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Sunday, 03 June 2012 09:46

Mike Phipps reviews The Economics of Killing, by Vijay Mehta, published by Pluto, price £14.99 pbk and Capitalism: a structural genocide, by Garry Leech, published by Zed, price £12.99 pbk.

Sunday, 03 June 2012, 
Labour Breifing 
book review

Why did the global economy crash in 2008? asks Vijay Mehta in his new book. The immediate cause, as we all know, was the sub-prime mortgage crisis in the US, fuelled by cheap credit – but why was credit so cheap? Why were US interest rates so low? Part of the answer lies in China’s voluminous appetite for US treasury bonds, but why did China use its growing wealth to buy these bonds?

It would have preferred to invest its surplus dollars in buying US goods, services and, well, corporations. Ultimately, what China wanted to buy was the US military-industrial complex, argues Mehta.

For security reasons the US has long banned the sales of arms or “dual use” (military and industrial) technology to China. The 2008 crisis suggests that the US economy cannot survive without reconsidering that policy.

Alternatively, it could restructure its economy away from the colossal sums spent on military-industrial production, but there are many vested interests which would oppose that. In 2012, the Defense Department had a budget of $553 billion, not including $150 billion for military operations in Iraq –  which US troops officially left last year – and Afghanistan.

This is a sum greater than all the military expenditure of the rest of the world, despite the US representing only 4% of the planet’s population. Where it all goes is anyone’s guess: in 2010, the US Government Accountability Office said the Defense Department’s financial statements were “un-auditable”.

A great deal of the money goes to companies like Lockheed Martin which tender for contracts in a usually secret and non-competitive bidding process, a form of corporate welfare. Huge sums go to foreign states, such as Israel, as long as they keep buying from US companies. Such deals are conveniently exempt from WTO rules.

The US is happy to sell technology to countries that already have it, while it freezes poorer ones out. Turning down China unbalanced the US economy to the point of collapse.

Sell arms to China or restructure the US economy? There is a third option: the US could simply not pay back China its debts. By printing more dollars, the US can devalue its currency on global markets. Since the debt to China is owed in dollars, this is one of the ways to reduce it. Some say the US is already doing precisely this. China, of course, may not react kindly to being swindled.

  • Mehta attempts to quantify the human impact of US global militarism: forced migration, refugees, pollution, ill health and more – but Garry Leech’s book takes on this task more comprehensively.

He starts with case studies from Latin America. Over 500 years after the Spanish Conquest, oil companies came to the Amazon basin to extract oil – with disastrous consequences on the people and environment of the region. Texaco alone spilled 16.8 million gallons of oil into the Ecuadorian Amazon. Other companies dumped untreated chemicals and industrial solvents, causing rates of cancer, miscarriages and birth defects significantly higher than elsewhere.

Is this just an extreme case, asks the author, or is there a pattern? Is there something fundamentally genocidal about capitalism?

The North America Free Trade Agreement, foisted on Mexico by the Clinton Administration, dispossessed about two million Mexican farmers of their livelihoods and lands, because they couldn’t compete with subsidised US agricultural imports. The resulting social breakdown has produced unprecedented violence, expressed through the turf wars of drug cartels and the huge rates of urban femicide. In India too, global neoliberalism has driven farmers into inescapable debt. Since 1997, more than 200,000 have committed suicide.

Neo-liberal globalisation is having a horrendous impact on families and communities. In El Salvador, people fled the civil war in the 1980s with good reason. Today they flee the structural violence of capitalism at an even faster rate – 700 El Salvadoreans leave daily. One third of the country’s population now lives in the US, sending home remittances that amount to almost 20% of GDP.

Nowhere is life more precarious than sub-Saharan Africa. Fifty years ago, Africa was a net exporter of food. Today, the continent imports 25% of its food, partly because the World Bank and the IMF require countries to produce non-food crops for export in order to acquire the foreign reserves that can service their debts. Food “aid” from advanced countries like the US is often more focused on finding markets for surplus US agricultural products than on helping people in need. The resulting hunger and malnutrition open the continent to the rapacious private health care industry and exploitation by western pharmaceutical companies.

Both these books contain a vast amount of material about the murderously destructive nature of capitalism and are highly recommended.

Source: Labour Briefing

Benn and Jerrys
Special Thanks to Benn & Jerry’s for their support to Uniting for Peace