'Well-placed'? Pull the other one

New Labour was always fond of telling anyone who would listen that globalisation dominated by powerful corporations and open markets, worked to everyone’s benefit. We were in a new period of economic history, where old-style capitalism was no more. What then to make of the following: "We are facing a testing period in the economy. We are facing the first real international economic crisis of globalisation."

This admission came yesterday from Lady Vadera, a business minister and former adviser to Gordon Brown (the ex-investment banker was responsible for devising the disaster that is the part-privatisation of London Underground). She was speaking in the House of Lords, as the price of oil experienced its biggest one-day increase in almost 20 years and New Labour headed for its first defeat by the Tories in a by-election in nearly 30 years. The two events are not unrelated – soaring prices and tax increases have hit poorer votes hard and their massive rejection of New Labour in Crewe spells political oblivion for the ruling party.

More on that later. Keeping to the Brown script, in a breathtaking display of national and nationalist self-interest, the Baroness insisted that Britain was “well-placed” to withstand the global turbulence. Never mind the reports from yesterday’s United Nations Human Rights Council which estimates that more than 850 million people worldwide are going hungry, and another two billion are suffering from malnutrition. According to the UN the high prices and shortages of food which jeopardise the well-being and rights of countless people add up to a massive violation of human rights.

In a few short months, a superabundance of apparently ever-cheaper commodities has been replaced by soaring inflation and food shortages on a scale unprecedented in human history. Argentina, Bangladesh, Vietnam, Russia, South Africa and Morocco are among the countries that have seen demonstrations and strikes in response to soaring prices.

These are the consequences of the policies and actions of New Labour’s support for the interests of transnational corporations and the global financial institutions.This year, agribusiness profits, like those of the oil giants are soaring, increasing by anything from 21% to 1200%, while hungry people from Haiti to Egypt to Senegal were taking to the streets to protest against rising food prices.

Just a few companies are the near-monopoly buyers and sellers of agricultural products around the world. Six companies control 85% of the world trade in grain; three control 83% of cocoa; three control 80% of the banana trade. ADM, Cargill and Bunge effectively control the world’s corn, which means that they alone decide how much of each year’s crop goes to make ethanol, sweeteners, animal feed or human food.

A senior editor of Time magazine warned recently: "The idea of the starving masses driven by their desperation to take to the streets and overthrow the ancien regime has seemed impossibly quaint since capitalism triumphed so decisively in the Cold War... And yet, the headlines of the past month suggest that skyrocketing food prices are threatening the stability of a growing number of governments around the world … when circumstances render it impossible to feed their hungry children, normally passive citizens can very quickly become militants with nothing to lose."

Back to New Labour’s prospects, or lack of them, and Vadera’s view that Britain is “well-placed”. Well, she might be “well-placed” but the rest of us aren’t. Unemployment is rising steadily, the house building industry is in a state of collapse and people who are obliged to drive to work cannot afford to do so as the price of petrol has risen by 20% in a year. Millions are in serious debt and large numbers of people face repossession. Her government is on its way out. This is the content of tomorrow’s timely conference, Beyond the Market Economy.

Gerry Gold
Economics editor