands were smoked (for conservation in a tropical climate) and delivered to European heads of post as proof that the thugs had done their work.

    Sometimes supervisors did not kill the natives, but only amputated their right hands  to deceive his superiors, hoarding the  remaining bullets or employing them for hunting.

    Capitalist companies ended importing nothing but guns and bullets. As denounce Edmund Dene Morel, ships loaded with rubber coming to Antwerp, returned to Congo loaded with rifles, chains, ammunition and explosives. The real "comparative advantage" of capitalist markets.

    Naked savage capitalism


    E.D. Morel  (Commenting on the Berlin Conference of 1885): "... it was visible through the discussions that took place during the drafting of the terms of the minutes of the conference, the desire to protect the natives of Africa injustice and expropriation; guarantee the peaceful possession of their land and properties; curb, as far as possible, the war between tribes and Arab slave raids; and to maintain and develop trade. Special emphasis was placed on the latter point, it is universally recognized that trade is, above all, a safer environment for the progress of the communities from a state of primitive barbarism to greater awareness of the arts and crafts and, in general, a high conception of life. "

    The capitalism of the late XIXth and early XXth centuries was a mature capitalism under their first procés of globalization. His sycophants had embellished and elevated it to the top of civilization. The public relations departments organized philanthropic geographical conferences to conceal and disguise the colonial plunder. It was a real "system" that was applied everywhere. Capital with a Bible in one hand and A. Smith "The Wealth of Nations" in the other advanced everywhere instopable.

    The capital which got a virtual monopoly on rubber and ivory from the Congo was Belgian capital and had nothing to do with the British, French, German and Peruvian capital that was invested in the exploitation of rubber in the Amazon. However, in both cases, separated by thousands of kilometers, forms of business organization, incentive systems and the results were identical. In the depths of the rainforests, without reporters or cameras, capitalism could operate without the fetishism of labor markets.

    Capital leave in Europe and the US  their disguised Dr. Jekyll, to develop, without scruples or restrictions, its intrinsic and true nature; to operate at ease, naked and wild, as Mr. Hyde.

    Vertical integration of the company



    Roger David Casement "One of the biggest concessionaires of the Congo had sent a request to its directors in Europe for an extra supply of cartridges. The directors complied with those requests asking what had become of the 72,000 cartridges shipped about three years ago. The answer was that they had been used in the production of rubber "..." Each time the corporal goes out to get rubber is given a certain amount of cartridges and he must return all the unused; and for each used he has to bring a right hand "

    W.E. Hardenburg: "As rubber is harder to find, the Indian, in order to be able to deliver the full amount of rubber that the Company requires, and escape  floggings and torture, often adulterate the rubber latex sap from other trees, thereby reducing the quality of the Putumayo rubber "

    0. Ownership of the means of production

    The documents signed H.M. Stanley (he collected no less than 450 "treaties") with heads of local tribes, they gave their rights over their territories to the International Association of the Congo   "for the advancement of civilization and commerce" in exchange for trinkets of little value. It is clear that local leaders were not aware of what they were signing. They thought surely they were granting permits for the establishment of commercial establishments. The idea that they were actually selling their lands (the document was written in French) could not fit in their minds. But according to these treaties, over 20 million people were expropriated and all the wealth of their land attributed to the Belgian company.


    Modern multinationals second globalization, as  Inditex o Appel, camouflage the terror exerted on the working class disintegrating its corporate structure, outsourcing production. The directors of the rubber companies of the first globalization do not needed not such tricks. They established an efficient system of vertical integration to achieve maximum productivity of their workforce.

    A vast area of the planet, similar to that of Europe extension would become a capitalist concentration camp.

    The organization chart of the companies faithfully obeyed this vertical integration:

    1. Administrative division: both the Amazon and the Congo territory where divided into districts controlled by white overseers.

    2. Establishment of collection stations and collection centers.

     Huitotos in front a PARC collection center

    Each district includes a number of collection centers in charge of the surrounding native villages. Every two or three months, the collected rubber was transported to the city (Iquitos in the Amazon, Boma in the Congo) on barges.

    3. Recruitment of foreman

    In Congo, one or two white sforeman (Belgian, French, English, German, etc.) hired by companies,  directed and controlled production from these facilities and accountant offices. They earn a small fixed salary but received additional bonus in proportion to the turnover.

    In the Peruvian Amazon Rubber Company (PARC)  the foreman were called "jefes". The "jefes" were not paid wages but only fees for the collected gum. Each "jefe" controled between 10 and 80 supervisors or "racionales" from the Barbados Islands.

    4. Supervisors of the workforce

    The foreman of the collection points controlled supervisors.

    The tasks of the supervisors were the usual for any company:

    • Determine requirements of production (such as quantity and quality of production, cost, time, labor requirements)
    • Determine the schedule, sequences and assignments for work activities harvesting and drying of rubber.
    • Meet with other supervisors to coordinate operations and activities.
    • Give instructions to workers, eg on job specifications.
    • Monitor and control production processes for detecting defects or faults.
    • Monitor the performance of workers, for example, by monitoring measures, weights and other indicators.
    • Check the quality and quantity of production.
    • Evaluate current production budgets and yields.

    In the Congo the supervisors were called "Capitas". They were cannibals indigenous tribes from remote areas . In each village was placed, day and night, a "Capitas". The efficient Capitas watched closely the collecting work of  the villagers imposing precautionary measures of terror for lack of diligence. In case of violence against the capitas a punitive expedition was organized which usually meant the destruction of the villages involved.

    In the Amazon, the PARC hired in Barbados, as supervisors, British West Indians called "racionales". These "racionales" commanded a troop of  "muchachos" or "boys", in general indigenous orphans, trained to brutalize their fellows. The "racional" exercised similar tasks as those of the Congolese Capitas.

    Racional of the PARCA with a group of his boys

    5. To keep the rubber workers in terror it was needed that they know always the existence of a huge reserve army (other natives likely to be recruited) and therefore its absolute physical dispensability.

    6. The terror was performed with maximum efficiency and effectiveness. It was not enough to kill but that terror must be something scenic and spectacular. They were tortured in public, the victims were burned alive dropping slowly flammable liquid over their heads, the severed heads where impaled, genitals exposed in the village palisades, people was crucified, sometimes upside down,  wives or daughters where impaled, etc.

    According to Veritas in the newspaper West African Mail, one of the capes of the Anglo-Belgian India Rubber and Exploration Company (ABIR), Mon. Foecie, practiced a terribly scenic terror when he killed the head of the region Isekifasu Bolima, killed his wife and their children, and cut them in pieces and ate some of them in front of everyone. He decorated the house of the head with the intestines, liver and heart of some of the victims.

    http://eltrabajonoshacelibres.blogspot.com.es/2012/08/leopoldo-ii-de-belgica-y-la-explotacion.html
    white commissioners ABIR with supervisors or Capitas

    7. The cost of terror was carefully controlled. From the collection center the foreman counted the number of cartridges delivered to supervisors, requiring a pledge in return at the end of the day (cut and smoked hands, testicles, ears, etc). A district foreman, Leon Flévez received 1,308 severed hands in a single day. It was also recommended to put the victims in a row to kill them with a single bullet.


    The companies involved



    a) Companies in the Congo Basin


    Along with the AIC, owned by Leopoldo, the companies that obtained major concessions were the Anversoise Société du Commerce au Congo and the Anglo-Belgian India Rubber and Exploration Company (A.B.I.R.). Leopoldo had a major stake in the two companies, directly or through proxies. The other big capitalist behind these companies was the banker Alex de Browne de Tiège, possessing 1,100 of 3,400 shares of the Company of Antwerp, and 1,000 of the 2,000 of the Anglo-Belgian company. Other companies operating in the area were the Compagnie du Kasai  (a cartel of 14 companies getting dividends of 700% per year), the Lomami Company, the Compagnie des Grands Lacs, the Lulonga Company and the Compagnie du Katanga.


    b) Companies in the Amazon basin:


    The most active companies in the Amazon basin were: the Society of Colombia, H. and U. Rubber and Coffee Status Lted., Rubber Corporation, and the Peruvian Amazon Rubber Company (PARC), which later became the Peruvian Amazon Company (PAC)

    The most important was the Peruvian Amazon Rubber Company Ltd (PARC) established on October 1, 1907 with a capital of £ 1,000,000 sterling, divided into 300,000 preferred shares to 7 percent with a nominal value of £ 1 each and 700,000 shares ordinary, with nominal £ 1 each.

    The total of British capital invested in stocks and bonds rubber companies operating in the Amazon basin and listed on the London Stock Exchange surpassed six million pounds, making profits of 5% on average. Some of these companies paid dividends of 12%, 20% and 25%.


    The police forces of public order


    E.D. Morel: “Expenses related to the accommodation, food, and equipment of regular and irregular cannibals soldiers were infinitesimal, the bodies of dead enemies were still sufficient for all purposes, considering that every cannibal had at least one body to eat, and, in fact, more than he could comfortably handle, because cases of death through excessive or indigestion were not unknown.”

    Congo companies have the right to exercise police powers in areas over which they had concessions but, if necessary, could enlist the help of the Force Publique.

    Since the early 1880s, in the absence of  Belgian people willing to move there Leopoldo  had hired European mercenaries to serve their interests in the Congo. In 1888 they were organized into a mercenary army called Force Publique acting simultaneously as an army of occupation and as law enforcement serving business enterprises. All officers were white.

    Force Publique


    There where great difficulties recruiting for the new army. The white officers managed to recruit elements of very backward tribes practiceing cannibalism (literally they ate at night the victims of the working day), but usually they had to resort to forced recruitment. The soldiers were recruited by force and forced to serve in the body for at least seven years. Recruits were often purchased from the heads of their tribes (if they do not agree to sell were themselves and their tribes subject to reprisals) or slave traders; at other times they were simply kidnapped.



    The Force Publique was also an instrument of ethnic cleansing, used by colonial capitalism to encourage confrontation between the various ethnic and social groups in the Congo, usually against Kongo majority group, promoting their weakening and population control.

    Entrepreneurship and Public Relations



    King Leopold: "Our unique program, I am eager to deal with,  is the task of moral and material regeneration, and we must do this among a population whose degeneration in their inherited conditions is difficult to measure. The many horrors and atrocities that dishonor humanity are receding slowly step by step through our intervention "


    Edgard Malet (GB representative at the Conference of Berlin 1885): "You can not forget that the natives are not represented among us, and that the decisions of the Conference shall, however, be extremely important to them."

    Leopold II, King of Belgium since 1865, turned out to be a very enterprising man. He was initially attracted to the business of ivory. In 1876, he chaired the Brussels Geographic Conference bringing together experts, explorers and scientists from major European nations.

     In this Conference Leopoldo raised the need to civilize Central Africa. The main result of the conference was the decision to create an international association, the African International Association (Association Internationale Africaine, AIA, (created in 1876), a philanthropic institution to coordinate the great task.

    In November 1878, in Brussels, was established the Committee for the Study of the High-Congo (CEHC), a "société en participation" with a capital of one million francs, the main subscribers were Leopold himself, possessing over one quarter of the capital (260,000 francs), and AHV (the Dutch company Afrikaansche Handels-Vereeniging) with 130,000 francs. Although the purpose of the Committee, as defined in its statutes, was mainly philanthropic and scientific, it talked openly to promote trade and industry in the area.

    The AHV soon declared bankruptcy; Leopoldo saw in this event the opportunity to take full control of the company bBecoming, de facto, the sole owner of the company which name would be changed to be called International Association of the Congo (AIC).

    Leopoldo worked hard to gain international recognition of their rights over the new territory. He played the trick of his fame as philanthropist king, and allowed a useful ambiguity between the old and altruistic African International Association, and the International Association of the Congo actual occurred.

    The US was the first country to recognize the rights of King Leopold II on the Congo April 22, 1884.

    Leopoldo announced that his "Congo Free State" would enjoy complete freedom of trade, all ports would be free port with no taxes on imports or exports, earning the favor of the European press.

    However, was necessary to reach agreement on the issue of the Congo with all the European powers. To this end, he called in 1884 the Berlin Conference, to which were invited all major powers of the time.

    Leopoldo obtained the recognition of its sovereignty over the Free State, whose borders had been drawn with the help of Stanley, in August last year. The coastal area near the mouth of the Congo was divided between France, the AIC and Portugal. Leopoldo obtained the port of Matadi, his starting point for the exploration and colonization of the interior.


    Indigenous Congo who dear to resist
     being civilized by Leopoldo



    The day August 1, 1885 was born officially the Congo Free State. Leopoldo assumed the title of "High King" of the new state with the approval of the Belgian Parliament.

    The Free State also had its flag: the same that had led the African International Association and the International Association of the Congo. A gold star on a blue background. Ironically, this star symbolized the benefits that would bring civilization to Central Africa.

    Bismarck delivered his baptismal blessing. "The Congo Free State is destined to become one of the main promoters of the civilizing work we have in mind, and pray for their healthy development and to fulfill the noble aspirations of its illustrious founder."


    The fortunes of rubber



    Edmund Wade Davis: "The rubber barons light their cigars with hundred dollars notes and appeased their horses thirst with champagne in ice silver buckets. Their wives, who disdained the muddy waters of the Amazon, sent their dirty cloth to Portugal to be washed there. Banquets were served in Carrara marble tables, and guests sat in cedar seats  imported from England (...) After dinner sometimes costing one hundred thousand dollars, men retired to elegant brothels. Prostitutes flocked from Moscow and Tangier, Cairo, Paris, Budapest, Baghdad and New York. There were fixed rates. Four hundred dollars for Polish virgins thirteen years old ... "

    In Tervuren, just outside Brussels, is located the Royal Museum of Central Africa built by Leopold II. The museum has one of the more important art collections of  African objects in the world. The museum, of course, does not harbor any memory of the terrible massacres that were carried out on behalf of the free market. In 2005 it took place in the museum an exhibition named "La mémoire du Congo", where only a small part of the numerous colonial crimes were recognized, but the positive aspects of colonization where highlighted.

    Leopoldo commissioned many buildings paid for by the fruit of his African businesses. Among them is the so-called Arco Cinquantenaire (a parliamentary opposition named it "Arc of the Cuted Hands"). At the Universal Exhibition in Brussels in 1897 Belgian people  could visit, among other things, the human zoo that settled in Tervuren.

    Many of the documents relating to the administration of the Free State were thrown into the fire by order of Leopold in 1908, shortly before the cession of the territory to Belgium. Those who survived were classified as secret until the 1980s but actually any inquiry confront strange administrative difficulties of all kinds.

    Manaus enjoyed an electric tram, when New York and Boston only offered horse-drawn trams. Avenues were built on dried marshes, stunning and luxurious buildings whe build as the Amazon Theater, which was inaugurated on January 6, 1897 with a performance of La Gioconda by Amilcare Ponchielli, played by the great company of Italian Opera.


    postscript


    Finished the rubber boom other capitalists fevers soon reached the jungles of the Amazon and Congo. In the Amazon, the rubber was replaced by wood and oil. In Congo, copper, diamonds, coltan, cassiterite, gold, etc., continue attracting capital and its untold succession of genocidal atrocities.

     Links:

    PARC

    Pdf Amazonian rubber

    Film: Congo White King Red Rubber Black Death

    EN EL CORAZÓN DE LAS TINIEBLAS... DEL PUTUMAYO, 1890-1932.

    Kasai Company and its shareholders