Part 2 of 2

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"[T]hese transactions are carried out by a very small community -
the world's largest 30 to 50 banks, and a handful of major
brokerages. ... The new communications technology has created a
small, elite community of international finance - perhaps no more
than 200,000 traders around the world who all speak the same
language and recognize a mutuality of interests despite their
rivalries." (Greider, p. 245-246.)


THE EMERGENCE OF SPECULATIVE CAPITAL

One of the key features of this free-flowing capital is the change
in the ratio of productive capital to non-productive (or
speculative) capital. Lenin noted that one of the key features of
imperialism was the emerging dominance of finance capital. Finance
capital is the merger of industrial capital and bank capital,
under the control of the financiers. It represented the domination
of the financiers over the industrial capitalists. Nevertheless,
this capital was destined to go back into production. The
financiers invest it in order to produce more profit from the
exploitation of human labor.

Today, the use of capital for productive purposes is being
replaced by capital invested for purely speculative purposes -
that is, the hope that its value will somehow rise in relation to
other speculative adventures: Tokyo real estate versus baseball
cards; or New York stock futures versus rare paintings.

There are still significant amounts of finance capital seeking out
profits. The World Bank estimates that between 1988 and 1995 some
$422 billion was invested in new factories, supplies and equipment
in select developing countries.

Many boats have been lifted by this tide. But the general,
historical trend is such that for this capital to generate
profits, it must plunge workers into slave (or near-slave)
conditions. Thus, it cannot generate the purchasing power
necessary to circulate commodities and hence sustain profits or
the economy.

Since sufficient returns cannot be made from electronics-based
production, increasing amounts of capital seek returns from
speculative adventures. The attempt to maintain the circulation of
goods through the extension of credit is itself a speculative
exercise, a maneuver done in the hope that consumers or debtor
countries will eventually be able to pay off their mounting debt.

Noam Chomsky cites estimates that in the early 1970s about 10
percent of the capital in international exchanges was for
speculation and about 90 percent of it was related to the real
economy, for investment in productive capacity and for trade. By
the 1990s, those figures were reversed - 90 percent was for
speculation and never destined to be invested in raw materials, or
factories, or transportation systems, or for trade. Chomsky also
quotes David Felix's study for the United Nations Conference on
Trade and Development which cites estimates that by 1994 the ratio
was about 95 percent speculative to about five percent real
economy-related." (Class Warfare: Interviews, Noam Chomsky with
David Barsamian, p. 106)

According to Grieder:

"As capital owners and financial markets accumulate greater girth
and a dominating influence, their search for higher returns
becomes increasingly purified in purpose - detached from social
concerns and abstracted from the practical realities of commerce.
In this atmosphere, investors develop rising expectations of what
their invested savings ought to earn and the rising prices in
financial markets gradually diverge from the underlying economic
reality. Since returns on capital are rising faster than the
productive output that must pay them, the process imposes greater
and greater burdens on commerce and societies - debt obligations
that cannot possibly be fulfilled by the future and, sooner or
later, must be liquidated, written off or forgiven." (Greider, p.
227.)

A report on global capital by McKinsey & Company, a global
consulting firm, estimated that the total stock of financial
assets from advanced nations expanded in value by six percent a
year from 1980 to 1992, more than twice as fast as the underlying
economies were growing. The report estimated that by the year 2000
the total financial stock will triple the figures for the economic
output of these economies. [These figures were adjusted for
inflation.] (The Global Capital Market: Supply, Demand, Pricing
and Allocation, quoted in Greider, p. 232.)

The chief concern of this new speculative capital is a stable
currency to protect the value of its money. It demands of
governments a deflationary policy - preventing inflation by
keeping pressure both on wages and government spending by use of
the interest rate.

We have seen the results of this policy in the United States - the
growth of long-term unemployment (much of it not showing up in the
statistics), the stagnation of wages, the dismantling of social
programs, and the sharply growing inequality in incomes. This new,
speculative capital is able to set the rules for the world economy
because governments have little or no control over the actions of
the speculative capital which determine their economies.



NEW POLARITIES, NEW POSSIBILITIES

The process of globalization is driven by the dynamics of
capitalism. Capitalism's survival rests on the extraction of
profit on a constantly increasing scale through the extension of
production. While electronics has enabled the unification of the
world commodity market (including the labor market) and the
financial market - by dramatically cheapening communications and
transportation - it also introduces a radical new quality -
electronic production. This new element attacks the very
foundation of capitalism - the extraction of surplus value from
workers - by introducing laborless production.

To maintain profits, capitalists seek out the cheapest production
costs (regardless of whether production is done by robots or by
human muscle, or whether it takes place in Detroit or in Jakarta).
So, as electronics extends throughout the global economy, workers
around the world are compelled to compete not only with each other
but with their electronic counterparts - robots and automated
machinery of increasingly diverse types.

For a number of reasons, employment under these circumstances can
actually increase while electronics is at the same time destroying
the value of labor power. With electronics driving down the value
of labor power, and therefore wages, more members of the household
are compelled to enter the job market, or to work past retirement
age, or to take on multiple jobs in unsuccessful attempts to
maintain a slipping standard of living. Others are being driven to
the bottom of the job market by the end of welfare. This is
temporarily providing a cheaper alternative to technology.

The capitalist does not care if production is done by the
"gratuitous labor of machines" or by the "free" labor of slaves.
The critical indicator of the impact of electronics on production
is not "employment" statistics, but the polarization of wealth and
poverty. With the destruction of the value of labor power and
wages, wealth polarizes and the economic center disappears. In
this process, capitalism is compelled to destroy whatever social
base it may have maintained in the old imperialist center.



A NEW PROLETARIAT

During the period of imperialism, the main arena of class struggle
was the struggle between the peoples of the earth and the
imperialist powers. Under globalization, a new proletariat is
emerging in the imperialist center, to join ranks with a
proletariat in the former colonies - propertyless, with little or
no permanent tie to the capitalist system.

This process is, of course, tremendously uneven, with some Third
World countries emerging as "tiger economies," with the standard
of living improving for many workers. But overall, the pattern of
deepening polarization is becoming clearer.

A U.N. Human Development Report in 1996 noted that even though the
world's economy surged during the past three decades, 1.6 billion
people (one-quarter of the world's population) are actually worse
off than they were 15 years ago. (Chicago Tribune, July 17, 1996.)
Thirty-two countries representing a half billion people are buried
under unsustainable debt burdens. Richard Barnett estimates that
two-thirds of the world's population has neither the cash nor the
credit to buy anything of note in the global marketplace. (Global
Dreams: Imperial Corporations and the New World Order, Richard
Barnett)

This vast majority of the world's population stands opposed to 358
billionaires whose income is equal to the total income of the
poorest 45 percent of the world's population. (This statistic was
quoted in The Nation, July 15-22, 1996).

While capitalism looks to the electronically united world market
to sell its prodigious output, it is at the same time compelled to
destroy the world market by driving down socially necessary labor
time and, as a result, the value of labor power - and ultimately
wages - to the wage of the robot.

The economic middle ground is destroyed, resulting in a handful of
international capitalists on one side, and a vast majority of
marginalized or destitute proletarians, incapable of purchasing
the flood of goods, on the other. Such is the inescapable dilemma
faced by capital in the age of globalization.

(c) 1997 by the League of Revolutionaries for a New America.
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