Saturday, July 19, 2008

Cloudy View from the Summit

Last month’s G8 Summit in the far north of Japan was typical of meetings of the heads of state these days. Held in a remote location, well out of sight and sound of protest marches, and protected by an army of police, the meeting was carefully choreographed to convey an impression of competence and confidence—but in the end only exposed the impotence of government leaders in the face of grave problems arising from their beloved social system.

The two problems that were the focus of attention at this year’s summit were climate change and price rises. Newspaper headlines quoted the vow of the heads of state to tackle both of these problems, yet the articles underneath admitted that this is much easier said than done.

One obvious reason why the various leaders are finding it difficult to solve such problems is that there is no clear consensus among them regarding the actions to take, which reflects the different and often directly opposed interests and standpoints of their respective nations.
For instance, not only are there differences between “rich” and “poor” nations regarding how to counter global warming, and the role that each nation must play, there are stark differences in the standpoints of the G8 nations regarding this issue, not to mention the political divisions within each nation.

Those same sorts of national and domestic differences came to the surface with regards to the rising food and fuel prices. Not surprisingly, each government has sought to frame the problem in a manner that lays the maximum blame on others. The root cause of the price rise has thus been identified, respectively, as the result of rising consumption in China and India, insufficient production by OPEC nations, or the flood of speculation on the commodities markets and declining dollar.

That is not to suggest, however, that such problems could be solved if only there was a clear consensus among the leaders and sufficient political will. The deeper issue is that the heads of state (with the backing, however tepid, of their electorate) have set out to solve problems that stem directly from the social system (= capitalism) that they are paid to serve and protect. (And it is worth emphasizing that their role is indeed as servants, rather than masters, of this system.) In other words, the reason that our self-styled “leaders” are unable to arrive at solutions is not that they are shortsighted, selfish and stupid—although more than a few fit that description—but that they are naturally reluctant to pursue the root causes of problems if it calls into question the capitalist system.

It does not take much digging, incidentally, to unearth the direct relation between a system of production for profit and a whole range of problems. This is particularly clear in the case of environmental problems. Capitalism is all about capital accumulation and the insatiable pursuit of profit is naturally accompanied by tremendous waste and destruction. If there are profits to be gained, capitalists are not too bothered by the long-term, or even short-term, consequences for other people or future generations. Political leaders lecture about the need to address environmental problems, while turning a blind eye to the role played by this rapacious system of profit chasing.

In the case of rising prices as well, it is rather absurd for politicians to bemoan the problem without fundamentally calling into question a system that revolves around prices and money. Granted, as long as the prices are “reasonable,” many people find this social system unobjectionable, or even natural. But a quick look at economic history reveals that inflation is a not uncommon side-effect of the money-centered capitalist system and that governments have had little success in bringing inflation under control once it picks up speed.

It is not surprising that inflation can be impossible to control, because commodity prices are not under our conscious human control to begin with. Simply put, prices are determined by the market. It is true that a business can set prices at whatever level it wants, but if that level is too far above or below that of their competitors the business runs the risk of losing sales or profit. Ultimately, therefore, businesses will tend to set the prices of their products according to the cost of production plus the average rate of profit. And, on a more essential level, these “production prices” are themselves ultimately determined by the amount of labor (or “socially necessary abstract human labor”) expended to produce the commodities.

In short, the very existence of prices reflects the fact, pointed out by Marx, that we live in “a state of society, in which the process of production has the mastery over man, instead of being controlled by him” (Capital vol. 1). When prices are high, the absurdity of this anarchic social system comes into clearer view, but even in “normal” times our lives remain prey to forces outside of our control. The “solution” to the problem, at least as far as workers are concerned, is not to bring prices back to some acceptable level (assuming that were indeed possible), but to progress beyond this social system where production is just a means of generating profit and distribution is mediated by money.

If the businesses that carry out production are not free to ignore “market forces” and arbitrarily set prices, then it is foolish to imagine that national governments somehow possess the magical power to bring prices under control. To remain in power, heads of state need to convince the public that they are in control of the economic situation, or can at least curb the worst excesses of capitalism. In fact, their “control” over the direction of the capitalist economy resembles that exercised by a rodeo rider over an angry bull during those four seconds before he is tossed from the saddle into the dirt.

The powerlessness of world leaders was highlighted by a comment made during the G8 Summit by a Japanese government source who told Reuters that “there is a limit to what governments can do now” to stem the rising prices. The fact that this bland and exceedingly obvious statement was made on “condition of anonymity” speaks to the insecurity of world leaders who are desperate to pass themselves off as superheroes.


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