The following article has been translated from the Internationales Freies Wort, journal of the Bund Demokratischer Sozialisten, the section of the World Socialist Movement in Austria.
The poison gas catastrophe in Bhopal in India with its large number of dead plus many more blinded and injured shook world opinion. The American multinational chemical corporation Union Carbide, to whom the Indian poison laboratory belonged, was quick to point out in the media that its production of protection for plants (pesticides) aided India towards self-sufficiency in food and thereby saved many people from dying of hunger. So, after deducting the thousands who were poisoned Union Carbide still comes out as positive!
But the truth is that India doesn't need any poisonous material for pesticides. The poverty-stricken small farmers lack the most basic implements such as spades and hoes as well as pumps for irrigation, etc. But there's no business in this for big industry in the Western countries. So the underdeveloped countries get pushed the products which the industrialised countries want to sell, all in the name of development aid. In other words, "we are helping ourselves, not the underdeveloped countries" as no less than President Nixon openly declared when development aid was under attack in America.
So the Indians, happy with their unordered poison which of course the poverty-stricken small farmers could not buy, were forced to migrate to the towns as they couldn't make a living from agriculture, where they settled in front of the gates of the chemical factory and died "like flies" when the poison gas leak came.
World opinion, prevented from a correct insight into the problems of the underdeveloped countries by all the manoeuvres that go on over loans and exchange rates, was taken unawares by this catastrophe. But not anyone who had taken the trouble to inform themselves of the facts. Some years ago the American writer Susan George published her How The Other Half Dies in which she attacked established myths and exposed the businesses of the industrialised countries as responsible for the poverty of the underdeveloped countries.
Such statements are not approved of by the establishment of the industrialised countries — but the latter's failings make their investigation of the problem worthless. This is also the case with the "Independent Commission for Development Questions", a committee under the chairmanship of Willy Brandt (SPD), the majority of whose members are "representatives" of the underdeveloped countries themselves but they are all from the capital-benefiting elite-strata of these countries. The consequence is that the first report (1980) carefully avoids everything that could go against the capital interests of the industrialised countries and so ignores all the real problems and can show no way towards solving them.
The second report (1983) is just the same. In the foreword Brandt points out that events have regrettably confirmed the worst apprehensions of the first report. In which case the Brandt Commission was useless. Of the 94 proposals in the first report not one had been implemented. Of course something else will happen — more recommendations and more pious wishes.
Development to what?
In reality everything resolves around the preservation of the existing economic institutions of the industrialised countries. The assumption is that the underdeveloped countries should be lifted to the splendid heights of the developed countries. But people in the developing countries are less and less enchanted with this. It has been noticed that all the aid has not reduced the gap between living standards in the South and those in the North — on the contrary the backward countries have fallen even further behind. It has also been noticed that the industrialised countries are not a paradise for all their inhabitants. The introduction of industry into the underdeveloped countries has led to more disadvantages than advantages — the uprooting of traditional ways of living and working, the cut-back in home production in favour of the products of the multinational corporations, the growing impoverishment through the ever-increasing dispossession of those who are insolvent, ending in the disasters like Bhopal.
If the practice of industrial development is so unsatisfactory this is above all because its theory, the basic concept of raising the underdeveloped countries to the level of the developed countries, is nonsense from the beginning. When the whole world is "developed" and busies itself with profitable stock exchange transactions where would the raw materials and foodstuffs at present imported from the underdeveloped countries come from?
But this leads to the view that real aid for the underdeveloped countries demands fundamental changes in the developed countries — and that the establishment does not want to hear. It wants to push forward normal business to an ever greater extent, to exploit the population of the underdeveloped countries as underpaid producers of raw materials and, beyond this, also to make them low-wage industrial workers and customers for the products of the multinationals. In this effort large factories have been set up in the underdeveloped countries, to the detriment of existing industries in the developed countries. Their financing has mainly come from credit.
International debts
High finance, which likes to go on about being thrifty, once again didn't follow its own advice. The big banks queued up to lend credits to the underdeveloped countries. Now they are faced with the international debt problem, the consequences of which are borne by the underdeveloped countries. Over-burdened with debts these have growing interest payments and an increasing dollar exchange rate to worry about too. The much-ballyhooed recovery of the American economy which Reagan boasts about has taken place mainly to the detriment of other countries. Tax reductions for the rich and unlimited increasing arms spending has led to an enormous deficit in the American budget with no noticeable inflation — at home. The inflation was in fact exported through the increased interest rates which attracted international capital to the US and made it a debtor country, but pushed up the exchange rate of the dollar.
The underdeveloped countries are now faced with a mountain of debts expressed in expensive dollars, borrowed at ever-increasing rates of interest. On top of this the International Monetary Fund (IMF), which the second Brandt report still hoped would increase its support for these countries, forced devaluations on the debtors, further increasing the burden of their dollar debt. In 1985 the interest payments alone were 50 per cent of the borrowed amount for Argentina and Brazil and 40 per cent in the case of Mexico. These are the so-called "threshold countries" who stand on the threshold of industrialisation and so should be "somewhat better" than the ordinary underdeveloped countries!
The Debtors
Brazil was the first country to break the hundred billion dollar debt level. In Sao Paulo 34 per cent of those available for work are unemployed. They don't known that they each owe 14,000 Schillings (about $750) to the international bankers, and, even if they did know, it wouldn't worry them. The debts were contracted under the military regime to use on numerous large projects which were in part profitable, but which in many cases became unprofitable through mismanagement and the downturn in the economy. Home-produced cars fill the streets, but have no petrol and run on alcohol which is produced from raw sugar. The cultivation of this together with that of soya beans for export means that the cultivation of foodstuffs has fallen by 12 per cent, and this in a country of chronic undernourishment! The really pressing problem of increasing the production of home-grown foodstuffs has been forgotten in the industrialisation-illusion.
The Pinochet regime in Chile, supported by international finance capital, came to power through the murder of the democratically-elected President Allende and has since practised a murderous reign of terror. But this has not meant that there have been no business swindles under it. The five big banks which Pinochet had privatised could only be saved from bankruptcy by being renationalised. And a number of bankers and two Ministers have been found guilty of fraud by the Courts.
In this respect there is no essential change if a military government is replaced by a civilian one, as has happened in Argentina and now also in Brazil, so long as the civilian government continues to obey international capital and its bailiff, the IMF. In the rest of South America and in Africa and Asia things are similar: foreign credit is mainly used for projects which ignore the needs of the population because these only very sporadically correspond to the valorisation requirements of capital.
The spectre
There is a saying that if you owe the bank $1000 you have problems but that if you owe the bank $1,000,000 the bank has problems. And the underdeveloped countries have debts of billions of dollars! Hence the spectre of a debtor's cartel: if all the developing countries were to stop their payments at the same time then all the big banks in the industrialised countries would go bankrupt and there would be an economic earthquake. At present it hasn't happened as the governments in these backward countries are in the hands of wealthy capital-benefiting minorities and have openly gone into the (well paid) service of the foreign exploiters. But in the last analysis they have to understand that an explosion threatens them if they exact further sacrifices from the population.
The creditors can no longer seriously hope to ever recover their capital. It is now only a case for the creditor-banks of not having to cancel the uncollected debts and thereby admit their faulty credit position. The debtors are given a delay for repayment and are lent yet more money so that they can pay the interest. In theory the debtors receive the new money but they never see it; it remains in New York, London, etc in the hands of the banks who are thus enabled to achieve considerable profits.
The truth is that these countries can only settle these new debts inadequately. Among the many proposed solutions there is the tried solution which always emerges when the capitalists are in difficulty: let the much-suffering state pay! This would save the banks, before or after, from their bankruptcy - naturally at the expense of the majority of the population of the industrialised countries who thereby see established a forced solidarity with the inhabitants of the underdeveloped countries.
We can't help thanking them. Financial pressures have produced more than enough harm — they have poisoned not only the thousands in Bhopal but the whole economy of the underdeveloped countries. And the economy of the industrialised countries is in no better state: they suffer from stagnation and unemployment and so have unused resources that could be used to produce the things the underdeveloped countries really need.
But this is opposed to the basic principles of the profit economy: only what yields or at least promises a profit is produced. Here is the real problem and any attempt to find a solution must start from here. The removal of the profit system is the watchword. That the Brandt Commission and the other aid schemes are chained to the profit system is the real reason for their failure.
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