Global Capitalism And Livelihoods Denied: Whipping India’s Farmers Into Submission

Colin Todhunter

In India, there is a push to drive people from the countryside into cities. The mainstream narrative implies that urbanisation is natural in the evolution of societies and constitutes progress. The World Bank wants India to relocate 400 million people to urban centres. Former Chief Finance Minister P. Chidambaram once stated that 85% of the population would eventually live in cities, which would mean displacing many more than 400 million people given that the country’s population is heading towards 1.3 billion and that over 60% reside in rural India.

It is easy for some to conflate urbanisation and progress and to believe this is how to ‘develop’. But societies do not ‘evolve’ in a unilinear way. Policy makers merely look to prosperous countries and see the bulk of their populations living in cities with a small percentage working in (heavily subsidised and an unsustainable system of) agriculture. This is what ‘we’ must do, Indian politicians then say, spurred on by World Bank directives.

The route to capitalism and urbanisation was not ‘natural’ in Europe and involved the unforeseen outcomes of conflicts and struggles between peasants, landowners, the emerging class of industrialists and the state. The outcomes of these struggles resulted in different routes to modernity and levels of urbanisation.

In the book ‘The Invention of Capitalism’, economic historian Michael Perelmen lays bare the iron fist behind the invisible hand which  whipped the English peasantry in a workforce willing to accept factory wage labour. In this article by Yasha Lavene, it is noted that English peasants didn’t want to give up their rural communal lifestyle, leave their land and go work for below-subsistence wages in dangerous factories being set up by a new, rich class of industrial capitalists.

A series of laws and measures were designed to push peasants out of the old and into the new by destroying their traditional means of self-support. Perelman outlines the many different policies through which peasants were forced off the land, not least the destruction of the access to common land by fencing off the commons.

Early capitalists and their cheerleaders complained how peasants were too independent and comfortable to be properly exploited. Indeed, many prominent figures advocated for their impoverishment, so they would leave their land and work for low pay in factories.

In effect, peasants were booted off their land by depriving a largely self-reliant population of its productive means. Although self-reliance persisted among the working class (self-education, recycling products, a culture of thrift, etc), this too was eventually eradicated via advertising and an education system that ensured conformity and dependence on the goods manufactured by capitalism.

‘Development’: facilitating capital

“We build cyber cities and techno parks and IITs at the cost of the welfare of the downtrodden and the environment. We don’t think how our farmers on whose toil we feed manage to sustain themselves; we fail to see how the millions of the poor survive. We look at the state-of-the-art airports, IITs, highways and bridges, the inevitable necessities for the corporate world to spread its tentacles everywhere and thrive, depriving the ordinary people of even the basic necessities of life and believe it is development.” – Sukumaran CV 

Today’s affluent sections of urbanised Indians are often far removed from the daily struggles of the farmers for whom they depend on for their food. While inequalities spiral, many city dwellers echo similar sentiments of the cheerleaders of early capitalism described by Perleman when they say loan waivers for farmers are a drain on the economy and any subsidies given to them or the poor in general just encourages unproductivity or fecklessness.

Neoliberal dogmatists are quite content to sign a death warrant for Indian farmers.

Despite nice-sounding, seemingly benign terms like ‘foreign direct investment’, ‘ease of doing business’, making India ‘business friendly’ or ‘enabling the business of agriculture’- behind the World Bank/corporate-inspired rhetoric, policies and directives is the hard-nosed approach of neoliberal capitalism that is no less brutal for Indian farmers than early industrial capitalism was in England for its peasantry.

Like the English peasantry, India’s farmers are also being booted off the land.

Let us take a look at what has happened to India’s farmers. Trade policy and agriculture specialist Devinder Sharma  has written much on their plight (access his writing here). GDP growth has been fuelled on the back of cheap food and the subsequent impoverishment of farmers. The gap between their income and the rest of the population, including public sector workers, has widened enormously. Rural India consumes less calories than it did 40 years ago. And corporations receive massive handouts and interest-free loans because it supposedly spurs job creation (which it has not), while any proposed financial injections (or loan waivers) for agriculture (which would pale into insignificance compared to corporate subsidies/written off loans) are depicted as a drain on the economy.

In short, although farmers continue to produce bumper harvests, the impact of underinvestment, lack of a secure income and effective minimum support prices; the undermining of the public distribution system; exposure to cheap imports courtesy of rigged international trade; the hardship caused by deregulation and profiteering companies which supply seeds and proprietary inputs; the loss of state agricultural support services; and the impacts of the corporate-backed/written Indo-US Knowledge Initiative on Agriculture, have made farming financially non-viable for many.

It is a deliberate strategy: part of the plan to displace the existing system of production with one dominated from seed to food processing to retail to plate by Western corporations. Independent cultivators are being bankrupted, land will be amalgamated to facilitate large-scale industrial cultivation and those that remain will be absorbed into corporate supply chains and squeezed as they work on contracts, the terms of which will be dictated by large agribusiness and chain retailers.

Between 300,000 and 400,000 farmers have taken their lives since 1997 and millions more are experiencing economic distress. Over 6,000 are leaving the sector each day. And yet the corporate-controlled type of agriculture being imposed and/or envisaged only leads to degraded soil, less diverse and nutrient-deficient diets, polluted water and water shortages and poor health.

In addition to displacing people to facilitate the needs of resource extraction industries, unconstitutional land grabs for special economic zones, nuclear plants and other corporate money-making projects have forced many others from the land.

Various reports have concluded that we need to support more resilient, diverse, sustainable agroecological methods of farming and develop locally-based food economies. Indeed, small farms are more productive than giant industrial (export-oriented) farms and produce most of the world’s food on much less land.

Instead, in India, the trend continues to move in the opposite direction towards industrial-scale agriculture for the benefit of Monsanto, Cargill, Bayer and other transnational players. Is this the future India needs, with a fraction of farmers left on the land, trapped on an environmentally unsustainable chemical-GMO treadmill?

While whipping farmers, tribals and the unorganised sector into submission by depriving them of their livelihoods by one way or another, India’s political elite blindly adhere to the mantra that urbanisation equals progress and look to the West, whose path to ‘development’ was based on colonialism, eradicating self-reliance and beating the peasantry into submission. There was nothing ‘natural’ or ‘progressive’ about any of it. It involved the planned eradication of peasants and rural life by capitalist interests and the sucking of wealth from places like India.

In India, the bidding of capital is these days done through its compliant politicians, the World Bank, the WTO and lop-sided, egregious back-room deals written by corporations.

Cyber Security: Going Beyond Data Protection

S.G. Vombatkere

Threats to databases

In an age of exploding data, information and knowledge, both human and machine, cyber security is as much a necessity for personal privacy as it is for internal and external national security, or for day-to-day economic activities and operation of social and economic infrastructure systems. Cyber security also constitutes the defensive part of modern warfare which is intimately connected with the blood-and-guts, on-the-ground military operations.

Thus, the threats to privacy and to national security from loss, leakage or corruption of data whether due to ignorance, inadvertence or cyber attack, need to be understood clearly.

Vulnerability to cyber attack is a function of the inter-connectedness of personal and institutional computer systems, and the integrity and quality of cyber defences at every level. Data has no geographical or political borders. The border for data is essentially the physical border formed by the physical infrastructure of installed hardware and the electronic boundary of the IT system or database within which the system manager has control.

Cyber attack has come into public spaces precisely because of increasing interconnectedness between systems or autonomous data silos, as internet users proliferate at the staggering rate of eight new internet users every second. This is even while there are allegedly 250,000 new computer viruses being created every day, which have the potential to infect private and institutional systems from around 300,000 infected websites, which can and do change every day. That gives an idea of the threat lurking behind every single keystroke of every computer which is connected to the internet.

Cyber criminals are not only professional in their capabilities, but are well organised, and even advertise their profession. There are ads for hacking services, which can be purchased by, say, a business person, to knock out business competitors by obtaining information or disabling systems for a critical period or effectively making the system inoperable by deliberately overloading it with inputs – called DDOS, standing for deliberate denial of services. DDOS can cost the purchaser of the hacking service $5 to $100 per hour or more depending upon the built-in security of the system, the risk of discovery, the benefit that the customer would get out of the DDOS to his business rival, etc.

While hacking into a system to extract (copy), corrupt or delete data is fraught with the risk of being traced, arranging DDOS is perhaps relatively safer. Alternatively, the hacker can be employed to infect a target system with malware. Such advertised services are themselves difficult to trace to a physical address, since the operators are skilled geeks who could be a next door neighbour or living on another continent.

Reportedly, malware sales and distribution to potential and in-practice cyber criminals is a thriving business. For example, a package named Black Hole Exploit Pack complete with full technical support and documentation, enables a newcomer to set up his own malicious hacking server.

Further, computer systems can be invaded by planting or embedding hardware at some stage of the manufacturing process or inserting malware during system installation. This provides a so-called “backdoor” to the system, unknown to the user, permitting individual criminals, corporate competitors, intelligence outfits or deep state actors unauthorised – and often undetected – entry to the system, for their respective nefarious purposes.

Software firewalls can prevent unauthorised entry into systems, but it must be understood that an engineer working in even a reputed firewall vendor company could have illicit and secret association with a hacking facility at the individual level.

Even otherwise, hacking is a part-time or full-time occupation which is open to even the very young, like 8-years of age. Some hackers do it for kicks – supposedly harmless – or to deliberately harm some particular person or organization, while others do it for making money.

All it requires for hacking a system is some self-acquired skill on computers (not very difficult for today’s youngsters born to the keyboard), motivation to hack (monetary incentives or personal satisfaction aims), and time (part-time after school or work is adequate) to succeed. The world over, cyber experts admit that a system is safe only until it is hacked, and the truth of this admission is that very high security systems like NASA, CIA, FBI etc. have been hacked or had malware injected into them.

Hard truth

Thus, cyber attack can be on an individual computer, a system, a network, or a server. But the threat is not only through the internet. There are many software devices and tools for physically gaining access to a system or database.

Most cyber criminals skilfully cover their tracks to escape detection and arrest. It helps them that most cyber security laws are national in scope whereas the internet is not limited to national political or geographical boundaries, being borderless and international. Furthermore, countries do not agree with each other on cyber security and privacy.

Backdoors and built-in threats

The IT infrastructure, meaning critical high-end hardware and software (“equipment”, hereinafter), in most, perhaps all, central and state government ministries, departments and organizations is purchased from international vendors. These vendors are not the original equipment manufacturers (OEMs), since OEMs have limited global marketing capability. The purchaser enters into a contract with the vendor who procures the infrastructure from the OEM and installs it. In most cases, the vendor is also contracted for life-cycle technical support since the design and details of the equipment are protected by the OEM under IPR.

Further, the OEM, operating under an export control regime, insists on the purchaser providing end-use certification. The nexus between the IT OEMs and the intelligence community needs no highlighting. It is this nexus which permits the OEM to secretly embed targeted hardware and/or software in the equipment, including detecting and suiting the geographical location of the end-user.

Regarding the life-cycle technical support of the equipment, the vendor is often contracted for on-line support. This means that the purchaser actually hands over the entire live system to the vendor’s systems engineer – who may be physically located anywhere in the world – for updation, upgradation, rectifications, etc. At this stage, one or more of the following could happen: (1) If a backdoor was not installed at time of supply and installation, this can be done, (2) If a backdoor was installed at time of supply and installation, data can be downloaded, (3) A new or updated backdoor can be installed.

On-line technical support by the vendor may be preferred because it is cheaper than having a vendor’s engineer visit the site, and also because security clearances for physical visits could be problematic especially in high-security installations.

The point here is that critical IT hardware and software infrastructure is purchased from the international market, for end-use in defence, home, finance and banking operations, energy including oil, education, health, social welfare, electric power, nuclear power, railway operations, air traffic control, rail and air passenger reservations, public or private sector industry, etc., including UIDAI’s Central ID Repository (CIDR).

Thus vulnerability to cyber attack is substantial when every single item of critical hardware and software is purchased from international vendors, especially those who also provide technical support as part of the contract.

Sub-critical equipment

Cyber vulnerability is not only from critical hardware. Sub-critical hardware is also vulnerable when purchased from international vendors.

Sub-critical hardware is essential for operation of IT systems, and routers are one such item used for communication, data handling and transfer. Routers are sub-critical hardware which route data within and between IT systems. Routers are much like postmen who collect snail-mail from post boxes and post offices and deliver it to the addressee, hopefully without reading the communications or extracting anything from the mail. However, for digital data security, data is coded and voice communication is scrambled. The software for some routers is regularly updated by security patches, and this, as in critical equipment, is a source of substantial cyber threat.

Open market purchase

IT equipment purchased from the open market overcomes the disadvantage of revealing the end-use and prevents installation of targeted backdoors. Cyber threat is minimised but not eliminated because, for example, a mother board or a hard disk or the microprocessor could have secretly embedded devices which can be activated remotely. Notwithstanding, this is a “safer” route.

However, this route of open market purchase calls for increased levels of hands-on IT competence for system design, integration and implementation. Such talent is not difficult to find in our country, but sadly this is not encouraged because of reliance on foreign vendors who exercise influence at the highest levels of state and central governments.

Security evaluation

Criteria for IT-product security evaluation is done under a framework of evaluation assurance levels from 1 to 7. EALs 1 to 4 are relatively easily dealt with, but levels 5 to 7 involve checks ranging from investigation into the source of the hardware and software, to the checks for embedded hardware and/or software, to silicon-chip-level testing to check whether the device performs only the task for which it is purchased and none other. As EALs increase, the level of expertise, infrastructure required, and time-and-cost required for conducting evaluation grow exponentially. These need to be assessed according to the assessed risk of cyber attack, the extent of non-acceptable consequences, and the capability and time-frame for restoration after attack. Infrastructure planning and provision should be done accordingly.

Effects of cyber attack on national databases

Cyber attack by a foreign power or a criminal group on a national database by one of the means mentioned above can be disguised to appear as internal system failure. Simultaneous attack on multiple databases can bring the economy to a grinding halt. The ability to enter multiple data silos or systems almost simultaneously is provided by an “entry-point” which is common to them.

Such an entry-point could be through a database which provides a digital entity that is linked to multiple databases. Several experts consider UIDAI’s Aadhaar number, which is linked to multiple databases, as providing a hacker with entry into multiple databases. That is, if CIDR is hacked, it can be a clandestine route for entry into linked databases. In fact UIDAI naively created and implemented the CIDR by contract with an international vendor which had intimate links with the intelligence community of the vendor’s country. Hence, the danger of backdoors having already been installed cannot be ruled out. It is a moot point whether Aadhaar is UIDAI’s self-goal by unwittingly planting a cyber-crime bomb, notwithstanding their unconvincing protestations.

A law to protect data would not hinder a determined aggressor from hacking into the CIDR. It would appear that cyber security with national security consequences was apparently not a priority with the architects of UIDAI’s Aadhaar, and hence justification for alleging naivety.

In international politics, cyber attack is an act of war, justifying reactive military response. However, when cyber attack disables multiple databases which affect military logistics and operations, it can restrict or limit the scale or speed of military response.

Capability for cyber security

As mentioned earlier, India has virtually zero production of critical hardware and software even in core sectors like defence, home, finance, energy (especially oil) and transportation, all of which impinge immediately and directly on the daily economic life of individuals and the State. Total dependence on international vendors for critical IT hardware and software is the bitter truth.

The attitude of successive governments to this truth has been denial, finger-pointing, or targeting whistleblowers by trolling or legal action – Tribune journalist Rachna Khaira being the most recent instance – or “shooting” the messenger, or adopting an ostrich-head-in-sand policy. It is not surprising that the problem has not gone away. Rather, the risk has increased from military, political and economic perspectives.

Focussing on data protection at database levels is inadequate, since data is simply digital alpha-numeric strings divorced from real-time situations and real-life people. Privacy, cyber security and national security which are at the core of individual sovereignty and national sovereignty, need to be covered both by actionable policy and law.

A degree of assurance for cyber security can only be had by using national human and material resources drawn from India’s public and private sectors. This is obviously a process which will take years, and planning for this can only be effective after the risks and consequences of cyber attack are accepted and realistically assessed at state and centre government levels, and policy and law on data and cyber security are formulated. All this needs to be with policy and time-bound action plans cleared at the level of the National Security Council.

National Security Council

Government’s e-governance initiatives will inevitably shift every aspect of national functioning into the cyber domain. As it gains momentum, the concommitant risk will be increased attractiveness as a cyber target.

Since cyber security compromised in one sector gives an aggressor access to associated sectors that use linked data, cyber-security cannot be effective unless it encompasses the entire linked databases of knowledge-information-data across administrative and procedural demarcations. Only holistically architectured security can reduce vulnerability to cyber attack, limit or contain damage to databases and speed up recovery in case of successful attack.

A national database like UIDAI’s Aadhaar CIDR was created without laws to safeguard it or the data that it contains. Even after a law was passed in 2016, reports of leaked data are eliciting defensive responses from UIDAI, indicating successive governments’ casual approach to cyber security. A law to protect data can fix responsibility for invasion of databases and prescribe legal action. It would be ineffective when the attacker is outside India’s political boundaries, and cannot take cognisance of the larger aspect of cyber security at the national level. That would call for holistic policy at the National Security Council level, with action plans for time-bound, phase-wise implementation.

An effective cyber strike on the day-to-day governance of a nation could be catastrophic, impinging on national security and also compromising national sovereignty. Being in a state of denial with respect to cyber security, as in the UIDAI’s case, will only take our country closer to the edge of a precipice beyond the point of no return. We need to think beyond feel-good, band-aid solutions like formulating a law on data protection. Political tie-ups with countries which promise assistance in security can only further compromise security, since critical IT hardware and software in use are all imported, and may actually facilitate the foreign intelligence agency’s access. The National Security Council has its task cut out, but is it listening?

Demonetization And Its After Effects

Harasankar Adhikari

  The Government of India celebrated the 1st year of demonetization. Opposition of the Government observed “Kala Dibas”.  Demonetization was a foul programme. However, initially,  people in Bottom of Pyramid were very happy, and they thought that it was good step. They believed that rich people would become poor and they would get monetary rewards from the Government in their ‘Jana Dhana Accounts’. But gradually they have understood how they were hypnotized with this illusion. The effects of demonetization were adverse so far as their survival was concerned. Now they claimed and opined that Government had pushed them into a bad situation and they are in trouble to manage their minimal self.

A result of the small survey on effects of demonetization has been discussed explaining the agony of demonetization among poor working class. In Kolkata, there are many giant urban housing colonies consisting many residual units (flats) and a huge number of middle and higher classes people is the owner of these units. A number of people(just literate or primary standard of education, backward, unskilled or semiskilled)  works as maintenance workers (sweepers, cleaners, electrician and plumbers, etc.) of these units. They are contractual labour. Beside their monthly wages, they generally perform extra duty when the owners of these units assign internal work in their residual area for extra payment. It is usually at large before the festivals (Durga Puja). This extra income is potentially helpful for their family.  But after demonetization, they did not get such assignment and their extra earning was obviously cut off. Even, when they got extra-assignment their payment was lower than earlier times. Moreover, before the festival they enjoy some monetary rewards from the owners of these units which were almost nothing in this year.  The second scenario is that these units usually tender for internal maintenance (interior work) frequently to the local contractors. This year there was too limited such tender. Consequently, working people was jobless and their families were in crisis.

Now this poor labour class people use to blame government for horrifying decision of demonetization. They are gradually entering into the situation of job losers and necessarily they are afraid of hunger and others. They use to utter that the rich people are very much conscious and they are strict to incur unnecessary expenses for their lives style management.

Thus,  it reveals that life style and life choices of middle classes and higher classes has been created jobs of informal sector and they use to maintain it through their extra-earning. The fate of informal sectors depends on them. It is a cause of uncertain future of labour of informal sectors. Demonetization alerts them (middle and higher classes) to be restricted in their lives style. It might be said that flow of money determines the future of informal sectors. Governments fail to create new job markets. But it destroys the labour markets for poor. Gradually these informal poor labours would lose their work, and they would surely choose another path of earning. Therefore, social conflict, anti-social work, and crime would increase. Is government prepared to handle this situation? Is government ensuring more progress and development or it leads to put the poor people in a stage of poverty and backwardness? Only the development of corporate sectors supporting the government would not be the path of country’s progress development. Government fails to keep its promise for development of poor.

“Fake news” hysteria set to take center stage in Brazil’s October elections

Miguel Andrade

Under the pretext of guarding Brazil’s October presidential election against the impact of “fake news,” security agencies are seeking to amass vast repressive powers that will have a lasting impact upon the country’s decaying Brazilian democracy, regardless of the immediate electoral outcome. With such measures, the Brazilian bourgeoisie is preparing itself for the inevitable eruption of class struggle in reaction to the sharp turn to the right taken by Brazilian politics since the last election in 2014 and subsequent ouster of President Dilma Rousseff from the Workers Party (PT) on trumped-up charges of budget manipulation in 2016, in favor of her vice president, Michel Temer.

As in 2014, Brazil will elect, between October and November, the president, the governors of all 26 states and the autonomous capital, Brasília, as well as all of the state parliaments, the whole 513-strong Lower House of the Federal Congress and two-thirds of the 81-strong Senate.

The front-runner in the presidential polls is former PT President Luiz Inacio Lula da Silva, followed by the fascistic congressman and former army captain Jair Bolsonaro. A ruling by a Porto Alegre appeals court scheduled today on Lula’s conviction on corruption and money laundering charges, the first in a series, may ultimately decide the fate of his candidacy.

In anticipation of the election, top officials, including Defense Minister Raul Jungmann, several Supreme Court members, and the chiefs of the Federal Police (PF) and the intelligence agency, the ABIN, have made declarations affirming that the alleged threat of “fake news” justifies the use of a 1983 National Security Law that forbids “the spread of information that may cause panic or disorder.” This law, passed under the outgoing military dictatorship, was written to justify censorship and repression and, crucially, says nothing about supposedly threatening information being “fake.”

Brazil’s High Electoral Court (Superior Tribunal Eleitoral, TSE) is spearheading the current censorship plans. Its outgoing president, Supreme Court Justice Gilmar Mendes, in late December appointed a Consultant Commission made up by TSE members and representatives of the Defense and Science ministries, the Federal Police, the ABIN, the Safernet consulting firm and the Fundação Getúlio Vargas (FGV) think tank, Brazil’s main government and business school.

From the start, Mendes has firmly placed the “fake news” hysteria under a “national security” framework, telling the public broadcaster EBC on December 15 that “our laws are only valid in Brazil, but we will have to act against websites hosted overseas.” With such concerns in mind, Mendes in October summoned Google and Facebook to Brazil to guarantee they would disclose the funding of political advertisements and comply with Brazilian justices’ orders to bring down content.

National security concerns were cited as the motivation for Defense Minister Jungmann declaring in October that the Army’s Electronic Warfare Command (CCOMGEX) could be involved in the operations. Additionally, it is highly significant that in his interview with EBC, Justice Mendes declared that one of the main worries during the elections would be the attempt by organized crime to elect officials, which would place the elections as one more arena in the “war on drugs,” a critical ideological pretext for the integration of Latin American armies into US imperialism’s regional aims.

The Consultant Commission’s stated goal is to research the actions of other governments against “fake news,” especially those of the United States, France and Germany. All of these countries are engaged in expanding imperialist interventions the world over and class war at home, in which “fake news” and “Russian interference” are treated as matters of national security and a justification for Orwellian spying and censorship.

According to the Poder360 website, the Commission’s second meeting on January 15 heard from Safernet that no model would be available outside Brazil, since no specific law had yet been approved in any other country targeting “fake news.” The chief of the Federal Police Organized Crime Division (DICOR), Eugênio Ricas, declared a week earlier that if no new law were approved by Congress before the elections, the 1983 National Security Law would be applied.

While no new laws or specific measures have yet been unveiled to censor the Internet, the attitude of Brazil’s repressive apparatus makes clear that this will be hardly necessary, with the dictatorship-era National Security Law being embraced as a legitimate resource once again. Moreover, the Brazilian state has already called upon the vast censorship apparatus set up since April 2017 by Google, Facebook and Twitter to guarantee that “dangerous” information will be kept from the public. The Consultant Commission’s January 15 meeting also decided that Google and Facebook representatives would be invited to all of its following bimonthly meetings.

At the same time, efforts are already being unveiled to revoke Brazil’s law-enshrined net neutrality. Only a day after the US Federal Communications Commission announcement of the end of the net neutrality in the US, Eduardo Levy, the head of Sinditelebrasil, the federation of national telecommunications companies, declared to Globo.com that Brazil’s so-called “Internet Constitution” approved in 2014 guaranteeing net neutrality forced companies to “double efforts” to guarantee that different kinds of data traveled without priority, and that “the concept of net neutrality has to be rethought for 5G and the ‘Internet of Things.’”

João Moreira, the president of the telecom lobby group comprised of some of Brazil’s largest Internet providers, also declared to Globo.com on the same day that the 2014 law was “obsolete,” with the Science Ministry’s Telecommunications secretary adding to the same report that net neutrality guaranteed by the 2014 law doesn’t take into account “technical needs” of the corporations, a declaration which reporter Helton Simões Gomes recognized as echoing the justification given by the FCC’s president, Ajit Pai, for revoking net neutrality in the United States.

At the heart of these right-wing moves to censor the Internet are the unsubstantiated and repeatedly debunked claims that “fake news,” and especially “Russian influence,” have shaped the outcome of the 2016 US election, the 2017 French elections and the Brexit vote in the UK. These claims are being made by the security agencies and go unquestioned in the Brazilian media, from the right-wing to the nominal “left,” all of which have since 2016 been acting as virtual extensions of the New York Times and the Washington Post on the “fake news” and “Russian interference” hoaxes, gaining the confidence of the security apparatus.

This role has owed them the trust of security forces. A Folha de S. Paulo report from January 15 quotes the head of the Paraná State Police Cyber Crime Division as telling readers, “do not share fake news. It is very easy to identify what is fake news: Google it, and check if big papers have reported it,” adding later, in an ominous call for the widest self-censorship: “don’t share it, because politicians that feel offended have every right to make a formal request to come after these people.” The same report makes clear the real target of the “fake news” hysteria by quoting an FGV professor claiming that he had found that “20 percent of social media traffic among those in favor of a general strike last April was produced by robots.”

For its part, the Workers Party mouthpiece CartaCapital takes for granted the influence of “fake news” on the latest major political events. It introduced its own interview with DICOR chief Eugênio Ricas on January 17 stating: “with the ever-increasing spread of fake news on social media, electoral periods have become moments that favor the manipulation of public opinion. The American and French examples, in the 2016 and 2017 elections won by Donald Trump and Emmanuel Macron, show the potential of the so-called fake news.”

Last but not least, it must be said that the growing ranks of small, “fact-checking” oriented websites such as Nexo, Agência Pública and Lupa, a relatively new phenomenon in Brazilian politics that is chiefly inspired by American liberalism and the privileged petty-bourgeois milieu around the New York Times, as well as the so-called “news satire” television programs, have increasingly fallen prey to the “fake news” and “Russian interference” hoax.

The political orientation of these initiatives made itself felt in the reports made by Agência Pública at the “3i Journalism Festival” held in Rio de Janeiro in early November, which gave a platform for Facebook and Google to voice their worries about assuring “authoritative content” and promote the collaboration of the fact-checking sites in flagging so-called low-quality content. By this they mean primarily oppositional views, especially regarding the war crimes of “democratic” American imperialism, which are excluded from public debate by the “authoritative” sources, such as the New York Times and the Washington Post.

In a revealing moment at the festival, a Guatemalan journalist asked Cláudia Gurfinkel, Facebook’s “media partnership leader” for Latin America, why news feeds were being blocked for users in his country, dropping the access to some websites by 70 percent, to which she replied that “this wouldn’t happen in other countries.” On January 11, however, this was revealed to be a complete lie, as Facebook announced precisely the opposite, that it would extend the “Guatemalan experiment” worldwide.

It is irrelevant if Gurfinkel was consciously lying or misinformed: the whole framework of the festival was designed to promote Facebook and Google as champions of democracy, even as they collaborate intimately with every major government to impose censorship and the blacklisting of socialist and antiwar websites, chief among them the World Socialist Web Site.

Hundreds more jobs being cut at Vauxhall’s Ellesmere Port plant in UK

Margot Miller 

Vauxhall's largest UK car plant at Ellesmere Port, in the northwest of England, has announced a further 250 job losses amid fears that the entire operation could close within two years.

This is on top of 400 jobs lost in October through early retirement and voluntary redundancies—reducing the workforce from 1,900 to 1,150—and plans to reduce the plant to just one shift in April.

Last year, French car giant PSA—owner of Citroen and Peugeot—acquired both the Vauxhall brand and German parent company Opel from General Motors, in a deal worth £1.9 billion. The move, aimed at countering European giant VW, has unleashed a new wave of continental and worldwide job- and cost-cutting.

PSA is using the Macron government’s new reactionary labour laws to target 2,200 jobs in France, while Opel, after thousands of “voluntary” redundancies organized by the IG Metall union, is threatening to slash 4,000 jobs in Germany. In the US, General Motors, Ford and Fiat Chrysler have pushed out thousands of older, higher-paid workers over the last two years, while expanding the use of lower-paid temporary workers.

Vauxhall is scheduled to continue production of the Astra at Vauxhall in Ellesmere Port until 2021 and the Vivaro van in its UK Luton plant until 2025. Thereafter the future of the Astra is uncertain. Production could be moved to Germany, France or Poland, as governments, backed by the trade union bureaucracy in their respective countries, engage in a bidding war to drive down wages and conditions and pony up tax cuts and other incentives.

Asked whether a British brand like Vauxhall—established in the UK in the 1960s—should produce cars in the UK, the firm’s manager, Stephen Norman, said, “The link where a vehicle is actually made and the nationality of the brand, is not as obvious as it was… there are many exceptions.”

Autoexpress, a website covering the car industry, claims the maximum annual pay of assembly line workers ranges from £41,000 (US $57,055) in the US, £39,800 (US $54,272) in the UK, £16,500 (US $22,961) in the Czech Republic, £10,300 (US $14,333) in Brazil, £8,729 (US $12,147) in China, £5,000 (US $6,957) in Mexico, to £1,830 (US $2,546) in India.

While these figures should be read with caution, as they include, in many cases, health care, overtime and bonus payments, and other benefits, they do show the disparities that the global auto companies seek to exploit as they drive to equalize wage rates by slashing the living standards of workers in the most advanced capitalist countries.

Autoexpress poses the question, “Why [should manufacturers] pay car factory workers $20 or $30 per hour, when in certain parts of the world the rate is nearer $2 or $3?... It’s no coincidence that the UK’s cheapest car (the Dacia Sandero) is built by some of Europe’s cheapest workers, in Romania.”

The commentator failed to mention, however, that Romanian Ford workers launched a wildcat strike in December, in opposition to their company-controlled union, precisely to fight poverty wages and sweatshop conditions.

Following the Vauxhall announcement, Conservative Business Secretary Greg Clarke met up with PSA CEO Carlos Tavares to press the case for continued production in the UK. Labour Member of Parliament for Ellesmere Port, Justin Madders, appealed to PSA to give the plant financial support and for the government to invest in car component supply chains in the UK. This would be predicated on undercutting component factories abroad.

In axing the 400 jobs last October, Vauxhall warned, “Current manufacturing costs at Ellesmere Port are significantly higher than those of the benchmark plants of the PSA Group in France. The teams are conscious of the need to accelerate the recovery of plant productivity in order to meet the challenges ahead…”

Integral to the “teams” are the Unite union bureaucracy, which agreed to the move towards single shift operation and the 400 redundancies—on a “voluntary” basis. In response to the latest 250 redundancies, Unite leader Len McCluskey politely urged the company to do all it could to retain its “efficient” base at Ellesmere Port. “This is an additional blow to a world class workforce that is one of the most efficient in the industry. PSA must provide investment guarantees on new models for Ellesmere Port.”

In April, workers face further speed ups with production moving from two shifts to one at Ellesmere Port to cut labour costs and “accelerate the recovery of plant productivity.” The nationalist and pro-capitalist trade unions, as they have demonstrated for decades, will mount no opposition to speed-up and the attacks on jobs.

The job cutting is being accelerated as signs appear of a potential global sales slowdown, particularly in North America and Europe. Car sales fell 6.4 percent in the UK last year, with Fortune magazine predicting a glut of new and used cars in the US. China accounted for 76 percent volume growth in car sales last year and is now the largest platform for the manufacture of cars in the world, rolling out 24 million compared with 7.9 million in Japan, Germany (5.7 million) the US (3.9 million) and the UK (1.7 million).

Last year, UK sales of Vauxhall cars fell by 22 percent compared to 2016—down to 195,137 vehicles—bringing the brand market share down to 7.7 percent, as competition has intensified between brands and premium vehicles become more saleable through pay-monthly deals.

The Ellesmere Port factory produces around 680 Astras every day and exports 80 percent of its vehicles to the continent, while importing 75 percent of component parts. These include engines from Hungary and gearboxes from Austria, Germany and Korea. Like most assembly plants today it operates on low profit margins and the just-in-time production model, so parts arrive from abroad just hours before assembly.

Brexit is set to exacerbate the crisis within the UK auto industry. While UK car production rose to 1.7 million units in 2016, the highest since March 2000, investment fell from £2.5 billion to £1.66 billion. The fall in the value of the pound since Brexit has driven up the price of components from Vauxhall's supply chains.

Some components cross the Channel three, four or five times during production. Lack of access to the European Union’s single market and customs union, and the imposition of costly tariffs, would severely disrupt this.

A hard Brexit, with the UK falling back on World Trade Organisation rules, could mean increased production costs of £2,370 per vehicle, according to research by the PA consulting group. Even an agreed UK/EU 5 percent tariff on imported and exported cars, and 2.5 percent on components would add an extra cost of £1,202.

Vauxhall workers are in struggle against globally organized automotive giants and the banks, and they can only defend their jobs based on an internationalist strategy.

Workers in the UK and Europe must follow the lead of car workers in Romania, who rebelled against the Ford Craiova Automobile union, which signed a sell-out deal with Ford Romania. This is part of growing opposition by the working class to the endless union-backed attacks across the auto industry globally. In 2017, Fiat workers in Serbia and VW workers in Slovakia struck against slave labour wages and conditions. Autoworkers in China and India have taken strike action over the last few years, and in 2015, autoworkers in the US rebelled against sell-out agreements reached by the United Auto Workers union.

Germany: IG Metall seeks to impose new contract

Gustav Kemper

At the start of this week, thousands of industrial workers took part in limited “warning strikes” organised by the IG Metall trade union. While workers are keen to broaden and extend the strikes, the union is striving to reach a speedy agreement with management on the terms of a new contract.

Above all, IG Metall wants to ensure that the negotiations currently taking place between the conservative Christian Democratic Union/Christian Social Union and the Social Democratic Party on forming a new federal government take place without pressure from striking metalworkers.

Reuters reported that IG Metall and the employers' organisation, Südwestmetall, aim to end the wage dispute with a "negotiation marathon" on Wednesday.

More than 620,000 employees have been involved in short warning strikes since the beginning of the year as part of IG Metall's campaign for a 6 percent wage increase and the introduction of a temporary reduction in weekly working hours.

On Monday, more than 20,000 workers from many factories participated in strike action. Among the companies affected were major corporations such as Siemens, Daimler and BMW. Also affected were Procter & Gamble, Hilite and Warema in Marktheidenfeld, Düker in Laufach, automotive plants and WA production in Waldaschaff, Schaeffler and other companies in Wuppertal, Bosch in Bamberg, the Engine Plant in Chemnitz, the Daimler engine plant MDC Power in Kölleda/Thuringia, Bombardier Transportation in Hennigsdorf, plus a number of other concerns.

As in previous labour disputes, the contract bargaining in the state of Baden-Württemberg is regarded as a template for a deal for the entire country. An agreement is expected on Wednesday. According to Reuters, union reps and management have met since mid-January, “with representatives from both sides struggling to make compromises almost every day.”

Details of any deal have not yet been announced. Instead, IG Metall speakers at rallies have repeated the union’s usual slogans and complaints about the unreasonable stance taken by the national employers' association, Gesamtmetall. Stefanie Jahn, from IG Metall in Oranienburg and Potsdam, criticised employers for failing “to respond to the demand for the equalisation of working hours between East and West.” How loudly, she asked, “do we have to announce that?” In general, she complained lamely, the “creativity of employers in the first three rounds of negotiations” left much to be desired.

On Monday, Anne Borchelt, IG Metall's political secretary for the same region, told striking workers at Bombardier Transportation in Hennigsdorf that the employers’ side offered only “a can of beer” in wage bargaining last Friday. In contrast, the union was working “with intensive pressure” in Baden-Wuerttemberg to reach a solution.

Many workers fear that the union’s call for a voluntary reduction in working hours from 35 to 28 hours per week (limited to a two-year period) will be used by the employers to increase the average work week to 42 hours.

The head of the Südwestmetall employer’s federation told Reuters he saw a chance for employers to “reach a significant share” of their goals in terms of longer working hours. So far, employees can work more than 35 hours a week only in a few districts.

At the start of the year, IG Metall announced its intention to achieve a quick negotiation result, possibly in January. IG Metall’s determination to achieve a rapid agreement and end the current strike movement was underlined by a quote from the head of the union, Jörg Hofmann, in Deutschlandfunk.

Hoffman said he wished for “moderation” in the coming talks and said a good result for both sides could be achieved “without further escalation.”

Thousands of jobs are currently under threat at companies such as Siemens, Bombardier and Thyssenkrupp, but the union has excluded the issue of jobs from the contract bargaining process. The IG Metall leadership is opposed to a broad mobilisation of workers against job cuts. The majority of trade union leaders are also Social Democratic Party (SDP) functionaries and support the formation of a grand coalition.

The union’s complaints about miserable working conditions and low wages are entirely hypocritical. The union is in the pocket of the party that has headed the Ministry of Social Affairs and Labour for the past few years and it supports the formation of a new government that will impose even more drastic attacks on past social gains.

For their part, many workers want to extend the strikes to encompass the entire country in order to defend jobs and end the nerve-racking insecurity of temporary contract employment.

Robert, a contract worker at Bombardier Transportation in Hennigsdorf, spoke on behalf of many of his colleagues when he told the World Socialist Web Site: “I have been working as a temporary worker at Bombardier since last October. We face quite different problems here than a reduction in working time. We will never be made full-time and that’s sad. As contract workers we earn about 400 euros less than the core workforce for doing the same work, sometimes even more work, because as a temporary worker you have an insecure job and are under pressure to work harder. One feels like a third-class person.”

New temporary workers arrive every week. He had the impression that almost half of the workforce in his department were temporary workers. “It’s easier for the company to get rid of contract workers when orders decrease. The core workforce are paid severance money, but we are not paid,” he added.

The most important issue was to secure jobs. “If people here were asked by the union what they want, I think 90 percent would reply a secure job. Especially those over 50 years old. They still want to work until they retire.”

Regarding the tactics of IG Metall and the holding of short warning strikes, he said: “The warning strike was organised to benefit employers. They are carried out at the end of a shift, when there is hardly any interruption to production. It is not really a means to exert pressure.”

Colleagues of Robert, who are also employed as temporary workers, said: “It would be good if we were to strike all over the country, including against foreign companies. But there is no all-European union. In fact, there should be something like that.”

There were also critical comments from the full-time workforce regarding the union. A young skilled worker said, “The open letter the union sent to the government did not help. There may have been a meeting between the Bombardier board and Economics Minister Sigmar Gabriel, but that did not help. I think little of politicians anyway. They make sure we pay our taxes, and then we are robbed of any influence. So much for equality.”

The union and the SPD are doing their utmost to keep the growing radicalisation in factories under control. Although the corporations are transnationally organised, labour disputes are reduced to mini-strikes limited to individual regions or plants.

Indian factory fire kills 17 workers

W. A. Sunil 

An explosion and fire at a fireworks packaging factory on January 20 in the Bawana industrial district, northwest of New Delhi, killed at least 17 workers and seriously injured two others who jumped from the building’s second floor.

The fire began in a ground floor storage area and quickly spread throughout the building, which then collapsed. Although the cause of the fire is not yet known, police suspect it was the result of an electrical short-circuit.

Some of those killed were women and children who were trapped inside the building because illegal constructions blocked their escape, one fire official told the media.

Indian police released the names of seven women killed—Baby Devi (40), Afshana (35), Sonam (23), Reeta (18), Nadeen (55), Rakho (65) and Dharma Devi (45). Police are still attempting to identify other victims.

Fires and other social catastrophes are frequent in the poverty-stricken and overcrowded district. The area was established in 2010, after government authorities ejected tens of thousands of shanty town dwellers from Yamuna Pushta in New Dehli in preparation for the Commonwealth Games.

In 2013, a fire incinerated 800 shanty dwellings, killing two children and one woman. In April 2017 one man and two children died in another fire.

Commenting to the media on the latest tragedy Anwar Ali, a local street trader, said: “Fire accidents aren’t accidents, they’re the norm in places like Bawana.”

Grief-stricken relatives of victims spoke to the media.

Mubeena, whose mother Madina has not been found, said: “We used to work together at a water bottle packaging factory. Around 15 days ago, she changed jobs. The previous one required heavy lifting and she was getting old. My mother and I were the main breadwinners [for the family] but how will I be able to manage, with her gone?”

Bantu Lal, 45, who was waiting for news about his 23-year-old daughter, Sonam, said: “This was her first job [and] and she was due to be married in a few months. She wanted to work, so she could pitch in with the expenses.”

According to press reports, the fireworks factory operated illegally. The building owner had a licence for a plastics facility but rented the building to Manoj Jain who early this month established a fireworks packaging plant. It employed some 40 workers, including children. Jain was arrested and detained by the police, pending a court appearance.

It is illegal to manufacture, import, sell or use explosives without authorisation. North District magistrate Sakshi Mittal said the plant ran without a licence or adequate safety measures.

The case has been transferred to India’s Crime Branch for a “detailed investigation.” Desperate to deflect popular anger, the government ordered an inquiry and quickly offered 500,000 rupees ($US7,845) in compensation for the family of each killed and 100,000 rupees for the injured.

Three women left the factory an hour before the explosion, following a dispute with a supervisor over the lack of basic safety equipment. One told the media: “Employees spent close to seven hours filling gunpowder into small packets—without masks and protective clothing apart from a pair of gloves.

“I told the supervisor that we could not work in these conditions, and they should give us our wages. Three of us took 600 rupees in all and left. The air inside was making me cough. While leaving, we tried to persuade two other women to leave too, but they did not.”

Meenakshi Lekhi, an MP from the ruling Bharatiya Janata Party (BJP), attempted to blame the Delhi government’s labour department, saying it was “responsible for ensuring that no explosives are manufactured.”

Delhi industries minister Satyendar Jain washed his hands of any responsibility, declaring that it was the fault of the municipal corporation, which “could shut down any illegal factory but did not prevent the [illegal] business from continuing.”

The fireworks packaging workers were paid just 200 rupees per day, with a monthly income of about 6,000 rupees. Most worked 12 hours per day—from 9 a.m. to 9 p.m.—and were paid an extra 3,000 rupees a month for the overtime.

An estimated one million workers are employed in the Savakis industrial zone in Tamil Nadu, the centre of India’s fireworks industry, with an estimated 700 legal and 1,200 illegal factories.

Most employees are women , youth and children. They work without formal training or safety equipment and suffer from asthma, eye complaints and tuberculosis.

According to the National Commission for Protection of Child Rights, 90 child labourers in Tamil Nadu’s fireworks industry have health problems. The workers are generally employed on a “piece-rate” basis, with children paid 30 to 50 rupees ($US47 to 78 cents) per day.

Explosions, fires and building collapses are commonplace in India’s fireworks industry because of poor safety standards. Last June, 25 workers were killed and 10 injured after an explosion at a fireworks factory in Kheri village, Madhya Pradesh. Five workers were killed in a blast in northern Uttar Pradesh in November. In October 2016, another 20 people were killed in a fireworks factory explosion in Tamil Nadu.

These disasters are not limited to the fireworks industry. In recent industrial accidents, 13 garment factory workers died after fire broke out last November in Ludhiana, Punjab. In the same month, 26 workers died and more than 100 were injured in a fire at a state-owned power plant in Uttar Pradesh.

In its ongoing efforts to attract foreign investment, India’s BJP government plans to water down the country’s limited labour regulations, guaranteeing that the number of people killed and maimed in industrial accidents will increase.

Continuing crisis used to justify sell-off of Puerto Rico’s electrical grid

Genevieve Leigh

Efforts to exploit the hurricane-ravaged island of Puerto Rico accelerated Monday evening, four months after Hurricane Maria made landfall, as governor Ricardo Rosselló announced his intention to sell off the Puerto Rico Electric Power Authority (PREPA), the largest public utility in the United States.

Governor Rosselló shamelessly leveraged the ongoing crisis of the island’s electrical grid to justify his decision, declaring that PREPA “has become a heavy burden on our people, who are now hostage to its poor service and high cost.” The governor concluded that privatization would bring more affordable rates and better service to consumers, and even went so far as to claim that proceeds from the sale of assets and contracts would be “used to capitalize the retirement funds of employees.”

These claims are a pack of lies. The privatization of PREPA will mean a massive attack on the working class of Puerto Rico and will lead to higher utility costs and major layoffs of electrical workers. The privatization of this basic necessity, electricity, is part of a broader strategy to extract recovery costs of the hurricane from an already impoverished working class and make Puerto Rico more attractive for investors. Far from “capitalizing the retirement funds of employees,” the money made from selling assets will be used to pay the $9 billion of debt owed by PREPA to a group of wealthy investors.

Plans to privatize PREPA have been long in the making. In 2016 the Obama administration created the financial control board, known on the island as “la Junta Fiscal,” which is essentially an assembling of eight right-wing political operatives charged with dictatorially imposing austerity on the population and funneling money to Wall Street. Since its implementation, the board has rejected restructuring the territory’s $74 billion debt and has openly called for the privatization of PREPA.

Months before Hurricane Maria landed, oversight board chair José B. Carrión III explicitly reported to local newspaper Metro that the main goal of the utility’s newly appointed “Emergency Manager,” Noel Zamot, was to “privatize the Electric Power Authority as soon as possible.” When Hurricane Maria knocked out the entire electrical grid in September, the corporate and government vultures saw the devastation as a golden opportunity to finally achieve this goal.

These same figures have cynically lamented PREPA’s botched recovery efforts, which have been crawling along at a historically slow pace, over the last four months. On top of this, there have been reports of desperately needed materials for restoring electricity being hoarded in warehouses, suggesting that there may have been deliberate efforts to sabotage the recovery in order to provide a further pretext for privatization.

It is no secret that PREPA has been in a state of complete disintegration for over a decade. The utility has been starved of resources and, like every industry on the island, it has been struggling to keep afloat through the territory’s 11-year-long recession.

Thousands of PREPA workers have been laid off, bringing the workforce from 8,628 workers in 2012 to 6,042 in April of 2017. Even before the hurricane, large-scale electrical blackouts were a common feature of everyday life.

Furthermore, the transition of power from former utility board members and officials to a new energy commission created by 2014 legislation has resulted in rampant corruption and mismanagement. The height of this corruption was displayed in the aftermath of the storm when PREPA awarded a major emergency contract—which they were eventually forced to cancel—to Whitefish, an inexperienced Montana company with only two employees.

Four months after Hurricane Maria, about 40 percent of electric customers remain without power in what is the longest and largest power outage in modern US history.

The third-world conditions this has created for the workers in Puerto Rico is a crime against humanity for which the ruling class in Puerto Rico along with both big-business parties of the US government hold complete responsibility.

The figures who have run PREPA into the ground would have the people of Puerto Rico believe that its state of disrepair is simply the product of its public ownership or mismanagement. In truth it is the result of more than a century of colonial exploitation of the island’s working class as a cheap-labor platform and tax haven for multibillion-dollar corporations. Now the same figures who have made their fortunes creating this catastrophe are attempting to profit off the destruction.

The efforts of officials like Rosselló and corporate mouthpieces such as Zamot to use this crisis to their advantage come from a well-used playbook. The modus operandi of the ruling class is to take full advantage of these “natural” disasters to push through long-desired financial schemes under the cover of the “unavoidable” devastation.

The past two decades in the United States offer countless examples, foremost among them the crimes carried out against the working class after Hurricane Katrina destroyed significant portions of New Orleans in 2005. In the aftermath of the storm, a full-scale assault was launched on public education, which was almost entirely dismantled or handed over to private for-profit companies; social services were slashed or removed altogether; hundreds of thousands of residents were forced to leave the city, many of whom could never return; and the privatization of public assets was carried out in the name of “rebuilding” New Orleans.

The same scheme was employed against Detroit workers during the city’s 2013-14 bankruptcy. Like in Puerto Rico, an Emergency Manager with unlimited dictatorial powers was brought in to oversee the destruction of pensions, the privatization of public utilities and schools, and he even attempted to sell off the city’s art work to private foundations. In fact, the federal judge who oversaw the criminal bankruptcy proceedings in Detroit, Steven Rhodes, was brought in as an advisor for the Puerto Rican bankruptcy.

Notably, Puerto Rico is facing both of these disasters at once—the aftermath of a hurricane and the largest municipality debt crisis in US history. As in New Orleans and Detroit, the storm and the financial crisis will be used to accelerate a social counterrevolution that was already well under way.

The central lesson of these struggles is that the elementary requirements of mass society are incompatible with a system that subordinates everything to the enrichment of a financial oligarchy. The greatest allies of the workers and students in Puerto Rico who want to fight against the coming attacks are not any local bourgeois politicians but fellow workers on the mainland and around the world.

IMF upgrades global growth forecast amid warnings of "fracture points"

Nick Beams

As the World Economic Forum summit of global elites got underway in Davos, Switzerland, the International Monetary Fund (IMF) upgraded its prediction for world economic growth over the next two years.

The IMF pointed to the “broadest synchronised global growth upsurge since 2010,” when the world economy pulled out of the recession of 2008–2009. It estimated that global output increased by 3.7 percent in 2017, a 0.1 percentage point rise on its forecast last October and 0.5 percentage points higher than 2016. The IMF revised its predictions of global growth for 2018 and 2019 upward by 0.2 percentage points to 3.9 percent.

However, a report issued by Oxfam for the Davos summit demonstrated that virtually all of this increase will flow to the oligarchs who dominate the world economy. Last year saw the biggest increase in the number of billionaires in history, as 82 percent of the increase in global wealth flowed to the top 1 percent, while the bottom 50 percent received no increase at all.

Not surprisingly, as the Financial Times reported, the mood among the chief executives gathering for the summit was more upbeat than at any time in the past decade. “With the stock markets booming … it’s no surprise CEOs are so bullish,” Bob Moritz, the global chairman of the accounting and financial firm PwC commented.

While attention is focused on the headline predictions for a rise in global growth, there are warnings, including from within the IMF itself, that the spurt may not last.

In a blog post, IMF chief economist Maurice Obstfeld said the upturn was “good news” but the present economic momentum “reflects a confluence of factors that is unlikely to last for long.” Without prompt action to address structural impediments to growth, the building of policy buffers and enhancing the inclusiveness of growth, “the next downturn will come sooner and be harder to fight.”

Obstfeld said the current upturn “is unlikely to become a new normal.” Instead, “medium-term downside risks” were “likely will grow over time.” He noted that the two biggest economies driving the present upturn—the US and China—both faced slowing growth prospects in the future.

China would cut back both the fiscal stimulus and credit expansion of the recent period, in order to “strengthen its overheated financial system.” In the US, the short-term stimulus provided by the Trump administration’s tax cuts would wear off.

Easy financial conditions, important as they were during the recovery, had left a legacy of debt, Obstfeld said. A sudden rise in interest rates from their current very low levels could tighten financial conditions globally. “Elevated equity prices would also be vulnerable, raising the risk of disruptive price adjustments,” he warned.

Summing up his views on the longer-term outlook, Obstfeld wrote: “Perhaps the over-arching risk is complacency. While the current conjuncture might appear to be a sweet spot for the global economy, prudent policymakers must look beyond the near term … The next recession may be closer than we think, and the ammunition with which to combat it is much more limited than a decade ago because public debts are so much higher.”

A sharper warning of the dangers facing the global economy and financial system came from former Bank for International Settlements chief economist William White.

In an interview with the UK-based Telegraph, White, who was one of the few to warn of the 2008 crash, said the world financial system was as dangerously stretched as it was during the previous bubble. This time, however, financial authorities had few defences left.

This was because of the policies pursued over the past decade—the reduction of interest rates to record lows and the pumping of trillions of dollars into the financial system under the program of quantitative easing (QE).

“All the market indicators right now are looking very similar to what we saw before the Lehman crisis, but the lesson has somehow been forgotten,” White said. He cited the revelation that the bankrupt US construction group, Carillion, had raised £112 million through German Schuldschein bonds, and a South African retailer also had tapped into this obscure market to raise £730 million.

Schuldschein loans were once issued to family-owned, middle-sized German companies. The transformation of this corner of the market into a high-risk, shadow banking operation showed how badly the lending system had been distorted by QE and negative interest rates.

White noted there is always an intoxicating optimism at the height of every boom when people convince themselves that risk is fading. But that is precisely when the worst mistakes are made. “Central banks have been pouring more fuel on the fire,” he said.

Since the 2008 crisis, global debt ratios had surged by 51 percentage points relative to global gross domestic product and stood at a record 327 percent, with every part of the world economy exhibiting some form of deformation.

“Should regulators really be congratulating themselves that the system is now safer? Nobody knows what is going to happen when they unwind QE. The markets had better be careful because there are a lot of fracture points out there,” White warned.

While the elites gather at Davos to wallow in their fabulously increased wealth, the international working class should draw a balance sheet of the policies pursued by governments and financial authorities around the world over the past decade.

What have these policies produced? The siphoning of wealth and income to the heights of society, paid for by stagnant and declining wages, worsening working conditions and intensified exploitation, savage and ongoing cuts in all forms of social spending. These are coupled with the creation of conditions for another financial disaster potentially more serious than that of 2008.