Neoliberalism on Trial: The Rise of the Fast-Pased Linear Economy
By lucas@endneoliberalism On 4 Jun, 2017 At 08:10 PM | Categorized As Odious Debts | With 0 Comments

Economic growth is a delusion under a Linear Economy. In just half a century, we have depleted the world’s oil, water, rain-forests, fisheries, and every kind of resource that sustains our consumer-centered lifestyle.

Global GDP skyrocketed from $1.34 trillion to $60.6 trillion in only four decades; GDP, however, accounts for each and every economic transaction, whether it be diabetes treatment, the cleaning of oil spills, or even war. Paul Hawken exposes in Natural Capitalism that “$2 trillion of the $9 trillion spent in the US annually is wasted, meaning that money spent does not give value, while half of the entire GDP is attributed to some form of waste.”[xi] For a sense of how linear the global economy is, McKinsey reports that about 80 percent of the $3.2 trillion worth of materials the world uses each year is not recovered. As of 2017, the European Union has lead the movement toward a more Circular Economy and implemented various policies that encourage product reuse, remanufacturing, and recycling; however its circularity rate reached only 11%. This means that 89% of resources extracted are wasted in a short life-span. The problem will only get worse under this economic equilibrium, where global demand for limited resource stocks is expected to reach 130 billion tons by 2050, up from 50 billion in 2014.

The Story of Stuff video gives a very good picture of how a Linear Economy works and how the real costs of products are externalized. A Linear Economy is one in which resources are extracted, turned into manufactured goods, and discarded due to perceived or technological obsolescence. Materials go to landfill instead of being recovered, and businesses manufacture products from virgin resources only to end up in the landfill in a short span.

In other articles, Neoliberalism on Trial showed how military coups deposed of democratically elected governments  and also  IMF programs bailed out those who did business with dictators.   This section will show these imperialistic events created a market equilibrium that supported the Linear Economy with access to cheap resources and labour.

How Military Coups and IMF Programs Sped the Linear Economy

Mineral exploitation in Latin America grew 400% between 1990 and 1997[i].  The profits all went to translational mining companies, while the exploited countries were left in shambles and continue to be wrought with extreme levels of poverty until this day. Today, Peru is the world’s fifth producer of gold, first in silver, third in copper and zinc, and fourth in lead, but 51% of its population are poor and 24% live in extreme poverty [ii]. Similarly, mining exploration projects in Argentina went from 18 at the beginning of the decade to 614 in 2012. Argentina now ranks 10th in gold and silver production, it is the third-largest producer of lithium, has vast uranium deposits, and is set to produce 2.4Mt of potash in 2012.[iii]  A mining law passed during the Menem government, Law 25.196, determines the number of royalties for the provinces at 3%.[iv]  Maristella Svampa reports that “[m]ore than half of the mining projects in Argentina are located in the provinces of San Juan, Catamarca, La Rioja, Salta, and Santa Cruz, which together have the highest poverty rates of the country”.[v]  Argentina is also the largest exporter of Monsanto’s soy. It took 25 years of dictatorship and IMF programs for Neoliberalism to destroy Argentina’s economy. Left with large odious debts and a weak local industry, the Kirchner government did what most Neoliberal governments do:  allowed multinationals in soy and mega-mining sectors to rip off the cheap resources that the Neoliberal market equilibrium had left.[vi]

Of Brazil, Jordi Miro reports that “mining production reached an estimated $11 billion in 2011, 20 percent higher than the previous year; while Ecuador is projecting 5.35 percent growth in its gross domestic product in 2012 as a result of gold and silver mining.”[vii]

Africa is the other major region that specializes in exporting resources. Congo’s mineral reserves include gold, diamonds, copper, cobalt, precious woods, diamonds, and coltan. Nevertheless, 80% of Congolese live in extreme poverty conditions[viii] .Ines Benitez reports in an article titled “Two Children May Have Died For You To Have Your Mobile Phone” that Congo enjoys approximately 64% of worldwide cobalt reserves, the material used in electronic equipments, and that “the extraction of cobalt contributes to maintaining one of the bloodiest armed conflicts in Africa, which has led to more than five million deaths, massive displacements of the population, and the rape of 300,000 women in the last 15 years, according to human rights organizations”.[ix]  The Financial Times reports that “Ivory Coast cocoa exports account for about 40% of global production. Cocoa exports contributed to as much as 30 per cent of the government military expenditure during one six-month period between 2002 and 2003 and has provided about $30 million a year to rebel groups since 2004.” [x]

In Ghana, Jason Tockman reports that mining, which has increased fivefold in just 3 years, has destroyed sixty percent of rain-forests in Ghana’s Wassa West District and has also polluted surface and groundwater with cyanide and other chemicals.[xi]

In Uganda, forests covered 40 per cent of the country in the 1970s and only 20 percent by 2007. [xii]  Journalists Danielle Knight and Abid Aslam report that “Brazil, Russia and Indonesia are home to 47% of the world’s remaining ancient forests… Spending cuts envisioned in the Brazilian government’s deal with the IMF included a possible 90-percent reduction in Amazon conservation programs and a two-thirds decrease for rain-forest protection and efforts to demarcate lands belonging to indigenous people… Russia is considering cutting Siberian old- growth forests – previously considered too remote to be commercially viable… Indonesia, under IMF pressure to raise revenues, has lifted a ban on log exports and slashed export taxes from 200 percent to 30 percent. The country reportedly also plans to expand cash-crop plantations to 3.9 million hectares from 2.4 million hectares.”[xiii]

Chad began pumping crude in 2003, but most of its people remain poor. Betel Miarom reports that “in less than three years of exploitation the consortium has earned $5 billion for a $3 billion investment. In contrast, Chad has just received crumbs: $588 million, just 12.5 percent.”[xiv]  The pipeline that brings the oil from Chad to Cameroon destroyed local fisheries, water sources, and cocoa plantations.

Similarly, the World Bank forced Bangladesh to develop a shrimping industry for export in order to pay the debts incurred by the previous military coup, and after selling its coastal land in the 1980’s, the shrimp industry destroyed mangrove forests and local agriculture that depended on these forests.

In Argentina, 162 mining projects are located within the glacier zone.[xv]  Law 26.418 was voted unanimously by Congress to protect the glaciers from mining operations, but was vetoed by the “anti-Neoliberal” Cristina Fernandez de Kitchner, making it commonly known as the Barrick Gold veto. Le Monde reports that “Open-pit mines make heavy use of explosives, cyanide and fresh water. La Alumbrera consumes between 60 and 100 million liters of water per day.”[xvi]

For having a comparative advantage in poverty, Africa has become the new site for dumping toxic e-waste that, in a sad twist, is produced using minerals from its own land. A 2011 report by the UK Environmental Investigation Agency shows that “an estimated 75% of e-waste generated in the EU, equivalent to 8 million tons a year, is unaccounted for”[xvii]. The United Nations Development Program found that between 650,000 and one million tons of domestic e-waste are now being generated each year in Benin, Ivory Coast, Ghana, Liberia and Nigeria.[xviii]  The impact on the environment and the health of the people is disastrous, as e-waste is placed in landfills where people burn the plastics to recover the valuable metals –which therefore release cancerogenous fumes and then leave the toxic junk on the ground and on river beads for children to mine what the teenage scavengers missed. According to a UN report titled “Recycling — from E-Waste to Resources”, global e-waste generation is growing by about 40 million tons a year.[xix]

The impact on humanity is as detrimental as the impact on the environment. The richest 1% has snatched 40% of global wealth, leaving 80% of humanity living on less than $10 a day, and 22,000 children to die each day from poverty related causes[xii]. Eight million children dying every year from policies inflicted during the totalitarian Neoliberal era sadly puts the Holocaust second by far.

The astonishingly increasing levels of global poverty and environmental destruction are an inherit characteristic of a totalitarian monopoly. Instead of fostering a dynamic trading system that expands from neighboring countries to diverse global networks, a system of heavily subsidized trading posts that serve monopolistic multinational corporations is emplaced.

The levels of economic inefficiency experienced by increasing environmental destruction and human degradation outweigh any benefit that consumption of new technologies provides to humanity. Rampant consumerism is facilitated by a market equilibrium where prices do not reflect the real values of production because totalitarianism heavily subsidizes the multinational corporations. With vast resources and pools of labour made cheaply available by force, everything is discarded quickly and the system needs to destroy new virgin lands to keep the wheels of consumerism running. Run by and for the One Percent, Neoliberalism counts new production as profit rather than an opportunity cost. Neoliberalism considers externalities as a necessary evil, but they are the inherit by-product of a global economy that is completely detached from economic reason and fails  to abide by and search for freedom through local development.

The corporations that control the world today are so inefficient that they would not exist under an evolved and dynamic capitalist system where the interaction of real supply and demand determine prices.

What communism had yet to destroy, Neoliberalism destroyed in its stead. The IMF played a direct role in this crime against nature and civilization, not by advocating a flawed capitalist ideology, but by subverting businesses and competition through the use of force in order to promote the monopoly of the One Percent.

Neoliberalism is not an American Empire, but a corporate one. The American people suffer the same living conditions as the rest of the world. The answer to why the average American is working more hours for a smaller income can be explained in simple economic theory terms: a larger supply of cheap labour, energy, and resources, made artificially possible through corporate friendly dictators and decades of bailouts to international banks, allowed corporations to move their factories abroad and destroyed the prosperous way of life that the United States had enjoyed until the late 1970′s.


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