Marx's theory of crisis

This is, without doubt, the best short exposition of Marx's theory of crisis that I have ever heard. It is brilliant, and congratulations to Cliff Bowman of Cranfield University for being so succinct.

Crash club: when sputtering economies collide

Trust Mike Davis to tell it like it is. It is going to be a difficult few years.

Crash club: when sputtering economies collide - Opinion - Al Jazeera English

globalization and labour

The International Monetary Fund has, in its most recent edition of the semi-annual World Economic Outlook, made an astonishing, if not, for them, heretical, discovery: that globalization, that great force for worldwide economic prosperity and social justice, has reduced the share of national income going to labour, and, as a consequence, increased the share of national income going to capital, in the form of profits. Has the IMF discovered that globalization is bad for global labour?

Not quite. The IMF argues that while labour's share of income has gone down, the total size of national income has gone up: in other words, the elasticity of income with respect share is both positive and greater than one. This means that labour's income has still gone up, because of the increase in national income, even though the fraction of national income accruing to labour relative to capital has gone down. In a sense, then, the IMF is proposing that globalization is producing an economic valhalla--more money for workers, more profits for capital. Talk about a virtuous circle that global capitalism creates!

The IMF also evaluates what is driving changes in the labour share of income: technological change, an expansion of the global labour force, or labour market policies. The Fund finds, consistent with the dominant economic orthodoxy, that technological change benefits capital and that the expansion of the global labour force benefits capital, but that liberal labour market policies benefit labour. So technological innovation and technical change benefits firms, the expansion of the global labour force as a result of the 'entry' of China and India onto the world stage benefits capital, by driving down global wages, but political economies where it is easy to 'hire and fire' benefit labour.

The IMF has, for the most part, apparently re-discovered elements of classical and Marxist political economy! Marx was, along with some of the classical adherents of the labour theory of value, extremely clear that technological change was biased in favour of capital. Marx's revenge on this point, however, was that as the share of labour in commodities declined, and the organic composition of capital rose, this would lead to a fall in the extraction of surplus value, and hence a fall in the rate of profit. This, according to Marx and others, could, to an extent, be partially offset by tapping into new labour forces had the benefit of increasing the reserve army of labour, fostering competition amongst the labour force that could generate relative, if not absolute, cuts in wages. This could counter, temporarily, the decline in the rate of profit. As for liberal labour market policies, this had a similar effect: disciplining labour so as to offset declines in the rate of profit. Thus, from a Marxist point of view, the Fund has discovered long-standing cyclical and counter-cyclical tendencies within capitalism which were already known by some but which were not accepted by the global economic orthodoxy.

Of course, it is important to stress that Marxist and Marx-inspired measures of the rate of profit are not the same as the profits reported by companies in the Standard and Poors 500. Thus, although Marx believed in a falling rate of profit, this is perfectly compatible with an increasing rate of profit amongst global firms. The two are measuring quite different things; and estimates of Marxian-based profits drawn from conventionally-based measures demonstrate that the increasing profitability of the corporate sector is perfectly compatible with Marx's theory of crisis.

Of course, the IMF does not see its findings as heralding a crisis. Far from it. What is interesting is the extent to which the Fund, the Bank and other global institutions feel the need to justify policies in the face of widespread discontent with the downside of globalization. In an era when resistance is widening, there is a need to shore up the defenses. The IMF offers a fresh pillar for the defense. However, the redoubt is extremely weak. Moreover, it is unlikely to convince global labour, excluded as they are from the prosperity that is accruing to the few during the latest bout of neoconservative globalization.

the end of the peasantry?

I have spent most of my professional life working in an area that, within the political economy of international development, is called 'the agrarian question'. Simply stated, it is an approach to rural change that tries to understand how changes in rural life do or do not contribute to the development of capitalism, both in the rural economy and more widely.

For the past 10 years or more, there has been a debate within agrarian political economy concerning the relevance of the agrarian question in an era of globalization. The proposition is straightforward: that as a consequence of globalization, the current form of imperialism, the development of capitalism in the rural economy is simply irrelevant to transnational capital. Capital is formed globally, and national capitalisms are now not relevant to its transformative 'project'. This debate is explored at length in my next book, Political Economy, Rural Transformation and the Agrarian Question: Globalization and Peasant Livelihoods.

Does agriculture matter any more, in today's globalized economy? Is the peasantry finished, a relic from an age that does not exist anymore? I have been thinking about this over the past month, both in Europe and in Canada, and it has struck me that this kind of thinking is predicated on a particularly modernist reading of change and development.

We live in an age where an ideology of progress holds firm. In other words, we believe, in our very soul, that human history is a constant movement forward, as problems are solved and our species slowly and fitfully 'progresses'. This motion is highly modernist: that we live in a times where science and technology propel change that will eventually be beneficial. Marx held to this notion; so did Adam Smith; and so does the World Bank.

The problem is that history shows us that progress is not inevitable. In the 10000 years since the human race began settled agriculture, and the 4000 years since 'civilization' emerged, ironically, in the modern day hell that is Sadr City, there have been many instances in which, rather than moving forward, societies have come to a halt, and indeed, regressed. Where progress has given way to retrogression. With retrogression has come technological collapse, and a loss of abilities to solve problems that had already been solved. In other words, human history is marked by periods of retreat, not progress. Invariably, this retreat is always associated with some kind of agricultural collapse, and the consequent inability of civilizations to feed themselves, allowing a degeneration of social order into conflict and death.

Our ideology of progress is so firmly rooted in us that we cannot imagine the idea of an agricultural collapse--although many parts of the world live it, day in and day out. Nonetheless, agricultural collapse may--and I hedge my bets here, and stress may--be staring us in the face. The median predictions of climate change that are currently accepted by those more knowledgeable than I suggest that the increase in planetary temperature in the next 40 years or so will result in end of wheat production in the second biggest wheat producer in the world--India. Of course, Indian wheat collapse will be partially offset by wheat production elsewhere--but that offset will only be partial. With this, and with the consequent possible collapse of grain production in many other parts of the world over the next half century (Argentina? Ukraine?), the idea that progress has rendered agriculture redundant to international development seems a non-starter. So it is. Indeed, it is probable that rather than facing the end of the peasantry, the death of the peasantry, we will soon be living in a world where a peasant's ability to feed themselves will be, once more, fought over by those who cannot or will not feed themselves and who have the resources and coercive power to take what they want.

Shanghai surprise

Yesterday the Shanghai stock exchange dropped 9 per cent in a single day, apparently setting off a worldwide round of selling as panicked investors sought safe instruments. Wall Street had its biggest fall since September 11, the TSE had its worst day in a year, and several 'emerging' exchanges, in Brazil, Turkey and Russia suffered big drops.

The Shanghai surprise clearly shows the herd mentality of global finance. Shanghai is an exchange which is largely domestic, with limited global participation. The drop was a demonstration of how the market is increasingly dictating policy: there were rumours that the government was going to place restrictions on some of the practices around the buying, selling and taxing of transactions, and in order to prevent this, the market collectively dropped, demonstrating who is in charge of policy (the fact that many big investors are Party people is not unimportant here). In any event, the drop in Shanghai was almost exactly the same as the previous day's rise--so the net effect was profits for some, with limited losses for others.

Why then did this largely domestic event spread? The answer lies in the vulnerability of the world economy. The US is dangerously imbalanced, both externally, in terms of its current account deficit and economic exposure to political events in oil producers, and internally, in terms of its budgetary deficit and the share of profits in total income. This vulnerability is what worries global finance capital. The possibility of a recession in the US has already been raised by Alan Greenspan, and global markets still respect him. A recession in the US will hurt the slow recovery in the European Union, and particularly Germany and France, and this has the possibility of spreading to other EU members. In short, the world economy, dominated as it is by finance capital, is vulnerable, because, simply put, the economy is not leading the market, and has not been for a long time indeed. Market finance is leading, but its fictitious character means that the global economy is being led by shadows and light. In shadows and light, the possibility of a bumpy ride for the real economy is strong. This year should be an interesting one as finance and productive capital struggle to exert dominance over the global economy and global development.

new times for the agrarian question?

I was very pleased this morning to walk into my local Indigo! bookstore and see, on the shelves, half a dozen copies of Promised Land: Competing Visions of Agrarian Reform, edited by Peter Rosset, Raj Patel and Michael Courville. This book, along with Reclaiming the Land, edited by Sam Moyo and Paris Yeros, and my own volume, Land, Poverty and Livelihoods in an Era of Globalization, co-edited with Jun Borras and Cris Kay, indicate that within both activist and advocacy groups as well as within academic circles in international development studies, land reform is most definitely back.

It is back, though, in a vastly different context. In the heyday of state-led land reform, in the 1950s and 1960s, land reform was about trying to promote national development and poverty alleviation. Today, in the era of market-led land reform, globalization has meant that land reform is about promoting agricultural commodification and agro-exports, the integration of peasant farmers into buyer-driven global agro-commodity chains, and their effective reconfiguration as little more than sub-contracted piece workers that own or control a small piece of land but who do not own or control their own means of subsistence, tied as it is, through contract farming, to agro-food TNCs. It is in this context that the dispossession of farmers in the South has become such an important issue. Unlike previous episodes of land reform, which were about building markets, development and capitalism, the current conjuncture is one dominated by dispossession.

I have been struck recently as to how different people can arrive at the same conclusion, even if separated by time and space. In the late 1990s Farshad Araghi cogently argued that the current period was witnessing peasant displacement through dispossession as, prefiguring the powerful arguments of Mike Davis in Planet of Slums, the increasing capital intensity of agriculture in the South, as a consequence of 25 years of debt-induced structural adjustment programmes, have led to the expulsion of rural populations from the land and their enforced migration to the cities. This is the new reserve army of labour, increasing casualized, insecure, footloose, and often hungry. I have seen them, in Ho Chi Minh City, in Peshawar, in Suva, in Nairobi, and beyond. More recently, David Harvey, in The New Imperialism, has termed this 'accumulation by dispossesion', as corporate profitability is increasing predicated upon massive rural displacement to the slums of megacities in the South. In our own recent book, Jun, Cris and I termed this 'neo-liberal re-enclosure', as the admittedly limited gains from land reform over the period between 1945 to 1975--often gains ceded to preclude peasant revolutionary movements--are rolled back under the guise of neo-liberal structural adjustment policies. These policies made it increasingly harder for poor farmers to make a living, even as they made it easier for agro-food TNCs to seek to organize their activities on a global scale, in partnership, at times with peasant farmers, but also, at times, in partnership with capitalist farmers, feudal landlords, plantations, and comprador elites and states in the South. Different times indeed.

Dispossession is the dominant agrarian issue of our time, and it is this issue which has given rise to resistance in the South, in the form of the Via Campesina and its various constituent elements--most notably the MST, but a host of other movements as well. Via Campesina seeks food sovereignty, and here, in this call, lies the basis of a global alternative to industrialized agriculture and a buyer-driven agro-food commodity chain, for it is in this call that a possible alliance between producers in the South (and the North) and consumers in the North might be made. As I had to remind my (often pessimistic) students a month ago, similar alliances were witnessed within the US in the early 1970s. They can be built. However, it is up to us to build them.

are we living under a corporate food regime?

Harriet Friedmann's most influential intervention in the political economy of agrarian change has been her concept of the 'food regime'. Derived from the work of the French regulationist school of political economy, food regime analysis tries to understand the governing principles underpinning the world food system. Friedmann's thinking has undergone changes over time; currently, she notes that there was a 'colonial-(settler) diasporic' food regime from the 1870s to the First World War; turbulence between the wars; and a 'mercantilist' food regime from 1945 to the early 1970s.

A question that one of my students put to me, a few months ago, then, is whether we are now living under a 'new' food regime. At the time, I was not sure; but having read some of Friedmann's more recent work, and, very importantly, the work of Philip McMichael, who has an outstanding depth of understanding of the contemporary global food system, as well as having considered, more peripherally, issues around food sovereignty, organic agriculture and the Slow Food Movement, I think I am coming around to the position that we do indeed now live within a coherent, if not contradictory, 'corporate food regime'.

The corporate food regime remains, as did the first and second food regimes, supply driven, in the sense that food production, rather than consumption, lies at its core. However, where the corporate food regime differs from previous food regimes is the role of global capital, and its organizational form, the agro-food transnational corporation, in structuring the coherence of the regime. The agro-food TNC may operate directly in food production, or indirectly control food production through its control of food inputs (seeds, fertilizer, pesticides, or water) or food markets. Thus, we are talking about companies such as Wal-Mart, Carrefour, Tesco, Cargill, Monsanto, Pioneer, and the like. These companies want to buy food cheaply, to which they then 'add value', selling into monopsonistic markets, in order to generate, in absolute terms, greater profitability. Competition is intense between these firms, but not over rates of profit, as over absolute amounts of money. In order to add value, these companies seek to control the commodity chain in an effective manner, a manner that does not require actual ownership of the chain, or ownership of aspects of it. The agro-food TNC instead is able to 'regulate' the operation of the food commodity chain through its market power, so that markets operate to enhance its ability to extract surplus-value at critical points in the chain.

The agro-food commodity chain is thus not vertically integrated; and this can give the corporate food regime an appearance of disorder. Such is not, however, the case. The industrialization of food that was carried out under the mercantilist phase of global food development is carried through to its logical conclusion under the corporate food regime, with food increasingly in the North being consumed as a consequence of the cultural construction of capitalist consumer society. Foods are assembled in such a way that consumers really don't understand where the product comes from; they consume the food because of advertising, which allows capital to realize the surplus value that is created in the production process.

The corporate food regime is, critically, supported by neoconservative states in the North and, vitally, the World Trade Organization which, in the name of global free trade, is reconfiguring food production in the South as peasants become little more than sub-contracted petty commodity producers enmeshed within a corporate food regime over which they have no control. The food regime thus has a coherence, as a result of 25 years of structural adjustment in agriculture, the opening up of agriculture under the rubric of 'globalization', and the ability to undermine resistance in the North and the South by pushing producers into an ongoing crisis of social reproduction.

The corporate food regime is intricately connected to ecological unsustainability and demonstrates the inherent ecological contraditions of late capitalism. It produces crisis in the name of profit, degradation in the name of choice, and biohazards in the name of efficiency.