Famine in Africa (1984)

From the December 1984 issue of the Socialist Standard

Toyin Falola, writing about the impact of colonialism in Africa, has this to say:

The situation then turned from one of mere trading partners to one of unmitigated exploitation. Colonial rule was so successful that although nearly all African countries have now achieved political independence they remain economically dependent on Europe. This unequal partnership is a major obstacle to the socio-economic development of Africa. [1]

The problem with the theory of “neo-colonialism" is that, like all theories developed within the narrow perspective of nationalism, it tends to overlook the boundaries of class. Where it acknowledges the dynamics of class struggle, more often than not it absorbs it into the conflict between countries — between the rich industrialised North and the impoverished providers of raw materials in the South. Thus Susan George:

The present world political and economic order might be compared to that which reigned over social-class relations in individual countries in nineteenth century Europe with the Third World now playing the role of the working class. [2]

To be fair to George, she does draw attention to the existence of “local elites" in the Third World. Yet all too often with those who subscribe to this neo-colonial model of the world, it is not that such an elite exists that matters but that it should so unashamedly ally itself with its erstwhile colonial masters.

Who is this elite in Africa? According to Greg Lanning:

At independence the new rulers in Africa lacked an economic base in society and used the patronage and power of government to consolidate their own position. Partly because of this and partly because of the nature of an underdeveloped economy, “the state plays a major role in economic activity and development". The importance of the state in post-colonial Africa means that those who staff and run the state apparatus form the basis of the emergent ruling class in Africa. [3]

The dominant ideas in society being those that best serve the interests of its ruling class, it is perhaps not surprising that contemporary politics in Africa should be so receptive to Leninist ideology with its statist prescription for the management of an emergent capitalism. On the other hand, as Lanning suggests, in trying to consolidate their economic position Africa's rulers depend heavily on the revenue accruing to their national treasuries from foreign companies operating within their territories. Such a situation demands a degree of pragmatism. For a ruthless pragmatist like President Mobutu of Zaire this has proved most rewarding. With a personal fortune of about £100 million, Mobutu is one of the richest men in the world, while the average wage of a Zairean worker amounts to just over ten dollars a month. Clearly, if Africa’s ruling class chafes against the constraints of “neo-colonialism", it is also very much a beneficiary of it. While it has neither the inclination nor the option to withdraw from the interlocking relationships characteristic of an integrated world economy. Dinham and Hines point out to what extent it has been able to modify these relationships to its own advantage:

Could a politically independent state wrest economic power from the foreign companies which continued to control their export crops? The strategies open to governments were limited and experience soon showed that measures to acquire immediate control by nationalisation led to retaliation from the companies involved. Most countries opted for more modest legal and financial controls. These measures did not drive the companies out — nor were they particularly intended to do so, for the companies were by now crucial to many African economies. [4]

More recently, however, the trend has been for these multinational firms to opt out of plantation agriculture in which many of them have their roots and to move towards an arrangement known as “contract farming”. What this means is that local producers are contracted by a firm to produce a certain output which the firm then purchases at a fixed price. This has the advantage for the firm concerned in that it eliminates the risks attached to growing crops.

But while multinational firms invest less in direct landownership than they did in the past, in other respects their dominance has become more entrenched and pervasive. These latter activities include the marketing, processing and transport of agricultural products as well as the provision of agricultural inputs such as fertilisers, machinery and management or technical services. Such "vertical integration" is the hallmark of modern agribusiness corporations. In other words they are able to exercise wide ranging control over the many links that make up the food chain, from the supply of seeds to the packaging of the final product.

For the proponents of economic nationalism, this is a highly regrettable state of affairs. Not only are African countries denied greater "vertical" control over their products but are economically restricted in a “horizontal” sense as well. This is to say their structure of production is relatively undiversified. being closely aligned in most cases to a fairly narrow spectrum of external markets which absorb the bulk of Africa’s trade. According to Dinham and Hines

Twelve countries are dependent on just one main crop for over 70 per cent of their income. and a further eleven countries depend on only two crops for well over half their income. [4]

Such a highly concentrated pattern of production has a number of disadvantages built into it. In the first place, it greatly increases the risk of loss due to environmental factors. It also makes these countries extremely vulnerable to fluctuations in the price of their export crops. Just as a mining community in Britain, for example, could be devastated by the closure of a mine on which it heavily depends, so a drastic fall in the price of a single agricultural product can wreak havoc with whole regions given over to the production of this crop. In Africa’s case, probably the most extreme example of “over-concentration” is that of Gambia, where groundnuts are grown on 73 per cent of the arable land and account for 90 per cent of its export revenue.

The market economy is, of course, an inherently unstable system and within it the price of agricultural products tends to be more volatile than most. It is this very instability which adds yet another dimension to Africa’s plight in that a high proportion of its export crops happen to be slow maturing and so not readily adaptable to the vagaries of the market.

Take, for example, coffee. In at least eight African countries coffee is an important export crop grown largely by smallholders. High current prices will induce farmers to plant or expand their acreage of coffee trees. Once planted they have to wait for roughly five years for the coffee trees to mature but as Moore-Lappe and Collins point out:

By the time your first harvest of such crops is ready you might find the bottom has dropped out of the market. And it probably will have since producers in your country and others will have planted to meet the demand at the same time you did The likely result is overproduction once the new trees begin to bear more than the consumers are willing to buy even with a drop in price. [5]

In the economically advanced areas of world capitalism, governments have usually sought to cushion agriculture from the erratic workings of market forces. But this in turn has created yet another problem: periodic crises of “over-production” and chronic food surpluses. In fact so huge are these surpluses that in America alone it costs £700 million a year just to stockpile them. [6] But such stocks are by no means surplus to human requirements; they are surplus to the capacity of the market system which restricts workers’ consumption to the size of their wallet. Once again, Susan George:

As long as food is regarded as a commodity . . . you will have this scandalous situation of surpluses on the one hand and famine on the other. Because people who can’t pay. who cannot become consumers with a Capital C are not interesting to this world system. [7]

In the Third World, however, there is far less scope for governments to intervene and protect their agricultural sector in the way that the EEC or the American government can. The reason is that the subsidies paid to farmers in the richer countries represent a tax burden on other sectors of industry. But in the developing countries this is hardly a practicable course of action:

Developing countries are so called because their other industries are not developed: generally speaking, agriculture is their one main industry. Agriculture has, in their case, to support the government. Only in developed countries with prosperous industries able to give revenue to the government can the government, in its turn, support agriculture. [8]

In addition to the problems affecting African countries arising from fluctuations in the prices of their agricultural exports, there has been in the post war era a longterm tendency for these prices to drift downwards against those of imported manufactures and oil. For example, "in 1969 a coffee producing country had to sell 66 bags of coffee to buy one 16 tonne truck but by 1979 it had to sell 123 bags of coffee to buy the same truck" [4] Don Casey, in a paper prepared for the UN Development Programme, estimated that the total loss of foreign exchange earnings to Africa due to this relative fall in the price of agricultural exports in the two decades after World War Two, "exceeded all foreign funds invested, loaned or granted during that period". [5]

This "deterioration in the terms of trade" has prompted African and other Third World governments to try to secure commodity agreements through bodies like the UN Conference on Trade and Development (UNCTAD) in order to stabilise prices or else to form producer cartels along the lines of OPEC. To date such attempts have been largely unsuccessful. Partly this is because "producer countries" are themselves no more a monolithic bloc than their customers but are deeply divided by competition over markets. When, for example, a conference was held some years ago to try to reach an International Tea Agreement, several African countries objected to the idea of fixing prices or quotas. The reason was that Africa’s share of world output was projected to grow substantially in the near future.

Faced with these increasingly stringent economic pressures, African governments have little choice but to move even further down the road that has led to the predicament in which they find themselves. To boost their revenue they must encourage commercial agriculture. In so doing they have had to turn more and more to multinational agribusiness for the necessary imports and to private banks or aid agencies for loans to finance this expansion. This of course only further reinforces the need to promote commercial agriculture. It is after all mainly from this source (apart from the mining sector in some cases) that governments can hope to raise the necessary amounts of foreign exchange that can go towards repaying the debts incurred.

For peasant farmers throughout Africa such developments translate into a mounting burden of misery. As peasant farmers they are of course mainly “self provisioning" — they produce food primarily for their own consumption — production for the market being a secondary consideration. But today this social arrangement is coming under increasing attack.

After “independence”

Julius Nyerere in his famous 1967 Arusha Declaration, remarked that

The basic difference between Tanzanian rural life now and in the past stems from the widespread introduction of cash crop farming. Over large areas of the country peasants spend at least part of their time — and sometimes the larger part of it — on the cultivation of crops for sale — crops like cotton, coffee, sisal, pyrethum and so on. But in the process the old traditions of living together, working together and sharing the proceeds have often been abandoned.

The Arusha Declaration itself was an attempt to transform peasant agriculture by reducing the influence of market forces. It sought to build a self reliant economy by raising agricultural productivity through the mass mobilisation of peasants within a framework known as the Ujamaa (meaning “familyhood”) programme. Among other things this entailed the enforced resettlement of scattered peasants into some 8000 planned villages, ostensibly to extend essential services to the rural population as a means to greater productivity.

The Ujamaa experiment is interesting because of its ideological commitment to the idea of peasant self-reliance. Its failure to live up to this commitment — for it came increasingly under the control of a burgeoning state bureaucracy — highlights all the more starkly the inherent conflict of interests between African governments generally and the peasant populations in the countries which they govern. The fact of the matter is that these governments need to further extend the influence of market forces, not to reduce it; to transform, as Marx put it. “a society in which one definite mode of production dominates even though not all productive relations have been subordinated to it" into one based more and more on purely capitalistic relations of production. In short, what the Ujamaa programme foundered on was not an ideological betrayal but the economic exigencies of Tanzanian capitalism and its heavy dependence on foreign imports and aid resulting in the need to generate foreign exchange.

How is the capitalist imperative to extract marketable surpluses from cash crop production transmitted to, and impressed on, the African peasant? In colonial times a favoured method to induce peasants to grow cash crops was by levying taxes. This remained the case after political independence. Indeed, in some cases the burden of taxation has substantially risen:

In Mali in 1929 the French levied a tax that required each adult over fifteen to grow between five and ten kilos of cotton to pay for it. By 1960, the last year of French rule, the tax had risen to the equivalent of forty kilos. By 1970. during the drought, the successor government forced each adult peasant to grow at least forty eight kilos of cotton just to pay for taxes. [5]

Generally speaking, crops that peasants produce for export are purchased by marketing boards — usually government-run and almost all monopolies — and then sold to foreign buyers for processing. The price that peasants are paid is often far less than that charged by the marketing board which in turn reflects the state of the world market. It may be deduced that the lot of the peasant might improve with an improvement in the world market. But this is not necessarily so:

A slight increase in income that peasant farmers in underdeveloped countries might acquire from a rising world price for their commodity has to be weighted against the increased threat of displacement by land-grabbing commercial farmers or corporations that see higher prices as new grounds for profit. [5]

In the post war era most countries in Africa experienced a surge in cash crop production though more recently in the 1970s output has tended to level off (partly due to the world recession). Significantly, this growth was achieved primarily not by raising yields but by expanding the area under cash crop production. Inevitably, this was at the expense of subsistence agriculture which was progressively pushed onto less productive marginal land. Since subsistence agriculture is a major local source of food, this development goes a long way towards explaining the steady fall in per capita food production in Africa over the last twenty years or so.

In the past the availability of relatively abundant land, coupled with communal forms of land tenure, tended to cushion subsistence agriculture and ensure a modicum of food security. Indeed, it was this that mainly inhibited the development of a strong indigenous landowning class. But today this picture is rapidly changing as a recent survey from the Cornell University Centre for International Studies suggests:

The study found a trend across Africa towards increasing privatisation of communal lands, growing concentration of landownership and the fragmentation of holdings, all factors further aggravating rural poverty. In some countries lands traditionally available to all tribal members are being appropriated by government officials or foreign firms, usually with the acquiescence of chiefs.[4]

It has been estimated that three quarters of Africa's population now have access to less than 4 per cent of the land [2] while in many parts of Africa “small farmers do not own enough land to occupy themselves for at least 6 months of the year”. [9] And most importantly, with the question of famine in mind, “8-10 per cent of the rural labour force in Africa is now landless and these numbers and proportions are growing rapidly". [4]

The consequences have been catastrophic for millions of peasants caught between the hammer blows of the market economy and the anvil of diminishing returns from subsistence agriculture. And as rural deprivation worsens, so the tide of migration to the cities has gathered pace. Africa may be the least urbanised continent. with less than a quarter of its people living in cities, but its rate of urbanisation is roughly twice that of its population growth. This means on current trends that the population of African cities can be expected to double every 14 years. But how can this growing population be fed when domestic food production mainly in the form of peasant farming is in the throes of decline?

The answer as far as governments are concerned is to import food, particularly cereals, from abroad. This first began on a significant scale in the 1960s when the price of cereals was low as a result of the accumulation of huge surpluses in North America and Europe. But. as Sir Fred Catherwood explained, this was by no means an unmixed blessing:

These surpluses from Europe and from America depress Third World prices; they put Third World farmers out of business, they drive them off the land and into the shanty towns and they reduce rather than increase production in the Third World. [7]

Without doubt. African governments are fully aware of this, but whether they are in a position to do anything about it is quite another matter. They have to take into account for example the likely response of town dwellers to any increase in the price of basic foodstuffs that might benefit local producers. Furthermore, as new tastes become entrenched in the urban areas it is even more difficult to break away from dependence on a particular cereal (like wheat) which for climatic or other reasons cannot be grown in much of Africa. The population of Africa may be mainly rural but political power is overwhelmingly urban-based, with consequences graphically spelt out by Basil Davidson:

So it was increasingly the towns, after independence, that dictated the priorities of economic policy; and the new demands of the towns, pushing aside the needs of the countryside, increasingly called the tune. More and more exports had to go in paying for the imports demanded by the towns . . . the towns and cities, in short, became the tail that wagged the economic dog. and the rural populations, still in most cases the great majority of all the people, had to suffer for it. [10]

When in fact big increases in food prices have been pushed through against the wishes of the urban population, this has in many countries been the prelude to serious riots and, in some cases, a successful coup d'etat. Little wonder, as Rene Dumont put it. "governments fear urban unrest far more than the dispersed and unorganised peasant farmers”. [11] Prompted by this threat—not to mention the military aspirations of rival African states — they have sought to massively arm themselves with the paraphernalia of repression: “At present governments spend an average of between 4 and 7 per cent of their budgets on agriculture — while spending 20 per cent on defence". [12]

More recently in the 1970s the cost of food imports rose substantially. For African countries this was an ominous development. particularly when seen against the background of a relative fall in the value of agriculture exports. Many governments in response to this crisis have initiated large scale (often state run) agricultural schemes in a bid to boost domestic food production by attracting foreign investment and expertise.

At first sight this might seem an unlikely area for foreign firms to invest in, for the reason so candidly explained by the Chairman of General Foods: "It is virtually impossible for a private business establishment to develop, distribute and sell enough of the kinds of food poor people need and still break even, much less look for any profit". But the role of aid has been a crucial factor in enticing agribusiness. Firms find it sufficiently lucrative to participate in large scale agricultural projects as these "attract funding on concessional terms by aid agencies" and with payments effectively guaranteed by the aid agencies concerned this eliminates financial risks to the firms themselves. In short, with the prospect of large scale schemes coming to dominate domestic food production in the 1980s this will "ensure agribusiness an increased role in Africa’s food production, thus complementing its historic control of Africa's cash crop production". [4]

Should this happen it will further erode subsistence farming, displacing peasants or driving them more and more into the market place of hunger where the economic risks are as great as the physical margins of survival are small. For increasing numbers of them throughout Africa a way of life is dying by degrees; slowly strangled, as though by a python whose length spans the circumference of the globe.

Robin Cox

References

(1) African History and Culture, edited by R Olaniyan, 1982

(2) How the Other Half Dies. S.George, 1979

(3) Africa Undermined. G.Fanning with M. Mueller. 1979

(4) Agribusiness in Africa. B.Dinham & C. Mines. 1983

(5) Food First, F.Moore Lappe & J.Collins. 1982

(6) The Observer, 1 April 1984

(7) Utopia Limited, programme notes, 1984

(8) Agriculture The Triumph and the Shame. R Body. 1982

(9) The growth of Hunger. R.Dumont & N Cohen. 1980

(10)  The Story of Africa, B.Davidson. 1984

(11)  The Guardian. 25 June 1982

(12) Newsweek. 6 August 1984

Feeble attack (2001)

From the June 2001 issue of the Socialist Standard

Attac France is another group who think they can tackle poverty. Is their answer any better to the World Development Movement’s?

The vice-president of Attac France, Susan George, addressed a public meeting on 27 March in my hometown of Aarhus, Denmark, attended by several hundred people. Attac was founded just under three years ago in France and professes to be an anti-capitalist movement. The acronym “Attac” stands for “Association pour une Taxation des transactions financières pour l’Aide aux Citoyens". Today it has some twenty sections around the world. An Aarhus branch was formed after the meeting was finished.

Attac has entered the popular vocabulary, especially after one of their very peaceful demonstrations, outside the Danish medicine firm Novo Nordisk. Novo was one of the companies involved in the legal action against South Africa. Novo produce AIDS medicine; due to its cost – South Africa has an HIV/AIDS epidemic – the SA government decided to import a copy medicine for medical aid. Novo were against this policy. The demonstration has the slogan: “People before profit”.

The flyer advertising the meeting already revealed that Attac is not anti-capitalist but rather anti-big business. It mentioned some of their aims: a redistribution of goods via taxation of currency speculation (the Tobin Tax) and the abolition of tax havens; better conditions for the Third World, necessarily involving the writing-off of debt; and democratic control of the market and the multinationals. None of these aims is strikingly original. There are a number of Social Democrats who share these views – and who believes those parties can be described as anti-capitalist?

The market cannot be controlled. Both inflationary policies of Keynes and the old, Eastern bloc command economics ought to be proof positive; the market simply cannot be regulated. Taking due consideration of the fact that a capitalist who has sold does not have to buy (i.e. reinvest), the market is nothing but the sum total of businesses buying and selling products, with a view to profit. Capitalist production is anarchic; this is never more obvious than at times of economic slow-turn and recession (slump). At the time of writing the Asian tech market has nigh-on crashed; America is facing a downturn; and Marks & Spencer have suspended their European operations. Capitalism runs through periodic cycles of boom-bust and back, despite Blair and Brown’s off-heard: “We will not return to the days of boom and bust.”

George was adamant “that public services are not for sale”. We might also ask what Attac’s redistribution of goods amounts to. It would seem that Attac want healthcare, etc to be state owned and funded by greater taxation of the (already taxed) capitalists. This is merely “Old Labour” policy.

Writing off Third World debt is already governments’ policy. The World Bank has a strings-attached policy on debt relief. What this reveals is that the (short-term) loss of money involved is not nearly so important as creating politically and economically stable areas for trade and investment, with future profit gains in mind. (“Debt prevents economic growth” – George.)

George’s lecture confirmed that the so-called anti-capitalist movements don’t attack capitalism as a system. George and the others single out multinationals as the baddies, as the root cause of the problems facing the workers of the world. We certainly can agree on what multinationals have done – that need not detain us. Attac, like others, base their critique of multinationals, however, on a caricature. Multinationals cannot act willy-nilly. They do have to abide by the laws in the countries where they are established as well as by international agreements. (The ultimate power in society is political power and not economic power.) Furthermore, multinationals are not immune to the economic laws of capitalism as expounded by Karl Marx in Capital. Whilst their size mean they only get a buffeting when others go to the wall, recessions do affect the Multis.

Whilst businesses are interested in shifting taxation burdens to others and do try to reduce wage claims – all of which eat into profits – it is not entirely true to state these are all they worry about. High taxation and wages are related to more developed capitalist countries, where the workers are educated and well trained. Such a workforce is more productive. Inefficient techniques and workers do not interest multinationals too much, when they have an adverse effect on profits. Capitalists seek high profits with security.

Capitalist realities

George revealed an ignorance of capitalist realities. She thought it strange that remuneration comes to capital from goods. Her explanation for financial crises was that anyone is allowed to invest anywhere in the world. Scathing remarks were saved for the WTO because “it wants to make everything a commodity”. (Fancy that! George ought to read the opening paragraph of Capital.) The word “capitalism” was hardly used; she talked of “globalisation” incessantly, and her definition of it was pretty flimsy. No mention was made of the unending rivalries between capitalists.

Attac’s ignorance of capitalism, both in the domains of economics and history is fundamentally crucial. Any political programme takes its starting point in axioms. In judging the Attac movement, and anything else, those axioms are the first things to be looked at. Attac clearly believe in the continued existence of capitalism.

Like all reformers, Attac limit themselves to attacking features which they do not like; they fail to realise that those features are due to capitalism. The Multies’ growth is a mere reflection of the growth of the global capitalist system – they aren’t anomalies. Because they fail to recognise this, Attac will not be able to eradicate inequality and poverty. Two features are at the core of capitalism – a minority own the wealth of the world, which forces the majority to sell their ability to work for a wage (and millions don’t even have jobs) and production is carried out for profit. It is true: “Capital is rewarded to the detriment of labour”, but she has drawn the wrong conclusions and ought to think about doing away with the capital-wage labour relationship altogether. Does she not know why the system is called capitalism?

How does Attac view changes occurring? They do not denigrate parliament. George stressed the need for laws, “new rules” and “political procedures”; broad coalitions should be formed; trade unions have an important rôle to play; and Attac are for “popular education towards action”. George is utterly mistaken if she thinks governments can ever work in the interests of the workers, since their policies are formed by the dictates of capitalism.

George described Attac. It was founded by people from a variety of backgrounds; the only organisation named was the French Small Farmers’ Union – Attac. She said Attac has internal democracy and that they work to get a consensus of opinions. She sent a message to those who would use Attac for their own ends: it is not permissible to use Attac as a front. This was fine, although it will do little good, since the local Trotskyist vanguard have been licking their chops and been busily promoting Attac. (These days, the Leninists are more reformist than they used to be.)

In the questions and answers session, I addressed some of Attac’s weaknesses. When I noted the Soviet Union was a state capitalist dictatorship some of the audience laughed; George, however, agreed with me – let us hope others in Attac share this view. I sold some Socialist Standards, received praise for my comments from my fellow workers, and was interviewed by national TV.

In conclusion, then Attac does not differ from other left-wing reformist groups. All they want is some nebulously-defined humane, egalitarian capitalism where business is accountable to the workers. And people call socialists utopian!

Graham C. Taylor

Tobin tax – what a joke (2001)

From the December 2001 issue of the Socialist Standard

The call for a Tobin tax – a tax on financial transactions – is not “anti-capitalist”, as some in the “anti-globalisation movement” seem to think

It is all very well being against something but if this is to be anything more than permanently protesting against some never-ending problem you’ve got to be for something too. Most of those who organise the “anti-capitalist” and “anti-globalisation” protest demonstrations don’t seem to have thought it through this far, and those that have show themselves not to be against capitalism. What they are against is what some of them call “neo-liberalism” – by which they mean the return of laissez-faire economic policies. What they are for is to go back to a more regulated capitalism. They merely want states to intervene to try to control capitalism, to make it more human, to suppress what they see as its worst excesses.

A case in point is the French-based organisation, with branches in many other countries, ATTAC whose vice-president is Susan George, author of such readable and informative books as How The Other Half Dies and A Fate Worse Than Debt. Their hobby horse is a call for the so-called “Tobin Tax”, as is reflected in their full name: “Association for a Tax on financial Transactions and for Aid to Citizens”.

James Tobin was (actually, he’s still alive) an American Keynesian economist who, after the 1944 Bretton Woods agreement on exchange rates collapsed in 1971 when America floated the dollar, proposed a tax on currency transactions as a way of reducing speculation. Here’s how he has recently described his proposal:

“This tax aimed to limit exchange rate fluctuations. The idea is simple: on each operation a minimum levy is made equivalent to, say, 0.5 percent of the transaction. Enough to put off speculators. For many investors place their money for very short periods in currencies. If this money is suddenly withdrawn from the market, countries have to raise their interest rates considerably so that their currencies remain attractive. But high interest rates are often catastrophic for the internal economy, as the crises which hit Mexico, South East Asia and Russia in the 1990s show. The Tobin tax would give back some margin for manoeuvre to the central banks of small countries to fight against the tyranny of financial markets” (interview with Der Spiegel, reproduced in Le Monde, 11 September 2001).

Tobin got the idea from Keynes who had suggested a national tax on internal financial speculation as one of his reforms to get out of the Great Depression of the 1930s. The idea was to encourage money-capital to be invested productively instead of being used for unproductive speculation. Tobin was given a Nobel Prize for Economics in 1981 (not that this is worth much in academic terms; it’s little more than a monetary prize), but no government took up his proposal. In fact, for it to work, all governments would have to take it up. That was why he suggested it should be paid to the World Bank or the IMF.

The Bretton Woods agreement had laid down fixed rates of exchange between currencies, in particular with the dollar which in turn was tied to a fixed amount of gold ($35 an ounce). Devaluations and revaluations were allowed; in fact that is what a “devaluation” was: a formal downward change in a currency’s fixed rate of exchange with other currencies. This system collapsed at the beginning of the 1970s when the Nixon administration announced that the US was no longer prepared to exchange gold at $35 an ounce. So began the present period of floating exchange rates.

Today, the rate of exchange of a state’s currency is determined by market forces: the demand for it in relation to the desire to sell it, which in turn depends essentially on a state’s balance of trade. The more it exports the higher will be the demand from foreigners to buy it (to pay for the exports) while the higher its imports the more will be the supply for sale as importers sell it for foreign currencies (to pay for the imports). This is not to say that states don’t try to maintain a more or less stable rate of exchange. They do, but their only weapons now are short-term interest rates or getting their central bank (and/or some other central bank or banks) to buy and sell their own currency. But these are not always that effective as was demonstrated by Britain’s ignominious exit from the European Exchange Rate Mechanism in 1992 under pressure from speculators led by George Soros.

The collapse of Bretton Woods coincided with the last years of the long post-war boom, and was in fact a sign that it was coming to an end. When the boom did end, or rather, fizzled out corporations found themselves with large “cash mountains” made up of money they would normally have re-invested but which they didn’t because it was no longer profitable to do so. This money thus became available for currency and other forms of financial speculation.

Essentially, speculation is the use of money-capital, not to invest in the production of new wealth and new surplus value, but unproductively to try and swindle other capitalists’ out of their past profits. It’s a zero-sum game in which the total amount of profits remains the same but merely gets redistributed differently amongst capitalists depending on their speculative skills.

The statistics show that most international monetary transactions are now of this nature. Production of course continues and has even been increasing slowly if in fits and starts, so some international transactions are linked to productive activity – transfer of capital to be invested in productive activity in some other country, payments for exports or imports, etc. But these are only a fraction of the total, estimated at less than 10 percent.

Just like Keynes in the 1930s on a national scale, some members of ATTAC today look at this internationally and conclude naively that, if somehow you could discourage speculation, the money tied up in it would then be reinvested in production instead, so reducing unemployment. But this is to get things the wrong way round; there is so much money available for speculation because there are not enough profitable investment outlets. Even if speculation was made less profitable by, for instance, the imposition of a Tobin Tax this would not increase productive investment. To do that you would have to increase the rate of profit or expand markets, but that’s not something that can be done by any tax.

The horse wouldn’t drink

What would happen would be the same as happened in Japan over interest rates. The government there thought that what has been discouraging investment was not low profit prospects but too high interest rates. So they reduced short-term interest rates to zero – but nothing happened. They learned the hard way that you can take a horse to water but you can’t make it drink. Japanese capitalists hadn’t been not investing because of high interest rates but because of low profit prospects. Similarly, capitalists have been speculating rather than investing productively, not because the gains to be had from speculation are too high but because the gains to be had from productive investment are too low.

Actually, ATTAC are not agreed on why they want to impose an international tax on currency transactions. Some want to do this to encourage productive investment and so employment (on the mistaken arguments above). Others want to use the revenue to help the so-called Third World; which, of course, assumes that speculation should continue as the cow to be milked for this purpose. Susan George has explained the arguments here:

“One of the aspects of this tax is to slow down speculation, i.e. making money with money without passing via an exchange of commodities. It could build up a mass of money to help essentially the citizens of the South since it is there that the needs are. At the moment, there is a debate within ATTAC about whether we want a high tax to stop speculation or, on the contrary, a less high one to restrain speculation while building up this financial aid to the citizen. Personally, I prefer the second option” (Le Soir, 24 September).

It is for this reason that you find different rates being mentioned in ATTAC literature from 0.01 percent to 0.1 percent to the 0.5 percent that Tobin himself suggested (but he wanted to stop speculation and was not particularly concerned how the money raised was used).

George’s preference for a low rate, to raise money to spend in the Third World, is in accordance with ATTAC’s main declared aim, but it involves calling people on to the streets not to denounce capitalist exploitation, but to demand a minimal tax on the financial transactions in which capitalists try to swindle each other out of the proceeds of their past exploitation of the working class. It really is one of the most pathetic reform proposals for which people have ever been called upon to demonstrate for. Of course, people are right to protest against the deal capitalism is meting out to the poor in the capitalistically-underdeveloped parts of the world, but the Tobin tax is not going to help them in the least, even if the political will and technical means to implement it could be found.

Tobin was – and still is – an unrepentant Keynesian. Despite the fact that the main result of implementing Keynesian policies was a 30-40 year period of permanent inflation, Susan George and ATTAC are essentially “global Keynesians”, people who want to apply on a global scale Keynes’s ideas on how to make capitalism work better. George in fact has openly called for the adoption of Keynesian policies. As she put it in the Le Soir interview we have already quoted:

“Our leaders must be more serious and move towards Keynesian solutions, as was the case after the Second World War. We need a Marshall Plan for the environment, for reducing inequalities in the world and particularly in the South”.

And

“We don’t expect le grand soir [a derogatory French term meaning “the Revolution”], but a more democratic type of economy. The market will have its place, but not all the place”.

What ATTAC, and their equivalents in this country, the campaigning non-governmental organisations (NGOs) such as Oxfam, the World Development Movement, Christian Aid, etc (not that some of them are all that “non-governmental”, given the grants they get from the state), want is to retain the world market economy but to try to control it for the benefit of humanity, to humanise it. Their hearts may be in the right place but this is to display an incredible lack of vision as well as an appalling ignorance of the way capitalism works, and has to work.

Capitalism operates according to the rules of “no profit, no production” and “can’t pay, can’t have” and, as the world market system, is what is responsible for the desperate plight of most of the world’s population. Before anything lasting and constructive can be done about this, capitalism has to go. The productive resources of the Earth have to become the common heritage of all humanity, so that production can be directed to meeting people’s needs – all people’s needs – instead of to making profits.

Adam Buick

Pathfinders: Crisis? Which Crisis? (2008)

The Pathfinders Column from the November 2008 issue of the Socialist Standard

A recent EU study headed by a Deutsche bank economist reveals that global economic loss through deforestation is vastly greater than economic loss through the current crisis in the world’s banks (Nature loss ‘dwarfs bank crisis’, BBC Online, 10 October). The study puts the estimated annual loss at between 2 and $5 trillion.

Graphs of consumption or growth trends almost all follow a hockey-stick trend, largely flat for a thousand years until 1900 and thereafter rising rapidly to nearly vertical today. These trends include consumption of water, paper, rainforest, ozone, fisheries, and increases of motor car production, population, CO2 and global temperature, and species extinction. Not surprisingly, the trend for GDP follows the same pattern.

This is capitalism’s normal modus operandi, regardless of banking crises. This relentless consumer-driven growth goes on year in year out, without respite, and the trends climb higher and higher with no end in sight. The world is burning itself out in an apparently unstoppable quest for economic growth, and nobody seems able to do anything about it.

Scientists can only do so much by reporting the facts. For instance, they can show that the Earth can sustainably support just 200 million people in a North American lifestyle, a figure which is not even large to account for North America’s present population. In answer to the much-loved argument that growth is the only way to lift the poor out of poverty, they can point to the fact that, during the 1990’s, the poor’s share of this growth was just 0.6 percent. According to this argument, for the poor to be even marginally better off, the rich have to become stupendously richer, so that “to get the poorest onto an income of just $3 per day would require an impossible 15 planets’ worth of bio-capacity” (New Scientist, 18 October).

Governments of course are very good at ignoring facts they don’t like. One scientist, Tim Jackson, professor of sustainable development at Surrey University, was accused by a UK treasury official of ‘wanting to go back and live in caves’. Herman Daly, formerly senior economist for the World Bank, describes how the first draft of its 1992 World Development Report contained a diagram showing the economy as a simple rectangle, with an arrow going into it, labelled ‘inputs’ and another coming out labelled ‘outputs’. When he pointed out that this implied that the inputs (resources etc) appeared to be coming from nowhere and the outputs (including waste) going nowhere, thus suggesting that the environment had infinite productive and absorptive capacities, the diagram was simply removed altogether from the draft. He remarks dryly that ‘mainstream economists are mostly concerned with the [economic] organism’s circulatory system … while tending to ignore its digestive system.” (New Scientist, ibid).

The problem is that when scientists, for all the right reasons, try to get political, they don’t seem to realise that they are in serious danger of reinventing wheels and using them to cycle over old ground. Worryingly, they show under-informed prejudices that any socialist can hear any night down their local boozer, to wit, that a global revolution against capitalism is utterly out of the question, and that even if it wasn’t, it would be utterly undesirable. Here’s Susan George on wealth ownership: 

“Must we organise world revolution … to save Earth? Is there a single point of attack? If so, tell me the name of the tsar… Nor would anyone welcome the political systems that shrouded those vast areas where revolution did occur. Somehow… we need a third way between red-in-tooth-and-claw capitalism and a worldwide uprising as unlikely as it is utopian.” 

Showing a similar knee-jerk horror of what he imagines socialism to be, Yale environmentalist Gus Speth: 

“I’m not advocating state socialism, but I am advocating a non-socialist alternative to today’s capitalism”, while Daly maintains that “shifting from growth to development doesn’t have to mean freezing in the dark under communist tyranny.” (New Scientist, ibid).

So, having written off as utopia or tyranny any possibility of an alternative to the capitalist system, they are driven of course to consider how best to modify the system from within.  What they are left with is a mishmash of reforms which have either been tried in the past (Keynesian inflationary investment), are even more utopian than the ‘utopians’ (scientists as technocrats dispensing orders to the wealth class), or contradict the internal boom-slump logic of capitalism (zero-growth ‘steady state’ capitalism), or would bankrupt by capital flight any country which first introduced them (various taxes). At best, the reforms wouldn’t work. At worst, they could accelerate armageddon. If capitalism really could be run more equitably and sustainably, don’t they imagine that it would already be running that way? No, they don’t. They just seem to think that the correct solutions have somehow eluded the rest of us because we’re not as smart as they are.

Still, all in all, it is undoubtedly a good thing that scientists are turning their attention to the question of free-market capitalism. They do at least have more credibility than politicians, priests or pop-idols, and one can only hope they don’t squander it by failing to sort through their various ill-conceived assumptions and prejudices. After all, that’s what the scientific method is supposed to be all about. The worst and most absurd assumption of all was always that science was somehow above politics, and that seems to be changing. What scientists need to do now however is recognise that they are latecomers to the political and economic debate, and that it is unhelpful to cloud the issues with careless ignorance of genuine socialist ideas, or to promote unworkable and possibly dangerous solutions which ignore capitalism’s known behaviour. Most of all, they would do well to recognise the importance of class in the debate, and their own class position as workers. If they don’t do that, they are always going to be so far behind other workers that they think they’re in the lead.

Paddy Shannon

Artificial Scarcity (1981)

From the October 1981 issue of the Socialist Standard

Food, like everything else under capitalism, is not produced for use. It is not produced to be eaten but to be sold, with a view to profit, on a market, a local market, a regional market and, increasingly, the world market.

When there is production for the market it is only market demand, not real need, that is satisfied and it is this that, in the context of food production, condemns millions of people in the world to go hungry or be badly fed and others to actually die of starvation. These people are malnourished, or die, not because it is technically impossible to produce enough food to feed the whole world’s population, but because the present world economic and social system capitalism-produces only to satisfy profitable market demand and not human needs. It is as simple as that. These people don’t starve to death; they are starved to death, by capitalism.

All scientists who have studied world food production potential are agreed that the world could, from a technical point of view, produce enough food to feed the present world population of 4,000 million, and more. We could quote pages and pages from scientists to this effect, but will confine ourselves to two who contributed to the September 1976 issue of the Scientific American on ‘Food and Agriculture’:

Considering only such natural factors (biology, soil and climate] one can say that with the present base of arable land, with a largely vegetarian diet based on yields that could be achieved with present knowledge and with a substantial amount of energy and human effort the world could support a human population of 50 billion or more (Robert S. Loomis, “billion” in the US sense, so 12 times the present world population).

The southern half of the Sudan is potentially one of the richest farming regions in the world, with the soil, sunlight and water resources to produce enormous quantities of food-as much, perhaps, as the entire world now produces! . . . If its glacial waters and rainfall were harnessed and its farmers better supported by modern off-farm services, the 40 million hectares of the Indus-Ganges-Brahmaputra plain of Pakistan, Bangladesh and India could be made to yield upward of 20 metric tons of cereal per hectare per year, or about 80 per cent of the world’s present cereal output (W. David Hooper).

So this point is not open to argument. The world can produce enough to feed all its present inhabitants and many more. The fact that at the moment it does not do so is to be placed at the door of the present world economic and social system.

But world capitalism, as a system of production for sale on a market with a view to profit, not only ignores needs that can’t be paid for, but it also distorts the pattern of world food production, as has been well-explained in Susan George’s How the Other Half Dies (Penguin).

The farmers in the so-called Third World have been increasingly drawn into producing for the world market (“cash crops”) at the expense of producing for themselves or for local markets (“food crops”). Everybody has heard of the banana republics of Central America, but scattered throughout Africa, Asia and Latin America are coffee republics, sugar republics, soya republics, cocoa republics states producing essentially a single crop for sale on the world market and who are thereby at the mercy of the purchaser of this crop, generally a multinational company.

Reactionaries denounce “multinational” companies for being multinational rather than national, but in fact they are inevitable under capitalism and a sign that it is already an international system and so ripe for the change-over to world socialism. A multi-national company has the same objective as any “national” company: to make profits and accumulate capital. If they support and encourage the distortion of world food production towards satisfying the market for processed foods in the industrialised parts of the world at the expense of producing food to satisfy the needs of the people of its agricultural parts, this is because the former is more profitable than the latter. In this they are behaving perfectly logically, given that we are living in a capitalist world. As George puts it:

The rub is that agribusiness and private banks cannot be expected to invest in anything that is not profitable—this is simply not the nature of the beast. This is where the question of the individual sincerity of industry leaders is answered: they themselves—even if they are corporations with the best will in the world—are not free agents. They must, under the logic of their system, market produce in countries that can best pay for it; they must get the best possible return on investment, which means either cheap labour and more amortisable machinery; they must control all the facts of food production and distribution for maximum profitability from field to supermarket shelf.

The countries of the Third World are caught in a vicious circle. In order to modernise themselves they must have funds to invest. How do they get these funds? By selling on the world market the crops that they are apparently best qualified to produce. This means forcing their peasants and farmers to stop producing to satisfy their own needs or local markets and turn to producing the cash crop in question. This in turn means that money has to be spent on importing fertilisers and food crops, paid for by the profits from the exports of the cash crops!

And, if the price of the cash crop on the world market falls? Then they do not have enough money to import enough food and the world hears about a “famine” somewhere caused by some “natural” disaster. The disaster, however, is really a social and economic disaster caused by capitalism. We have already seen how two areas which suffer most from famine—Bangladesh and the Sudan (a Sahel country)—could, under appropriate social and technical conditions, easily produce enough food to feed their populations. These famines, we repeat, are not natural but artificial in the sense that they could be avoided if we had a social system geared to satisfying needs rather than profitable sales.

Susan George is right: this is a crazy way to run the world. Her proposed solution, however, is very disappointing. She recommends Third World States to try to cut themselves off from the world market and concentrate on food production for internal consumption (as she imagines China and Vietnam tried to do for a while). But this can’t work precisely because, both from an economic and from a technological point of view, there already exists a world system. No one area of the world can isolate itself.

The only solution is a change of social system at world level, to one where the resources of the Earth, man-made and natural, would become the common heritage and be used purely and simply to satisfy human needs. In other words, the abolition of frontiers and Nation-States, the abolition of markets and production for profits, the abolition of banks and of companies, multi-national and national. Only on this basis can the technical potential to produce enough to adequately feed, clothe and shelter every single man, woman and child in the world realised.

Adam Buick

Global rollback (1999)

Book Review from the May 1999 issue of the Socialist Standard

Dark Victory, The United States and Global Poverty. New edition by Walden Bello with Shea Cunningham and Bill Rau, Foreword by Susan George, Pluto Press, 1999 (paperback 162 pages)

Socialists should be grateful to Food First and the Transnational Institute for bringing out a revised edition of their handy little book detailing the extent of global poverty, inequality, environmental degradation and war. We do not have the resources to do the desk research to compile all these detailed facts and figures, or to send photographers out to take pictures of destitute people picking over rubbish dumps or police firing on protesters. The authors are enlightened enough to see that capitalism is the culprit, making their analyses useful, without drastic re-interpretation, for the work of presenting the Socialist Party’s critique of capitalism and the socialist alternative. Our argument does not change essentially from year to year, but it is important that we relate it to the world situation as others see it.

The central message of the book, which accords with our case, is that political and social changes that seem to benefit the majority only happen if they advance capitalist interests, and are dismantled willy-nilly when those interests change. The particular scenario focused on is what the authors call the “global rollback” of advances in economic development in the South, and the New Deal and the Welfare State in the North, so that corporate America shall enjoy sources of cheap raw materials and labour, and not be threatened by competition from Japan and the Newly Industrialising Nations.

Having with “relentless scholarship . . . crisply laid out” (Susan George in the Foreword) the disastrous consequences of US capital’s “dark victory”, the writers eventually get around to considering how the world is ever going to recover from this. There is an encouraging paragraph headed “The Role of Working-Class Solidarity” which states that “the globalization of production . . . has brought home to workers in both North and South . . . their common subjugation to the capitalist calculus of short-term profitability”. If such an advance in majority consciousness were really what has happened, socialists would be tremendously excited, but later this is referred to as merely “glimmers of hope on the labor front”. Pious hopes are expressed in “the power of the conviction that human rights, peace, and environmental welfare are indivisible and transcend the . . . limits set by corporate capital in the name of ‘national sovereignty’ when it suits its objectives”. One is reminded of the high-sounding verbiage produced by one of the many conferences of pressure groups, charities etc.

It is not until the final chapter, an Epilogue focused on “the Asian Economic Implosion”, that anything resembling a solution to the world’s problems is put forward. The writers declare that “the state must be reformed along the lines of more transparency, more accountability, and more democratic surveillance of government, but the aim of this enterprise is not to banish it as an economic agent but to enable it to more effectively regulate the market”. They go on to say: “What is being advanced here is not just the reform of the state but the transformation of the economic regime. While market and state must continue to play a vital role, the fundamental mechanism of production, distribution, and exchange . . . must be democratic decision making by communities, civic organisations, and people’s movements”. Why the capitalist class and their political servants should consent to handing over the reins to this well-meaning coalition is not made clear. Given the degree of worker solidarity and understanding the authors believe exists in the world today, how much simpler and easier to just get rid of the capitalist mess altogether and bring in a socialist society.

Chris Marsh

How many die of famine? (1985)

From the March 1985 issue of the Socialist Standard

There are two short answers to this question. One is that we don't know and the other that it depends what you mean by "die of starvation".

Obviously in those parts of the world affected by hunger the last thing doctors and government officials do is fill in death certificates setting out the cause of death, and even if they did there would be no guarantee that they would be using the same criteria from country to country. So we are dealing here not with accurate information but with informed guesses based on what statistical evidence there is.

The word "starve" in English has two meanings: it can either mean to die from lack of food or it can mean to suffer from lack of food. An ambiguity can easily arise here: when we say someone dies from lack of food, do we mean that they literally die from not eating (as Bobby Sands and other hunger strikers did) or that they died as a result of some disease from which they might not have died had they not been suffering from lack of food? Clearly the figures for the former are going to be much lower than those for the latter.

Some absurd figures

In the course of the 1981 presidential election campaign in France, Mitterrand went on record as saying that "50 million human beings die from hunger each year" (La Croix, 18 May 1981). It is not too clear how this figure got into circulation but it came to be widely quoted by charitable organisations in France. It was not until a year later that an expert in the field. Professor Joseph Klatzmann of the Institut National Agronomique in Paris, showed how absurd this figure was by pointing out that the total world deaths in 1981 were about 48 million (Le Monde, 24 March 1982)! This refutation of the claim of 50 million deaths from hunger was also incorporated in the second edition of his book Nourrir Dix Milliards d'Hommes? ("Can Ten Thousand Million People Be Fed?") published in 1983. in which he argued that using existing agricultural techniques world food production could be increased two or three times so as to be able adequately to feed every single man. woman and child on the planet and if necessary more, up to the 10.000 million mentioned in the title of his book. So Klatzmann is no defender of the existing capitalist status quo where millions suffer unnecessarily from hunger and malnutrition.

On 5 August 1981 the Guardian claimed in its Third World Review that:

  Every year 30 million people die of hunger, more than half of them children under five.

  Every year 780 million people are suffering from hunger and malnutrition.

  By the end of this decade these figures will have doubled.

At first sight this seems more reasonable since the number of deaths claimed to be due to hunger is at least less than the total number of deaths from all causes. But on closer examination it too turns out to be absurd.

If 30 million of the 50 million deaths in 1980 were due to hunger this would leave only 20 million for deaths from other causes. If this figure of 30 million deaths from hunger were true, it is logical to assume that all these deaths would have occurred among the 780 million suffering from hunger and malnutrition (the one figure quoted here by the Guardian not open to challenge, if anything it is probably on the low side). If we also assume that the death rate among the remaining 3,650 million of the then total world population of 4,430 million was the same as that in the developed countries — about 9 per 1,000 — this would mean that 33 million would have died in 1980 from causes other than hunger. But this is more than 20 million, so the figure of 30 million can't be right.

As to the claim that by 1990 the number of deaths from hunger will have doubled to 60 million, this is just as absurd as the 50 million figure mentioned earlier, since it too is higher than current estimates for all deaths in the world in 1990.

The basic figures

All estimates of the number of deaths in the world are derived from figures published regularly by the United Nations. These are prepared on the basis of national population statistics. The latest set of figures was published in 1982 under the title World Population Prospects as Assessed in 1980. The following Table has been prepared from the statistics given in this document :

This table shows:

1. That world population in 1980 was estimated at being 4,430 million.
2. That about a quarter of the world's population live in the developed countries, defined as being Europe, North America, Australia, Japan, New Zealand and the USSR.
3. That the number of deaths in the world in 1980 was estimated as being 50.5 million, about 40 million of which occurred among the three-quarters of the world's population living in the underdeveloped countries.
4. That nearly 15 million children under ten years of age died in 1980, all but about 300,000 of them in the underdeveloped countries.

Interpreting the figures

The first point to notice is that the figures often quoted by UNICEF (UN Childrens Fund) of 40,000 young children dying a day in the world is correct (40,000 X 365 = 14.6 million). But it should be noted that the Executive Director of UNICEF. James P. Grant, when he first launched this figure in the early 1980s, did not attribute all these deaths to hunger alone. What he actually said was:

  every day of this last year more than 40,000 young children have died from malnutrition and infection (The State of the World's Children 1982-3. UNICEF, quoted in Hunger Project Handout "The "Other" UN", p.5).

So Grant was not saying that 40,000 children die a day from inanition, from not consuming enough food to keep them alive. Most of them died from parasitic or infectious diseases of one kind or another which is what you'd expect in fact, since children under ten don't die from natural causes — but he did strongly argue that the spread of these diseases and their effect were made easier and more devastating by the fact that nearly all the children were already suffering from malnutrition in one form or another.

Thus the claim is that 40,000 children a day die from the combined effects of malnutrition and disease. In this form, and only in this form, is the claim correct. If the "and disease" is omitted then it becomes misleading as this would suggest that 40,000 children die a day simply from lack of food — which, factually is just not the case. This clarification allows us to see how a claim such as the Guardian's "every year 30 million people die of hunger" could have got into circulation. According to the World Health Organisation (WHO), most people in the underdeveloped countries die of diseases related to inadequate water and sanitation. Thus Susan George in her excellent How The Other Half Dies (first published in 1976) writes that

  in the Third World 70 per cent of the people die of parasitic or infectious disease for which hunger provides the favourable terrain (Penguin edition, p.32).

On the basis of estimated population and death trends in the mid-70s when George was writing her book, this would mean that there were then about 25 million deaths in the underdeveloped countries attributable to these diseases. It is easy to see how somebody eager to do something about world hunger, sincere but not too careful about statistics, could turn George's carefully-worded statement into a full-blown claim that 30 million people actually starve to death each year. George herself makes no such claim and is considerably more cautious. In her introduction (in a passage which is also quoted on the back cover of the book) she writes:

  If it takes you six hours to read this book, somewhere in the world 2.500 people will have died of starvation or of hunger-related illness by the time you finish.

This is equivalent to 10,000 deaths a day. or 3.65 million a year, from "starvation and hunger-related illness"; which is a much more defendable figure for the number of people who die because they literally do not have enough to eat, together with those who die from protein or vitamin deficiency diseases like kwashiorkor and beri-beri (as opposed to the parasitic and infectious diseases mentioned earlier).

People do die of starvation (inanition) in the world today (under capitalism there is always a famine somewhere in the world — last year it was North-East Brazil, this year it is Ethiopia) but nowhere near 30 million. To quote such a demonstrably exaggerated figure is to weaken the credibility of those who do so, and is quite unnecessary since the case against capitalism on this question is strong enough without exaggerating. The knowledge, resources and machines exist to provide enough food for every single human being on the planet yet capitalism, because of its property and profit basis, does not allow this to happen, so condemning millions to malnutrition and diseases and. as we shall now see, to preventable death.

Preventable deaths

The second point that emerges from the basic figures is that, if the same health standards (clean running water, vaccinations, regular medical care) applied in the underdeveloped countries as in the developed countries, then the number of world deaths would be considerably less than they are. Since, from a technological point of view, it is possible both to produce enough food to eliminate malnutrition in the world and to provide adequate water supplies and health care for every man. woman and child on the planet, these deaths can objectively be regarded as being "preventable". They are deaths that can be laid at the door of capitalism in the sense that if society were geared to catering for human needs (as it would be in socialism) they would not happen.

How many such "preventable" deaths can there be each year? A very simple calculation allows us to estimate a minimum figure. As the Table shows, the death rate in the developed countries is 9.4 per thousand while in the underdeveloped countries it is 12.1 per thousand. If the death rate were 9.4 per thousand throughout the world then only 41 million would have died in 1980 compared with the 50 million who are estimated to have died that year.

But this difference of nine million is, as we have said, only the minimum figure for preventable deaths. The death rate depends not only on health and sanitation standards but also on the age structure of the population. Since the population of the underdeveloped countries is on average younger than that of the developed countries the death rate, if the developed countries' health and sanitation standards prevailed throughout the world, would have been lower than 9.4 per thousand. Calculations based on the figures in the 1982 UN population report referred to above suggest that it would have been between six and seven per thousand. This would mean that world deaths in 1980 would have been as low as 32 million. In other words, that preventable deaths will be of the order of 17 or 18 million a year.

A closer examination of the figures show that most of these preventable deaths are those of young children. If the death rate for children under five and for children under ten had been the same in the underdeveloped countries as in the developed countries. then 10 million children under five and 13.5 million under ten (including the under fives) would not have died.

We can now estimate how many people died in 1980, not "from hunger", but from a combination of malnutrition and parasitic and infectious diseases caused by the conditions under which capitalism forces over half mankind to live: about 17 million, of which about 13 million were children under ten.

A final word of warning. This estimate refers to the year 1980 while the basic statistics on which it was based change as the years go by (for instance, the world population is going up and the world death rate going down). In time then these figures will need to be revised, upwards or downwards, in the light of new statistical evidence.

Adam Buick

On Third World debt (1988)

From the December 1988 issue of the Socialist Standard

At the Economic Summit held in Toronto in June this year, the seven leaders agreed, in principle, measures to ease the debt problems of the poorest countries in sub-Saharan Africa. Africa is mainly dependent on raw materials for its trading income, but because of the state of the world economy, and the introduction of substitute materials, the demand for Africa’s staple products has dropped, so that a typical 'basket' of exports buys nearly one third less imports than ten years ago. Debt service obligations for countries like Mozambique. Sudan and Somalia now pre-empt the whole of their export income.

The measures eventually worked out by the Paris Club, from the "menu of options" (sic) agreed at the Summit, will do little to relieve the conditions of the poor in those countries. The lucky beneficiaries of debt relief must first be undertaking internationally approved "adjustment" programmes. This means conditions laid down by the International Monetary Fund (IMF). The aim of such conditions is to increase exports, and those most frequently imposed are devaluation of the currency, drastic reduction of government expenditure, price increases, wage cuts, and the reduction of domestic consumption. When added to the difficulties arising from the dependance on particular products, the concentration on growing cash crops, "unfair" competition and falling world prices, these policies spell disaster for people whose incomes are precarious at the best of times. Over forty countries are under IMF "guidance", while others practice Fund doctrine without formal agreement, in order to obtain loans from other sources.

Formed at the Bretton Woods Conference in 1944, the IMF is a financial institution, primarily concerned with promoting trade, which only slowly became involved in developing countries. It is governed by the Group of Ten leading members, and voting rights are related to the quotes put in by each member country, although the US has what amounts to veto power on important issues.

Although the deprivation endured by mill ions in Third world countries has intensified, their poverty did not begin with the debt crisis. It is a capitalist world. Every country is run in the interest of its owning class, following the dictates of a system geared to sale and profit. The Third World (or "The South' or "less developed countries") accounts for three-quarters of the world's population, and includes countries at widely differing stages of development. Most of the high interest debt has been incurred by the better-off developing countries, while the countries needing most help to "develop" are the least attractive from an investment/profit point of view. There has not been the same incentive to push loans to them. Sub-Saharan Africa accounts for less than 9 per cent of total Third World borrowing. In A Fate Worse Than Debt Susan George details the background, and the many implications, of debt for the less developed countries. She describes the dire consequences of IMF adjustment programmes for the poor — who do not benefit from the loans; how repressive ruling elites are assisted by IMF loans; how billions of dollars have been "squandered on current consumption or spent on sterile pursuits or has ended up Northern banks" (p59); and the way in which huge foreign loans have contributed to "environmental plunder, widespread impoverishment and ethnocide" (p161).

The International Bank of Reconstruction and Development, known as the World Bank, was also founded at Bretton Woods. The 134 member countries have to be members of the IMF. and subscriptions and voting power are on the same basis. The projects financed by the World Bank are supposed to follow guidelines with regard to migration, minorities and the environment. These guidelines have been flouted by internal migration programmes in Indonesia and Brazil. The Grande Carajas iron ore project in Brazil is receiving major funding from the World Bank, Carajas, the "several billion tons of iron and half a dozen other mineral-ore deposits", has been described by the Brazilian government as a "national export project", and as an answer to the country's crippling debt problem. It will cost $62 billion (with an EEC contribution of $600 million) and will mean an area the size of France and Britain together, being partially or totally deforested. To hasten the completion of the Tucurui Dam. forest was not cleared but sprayed instead with the defoliant Dioxin — agent orange. Landless peasants are sent to the deforested areas, where the soil is unsuitable for cropping. to grow soybeans — a major cash crop — for the foreign exchange needed to help pay between $12 and $14 billion in interest on loans each year. The price of soybeans is depressed because of “overproduction" in the US (the effect of the current drought in US remains to be seen), so more must be grown “to keep the revenues stable". However the motivation for extracting mineral wealth, and for the drive to export, is the pursuit of profit — regardless of the debt problem

Servicing the debt is seen as a major obstacle to development, with development itself adding to the debt burden. Under the influence of foreign experts, the western industrialised model has been followed in Third World countries regardless of whether it was appropriate, and the costly capital goods and energy requirement have been financed by borrowing. Some highly inappropriate and expensive projects have been debt financed. In the Philippines a nuclear power plant was sited in a zone of high seismic activity — it is not being made operational. Possibly up to $40 billion of Brazil’s debt is due to the purchase of nuclear reactors (also non-operational to date). Twenty per cent of Third World debt is down to military spending.

Over a quarter of the debt accumulated by the totality of Third World countries is accounted for by the increase in oil prices following the oil and energy crisis of 1973/4 and 1979/80. When the Reagan administration refused more resources to the IMF bank, lending, which had already expanded, was increased to the most heavily indebted countries. In the four years to the end of 1982 the amount loaned by US banks grew from $110 billion to $450 billion. The banks eagerly sold money to Third World countries, including those with oil (Mexico borrowed heavily to develop the oil industry), ignoring the usual constraints and safeguards. There was pressure to serve the interests of their domestic clients. Bank loans enabled countries to purchase the products of US and European corporations like Boeing and Westinghouse. Some of the money borrowed is invested outside of the debtor country. Banks accommodate this capital flight which accounts for billions of dollars in debt — possibly 70 per cent of the new loans to the big ten Latin American countries between 1983 and 1985. Money from corrupt government officials, or national companies whose government has guaranteed the debt, goes straight back to the banks — some of it actually carried back in suitcases taken there empty for this purpose — but has still been added to the burden of debt. Multinational corporations have taken over the role of direct investment. Apparently the banks do not consider development to be any of their business Bank strategy, based on the assumption that countries could not cease to exist, was (is) simply to make money. Even the debt crisis was looked on as "a true windfall" with Brazil, for example, paying back $69 billion in interest between 1979 and 1985. However, global recession brought home to the banks their over-exposure. Clearly countries could have repayment problems, with further borrowing as the only way to service their debts.

Borrowing and lending are normal commercial and banking practices, and the usual answer when countries get into repayment difficulties is to reschedule the debt. There were 144 reschedulings of official debt alone in the ten years to 1985. Default is not in the interest of either side. All of the indebted Latin American countries defaulted in the 1920s and 1930s when most of their debts were in the form of government bonds held by individual investors. Today the situation is different. In 1982 Mexico came close to default when holding $80 billion of debt. The nine largest US banks had 44 per cent of the capital tied up in loans there. A deal was eventually agreed between assorted representatives from US government Departments and Agencies — including the White House, "top brass" from the commercial banks with their lawyers, the Mexican team led by their Finance Minister, and with the involvement of the IMF. The banks were saved from having their stock plummet, an international financial crisis was averted — and Mexico got $8.3 billion in fresh money. Dividends declared by the big nine banks increased by more than a third between 1982 and 1985. (the fate of more than 400 smaller banks was rather different.) A country which defaulted would have considerable difficulty getting new loans. When Argentina showed signs of stopping interest payments in 1984. coercion was applied by US bankers, and representatives from the IMF, commercial banks and officials from major industrial countries. The US Treasury compiled a list of items likely to become "scarce" — and raised questions of what would happen to a President of a country if, for example, "the government couldn’t get insulin for its diabetics? (George. p68).

Third World countries are expected to solve their problems by exporting, but their exports have to compete in world markets. They also provide markets for creditor countries. The Brazilian computer industry became so successful that in 1985 it managed to outsell the transnational competition, which brought threats of "trade reprisals" from the US if local (Brazilian) demand continued to be satisfied at the expense of IBM. Ironically IMF imposed conditions mean fewer imports. US exports to Latin America fell by 42 per cent between 1982 and 1984. and hundreds of thousands of US workers lost their jobs. The annual report of the United Nations Conference on Trade and Development (UNCTAD) calls for the writing off of at least $90 billion of Third World bank debts, and says that, if combined with the $5 billion of debt relief for sub-Saharan African countries, debtor countries could increase their "net demand for imports by $18 billion each year". A third of this would come from the US “helping its trade get out of the red" (The Guardian, 2 September 1988). The report also argues that debt relief on this scale (30 per cent of the $300 billion owed to banks by the 15 worst afflicted countries) would enable Third World economies to grow faster, and boost the world economy.

Since the Mexican rescue the banks have made their own provision against the effects of possible bad debts, by adding to their reserves. (Some debts have been sold at a discount, and some "debt for equity" swaps have also been made.) Together with the IMF. they are opposed to the UNCTAD proposal, preferring the present strategy whereby each near-defaulting country is dealt with "case by case".

Whatever deals over debt relief are agreed in order to facilitate trade, they will not end Third World poverty — that is not their purpose.

Pat Deutz

Food, Hunger and Politics (1990)

From the August 1990 issue of the Socialist Standard

It is becoming increasingly obvious that the present way of organising society cannot ensure that everyone has enough to eat. Millions go hungry in what the Times (10 June 1985) admitted is “a world which is awash with food surpluses”.

High-powered conferences of experts have failed to solve the problem. Reports and resolutions provide empty words for empty bellies. The objective proclaimed in 1974 by Nobel Peace Prize winner Henry Kissinger that “within a decade no child will go to bed hungry, that no family will fear for its next days bread" (London Evening Standard, 5 November 1974) has been a mockery. There are now. both in absolute and relative terms, a greater number of hungry people in the world than there were then.

The efforts of voluntary relief agencies have fared no better. They face what they have called "donation fatigue' and openly admit that they have to rely on the actions of governments—of those in charge of the system that produces the problem in the first place.

Hiroshima every three days
People are dying in their millions from entirely preventable causes. The side-effects of hunger and malnutrition kill 15 million children a year. Fifteen million completely unnecessary deaths. Poverty killing more than war ever did. And yet the means of ending hunger are to hand. Susan George, Associate Director of the Transnational Institute and writer and broadcaster on world poverty, claims that providing for the needs of 15 million could be done by 3.6 millions tons of grain. World harvests of grain in 1980 were 1.556 million tons. To feed the 450 million estimated by the UN Food and Agriculture Organisation to be malnourished would only take 128 million tons of cereals—8 percent of world harvests, less than the United States feeds to its livestock (world-wide, half the grain crop is fed to animals). In 1984 the FAO estimated global cereal carry-over stocks as 294 million tons (State of Food and Agriculture, 1984. p. 47).

That people are hungry because they are poor is a theme which runs through a series of essays written in the 1980s by Susan George and now published in a revised form as Ill Fares the Land (Penguin Books. £5.99). The book is written with a deep concern for the victims of a world where "the toll of hunger on human life is equal to a Hiroshima explosion every three days" (p. 223).

She catalogues in detail some of the seemingly endless contradictions of a world where profit is the driving force behind the production of the means of life. “Higher productivity—and higher profits— actually mean more hungry people . . . " Even a so-called success such as the "green revolution" brings in its wake a loss of land and employment for millions because it was "a means of increasing food production without upsetting entrenched interests (as well as a means of providing increased revenues to the Western firms supplying industrial inputs)" (p.184).

This has resulted in a situation where poor peasants now die of exposure in the Indian province of Bihar. Straw was formerly free for bedding, but the new breeds of cereals have shorter straws which now command a price as a raw material used in paper-making (to replace wood which is in short supply due to deforestation). At the same time, "substantial grain reserves exist partly because half the population is too poor to buy them" (p. 184).

However, while the descriptions of the scale and effect of the profit system are written with a humanitarian concern for the poor and the destitute. George's prescriptions for actions are deeply flawed. Having recognised that the economic power of the more industrially and economically advanced nations is used for the furtherance of profit, and that to this end the privileged elites of the "Third World" are willingly enlisted as allies, she fails to draw the obvious conclusion: if ensuring that all have enough to eat is not a technical problem but a political one, then the techniques and means of life must cease to be the property of a tiny privileged minority. They must be made the common property of the whole of humanity. Production must be directly for use and not for sale on a market where “the poor cannot express their needs in terms of money, the only language the market economy understands" (P. 6).

Third world elites
What George is doing is to decry the effects without removing the causes of those effects. Having, consciously or unconsciously, rejected a complete change in society she is forced back into attempts at reforming the present system. This results in her appealing to the self-interest of nationalists in less developed countries, to the economic self-interest of European capitalists (she has given up on the USA and Russia), and, most futile of all, for "justice".

She appeals to those elites in the Third World (short-hand for those areas of the world where capitalism is still in the process of being developed at the expense of the increasingly landless peasants) who are perceived to be "working for the betterment of their countries". These she calls "true nationalists". But, if as she argues, the system that dominates the world is increasingly global then the solutions to the problems it creates must also be global.

Capital must of its nature expand at the expense of other capitals. To advocate the implementation of schemes that are deliberately labour intensive (so as to provide work for the jobless peasant/worker in the making) is to invite disappointment when the system follows its own immutable laws. She is not unaware of these laws, describing the “trans national corporations" (TNCs) as operating as follows:

In a world of rising costs and diminishing profits, it becomes more important than ever for the industrialised countries and the TNCs to maintain and to reinforce their hegemony over the global economy. They must, from their point of view, increase their control over world production, and world markets . . . Those who believe that these companies have any object besides the enhancement of their own profits are making a serious mistake. (pp. 93-4).

If banks and international lenders see these firms as more reliable and more profitable than local Third World ones, and so give them better credit terms and loan facilities, it is unrealistic to expect them to act otherwise—they exist, after all, in the same profit-seeking economic environment. If in acting this way they "thereby indirectly prevent the creation and expansion of national firms which are short of working capital" (p. 102), nothing can be done about it; this is the way the capitalist system works.

What should be noted here is that we are being asked to take sides with the emergent capitalists in the less developed world—with the very group who control the state and have no compunction in using the military and police to "control" the desperate and hungry when they revolt (as Kaunda recently did in Zambia). Nationalists everywhere have always acted this way when they come to power and are strong enough to implement the rule of the class they represent, using the state "to extract as much wealth as possible from the countryside" (p. 215) (actually, from the labour-power of the people living there).

Giving this parasitic class in the making a sympathetic leg-up to join the first division of robbers will not solve the problems of the poor. George's dream of an improvement in the lot of the Third World poor through economic developmemt "independent" of the more developed capitalist countries is a non-starter. Not that the full development of a successful and prosperous capitalist system is a guarantee against hunger, as the existence of 20 million hungry Americans testifies (Scientific American, February 1987)

Who’s aiding who?

If her appeals for "independent" development in the Third world are unrealistic, her appeals to the power structures of the European Community are unnecessary. She tempts them with the following;

By espousing the cause of three-quarters of humanity. Europe would also, in the fullness of time, reap the more traditional commercial and financial benefits. (p. 68. emphasis added).

She need not worry. This kind of self-interested approach to aid has already been eagerly adopted by both the major British political parties. In a debate a few years ago on famine and debt in developing countries, Timothy Raison, Tory Minister for Overseas Development, told the House of Commons:

I believe that our approach to debt is sound. We have to work constructively in the world that exists. . . .  At the same time of course, we are concerned with British interests. We want to develop good relations and see stability increase and see potential markets grow . . . The aid trade provision enables us to respond flexibly to commercial opportunities . . . Over the last few years some £350 million of aid trade provision has resulted in British firms winning contracts overseas valued at more than £1,400 million. (Hansard. 11 June 1985. Vol 80. colls 779-780).

While in power the Labour Party also embrace "the world that exists" and the "commercial approach". Aid to the Third World is regarded as being in line with "British interests". Judith Hart. Labour Minister for Overseas Development, claimed an even better return than Raison's. This indirect subsidy to British capitalists cost £400m but resulted in £2,400 million's worth of exports—"growth for them means imports from us" (Times. 14 July. 1976).

The other main remedy Susan George relies on is a case for "justice"—an appeal to give the rapidly disappearing peasants a “fair" chance to help themselves. This amounts to trying to make the market system, which is driving them out of existence, work other than the way it must. To complain that TNCs "underpay" for Third World commodities is to ignore the fact that in any market buyers press for the lowest price while sellers press for the highest. Crying foul when the powerful exploit their advantage is no cure. The establishment of an "independent" enclave which would somehow circumvent the weak position of Third World producers is a chimera. The food producers of the EC and the USA, for example, can always as part of a potential trade war dump food on the world markets at prices which Third World peasants cannot compete with.

The only real hope for the hungry and exploited of the Third World lies in their realisation of the potential power they collectively have and organising consciously and politically with their fellow workers in the developed capitalist countries to democratically abolish capitalism and establish socialism. This entails the pursuit not of "justice" but of interest. Free men and women have no need of justice.

Gwynn Thomas