Charting the anti-capitalist movement

The American economist Hazel Henderson has likened the study of economics to a form of brain damage, and anyone who has studied the subject knows why.

Armed with dense, dull and mind numbing theorems, economists have for years acted as gatekeepers to a realm of knowledge inaccessible to the everyday person.

The dizzying array of statistics, graphs and tables used to justify the whims of business cycles evoke a collective yawn from most, which is precisely what the architects of the system want.

For this reason alone, Paul Kellogg's essay in Crisis, trade deals and anti-capitalism has made an important contribution to those challenging the grip of ruling ideas today. Through careful research and sound argument, Kellogg — editor of Socialist Worker — exposes the root causes of periodic economic slumps and the emergence of trade agreements in that context.

Apologists for market economies emphasize that greater competition between firms through freer trade is the best means to redistribute wealth, promote innovation, and expand consumer choice. Early on, Kellogg puts the lie to such claims.

Citing the case of Caribbean countries, he documents how trade deals lock in the rights of investors and quicken the poverty endemic to poor countries.

Far from increasing free trade, trade deals have limited the exports of sugar and other commodities where Caribbean nations are competitive. Trade deals between Canada, the US and the Caribbean have been a restructuring of the Caribbean in the interests of big Canadian and US multinationals.

The Caribbean example is hardly a freakish case. The same basic pattern has tracked almost every poorer nation around the world. As free trade increases, so too does the exploitation of workers and the environment as firms from the West seek out profitable new markets.

Apart from challenging the hypocrisy of trade deals, Kellogg also addresses the claim that government regulation of investment under capitalism can yield the gains working people deserve. In doing so he reviews the Jim Stanford's Paper Boom, the most sophisticated case for such regulation to date.

Kellogg agrees with Stanford's lucid description of the way in which speculative investment has created a global economy built on sand. He also applauds Stanford's challenge to the long-held view on the Canadian left that Canada was a "dependent nation" in the world of global capitalism.

But where Stanford argues for government regulation to channel markets towards "real" (as opposed to speculative) investment, Kellogg makes a convincing case to question the abilities of governments alone to reverse the exploitation at the heart of capitalism itself.

Kellogg draws our attention to Karl Marx's key insight that the rate of profit under capitalism has a tendency to fall. It does so even as profits massively increase because more money is funneled into the machinery used to shed workers and make production more "efficient".

This poses a dilemma for Stanford and other advocates of state regulation as tinkering with interest rates and investment yields less in the long run. The cutthroat, unplanned competition under capitalism drives firms to further exploit workers and shoulder massive levels of debt. The intensity of this competition makes Stanford's ideas unfathomable for corporations who must produce profits or perish.

Kellogg cites the case of Japan, where massively indebted firms have crippled that economy's once revered financial clout. Low interest rates there have not lessened the huge debt being shouldered by the Japanese state. Much of the investment in Asian economies has since fled to North American markets, where the price/earnings ratios of many firms is causing great unease among once confident business analysts.

Forcing the huge players of capitalism to redirect investment is like requiring a leopard to change its spots. The problem today, as Kellogg explains throughout his analysis, is less a problem of tinkering or battening down hatches.

What is needed now more than ever is an entirely different economic system, one that is democratically planned to meet human need and the integrity of the earth's environment (which is, as many recognize with recurring ecological disasters, not distinct from ourselves).

Russian socialist Boris Kagarlitsky adds a thought-provoking essay to Kellogg's analysis about the lessons socialists can draw from the important protests against the International Monetary Fund and World Bank in Prague. The article compliments Kellogg's attack on the assumptions behind trade deals and economic slumps, and challenges socialists to present an inspiring programme that working people will support.

Read this pamphlet. Use it to challenge anyone who claims that free markets bring limitless prosperity. Crisis, trade deals and anti-capitalism is a weapon to be used in the struggle. Waste no time — arm yourself immediately.