The
spokespersons for capital are constantly telling us how efficient the so-called
free market is. But it depends on how
one judge’s efficiency. Capitalism has revolutionized the productive forces for
sure and that has produced great advances but along with it great waste. If it comes to the issue of food, capitalism
is not very efficient; it refuses to feed billions of people on the planet.
Food is a commodity like everything else in a capitalist economy and if you
don’t have the money to pay for food or its not profitable to produce it then
people starve.
Production
under capitalism then is very wasteful as well as harmful to the
environment. The massive pollution that
is a by-product of an unplanned economic system based on profit is not very
efficient either. Not only that, the
cost of cleaning up after capitalist production is not considered in the
numbers when they prepare the books. The
cost of trying to repair the poisoned rivers, plastic laden oceans and polluted
air is borne by the taxpayers, by society as a whole. Then there are the diseases, illnesses and
numerous cancers that are the product of chemicals they use in production that
find their way in to the soil and oceans----these are not considered in the
costs.
But
another incredible example of waste and inefficiency is parasitic economic
activity of all types. The FOREX or
foreign exchange market is the worlds largest market about $4 trillion a day is
exchanged there. The reason the FX
market exists, or should exist in a capitalist economy, is to facilitate the
exchange of one currency into another. For example, as businesses exchange
goods and services and companies from different nations merge, currencies have
to be traded at a ratio that makes the deals worthwhile and creates a certain
amount of stability in commerce. But only about 20% of the activity on this
exchange falls in to this category with about 80% of the trades simply
speculating on the rise or fall of a currency in relation to other currencies.
And reputable
estimates claim that fully 95% of the participants in this market are
speculators that include large multinationals, investment banks, hedge funds
and professional traders. http://www.investorguide.com/igu-article-1149-investing-basics-currency-speculation.html
The Financial Times reports today that, “Central banks in countries that have attracted people trying to seek shelter in their currency have sent a firm message: only a limited number of investors are welcome here. That has left investors hunting for havens outside the US dollar, which has attracted huge inflows this year from those looking for somewhere liquid to park their cash.” The Forex market is where they appear to be headed.
The Financial Times reports today that, “Central banks in countries that have attracted people trying to seek shelter in their currency have sent a firm message: only a limited number of investors are welcome here. That has left investors hunting for havens outside the US dollar, which has attracted huge inflows this year from those looking for somewhere liquid to park their cash.” The Forex market is where they appear to be headed.
The Forex market is not regulated and there are no
structures or governing body, no judicial panels or forum that can arbitrate
disputes, “Self regulation
provides very effective control over the market.” one
source informs us confidently.
Yes,
we can certainly rely on hedge find managers, bankers and corporate chieftains
to self regulate their profit taking in the interests of all of us, just like
we could rely on their government officials to regulate the housing market,
financial institutions and, oh yes, the safety rules for deep sea drilling.
One site above describes the activity of this $4 trillion a
day market (it trades 24 hours a day) in this way:
“The FX market is
different from other markets in some other key ways that are sure to raise
eyebrows. Think that the EUR/USD is going to spiral downward? Feel free
to short the pair at
will. There is no uptick rule in FX as there is in stocks. There are also
no limits on the size of your position (as there are in futures); so, in
theory, you could sell $100 billion worth of currency if you had the capital to
do it. If your biggest Japanese client, who also happens to golf with the
governor of the Bank of Japan tells you on the golf course that BOJ is planning
to raise rates at its next meeting, you could go right ahead and buy as much
yen as you like. No one will ever prosecute you for insider trading should your
bet pay off. There is no such thing as insider trading in FX; in fact, European
economic data, such as German employment figures, are
often leaked days before they are officially released.”
You
can imagine the fraud and thievery rampant here; the havoc this parasitic
activity can cause to national economies, interests rates, world trade, food
prices and human existence in general; investorguide.com
explains:
“Currency speculation can
have serious consequences on a national currency and accordingly on a country's
economy. While a major benefit of speculation is an increase in liquidity (more
units of currency are used in transactions rather than reserves), speculation
can also devalue or inflate a currency to the point at which a country’s stock
market and overall economy starts to follow suit. Heavy trading in a currency
creates “artificial demand”, and can increase the prices of goods beyond an
inflation-adjusted level. Some major crises occurred when Brazil devalued its
currency in 1999. For countries with fixed exchange rates, currency speculation
can lead to a major crisis, as was seen in several Asian countries in 1997, and
in both Brazil and Argentina in 1999.”
The
waste and inefficiency of the market economy is staggering. The misery, death and ecological destruction
that are inherent in a system of production based on profit cannot be
eradicated within the framework of such a system. Capitalism, the blind and unplanned
production of human needs for profit cannot be made human or environmentally
friendly; it cannot be reformed. The
poverty, war, hunger and ecological destruction we are witnessing on an
unprecedented scale is not an act of nature or the product of what the
mouthpieces of capital tell us is an inherently selfish and greedy “human nature”.
The
only natural thing about these developments is that they are natural to
capitalism. It’s the way the system works.
No comments:
Post a Comment