Global Turmoil

Disorder and People’s Struggles

Arup Baisya

The world economic and political order is in great turmoil. The US economic and geo-political world hegemony is based on two pillars. The dollar, for all its faults and weaknesses, is the pivot of the entire global system of currencies, stocks, bonds, derivatives and investments of all kinds. Along with it, the military might for strategic geo-political control is another pillar.

The third currency war which has been started from 2010 post-subprime crisis is taking new dimensions. In 1997 the US trade deficit with China was less than $50 billion. Then the deficit grew steadily, and in the space of three years, from 2003 to 2006, it exploded from $124 billion to $234 billion. This period, beginning in 2003, marks the intensification of concern about the US-China bilateral trade relationship and the role of the dollar-yuan exchange rate in that relationship.

China's internal deflation is exported to the United States through the currency exchange rate and ends up threatening deflation in the United States. This begins with the Chinese policy decision to peg the exchange rate between the yuan and the dollar.

This meant that as the Fed printed dollars and those dollars ended up in China to purchase goods, the People's Bank of China (PBOC) had to print yuan to soak up the surplus. In effect, China had outsourced its monetary policy to the Fed, and as the Fed printed more, the PBOC also printed more in order to maintain the pegged exchange rate. The Chinese acquired massive quantities of US Treasury obligations as their trade surplus with the United States persisted and grew.

Chinese leaders have begun to make it easier to trade the yuan in foreign exchange markets. On March 23, 2015, China backed the Renminbi Trading Hub for the Americans. That makes it easier for North American companies to conduct yuan transactions in Canadian banks. China opened up similar trading hubs in Singapore and London. (Source: "Canada Aims to Boost Deals in China Currency", The Wall Street Journal, March 23, 2015.)

The process of absorbing all the surplus dollars entering the Chinese economy, especially after 2002, produced a number of unintended consequences. The first problem was that the PBOC did not just take the surplus dollars, but rather purchased them with newly printed yuan. By early 2011, Reuters estimated that total Chinese foreign reserves in all currencies were approximately $2.85 trillion, with about $950 billion of that invested in US government obligations of one kind or another. The United States and China were locked in a trillion-dollar financial embrace, essentially a monetary powder keg that could be detonated by either side if the currency wars spiralled out of control.

While the Russian ruble is in no position to replace the dollar in international reserves, it could become a regional reserve and trade currency for Russian and Central Asian gas suppliers and Eastern European gas customers, dislodging the dollar to that extent at least. Energy is a wedge used to forge a regional economic bloc with a regional reserve currency, the ruble. Russia successfully maintained its regional hegemony by establishing Gazprom's near monopoly on natural gas supplies to Europe through pipelines transiting Ukraine and Belarus. Europe and US backed company Nabucco 's attempt to circumvent these pipelines in a way that neither uses Russian natural gas nor passes through Russian territory has been foiled. Nabucco tried to source its gas initially in Azerbaijan and later Kazakhstan and Iraq and traversed to Turkey on its way to Europe. Russia also speaks openly of the dethroning of the dollar as the dominant reserve currency.

Russia released its official "National Security Strategy of the Russian Federation up to 2020," an overview of the global strategic opportunities and challenges confronting Russia. In addition to the usual analysis of weapons systems and alliances, the strategy draws the link between energy and national security and considers the global financial crisis, currency wars, supply chain disruptions and struggles for other natural resources, including water. The strategy does not rule out the use of military force to resolve any of these finance- or resource-related struggles.

For now, it is enough to say that Russia has warned the world of the coming blue fuel wars in both words and deeds.

While all currencies by definition represent some store of value, the dollar is different. It is a store of economic value in a nation whose moral values are historically exceptional and therefore a light to the world. The debasement of the dollar cannot proceed without the debasement of those values and that exceptionalism.
In global scenario, table has already turned, and US, it seems, is oblivious of its containment. US is desperately flexing its muscle and inciting war hysteria with pernicious show of its war machine, when both US job market and wages are plummeting. When Turkey strikes a missile deal with Russia, US war machines are displayed in Sweden under NATO umbrella fearing deep fissures within NATO camp. When US fails to compel North Korean rulers to kowtow, it brazenly applies sanction and shows South Korean missile. Israel, the pivot of US Arab domination, has been taken aback by the recent non-violent resistance by tens of thousands of Palestanians mobilised in response to Israeli closure of old city. The Palestenian youths forced open a gate in the Israeli separation wall. It's a sign of rejuvenation of Palestanian movement. New form of grassroots movement is emerging all over the world. And it's a sign of warning to the imperialists of all hues.

The US is threatening to cancel nuclear agreement with Iran, but other European signatories are averse to Trump's rhetoric. US failed to tame North Korea despite repeated threatening of attack on Korean nuclear installations. Through Russia's successful intervention, the US agenda to dislodge Assad regime has failed. US show of its military might could not dissuade China from its overwhelming claim on South China Sea. The strategic interest of US in East Asia and Afganistan is getting jeopardised by China's ever-increasing influence in East Asia through its One Belt One Road (OBOR) project. The diffusion of Doklam crisis is in conformity with the toning down of India's opposition to China's OBOR project.

One must comprehend where this disorder in world geo-politics will lead. In view of the world capitalist economic crisis which is showing no sign of overall revival post-subprime crisis, the imperialist conflict for strategic control will deepen. If it triggers into a full-fledged war, it will not last long with large-scale human and natural catastrophe due to the use of nuclear arsenals which many countries now posses.

So, while aligning with world-wide anti-war campaign and people's movement, progressives in India must build popular pressure for negotiation and dialogue with the neighbouring countries especially China and Pakistan to resolve all vexed issues.

Throwing a Russian resources assault, a Chinese currency assault and an Iranian military assault at United States interests in a near simultaneous affront would produce predictable effects in the hair-trigger world of capital markets. Markets would experience the financial equivalent of a stroke.

The global economy in double whammy: the capital surplus absorption problem due to scarcity of profitable destination for investment and investment problem due to scarcity of fund of highly indebted banks. Labour's earnings plummeted due to the widespread trend towards investment in asset values instead of production and manufacturing, the asset value also took a plunge. The gap between earnings and consumer spending is being tried to cover by the rise of credit card industry and increasing indebtedness.

The Japanese boom of the 1980s ended with a collapse of the stock market and plunging stock prices and is still ongoing. To boost investment, Japanese banks are maintaining near zero percent interest rates. Investment in India for bullet train etc is an opportunity for the Japanese. But this model of development will further screw the Indian people. Indian banks are reeling under crisis due to bad loans and NPA, and now expecting bailout package from Govt. with common Indian taxpayers' money.

Despite the appearance of economic dynamism in China today, sudden collapse is entirely possible and could be caused by things such as inflation, rising unemployment, ethnic tensions or a burst of housing bubble. Prolonged and widespread unemployment is potentially destabilising in China.

In the midst of deep global economic crisis, India cannot achieve export led growth as China achieved at the initial phase of neo-liberalism in the eighties. The SBI report said, "GDP growth during the second quarter of the current fiscal is expected to remain below 6 percent due to downward trend in export and muted growth in the agricultural sector. The Gross Domestic Product (GDP) growth in the first quarter had fallen to 5.7 percent". Though US imports of textile and apparels have grown 30 percent between April and July, Indian export to US remained at the same level. The slowdown in demand has only aggravated the situation. The Indian economy is facing the cliff from where its downward march would continue. As the economy contracts the news came of the massive growth in net worth of the top 100 billionaires growing by 26% and who else to top the chart but Mukesh Ambani whose net worth increased by a massive 67%. What people are witnessing is a jobless economic growth with tremendous growth of capitalists.

The author of Capital in Twenty-first Century, Thomas Picketty, and his colleague Lucas Chancel at the World Inequality Lab, Paris School of Economics, have provided the numbers as far as incomes are concerned in their working paper "Indian Income Inequality, 1922-2014". (Indian income inequality, 1922-2014 : From British Raj to Billionaire Raj? : Lucas Chancel, Thomas Piketty : July, 2017)

This report states "our results shed light on a particularly striking characteristic of Indian growth over the past three decades: the very moderate rise of the "middle class"—at least defined as individuals above median income and below the top 10% earners. Incomes of the middle 40% grew at 102% over the 1980-2014 period. Compared to industrialized countries' growth rates for this group, the figure is impressive. In the Indian context however, the middle 40% were notably below average growth (187%). Since 1980, the middle 40% group in India captured a much smaller share of total growth (25%) than its counterparts did in China or Europe (more than 40%) or even the USA (33%). This result should help us better characterize what has been termed as the rise of India's middle class".

In this mirage of growth and despair the opportunity arises from the revolutionary proletarian to give the clarion call for redistribution of wealth through nationalisation, state intervention and workers’ participation.

The uneven development is ingrained in capitalism especially at its latest stage of imperialism. But the capitalism has the dynamic capacity to annihilate the space with time. It can dismantle all geographical barriers to bring sundry nations under its overwhelming control. Geographical diversity is not anathema to capitalism, rather it is necessary for its sustainability. Barring few African countries, every part of the world has come under its fold. Capitalist relations of production are in the driving seat when all other social relations have been remoulded and co-opted under its command. When one talks about uneven development, one must keep an eye on changing geographical landscape due to capitalist restructuring and huge investment in assets. The rising Washington DC with investment in social and physical infrastructure and contrasting sorry state of affairs of once industrialised Pennsylvania with deserted factories, dilapidated roads and bridges and unemployed workers speak volumes about the capitalist restructuring. Who could have imagined that Bengalore will develop as world's IT hub and Mumbai will take its present look with high rise buildings. The investment of capital in assets is displacing the toiling masses from its habitat and workplace. Capitalist accumulation through displacement or primitive accumulation already displaced crores of people from Indian agriculture as well as from urban and semi-urban areas. The distress situation of agriculture due to lack of Government investment and the presence of blood-sucking corporates in agri-business, a huge number of migrating contractual labourers have been created. On the one end, the organised labour has been dismantled through capitalist neo-liberal restructuring and on the other hand a large vulnerable proletariat or precariat is being created. In agricultural sector, a new class of landlord capitalist and peasant capitalist have emerged, the mid-peasant is almost extinct, and the number of agricultural wage labourers has crossed the threshold to influence the change of relation of production to capitalist one. But all the agricultural classes have a score to settle with global corporate sharks that are in control of labour process, surplus accumulation and input and output side of production.

This new proletarianisation and precatrianisation has also been changing the contours of all kinds of identity movements. The support base of the dalit movements solely driven by identity rights without focusing on the working class within the identities is dwindling, when section of upper strata being co-opted in the overall corporate interest is siding with the ruling class. When there is loss of jobs of muslims and lower castes Hindus who cart cattle, labour in tanneries and make shoes, bags and belts including for big name brands such as Zara and Clarks, the Dalit middlemen who are in supply chain are with ruling class. The timings of banning and lynching in the name of cow nationalism are in sync with claim of big exporters that that they have enough leather as they source hides widely, including from abroad. However, the emergence of new Dalit movement which is highlighting the rights of Dalit workers is noticeable.

Without organising this working class, there cannot be any effective resistance movement against corporate onslaught. There are structural barriers to achieve the unity of working class. These working classes are disorganised and compartmentalised with their diverse immediate interest. But there is also a commonality in their desire of wage-hike and social security. They are also divided on caste-identity fault lines. The agenda of identity rights and opposition of caste oppression needs to be incorporated within the working-class struggle with strenuous and continuous pedagogic efforts. The socio-economic gap between the mental working class predominantly comprising of upper-castes and the manual working class is huge in Indian reality and this needs to be addressed through a simultaneous cultural movement too.

The resistance movement against land grabbing and eviction or the movement against the capitalist accumulation by displacement as David Harvey termed it is not enough to build a revolutionary struggle against corporate onslaught. If progressives fail to build a revolutionary working-class movement, the fascist forces are bound to raise their ugly face. When capitalism is in crisis and the working class is in disarray, the fascist forces are bound to rise.

Due to jobless growth and dismantling of state-guaranteed social security, the exponentially rising parliamentary curve of Bharatiya Janata Party (BJP) has been momentarily halted. In the recent by-elections and very recently held Gujarat Assembly elections, the downward trend of the curve is also visible. But there is no scope for complacency, the revolutionary popular upsurge under the leadership of working class can only defeat fascism effectively. One must bear in mind that the fascist forces backed by RSS have taken two-pronged strategy for fascist take over. One is overt fascist mass movement on the issue of Hindutwa—illegal migrants, infiltration, refugee etc and other is more insidious nature of changing the character of democratic institutions through infiltration of fascist forces. On the second front, RSS has achieved substantial success. No doubt the Supreme Court is still giving citizens some respite by pronouncing democratic judgement on Privacy issue, Rohingiya issue etc. But this will not be sustainable, if BJP once again reign in power post 2019-election.

The revolutionary forces should rise to the occasion when Indian economy is in deep crisis, to build the working class revolutionary core with a view to develop united anti-fascist struggle of all social and political anti-BJP democratic forces.

The two things that capitalism exploits are the labour and nature for profit and accumulation. The human being has been evolved from and is organically linked with nature and thus human body is the metabolic unity of labour and nature. The separation between natural, inorganic conditions of human existence and living & active humanity is a separation which is completely posited only in the relation of wage labour and capital. In the capitalist social relations of production, the metabolic rift between labour and nature occurs and capitalists control the labour process to exploit both labour and nature and thus destroy the balance of nature. The capitalist carbon economy and unbridled exploration of natural wealth has already destroyed the nature to such an extent that it is beyond the reach under the capitalist profit-motive to repair the damage and rejuvenate nature.

The genius of capitalism's Cheap Nature strategy was to represent time as linear, space as flat, and nature as external. Recognising capital accumulation as both objective process and subjective project, Marx's value thinking offers a promising way to comprehend the inner connection between accumulation, biophysical change, and modernity as a whole. So, to save earth and the humanity from ecological disaster, people must have a project to go beyond capitalism.

The global warming, holes in Ozone layer and rise in sea water level have posed disastrous consequences to the existence of human civilisation. The first world or industrial north, with about 25 percent of the world's population and owning about 86 percent of the world's industry, consumes 80 percent of world energy. The US, with around 5 percent of world population, has been estimated to consume 20 percent of the world's non-renewal energy resources. The US gobbles up a quarter of the world's energy supplies, about as much energy as used by entire third world. Under the pressure of global opinion, global leaders reached an agreement known as Kyoto Protocol to address ecological issues. But industrial north especially the US diluted the obligatory provisions of Kyoto Protocol and designed a new agreement known as Paris Agreement with voluntary provisions. Now President Trump is threatening to withdraw from Paris agreement too. The people's struggle against capitalist development and for sustainable development model needs to be launched with a view to march ahead beyond capitalism, can only save humanity from ecological disaster.

Indian people are bearing the brunt of both global ecological degradation and the capitalist development model. Many states and cities are encountering repeated floods and draught. For example, due to the release of water from the Big Dams, the large landscape of lower Assam has been inundated with three consecutive floods in this year.

There is a sustained anti-dam movement in various parts of India including Assam. But the difficulty is that the workers engaged in the construction and running of Big Dams and ancillary industries are not averse to its construction due to their immediate livelihood issue. So, it is necessary to formulate a programme on sustainable development model along with anti-dam movement.

Vol. 50, No.27, Jan 7 - 13, 2017