WOLF AT THE DOOR the imminent crisis of capitalism

The Bell is Tolling

In the past, Leftists all over the world have predicted the demise of capitalism many times and have been proved wrong. Now that the demise is imminent - the wolf is actually at the door – the leftists are the last to believe it.

What makes the end of capitalism so imminent is that, there are several crises that have come simultaneously, interacting and reinforcing each other, that have made the present crisis of capitalism probably the last and final crisis of capitalism.

Some of these crises are well known, such as the Iraq war, global warming, the ongoing world wide recession... Others such as peak oil or peaking of world food production are less discussed in newspapers and popular mass media. In India, violence in Kashmir, insurgency in the North East and the Naxalite movement has posed a major threat to law and order. Every one of these is related to capitalism and each has reached its flash point.

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Ordinary people in every walk of life are deeply conscious that all is not well with the world. Majority of the people are in deep economic crisis, in their personal lives. In India a third of the population is living below poverty line and is forced to deal with food shortage, illnesses and distress in the course of day to day existence. Several thousands of farmers and urban poor have committed suicide. Systems are falling apart. Patients are attacking doctors; students are attacking teachers, and even going to the extent of killing each other! A crisis of this proportion does not emanate from one single cause. When several issues converge in a negative synergistic manner it causes collapse in a system.

Some of these causes are being examined below, followed by an attempt to establish their interconnectedness.

Global Warming

The main cause of global warming is burning of fossil fuels in astronomical quantities by the automobile industry and coal based thermal power plants. The consequent release of green house gases (GHG) is so huge that it far exceeds the earth’s capacity to absorb them.

This consumption of fossil fuel is not evenly distributed across the globe or among the people within a country. An average American puts into the atmosphere 18.5 tons of CO₂ emission per year as compared to a mere 1.8 tons by an average Indian. These averages hide the fact that most of the carbon output is contributed by the 20% rich of these countries and that the poor consume far less energy. Thus, even here, there are extreme inequalities in GHG output within and across countries.

This level of release of GHG is relatively a new phenomenon. For tens of thousands of years, humanity has existed, slowly changing the natural environment and ecology to meet its existential requirements. However, human activities of the present day that lead to increase in greenhouse gases are very specific. They do not pertain to the tribal or community based village life that humanity led in the past and which even today billions of poor people lead. GHG is the direct consequence of coal-based steam technology that saw the creation of the industrial revolution and mass production patterns. In the 20th century oil replaced as well as supplemented coal causing further pollution and global warming.

Why does capitalism need continuous increase in energy consumption? The logic of capitalism is production for sale and profit and not necessarily for requirements. It follows that, to increase profits, one should go on producing more and more create artificial needs and demands through public mind control. All of which necessarily requires consumption of energy.

Thus, global warming is a specific historical phenomenon.  It is with the ascendancy of industrial-based capitalism in the past one hundred and fifty years that global warming has occurred in a dramatic manner and increased to a point that threatens to alter the earth’s climate and ecology irreversibly.

In recent years, global warming has reached crisis levels because it is exceeding the biological carrying capacity of the earth. One and half earths are required to meet the needs and balance the demands of current human consumption levels. This is inevitably leading to the tipping point, meaning, that we have reached a point in time when global warming cannot be reversed. That is, we have entered a vicious cycle where global warming itself leads to further global warming and no one can do anything about it.

One cannot point with certainty as to when the tipping point will occur. Some even claim that it has already occurred and that humanity will see and feel its consequences in coming years. The assumption here is, it has not yet occurred and we have, say, a window of ten years left do something about it. The reason for this assumption is that changes in human society occur faster than changes in nature.

Many people believe that capitalism can reform. It is true that no big changes occur till all the existing alternatives are tried out. But today, the very material basis of capitalism, i.e., the concentrated form of energy - oil - is coming to an end or is becoming economically unviable. Although coal is still available, as will be seen later, it is the most undesirable source of energy and cannot easily displace oil.

Then, what about alternative forms of energy that don't release GHG to this extent? This will be dealt with, in greater detail, in section II of this book. Can all of us individually do something? Certainly yes! It will not be to save capitalism but to work towards building an alternative along with major social and political changes. It must not be forgotten that in order to solve the problem the essential need is to roll back energy consumption to at least pre 1975 levels; preferable even earlier to say 1930 levels. I have yet to come across a roadmap that can do it within the capitalist system. I firmly believe that this problem can only be solved by the demise of capitalism. If this does not happen, I have no doubt that we will reach the tipping point in the near future. So it is imperative that capitalism should collapse within 10 years or so, so that life on earth has a chance to survive. Therefore one should look at the tendencies that will lead to such an event. One such major tendency is Peak Oil.

Peak Oil

So what exactly is ‘Peak Oil’- which is likely to lead to the end of the industrial era? At the present rate of consumption, all available oil will be used up within this century. But peak oil is not about when we run out of oil, but rather, when the production of oil starts to decline, and this is much closer. It may be as close as 2010. Many observers believe that it has already occurred and we are witnessing the effects in the global crash of capitalism! On the other hand, many people believe that Peak Oil is a few years or decades away. This does not change the main argument that follows below as well as the fact that the consumption of fossil fuel is causing global warming and environment degradation in significant ways and therefore its use must be reduced as soon as possible.

How does one predict, ‘when Peak Oil will occur’? In 1956 a US scientist, M. King Hubbert correctly predicted that US oil production would peak in 1970. Since then, his methods of accurate predictions have been refined further. Essentially it is based on the fact that all locations of major deposits of oil are known, because, it is easier to locate large deposits. Therefore no new discoveries of large oil deposits are likely to occur. Secondly, since the consumption pattern is known it enables one to make fairly accurate predictions. The dates, however, may be advanced due to several factors. For example, consumption has increased dramatically in China and India. The oil-producing countries in West Asia are using more oil to spend their income from rising oil prices. Finally, the wars being waged primarily to gain control over oil resources - like the Iraq war - are not only consuming more oil but are also proving counterproductive.

Peak Oil crisis starts with rise in petroleum prices. For some time the figure of USD 100 per barrel of crude has been considered to be the turning point. On November 21, 2007 oil price hit USD 99. In 2008 it reached USD 147, ushering in an economic crisis; a recession in North America, Europe and Japan. Many believe that in the USA the economic crisis started with the housing crisis in August 2007. This economic crisis, as we know, is leading to a worldwide collapse of the system.

Transport and power are the backbone of an industrial society and a crisis in either or both can lead to a general breakdown. The rise in transport costs increases all commodity prices. Chemical fertilisers and pesticides are petroleum based products. A rise in their prices may reduce food production leading to increase in food prices. (In fact, some say the world food production has peaked in 2008 and that there will not be any further rise in world food production!) These processes lead to decrease in relative purchasing power, fall in demand, and recession. The Government of India is trying hard to maintain the subsidy on CNG, LPG and kerosene. Without the subsidy, the price of these commodities would be much higher, making them out of reach of many poor and middle class users. One way to overcome shortfall is to issue petroleum bonds. But this only distributes the risk to a wider range of gullible people; managing only to buy time for a short period. Very simply put, there is no solution to this crisis.

The Iraq War

As is well known, the war in Iraq is for control over oil. After Saudi Arabia, Iraq has the second largest reserve of oil. USA, with about 5% of the world’s population consumes 25% of the world’s production of oil. Its own reserve is only 3% of the world’s proven oil reserves. USA imports 65% of the oil it consumes, 13% of which comes from Saudi Arabia, which has 25% of the world’s proven reserves.

For USA, the aim of the war was to control the growing power of Saddam Hussein and to have access to Iraq’s oil on its own terms, as with Saudi Arabia and Mexico. While the war caused untold miseries and deaths to the Iraqi people, USA did not fully succeed in its war aims. It controlled Iraq’s growing power, but the oil production dropped during the war. In fact it is Iran which has benefited from the war. Its arch enemy, Saddam has been eliminated and in his place is the Shia community dominated government, which is on friendly terms with Iran. As other global events have unfolded, USA has in fact become weaker; going downhill steadily since July 2007. Today, USA is extremely vulnerable and is in the grips of a major recession.

Food Production Peaking

A basic essential for mankind is food. The world population has grown threefold in the last 100 years and so has the requirement for food. Food production is increased by increasing the area under cultivation and increasing productivity by utilising irrigation, fertilisers and pesticides.

The increase in land area for food has a finite limit and it has come now. In fact many non food crops are taking up agricultural land. Historically it was sugar, cotton and tobacco; today floriculture, bio-fuels and ethanol production is eating up existing crop areas as well as forests.

Similarly, increase in productivity also has its limits. After some time, typically after about 30 years or so, land degradation and reduced fertility occur. As a result, more and more chemical fertilisers and chemical pesticides are required to maintain productivity. Salinity of land increases. With oil peaking, costs of chemical inputs also start increasing. In the absence of social support structures and subsidies, farming becomes increasingly unviable. In India, this has led to tens of thousands of farmers committing suicide.

All these factors have led to decrease in rate of growth of production; now that production has reached its peak, it will start to decrease. In India, for the last 7 years production of wheat, dals and millets have fallen steadily. The per capita availability of food also has been decreasing. The poor having relatively less purchasing power are starving, dying or taking the extreme step of committing suicide. The world food production has in fact fallen this year (2009). Consequently a billion people are presently facing hunger and starvation.

Inter-imperialist Contradiction

With the depletion and scarcity of resources, capitalist powers are in sharp contradictions with one another over resource control. Russia with large natural resources of gas and petrol and military power is able to confront Europe and the USA. China with its huge economic power is able to purchase reserves of non renewable resources (that is gas and petrol) all over the world and also buy the companies that control them. The USA owes so much money to China that China is converting its dollar reserves into market shares of US companies. Some even say that the US economy is integrating into Chinese economy in the same way as the British economy integrated with the US economy after the Second World War.

In the 20th century, this kind of a situation led to the two world wars. Today a war of that nature is too dangerous because of nuclear weaponry. Hence wars are being waged by the USA directly over countries with resources that are not under its control. Still major confrontations cannot be ruled out. The Pugwash clock which symbolically indicates how close we are to a global disaster has been moved up by 2 minutes; that keeps us only 5 minutes away from such a disaster.

The South versus the North

These terms have come to imply the under developed and the developing countries (the South) and the developed countries (the North), because, as it happens, almost all the developed countries, except Australia, lie in the Northern hemisphere. Now in various international bodies, like the UN agencies, WTO, World Bank and IMF, the South is trying to act as a block to reduce the exploitation by the North. Among the most vocal are leaders from Cuba, Venezuela and Malaysia. Some of the Arab countries like Syria, Lebanon and Palestine are also extremely vocal in their condemnation of the USA. Some of these countries are following extremely innovative policies within their countries. Some of which may help them prepare for the crisis of capitalism and reduce their vulnerability. Alongside, they are also trying to increase their share of holdings of the world’s non renewable resources, thus deepening the crisis further.

Anti-imperialist Movements

There are several kinds of these movements.

1. Organised political movements: These are mainly Maoist sort of movements. In Nepal they have won a major victory. In India the Maoist/Naxalites are the most significant anti state organised movement. Besides which, in several countries, communist movements exist and they organise trade unions and peasant organisations. Individual communists also work in several other organisations concerning civil liberties, women’s movements, tribal and dalit movements and so on.

2. Another organised movement is Al Qaeda sort of groups. It has a mass basis as a result of atrocities committed by the US army against the people of West Asia and the desecration of their religious sites. The movement has tremendous mass support and the ability to hit the US in its vulnerable positions. However, many people in the anti imperialist movement disagree with these organisations claiming they do more harm. Even within the Islamic nations, their support to Taliban kind of Islamic fundamentalism is opposed by many people. Historically, these organised groups had support from the US government, so also from the army and intelligence forces in Pakistan. They were a strong force against the Russians in Afghanistan.

3. There are large peoples’ movements against major projects of capitalism such as large dams, large coal based power plants, sponge iron plants, nuclear power plants, special economic zones (SEZs) and so on. They comprise of peasants whose land is at stake, environmentalists and naturalists who fear that these projects will damage ecosystems and citizens’ groups. They also have the sympathy, support and involvement of radical academia from among the science and humanities streams as also activists from the peoples’ science movements.

4. Finally, there are innumerable locally organised small groups all over the world addressing location specific or larger concerns within their limited sphere of operation. The oft quoted rationale has been ‘Think Globally Act Locally’. Politically, they range from anarchists of various hues, socialists, civil rights activists, women, black and dalit groups so also some religious groups. While their impact on capitalism and the deepening crisis may not be very significant, their role in contributing towards a possible future vision is very critical.

Why does no one Appear to be bothered?

No ruling class in history ever appeared to be aware of their imminent fall. They are akin to drunken drivers down a slope dimly aware that there is danger luring ahead but nevertheless confident that they will carry through this time! However there are variations, particularly, in 'market' circles and among professionals. Markets in the USA have been jittery over the last two years, ever since the housing bubble burst and more so since the financial melt down of September 2008. Professionals in their journals have been giving warnings. But on the whole, the ruling class comes across as confident. The Indian crisis has not yet reached such a serious level, so the Indian ruling classes and the state appear very confident.

What about the left and leaders of the peoples’ movements? The parliamentary left, particularly CPI-M, being in power, is totally committed to capitalism. Their veteran leader, Jyoti Basu, even said on January 5, 2008 that in the near future there is no alternative to capitalism and that socialism is not possible in the near future.

On the other hand, peoples’ leaders have been so busy assisting their people in their struggles for sheer survival against oppression and exploitation by the ruling classes and the State that they have little breathing space to take stock. Then, there are many who are aware of the deepening crisis of capitalism, but feel helpless. The sincere among them continue to work with peoples’ struggles in various capacities. And finally, there could possibly be a deeper reason. Eric Fromm called it 'Fear of Freedom'. When one has been a slave so long, it is difficult to imagine and plan for a day when you will be free to plan your own life. The phenomenon is evident in retired people; on retirement, in spite of adequate means of survival, they are unable to live on their own. Some get depressed; a few go to the extent of ending their own life.

But this need not be so. There have been dreamers in the past and revolutions too have occurred in the past. After all, we have nothing to lose but our shackles!

Once we are convinced about the imminence of the crisis; its knowledge should enable us to collectively evolve a viable, fossil fuel independent, low energy usage future with equity among human beings and harmony with nature as the norm.

Such a vision should also help in evolving a practical roadmap for an ordered transition. This ordered transition may necessitate violent confrontations with the ruling classes. The programme could provide guidance to peoples’ movements, organisations, trade unions, NGOs, volunteer groups and even to individuals. Such a programme will help dispel the helplessness and defeatism; the sense of fighting a losing battle. It will energise people to work towards a sustainable future, if not for ourselves, at least for the future generations. After all we owe them a legacy of responsible behaviour towards the planet.

See also

http://t-vijayendra.blogspot.com/2011/04/references-and-resources.html