referred to as the 'Asian Tigers'. With the exception of the Multifibre Agreement drawn up by GATT, much of this investment for Asia hit a variety of protectionist barriers on the export of capital. Although GATT tried to get aroundmonetary restrictions with the introduction of the SWIFT system for electronic interbank fund transfers worldwide and other measures, the pressure for change in currency regulations intensified throughout the 1980s as capitalism's trade cycle returned with a vengeance with plummeting production and soaring unemployment. Out of this emerged what came to be called the 'Washington Consensus' instigated by the neo-liberals within the US Treasury,IMF and World Bank who advocated a programme to free up capital assets by: privatising state owned monopolies; reducing personal and business taxation; deregulating financial institutions; removing restrictions on FDI; and reducing publicspending, particularly on welfare benefits. Urged on by the collapse of the state capitalist regimes who could not compete economicallyor militarily any longer with the dominant Western economies, the pressure continued to intensify for deregulation of currency movement and the abandonment of GATT, and its replacement by the World Trade Organisation. This eventually took place in 1995 and under it trade and the movement of currency and capital assets has had a much more straightforward path to profitable markets. Deregulation of currency movement and the removal of restrictions on FDI, however, proved to be just too late for the developing countries on the Pacific Rim. By 1997 these countries had found their credit was severely overextended, delivering a lower rate of profit than predicted by the pundits and speculators of the financial institutions. The unintended consequence of the crisis in South East Asia was the acceleration of the movement of currency into other areas still - like China and India - where there were better prospects of profits. This is the nature of capitalism for the accumulation of capital is dependent on economic growth, regardless of the risk attached, and is essential to the workings of a system that puts competition and the pursuit of profit, at each link in the chain - from production to distribution and eventual sale to the consumer - above all else. Risks With the velocity facilitated by the internet, clearly the overall economic trend is towards short-term profits through FDI, currency speculation and by squeezing market share of competitors, particularly in manufacturing and services. But that does not mean that the developed countries are solely concentrating their investments in the developing countries - far from it. The greater volume of trade and investment is still between the G8 countries themselves who, forced by global market conditions, have taken into account the relative economic, political and social stability of the developed world, compared to what they would sometimes gain from relatively precarious investment in any of the developing, or even undeveloped countries. Generally, what is most noticeable about this economic activity is that all the developing countries targeted by the World Bank, IMF and the WTO were selected because they have access to sufficient energy and water supplies to sustain a short-term industrialisation programme, rather than sustained long-term growth.
is currently finding it very difficult to meet the increased demand for electricity andfor bottled and industrial water, and consequently using 47 percent of the world's cement to complete the damming of the Yangzi, and meet their targets on urbanisation and industrial capacity. In effect the Chinese have soon come to realise that without sufficient energy and water their plans for long-term growth are unachievable. Although this economic targeting over energy and water resources is undoubtedly a high-risk strategy, and has all the potential for military conflicts over essential resources, it is one explanation why the emphasis is on short-term profit and speculation. What is also apparent is that the freeing up of the movement on capital has not entirely been accompanied by a corresponding deregulation in the movement of labour. Indeed, the restrictions on immigration have been tightened in some cases,and strictly enforced by some countries to hold back the flood of economic, and mostly illegal, immigrants chasing the movement of capital in the developed and developing countries. These phenomena have led to the growth in human trafficking - and the casualties are being found suffocated in the back of lorries at Dover harbour, or drowned on a beach in Morecambe Bay or even crushed by a train in the Eurotunnel. There are also other risks associated with the pursuit of industrial growth in the developing world, the most obvious one being the spread of AIDS, particularly in Africa where it has been helped along by a tenfold increase in the transportation of commodities. And then there's the risk that the increase in global pollution and the onset of global warming will put severe pressure on the relocation of coastal communities. A less immediately obvious risk is of an increase in capitalist industrial growth in some countries facilitating and encouraging the manufacture of weapons of mass destruction and their eventual use in competitive power struggles between states. These and other risk factors can only accelerate as the demands for more energy and water increase in line with industrial growth. The reasons why these patterns of risky economic activity are so pronounced are many and varied, but all are nonetheless based on capitalism's inherent competitive drive to maximise profits regardless of the consequences. The actual growth in economic development in parts of the developing world attracting investment has been on a tremendous scale with developing countries like Brazil, China and India sucking in vast amounts of capital to increase their infrastructure and manufacturing base. In particular the annual percentage increase in GDP for China (9.8) and India (8.1) illustrates how these economies are being dramatically reshaped in the interests of capitalism. BRIAN JOHNSON Next month: the impact that the continuing surge in globalisation is having on people in the developing and undeveloped countries. |
||
|
To Socialist Party Homepage: To contents: To next page : |
||
|
Page 8 Socialist Standard August 2006 |