Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

Speculating to death

By Richard Hil and Nick Rose - posted Monday, 2 June 2008


For years we've been told that globalisation has a “dark underbelly”. It has, but the question now is whether the rest of it is in any better shape. There are no clearer signs of the terminal moral, social and economic bankruptcy of the globalised “free market” than the unfolding global credit and food crises.

Both are the product of a systemic financial logic that rewards unconstrained speculation, irrespective of the social costs. Most of the world now faces a prolonged recession with all its associated hardships, beginning with increasing unemployment, falling house prices and mortgage foreclosures, with an estimated one million Australian households now in mortgage “stress”.

The credit crisis has been brought about in large measure by the predatory and fraudulent lending practices of mortgage brokers in the US, who in turn have been egged on by the financial whiz-kids of the major banks and investment firms, all eager to get their share of the multi-million dollar bonuses from the real estate bubble.

Advertisement

The collapse of the sub-prime market in the US along with the demise of several US and British financial institutions is threatening a return to 1970’s style “stagflation”, and some commentators even draw parallels with the Great Depression of the 1930s. While multibillion dollar rescue packages are mounted with dizzying speed for investment banks such as Bear Stearns, those on the lower rungs of the socio-economic ladder are told to “tighten their belts” and reduce their expectations.

Equally, the commodification of food - that is, its trading as a means of generating profits rather than an end in itself - means that it too has been the subject of futures speculation, which helped produce fabulous earnings for hedge fund managers like John Paulson and George Soros, who pocketed $US3.7 billion and $US2.9 billion respectively in 2007 from speculation on the global credit and commodities markets.

Of course many other factors are involved in this escalating “food crisis”: drought and floods, increased demand for meat from China and India, exponential oil price rises leading to higher costs of chemical inputs and transport, and the diversion of vast grain acreages into feed stock for biofuels. While people in the west face the prospect of limits being imposed on their rice purchases (as has already occurred in the US and Britain) those in poorer nations face a far more grim reality: starvation.

Despite all the posturing of western governments, international financial institutions and the odd rock star, it is the world's poor who continue to bear the brunt of the food crises.

In the very short term the UN’s World Food Programme estimates that as a result of sky-rocketing grain prices more than 100 million people face the prospect of hunger and extreme poverty in addition to the 860 million who already go to bed each night under-nourished.

The bottom line, however, is that there is enough food in the world to feed everyone; the total grain production for 2007 of 2.3 billion tons is actually a 4 per cent increase on 2006. At stake here is the equity of food distribution and how the financial markets operate to price basic grains beyond the reach of the most vulnerable billion people in the world, most of whom are already food insecure.

Advertisement

This issue is hardly new. As food equity campaigners have argued, food insecurity is the result of decades of economic and trade liberalisation policies imposed by the industrialised world, its banks and its global governance institutions. These policies were always cynically hypocritical since the US and the European Union continued to hand out multibillion dollar subsidies to their own farmers, allowing them to destroy the grain producing capacities of developing nations through the dumping of cheap exports.

Dozens of poorer countries like Haiti, Sierra Leone and the Philippines lost the capacity to feed themselves through the combined effects of such practices, together with “conditionalities” attached to IMF loans that forced them to remove all tariffs. Now their impoverished populations are desperate, angry and rioting.

The very least we can now expect from our governments - and members of the super-rich club - is that they act decisively to provide sufficient food aid to avoid a looming global famine, without attaching the usual strings of liberalisation.

However, this can only be the bare minimum that decency demands. A fundamental issue is whether basic grains - the very source of sustenance for millions of people - can continue to be regarded as any other commodity; whether billionaires can continue to enrich themselves by condemning millions to eat, quite literally, dirt - as in now occurring in Haiti’s slums.

The stability of any system that produces such obscenities is in serious doubt, for two principal reasons. In the first place, these inequities are stripping globalised capitalism of its remaining popular legitimacy and prospects of survival.

Second, the global economy’s fragile dependency on endless supplies of cheap energy inputs is rapidly confronting the hard reality of the world’s geological limits. The price of a barrel of oil has risen 40 per cent since the start of the year, and 400 per cent since 2003. As we saw in the 1970s, the global economy cannot withstand that sort of energy inflation. This is a major reason why those ahead of the curve on sustainability are putting their energies into community gardens and local food systems.

  1. Pages:
  2. Page 1
  3. All


Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

7 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Authors

Richard Hil is Senior Lecturer in the School of Arts and Social Sciences at Southern Cross University, NSW.

Nick Rose is the Coordinator of the Bellingen Community Gardens Association and is the National Coordinator of the Australian Food Sovereignty Alliance.

Other articles by these Authors

All articles by Richard Hil
All articles by Nick Rose

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 7 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy