Friday, March 08, 2013

The age of profit has reached its limit

In the wake of the worldwide scandal of meat products boosted with horse, investigations into contaminated cakes sold by IKEA are certain to reveal more links in a contaminated global food chain. The actual cause will stay hidden, however.

Chinese inspectors discovered high levels of coliform bacteria in cakes exported by a Swedish supplier, Almondy, to IKEA outlets throughout the world. Close to two tonnes of the product were destroyed and it was withdrawn from sale in 23 countries.

Coliforms can be found in soil, vegetation, water and everyday human environments, as well as in the faeces of humans and other warm-blooded animals, though so far at least, there’s no report suggesting the presence of human intestinal bacteria.

As public safety concerns grow and more inspections are carried out, the physical causes will look different under the microscope as each new case of a polluted product comes to light. But the true cause common to them all can’t be seen through any laboratory equipment.

In the capitalist economy, the over-riding concern is for profit. If the shareholders in a company, now mostly giant investment funds,  see their unearned incomes – their shares in the profits extracted from the production and sale of commodities – falling, they move their capital elsewhere.

So to stay in business every company has to continuously compete to attract investors by driving the rate of profit up, and one of the key ways they do that is by reducing the costs of production.

As we’ve seen, the price of horsemeat is less than a quarter the price of beef – even the cheapest, worst quality beef. So there’s really no contest. The temptation to fraudulently change the composition of a product using less and less costly ingredients is irresistible.

It’s a law governed process that drives the dominant capitalist system of production in all its guises. Control systems involving regulations and inspections attempt to keep a lid on it, but they are always overwhelmed by the inbuilt inevitability of polluted, debased, denatured production and its consequent despoliation of the planetary ecosystem.

There’s another law, a universal. Everything – including every social system – is governed by specific laws that regulate its origin, existence, development, passing away and perhaps, as the science of evolution tells us, its replacement by one more suited to the changing circumstances. 

The profit which defines capitalist society is derived solely from the work people do in creating products. The cost of that labour lies at the heart of the problem. Competition means that the cost of labour must be continuously reduced. 

Reducing the cost of food helps to reduce the cost of labour. So there’s a downward spiral: competition demands cheaper food, cheaper food means lower wages, people on lower wages must have cheaper food.

It’s been a brilliantly successful strategy for a couple of centuries, alternating periods of rapid explosive growth with sudden, brutal and destructive contractions, extending its reach to every part of the globe and overwhelming all opposition.

But there are limits. There always are. That’s another universal law of nature. 

So when the process of competition finds IKEA feeding bacteria that occurs in sewage to its customers worldwide you know that the social system has arrived at a limit of its development.

Fortunately, nature has ensured that the replacement for capitalist society has been developing in opposition to it for some considerable time. It takes the form of democratically-run, not-for-profit organisations like worker-owned cooperatives, credit unions and community banks. These are mushrooming in the United States, of all places, as Marjorie Kelly explains.

The author of the book Owning Our Future: The Emerging Ownership Revolution: is right when she says: “When economic relations are designed in a generative way, they’re no longer about sole and despotic dominion. Economic activity is no longer about squeezing every penny from something we imagine that we own. It’s about being interwoven with the world around us. It’s about a shift from dominion to community.”

It’ll take a co-ordinated push to end the age of profit, but it can be done. It has to. 

Gerry Gold
Economics editor

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