Outpacing labor in creating wealth
Part IIITo lessen the value of those treasury certificates held by its creditors, the US resorted to the unorthodox practice called “quantitative easing” by printing more money and putting them to circulation to reduce their value. But that monetary trick of shortchanging is not a one-way street. The decline in the value of the US dollar equally reduced the purchasing power of the American wage earners. Increasing money supply affected mostly the consumers, although theoretically, that increased the profit of banks and finance corporations.
The speculative trading of stocks, bonds and all sorts of toxic CDOs reached its déjà vu when President Bill Clinton abrogated the Glass-Steagal Act in 1994. As Tyler observed, the abolition of the Glass-Steagal Act virtually demolished the firewall between banking and investing activities. It enabled banks, deposits which were ensured by taxpayers’ money to speculate on stocks, derivatives, or virtually anything tradable under the sun. It was the final departure of capital from labor as the principal source of wealth.
Maybe Marx was right that capitalism has its built-in contradiction. Nonetheless, his doomsday prediction was averted by the introduction of regulatory laws, thereby recognizing the indivisible relations between labor and capital. As Tyler described its useful value, “Regulations prevent business interest from combining to create exploitative monopolies. Regulations avoided the problem of financial speculation by banks.” In short, it was a compromise to the Marxist formula of expropriating the appropriators.
The rapid growth of profit from capital investment reduced the national economy to that of a casino economy. As the author of Capital in the 21st Century, Thomas Piketty observed, “the global income distribution today is more unequal than the production distribution because countries with higher per capita output are also more likely to own part of the capital of other countries and therefore to receive a positive flow of income from capital originating in countries, with lower level of per capita output.” Stated differently, even if one would assume that labor value in poor countries is equal to that in the rich countries, that assumption remains a theory more so if on the average about 30 percent of the goods produced in poor countries are capitalized by the rich countries. Effectively, that results in an added advantage to the wealth accumulation of the rich countries.
Imperialism, as the highest form of capitalism is characterized by the export of capital. It is far more dangerous because it inevitably leads to war. It is dangerous because war among the imperialist powers is based on the absolute principle of “dog eats dog” given a glorified term called “globalization” or “free trade”. Global war has become imminent today, for despite the elimination of ideology as the basis of competition. The new face of imperialism called “globalization” continues to subscribe to the same doctrine, which is to economically dominate and control other states enforced by the might of a modern army that is kept public to give substance to patriotism in actually defending the global oligarchy.
Lenin was keen in observing the ruthless behavior of imperialism fearing the possibility of Japan wanting to grab America’s war booty in what was then the Far East. In his book written way back in 1916, or long before World War II, Lenin gave his ominous assessment in his book, Imperialism, the Highest Stage of Capitalism: “In order to appraise this “mental aberration” we will take the following example. Let us suppose that a Japanese is condemning the annexation of the Philippines by the Americans. Will many believe that he is doing so because he has a horror of annexations as such, not because he himself has a desire to annex the Philippines?” That observation was foreboding because Japan did come not to liberate this country, but to carry out its own imperialistic design for which it was already fighting for its own economic survival due to Western economic sanction.
Today imperialism has been resurrected with greater ferocity and deeper bite after the collapse of the socialist bloc. Even if one would avoid using the stereotype communist lingo of “exploitation” and “imperialism”, imperialism done by the export of massive capital uses the same finance mechanism to take advantage of other nations. Even the right to develop their own products has been greatly stifled by the strict enforcement of international patents and copyrights. Most seriously affected was the right of poor countries to produce and develop their own technology, medicines and variety of crops to improve agricultural production.
That effectively deepened the wedge of inequality because pure foreign capital has collaborated with the local oligarchy to set aside labor-based production. Maybe Piketty has given his thesis a new dressing, but it remains the same as written a century ago by J. A. Hobson, to quote: “Analysis of imperialism, with its natural supports, militarism, oligarchy, bureaucracy, protection, concentration of capital and violent trade fluctuation, has marked it out as the supreme danger of modern national states. The power of the imperialist forces within the nation to use the national resources for their private gain, by operating the instrument of the state, can only be overthrown by the establishment of genuine democracy, the direction of the public policy by the people through representatives over whom they exercise a real control.”
Admit it or not, the wars wage by the US made to appear as a crusade against Islamic fundamentalism in Afghanistan, Iraq, Syria, Libya, Yemen, Sudan, Kenya, Algeria, Nigeria, Uganda, Pakistan, and elsewhere, is in truth the reemergence of a more vicious variation of imperialism now racing to fill in the vacuum caused by the end of an ideologically-based Cold War. The export of capital seeking to increase wealth through usurious interest rate and speculative trading is about to reach its dead end. The increase in money supply that first showed its ugly head in the form of inflation has now evolved to become one of stagflation.
Aside from warding off price increases, wage earners are now fighting a far dealier enemy of warding off unemployment. Money keeps on flowing and increasing, but it is money that is losing much of its value. None of it is plowed back to production, but only to the pockets of the speculators and the greedy oligarchy. The gap between income from speculation and income from production has become so wide that today capital investment for production has become critical due to unattractive returns. In the US, many companies had shifted to countries that offer lower labor cost, but that only buried them deeper into the pit of borrowing more to sustain the tightening inequality with the huge profit from investment gobbled up by the global oligarchy.
rpkapunan@gmail.com
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