Buying Time

Note: This article was written in 2000, and buying time refers not only to the way capital organizes its functions, daily, weekly, yearly, but also to the fact that while I am working on something that requires more time than I have, I don’t want to lose your interest, modest or immodest as it, and I, may be.

Hopefully, it, the article, will be worth the wait, and the purchase, but I make no guarantees.

S. Artesian

Havana C+

A ten thousand ton elephant sat inside the Palacio de las Convenciones at the Second Conference of Economists on Globalization and Problems of Development. Omnipresent, yet invisible. Snoring soundlessly. Impervious to the criticisms that were short of merciless. Unharmed by attacks falling short, going wide of and missing the mark, and the market. That elephant was the United States economy. The United States doesn’t exist as a national economy at all, but as the lynch pin of a global economy spinning rapidly between success and failure, spinning simultaneously between the appearance of prosperity and the reality of deprivation.

That the elephant was there, slept so soundly, was so impervious, wasn’t due to the lack of effort by those assembled for this second conference. Effort isn’t everything. Almost isn’t close enough, and close doesn’t count. To reach a conclusion, you need the beginning. And the beginning for globalization is a continuous assault on the living and laboring standards of the working class, on the global level. That beginning can be traced to 1973 when the ruling capitalist ruling class, that of the United States, launched two critical tactical assaults, one the dramatic increase in oil prices, and the other the overthrow of the Allende government in Chile. The former rearranged profits in the world economy to offset the declining rate of return confronting the oil corporations. If OPEC hadn’t existed, the United States would have had to invent it. OPEC did exist and the United States still had to invent it.

The latter was the overture to the ideology of “liberal” globalization where the virtues of the free market, the wisdom of the invisible hand of capitalism, were secured by bayonets against the free collective actions of the Chilean workers. The working class of the entire world, east and west, was going to go to school, the Chicago School. The Chilean workers were the first class of an industrialized country to be subject to its discipline, its curricula anti-vitae of privation and military terrorism.

The results and prospects for globalization are marked by specific and general declines in the living and laboring standards of the working class on a global basis. As such, it is a logical self-contradiction, an oxymoron, to discuss the “benefits” of globalization based on the “economic” performance of any particular country or even group of countries. The ideology of globalization demands that its performance be analyzed on the global platform. The much lauded performance of the United States economy since 1992 is not a result of some free market wisdom. It is the product, the culmination, of a twenty year program of reducing wages, minimizing labor costs, devaluing and depreciating fixed industrial capital, and increasing the rate of exploitation, and doing all those things on a global scale. In a nutshell, animating proportionately more capital with proportionately less labor power, thus offsetting a decline in the rate of profit with higher rates of exploitation. The inevitable result of this process is overproduction as the costs of the production process for each of the units of production decline while the overall investment increases more rapidly than older equipment can be depreciated. Then the methods of depreciation and devaluation become more drastic, moving from debt to bankruptcy, from attrition to destruction, from austerity to war.

Like good generals, good economists are always well prepared to fight the last war again. So that critical analysis of the success of the US economy begins at just that moment when the success is fading. This year that success is blinding. Next year, after the US has slipped into a recession, after the capitalist class has installed a Republican president to preach the gospel of austerity and the virtues of poverty to those whose lives are about to made more austere and more poor, the long expansion of the US economy will be a shadow. The journals of finance and commerce will be pointing to the low savings rate, the assumption of debt, the trade imbalance, expanded consumer spending, low interest rates, raised interest rates, increased speculation, excess liquidity, decreased liquidity, all those elements of the previous period’s growth to explain the contraction. You can bet on it.

“There are lies, damn lies, and statistics,” said the US author, Mark Twain. The claim that capitalist globalization has led to rapid global growth is a lie. The assertion that the capitalist growth has benefited all classes is a damn lie. But the prosperity of the US economy is a statistic, more damning than a damn lie. That growth has been the producer and product of growing inequality. For the United States prosperity has meant not so much the production of wealth as the reapportionment of the produced wealth, the transfer of wealth from the pockets and hands of the poor into the financial instruments of the rich.

After the first oil shock of 1973-74 real wage growth slowed drastically in all countries. After the second oil shock of 1979, the United States capitalist class unleashed its penultimate weapon against the working class, –higher interest rates. No less important, no less brutal than the 1981 dismissal of the striking air traffic controllers, high interest rates began the process of locking out, on a class scale, hundreds of thousands of organized, highly paid, production workers. Railroads collapsed, steel mills closed, the United Auto Workers lost half its membership. By 1998 unions represented only 13.9 percent of the total labor force and only 9.4 percent of workers in the private sector.

The internal trajectory of the US economy was matched in the international arena, where the US launched its ultimate weapon against the working class. The US support for counterrevolution in Afghanistan had as its real target, the living standards of the Soviet workers. The population of Mexico was sacrificed almost en masse at the altar of higher interest rates. The living standards of the Mexican workers have not recovered to this day and stand as the real message of NAFTA and globalization.

If interest rates were the international demand of capital against the working class, exports, imports, trade was the supply to that demand. Thus, Jaruzelski in Poland, in his struggle against the Polish coal miners and their strike, could count on Thatcher to supply him with coal mined by British miners, and then repay the favor in kind when Thatcher, closing pit after pit in Britain, imported coal from Poland and broke the British miners’ resistance.

During that decade, as wage rates were being driven lower, and as manufacturing capital was being depreciated, more capital was deployed into financial instruments. The 80s opened with the firing of the air traffic controllers. The 80s closed with the collapse and bail out of the savings and loan industry. Between and throughout the beginning and end of the decade was the leveraged buyout, where debt subjugated equity, liquidated productive assets, and used the proceeds to reward itself for a job well done. The leveraged buy out was in fact, the financial equivalent, of the owners’ “lockout” of the workers, as manufacturing wages declined precipitously during the sell off and shutdown of industrial assets. The leveraged buy out was capital’s own preemptive bankruptcy. In reality, the Washington Consensus was nothing other than the imposition of the leveraged buy out economy on the world economy.

The nineties opened, finding once again in oil the concentrated version of the movement of capital. The overproduction of oil called forth the invasion of Iraq and the destruction of its production capacity. This grand alliance of capitalists from east and west and would-be capitalists from the east, marched in unison to a cadence pounded out on 55 gallon drums.

In the United States, the legacy of the drastic depreciation of manufacturing capital in the 80s was reflected most acutely in the “new” structure of poverty, a wage poverty. Between 1974 and 1994 the proportion of US workers making less than 75 percent of the median wage increased by 10 percent, from 31 percent of 34 percent of the total. While the number of workers engaged in manufacturing remained stagnant between 1980 and 1997, that total represented a 50 percent decline in relation to the total labor force. Class I railroads reduced employment by more than half. Petroleum production employed one-third fewer workers. During this period, real hourly earnings in private industry declined by five percent.

The period from 1992 through 1999 in the United States has seen average annual increases in capital spending of approximately nine percent. This is a rate far above the historical average. The investment has been concentrated in the means and methods of communication and transport. For example, the capital budget in 1998 for one particular class 1 railroad exceeded the amount spent in 1981 on capital programs for the entire railroad industry.

Between 1987 and 1997, US producers’ net stock of durable equipment doubled for information processing and communication, increased by 25 percent in transportation, and by 18 percent for industrial production. The truck, actually the container, and the telephone are the twin symbols of capital’s charge through the world markets. With the efficiencies in communication, information processing, and transport, capital is able to reduce both the time and the costs of circulation, thus “sharing” less profit with the mechanisms necessary to realize those profits in the markets. Just as important, the biggest consumer of capital, the largest demand for capital comes from capital itself. Demand economics, public consumption, has precisely nothing to do with the expansion or the general well-being of the capitalist economy. Profit has everything to do with that economy. Profit is that economy. Between 1980 and 1997, manufacturing as a percent of the total US economy declined by one-third, however the relation of manufacturing profits to manufacturing doubled.

It is the gravitational pull of the US economy, for better for the capitalists, always for worse for the workers, that accounts for the impact and transformation brought about through globalization. If globalization has changed certain characteristics of the economies of developing countries in general and Latin America in particular, an increase in direct lending by banks, accelerating use of capital markets, the decline in foreign government and official aid, an apparent shift from “commodity” (natural resource) production to technology and industrial based exports, certain characteristic remain the same, and they remain the same in their decline.

Despite the emphasis on world trade, exports of technology and industrial products, the terms of that trade have worsened for the non-OECD countries in general and Latin America in particular. Between 1981 and 1998 Latin America’s share in world exports declined from 4.7 percent of the total to 3.1 percent. For non-OECD countries as a whole the decline was from 34.6 percent to 27.5 percent. The decline in the share of imports for Latin America was from 4.9 percent to 4.1 percent. For the non-OECD countries it dropped from 32.7 percent to 27.3 percent.

The worsening of the terms of trade during this the self-proclaimed utopia of world trade provides insight into the fundamental character of globalization: all capitalist economy is the economy of extraction. The use of debt, the terms of repayment of that debt, the assaults on a national currency, the flights of capital are manifestations of the economy of extraction, the transfer of already existing wealth to those with the greatest already existing wealth.

The mechanisms of capital’s stabilization are mechanisms of dynamic disequilibrium. So that grants, aids, loans, currency supports, special drawing rights, even tourism become new vectors for destabilization and exploitation. That is the lesson of globalization. The meaning of that lesson is not that new and more refined mechanisms for aid, support, and trade are required. Regional trade groups, currency blocs, restrictions on capital flows, like growth itself, have only the transient existence allowed by a specific moment in global capital movement. At the next moment, these mechanisms are attacked, shattered, and converted into mechanisms of destabilization. Currency hedging, for example, was initially utilized by transnational corporations to stabilize their earnings and protect their business activities from swings in currency values. So much for good intentions.

Globalization is the activity of a specific class controlling a specific organization of the economy. As such, globalization is both program and power. A significant response can only be created in a program of power for a different class, a class that takes upon itself the immense burden of providing initially for the simplest of needs on its own terms. Where there is no access to sanitation, that class of workers takes the responsibility for demanding and creating that sanitation. Where there is no safe water supply, that class demands and accepts the responsibility for providing that water supply. Where disease and infant mortality compete with drought, flood, and famine for the crown of misery, that class demands the power to overthrow the crown.

S. Artesian


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