Speculation in Food Prices Murders Millions

Cocoa prices have risen 150% in the past 18 months and its not due to a genuine shortage.  It is due to a manufactured shortage though, as hedge funds and banks have waded in to the commodities markets according to reports. Speculators on coffee and chocolate prices  are the cause for the price increases and its not only the consumer that suffers, but the farmers that produce the cocoa beans are not benefiting either.
Deborah Doane, director of the World Development Movement, says that  "Investment banks, like Goldman Sachs, are making huge profits by gambling on the price of everyday foods. But this is leaving people in the UK out of pocket, and risks the poorest people in the world starving." She claims Goldman made some $1 billion in profit from this sort of speculative activity citing the company's own figures.*  The finance firm denies it of course but this is the same bunch we wrote about yesterday who have just paid a $550 million fine for being lying cheating scoundrels, what the capitalists refer to as providing "incomplete information."

According to the Financial Times, a London based Hedge Fund,  Armajaro purchased 240,100 tons of cocoa which is about 7% of global output. The economies of entire nations can be destroyed by these traders and speculators in everything from the food we eat to the money used to purchase it. The attacks on the World Trade Center pale in their significance when compared to the murder and mayhem the actions of these coupon clippers leave in their wake. The effects of this sort of activity on farmers and the economies of countries like the Ivory coast is devastating.

Charities like the WDM are calling for regulation of the commodities markets but this is a utopian idea.  The capitalist state will not prevent private capital from acting as it should, it never has and never will.  It is the right of capital and capitalists to speculate on food if they so wish.  This Financial activity is necessary to them as the productive forces are too damn productive, capitalism produces more than can be bought back.  

As the Guardian points out, The United Nations' Food and Agriculture Organization admits that the cost of food, "might have been amplified by speculation in organised futures markets". This capitalist club is very careful to throw the word "might" in there.  The UN adds "that some regulation of commodities futures markets was desirable.", but makes clear that any intervention in the markets should be, "cautious and stop short of imposing tight limits or an outright ban on such trading".  All caution is thrown to the wind when it comes to bailing out the banks and the thugs that run them. There has been little reluctance when it comes to throwing public funds at the crisis caused by these very same speculators.

Is this sort activity useful?  It is not.  It is parasitical and destructive.  It also cannot be made nicer; it is as natural to the capitalist system as any form of buying and selling.  It is a wasteful form of capital allocation and will only be stopped by nationalizing capital, by taking capital out of private hands and placing it at the disposal of the collective, of those whose Labor produces it.  It is a necessary part of the democratic socialists transformation of society that must take place if we want a future for our children and the planet on which we live.

Capitalism will not regulate itself in to a kinder, gentler system.  Capitalism is a state of war.

** Guardian UK: Hedge funds accused of gambling with lives of the poorest as food prices soar 7-19-10