Via Campesina position on financial crisis
The food price crisis and the financial crisis are the result of years of ultra-liberal deregulation that can be traced back to the crimes against humanity committed against native Americans and Africans to maximise profit. Investors and speculators looking for the highest profits have used “financial engineering” in order to move large amounts of capital between countries and continents. These speculative, so-called "financial products or services" brought in huge profits but nothing was produced. Their value increased as a result of mere expectation that the financial system would continue to overvalue these "products" and "services."
With the de-regulation of the financial system came a disconnection from a "real economy" based upon agriculture, manufacturing, and the hard work of citizens. The system became based upon a speculative bubble that relied upon the irresponsible trade of "products" and "services" on the financial markets. When this bubble burst, it affected the global economy from top to bottom, not just the financial markets and the banks.
What does this financial-economic crisis mean for peasants, food and
agriculture?
When the industrial sector slows down, unemployed workers return to the land. This is happening now, in all corners of the globe: China, Mexico and Indonesia have all seen citizens – women and men – moving back to the rural areas when jobs in the city were lost. In principle the return of people to the land is something to be welcomed. However, without support from the national governments, rural families are paying the price of this economic debacle. They have lost the income from the city workers and must scrounge to find land and additional resources to provide for the returned workers. It reinforces the ongoing crisis in the agricultural sector where thousands of farmers in desperation commit suicide. Therefore we consider the current crisis a crime against humanity.
This crisis will cost billions of dollars and in the end will have a heavy impact on national budgets. For example, in 2008 and 2009, under both the Bush and the Obama administrations, the U.S. government has spent nearly $1.4 trillion dollars to help bail out the banks. This will lead to increased taxes that will disproportional burden the poor and the middle class, and decreased spending for necessary public services. This deterioration especially affects women and children, particularly in rural areas where due to the lack of access to land and resources they do not have easy access to healthy foods or medical care. Farmers and peasants are being squeezed by the lack of available credit due to the collapse in commodity prices. In the U.S. many farmers face a much tighter credit market due to changes imposed by the banking industry.
Because of the collapse of the financial speculative markets, investors are now looking for new ways to make large, quick profits. Some investors are engaging in massive, world-wide land-grabbing, the purchasing of agricultural lands in developing countries. This drives up the price of the land, pushing peasants off their farms, and putting developing countries in the position of having to put easy capital over their long-term agricultural interests. Additionally, control over biomass production such as agro-fuels increases the pressure on land.
It is the poor who are already bearing the brunt of this crisis. Rural families must absorb laid-off workers, employees are seeing their wages cut, citizens will pay higher taxes, children will be taken out of school to work, and millions will simply lose their jobs and sources of income. Meanwhile the banking system is rescued by governments who spent billions of dollars in bailing them out.
Peasants' and farmers' movements are facing increased criminalization simply for defending their right to live and to be treated as human beings.
No need for false solutions
At the moment, governments are only concerned with stopping the slide, propping up the banks, and increasing GDP and global growth, while ignoring the pressing environmental concerns of a limited resource base and the climate change crisis.
The stimulus packages currently adopted by various countries and institutions to increase consumption are mainly a response to abusive corporate lobbies such as the car industry. By making only some minor changes, like producing higher mileage vehicles, these packages take minor and insufficient steps toward addressing the environmental challenges. The G20 stated that in total 5000 billion dollars would be spent in order to "save and create millions of jobs that otherwise would have been destroyed" (2). The G20 states that it wants to "accelerate the transition to a green economy" but no concrete measures are mentioned. Governments worldwide are encouraging the same system that has led to climate change, pollution, and global environmental degradation. Instead of leaving the initiative to the G20, the UN should have taken this opportunity to re-orient the global economy away from the current endless and wasteful consumption.
The fight against the crisis has turned into a crusade against "protectionism" while in reality it is the right and obligation of all governments to actually "protect" their citizens. Policies such as tariffs to promote local production and protect infant industries can actively benefit people and should not be forbidden, especially by developing countries trying to compete against unfair agriculture and trade policies.
The new policies and regulations will not make any long term change in the system. The mindset remains the same. Controls over the financial sector may be tightened, but fundamental structures remain unchanged: diversion of wealth from the poor to the rich will continue as labour is exploited. In time, new crises will be generated by the financial mono-culture of big banks and investment funds.
Additionally, the current policies consider agriculture as any other business. They ignore peasant-based agriculture and the importance of people-centred food systems. Commodity crops like soy, corn, and the burgeoning agro-fuel market will drive agricultural investment, just as it has in the past. The devastating impacts of industrial agriculture and plantation production will continue the process of environmental destruction. The G8 on agriculture in Italy presented the initiative of the "Alliance for a Green Revolution in Africa" (AGRA) as a key aspect of jump-starting the global economy, while ignoring the history of the first Green Revolution of increased inequalities, dependency, and environmental degradation.
The G20 in London agreed to give the International Monetary Fund (IMF) 500 billion dollars in extra funds for loans to countries that face difficulties because of the crisis. This renewed focus on the IMF as "lender of last resort" removes economic control from the individual countries and places it in the hands of IMF economists who are proponents of strict neo liberal reforms. The IMF states that fiscal stimulus is needed; however, in some program countries, the IMF is still pushing the old policy stipulations: reduce public spending, cut salaries in the public sector and eliminate subsidies (3). We have already seen how these policies affected developing countries in the 1980s and 1990s: growth at the expense of the rural poor.
The new programs do nothing to change the orientation of the funds. They reinforce the impunity of those who have most profited from the system while punishing further those who have been most impoverished by their policies. They ignore peasant-based agriculture while forcing programs to support corporate and export-based agriculture.
What is needed now as a response to this crisis?
Given the immensity of this unfolding crime against humanity we believe that there are no solutions under the prevailing global financial architecture. Meaningful policies cannot be achieved without radically reforming the international banking system (1).
The financial sector should be at the service of society instead of squeezing people of the
wealth for the benefit of the few who control the system. Strong state regulation and a ban on speculation are necessary. The ongoing concentration in the bank sector has to be halted and big banks must be dismantled. It is unacceptable that financial institutions can become "too
big to fail."
Those who are part of the crisis, such as the IMF, should not be expected to resolve it. The UN should play a central role and facilitate an in-depth analysis of this crisis, including the participation of key actors in civil society. Solving this crisis must take place in democratic and representative forum, where participants from all nations can participate.
We have to stop the privatisation of land, water, seeds and other resources, as this process increases the possibilities for speculation in addition to being inequitable. Instead of making the poor pay, those who own most of the capital and who have accumulated so much profit over the last years must cover the losses through a specific tax on their capital.
We need to continue to build on our own autonomy in order to make us less dependent on this predatory (international) financial system. We should strengthen our own alternatives developed through the "economy of solidarity" where capital is put at the service of people and not the other way around. We should develop our collaboration with the solidarity banks to build our own system based on cooperation and mutual responsibility, giving priority to local, community based lending models on a non-profit basis.
This crisis is the expression of a deep crisis of the system
The practice of transnational companies and those in power blinds them to the criminal nature of the injustices that they create. They impose and reinforce an economic system that is based on the plunder of resources and an absolute "right to profit." It is based on unlimited growth and a systematic theft of wealth from the poor to the rich. What was once a public good becomes a commodity; to the point where humanity itself is being turned into commodities. Governments create policies to please their industries and the private sector, and not their citizens and workers. It is a violent system that creates conflict and war over limited resources. Our food system and environmental heritage are quickly becoming degraded.
We cannot expect that those who caused this problem have an interested in resolving it. The G8, the World Trade Organisation, the World Bank and the International Monetary Fund are trying to control the solutions and maintain their influence. As social movements, we must continue to mobilize against false solutions and take the initiative to make our own true solutions real!
We have paid enough for their crisis!
No more public funds to banks, export crops or agro-fuels!
Commons good are for people, not for profit!
Bamako, 23 June 2009
- Bhumika Muchhala in the South Bulletin, 24th of April 2009, Issue 36