Friday, February 1, 2013

Protectionism nor free trade: no way out for workers

by Richard Mellor

The Chinese are not only having problems in Africa, but their role in Latin America is also causing some tension. US capitalism certainly doesn't like the Chinese presence like as it considers Latin America its own back yard. Meanwhile, Colombians are up in arms because Chinese imports are destroying the local economy and small manufacturers.  This process is threat to local manufacture much like British imports were in India more than a century ago.

The real thing: twice the price of the Chinese import
The Sombrero Vueltiao is a Colombian national symbol, a hat that is hand crafted in the small Colombian town of Tuchin, “Artisans spend up to 15 days cutting, sun-drying, and braiding cane leaves to make one hat.” Writes Bloomberg Business Week. But along come the Chinese and imitation Vueltiao’s are selling for $10, half the price of the Colombian ones.  (Marx explained how the value of the artisan’s Labor power declines in this process with the example of the introduction of the power loom in to British industry) As in Africa, anti-Chinese sentiment is growing among much of the population especially small manufacturers and local artisans like makers of the sombrero: “The Chinese are taking us to bankruptcy.” Says one sombrero maker whose family business has seen sales drop by half thanks to the cheaper Chinese model.  Ninety percent of Tuchin’s 34,000 residents depend on the handicraft trade, “The Chinese are stealing our culture like the Spaniards did 500 years ago” says Tuchin’s mayor, although which culture he is referring to I am not quite sure—indigenous native culture or capitalist culture.

It can’t be the fault of the Chinese, and living as I do in the land of identity politics surely the conclusion to draw is that the white man made them do it. Or perhaps there is another explanation.  The Chinese have been gorging themselves on Latin America’s natural resources in order to feed the incredible boom and growth the country has experienced over the last 20 years.  I recall reading at one time that the Chinese were consuming 43% of the worlds concrete.  They were the source of the Australian boom in raw material exports and own a number of mines and the largest bank in Africa.  They owned some 40% of US debt as they lent us money to buy Chinese goods.

Latin America’s annual exports to China have risen to $86 billion from $3.9 billion since 2000 and China’s share of Latin America’s imports has increased to 13.3% from 1.8% over the same period.  On the one hand this has been a boon to the region strengthening currencies and firms that are heavy exporters like those in raw material production and making imports cheaper, but that is damaging local manufacturers like the makers of the Sombrero Vueltiao who are having a hard time competing.

Globalization has had a similar effect in the US keeping prices low.  Karl Marx wrote of this process over 150 years ago, “The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.”

But it is not “Chinese walls” in this instance but the walls of a different nation state or region of nations states----an entire continent.  The problem is that this process is, as Marx pointed out, inevitable in a market economy.  Capitalism is a state of war.  “Free trade of the 21st century has rules. It’s not the law of the strongest.” Colombian Trade Minister Sergio Diaz-Granados tells Business Week but he’s wrong. In a desperate plea for rationality and human decency, “Free trade can’t be a vehicle for destroying our culture” says Tuchin’s mayor. He’s wrong too.

Unfortunately it can and has throughout the history of capitalism.  There is no such thing as free trade.  Combatants rise and fall in the battlefield of the global marketplace and the big will destroy the small.  Capitalism is not an egalitarian system of production. Whole cultures, languages, and communities have been swallowed up in the rapacious quest for surplus value.  They try to limit the conflicts after two world wars and endless regional conflicts and competition for raw materials and markets but they cannot reign in the beast.  They are driven by the laws of motion of capitalism to clash at some point.

The Colombians have imposed tariffs on imported apparel and footwear in an attempt to protect local producers and under pressure from them.  The Chinese have tried to convince them that they mean no harm, that they want a “balanced” and not a one-sided trade relationship with China having a huge surplus. It is a love/hate relationship as China as a raw materials consumer has brought great wealth to sections of the capitalist class of Latin America.  But as the great Irish revolutionary James Connolly pointed out, "Capitalism teaches the people the moral conceptions of cannibalism are the strong devouring the weak; its theory of the world of men and women is that of a glorified pig-trough where the biggest swine gets the most swill."

All talk of free or fair trade in the market economy is nonsense.  They all protect their home markets.  They try to rein in the rampaging global market forces and competition from other nation states by introducing protectionist measures as the Colombians are doing or forming regional trade blocs (Nafta impoverished millions of Mexican farmers unable to compete with US agribusiness) but their more astute thinkers are well aware of the consequences of such behavior.  It was the infamous Smoot Hawley protectionist legislation in the US that exacerbated the effects of the Great Depression and the march to World War 2 as other nations retaliated with measures of their own.

And it is not only trade that becomes a more hostile arena.  The hundreds of bases the US has built around the world particularly in Central Asia and the proposed new bases in Australia are all an attempt to contain China in the struggle for dominance in the global marketplace. The interventions in the Persian Gulf and Saharan Africa by NATO is to control precious resources and the profits that flow from them, oil in the gulf, precious metals in the Sahara.  Their talk of a global community and such things as free or especially “fair” trade is the diplomatic chatter of thieves and robbers. There will be further escalation of tensions between western and eastern capitalism in the period ahead, especially with China; it cannot be avoided.

Capitalism cannot prevent the wars and conflicts that will increase in the struggle for the global domination of depleting resources.  The only way out (of course, I’m open to discussing it) is a world federation of democratic socialist states whose economies are integrated with the global society and production of the planet’s needs and use of its resources. Economies that have collective ownership and control of the productive forces and the capital necessary for production and a rational plan to them that produces for social needs not to increase the wealth of a tiny global minority.

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