At the World Economic Forum, the extensive global crisis is trivialized to four "great risks." The neoliberal elite does not want a system change. It wants to assure itself against the threatening fourfold injustice. A 20% loss in the global social product could be avoided.
ENERGY AND CLIMATE – HUNGER AND MONEY
The Financial Crisis Seizes the Real Economy
By Elmar Altvater
[Emeritus professor of political science Elmar Altvater grapples with the “global risks” destabilizing the world economy and world civilization. This article published in: Freitag, 8/22/2008 (www.freitag.de) is translated from the German on the World Wide Web, http://www.lebenshaus-alb.de/magazin/006220.html.]
This year the World Economic Forum in Davos repressing critical emancipatory worldviews emphasized “global risks” in the long stable neoliberal world order. “Systemic” risks threaten human security. The risks mentioned explicitly are (1) the crisis of the financial markets that first caught the centers of the world economy, the US, Great Britain, Germany, Spain and other European Union countries (after the debt crisis of the “third world” in the eighties and the financial crisis of the “threshold countries” in the 1990s), (2) the growing disparity of income and assets worldwide with the consequences of increased poverty, hunger and other “deficiency symptoms” under which billions of people suffer, (3) the energy crisis because oil runs out (peak oil) and therefore energy prices break records and (4) a dangerous climate change with dramatic effects for the human habitat including the loss of coastal regions, drought periods and the predicted shortage of food.
Given this all-embracive crisis, debate over the question whether the financial crisis could reach the real economy or whether or not financial and real spheres of the economy can be separated grows stale. At the World Economic Forum, the extensive global crisis is trivialized to four “great risks.” The neoliberal elite that has its rendezvous in Davos does not want a system change. It wants to assure itself against the threatening fourfold injury. It knows insurance costs are expensive but hopes to shift them somehow.
Reaction models to the political security crises of industrial countries seem non-existent. Interventions or militarily grounded “missions” in the NATO-jargon and the EU-reform treaty) are crucial. Interventions need justifications. Justifications can be bald-faced lies. The justification of bombing Yugoslavia of former German defense minister Scharping at the presentation of the “Hufereisen plan” concocted by the German secret service and the justification of Israel, president Bush and many others based on the falsified translation of Iranian president Ahmadineshad’s speech allegedly announcing Israel’s destruction are justifications in the age of mass consumption and production. Spread by the mass media, they are believed by the masses – until it is too late as in Yugoslavia and Iraq.
If the crises are mastered technically, politically and militarily, social collapse cannot be excluded. This would not be the first time in history that societies collapse because they destroyed their natural bases out of economic greed and short-term political motives. For a long time this danger never threatened the whole planet. In Europe, the destruction of the inhabitants of Easter Island and their culture was not noticed when the tragedy occurred. This is different today. Global risks threaten the globe altogether. The industrial countries are at the epicenter of all these crises. They have the main responsibility.
ONE PERCENT OF THE GLOBAL SOCIAL PRODUCT
What the nation states, international corporations and speculative funds of the North undertake has consequences for all other regions of the world. As one consequence, the sovereignty of the states in the global South is threatened increasing the “vulnerability” of their populations. The crises of the financial markets destroy jobs and increase poverty and hunger. Economic and social institutions important for social stability collapse, regions become deserts due to the greenhouse effect and settlement areas are flooded. The fourfold crisis can plunge societies into social and political chaos.
That conflicts are triggered and that migration streams swell with one outpost of the global North at the Mexican-American border or reach the Mediterranean Sea and the Canary islands cannot be astonishing. Not preventing this or not being able to prevent this is interpreted as weak government and state failure. Thus justification of (military) intervention from the outside is manufactured.
With good government leadership, the world of states then deems itself authorized for “Responsibility to Protect” (R2P). The R2P concept was developed after the invasions in Yugoslavia (1999) and Iraq (2003) that cannot be legitimated in international law and was informally accepted by the UN in 2005. First laid down in the American Declaration of Independence, “protection of human rights” ranks above respect for nation-state sovereignty established in the Westphalia Peace of 1648 as a principle of international order. Thus two venerable legal principles are made into an antithesis.
Can “responsibility to protect” do justice to the “global risks”? Hardly. These risks firstly influence one another and are not independent of one another. Climate change is a consequence of the burning of fossil fuels whose emissions concentrate in the atmosphere as greenhouse gases. The “old” industrial countries in North America and Western Europe are responsible for at least 80 percent. The largest share of CO2 emissions today comes from exhaust and chimneys of the “rich” countries.
As the World Climate Council (IPCC) and the Stern report explain, the rising temperature of the earth causes massive environmental damage. This harm extends from the melting of the polar caps, the rise of the sea level and the loss of coastal areas to unusual weather phenomena like heat waves or destructive tropical storms. All this costs up to 20 percent of the global social product. Thus humanity altogether is poorer through the energy-intensive lifestyle and the fossil mode of production of the rich – even if precautions are taken by investing money in protecting the atmosphere. With a monetary standardization of climate change, the implicit assumption is that the damage can be avoided, compensated or repaired through a corresponding financial expenditure. The monetary figures found in many international reports on the climate crisis and the consequences caused by this crisis result from the logic of a commodity-world transfigured into a fetish.
In his play “The Measure,” Bertolt Brecht exclaims: “I don’t know what rice is. I only know its price.” Everything has a price – whether the climate catastrophe or the financial crisis – and it is a high price.
In the 2006 Stern report and in the reports of the World Climate Council, the loss of 20 percent of the global social product as a consequence of climate change could be avoided if one percent of the global social product were spent preventively. Avoiding 20 percent costs with one percent for protective measures is obviously a good business.
Still real prevention is only possible if the energy regime is rebuilt from the source (production of oil from the ground) to the sinking of wastes (disposing greenhouse gases in the atmosphere), that is when the question of the functioning of a capitalist society is raised. However both the “Global Risks” report and the Responsibility to Protect model avoid this question. R2P allows a military intervention of managers of western civilization against the rogues of “bad governance.”
AGRICULTURE BECOMES FUEL
The financial crisis that erupted in 2007 offers a second example for the connections. This crisis prompted owners of financial assets to search for profitable investments in raw materials or derivatives of raw material assets. Their prices inevitably rise in a global market economy. In other words, financial speculation with its demand for raw material assets influences the price of fossil energy for the car and the price of biotic energy for human food. Using plants as bio-fuels for motors, fuel instead of food, is possible because fossil and biotic sources of energy are partly interchangeable. This substitution is profitable with rising prices for fossil energy.
The price inflation for fossil energy is a consequence of financial speculation endangering human food. Speculation benefits from and is supported by higher prices. Oil has either reached the peak of production or will reach that peak soon (peak oil). After the peak, supply can at best increase in the short-term but no longer in the long-term. Massive capital expenditures for the infrastructure of production (deep sea drillings), transport in pipelines and tankers and military security for refinery processing are connected with peak oil. At the same time the world demand for fossil energy is growing. The energy-intensive “American way of life” can hardly be shaken. More and more countries claim the right to an energy-intensive lifestyle.
When oil becomes expensive, consumption of oil will probably fall despite trifling elasticity of demand. Thus the higher oil price will lead to reduced CO2 emissions. Neoliberal optimists rely on market-conditioned price increases of oil as the best protection of the atmosphere.
In a market economy, prices for fuel rise because more bio-fuels flow into car tanks. This trend is supported by demographic changes and eating habits of more prosperous middle classes in the world, higher transportation costs and higher fertilizer costs because of the higher fossil energy prices.
Along with this catalog, the agricultural subsidies and the export policy of the European Union and the US, liberalization of agricultural trade and its submission under the mechanism of the World Trade Organization (even though the negotiations of the Doha round in Geneva broke down at the end of July 2008), the destruction of autonomous agriculture and the transfer of agricultural production to mammoth agricultural conglomerates are ominous. “Food sovereignty” is undermined in that food is so expensive in many countries of the South as if food were sold in luxury boutiques, as the Brazilian liberation theologian Frei Betto remarked. Agricultural companies are rededicated into fuel distillers.
‘HAPPINESS IN UNHAPPINESS” IN THE LONG TERM
The OECD (Organization for European Cooperation and Development) encounters this bitter sarcasm with neoliberal frivolity. According to its interpretation, rising food prices in the long-term could prove to be”happiness in unhappiness.” Changing subsistence agriculture of less developed countries into a “profitable business” and the marketing of food are rewarding. This “blessing” can quickly capsize into a curse as in speculating with foods made into merchandise or commodities. The money sack is then filled, not stomachs.
Therefore the global crisis has the result that poverty is becoming greater and not less compared with the millennium goals. The one dollar per day regarded as the poverty threshold is only worth 60 or 70 cents when prices for food increase more than for other consumer durables. The British relief organization Oxfam points out more and more people are drifting into the army of the poor.
The de-stabilizing effect of transnational corporations and actors on the financial markets and a neoliberal economic policy on energy prices, climate and food supply have nothing to do with natural conditions and are more harmful for nature and the people living in and from nature than tropical hurricane or a tsunami triggered by a sea-quake. Poverty is the result of the mode of operation of neoliberal capitalism. The “risks” have intensified to a veritable system crisis.
The circle closes here. People in the South above all suffer under the scarcity of food, energy poverty, inequality and material poverty. The causes can be found in the economic conditions of accumulation and the economic policy of the North. If the crisis consequences lead to social chaos, disdain and violation of human rights, the South will become the object of northern “responsibility to protect.” With the “responsibility to protect,” people are protected from violations of their rights in a world of “global risks” thanks to military interventions. However neither climate change nor peak oil, neither the financial crisis nor the food crisis can be tackled militarily. Everyone really knows this. Nevertheless everyone who knows the futility of military missions prepares military missions. This fixation appears as the best method for avoiding the roots of crisis tendencies: in the de-regulated and liberalized capitalism fueled with fossil energy.
FURTHER READING
· Oxfam (2008): Another Inconvenient Truth. How bio-fuel policies are deepening poverty and accelerating climate change (http://www.oxfam.org/files/bp114-inconvenient-truth-biofuels-0806.pdf)
· Diamond, Jared (2006): Kollaps. Warum Gesellschaften uberleben oder untergehen (S. Fischer)
· Stern, Nicholas (2006): Stern-Review on the Economics of Climate Change
(http://www.hm-treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/sternreview_index.cfm)
VIDEOS ON THE INTERNET
· www.storyofstuff.com
· www.worklessparty.org
· “Alarm Clocks Kill Dreams – The Movie”
(http://video.google.com/videoplay?docid=-7123489617894062318)
· www.informationclearinghouse.info
Original: Energy and Climate - Hunger and Money