TripleCrisis

Marx and President Correa’s Extraction

Joan Martínez Alier, Guest Blogger

President Rafael Correa of Ecuador asks when and where Marx criticizes mega-mining. In various interviews, Correa, the mouthpiece of mega-mining and the expansion of oil exploitation, has asked, “Let’s see, señores marxistas, where was Marx opposed to the exploitation of non-renewable resources?” The response is easy. Marx and Engels criticized predatory capitalism, even if (in my opinion) their proto-ecologist critique was not a fundamental pillar of their work, which was more focused in an analysis of the exploitation of salaried workers and its consequences for the dynamics of capitalism.

But what would Marx have said of mega-mining and the ideas of President Correa? I don’t know enough German to guess, but I imagine it would be something like Pfui Teufel! In this respect, the pertinent concepts of Marxism that Correa doesn’t know or has forgotten are at least two: 1) Primitive or Original Accumulation of Capital (a concept revised by David Harvey in 2003 under the name Accumulation by Dispossession, very appropriate to the realities of President Correa’s oil and mineral extractive projects in Ecuador’s Amazon and other regions); 2) The interpretation of economics as Social Metabolism (for which Marx was inspired by Moleschott and Liebig).
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We Need a Shadow CBO

Jeff Madrick

I have written before on this blog and in my Harper’s Magazine column about the distorted long-term budget projections produced by the Congressional Budget Office. The CBO’s figures are a primary source of the current alarm about the need to cut government spending even with the economy weak.

To earn its “non-partisan” label, the CBO makes unrealistic assumptions that for the most part merely project past trends into the future, and sometimes don’t even do that — underscoring the need, in my view, for a “shadow CBO” that exposes the office’s outlandish assumptions and offers us a set of alternative projections based on realistic ones. The office forecasts, for instance, that U.S. debt as a proportion of GDP will be 150 percent by the early 2030s and nearly 200 percent by 2037. Michael Linden, a highly competent economist at the Center for American Progress, has made a good start at exposing the assumptions that underlie such predictions by taking a close look at the office’s June 2012 long-term forecast:

Since CBO released its long-term outlook in June 2012, we’ve already made significant progress toward bringing down our deficits. First, contrary to CBO’s assumption, we did not extend all of the Bush tax cuts at the end of 2012. Instead, the American Taxpayer Relief Act allowed approximately $600 billion of the Bush tax cuts to expire as scheduled, thereby raising future revenue projections. Second, the most recent CBO budget outlook, published in early February 2013, shows substantially less spending over the next 10 years than was projected in June’s long-term outlook. Finally, given the scheduled drawdown in Afghanistan, it seems unlikely that we will continue spending more than $100 billion a year—as is currently projected—on foreign wars. Incorporating these changes brings the 2037 debt projection down from 199 percent of GDP to 169 percent.

Linden goes on to point out that the CBO is projecting no rise in tax revenues as a proportion of GDP, even though these revenues usually go up with the rise in personal and corporate income that accompanies economic expansion. The office is also expecting a sudden increase in non-entitlement spending in 2022 — the very spending that Congress is now working to cut. Thus, the CBO is building into its projections deficit increases that likely won’t occur. Moreover, if these programs receive additional funding in the future — and let’s hope they do — they may be accompanied by tax increases to finance them.

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Why Chavez's legacy will live on

Martin Khor

Hugo Chavez, who died last week, mourned by millions of Venezuelan citizens and people around the South American region, was a figure that was larger than life.

During his 14 years as President of Venezuela, he managed to institute profound changes with effects on his country and the developing world long after his death.

Some leaders and media outlets in the West have been giving misleading or trivialised commentaries, just as they tried to demonise him during his lifetime.

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Why Chavez’s legacy will live on

Martin Khor

Hugo Chavez, who died last week, mourned by millions of Venezuelan citizens and people around the South American region, was a figure that was larger than life.

During his 14 years as President of Venezuela, he managed to institute profound changes with effects on his country and the developing world long after his death.

Some leaders and media outlets in the West have been giving misleading or trivialised commentaries, just as they tried to demonise him during his lifetime.

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Wake Up and Smell the Air

Sunita Narain

Our health is not on anybody’s agenda. Or, we just don’t seem to make the connections between the growing burden of disease and the deteriorating condition of our environment. We don’t really believe the science, which tells us each passing day how toxins affect our bodies, leading to high rates of both morbidity and mortality. It is true that it is difficult to establish cause and effect, but we know more than enough to say that air pollution is today a leading cause of both disease and death in India and other parts of South Asia.

The Global Burden of Disease is an initiative involving WHO that tracks the causes of disability-adjusted life years lost—the number of productive years lost to diseases—and human death. In other words, it assesses a large number of risk factors responsible for the global burden of disease. Why are we ill? The initiative’s decadal 2010 assessment should make us angry.

In South Asia the top cause of disease and death is particulate pollution—inside homes because of the poor quality cook stoves and biomass fuel burnt by poor households, and outside homes because of growing numbers of vehicles and use of dirty diesel fuel. What is more worrying is that ambient and household-level air pollution has a correlation with ischemic heart disease, stroke, lung cancer and lower respiratory infections. According to this assessment, some 627,000 deaths in 2010 are attributable to ambient air pollution alone in India, of which heart disease caused almost 50 per cent deaths and stroke and hypertension another 25 per cent. In all, over 1.6 million deaths happened in India because of indoor and outdoor air pollution in 2010, finds the global assessment. It is not mocking numbers.

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Conflict, Inflation and Income Distribution

Matias Vernengo

Fears of inflation have been misplaced, since there is little evidence that without wage resistance, which depends on the bargaining position of workers, there could be systematic inflation pressures. Last time that workers tried to push back and increase wages was in the 1970s, in which labor’s stronger position, and employers’ resistance to workers’ demands, resulted in high levels of industrial conflict.

The graph below shows the number of strikes, using LABORSTA data, and inflation, from the FRED database, and shows that the decrease in inflation has been correlated with lower levels of work stoppages.

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China’s exploding debt

C.P. Chandrasekhar

If the international media are to be believed the world, still struggling with recession, is faced with a potential new threat emanating from China. Underlying that threat is a rapid rise in credit provided by a “shadow banking” sector to developers in an increasingly fragile property market. Efforts to address the property bubble or reduce fragility in the financial system can slow China’s growth substantially, aggravating global difficulties.

The difficulty here is that the evidence is patchy and not always reliable. According to one estimate, since the post-crisis stimulus of 2008, total public and private debt in China has risen to more than 200 per cent of GDP. Figures collated by the World Bank show that credit to the private sector rose from 104 per cent of GDP in 2008 to 130 per cent in 2010, before declining marginally in 2011. The evidence suggests that 2012 has seen a further sharp increase.

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Expert Panel: Don't trade away financial stability in Trans-Pacific Partnership Agreeement.

Kevin P. Gallagher published the following op-ed in the Financial Times based on the recent Pardee Center report from the Task Force on Regulating Global Capital Flows for Long-Run Development, which he co-chairs.

Negotiators will meet in Singapore this week for yet another round of talks on a Trans-Pacific Partnership – it is the 16th time in just a few years. A TPP would bring together key Pacific-rim countries into a trading bloc that the US hopes would counter China’s growing influence in the region.

Among other sticking points, talks remain stalled because the US insists that its TPP trading partners dismantle regulations for cross-border finance. Many TPP nations will have nothing of it, and for good reason. The US stance stands on the wrong side of country experience, economic theory and guidelines issued by the International Monetary Fund.

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Expert Panel: Don’t trade away financial stability in Trans-Pacific Partnership Agreeement.

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Currency Concerns Under Uncertainty: The Case of China

Sunanda Sen, Guest Blogger

Concerns have been rising, in recent months, over the current state of China’s external balance and the future of the RMB. Apprehensions relate to the negative balances, which have been visible in China’s financial balance since the last quarter of 2011. The negative sums were respectively (-) $ 3.02 and (-)$ 4.21 billion during the second and third quarters of 2012, preceded by an even larger sum at (-)$ 29.0 billion in Q4 2011. Such deficits contrast with the surpluses in the financial account usually maintained, which were as much as $13.20 billion during Q4 of 2010. These changes have been matched by tendencies for its official reserves to slide downwards. For instance, there was a $ 6 trillion drop in official reserves between March and June 2012. Pressures on the RMB rate even led to its depreciation, from 6.30 per dollar in April 2012 to 6.41 by August 2012. The currency, however, reverted to its earlier phase of appreciation, with the rate moving up from RMB 6.38 to RMB 6.31 between 24^th July 2012 and 18^th January 2013.

Differences relating to the exchange rate have continued to prevail across officials and think tanks in China and the US, with the latter holding China’s exchange rate management responsible for the continuing global account imbalances between the two countries. With pressures on China to appreciate the currency, the US Treasury even came to the point on in April 2010 of deciding whether China can be treated as a currency manipulator. The on-going dynamics of China’s foreign exchange transactions can be better understood by tracking the following major breaks in China’s exchange rate policy:

First, an end to the prevailing fixed RMB-dollar rate in 2005, which came largely with pressures from the US. Despite the twin surpluses between the current and the capital account, China was maintaining, since 1997, a fixed exchange rate at around 8.27 RMB per dollar. The change to managed floating, still supported by direct purchases of foreign currency which were flowing in abundance with the twin surpluses, led the RMB to rise immediately to 8.11 per dollar, with gradual appreciations since then. With appreciations continuing, the change to a floating RMB did not, however, lead to currency speculation till the third quarter of 2011.

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