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Booming Crisis And Bullish Profit

By Farooque Chowdhury

30 January, 2012

Capital is pocketing bullish profit in a period of booming crisis! Among others, a number of auto makers announce this fact of capitalist economy. Financiers are also no exception. The system’s tale of crises is evident in the Global Risk 2012 report. Davos-deliberations also divulge the crisis-reality. Bankers’ political wrangling in countries, advanced or backward, is another manifestation of the unstable situation. These are obviously only parts of the whole story full of contradictions.

Ford, the famous US carmaker, reports a billow in profits in 2011. Jubilant Ford reports a net income of $20.2bn for last year, up from $6.5bn in 2010. In the last three months of the year, profits leapt to $13.6bn from only $190m in the previous year.

General Motors’ sales increased 7.6% in 2011. It was more than 9 million vehicles. With this achievement GM reclaims its position as the world’s biggest vehicle maker. But, Volkswagen contradicted. Volkswagen claimed the position. In 2011, Volkswagen sales ran to 8.1 million vehicles.

Hyundai Motors, South Korea’s biggest carmaker, attained a 38% rise in profits for the fourth quarter. Its net income rose to $1.8bn in the three months to December. For the whole of 2011, Hyundai’s net profit climbed 35%.

Natural disasters with its blind force came as obstacles to sales to some vehicle makers while others gained from the calamities. China was a nice market for them. Ford, GM and Hyundai made record sales for 2011 in China. Overcapacity was the biggest problem in Europe. Ford claimed: A number of countries shield own vehicle makers. (BBC, Analysis, Jan. 27, 2012) Competition is there. The market there doesn’t appear free. It’s a regular precarious tale of profit-makers.

There is another tale. It’s the tale of ordinary persons, the wretched, the people.

Unemployment figures are almost universal now, and ground for optimism is difficult to find out. Mainstream doesn’t feel shy in admitting hard unemployment-reality. In the poor, under-developed part of the globe, unemployment-reality has virtually turned into a tolerable-reality to commoners. The issue fuels angers of only those having aspiration for changing status quo. Elites don’t consider the fact threatening their existence. Unemployment in all advanced capitalist economies is much talked now-a-days.

In Spain, unemployment number very recently crossed 5 million. In the last quarter of 2011, 350,000 persons lost jobs there. The rate now stands at 22.8%. The scenario will darken more. Still, the stubborn Spanish government is moving forward with spending cuts. Basic services including health care, education and social services are being axed. Almost 1.5m Spanish households have no wage earner as well as about 3.5 million persons seek charity over the past four-and-a-half years. The country with capitalist economy is not a single case. The only new fact is the latest figure on unemployment. From one corner of the world to the other, unemployment dominates labor market.

Jon Henley traveled through Portugal, Spain, Italy and Greece to hear the human stories. (“Portuguese are ‘working more for less money’”, The Guardian, Oct. 14, 2011) Following are a few of the voices Henley heard:

In Portugal, Claudia Barros tells: “Individuals filing for bankruptcy or having no money to purchase food are becoming more and more common in Portugal. […P]eople struggle to get a degree and then end up working 35 hours a week for €600 (£525) in supermarkets [….] I make €760 a month, work in the public sector, and am not happy about this at all. There are those who make €5,000 a month and will not be affected by this tax. Is it fair? [P]ublic transport fares were increased in January, and again by 15% in September, with another 15% increase expected to happen next January. Electricity was also increased last month, and the tax on food went from 19% to 23%.” Sergio Abreau says: “One point of the [austerity] agenda means no Christmas and summer bonuses for public sector workers who earn more than €1,000 a month in 2012, which means a cut from 14 to 12 pay cheques per year. I’m a communication designer […] I’m almost 29 […] My generation is simply postponing its future. The result will be that in 10-15 years there will be a sudden decrease of the population. The younger generation will have gone abroad and the country will be left with old people.” Tiago Mota Saraiva, a Portuguese architect, narrates: “[W]ages have started to decrease, public investment in the productive fabric almost stopped and a huge process of emigration of the most qualified workers started [.…P]eople that have a job are working more for less money. Another is a feeling of distrust on politicians and politics […] This year, Portugal will be paying €7bn interest rates to banks and sovereign debt speculators […] That amount is the same that Portugal will pay for all public officials. It’s unaffordable. […I]nterventions by the IMF are always meant to save speculators’ investments.” From Spain, Alex Watkins, a British journalist working for the Costa Blanca News, describes: “[E]xpat families handing over their keys to the bank and simply going home – mostly because available work for them has dried up […] A generation of young Spaniards dropped out of school to take jobs in construction during the property boom before the bottom fell out of the market, and they have now been left unemployed and unqualified. Then there’s the regional government school building programmes which have been delayed for years, leaving pupils in overcrowded Portacabins which leak in the rain. One near me was built on reclaimed land in a ravine and actually moves when the rain is heavy.” (ibid.)

A few headlines from the newspaper also resound the same reality: “The hunger line starts here”, “Europe’s debt crisis: Tweets from the breadline”, “Portugal’s market has died. Banks aren’t lending. Everything is blocked”, “Portugal’s debt crisis: ‘Younger people can’t live within their means”. (ibid.)

The same newspaper carried a few comments from readers: “I have already seen shops closing in the town [….A]s a pensioner on fixed income, it is becoming more challenging to cope with ever rising prices of necessities.” “Why are the ‘middle’ classes going to have to foot the bill and pay for everything while the rich won’t even notice the difference? The rich need to pay more tax and stop being protected by their friends in government. They avoid everything with their offshore accounts and rub it in our faces when they drive around […]” “Wake up Portugal! Do not look up to or aspire to be like these people! These people will step over you in the street if they ever got out of their cars.” (ibid.)

These tales of profit and poverty produce relevant questions: Are the vehicle makers’ surging sales and profit, and unemployment in countries contradictory facts standing opposed to each other? Or, are they related, mutually dependent? Have not markets, car market and labor market, free in appearance but shackled by capital’s choice, determined these? Were not the markets free and democratic for capital? Had not everyone, from pauper to prince, right and opportunity to enter the markets, either to buy a car or to sale labor? Or, were there some other facts under the apparent appearance? Do these questions help expose the free market-reality?

Facts of enormous profit may astonish common citizens. But powerful profit holders don’t get bewildered with the trend as they know the old golden formula for profit: appropriate. It is not only the industrial workers who are appropriated. The act of appropriation goes at social level. Profit only comes from variable capital, that part of capital expended on labor power. In these monopolists’ days, they are making monopoly superprofits. Scores of the “game” come to light: billions of dollars as profit.

As millions of persons pass unemployed days, as violence of poverty dominates billions of persons, the game turns cutthroat. ILO reports, etc. expose a significant part of the reality.

The unemployed join reserve army of labor, and capital’s bargaining power strengthens as the unemployed put downward pressure on wage level. This reality exposes, on the one hand, capital’s bargaining power, and on the other hand, capital’s incapacity to employ labor. Stymieing capital cannot reconcile the two. It is the system’s inefficiency that leads to wastage and misery creating logic to change it. Capital creates an opportunity to threaten labor with a huge reserve army of labor while the power of reserve army of labor touches realm of politics; acceptability of capital’s political power is questioned; with dented confidence capital’s political power feels threatened. Capital is incapable to resolve this problem other than using violent force of dominance, and at times, making concessions.

The present period of crises, financial, economic, environmental, political, are depicting a disconsolate picture of the dominating system. “The general picture among G-20 economies is one of slowing growth, swooning financial markets, and declining consumer and business confidence. [A]dvanced economies’ policy options are being hemmed in by economic and political circumstances. Fiscal policy is constrained by crushing debt burdens and monetary policy is reaching its limits, with further unconventional monetary easing likely to yield a low ratio of reward to risk. Advanced economy central banks have already expanded their balance sheets massively in ways that carry many economic and political risks. The world economy is entering a difficult and dangerous phase, where there are no easy or costless policy solutions but policy paralysis also carries enormous risks of unraveling the feeble recovery.” (Commentary based on the September 2011 update of the Brookings Institution-Financial Times Tracking Indices for the Global Economic Recovery interactive map, Sept. 19, 2011)

A micro case makes a twist in this blue reality. A November, 2011 news story said: More than $5,000 was spent to save a dog. The costs include initial visit to vet: $125, X-rays: $285, sonogram: $420, surgery: $1,182.

How much a poor consumes? What about an entire poor family? An AP news story from Henderson, Nevada, US, on March 3, 2011 presents a particle of the poor’s reality, almost universal:

“Tera Burbank pulls a frayed robe tighter across her body as she leans into the refrigerator, her eyes canvassing the modest offerings for something to pack in her daughter’s lunch box. Burbank stuffs carrot sticks, peanut butter and apple sauce into a backpack and cajoles her son and youngest daughter out the front door and down the street toward the nearby elementary school. The meager lunch box offerings are just one of many painful struggles that the mother of three encounters every day while living under the weight of long-term unemployment and threats of foreclosure, hunger and loss. Burbank and her husband, John Clark, epitomize the dreadful economic situation these days in Nevada, where a mighty construction boom has given way to a historic recession and a record 14.9 percent unemployment in Las Vegas.”

It’s one of many similar stories from a rich, advanced capitalist country. The poor’s-reality in Asia, Africa and Latin America is much difficult to accept for any human being. Those are beyond tolerance, below acceptance.

But property and profit have their own logic. They mould world as they feel and need. Cats and dogs own plenty of property in this world shaped with the power of capital’s logic. Each of these pets also own interesting, pathetic, dramatic, etc. story.

ABC News, Daily Telegraph and other media outlets reported in 2011: Maria Assunta, an Italian property tycoon, left $13 million fortune to Tommaso, her beloved 4-year-old kitty, before she died in a day in 2011. It was an act ab imo pectore, from the bottom of the heart. The fortunate feline’s fortune includes cash, properties in Rome, Milan and Calabria. Tommaso stands third on the list of wealthy pets, behind Kalu the chimp owning $80 million transferred by his life-loving owner, and dog Gunther IV, a German shepherd. Gunther IV inherited $372 million from his father Gunther III. The senior Gunther was the beloved companion of an eccentric German countess. Leona Helmsley, a real estate magnate, left $12 million to Trouble, Leona’s little dog. Leona’s descendents contested and Trouble’s pot was reduced to $2 million.

There are “doya”, dog yoga, classes in a corner on this fabulous earth. The doya aims to help dogs find their “inner” peace and maintain a close relationship with dog lovers. Reuters reported this news with a lovely photograph from Hong Kong on August 20, 2011.

Within this cranky reality profit continues its journey to its doomed destination as it fails to resolve its contradictions embedded in it. The contradictions manifest in its disunity, acts of violence and treachery, in its act of imposition of unilateral design – profit at all costs, even in time of crisis – on a diverse nature and society.

Dhaka-based freelancer Farooque Chowdhury contributes on socioeconomic issues.




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