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Workers Vanguard No. 919

29 August 2008

Behind the Hunger Crisis: Capitalist Profits

Imperialism Starves World’s Poor

Part One

The astronomical price of food on world markets threatens to condemn additional millions of the world’s poorest and most vulnerable to death by starvation. The overall price of cereals on international markets increased 92 percent in the year ending in April. In the first five months of this year, the world price of rice, a staple for more than half the planet’s population, more than doubled. As prices peaked, the total bill paid by people in underdeveloped countries for imported food was almost double what it was in 2000. Today, the world’s poorest people spend 50 to 80 percent of their total household income on food.

Even before the current crisis, an estimated 850 million people suffered from chronic malnutrition, over half of them children. Today in impoverished Haiti, many residents of the vast slums like Cité Soleil survive on cookies make of dried mud mixed with sugar, salt and vegetable oil. In Egypt, at least eleven people died on breadlines in March and April—some were killed when fights erupted among frantic customers, others were pushed beyond exhaustion by the endless wait for food. In Afghanistan, a country devastated by U.S./NATO military occupation, grain prices reached such heights that many farmers have switched to growing wheat instead of raising poppies for the heroin trade.

In a number of countries, the surging food prices have sparked riots and demonstrations, sometimes backed up by striking workers. In northern Egypt, rioting broke out after a planned strike on April 6 at the Mahalla al-Kobra textile mills, the country’s largest industrial complex, was headed off by a massive show of police force. For two days, thousands clashed with police, who fired on protesters, leaving three dead. In Bangladesh, an explosion of rage by some 20,000 textile workers in Fatullah, south of the capital, culminated in a strike on April 15 by thousands of garment workers, many of them women, in the capital city, Dhaka. A sweater machine operator, who earns $30 a month, declared: “With our poor salary, it is now impossible to buy three meals a day” (Agence France-Presse, 12 April).

In April, the Haitian prime minister was sacked after more than a week of rioting in which at least six people died. At the same time, several days of food riots in Yemen left at least a dozen dead, as tanks were deployed against street barricades, and police stations and military vehicles were torched.

In sub-Saharan Africa, the food crisis has been compounded by years of drought, brutal communalist wars and the AIDS epidemic. Unions in Burkina Faso called a two-day general strike in April to protest soaring food and fuel prices; this came after widespread riots in February in which official buildings were burned and government representatives stoned. In Senegal, rioters last November torched municipal buildings and attacked the former headquarters of the ruling party, while in Mauritania rioters were dispersed by the police, leaving one dead. In February, at least six people were killed in protests in Mozambique, while in Cameroon the death toll in anti-government riots reportedly numbered at least one hundred.

Because they perpetuate the conditions of economic impoverishment and cultural backwardness, the imperialist powers are ultimately responsible for the horrific conditions in sub-Saharan Africa. The wholesale economic devastation of the African continent has been deepened by the destruction of the Soviet degenerated workers state in 1991-92. The existence of the Soviet Union, which acted as a counterweight to U.S. imperialism, had allowed maneuvering room for “Third World” capitalist rulers, who garnered economic and military aid by offering themselves as clients to Moscow or Washington (see “Imperialism Starves Africa,” WV No. 561, 16 October 1992, reprinted in Black History and the Class Struggle No. 10, February 1993).

With the world capitalist economy now entering a recession, global prices for agricultural products and a number of other commodities have slipped from their record highs. This is true of oil, whose skyrocketing price helped drive up the cost of fertilizer, fuel and many other goods and services. But this will not alleviate widespread hunger in Third World countries. Hundreds of millions of workers, peasants and urban poor will still not have the money to buy sufficient food for their families. A global recession will increase mass unemployment and drive down wages even as it dampens the current inflation of food prices.

The excruciating fact is that the terrible famines which are endemic to the capitalist Third World are not the result of food shortages. Figures published by the UN World Food Programme indicate that the amount of food currently produced is more than one and a half times what is needed to provide every person on earth with a nutritious diet (Tony Weis, The Global Food Economy: The Battle for the Future of Farming [2007]). But food is distributed according to the ability to pay. As with all commodities under capitalism, food is sold on the market in order to make a profit. Like any other business, agribusiness seeks to monopolize and control the market to keep prices as high as possible and maximize profits.

That starvation has become the increasingly common condition of a large portion of humanity is rooted in the very logic of the capitalist system. As Lenin explained in Imperialism, the Highest Stage of Capitalism (1916):

“It goes without saying that if capitalism could develop agriculture...if it could raise the living standards of the masses, who in spite of the amazing technical progress are everywhere still half-starved and poverty-stricken, there could be no question of a surplus of capital.... But if capitalism did these things it would not be capitalism; for both uneven development and a semi-starvation level of existence of the masses are fundamental and inevitable conditions and constitute premises of this mode of production.”

The country most cited as the “success” story for the development of commercial agriculture in the face of imperialist competition is Brazil. Starting in the 1960s, Brazil used state credits and tax breaks to create a livestock sector based on nationally produced grain, becoming in 1980 the world’s main supplier of soybean meal for cattle feed. Yet this “success” was achieved through the destruction of local food production, massive eviction of peasants from their land and ongoing destruction of the Amazon rain forest. After several decades of such “success” under capitalism, fully one-tenth of the Brazilian population suffered from malnutrition. Today, 3 percent of the Brazilian population controls some two-thirds of all arable land, while five million rural families remain landless.

The current food crisis cries out for an internationally planned socialist economy based on the most advanced levels of technology. Such an economic system would enormously increase agricultural output throughout the world while also greatly reducing transport costs, thereby facilitating a rational international division of labor. But how can a worldwide society of economic abundance be achieved? Only through proletarian socialist revolutions, above all in the advanced capitalist-imperialist countries of North America, West Europe and Japan where the productive wealth and technological resources of the world are now concentrated. Only then can production and distribution be based on social need rather than profit.

Tortilla Protests in Mexico, Strikes in South Africa

In Mexico early last year, the soaring price of the main staple food, tortillas—which are made with corn—provoked a series of demonstrations, including a protest in Mexico City of 100,000 people called by the Unión Nacional de Trabajadores (National Union of Workers) and composed largely of labor and peasant organizations. A major factor in the impoverishment of the Mexican masses was the imposition in 1994 of the North American Free Trade Agreement (NAFTA), which we Marxists have opposed as the “free trade” rape of Mexico by the U.S. imperialists.

In a 27 January 2007 leaflet titled “Mobilize the Working Class Against Hunger and Repression!” (reprinted in WV No. 886, 16 February 2007), our comrades of the Grupo Espartaquista de México, section of the International Communist League, raised a series of transitional demands seeking to link the immediate struggles and consciousness of the masses to the program of socialist revolution. The GEM demanded the expropriation of the corn magnates without compensation as part of a call for the working class to fight against the capitalist class as a whole. The GEM called for “labor strikes that demand a subsidy for tortillas so everyone can have them” which, together with the call for “the distribution of food for all under control of the trade unions, organizations of poor peasants and the urban poor,” aimed at ensuring food distribution among the workers and the poor. The leaflet declared: “The only way to end hunger is to seize the means of production from the capitalists through proletarian revolution and its extension internationally.”

In an underdeveloped capitalist country like Mexico, the national ruling class depends overwhelmingly on credit and investment from its imperialist masters. Because bourgeois populists, like the Party of the Democratic Revolution (PRD) in Mexico, stand for the continuation of capitalism and defend the rule and interests of a wing of the national bourgeoisie, they inevitably reject in deeds the democratic demands they at times promise.

The road to national and social emancipation in countries of combined and uneven development (where modern industry exists alongside backward, traditional economy) was charted by Trotsky’s theory of permanent revolution, which was verified by the experience of the 1917 Russian Revolution. The only path forward is the fight for the dictatorship of the proletariat, standing at the head of all the oppressed, above all of the peasant masses. This would place on the order of the day not only democratic but also socialist tasks, such as collectivizing the economy, giving a mighty impulse to the international socialist revolution. Short of the international extension of the revolution, particularly to the advanced, industrialized imperialist centers, socialist construction will be arrested and ultimately reversed.

While in most countries the recent food-price protests were spontaneous upheavals of the urban and rural poor, in South Africa mass anger over price hikes for food, transport and electricity has been channeled into protests organized by the powerful Congress of South African Trade Unions (COSATU). These included a series of one-day strikes in the country’s various provinces in July, culminating in a one-day nationwide work stoppage on August 6 that effectively shut down Johannesburg and other major cities as bus and taxi drivers joined the strike. Tens of thousands of trade unionists and township poor participated in protest rallies in Pretoria, Cape Town and elsewhere. Both the provincial and nationwide strikes had strong support from mine workers—a large percentage of whom are immigrants—who constitute that section of the working class producing South Africa’s main exports.

The COSATU bureaucracy felt pressure to call the protest strikes because its members are among those hardest hit by the skyrocketing prices of food, fuel and electricity. However these protest strikes were not directed against the capitalist government that enforces the brutal exploitation and immiseration of the predominantly black workers, rural toilers and township poor. Quite the contrary. The strikes and rallies were held with the explicit support of the ruling African National Congress (ANC) and were intended as a pressure valve to let off some steam and channel the discontent of the workers and poor into support for the ANC’s new, more populist leader, Jacob Zuma.

The leadership of COSATU is largely in the hands of the reformist South African Communist Party (SACP), which plays a major role in the government in its bloc with the bourgeois-nationalist ANC. COSATU itself also participates in the government, which is commonly called the Tripartite Alliance. We describe the Alliance as a nationalist popular front through which the SACP and COSATU misleaders tie the working class to the mainly white capitalist class and their black front men, who are committed to maintaining neo-apartheid capitalist rule.

While the strikes and rallies were initially called over the escalating cost of food, fuel, transport and utilities, shortly before the first of the provincial strikes the COSATU tops announced that they were complying with a court injunction limiting the official demands to protest against the massive increases in electricity rates by the state-owned power company, Eskom, and any job losses resulting from the rotating power outages. In fact, this was a state-sanctioned COSATU “general strike.” Despite the official line, stickers, posters and banners at the Pretoria rally sought to address the broader crisis for the millions facing hunger across South Africa. “Away with high food prices,” was one of the most prominent slogans.

Spartacist South Africa, section of the ICL, intervened in the strikes and rallies, putting forward our revolutionary program. Along with Workers Vanguard and Spartacist South Africa, our comrades also distributed at the August 6 protest a leaflet issued in May as a wave of pogromist attacks against immigrants swept the country (see “South Africa: Mobilize Trade Unions Against Anti-Immigrant Terror!” WV No. 915, 23 May). The leaflet called for “Full citizenship rights for all immigrants!” and declared:

“It is the ANC/SACP/COSATU Tripartite Alliance government that oversees neo-apartheid capitalism, under which the overwhelming majority are locked in grinding poverty and black people remain on the bottom. The poor in this country, and hundreds of millions around the world, are faced with starvation from rising food prices, which are at bottom caused not by shortages but by price-gouging and other capitalist profiteering.”

Above all, we explained to strikers and demonstrators that the working class, especially its most politically advanced and organized sector, must break with the Alliance in order to fight for a black-centered workers government that would seize the means of production from the conglomerates that dominate neo-apartheid capitalism. Only such a government can bring decent living conditions and national liberation to the exploited and oppressed black, coloured (mixed-race) and Indian masses. Among other measures, a proletarian regime would expropriate the large, white-owned commercial farms and promote collectivized and state-owned agriculture under the control of farm workers. The collectivization of agriculture is especially necessary to achieve social equality for the downtrodden immigrants from Zimbabwe and elsewhere in Africa who make up a good part of the farm labor force.

South Africa is key for the sub-Saharan African population. The black population in South Africa has been partially absorbed into the bottom of a modern industrialized society that can, based on the revolutionary reorganization of society, provide a decent life for all who live there. Our call for a black-centered workers government is part of our struggle for a socialist federation of Southern Africa that would begin to lay the material foundations for social equality throughout the region. This can be fully realized only through the extension of socialist revolution to the most advanced capitalist countries and the establishment of a collectivized, planned world economy.

Biofuel and Other Rackets

The record food prices crushing the world’s poor are occurring at a time of booming global agricultural output. Last year’s total cereals crop of 1.7 billion tons was the largest in world history; it was 89 million tons more than 2006, another bumper crop year. What then explains today’s sharp increase in food prices?

A confidential study by the World Bank last April, “A Note on Rising Foods Prices” by Donald Mitchell, was leaked to and published by the London Guardian. Its summary conclusion:

“The World Bank’s index of food prices increased 140 percent from January 2002 to February 2008. This increase was caused by a confluence of factors but the most important was the large increase in biofuels production in the U.S. and EU [European Union]. Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate.”

The study estimated that 75 percent of the price increase between 2002 and 2008 was due to the massive diversion of food grains and cooking oils into biofuels.

In the U.S., the biofuels bill passed by Congress in the summer of 2005 mandated the use of ethanol in motor fuels, granting generous subsidies and tax credits for its production, on top of pre-existing tariffs on the cheaper and more efficient ethanol produced in Brazil from sugar. The bill passed with strong bipartisan support, including from Barack Obama, an early champion of the biofuel racket. His state, Illinois, is a leading corn producer, and he has received support from ethanol magnates. The biofuel bonanza has, in part, been sold as a means of achieving “energy independence” from Near Eastern oil as part of the reactionary “war on terror.” Most biofuels are also touted for reducing greenhouse gas emissions, but a study in Science (4 January) noted that the main biofuels “have greater aggregate environmental costs than do fossil fuels” and concluded that “multibillion-dollar subsidies for U.S. corn production appear to be a perverse incentive from a rational cost-benefit perspective.”

This year, an estimated one-third of the corn crop produced by the U.S., by far the world’s largest exporter of corn, is being withdrawn from the food market to be used for biofuel production. In turn, this deliberately provoked shortfall in the food grain harvest is driving up the prices of other grains as they are used to replace corn—or as their cultivation is cut back to free up land for growing corn. The UN’s Special Reporter on the Right to Food earlier this year denounced using food crops to produce biofuel as a “crime against humanity.”

That crime has paid off handsomely for U.S. capitalists in the form of record profits. The family-owned agribusiness giant Cargill is so awash in earnings that the personal fortunes of the two family heirs more than doubled last year to $4.4 billion each. In the first three months of this year, the net income of grain conglomerate Archer Daniels Midland (the country’s largest ethanol producer) soared 42 percent, while seed and herbicide giant Monsanto has reported earnings up almost 300 percent. That didn’t stop Congress, with liberal Democrats in the lead, from passing a new farm bill this spring containing huge subsidies to wealthy farmers and agribusinesses.

West European imperialists are just as involved as their U.S. counterparts in the worldwide biofuel scramble and in colossal land grabs for biofuel cultivation at the expense of food. If the Americans have devastated the rural and urban poor in Mexico and elsewhere in Latin America, the Europeans are responsible for seemingly endless lines for previously available basic foodstuffs in much of East and South Asia and Africa. It is not corn that has been shifted to biofuel cultivation in Malaysia, for instance. It is palm oil, an important source of calories in Asia, that has been diverted to produce biodiesel, particularly for use in Europe. In Indonesia, the world’s largest producer of palm oil, where 110 million people live on less than $2 a day, the sharp rise in the price of cooking oil is devastating. “The Other Oil Shock: Vegetable Oil Prices Soar” headlined the International Herald Tribune (19 January). The article pointed out that edible oil prices have increased more than any other category of food prices.

While U.S. agribusiness moguls are shifting production into corn-based ethanol to replace gasoline in automobiles, European countries have been subsidizing biodiesel (though some have cut back as the exaggerated claims of biofuels’ environmental benefits have been exposed). In addition, Germany now has 1,800 combined heat and power plants using palm, soy and rapeseed oil, and Britain has similar plants in the works. Since European agriculture does not grow all of the feedstocks necessary for biofuels used in the EU, parts of Africa and countries such as Malaysia, Indonesia, India and the Philippines are being enlisted to provide such feedstocks at the expense of food.

The worldwide scramble for biofuels takes place in the context of competition between the main imperialist states. Finance capital flows into the construction of fully integrated biofuel networks, involving cultivation, shipping, processing and distribution. Substantial sums go to countries that sign special deals or have preferential trade access to the U.S., the EU or Japan. The competition for feedstock resources is an element of the imperialists’ moves to redivide control of the world’s semicolonies.

Also contributing to the skyrocketing prices for foodstuffs has been a shift of speculative money capital into primary products of all kinds. Commodities as diverse as crude oil, gold, lead, uranium, cattle and cocoa were trading at or near record prices earlier this year. The slide of the dollar against other world currencies has buoyed the prices of raw commodities in dollar terms. This, in turn, prompted a wave of buying by large banks, hedge funds and other financial institutions seeking “hard assets” as a hedge against inflation—or as simply speculation on further price increases. One hedge fund manager told a May 20 Senate hearing that such “institutional investors” had poured some $55 billion into speculative commodities trades in just the first 52 trading days of this year. He asked rhetorically: “Doesn’t it seem likely that an increase in demand of this magnitude...could go a long way in explaining the extraordinary commodities price increases in the beginning of 2008?”

In contrast to the capitalist biofuel producers, the People’s Republic of China, the world’s third-largest producer and consumer of ethanol, has an official policy of prohibiting biofuel production from competing with food cultivation. Initially, China produced significant quantities of ethanol from corn, but this drove up domestic corn prices. Worried that surging food prices might cause urban proletarian unrest, the Chinese government in December 2006 decreed that biofuel production would not be undertaken by utilizing arable lands and food grains. Instead, China has moved to produce ethanol from stale grains in the national reserve and from non-grain crops. A Chinese official declared: “In China the first thing is to provide food for its 1.3 billion people, and after that, we will support biofuel production” (Fengxia Dong, “Food Security and Biofuels Development: The Case of China” [October 2007]). This is just one illustration of how China is a fundamentally different type of society from the capitalist countries.

China is not a capitalist but a workers state, albeit one that was bureaucratically deformed from its inception. The overthrow of capitalist rule in China by the 1949 Revolution, leading to the building of a collectivized economy, represents a historic gain for the working class internationally. While the U.S. and other imperialists aim to destroy the Chinese workers state and restore bourgeois rule, we stand for the unconditional military defense of China against imperialist attack from without and counterrevolution from within. At the same time, we call for proletarian political revolution to oust the parasitic and nationalist Stalinist bureaucrats and to establish a regime based on workers democracy and revolutionary internationalism.



Workers Vanguard No. 919

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29 August 2008


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