{"id":10192,"date":"2018-08-07T13:54:41","date_gmt":"2018-08-07T13:54:41","guid":{"rendered":"https:\/\/litci.org\/en\/?p=10192"},"modified":"2018-08-07T13:54:41","modified_gmt":"2018-08-07T13:54:41","slug":"g-20-financial-summit-how-to-get-out-of-the-storm","status":"publish","type":"post","link":"https:\/\/litci.org\/en\/g-20-financial-summit-how-to-get-out-of-the-storm\/","title":{"rendered":"G-20 Financial Summit: How to get out of the \u201cstorm\u201d?"},"content":{"rendered":"

The Summit of the Economy and Finance ministers and the presidents of the central Banks of the G-20 members carried out in Buenos Aires just ended. An immediate consequence of their conclusions was the drop in the Europe and Japan Stock Markets. <\/em>
\nBy: Alejandro Iturbe
\nAs president of the host country, Mauricio Macri carried out the closing statement of the meeting. He used a language named by an Argentinian opposition newspaper (linked to Kirchnerism) called \u201cclimatic\/nautical\/aeronautical\u201d, filled with terms such as \u201cstorms\u201d, \u201cturbulence\u201d and \u201ctroubled waters\u201d [1]. Actually, it was a speech destined to the \u201cinternal market\u201d, to explain why its government is not responsible for the current disastrous economic situation in Argentina, rather than contributing to the debate done by economists present. However, the terms he used describe well the current situation of world economy (\u201cstormy\u201d or \u201cturbulent\u201d).
\nThe final document issued by the summit also refers to this reality and its consequences, with the cryptic and \u201cneutral\u201d language used by bourgeois economists in these cases:
\n\u201cThe growth has been less synchronized recently and short and long term risks have increased. These include growing financial vulnerabilities, increase of commercial and geopolitical tensions, global unbalances, inequality, and weak structural growth, specifically in some advanced economies\u201d [2].
\nWhat do they mean? Without naming it, the center of the statement is the \u201ctrade war\u201d begun by the Donald Trump administration by collecting taxes from the import of some commodities to the USA, particularly industrial products from China. The Chinese government answered with tax collection from the import of agricultural North American products like soy and derivatives.
\nThe dynamic of the battle between both countries (the great commercial partners of the world in the last decades) is to worsen. At the same time, other fronts may open, since Trump\u2019s tax policy begins to affect several countries and threatens to do it more (like taxing cars with German, Japanese or Korean origin), with the possibility of symmetrical answers on their behalf. In other words, if the storm front that already exists continues to grow, it threatens to take the capitalist economy into a sort of \u201cworld trade war\u201d.
\nA New International Division of Labor<\/strong>
\nTrump\u2019s measures unleashed the current storm. However, the \u201ccloud accumulation\u201d and the factors that affect it and push it are much deeper. They have been preparing for the last decades.
\nThe first process began with the deep world economic crisis of the late 1960s and early 1970s, which marked the end of the \u201cpost war economic boom\u201d. One of its expressions in 1917 was the unilateral decision on behalf of President Nixon to end the gold-dollar parity ruling since the Breton Woods Agreements (1944), the bases of world economic stability during those years. The dollar continued to be an actual \u201cworld currency\u201d, but the monetary-financial markets became more fragile and volatile.
\nAnother expression was the strong increase of the oil barrel price, pushed by the OPEC (Organization of Petroleum Exporting Countries) to obtain most of the petroleum profit. This generated an increase in the cost of energy used in industry and led imperialist countries to transfer the production of the most polluting industries and those with the greatest energy consumption (like steel and aluminum) to the periphery countries.
\nSeveral industrial sectors began to \u201cemigrate\u201d, like textile, small steelworks and electronic product assembly, to countries with much lower wages and harder labor conditions like the Asian Tigers (Malaysia, Singapore, Taiwan and Hong Kong) and India.
\nThis process took a leap in the 1990s, with a waterfall of imperialist investments in China, a country where capitalism had been restored in 1976 and where the dictatorship of the \u201cCommunist\u201d Party, after the defeat of the Tiananmen rebellion, guaranteed solid \u201cstability\u201d and a very high level of surplus extraction. China became the \u201cfactory of the world\u201d with growingly complex products, like cellphones, computers, automobiles, construction machinery and trains, which were exported to the entire world, specially the United States.
\nA new international division of labor was established. Until then, the imperialist countries concentrated the industry and the semi-colonial countries supplied raw materials, fuel and foods. Now, there are still semi-colonial countries that supply these materials, but most of the industrial production is done in China and other Asian countries (or the Latin American maquilas<\/em>). On the meantime, the imperialist countries and companies continue controlling the process through technology production and the trade chain. Therefore, they obtain most surplus value. World economy was pushed by what we have called the \u201cUSA-China tandem\u201d, with the first as a dominating locomotive and the second as a subordinate one.
\nLet us see two examples: in 2008, the North American supermarket chain, Walmart, controlled around 15% of the Chinese exports (almost 225,000 million dollars per year), with a production of industrial consumption articles, through different \u201cChinese\u201d companies (like small four-cycles to mow the lawn), which they then sold in their place in the world chain. And Apple IPod was sold internationally for 200 dollars. These and other products were manufactured in China by the giant enterprise Foxconn. However, this country only held 4% of the value, the rest was appropriated by imperialism through technology control and the marketing chain. [3]
\nAn important part of the functioning of this new international division of labor was \u201cfree trade\u201d without tax obstacles, established through agreements like the European Union, the NAFTA, the Pacific agreement, Mercosur and bilateral agreements.
\nThis world process was reflected in the North American \u201cmacroeconomic accountability\u201d through a very high structural and chronic deficit in China\u2019s trade balance. At the same time, it affected some bourgeois sectors of the USA and other imperialist countries (which had not joined \u201cproductive globalization\u201d), which saw their market space dramatically reduced. Consequently, so was a sector of the traditional North American white working class, linked to these industries.
\nThe Growth of Speculation and Parasitism <\/strong>
\nThe tandem USA-China was completed because a significant part of the favorable trade balance obtained by China was invested by its government in buying North American Treasure bonds, in order to have international monetary reserves. The USA had a double and combined objective in selling its bonds to China and other countries (increasing the public debt). On one hand, it worked as a \u201csurplus value vacuum cleaner\u201d of the entire world; on the other, it allowed maintaining the gigantic \u201ctwin deficits\u201d (trade and fiscal) on which the North American economy worked.
\nThis was the bases over which imperialist North American (and world) capitalism tended to be more speculative and parasite. A real operation (like the buying of petroleum or cereals) became a speculative operation (the \u201cbuying for the future\u201d) increasing artificially the demand and betting on price increase. Based on another real operation (the building and selling of properties and mortgage credit to finance the purchase) many \u201cderivative operations\u201d were established, which actually multiplied a tenfold the actual bases.
\nTherefore, \u201cbubbles\u201d were formed as part of an artificial \u201cfinancial building\u201d, largely formed by fictitious capital (which did not express new produced value), but disputed with other capitals the surplus value extracted from production. At first, this process encouraged the demand and the dynamics of economy, but it went on to be sustained over much more fragile and volatile bases. At a certain point, a bubble \u201cburst\u201d and begun to \u201cdeflate\u201d, which shook the entire building. This happened when the property market bubble burst in the USA in 2007, beginning the international economic crisis, which still influences us today.
\nCrisis worsens Everything<\/strong>
\nThe crisis did not burst only due to \u201cpure\u201d economic-financial causes. It had the framework of the defeat of the \u201cNew American Cycle\u201d project and the policy of the \u201cWar against terror\u201d by George W. Bush, in Iraq and Afghanistan. These defeats generated in the political ground what analysts have called \u201cthe Iraq syndrome\u201d, whose expression in the financial grounds is the \u201clack of investment trust\u201d of the world bourgeoisie.
\nThe crisis had entered a dynamic of \u201ca downhill snowball\u201d and threatened to bankrupt the entire world banking-financial system. The answer of the imperialist governments and other national governments were the \u201cmega-packages\u201d of help to the financial sector (the famous \u201cliquidity injections\u201d). They acted like insurance companies covering the losses of the great speculators. But they did so compromising their monetary reserves and with over indebtedness.
\nThey did achieved to avoid the bankruptcy of the world banking-financial system and they stopped the downhill dynamic. However, they achieved this objective maintaining intact (actually recomposing) the capital excess that had been in the origin of the crisis, therefore preparing new and superior ones (today it is spoken of \u201cindebtedness bubble\u201d). At the same time, they spent most of the \u201cammunition\u201d that they would need today to face a new open and intense episode of the \u201cstorm\u201d.
\nOn the other hand, the governments and companies carried out hard attacks to jobs, wages, labor conditions and public services. With these attacks, they have achieved many triumphs and the living conditions of the workers and masses are constantly lowering. However, they have not managed to defeat their permanent struggle and resistance to these attacks. This struggle wears and erodes the bourgeois governments and regimes of all types, and it has stopped the bourgeoisie from achieving the exploitation level needed to obtain sufficient surplus value to satisfactorily value of the grown volume of existing capitals.
\nIt is true that imperialist capitalism sometimes manages for a piece of the sky to appear with a ray of sunshine. Then, it claims, \u201cThe worst has past\u201d. However, the storm front that opened in 2007 continues and it threatens to take on worse expressions.
\nThe Trump Factor<\/strong>
\nIn this framework, Donald Trump appeared as the president of the USA, the most powerful country in the world. For such a character to reach office there is a set of reasons we analyzed in International Courier <\/em>N 15 (January 2017) and in several articles published in this website. [4]
\nAmong other elements, he expressed sectors of the North American bourgeoisie that have lost weight in the new international labor division and have been displaced. It was not the only case: the same was expressed in the British bourgeois sectors that pushed the \u201cBrexit\u201d or the growth of the right wing bourgeois \u201ceuro-skeptic\u201d parties.
\nIn Trump\u2019s case, he posed that the USA was \u201cweakening before the world\u201d and \u201cother countries are taking advantage of it\u201d. It was the moment to overcome this \u201cweakness\u201d. For this, they had to reformulate the new international labor division and restrain free trade with tax barriers for the products imported to the country.
\nHowever, these measures by Trump go against the current deeper tendencies of imperialist capitalism in general and North American in particular. Specially, against the great multi-national enterprises that have factories directly in or associated with China. It also goes against the policy and dynamic of other imperialist sectors and countries [5].
\nTherefore, he acts as an \u201celephant in a shop\u201d in the heart of the main leaders of imperialism and its most important agents, not just in economic, but also in political grounds. His proposals and measures, added to his personal rudeness, have achieved his enmity with all those who should be the natural allies of North American imperialism, like the German Angela Merkel, the British government, the Chinese government, the Canadian premier\u2026
\nOne might say imperialism is living a \u201cleadership crisis\u201d, with the leadership (the government of the countries of the G-7) divided and Trump opening a \u201ctrade war\u201d as a future \u201cperfect storm\u201d in world economy.
\nA climate of \u201cevery man\/woman for his\/herself\u201d begins to prevail. By the end of last year, Germany repatriated a part of the gold stock deposited in the USA \u201cjust in case\u201d (The Netherlands and Austria followed their lead) and is afraid of taxes on import of German automobiles (the main source of income of the country). Germany is also withdrawing the gold deposited in France [6]. The Putin administration sold 85% of its North American Treasure bonds (which went from a 95 billion dollar stock to 15,000) [7]. Everything is moving in this dynamic.
\nSome Conclusions<\/strong>
\nThis reality had a dim expression in the G-20 summit statement. After the analysis of reality, the statement said there is not much to do but \u201cmonitor\u201d the consequences and attempt to mitigate them. At the same time, it said that the attacks on employment, wages, labor condition and the cut in public service budget would continue.
\nIt is necessary for the workers to double their fight against these attacks. We must seize the crisis and the division of our enemies in our favor to fight harder and defeat them.
\nNotes
\n[1]\u00a0https:\/\/www.pagina12.com.ar\/130274-macri-el-oso-carolina-de-la-economia-mundial<\/a>
\n[2]\u00a0http:\/\/www.ambito.com\/928232-estos-son-los-13-puntos-del-documento-de-la-cumbre-de-finanzas-del-g20<\/a>
\n[3] On this subject, see:\u00a0https:\/\/litci.org\/es\/menu\/mundo\/asia\/china\/certezas-e-interrogantes-que-plantea-la-crisis-economica-en-china\/<\/a>
\n[4] See, for example:\u00a0https:\/\/litci.org\/es\/menu\/mundo\/norteamerica\/estados-unidos\/trump-y-la-burguesia-estadounidense\/<\/a>
\n[5] See:\u00a0https:\/\/litci.org\/es\/menu\/mundo\/norteamerica\/estados-unidos\/las-sanciones-comerciales-trump-china\/<\/a>\u00a0and\u00a0https:\/\/litci.org\/es\/menu\/economia\/esta-detras-la-amenaza-guerra-comercial-trump\/<\/a>
\n[6]\u00a0https:\/\/www.hispantv.com\/noticias\/economia\/351492\/alemania-retirada-reservas-oro-extranjero<\/a>
\n[7]\u00a0https:\/\/www.cronista.com\/finanzasmercados\/Putin-ordena-vender-el-stock-de-bonos-del-Tesoro-de-Estados-Unidos-20180723-0012.html<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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