boilingspot: ‘Creative Destruction’ – The Madness of the Global Economy

MediaLens - 02/06/08

Watching the corporate media report the ‘financial crisis’ is instructive. From the perspective of power, it is important that a steadying hand is applied to the tiller of news and commentary on the crisis, and the global economy itself.

And so columnist Martin Wolf took a ‘measured’ view in the Financial Times. There have been 100 “significant” banking crises in the past thirty years, he noted, making them almost routine. Authorities have had to intervene to “rescue” the US financial system from four crises over that period: the developing country debt and also the “savings and loan” crises of the 1980s; the commercial property crisis of the early 1990s; and now the subprime and credit crisis of 2007-08. As Wolf observed correctly of the banking sector: “No industry has a comparable talent for privatising gains and socialising losses.”

Wolf’s big “fear”, though, is that the crumbling financial system will destroy “the political legitimacy of the market economy itself.” Why this “political legitimacy” should not be challenged is left hanging in the air.

And what Wolf terms the “market economy” is an extreme variant of capitalism known as ‘neoliberalism’ which is massively subsidised and protected by powerful states. Again, all this is left unsaid. Wolf turns instead to bankers’ pay which, he asserts, lies at the root of the problem:

“By paying huge bonuses on the basis of short-term performance [...] banks create gigantic incentives to disguise risk-taking as value-creation.” Official intervention to regulate bankers’ remuneration is a “horrible” solution. But the alternative, an endless series of financial crises, is “even worse.”
(Wolf, ‘Why regulators should intervene in bankers’ pay’, Financial Times, January 16, 2008)

Wolf’s “solution”, however, is hugely impractical. Defining a link between bankers’ performance and remuneration would be immensely difficult, involve unlikely international regulation of global markets and require complex mechanisms to police. As this simply is not going to happen in the current political climate, given the certain massive resistance of financial interests, we can expect similar and maybe worse crises in the future.

Over at the Times, another useful gauge of establishment thinking, the title of Anatole Kaletsky’s column summed up the required pacifying message: ‘Relax. Our economy isn't manic depressive.’ Happily, according to Kaletsky’s “hunch”, it will all turn out fine: “a combination of monetary and fiscal easing, along with some regulatory changes [...] will lessen the credit crisis and prevent a world recession.” (Kaletsky, The Times, January 24, 2008). The message was buoyant, but it was also superficial.

The Independent’s economics commentator, Hamish McRae, pinned blame for the crisis simply on “mistakes”:

“Bankers, like the rest of us, make mistakes, but the scale of the mistakes, particularly in US banks, has been enormous. We won’t fully understand for some time quite how they could persuade themselves that bundles of housing loans to clearly uncreditworthy borrowers should be ranked as almost as good as government securities.”

The “legitimate question” now, asserts McRae, is “whether the continuing banking weakness has become so serious as to transfer what is still a financial market problem into a more general economic problem.” His reassuring conclusion:

“Banking troubles will be a drag on the world economy, slowing it down. But they won't stop it in its tracks.”
(McRae, ‘The markets are bad, but don’t panic just yet’, Independent, January 23, 2008)

This would be comforting news for the ‘masters of the universe’ who were meeting in Davos, many of them in sombre mood: 27 heads of state; 113 cabinet ministers; hundreds of chief executives, bankers, fund managers, economists and journalists: about 2,500 participants in all. Sean O’Grady, the Independent’s economics editor, was enthralled by the “concentrated, eclectic mix of the top slice of humanity” that “is part of the ‘magic’ of this mountain redoubt”; all twinkling under a “sprinkling of stardust” brought upon proceedings by the likes of Bono.

The stardust was clearly affecting O’Grady’s vision as he proposed we should rely on western political and corporate leaders to “balance the needs and aspirations of the old economies of the West, the emerging economies of the east and the still poor billions in the south.” (O’Grady, ‘Davos. Wealth, power and a sprinkling of stardust’, The Independent, January 22, 2008)

In the Guardian’s comment pages there was at least a glimmer of dissent from columnist Jonathan Freedland. “Turbo-capitalism is not just unfair,” he wrote, “it is dishonest and dangerous.” He pleaded: “surely this is the moment when Labour and the centre-left can dare to question the neoliberal dogma that has prevailed since the days of Thatcher.”

Freedland’s dissection was limited, though, cautiously proposing that “you could argue” that “capitalism is always [...] parasitical on the state.” What he sought was a kinder, gentler form of capitalism instead of the “turbo-capitalism” which is happy to rely “on us, the public, and our instrument, the state, when it gets in trouble.” Thin on details, he concluded weakly: “Now we should demand a say the rest of the time, too.” (Freedland, ‘The free-marketeers abhor the crutch of the state - until they start limping’, Guardian, January 23, 2008)

The above sample indicates the narrow spectrum of corporate media opinion on the ‘financial crisis.’ Viewpoints are heavily biased towards the status quo, with only occasional fig leaves of mild dissent. This is a misleading picture, avoiding scrutiny of an economic system that is both fundamentally flawed and stacked against the majority of humanity.

Financial and political elites are at pains to convince the public they +can+ get things ‘back on track’ by tweaking interest rates, ‘stimulating’ the economy and only infrequently having to intervene to make a heroic “rescue”. Thus, although the occasional financial crisis cannot be prevented - just as a flu virus might afflict a healthy body - the economy itself is presumed to be “inherently strong.” (President George W. Bush, quoted, Democracy Now!, January 23, 2008).

This is a vital illusion; the required view of wealthy investors and corporations. After all, a basic requirement for powerful authority to prevail is the mythical projection of a benign force in control of events. Western leaders and their faithful retinue in the media are deceptively reassuring about the global economic situation - because profits and power demand it. Otherwise they run the serious risk of a huge slump in public confidence in the current economic system and even in what passes for ‘democratic’ politics. Corporate reporting of the ‘financial crisis’, then, is yet another example of how reality is distorted in service to power and profit.

Boom And Bust

Despite the huge scale of yet another financial crisis, and the threat of an impending severe global economic recession, the major political parties and elite media refuse to address the possibility of fundamental weaknesses and inequality at the very heart of modern ‘capitalism.’ In reality, the current system, driven by private profit far beyond environmental sanity, is incapable of meeting the needs and aspirations of humanity.

The inherently unstable and destructive behaviour of capitalism derives from its inevitable cycles of “boom and bust.” We can see this in both theory and practice. Corporations operate for the primary benefit of their shareholders, as demanded by company law. The priority of shareholders is to maximise profits. The capital that they invest must increase in value to justify the risk undertaken. Demand for products and services thus needs to expand. The profits gained, or part thereof, can then be reinvested to generate further profit.

But the process is unsustainable because markets become saturated as consumers reach the limit of their demand capacity. Intense competition impels producers to drive down costs, especially labour, to make a profit. As profits become squeezed, and dividend-hungry shareholders threaten to take their investment elsewhere, producers become desperate to push up total sales. They pump out ever greater volumes of commodities and spend billions on advertising to boost demand. Inevitably, the flood of commodities surpasses the capacity of the market to absorb products. Sales collapse, unemployment rises and a full-blown recession ensues: this is the ‘bust’ part of the cycle. Surplus productive capacity then has to be destroyed before a new ‘boom’ can begin.

That is the theory, and it is borne out by historical experience. Since the industrial revolution, around 200 years ago in the West, boom-and-bust cycles have recurred with varying intensity. The most destructive bust occurred in the 1930s Great Depression, leading to World War Two and the deaths of over 60 million people.

Historically, as Karl Marx recognised, capitalism can also be seen as the driver of technological revolutions and in boosting human powers of production. And, at least in the West, it has been associated with past increases in the living conditions of a sizeable fraction of the population. So perhaps we should accept that capitalism, with all its flaws, +is+ the best we can do. Perhaps we should believe the official argument that governments have largely learnt to cope with boom-and-bust cycles through judicious planning.

For example, a huge crisis +was+ averted in the 1970s. However, this was only possible because, as British economist Harry Shutt explains: “the authorities were determined (as never before) to use the forces of the state - through fiscal and monetary manipulation (including massive but unsustainable government borrowing) - to try and keep the show on the road.” (Shutt, email, January 28, 2008)

But these were only short-term ‘fixes’ at best. Gerry Gold and Paul Feldman sum up:

“Attempts to resolve the simultaneous stagnation and inflation of the 1970s through high interest rates produced a recession in the US in the early 1980s. Parallel deflationary policies imposed by the UK’s Thatcher government from 1979 led quickly to a recession and a fullblown slump by 1985. Attempts to overcome this only led to a further recession in 1991-2.”
(Gold and Feldman, ‘A House of Cards: From fantasy finance to global crash’, Lupus Books, London, 2007, p. 28)

Moreover, Shutt exposes the “coping strategies” promoted over the past twenty years by government authorities in cahoots with Wall Street and the City. These have “all involved pumping up credit bubbles around various fantasies – ‘emerging’ markets, dot.com, housing - which had about as much substance as the original South Sea [Bubble] and could only be sustained even for a few years by a similar level of fraud and misinformation.” (Shutt, email, January 28, 2008)

In 1997, a major financial crisis erupted, starting in East Asia. Currencies collapsed, businesses went bankrupt and millions of people lost their jobs. Many Asian enterprises were subsequently snapped up at rock-bottom prices by corporations and investors in the West. Soon after, in 2000, the speculative bubble of investment in internet-related companies burst spectacularly. This ‘dot-com’ bust saw a lengthy recession ensue in the developed world.

Historical evidence shows, then, that governments have been largely powerless to combat capitalism’s inevitable and damaging ‘business cycles’. However, this should not be confused with the resiliency of capitalism; the system has demonstrated a repeated capacity to reform itself sufficiently to allow renewed growth and to survive further rounds of business cycles. So it would be wrong to assume that the whole capitalist system, unstable and unfair as it always will be, is on the verge of total collapse.

Official Fraud And Propaganda

An alarming symptom of what is wrong with current economics is the increasingly desperate and cynical measures taken by powerful states, corporations and investors to maintain faltering public confidence in global capitalism. Just as Enron, Worldcom and a host of other large corporations have committed accounting fraud, so governments have falsified figures on inflation, output and unemployment to present a false picture of a healthy economy. (See Shutt, ‘The Decline of Capitalism’, Zed Books, London, 2005, pp. 104-5)

For example, the US government has deliberately exaggerated GDP growth rates in order to disguise the economy’s poor performance since the mid-1970s; in the developed world, growth rates have actually declined over the past three decades. As David Harvey reports, aggregate global growth rates stood at around 3.5 per cent in the 1960s. Even during the difficult 1970s, marked by energy shortages and industrial unrest, it fell only to 2.4 per cent. But the subsequent growth rates have languished at 1.4 per cent and 1.1 per cent in the 1980s and 1990s, respectively, and has struggled to reach even 1 per cent since 2000. (Harvey, ‘A Brief History of Neoliberalism’, Oxford University Press, 2005, p. 154)

In terms of public perception, however, the authorities have largely succeeded. They have maintained the fiction that they +can+ manage the economy effectively and that global capitalism is the only game in town. How has this been possible? Shutt points to a “media campaign of uncritical propaganda and pro-market hype.” This “sustained act of mass deception (in which the establishment has seemingly come to believe in its own propaganda) has had disastrous consequences.” (Shutt, op. cit., pp. 36-37)

Those consequences include crushing levels of poverty and inequality; wars motivated by the desire for strategic control, hydrocarbon resources and economic markets; climate instability; and the most rapid loss of species in the planet’s history.

The Neoliberal Nightmare

To complement the above picture, and in contrast to corporate media coverage, we must also critically describe the political-economic process summed up by that innocuous-sounding word, ‘neoliberalisation’. This serious attack on democracy, the latest stage in advanced capitalism, took root in the Reagan-Thatcher era of the 1980s, and has accelerated ever since. Proponents of neoliberalism tell us that human well-being flourishes best within an institutional framework characterised by strong private property rights, ‘free’ markets and ‘free’ trade. But what has it meant in practice?

First, recall that after the trauma of the Depression and WW2 in the 1930s and 1940s, Western governments used Keynesian fiscal and monetary policies (named after the British economist John Maynard Keynes) to try to dampen business cycles and to ensure reasonably full employment. There was significant state-led planning, and even state ownership, of key industrial sectors such as coal, steel and cars. Governments also made huge investments in health care, education and infrastructure. As David Harvey explains, this system of “embedded liberalism” involved “market processes and entrepreneurial and corporate activities [that] were surrounded by a web of social and political constraints and a regulatory environment.”(Harvey, op. cit., pp. 10-11)

During the 1950s and 1960s, embedded liberalism delivered high rates of economic growth in the West. But in the 1970s, given the inevitability of boom-and-bust, a serious crisis of capital accumulation arose. Inflation and unemployment soared, and labour unrest threatened business interests. The free-market and monetarist financial centres, notably the City of London, had never been enamoured of the postwar welfare state and were increasingly antagonistic towards state Keynesian policies. As Harvey notes, “the nationalized industries were draining resources from the Treasury.” (op. cit., p. 57). With the oil shocks and economic stagnation of the 1970s, powerful business and political forces mobilised to set a course for the next stage of capitalism: to regain the elite class power that had been dissipated, to some extent, by postwar policies of wealth redistribution and social welfare. Neoliberalisation was born.

A wave of deregulation of financial markets swept the world, and transnational mobility of capital rapidly rose. Corporate pressure intensified on governments to create a ‘good business climate’ and to adopt neoliberal ‘reforms’ that routinely squeezed state spending. Wall Street-IMF-Treasury policy measures came to dominate US economic policy and many developing countries were driven down the neoliberal road, creating social havoc and environmental disasters. Neoliberalism became the new economic orthodoxy, exerting a powerful ideological influence in the media and academia.

The whole process has been a form of ‘creative destruction’, weakening or even breaking down existing institutions and state powers, social welfare, health care, education systems and culture – even modes of human interaction, behaviour and thought.

In some countries, certainly, there have been ‘successes’ during the initial stages of neoliberalisation in lifting people out of poverty and in raising living standards for many – just as past capitalism generally did in the West. However, this has certainly not been the motivating intent of corporations and investors, despite much pious rhetoric about ‘solving poverty’. Any localised ‘success’ has typically been achieved at the expense of people elsewhere, in regions where neoliberal ‘development’ has not been as advanced. China’s achievements, for example, have been gained to the serious detriment of neighbouring economies.

A persistent and deep-rooted characteristic of neoliberalisation has been its strong tendency to worsen social inequality, as we will see later. Social progress achieved during neoliberalisation of previously poor countries has not been sustained. Typically, state intervention has been required to maintain any semblance of a social welfare safety net – or the net has simply been left to fray in the chill winds of economic ‘progress’.

At the other end of the social spectrum, neoliberalisation has generated spectacular concentrations of wealth and power that have not been seen since the 1920s. In China and Russia, new and powerful economic elites have been created. Harvey sums up:

“The flows of tribute into the world’s major financial centres have been astonishing. What, however, is even more astonishing is the habit of treating all of this as a mere and in some instances even unfortunate byproduct of neoliberalization. The very idea that this might be - just might be - the fundamental core of what neoliberalization has been about all along appears unthinkable. It has been part of the genius of neoliberal theory to provide a benevolent mask full of wonderful-sounding words like freedom, liberty, choice, and rights, to hide the grim realities of the restoration or reconstitution of naked class power [...].”
(Harvey, op. cit., pp. 118-119)

The above is but a hint of the stark reality underpinning the ‘flourishing’ of the global economic system; a reality that is shamefully missing from broadcast headlines and newspaper front pages. The current system of economics, particularly the latest stage of “turbo-capitalism”, known inoffensively as “neoliberalism”, is built upon painful boom-and-bust cycles fuelled by corporate greed and maintained by cynical deception of the public. The costs to the planet – in terms of human suffering and environmental collapse – are staggering.

Exchange With The Independent’s Hamish McRae

In Part One of this alert, we noted an observation made by Hamish McRae, economics columnist at the Independent:

“Bankers, like the rest of us, make mistakes, but the scale of the mistakes, particularly in US banks, has been enormous.”
(McRae, ‘The markets are bad, but don’t panic just yet’, The Independent, January 23, 2008)

We asked him why he talked merely of “mistakes”, adding:

“Why are the terms of your analysis so narrow; so skewed towards the perspective of financial power?”
(Email, January 23, 2008)

As an alternative, we suggested a few observations made in Part One; in particular, that the current economic system is both innately unstable and destructive. We asked McRae why he appears to reject such a rational analysis. On the same day, he wrote back confusingly:

“Thanks - I see your point. I suppose I feel I should deal with the world as it is, rather than as it might be. Is that narrow? Well, yes if you are seeking a discussion of the merits and demerits of the present global market economy, but no if you are trying to understand and calibrate what is actually happening. I think I am probably more use doing the latter.”

We responded:

“You say: ‘I feel I should deal with the world as it is.’ Perhaps it would be more accurate to rephrase this as: ‘I feel I should deal with the world as I see it.’”

His reply, sent as he was about to head for the World Economic Forum in Switzerland:

“Not sure - let me think about it. But in all earnestness I do think that you should not discount the huge progress made in India and China in lifting people out of poverty. I visited both in recent months and am in awe. I shall have to stop this interchange as I have to pack for Davos now.”

But just how accurate is McRae’s observation of the “huge progress made in India and China”, a mantra that appears regularly in the corporate media?

India And China: The Latest ‘Success Stories’ Of Capitalism

Cheerleaders for capitalism are keen to advertise the system’s ‘successes’. Earlier, model countries were said to include Japan, South Korea, Malaysia and Thailand. But that was before the East Asian financial crisis of 1997-98. India and China are today’s poster states for capitalism.

Some progress in these countries is real. However, as we noted before, any social progress under ‘neoliberal reforms’ has not been sustained and, moreover, has been to the detriment of people losing out elsewhere in the global economy (not to mention the damage to global ecosystems).

Another important factor, glossed over in conventional reporting, is that massive state intervention and subsidies have been required to ameliorate the worst consequences of ‘shock therapy’ in following neoliberal doctrines of ‘market reforms.’ Political economist David Kotz notes that China’s strategy of opening up its economy since 1978 “bears almost no resemblance to the neoliberal approach followed by Russia.”

For example, government price controls were lifted only gradually in China. Also, the large-scale privatisation of state-owned enterprises, upon which many people depended, did not begin until 1996, 18 years into the transition. The state continued to direct and support large state enterprises, only gradually loosening its regulation as experience grew of operating in a market environment.

Public spending and public investment continued to grow, rather than shrink as in Russia. China did not privatise its banks, as Russia did, but retained a state-controlled financial system. And rather than rapidly eliminating barriers to trade and capital movements, China has retained significant controls over both. (Kotz, ‘The Role of the State in Economic Transformation: Comparing the Transition Experiences of Russia and China’, Political Economy Research Institute, University of Massachusetts at Amherst, October 1, 2004)

By keeping strict control of key elements of the economy, China managed (at least initially) to avoid the disasters that assailed other countries. India, too, has long pursued interventionist economic strategies, with the government restricting the attempted access by foreign corporations to domestic markets and enterprises.

Commentators in the corporate media seem reluctant to acknowledge all this when they talk of the supposed successes of ‘market reforms’ in China and India. Moreover, behind McRae’s impression “of huge progress” in these countries, the reality is far more disturbing.

Take India first. In 2007, the country’s rank in the Human Development Index of the United Nations Development Programme (UNDP) fell two places to 128. That put India in the bottom 50 of the 177 nations examined. P. Sainath, rural affairs editor of The Hindu newspaper, points out the disturbing context of the statistics:

“El Salvador, which saw a bloody civil war for over a decade from the 1980s, ranks 25 places ahead of us at 103. Bolivia, often called South America’s poorest nation, is 11 steps above us at 117. Guatemala, nearly half of whose citizens are poor indigenous people, saw the longest civil war in Central America. One that lasted close to four decades and which saw 200,000 people killed or disappear. That too, in a nation of just 12 million. Guatemala ranks 10 places above us at 118.”
(Sainath, ‘India 2007: High growth, low development’, The Hindu, December 24, 2007)

Sainath adds, with grim humour:

“India rose in the dollar billionaire rankings, though. From rank 8 in 2006 to number 4 in the Forbes list this year [...] In the billionaire stakes, we are ahead of most of the planet and might even close in on two of the three nations ahead of us (Germany and Russia).”

As India’s new billionaires snap up palatial homes and luxury yachts, desperate conditions for the nation’s farmers have led to an epidemic of suicides. Vandana Shiva, director of the Research Foundation for Science, Technology and Ecology, refers to the appalling suicides of more than 40,000 Indian farmers since 1997 as “genocide”:

“This genocide is a result of deliberate policy imposed by the World Trade Organisation and implemented by the Government. It is designed to destroy small farmers and transform Indian agriculture into large-scale corporate industrial farming.”

Farmers are in despair over crippling debts from rising production costs and falling prices, both linked to the corporate-led imposition of ‘free trade’ in agriculture. Shiva warns of the growing forced dependence on hybrid and genetically modified seeds which are costly and cannot be saved. These consequences derive from the corporate policy of privatising seed supply and the drive towards multinational seed monopolies. (Special correspondent, ‘Farmers’ suicides nothing but genocide, says Vandana Shiva’, The Hindu, May 9, 2006)

So India’s ‘success’ has come at a huge social price. What about China?

“A Large Statistical Glitch”

A new World Bank study has revealed that China’s economy is considerably smaller than had been thought, perhaps by as much as 40 per cent. “What happened was a large statistical glitch,” reported the New York Times. But it’s a glitch that has huge repercussions:

“Suddenly the number of Chinese who live below the World Bank’s poverty line of a dollar a day jumped from about 100 million to 300 million.” That is the same size as the entire population of the United States. The new figures mean that the size of India’s economy, too, has probably been exaggerated until now. “And, by the way, global growth has very likely been slower than we thought.”
(Eduardo Porter, ‘China shrinks’, New York Times, December 9, 2007).

Economist Martin Hart-Landsberg notes that China’s alleged success is “at the expense of economic problems elsewhere”:

“[W]hile investment rates are very high in China, they are low and falling in most of the rest of East Asia. Their economies have become increasingly dependent on exporting to China and to succeed they have been forced to keep wages low.”
(Email, January 26, 2008)

China has largely failed to generate new jobs: an endemic feature of neoliberalism. Indeed, a 2004 study by Alliance Capital Management reported that manufacturing jobs are being +eliminated+ faster in China than in any other country. Between 1995 and 2002, China lost more than 15 million factory jobs: 15 per cent of its total manufacturing workforce. (Jeremy Rifkin, ‘Return of a Conundrum’, The Guardian, March 2, 2004)

Even by the World Bank’s own analysis, China’s poor have been growing poorer as the country’s economy ‘booms.’ The real income of the poorest 10 per cent of China’s 1.3 billion people fell by 2.4 per cent in the two years to 2003. During this time the economy was growing by nearly 10 per cent a year. Over the same period, the income of China’s richest 10 per cent rose by more than 16 per cent. (Richard McGregor, ‘China’s poorest worse off after boom,’ Financial Times, November 21, 2006)

Tragically, studies of China’s health indicators show a slowdown or even reversal of trends. A report in 2005 “concluded that China’s rates of improvement in life expectancy were lower than those of East Asia and the Pacific region as a whole in every decade other than the 1960s, and fell below the world average in the 1990s. They observed a similar trend for infant mortality, noting that China’s advances were again outpaced by those of high income countries and other East Asian and Pacific states.” (Sanjay Reddy, “Death in China, Market Reforms and Health,” New Left Review, 45, May/June 2007, p. 62)

Hart-Landsberg warns that “past health gains from immunizations, water and sewer infrastructure, education, etc. may now be exhausted. And as marketization continues, the social infrastructure is being destroyed, with the consequence that problems are emerging for most Chinese. Social support/public health care system is not there and health care is now a market process. Many cannot afford it as they have to pay for access to it.” (Email, January 26, 2008)

On top of this working class misery, inequality between China’s rich and poor is appalling and is actually getting worse. The Asian Development Bank studied the degree of inequality, using the popular Gini coefficient, in 22 East Asian developing countries. It found that China had the second highest degree of inequality, trailing only Nepal (Asian Development Bank, 'Inequality in Asia, Key Indicators 2007, Special Chapter Highlights', p. 3 ).

China’s tragic transformation from one of the most equal, to one of the least equal, countries is even more striking if we switch our measure of inequality from the Gini coefficient to income ratios; in particular, the earnings of the top 20 per cent relative to the bottom 20 per cent of the population. Using this measure, China had by far the highest growth in inequality (Ibid., p. 7). Sadly, Hart-Landsberger warns that there is “every reason to believe that these [official] statistics strongly underestimate the degree of inequality.” (Email, January 26, 2008)

There are further ‘hidden’ costs to China’s rapid growth: rising pollution, destruction of ecosystems and the heightened threat of climate chaos. Future generations will bear the brunt of these ‘externalities.’ The Worldwatch Institute reported at the end of 2006 that China had slid down the annual Climate Change Performance Index (CCPI), a measure of a country’s climate protection efforts, due to its rising emissions of carbon dioxide. China ranked 29th out of 53 countries in 2006, dropping to 54th out of 56 in the 2007 update. (Hua Zhang, ‘China’s Climate Change Performance Worsening’, Worldwatch Institute, November 23, 2006 )

The history of neoliberal ‘reforms’ suggests things can only get worse.

Concluding Remarks

The dominant system of economics is unstable, inimical to social justice and lethally damaging to the environmental support systems on which we all depend. A major failure in professional journalism has been the refusal to analyse this; or even to report that real growth rates in the developed world have been declining since the 1970s. Instead, corporate-employed journalists and mainstream analysts frequently extol the alleged spectacular achievements of an ‘unparalleled’ rise in wealth.

We referred in Part One to the desperate attempts by governments to manipulate official statistics to hype the ‘success’ of global capitalism. Do commentators in the media really believe that a civilised society should tolerate an economic system so dependent on deception to maintain public ‘confidence’ in ‘free’ and ‘open’ markets?

The media’s omission of rational perspectives on the global economy is particularly galling in the case of the publicly-funded BBC, which professes a “commitment to impartiality.” This “commitment” supposedly means that “we strive to reflect a wide range of opinion and explore a range and conflict of views so that no significant strand of thought is knowingly unreflected or under represented.” (BBC, Editorial Guidelines; accessed January 23, 2008). As on so many other issues that we have examined in media alerts over the years, this is simply BBC rhetoric.

Meanwhile the threat of global economic recession, the horrific divisions between rich and poor, and worldwide climate chaos, threaten to engulf us all.