Crunching NZ

Globalist Contradictions Bite Home

- Dennis Small

 “… the warming of the Earth’s surface is putting more moisture in the atmosphere…. So the chances for extreme weather are going nowhere but up. We need to face that reality” (National Geographic, September 2012, p53).

“Exposing Western hypocrisy – how much more exposed can they be? Which decent human being on Earth harbours any illusions about it? These are people whose histories are spongy with the blood of others. Colonialism, apartheid, slavery, ethnic cleansing, germ warfare, chemical weapons – they virtually invented it all. They have plundered nations, snuffed out civilisations, exterminated entire populations. They stand on the world’s stage stark naked but entirely unembarrassed, because they know that they have more money, more food and bigger bombs than anybody else” (“The Cost of Living”, Arundhati Roy, Flamingo, 1999, p144). But power is shifting worldwide.

“We shall require a substantially new way of thinking if mankind is to survive.” (Albert Einstein)

As global capitalism continues to implode, the system’s true believers are increasingly challenged by the pervasive sense of crisis. Their ideological credibility is in limbo or in tatters with many publics worldwide, but they struggle on in promoting their standard prescriptions for economic growth.  Meantime, the magic hand of the market has gone haywire and is spinning out of all control. In Aotearoa/NZ, the contradictions of globalisation are closing ever more tightly on our own society and economy. Growth has inevitably become more and more uncertain and problematic. What worked well in the past can now seem very questionable for the future for all sorts of reasons. We need to place the position of Aotearoa/NZ in perspective within the current and future context of globalisation.

Chaotic Capitalism

Industrialising the planet via free trade and investment is still seen as the path to endless prosperity by our political leaders and economic pundits, despite mounting resource conflict, resource wars, peak oil, pollution, climate change and global warming, diminishing fresh water supplies, declining ecosystems, acid oceans, etc, etc. (“Resource Wars: The New Landscape of Global Conflict”, Michael Klare, Owl Books, 2001/02;  “World on the Edge: How to Prevent Environmental & Economic Collapse”, Lester Brown, WW Norton & Co, 2011: President of the Earth Policy Institute, Brown is the author of many significant books, e.g. “Building a Sustainable Future” and “Eco-Economy: Building an Economy for the Earth”). The Economist, the Wall Street Journal, Goldman Sachs, and other agencies of globalist ideology plough on regardless of all the absurdities, fantasies, contradictions, and inconsistencies of their creed with typically vacuous utopian projections (or even simply wish-list) of the prospects ahead (e.g. New Zealand Listener, “Touch the Future – the Economist’s Daniel Franklin on the coming megatrends”, April 28/May 4, 2012). The ruling principle is not to let any hard facts get in the way (but also see below the exceptional case of another Listener article).

The very base (its al Qaeda!) of capitalism’s credibility depends on the notion of limitless economic growth. Despite the glaring contradictions of war, environmental deterioration and quantitative easing (printing more money), the capitalist mantra is still very much the maintenance of the current system and business as usual: let us not look seriously at alternative paths for more sustainable development… Keep growing and consuming until we consume ourselves. More and more as its mana crumbles: the system resorts to the use of repression and armed force.

The Origins Of Power, Prosperity And Poverty: Explaining Inequality?

In a book published in 2012, “Why Nations Fail: The Origins of Power, Prosperity and Poverty” (Profile Books), the American authors expound the thesis that the nature, structure and functioning of institutions explain why some nations are more prosperous than others. According to the blurb: “leading academics Daron Acemoglu and James Robinson, show that to invest and prosper, people need to know that if they work hard, they can make money and actually keep it – and this means sound institutions that allow virtuous circles of innovation, economic expansion, more widely held wealth, and peace” (ibid.). There has to be a central government that regulates and guides in ways that are inclusive of society’s members and safeguards their gains from the market. 

Acemoglu and Robinson cover economics, politics, history and technology in the explication of their theory. Acemoglu is the Killian Professor of Economics at MIT while Robinson is the Florence Professor of Government at Harvard University, and said to be “a world renowned expert on Latin America and Africa” (ibid, see inside cover). Basically, for these two analysts, world inequality exists today because some nations were able to develop and take advantage of technologies linked to the Industrial Revolution, and the rest were not (ibid, p271). They contend that the two interlinked factors identified above, i.e. a positive central government promoting socio-economic inclusiveness, were crucial in this process. These two factors are expressed above all in the current prosperity of the Anglo-American axis. 

“Why Nations Fail” contains positive reviews from a number of other American academics, especially economists, including five Nobel Laureates in economics. Some well-known Rightwing, neo-imperialist cheer-leaders like Niall Ferguson and Francis Fukuyama are among these laudatory reviewers. In all, the book is yet another celebration of market economics, capitalism, entrepreneurship and Western success but it does have some significant balancing aspects in its emphasis on positive central government and social inclusiveness, along with much of its analytical framework and commentary on colonial history.   

Celebrating Capitalism

The author’s claim of originality for their thesis is weak. For instance, John Kay, Professor of Economics at London School of Economics, has emphasised the role of institutions in development (“The Truth About Markets: Why Some Nations are Rich but Most Remain Poor”, Penguin Books, 2003/4). In Kay’s considered opinion: “The difference between rich and poor states is the result of differences in the quality of their economic institutions” (ibid, p378). Similarly, the very insightful study “Bad Samaritans: The Guilty Secrets of Rich Nations & The Threat to Global Prosperity”* (Random House, 2007), by Cambridge University economist Ha-Joon Chang, argues strongly for positive central government and inclusive “institution building” in opposition to the free market ideology propounded by the neo-liberalist bloc. While neo-liberalism is not so fashionable now within the upper bastions of the economics profession, it is still rife in certain circles of the Western politico-economic Establishment including, of course, NZ.  *Reviewed by Jeremy Agar in Watchdog 120, May 2009, http://www.converge.org.nz/watchdog/20/08.htm. Ed.

For the purposes of this article, I am going to use the book “Why Nations Fail” in order to illustrate what I see as some of the glaring failures of conventional economic thought, its application to the development process, and the current condition of the world. Not only is this book fresh off the presses this year, it obviously typifies some of the latest top level thinking on economic development. Furthermore, the thesis expounded by “Why Nations Fail” is clearly written with lots of interesting, historical case studies. It can conveniently serve here as an articulate, up to date declaration of the virtues of Anglo-American capitalist development. We need more than ever to examine the standard arguments on offer, and how these arguments stand up under scrutiny. What makes “Why Nations Fail” so significant and stimulating for our purposes is that the concept of “exploitation” is actually central to the book’s thesis, although defined by different terminology. The book’s authors, two capitalist ideologues, develop their thesis around this idea, with an emphasis on the importance of politics.

While there are only a few index references to “colonialism”, the authors cover a number of historical case studies. Compared with other such historically based, Rightwing-oriented treatises on capitalist development, they give a notably more balanced account of the legacy of colonialism. They observe that: “The end of colonialism in the decades following the Second World War [WWII] created critical junctures for many former colonies” (ibid, pp111-12). The governments of most, unfortunately, “repeated and intensified the abuses of their predecessors” (ibid, p112). But we can see here that at least the authors do not take a self-serving, rosy view of colonial history. However, in “Why Nations Fail” there is nothing on “neo-colonialism”, nor is there any meaningful review of neo-colonial relations since WW11. So, despite the historical case studies, a rather abstract unreality pervades this study of “Why Nations Fail” (and succeed), so emblematic of the market economic tradition. Professors Acemoglu and Robinson carefully screen the role of the Anglo-American axis in exploiting both peoples and the environment in the modern era. In particular, the central role of the US in subjugation and plunder of the “Third World” is simply ignored, or even implied to be benign. The authors simply reflect a great American myth (“Empire – What Empire?”, Graham McPhee, History Today, vol. 58 (11), Nov, 2008, pp46-50).

McDonaldisation: Via Golden Arches Into Golden Straitjackets  

Their book fits in with an extensive US-driven literature in Western economics, sociology, political science, and the so-called social sciences in general. The overall theme of this approach can be expressed by the terms “development” and “modernisation”; and the big question is how do societies become developed or modernised, i.e. become like our own. But in the case of Acemoglu and Robinson, they explicitly state that their own theory is not part of “modernisation theory” as it is understood within the social sciences (op. cit, pp 443-5). Within this academic domain, the term “modernisation” has a more limited and specific meaning; a “technical” usage as it were (ibid.). Above all, they object to the idea that modernisation means inevitable progress to capitalist democracy (ibid.). 

Versions of social science modernisation theory, however, have even been part of the neo-liberal arsenal. For instance, New York Times (NYT) columnist Thomas Friedman, a very Rightwing pundit of corporate globalisation, “went so far as to suggest that once a country got enough McDonalds restaurants, democracy and [relevant] institutions were bound to follow” (ibid, p443). The presence of McDonalds is supposedly the epitome of benign modernisation! The American free market model is thus sold as the fount of affluence and freedom itself, a la the prescriptions of Nobel Prize winning economist, Milton Friedman (e.g. in “Capitalism and Freedom”, 1962), and updated by the likes of Friedman, Fukuyama and Ferguson. 

Hilariously, here in Aotearoa/NZ, Dr. Don Brash (ex-would-be-ACT-leader/MP) has actually called for the McDonaldisation of education, and done this with a straight face in all seriousness! Current ACT leader and self-confessed fundamentalist Christian, MP John Banks, is trying to implement part of the McDonaldisation agenda with his “charter schools” project*, and thus engineer the further subversion of public service education. Post the Dotcom donation fiasco, Banks himself has effectively zero credibility but is still vital to the National Party for propping up its coalition Government, and so he has scope to push some far Right policies.   *See Liz Gordon’s article on charter schools elsewhere in this issue. Ed.

Of course, given PM John Key’s own personal incompetence over the Government Communications Security Bureau’s surveillance of Dotcom, this “Keystone Cops” affair has made the National Party government a laughing-stock for many of us. The affair both illustrates and confirms my warning in my article “Primary Production, Free Trade, Resource Conflict & Corporate Plunder: Part 3”, in Watchdog 130 (August 2012, http://www.converge.org.nz/watchdog/30/13.html) about the dangerous trend to the close association of covert agencies, corporate capitalism and foreign control (p58). In his inimitable fashion, New Zealand First Party Leader Winston Peters has continually drawn attention in Parliamentary exchanges to Key’s Merrill Lynch background and his correspondingly cavalier style (characterised by astonishing ignorance!). The Government’s position on the whole Dotcom saga reeks of an orchestrated litany of lies.

Merrill Lynchisation: The Race To The Bottom

It is worth dwelling some more on Thomas Friedman’s very crude McDonaldisation, Merrill Lynchisation, or Americanisation thesis – similarly propounded in so many other quarters - because it has been hugely influential, and reveals so much about the cutting edge of US free trade ideology.  American free market doctrine has been expressed via the General Agreement on Tariffs & Trade (GATT) and its successor World Trade Organisation (WTO). Following historical precedents, this policy has been firmly in the tradition of the highly hypocritical version pushed by the most powerful trading nations on to other countries (“Bad Samaritans”, op. cit.). The outstanding expression of this as it relates to NZ applies to agricultural trade and its extensive subsidisation by successive American Administrations for the benefit of big farmers and big companies. “The US government . . . pays $US19 billion a year to subsidise American farmers” and agribusiness to further the goal of free trade (“Modern Slavery”, by Kevin Bales, Zoe Trodd and Alex Kent Williamson (Oneworld Pubs/Beginner’s Guide series, 2011, p57). But the NZ government is always content to hang on to Uncle Sam’s coat-tails - whether in trade or in war - whatever the cost to the rest of humankind and its own credibility.

In his environmentally obtuse fashion, the NYT’s Thomas Friedman took a grossly flash car as the symbol and image of global modernisation, the Lexus.  “….Toyota’s luxury brand Lexus has become something of an icon for globalisation, thanks to . . . Friedman’s book, ‘The Lexus and the Olive Tree’ (2000). The book owes its title to an epiphany that Friedman had on the Shinkansen bullet train during his trip to Japan in 1992. He had paid a visit to a Lexus factory, which mightily impressed him” (“Bad Samaritans”, op. cit, ch. 1: ‘The Lexus and the Olive Tree Revisited: Myths and Facts about Globalisation’, quote p20). 

Subsequently, Friedman put forward as his idea of the road to success: “a particular set of economic policies that he calls the Golden Straitjacket” (ibid.). This was what Rogernomics more or less had earlier taken as its model, i.e. “today’s neo-liberal economic orthodoxy” (ibid.). We know the standard score so well: privatisation of State-owned enterprises; low inflation; reduction of government bureaucracy and regulation; balanced budget (more a pious hope these days, given debt levels!); liberalisation of trade; open door for foreign investment; uncontrolled capital markets; convertible currencies; corporate self-regulation; and privatised welfare, health, education, security, and other services (ibid.). NZ Trade Minister Tim Groser and his pals are trying to foist an updated version of this programme on us via the Trans-Pacific Partnership Free Trade Agreement (www.itsourfuture.org.nz). 

This goes in tandem with the Warner Brothers-Hollywood-Disneyland-American Dream/Nightmare collaboration with which PM John Key is so enamoured. Ex-Merrill Lynch executive Key has made it clear that the American movie moguls, who have already dictated a downgrade of our domestic labour laws, are likely to get concessions on intellectual property and other trade matters from NZ in the TPPA, as well as even subsidies from the NZ government (e.g. Press, 9/10/12). Indeed, the Government’s over the top official assault on Dotcom, and the related invasion of our national sovereignty, was at the behest of the Obama Administration and the Hollywood brigade (Campbell Live had a particularly revealing item on this, also confirming PM John Key’s very cosy American connections [TV3, 10/10/12]; congratulations to John Campbell who does good work as well on issues like child hunger in NZ). The Dotcom saga, with all its ramifications, graphically illustrates crony global capitalism in action (ironically making a hero of a suspect, very gross multi-millionaire!). The National Party government actually flaunts its comprador subjugation to foreign capital. It exults in its own special banana republic role.

The Neo-Liberal Straitjacket

Much of the neo-liberal agenda, still followed so assiduously in NZ, was originally inspired by the rigid austerity conditions (straitjacket indeed!) imposed on developing countries (Third World) by the World Bank and the International Monetary Fund (IMF) to extort debt repayments, especially under the Reagan/Thatcher doctrine of what came to be known later as the “Washington Consensus” (e.g. see “World Debt: Who is to Pay?”, Jacobo Schatan, Zed Books, 1987; “A Fate Worse Than Debt”, Susan George, Penguin, 1988). The phrase “Washington Consensus” was first used in 1989 (“The Truth About Markets”, op. cit, p388). This so-called Washington Consensus doctrine was a particularly virulent version of American free trade/investment ideology and the so-called “Golden Straitjacket”.   

In Orwellian fashion, the militarist Anglo-American axis used its dominant global position to promote the idea of market freedom in order to try and consolidate its politico-economic position even further. After the oil shock of the early 1970s, a major Western aim was to enforce low commodity prices at the expense of Third World peoples and correspondingly fulfil the monetarist aim of low inflation.  During the rest of the 1970s, and then the decades of the 1980s and 90s, the US spearheaded the Western drive to crush any other commodity coalitions and agreements that could benefit the Third World – from coffee and cocoa to tin and copper. 

The axis even succeeded in influencing oil prices for much of the time in the latter part of the 20th Century thanks to its backing for feudal, totalitarian Saudi Arabia and that land’s pivotal geopolitical role in the world oil market. Given “its special dependence on the US” and its own enormous reserves, Saudi Arabia was able to make clear to the rest of the Organisation of Petroleum Exporting Countries (OPEC) that “only if they [agreed] to keep the price at a reasonable level would Saudi Arabia agree to control its production” and not flood the market (“The Seven Sisters: The Great Oil Companies and the World They Made”, Anthony Sampson, Coronet Books, 1975/88, p307). Speculative money trading outfits like Merrill Lynch came to thrive on petrodollars and unfettered financial markets. The Middle East, as well, became a weapons bazaar for the Western arms industry (“The Arms Bazaar: From Lebanon to Lockheed”, Anthony Sampson, Viking Press, 1977). 

Political And Economic Extraction

The world vision of the supposed “free market”, rigged so grossly in favour of Western interests and underwritten by military power, has yet been the way to global prosperity for ideologues like the Friedmans (including George Friedman, head of Stratfor, the so-called “private Central Intelligence Agency (CIA)”: Rightwing Friedmans have run riot in the US!). However, Professors Acemoglu and Robinson dismiss NYT journalist Thomas Friedman’s version of modernisation theory and the social science modernisation approach in general. Whereas modernisation theory sees societal inclusiveness developing from economic growth, Acemoglu and Robinson contend instead that inclusive institutions engender economic growth rather than the other way round (“Why Nations Fail”, op. cit, p444). Modernisation does not necessarily mean socio-economic inclusiveness. In their view, modernising China is the current big example of this failure of real progress. For them, China is characterised by a lot of negative political and economic extraction - especially the former - despite the Asian giant’s industrial success to date and rapid economic growth. These conditions will inevitably come to limit its growth (ibid, pp437-443).

As previously indicated, “Why Nations Fail” acknowledges external exploitation by Western countries and agencies in the relatively near past, i.e. during colonial times. The authors use the specific terms “extractive economic institutions” and “extractive political institutions” for what is usually meant by “exploitation”. Ironically enough, they adopt what might be labelled in some ways an explicitly Marxist approach to the question of development, although politics comes first for them. In fact, much of the information and assessment put forward by Acemoglu and Robinson can be used in support of a Marxist interpretation of the inequality between nations, undermining their own thesis. The authors only very selectively consider three other contending theories to their own approach – those relating to climate, geography and culture (including the variability of knowledge possessed by societal leaders). In dismissing these alternative theories, they very conveniently overlook any Leftwing approach. A more complex theoretical perspective might even draw on different specific theories at different stages of development or societal evolution.

With regard to the modern era (i.e. post-WWII), Professors Acemoglu and Robinson apply their “extractive” analytical terminology most critically in condemnation of Communist systems (ibid, pp389-90). Regimes from Lenin and Stalin’s Soviet Union to Pol Pot’s Kampuchea (Cambodia) concentrated extractive apparatus for the benefit of the ruling Communist Party at huge human cost (ibid.). In reference to the Soviet Union, they comment that: “Lenin and his Communist Party were inspired by Marx, but the practice could not have been more different from the theory” (ibid, p389). 

Looking At The Bigger Picture

Yet, in trying to account for the unequal status of nations, Acemoglu and Robinson comprehensively and conveniently gloss over the extent and depth of capitalist exploitation in this same modern era.  They deliberately ignore how so many forms of political and economic extraction have been deeply integrated with Western trade and investment, especially its linkages early on to American hegemony (see e.g. “The Age of Imperialism: The Economics of US Foreign Policy”, Harry Magdoff, Monthly Review, 1966/69; “The Enemy: What Every American Should Know About Imperialism”, Felix Greene, Vintage, 1970/1). They do not refer in their index to either the GATT, or to its successor, the WTO.  They have only a few passing references in their text to the World Bank and the IMF. From a Leftwing viewpoint, their list of publication References is eminently lacking in critical, in-depth analysis of capitalist accumulation (“Why Nations Fail”, op. cit, pp483-509). From an environmental or human ecological viewpoint, the References list is similarly lacking. Consequently, the book is deficient on two very big counts, among various other criticisms that might be made.    

Together the two big liabilities identified are typical of so much of the market outlook today, and the related indoctrination of Western publics. One of the book’s index references is “slavery”. But slavery in “Why Nations Fail” only really applies for the authors in the past, although at one point they do seem to almost concede its relevance today. Take the pertinent quote: “The South African state created a dual economy, preventing 80% of the population from taking part in skilled occupations, commercial farming, and entrepreneurship. All this not only explains why industrialisation passed by large parts of the world but also encapsulates how economic development may sometimes feed on, and even create, the underdevelopment in some part of the domestic or the world economy” (ibid, p273). Marx would have said “amen” to that! This particular quote flows on from some sombre reflections on the African slave trade and its deleterious and widespread effects (ibid.). In another paragraph, Acemoglu’s and Robinson’s review of the damaging effects of the European slave trade on Africa could well have been written by the Marxist historian Walter Rodney (ibid, p116; see “How Europe Underdeveloped Africa”, W Rodney, Bogle-L’Ouverture/Tanzania Publishing House, 1972/3). 

But if Professors Acemoglu and Robinson recognise such harmful historical causes (and further similar remarks can be quoted from their book), they systematically elide the related and parallel workings of more recent and current causes. Although Acemoglu and Robinson acknowledge as well that colonial rule left Africa “a pernicious institutional legacy in the 1960s”, with the suppression of the potential for “African commercial agriculture”, they deliberately ignore how externally based extraction has carried on from this decade until the present (“Why Nations Fail”, op. cit, p116 & 341). Instead, they allocate all the subsequent blame to the post-colonial African governments. But neo-colonialism or neo-imperialism in Africa has been very real (e.g. “Looting Africa: The Economics of Exploitation”, Patrick Bond, Zed Books, 2006). Similar processes have been at work in Asia and Latin America (“The Wealth of Some Nations”, Malcom Caldwell, Zed Press, 1977; “The Creation of World Poverty: An Alternative View to the Brandt Report”, Teresa Hayter, Pluto Press, 1981/85).

Externally Backed Repression

The Americas have long been the province of US politico-economic predominance.  Acemoglu and Robinson might well note that instability in Latin America “was accompanied by mass repression and murder” in modern times (“Why Nations Fail, op. cit, p38).  They even cite in this connection the specific cases of Guatemala 1962-1996, Pinochet’s Chile (1974-90), and the military dictatorship in Argentina from 1976 to 1983 (ibid.).  But there is not a word about CIA and other US support for such regimes (see e.g. “The American Connection: Vol. 2, State Terror and Popular Resistance in Guatemala”, Michael McClintock, Zed Books, 1985: a companion volume covered El Salvador; & “The Condor Years: How Pinochet & His Allies Brought Terrorism to Three Continents”, John Dinges, The New Press, 2003/05: Pinochet was a close pal of British PM Margaret Thatcher and his dictatorial regime a laboratory for Milton Friedman’s ideas of freedom). 

When reviewing the failings of dictator Mubarak’s Egypt, Acemoglu and Robinson are likewise silent on all the extensive US support for the Mubarak regime in recent decades.  They say that: “Egypt is poor precisely because it has been ruled by a narrow elite that have organised society for their own benefit at the expense of the vast mass or people” (“Why Nations Fail”, op. cit, p3).  Well, yes, support for this sort of thing has been standard practice for the Anglo-American axis - and Western interests in general - in close conjunction with comprador fractions in so many Third World countries.  Whether considering Mobutu’s Congo or oligarchic Mexico, Acemoglu and Robinson self-interestedly sweep this very embarrassing truth away from the scrutiny of their readership. 

The South African Apartheid Model

While Professors Acemoglu and Robinson signal the oppressive existence of South African apartheid up to 1994, they specifically say that its “dual economy” (modern alongside traditional/subsistence/low technology) came to an end in that particular year, as if there has been a big improvement since this date (ibid, p270). But foreign control reigns there and its tentacles are internationally pervasive. A lot of the looted funds that make black Africans poor are sitting in Europe, America, Australia, NZ, and other countries outside the continent, protected for the most part by the Western Establishment and its media. NZ even serves as a tax avoidance haven for some 8,000 foreign trusts under a regime that enables no actual flow of money to happen within our country (60 Minutes, TV3, 7/9/12). James Henry of the international Tax Justice Network stresses the point that the peoples of “developing countries” are being ripped off on a truly colossal scale (ibid; www.taxjustice.net/ )*. Rich Mexicans and Peruvians, among others, have been using NZ foreign trusts. Worldwide, such tax avoidance may involve staggering sums - up to US$21 trillion of wealth hidden offshore – as much as the US and Japanese Gross Domestic Products (GDP) put together! (ibid.).*See Jeremy Agar’s review of “The Price Of Offshore”, by James Henry of the Tax Justice Network, elsewhere in this issue. Ed.

Professor Patrick Bond charges that: “Looting is a system driven from capitalist institutions in Washington, London and other Northern centres and accommodated by junior partners across the Third World, including African capitals, especially Pretoria”, which plays a sub-imperialist role for the rich industrial nations of the North (Africa Today, vol. 54, no. 4, Summer 2008, p88). More generally, the apartheid system in South Africa was an expression of the broader global pattern of the political economy of relationships between the West and the Third World. Since the collapse of apartheid, at least in its Afrikaner form, the global economic system has got considerably more complicated but divisions between rich and poor are even more fundamental in all sorts of ways, both within and between countries. 

Undermining Development

In South Africa itself, former black revolutionaries have allied with their former white oppressors in the societal apparatus of “extractive economic” and “extractive political” institutions, as so dramatically illustrated by the recent brutal killings of striking black miners. The West has continued to benefit enormously from this situation of repressed, cheap labour, with a constant incoming flow of vital mineral wealth and rich profits. South Africa is now firmly in the hands of international capital, having co-opted its former opponents (“Freedom Next Time”, John Pilger, Black Swan, chapter 4, “Apartheid Did Not Die”, 2006, p284). London-based Lonmin’s Marikana platinum mine where a number of protesting miners were shot dead by police in August 2012 “accounts for most of the platinum output of Lonmin, which itself accounts for 12% of global supply of the precious metal used in jewellery and vehicle catalytic converters” (Press, 7/9/12).There have also been strikes, often involving violence, at other South African platinum, gold, coal, iron ore, and chrome mines. Besides Lonmin, major companies like Anglo American Corporation and Gold Fields have elicited the anger of the miners. 

As well as the uses cited above, platinum group metals are also important in petroleum refining and telecommunications systems (“Global Technopolitics: The International Politics of Technology and Resources”, Dennis Pirages, Brooks/Cole, 1989, p125). Among the “scarcest metallic elements”, the metals of the platinum group are known as the “precious metals” (“It’s All for Sale: The Control of Global Resources”, James Ridgeway, Duke University Press, 2004, p71). Corrosion-resistance is another prized property of certain metals within the group. Worryingly for the West, Russia is the next biggest platinum producer after South Africa, which currently accounts for 80% of the world supply. Africa has long been a most critical source of minerals and other raw materials for Western nations. During the Cold War, Rightwingers were strident in defending apartheid on this ground, among other arguments. 

Those of us in Aotearoa/NZ who took part in the anti-apartheid movement can well appreciate the fact, as John Minto has stressed in recent years; that - little, if anything - has really changed for most of the people of South Africa. The West, including NZ, continues to live off the backs of these people. And this pattern continues to be true of so much of what we can still classify - for want of a more convenient term - as the Third World or Global South (i.e. most countries in Africa, Asia and Latin America). For a considerable time now, NZ itself – after helping plunder Pacific islands like Nauru (now, symbolically enough, used by the Australians as a refugee holding centre) - has especially benefitted from “Moroccan” phosphate, including supplies extracted from Morocco’s colony in Western Sahara where the struggle for a Sahrahwi Arab Democratic Republic (SADR) goes on, supported to some extent by the United Nations (UN) itself. 

Incidentally, Nauru is a classic case of boom and bust, and a graphic demonstration of the resource curse in action, a “particularly spectacular” warning for other countries (“Too Much Luck: The Mining Boom and Australia’s Future”, Paul Cleary, Black Inc, 2011, pp17/18). On the wider African continent in recent years, China has massively joined in the now long-established institutional arrangement of neo-colonial extraction, and the new scramble for raw materials there, including agricultural resources in general. Revealingly enough, the neo-imperialist Economist magazine certainly knows a major Western rival has arrived (see “The New Colonialists: a 14-page special report on China’s thirst for resources”, cover story, vol. 386, no. 8571, 15-21/3/08). 

Globalisation And Capitalist Exploitation

It was the era after WWII that saw the rise of the transnational corporations (TNCs) to the dominant role that they have now in the world economy, especially in the last few decades (e.g. see “Global Reach: The Power of the Multinational Corporations”, Richard Barnet & Ronald Muller, Jonathan Cape, 1974/5; “The New Protectionism: Protecting the Future against Free Trade”, Tim Lang & Colin Hines, Earthscan, 1993; “When Corporations Rule the World”, David Korten, Earthscan, 1995; “The Silent Takeover: Global Capitalism and the Death of Democracy”, Noreena Hertz, Arrow, 2001; & “The New Rulers of the World”, John Pilger, Verso, 2002). For an alternative up-to-date viewpoint to “Why Nations Fail” on the most recent decades, we can draw on a book said even by that bastion of capitalist economics, Rupert Murdoch’s Times, to be “timely and important” - “Modern Slavery” by Kevin Bales et al (already cited above, op. cit, quote on cover). This book’s authors frankly declare: “Slaves are used to produce many of our commodities. Originating from numerous different countries, there are documented cases of slavery in our carpets, cocoa, cotton, timber, beef, tomatoes, lettuce, apples and other fruit, shrimp and other fish products, gold, tin, diamonds and other gemstones, shoes, clothing, fireworks, rope, rugs, rice and bricks” (ibid, p49). Other examples include coffee and sugar, and tantalum from the Congo for use in cellphones and computers (ibid.). Slavery is the ultimate form of political and economic extraction.  

Kevin Bales et al trace all this from the phenomenon of globalisation and the race to the bottom since “slaves are now so cheap that they have become cost-effective in many new kinds of work” (ibid, p47).  There are some 27 million slaves in today’s world. As Bales et al explain: “For centuries, countries had controlled the flow of money across their borders, but in the mid-1980s these restrictions ended all at once for most countries. This meant that money could fly around the globe… Businesses could move quickly whenever and wherever they found cheaper labour… As businesses began to spread around the planet, governments had less and less control over their operations; whether the businesses were legal or criminal or a mix of the two” (ibid, pp47/8). “Northern countries have exploited the weak bargaining position of Southern countries to open up new opportunities for their TNCs” (“Big Business, Poor Peoples: The Impact of TNCs on the World’s Poor”, John Madeley, Zed Books, 1999, p15). As recent events again demonstrate, small “developed countries” like Aotearoa/NZ are also very vulnerable whenever pliable politicians are in power.

Among other matters, we have had some media exposure of the systematic abuse of fishing crews, even “slavery”, on foreign-chartered vessels in our waters (e.g. Sunday Star Times, 30/9/12). A very disturbing trend in the weakly regulated world economy is the globalisation of organised crime, its intensifying links with legitimate capitalist business, and long associations with covert agencies (especially the CIA), some ruling elites, terrorist groups, and even resistance movements (“The History of Organised Crime: The True Story and Secrets of Global Gangland”, David Southwell, Carlton Books, 2006). NZ has felt the impact (ibid, pp152/3). Organised crime is deeply rooted in the Anglo-American axis and Europe. Bribery is regularly fostered by international business practice as in the British arms trade. Liberalising economies like Mexico, South Africa and India are affected by corrosive corruption, extensive illegal exploitation and gang violence (ibid, chapter 9). 

Ever since Labour Party Trade Minister Mike Moore (our current Ambassador to Washington) started pushing American-inspired policies in the late 1980s, NZ has been a dedicated and enthusiastic advocate for free trade/investment, especially in agriculture and food. The international TNC-dominated regime constitutes the context in which NZ labour competes today. Most tellingly, the NZ government continues to boast to prospective TNC investors that labour here is relatively cheap in comparison with a number of other countries. This is a spin pitched by Finance Minister Bill English in relation to Australia. The Government even brazenly reinforces this situation with further reductions in labour conditions, e.g. youth rates below the minimum wage, and “a new attack on the low-paid” (Press, 31/10/12).

Resource Extraction

Bales et al give a very incisive overview of the global causes of slavery and other forms of exploitation (op. cit, chapter 3, “A Money-making system: modern slavery and the global economy” ibid.). The combination of corporate globalisation, population growth, corruption, and the inequities of crushing debt and poverty have meant that labour is both profusely abundant and cheap (ibid.). Although slavery is illegal everywhere, the practice goes on as ever. The growth of the world economy “had a profound impact on the people of the Global South and the small-scale farming that supported many of them. The loss of common land shared by all the people in the village, and government policies that pushed down farm income in favour of cheap food for city workers, have helped to bankrupt millions of peasants and drive them from their land” (ibid, p55). As a consequence: “Many of these families are economic refugees from rural areas that have been converted from family farms into plantations growing cash crops for export” (ibid, p56). These processes are glaringly evident today in China, India, Brazil, and other so-called “emerging economies” as productive farmland is taken over - often by force or fraud - for various forms of “development” in the name of progress, dispossessing peasants and low-income rural inhabitants. Free trade/investment is deeply integrated with such negative outcomes and the consequent lack of food security.

We can usefully extend our examination of the South African case and its implications. In “Why Nations Fail”, Professors Acemoglu and Robinson – despite their political bias - actually say, “that in several instances the extractive institutions that underpinned the poverty” of certain nations like South Africa and its “dual economy” came to be “imposed, or at the very least further strengthened, by the very same process that fuelled European growth: European commercial and colonial expansion” (op. cit, p271). They go further in that they also state that: “In fact, the profitability of European colonial empires was often built on the destruction of independent polities and indigenous economies around the world, or on the creation of extractive institutions essentially from the ground up, as in the Caribbean islands” (ibid.). For instance, Acemoglu and Robinson note that the Aztec and Inca empires were quite sophisticated. Then the arrival of Columbus in 1492 led to a massive reversal of such development in Latin America (ibid, p50). African kingdoms suffered a similar reversal (ibid.).  Yet for these authors: “South Africa is now one of the most prosperous nations in sub-Saharan Africa” (ibid.). The awkward fact is that: “South Africa has become the most unequal nation on Earth” - again (Press, 20/9/12). 

In ignoring the wave of globalisation arising in the 1980s and identified by Bales at al in “Modern Slavery”, Acemoglu and Robinson also ignore how this specific process itself has arisen from the earlier process of transnationalisation” and its roots in colonial history. By the 1970s, the American elite owned or controlled almost two thirds of all humankind’s realised resources (“Exploitation: The World Power Structure and the Inequality of Nations”, Robin Jenkins, Paladin, 1971). Besides the structure and functioning of extreme political and economic extractive institutions examined by Bales et al in “Modern Slavery”, there has been the wider pattern of commodity exploitation in the Third World, which sparked the international fair trade movement into life and spurs its ongoing activism (“The Economics of Imperialism”, Michael Barratt Brown, Penguin, 1974; “Fair Trade”, MB Brown, Zed Books, 1993; “The No-Nonsense Guide to Fair Trade”, David Ransom, New Internationalist Publishers, 2001). 

“Ghost Acreages” - Environmental Extraction

Further - from a human ecological or environmental - as well as from an extractive perspective, the cultivation of commodity crops in so many countries in the periphery located outside the core industrial nations provides what Professor William R Catton Jr has called “ghost acreages” (“Overshoot: The Ecological Basis of Revolutionary Change”, University of Illinois Press, 1980, p276).  Catton defines the concept thus: “Ghost Acreage: the additional farmland a given nation would need in order to supply that net portion of the food or fuel it uses but does not obtain from contemporary growth of organisms within its border – e.g. from net imports of agricultural products, from oceanic fisheries, from fossil fuels” (ibid.). The West has long been predatory in this fashion on poor countries - over several centuries in fact - with the latest outrage being the cultivation of biofuels at the expense of food for local peoples (Pacific Ecologist: “Full Tanks – Empty Stomachs: agro-fuels devastate 3rd world countries for 1st world’s cars”, issue 17, Summer 2009). Despite the evidence available that clearly shows abuse of both people and the environment, the NZ Government still permits the import of sugarcane biofuel from Brazil (ibid; “Hearing the Cry of Brazil’s People of the Land”, Padre Tiago Thorlby, Pacific Ecologist, no. 21, Autumn-Winter 2012, pp13-16, http://pacificecologist.org/archive/21/pe21-brazils-people-of-the-land.pdf). The NZ-based Pacific Institute of Resource Management (PIRM) has campaigned hard for social justice on this particular issue.

After remarking that the Washington Consensus approach to “developing countries” is much less in vogue now given the current emphasis on “micro-market” management (managing specific markets or industries rather than whole economies), Professors Acemoglu and Robinson make a positive point on development prospects. They stress the concept of “empowerment” in facilitating the greater participation of people in development (“Why Nations Fail”, op. cit, pp448-62). Empowerment has long been a basic idea too in the creation of alternative, more sustainable development paths enjoining active public participation (e.g. “Post-Scarcity Anarchism”, Murray Bookchin, Wildwood House, 1971/4; “Creating Alternative Futures: The End of Economics”, Hazel Henderson, Perigee Book, 1978). Acemoglu and Robinson assert that the threat of revolutionary action has often prompted ruling elites to modify their behaviour and share resources more widely. 

Market Contradictions

But Professors Acemoglu and Robinson are absolutely committed to industrialising the planet as the path to human progress in the grand tradition of Western economics. In the fantasy world that they inhabit, they are apparently devoid of any appreciation of environmental limits. The only limiting factors that they recognise are political or economic, and they are also devoid of any comprehension (at least in their treatise) of how these apply to the Anglo-American axis. This is par for the course for the vast majority of economists despite the supposed starting point of the discipline being the problem of scarcity – how to make the best use of available resources. Imperial resource wars destabilising the Middle East; impasse in the WTO over agricultural trade and food security; financial implosion unravelling European countries like Greece and Spain; the increasing socio-economic and environmental angst of the US itself with its own deepening inequities; similar problems for other big industrial nations like Britain, France and Japan; growing dependence on overseas resources; the regular and mounting resort to authoritarian control and armed force: the accumulating list of self-generated capitalist woes goes on. As only a bit player in the global economy, Aotearoa/NZ will mirror this angst. 

While continually warning about the implications of the financial/economic crisis, the IMF still looks to an eventual recovery. In the meantime, the West keeps printing more money. This institution is living, like so many of the world’s political leaders and agencies, in cloud cuckoo land. In contradistinction, a recent report of the former New Zealand Institute* even echoes the predictions and concerns of Professor Catton’s “Overshoot” in a quite extraordinary review of the failings of the free market. It refers explicitly to the global “overshoot crisis” (“Climate Change – Is NZ Prepared?” Listener, 22/9/12). This NZ Institute report is evidently in the tradition of studies like those of the Commission for the Future, and George Preddy’s “Nuclear Disaster: A new way of thinking down under” (Asia Pacific Books/Futurewatch, 1985). *In 2012 the New Zealand Institute and the Business Round Table merged to become the New Zealand Initiative. Ed.

Distorting Development In Australasia

Against the background of the historical waves of globalisation, as well as current and future challenges, many of us in Aotearoa/NZ in 2012 are acutely aware of our country’s dependence on an unstable world economy. Our high dollar is getting plenty of political attention and proposals for more hands-on management. 40,000 manufacturing jobs have gone over the last four years. Yet, even given the recent significant job losses from mining and mining-related enterprises – in particular, Solid Energy’s Spring Creek and Huntly operations, and Rio Tinto’s aluminium smelter – the governmental and big business watchword is still that the global crisis only amounts to another capitalist cyclical downturn, however acute it might be. A widespread expectation is that there will be a cyclical upturn again soon - another economic recovery - or eventually anyway. In the past, we have referred to the commodity trade trap prevailing in the new era. Globalisation is now firmly caught in the jaws of this trap, as repeatedly surging commodity prices check the next spurt of economic growth. In a multitude of ways, the very process of industrialisation is becoming more and more obviously self-destructive. 

The National Party government in Aotearoa/NZ has been fervently pushing the mantra of mine and drill everything within the country, including the seas of our Exclusive Economic Zone (EEZ). With the wheels spinning off the vehicle of their sale of State-owned assets programme – including the partial privatisations of Solid Energy and power companies – this Government has certainly been caught in the commodity trade trap, although with the impact of drought in the US, and climate/weather problems elsewhere, agricultural and food prices are rising. The NZ government is very loath to back down on mining in the face of expert criticism and public protest. Steven Joyce, Minister of Economic Development (along with all his other portfolios) has regularly appealed in his Parliamentary speeches to the model of Western Australia and the mining boom there (although, see his latest spin below).  National’s repeated appeal to such a model can certainly afford us some incisive insights into the kind of development that the National Party government represents. The mining boom in Western Australia has in fact been unbalancing and distorting the greater Australian economy. And now, to some extent, the wheels are coming off this model of success too. But, first, let us subject the model in its working form to some scrutiny.

As an Australian mining analyst critically remarks: “For Australia, one profound consequence is that the more China and India industrialise and demand our raw materials, the more our economy resembles that of a developing country” (“Too Much Luck”, op. cit, p25).  Stanford University’s Paul Ehrlich, a world famous environmental expert, observed during a 2009 visit to Australia that: “By becoming the quarry to these countries, Australia is exploiting its ‘comparative advantage’ as a low-cost producer of minerals and energy, instead of maintaining a broad-based export sector” (ibid.).  This makes Australia “more vulnerable to anything going seriously wrong in the global economy” (ibid.). In fact, Australia has developed its own version of a “dual economy”. 

To be sure, economies everywhere should be trying to become more self-sufficient. Increasingly, as the limits to growth bite deeper, reliance on trade will get ever more problematic. Export-led growth will prove in the end to be a mirage. A positive internationalist focus on the global economy would be in terms of encouraging greater cooperation on renewable forms of energy, recycled materials, reduced consumption, increased self-sufficiency, and a whole host of other more sustainable, long-term policies. The Washington-based Worldwatch Institute (www.worldwatch.org/) and Earth Policy Institute (www.earth-policy.org/), along with various other research/advocacy bodies, strongly articulate such policies. We need a radical greening of the world economy. Further, the equation of more people and less resources should mean the imperative of social justice. But social justice, of course, is an anathema to greedy capitalists.

Close To Home

The commodity trade trap, and planetary limits to growth, will in fact mean that in the future the cyclical economic process will more and more represent an overall downward spiral, compounding in its problems. The question of just where the global economy will eventually peak in its growth is of course hard to predict with any exactitude for a plethora of reasons. But what is absolutely certain is that a whole range of factors will combine in forcing decline along the conventional measures of progress and economic growth (“Navigating Peak Everything to Secure Societies”, Richard Heinburg, Senior Fellow at the Post Carbon Institute, in Pacific Ecologist: “Why We Must Phase Out Economic Growth”, no. 16, Winter 2008, pp5-11, http://pacificecologist.org/archive/16/heinberg-peak-everything.pdf: Heinburg is author of “Peak Everything: Waking Up to the Century of Declines”).  Aotearoa/NZ is feeling so much of that uncertainty about the future now. Among the factors impinging on growth, Heinburg lists: population growth; “grain production (total and per capita)”; peak oil; climate change; “fresh water availability per capita; arable land in agricultural production; wild fish harvests; yearly extraction of some metals and minerals (including copper, platinum, silver, gold, and zinc)”; and uranium supply and production (ibid, especially p6).

To return to the model of mining in Western Australia again, the local indigenous people have suffered from the common “resource curse” experienced throughout the Third World (and the Fourth World of indigenous peoples within developed countries). In Pilbara, the heart of the Western Australian mining boom, the Aboriginal experience mirrors that elsewhere in Australia. Professor John Taylor’s research has shown that: “The overall picture is one of mineral wealth making no discernible impact on the high rates of poverty experienced by Aborigines” (“Too Much Luck”, op. cit, p136).  Thankfully, many Maori seem alert to the dangers of such politico-economic extraction within Aotearoa/NZ. Water pollution from mining has also been a significant issue in Western Australia as elsewhere in this country (“Dirty Money: The True Cost of Australia’s Mineral Boom”, Matthew Benns, William Heinemann, 2011, pp92-97).

Now even the much-admired Australian mining-driven growth model is slowing down. A TVNZ1 report highlighted the Aussie reversal in mid-September 2012 (ONE News, 11/9/12). The mining boom was said to be going bust. Red iron ore from Western Australia and coal from eastern Australia had fuelled this long boom. But demand from China had sagged, with the predicted hang-over of excessive property and infrastructure investment coming to pass. Some 2,000 Aussie mining jobs had been lost in the past week alone. Altogether, about 160,000 jobs up to this point had been dependent on the industry, which comprised 10% of Australian GDP, and half of the nation’s exports. By October 2012, mining momentum was still falling in Australia. Comically enough, the latest spin from NZ Development Minister Steven Joyce is that New Zealanders fleeing the economic meltdown in Australia will help rebuild earthquake-damaged Christchurch.

Gross Concentration Of Power

The anti-Wall Street Occupy movement that sprung up in the US and then spread around the world has been a dramatic expression of concern about the deepening inequalities in the Western world and elsewhere. A particularly gross example of such concentration of power and social injustice is personified by the rise of mining baroness Gina Rinehart to the top of the Australian socio-economic pecking order. Her command over the red iron ore exports from northern Australia was built on the business that her father Lang Hancock had launched on Aboriginal land.  Lang, and now his daughter - once called the “Pilbara Princess” - have been the very stuff of an Aussie Ayn Rand-type nightmare in foisting themselves and the power of their wealth on the rest of society. Their far Right views strike at the very heart of Australia, even if they typify much of ruling class sentiment at the same time. Rinehart’s mining empire (Hancock Prospecting) is a graphic instance of the processes of globalisation concentrating enormous wealth in the hands of a very few at the expense of whole societies and the world environment. Like Rupert Murdoch and his oppressive media empire, Gina Rinehart is the very manifestation of capitalist globalisation. 

Rinehart inherited her father’s mining business in 1992. Lang Hancock, whose sources of inspiration included Milton Friedman*, had groomed her to take over, although Rinehart got involved in litigation battles with her father’s later partner and even some of her own children over the inheritance.  Rinehart is personally active in promoting her far Right agenda. As to be expected, there has been a flurry of biographies charting her rise to the peak of prominence. In one of these, Fairfax Media business journalist Adele Ferguson praises Gina Rinehart for being a woman creating an $A29 billion empire in a very male-dominated industry (“Gina Rinehart: The Untold Story of the Richest Woman in the World”, Pan MacMillan, 2012). But Ferguson does raise a number of questions about Rinehart’s influence. *Economist Milton Friedman (1912-06) and author Ayn Rand (1905-82) are major influences in, respectively, neo-liberalism and extreme individualist “libertarianism” (a word the Right has stolen from the anarchists). Ed.  

Rinehart was a pivotal player in subverting the original import of the Australian Labour Party government’s carbon tax legislation, even helping get rid of PM Kevin Rudd and replacing him with the more pliable Julia Gillard (“Gina Rinehart”, ibid, Internet extract; Your Weekend, Press, 11/2/12, p14). Mining companies waged an all-out campaign costing $A22m against the carbon tax and a fairer distribution of mining revenue.  “…the super-tax morphed into a weak compromise as the new Gillard government agreed to take billions of dollars a year less than the original tax had been set to provide. The result gave Gina a fresh taste of the power of the media” (“Gina Rinehart”, ibid.).

Ferguson says Rinehart “is fast becoming an unstoppable force”, following her father’s teachings by buying up stakes in Ten Network and Fairfax Media, owner of Melbourne’s Age, the Sydney Morning Herald and the Australian Financial Review, as well as a whole stable of papers in NZ. “But while Gina’s influence over the media is in its early stages, her influence over politics and politicians is well advanced” (ibid.).  According to Ferguson’s portrayal, Rinehart is “fiercely patriotic”. She wants “to lift the importance of mining in Australia, redefine government policy, and promote Western Australia” (ibid.). So for Ferguson, Rinehart’s self-enrichment is a supposed reflection of her patriotism. This is of course what you might expect from a Fairfax business journalist. Ferguson then goes on to explain how Rinehart wants to abolish the carbon tax and any other new mining taxes, opening up the top end of Australia to new development, and introducing cheap Asian labour in the form of “guest workers” to help build mines, ports and railways.

Ominously for Australasian labour law and conditions, by October 2012 Rinehart had again clearly pulled some important political strings. “More foreign workers are expected to service Australian resources projects within the new few years as major companies look to save on labour costs” (Press, 15/10/12). The mining industry is gearing up to use “temporary workers to maintain and service major operations in the nation’s north-west”, in line with Rinehart’s injunction (ibid.). Rinehart is also especially dedicated to challenging the science of climate change, cutting “red tape” and pushing tougher laws on crime. She has even openly compared the willingness of South African mineworkers to accept much lower pay than Australian mineworkers, with the message that the latter should also accept less (www.maxkeiser.com/2012/09/05/gina-rinehart-bubble/). However, in the light of recent events in South Africa – including a 22% pay increase for the Marikana miners - a big irony has certainly arisen for her on this issue.

Rampant Manipulation

Ferguson does make some telling points on how the “patriotic” Rinehart pulls political strings. “Gina operates relatively covertly. Like the rest of corporate Australia, she is increasingly turning to more behind-the-scene methods to wield influence in politics – most of which the public or media will never see (emphasis added. DS). Her more subtle indirect influence can include things like inviting federal MPs on overseas trips, paying climate sceptics’ expenses when they come to Australia, hosting anti-mining-tax events” (“Gina Rinehart”, op. cit.). Like Rupert Murdoch she invites politicians for closet meetings at congenial venues on expensive hotel-type yachts. Former Australian PM Malcolm Fraser believes Rinehart’s exercise of power is a frightening prospect for Australia. As he says: “The idea that you can buy what you want is becoming pervasive and Rinehart seems to think politics and politicians are for sale. The objective seems to be to make more money, so you have to ask is business buying Australia?” (ibid.).While, within the Fairfax Media empire, there has been some resistance to Rinehart’s political agenda - both at board and journalist levels - the message must be watch this space.  

We should note too that a major function of the corporate mainstream media today is to systematically suppress from the public the “behind-the-scenes methods to wield influence in politics”, whatever the pretence and posturing of such media. With the virtual death of investigative mainstream journalism in NZ, the covert power manipulation by capitalist cabals mostly escapes under the radar. It gets worse.  Given the corporate concentration of mass media as exemplified in 2012 by Rinehart’s keystone shareholding in Fairfax Media, the threat to what democracy we have left is now mounting rapidly on a wide range of social fronts. Rinehart’s rise is both expressive and symbolic of related socio-economic distortions to Australian society. Its implications are reflective of larger, negative trends impacting on Western democracy, social equity, media influence, and the environment to name only some of the most important.

The Slight Matter Of Oil, Etc 

As Western capitalism gets into a deeper mess for a whole range of compounding causes, such inequities - along with all the environmental fallout - will grow. Capitalism is what we can call a doomed “paradigm”. To base human economics on an approach that runs directly counter to biological and physical laws is ultimately a bizarre fantasy (see e.g. “Population, Resources, Environment: Issues in Human Ecology”, Paul & Anne Ehrlich, WH Freeman & Co, 1970; “The Closing Circle: Confronting the Environmental Crisis” [Jonathan Cape, 1971/2] & “The Poverty of Power: Energy and the Economic Crisis” [JC, 1976] by Barry Commoner; “The Limits to Growth: A Report for the Club of Rome’s Project on the Predicament on Mankind”, Donella Meadows, et al, Pan Books, 1974 [report first published in 1972]). The basic facts and imperatives for a sustainable existence were readily available over 40 years ago. But human mythology and hubris got in the way.

In essence, capitalism is the ruling ideology of Western growth economics and notions of progress. This dominant paradigm is founded on a declining oil culture – specifically on an evolutionary boom and bust syndrome. The world economy depends on fossil fuels for 85% of its energy demands.  Capitalist globalisation actually violates the second law of thermodynamics, the “Entropy Law”, with waste energy gases rampant (“Entropy: Into The Greenhouse World”, revised ed., Jeremy Rifkin, Bantam Books, 1980/89; “Storms of My Grandchildren: The Truth about the Coming Climate Catastrophe and Our Last Chance to Save Humanity”, James Hansen, Bloomsbury, 2009/11. Hansen’s book was reviewed by Jeremy Agar in Watchdog 124, August 2010, http://www.converge.org.nz/watchdog/24/10.htm. Ed.) 

In the Arctic in 2012, the summer pack ice cover has disappeared “50 years ahead of schedule”, shrinking “to its smallest ever recorded level” (Press, 20/10/12; Sunday Star Times, 23/9/12). “Global weirding” of our weather systems could soon become the norm (“Horizon – Global Weirding”, Choice TV, 21/10/12).The monster “Frankenstein” storm (Hurricane Sandy) at the end of October 2012, which blasted the American Atlantic seaboard and disrupted the Presidential election campaign, spoke volumes to anyone really listening.

Climate Change In Colorado (And Elsewhere!)

The Southwest of North America (US) has been an important region in the history of the native peoples of the continent, “including…the Ancient Pueblo or Anasazi people, who lived along on the Colorado Plateau before climate change in the 12th and 13th Centuries turned the landscape dry and forced a people that had thrived for over 2,000 years to quickly abandon their settlements” (“Book of Peoples of the World: A Guide to Cultures”, Wade Davis, et al, National Geographic, 2007, p297). “In the American West, the biggest river, the Colorado, is a shadow of its former self. Early in the 20th Century, the average flow was 16 cubic kilometres a year. From 1999 to 2003, the average sank to 8.7 cubic kilos – worse even than the dust bowl years of the mid-1930s. In 2002, it fell to just 3.7 cubic kilos. In 2005, the drought was continuing”(“The Last Generation: How Nature Will Take Her Revenge For Climate Change”, Fred Pearce, Eden Project Books, 2006/7, p261).  

These days the Colorado River usually fails to flow to the sea, mainly due to the extraction for water supply to Los Angeles and various towns. The fate of the Colorado - and the drying out of Colorado State - is potently symbolic of the human overkill of our planetary ecosystems. There are over 20 dams on the Colorado River, harnessing it for hydroelectric power and irrigation. The river, so famed for its Grand Canyon, has lost much of its scenery and wildlife, let alone environmental damage in the Gulf of California. But the implications go much deeper. Over the American spring and summer of 2012, Colorado was seared by constant wildfires – one of the states most affected by record breaking heat waves. According to climatologists, global warming is already widening the tropical rain belt, and in turn pushing the sub-tropical dry zones poleward (“What’s Up With The Weather?”, National Geographic, September 2012, p41). These dry zones are covering “regions such as the American Southwest, southern Australia, and southern Europe, making these regions increasingly susceptible to prolonged and intense droughts” (ibid.). In 2006, Kevin Trenberth of the National Center for Atmospheric Research in Boulder, Colorado, reported “that the percentage of the Earth’s land area stricken by serious drought has more than doubled in 30 years from 15% to 30% (“The Last Generation”, op. cit, p262). Trenberth observed that “climate models predict increased drying over most land areas”, and that this process may have already begun (ibid.). What this means for the world’s future food supply is chilling.  

Market Crisis

Informed, objective, expert assessment pinpoints the crucial role of the market in the global “Environmental Crisis” (“Oxford Dictionary of Environment and Conservation”, Chris Park, Oxford University Press, 2007/8, p151). Among the major factors contributing to this crisis have been “the emergence of ‘free market’ economies, in which economic factors play a central role in decision-making about production, consumption, use of resources, and treatment of wastes; attitudes towards the environment, particularly amongst Western cultures, which regard it as freely available for people with which to do whatever they like; and the short-term time horizon over which many people, companies, and countries make decisions, which means that short-term maximisation of profit has generally been taken more seriously than long-term sustainable use of the environment” (ibid.). Such attitudes and outlook shape the capitalist view of oil and other fossil fuels, along with other natural resources. The policy of the National Party government in Aotearoa/NZ is - incredibly enough - to sell off parts of country for the benefit of the transnational fossil fuel industry and thus completely foreclose our democratic options for a more sustainable, renewable energy future, and a more participatory and decentralised energy path.

The term “paradigm” can be defined as: “An ideal or archetypal pattern or example that provides a model to be emulated” (“The Dictionary of Important Ideas and Thinkers”, Chris Rohmann, Arrow Books, 2000/02, p295). In 1962, an enormously influential book appeared by Thomas Kuhn, “The Structure of Scientific Revolutions”. Kuhn contended that a “paradigm shift” can occur when a prevailing mindset changes, as happened for instance with the shift from a Newtonian view of the universe to an Einsteinian view, just as previously a Ptolemaic perspective had been even more dramatically overturned by a Copernican view (ibid, p296). This is a general adaptation of the complexity of Kuhn’s big idea (New Scientist, 20/10/12, pp28/29). With reference to the capitalist globalist view of the world economy, a more sustainable “green” approach has unfortunately never really got further than the fringes. A shift from a globalist capitalist paradigm to a greener paradigm is highly problematic. But a far more internationalist, cooperative approach grounded in environmental realities is the only hope for our species, as well as so many other existing life forms with which we share this small and very vulnerable planet.

Growing Connections Between Internal And External Repression

“Modernisation theory was a dominant analytical paradigm in American sociology for the explanation of the global process by which traditional societies achieved modernity”, i.e. became Westernised (“The Penguin Dictionary of Sociology”, Nicholas Abercrombie et al, 3rd edition, p270). As we have seen above, modernisation theory in so many ways came to be simply a self-serving American programme to open up countries to the extractive institutions of free trade and investment. “Marxist alternatives to modernisation theory stress the negative aspects of modernity on traditional societies” (ibid, p271). In recent decades, environmental concerns have added enormously to such critiques of modernisation. In all, the concept of modernisation has proved to be very hazardous, being fraught with a variety of pitfalls - from conventional ideas about progress to the impact on non-Western cultures. 

The NZ government has practised the approach of Western modernisation in Afghanistan as part of the North Atlantic Treaty Organisation’s occupying International Security Assistance Force and its allegiance to America. Sadly, we may have protected to a degree a minority ethnic group, the Hazaras in Bamiyan province, but not in a way that will ensure a positive long-term future. Our troops, along with our Aussie mates, have been reaping the blowback of Taleban resistance. A political solution, or at least accommodation, has to include the Taleban, who represent a substantial constituency despite whatever concerns we might have about their ideology and practices.  Repression will not work in the long run, but only bleed treasuries and morality. The militant poor multiply endlessly with Mali being the latest Western military target (Press, 27/10/12).

The virulently self-serving and counter-productive pattern of Western behaviour has to change. Human rights have to be safeguarded in much more positive ways. The West hypocritically poses as the defender of women’s rights in the case of the Taleban while backing feudal repression in Saudi Arabia. Militarist imperialism only elicits a similar political extremism. To counter the growing “Clash of Civilisations”, we need a far different approach on a whole range of fronts. Ever since 2010, the NZ government has whipped up xenophobic fear of Third World refugees and asylum seekers, like Sri Lankan boat people, with even legislation to this end. It is symptomatic of the Western siege mentality, of its white laager outlook. The Government, sadly enough, has even failed to accept all the interpreters used by the NZ military in Bamiyan province (Sunday Star Times, 28/10/12).

Ready Reaction

Meantime, the strategy, tactics and technology of the “War on Terror” are reaching deeper into Aotearoa/NZ. Our Police are seriously considering the use of unmanned aerial vehicles (UAVs), i.e. drones, for surveillance purposes, e.g. traffic control (Nightline, TV3, 30/8/12). This follows the introduction of UAVs for the police and the Federal Bureau of Investigation in the US; where the homeless and other deprived groups are subject to constant harassment.  he Privacy Commissioner “Marie Shroff is calling for a debate on the usage of drones” and the question of regulation of this new technological intrusion (Press, 18/9/12). Given all the security legislation and widespread means of monitoring citizens since 9/11, a potentially Orwellian regime is steadily taking shape here too, as mandated by American imperatives. In October 2012, the NZ national security State took another step of consolidation with the introduction of new intrusive Police powers of surveillance and the right to enter premises. 

On October 12th, 2012, Foreign Minister Murray McCully attended a commemoration in Bali, along with Australian political leaders, for the victims of the 2002 Bali nightclub bombings. Conveniently forgotten are the some 80,000 victims of the 1965/66 massacres in Bali. The Anglo-American axis orchestrated these massacres and NZ was certainly complicit in them (see my “Ghosts of a Genocide: The CIA, Suharto and the Terrorist Culture”, which constituted the entire Special Issue of Peace Researcher 25, March 2002 http://www.converge.org.nz/abc/pr25intr.htm; and my “Case Study: The 1965-70 Indonesia Genocide” in Peace Researcher 44, November 2012, http://www.converge.org.nz/abc/pr/44/pr44-005b.htm). At that time, radical violent Muslims were our allies, as later again in Afghanistan during the 1980s {“Western Policy of Murder Rebounding as Terrorism”, Mark Curtis, Guardian, 7/10/2005: www.arabnews.com/node/274193).  President Lyndon Johnson, head overseer of the Indonesian genocide (1965-70), visited NZ in 1966, the first American President to do so. 

Cynically calculated policy and propaganda on human rights issues are fundamental to the conduct of the so-called “War on Terror” (www.youtube.com/watch?v=OrwotlSkHfw: John Pilger on “Western Terrorism” and the related media silence). This Anglo-American war is fundamentally about the world’s resources (for background, see my “Ready Reactionaries Practise Repression”, in   Peace Researcher  29 (1st series), Special Issue, August 1991 http://historicalpeaceresearcher.blogspot.com/2010/06/peace-researcher-vo1-issue29-aug-1991.html).  In the case of the massacres on Bali during 1965/66, we can aptly quote TVNZ1 in relation to the 2002 nightclub bombings: “The scars still run deep” (ONE News Tonight, 12/10/12).  

Not only does the global resource war reach outward from Western countries like NZ, but it threatens to reach inward as well (“Ready Reactionaries Practise Repression”, op. cit.). American counter-insurgency strategy has had to accommodate to an increasingly urban environment in recent times (see my “Brave New World of the Endless Resource War” in Peace Researcher 28 (2nd series), December 2003, www.converge.org.nz/abc/pr28-86.html). In line with this, NZ soldiers have been training “in varied urban environments to prepare for deployment both here and overseas” (Press, 4/10/12). October 2012 saw NZ “armed soldiers” using earthquake-ruined sites in Christchurch for this purpose (ibid.). Reporter Caroline King claimed there was “nothing sinister afoot” (ibid.).

Compounding Globalist Contradictions

Against the background pictured in this article, it is useful to summarise the key set of globalist contradictions now impinging on NZ/Aotearoa:

(a) Globalisation causes growing divisions and inequalities both within and between countries.

(b) A growing world population confronts diminishing resources.

(c) Capital concentration continues at the expense of people everywhere.

(d) Industrialisation is ultimately a self-destructive process, running down resources and destroying ecosystems. Besides mounting competition and conflict, the most dramatic fallout from this is global warming and its impacts.

(e) The neo-liberal free trade/investment plan of globalisation to industrialise the planet is proving increasingly costly in the conventional economic sense, since the prices of the raw materials for industrialisation and agriculture inevitably rise as supplies become more constrained.

(f) Globalisation ran aground on the shoals of unfettered financial markets in 2008, when free trade/investment finally imploded. Global socio-economic stability has been under heavy weather ever since, adversely affecting the West and the rest of the world. Ethnic, nationalist, religious, class, regional and other fault-lines fracture as social competition intensifies and failed states pile up. This is not just another global recession – it marks a global turning-point, a deepening crisis. 

(g) The commodity trade trap, and the consequent intermittent pattern of growth, has meant sudden recent job losses in NZ, as well as elsewhere.

(h) Most dramatically of late, the gathering resource war around the Earth is now not only exemplified in the conflict-torn Middle East but on the South China and East China Seas of the Asia-Pacific region, the supposed cockpit of future global growth. There is a big arms bazaar under way in this particular region. 

(i) China, India, and other countries are projected by capitalist pundits as the vehicles for our economic growth far into the future. Yet, at the same time, their very growth is making them loom as potential dangerous enemies. The West has promoted the market economy in such countries but there has already been huge blowback in terms of lost manufacturing capacity, less exports, falling employment, as well as the loss of a lot of technological control, and so on. The material living standards and modern consumer societies of the West have depended for centuries on the pillage of planetary resources, and the accompanying exploitation of peoples and environment in Asia, Africa and Latin America. The West has plundered the best and most accessible resources (“The Pillage of the Third World”, Pierre Jalee, Monthly Review Press, 1968). It has long operated a global apparatus of extractive institutions – political, economic, financial, intelligence, and military. Now the rest of humankind is contesting its control – from the Middle East to the Malvinas/Falklands. 

(j) When subject to mounting stress and given its’ huge and increasing inequities, capitalism inevitably becomes more authoritarian. It relies more on internal repression as well as external repression.  Internally, the capitalist ruling class is faced with the moral imperative for a fairer, more egalitarian society versus the reactionary defence of its own wealth and power. But maintenance of the inequities of capitalist society depends on the surplus siphoned from exploitation overseas - on the structure and functioning of political and economic extractive institutions imposed on other societies. In Aotearoa/NZ, our own culture is in tune with wider Western trends and militarist conditioning. Cued by the Anglo-American corporate media, TVNZ1 is paving the way with continual militarist propaganda, i.e. commemorations, celebrations, reportage, etc. Imperialism implies fascism. Consequently, a mounting danger is the motivation of the capitalist power elite to take greater risks in foreign policy ventures, already graphically exemplified in the Middle East, in order to secure the dominant Western grip on world resources as competitors like China and India become more assertive. Of course, such competitors can in turn create their own very real dangers.

(k) What democracy and freedoms we enjoy in the countries of the Anglo-American axis have historically depended on relatively widespread inclusiveness in economic benefits, consumerism, and access to “greenfield” resources. In the modern era, increasing and higher material standards of living have underwritten these freedoms. Now the great myths of capitalist growth, democracy and freedom are crumbling. Militarism and neo-fascism are demonstrably on the rise as openly Social Darwinist attitudes and behaviour take hold. Freud’s “death instinct” is alive and well as warmongering grows and the accompanying culture of vampires, zombies, “Armageddon” exhibitions, apocalyptic TV series, video wargaming, etc. spreads its tentacles. 

(l) The great propaganda tool in recent decades, employed systematically in Orwellian style by the ruling class of the Anglo-American axis, is the purported cause of democracy and freedom. Even when this weapon of mass deception is transparent to so much of the rest of the world, it seems to work a lot within the West itself for all sorts of reasons. The prime reason stems from the pervasive power, malevolence and hypocrisy of the mainstream media. Other reasons range from racism to the usual sentiments associated with the denial of reality, and wanting to feel justified about the use of violence. The Orwellian nature of the “War on Terror” is pushed to the extent that the Anglo-American axis perfidiously condemns countries like Iran for lack of democracy, when this axis has deliberately and continuously sabotaged the freedom and independence of such countries over many years.

(m) Invading your country, letting loose special forces, or bringing drones into your home! Western forces are deployed and/or are in action all over the globe. From the illegal invasions and occupations of Afghanistan and Iraq to death squad drone attacks on Pakistan, Yemen and a growing list of other countries, the murderous war machine of the Anglo-American axis is in constant operation. This strategy is proving very counter-productive (e.g., http://pakobserver.net/detailnews.asp?id=175693; see recent Peace Researchers and number 44, November 2012, http://www.converge.org.nz/abc/prcont44.htm for detailed analysis and evaluation). Greater resource conflict means greater instability, which further delimits the potential expansion of the world economy, as well as degrading the environment. Military power, which has guaranteed the growth of globalisation, is thus due to undercut the very basis of this growth. Whether owing to greater conflict, or greater damage to the environment, or a combination of the two, globalisation must ultimately undermine itself.

The Capitalist Culture Of Death

Former Directors of the US National Security Council in the 1990s, Daniel Benjamin and Steven Simon, have readily acknowledged that the US is generally hated throughout the Muslim world, with America being seen as “a nation of hypocrites” (“The Next Attack: The Globalisation of Jihad”, Hodder & Stoughton, 2005, p53). But such perceptions do not really worry the likes of Benjamin and Simon. Their real worry only kicks in when the victims strike back. One of their fears has been the rise of the radical Salafi movement (ibid, pp54-7). Well, boys, you have certainly helped spread this movement (“The Rise of the Salafis”, Time, 8 /10/12). Western backed repression as in Saudi Arabia, Egypt, Morocco, Algeria, Jordan, Iraq, Somalia, Yemen, United Arab Emirates and Tunisia has been a major critical factor in the development of violent jihadism. Ironies run riot today. The Anglo-American axis is even assisting the Sunni jihadists in the Syrian rebellion (http://www.atimes.com/atimes/Middle_East/NH03Ak04.html).  

Globalisation, as so easily predicted, has become conflict-ridden. Suicidal stupidity has been the watchword of the Anglo-American axis! (see “Globalistan: How the Globalised World is Dissolving into Liquid War”, Pepe Escobar, Nimble Books, 2007, and also Escobar’s “Obama does Globalistan”, Nimble Books, 2009). Huge ironies centre on the McDonaldisation thesis of NYT’s Thomas Friedman. He had compared the Lexus as a symbol of wealth creation to the olive trees that could be at dispute in the Middle East (“Bad Samaritans”, op. cit, p20). For him, the Lexus represented future progress.  But whether it is oil, metals, or trees, the underlying health of the global economy depends on natural resources and the health of ecosystems. Development that exhausts or destroys resources and ecosystems generates conflict and must eventually prove bankrupt. We need a radically different vision of world development, of internationalist cooperative paths for human and sustainable development, and the conservation of nature (“World on the Edge”, op. cit; "The Transition to a Sustainable & Just World", Ted Trainer, Envirobook, 2010).   

Contesting Capitalism

Our basic argument in this article about the compounding contradictions of global capitalism underlies our warning that its leaders will become more and more desperate and dangerous. The more desperate they become, the more they will resort to all forms of denial and distraction: from strongly opposing social justice to constant warmongering.  We need commitment to a green vision of a global eco-economy. We must unite wherever we can with people resisting the forced march to Armageddon that our “leaders” would inflict upon us. We must oppose the capitalist culture of death. The need for all this is greater and more urgent than ever.


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