US Supreme Court guts wetlands protections

Daniel de Vries

The US Supreme Court on Thursday eliminated federal protections for millions of acres of wetlands across the United States. The ruling in Sackett v. EPA is the latest in a series of anti-democratic and anti-science dictates by the right-wing majority. It upends more than 50 years of environmental policy and represents an attack on ecological and human health. 

This image taken with a drone shows a river bank exposed by abnormally low water levels along the Mississippi River, Thursday, Oct. 27, 2022, in New Orleans [AP Photo/Stephen Smith]

The Court sided with Idaho landowners 9-0 on the narrow issue of whether a federal permit was required to fill wetlands on their property. However, the far-right majority also took the opportunity to redefine the water bodies covered under the Clean Water Act, in a 5-4 decision authored by Justice Samuel Alito. Justice Brett Kavanaugh penned the main dissenting opinion and was joined by the Court's three liberal judges. 

In practice, the ruling means that a majority of wetlands previously overseen by the Environmental Protection Agency (EPA) and the Army Corps of Engineers will lose federal protection. It is a gift to developers and mining, oil, and other polluting industries, which have long sought to overturn the permit requirements in the Clean Water Act to maximize profits. Representatives from the American Petroleum Institute and the National Mining Association hailed the ruling. 

The consequences for the environment are potentially devastating. Wetlands provide critical habitats for a variety of wildlife, including at least a third of threatened or endangered species. The ecosystems perform vital services such as filtering out pollution and controlling floods. 

According to a study by the Fish and Wildlife Service, more than half of the approximately 220 million acres of wetlands in the continental United States have already disappeared over the past two centuries. Under conditions where climate change is driving more extreme rainfall and more intense hurricanes, the evisceration of wetland protections will have severe consequences. Catastrophic flooding events like the kind seen in Texas and Louisiana in 2017 with Hurricane Harvey will increase. Harvey shined a spotlight on the impact of the destruction of tens of thousands of acres of wetlands in the metro-Houston area, worsening a disaster that led to the deaths of 103 people.

The judicial gutting of the Clean Water Act marks a major step towards unraveling the regulatory regime that helped slow the loss of wetlands and improve water quality across the country, however limited. Before the adoption of the Act in 1972, water pollution had reached such crisis levels that swimming in many rivers and lakes around the country was hazardous. High-profile disasters like the fires on the Cuyahoga River in Ohio triggered widespread opposition. While overall water quality has improved in key ways over the past 50 years, the poisoning of drinking water in places like Flint, Michigan, and Jackson, Mississippi, underscores the need to extend environmental protections.

While water quality safeguards enjoy widespread support, an unelected cabal of right-wing ideologues has now asserted the power to effectively rewrite the federal government's primary mechanism to protect the environment. 

Environmental advocates denounced Thursday's ruling. “The Sackett decision undoes a half-century of progress generated by the Clean Water Act. More than 118 million acres of formerly protected wetlands now face an existential threat from polluters and developers,” Sam Sankar, an executive at the environmental law firm Earthjustice, said in a statement. “This decision is the culmination of industry’s decades-long push to get conservative courts to do what Congress refused to do. The Court's decision to deregulate wetlands will hurt everyone living in the United States.”

The definition of “Waters of the United States” in the Act, which lays out which areas are subject to federal oversight, has long been subject to political battles. Prior to Sackett, the Supreme Court accepted that wetlands with a “significant nexus” to navigable waters—that is, wetlands that impact the chemical or biological health of navigable waters—should fall under federal jurisdiction. This regulatory regime recognized the physical reality of an interconnected water system. Destroying or polluting wetlands, ephemeral streams and other water bodies has an undeniable adverse impact on the health of lakes, rivers, and oceans. 

The majority's ruling in Sackett limits federal authority to only those wetlands with a continuous surface connection to navigable waters. The new definition is absurd from a scientific standpoint, falsely attributing decisive importance to the presence of man-made or natural barriers on the surface. 

The decision also disregards the plain language of the Clean Water Act, which specifies that water bodies adjacent to navigable waters are covered. The meanings of the word adjacent as “next to” or “very near” are disregarded by the majority, instead substituting a meaning of “continuous.” As Justice Elena Kagan, who, in addition to signing on to Kavanaugh’s dissent, filed a separate opinion, wrote, “The majority shelves the usual rules of interpretation—reading the text, determining what the words used there mean, and applying that ordinary understanding even if it conflicts with judges’ policy preferences.”

The legal principles involved in the majority's decision go far beyond deliberately misreading the Dictionary. “The majority relies on a judicially manufactured clear-statement rule,” Kagan explained, which asserts that Congress must use only “exceedingly clear language” when it comes to the federal government’s authority over private property.  

What is involved here is a usurpation of political power by a corrupt and reactionary judiciary to safeguard the privileged position of private property. As far as the Court is concerned, the American people have no social rights to a livable planet. 

Even this reactionary content was too limited for Justice Clarence Thomas, who authored a separate opinion that Justice Neil Gorsuch joined. Thomas's opinion attacked the long-standing interpretation of the Constitution's Commerce Clause, arguing that the federal government’s authority should be limited to keeping interstate commerce “open and free from any obstruction to their navigation.”

As Ian Millhiser explained in Vox, “Under the approach Thomas lays out in his Sackett concurrence, the federal ban on child labor is unconstitutional. So is the minimum wage, federal laws protecting the right to unionize, bans on workplace discrimination, and nearly all other regulation of the workplace. Thomas’s approach endangers countless laws governing private business, from rules requiring health insurers to cover people with preexisting conditions to the ban on whites-only lunch counters. And even that is underselling just how much law would be snuffed out if Thomas’s approach took hold.”

While Thomas’s extraordinary diatribe does not have the force of law, it is a striking illumination of the crisis of American democracy and the political thinking which dominates among a significant section of the capitalist ruling class. Two of nine justices are now determined to send America back to the 19th century. The Sackett ruling follows other decisions to roll back environmental protections, as in West Virginia v. EPA, along with other attacks on democratic rights, including most notably the overturning of national abortion rights in Dobbs.

The Biden administration issued a statement expressing its “disappointment” in the Sackett decision, highlighting the bipartisan support for the Clean Water Act and criticizing the upending of the legal framework of environmental regulation. As in the responses to the other reactionary Supreme Court rulings, the Democratic Party is incapable of and uninterested in waging a political struggle against these right-wing attacks. On the contrary, just three days after the Sackett decision, Biden announced a debt ceiling deal that includes environmental permitting “reforms” demanded by Republicans on behalf of energy giants.

Floods and landslides in Italy: a man-made disaster

Marianne Arens

A state of emergency remains in force in the Italian region of Emilia-Romagna, following last week's severe floods. The disaster is another stark warning of the worsening impacts of climate change, which is ultimately man-made and a consequence of the capitalist economic system.

Flooded fields in Emilia Romagna [Photo by Dipartimento Protezione Civile / flickr / CC BY 2.0]

Floodwaters have only very slowly receded from the villages and fields in the hinterland of the Adriatic coastal strip. In the affected area, which stretches from Ravenna and Cesena to Bologna, the floods claimed at least 14 lives. More than 36,000 have had to leave their homes, over 20,000 in the Rimini area alone, and thousands remain in emergency accommodation, their houses and apartments destroyed. Many roads and train lines remain impassable after 22 rivers broke their banks and no less than 300 landslides occurred.

In the last few days, the storm has continued to spread, and a red alert was issued in other Italian regions last weekend. In Sicily and Calabria, flooding occurred as a result of heavy rain. In Reggio Calabria, strong winds added to the situation, with one man killed by a falling tree. In Piedmont in northern Italy, where the Po River has flooded, roads near the river had to be closed in the city of Turin.

In Emilia-Romagna and the neighbouring areas, this flood-of-the-century destroyed the grain, fruit and vegetable harvests. Whole plantations of strawberries, apricots, apples or peaches have been covered with silt and devastated. Thousands of cattle, pigs and sheep have also drowned, and many farms were completely cut off by landslides.

In addition, there is an increased risk of infection due to contaminated drinking water. According to the Italian Society for Environmental Medicine, sewage has overflowed in several places and elderly people and children in particular are at risk of gastrointestinal infections, skin diseases and conjunctivitis. Residents have been advised to protect themselves with a tetanus vaccination.

On the Adriatic, from Ravenna to Rimini, the holiday season should now be starting. For more than 120 years, the coastal region has lived on the basis of tourism, after the beach resort of Rimini was built at the end of the 19th century following completion of the Milan-Ancona railway line, which reaches to the sea. Just before the Spring holiday, however, storm tides washed over the beaches and partly swept them away. Tens of thousands of cubic metres of sand have been washed away, along with cabins, sunbeds and parasols. Pumps are running day and night to clear the basements of hotels and restaurants.

The response of Italy’s Tourism Minister, Daniela Santanché, herself an entrepreneur and a member of the far-right La Destra-Fiamma Tricolore party, was merely to call on Italians and international guests to spend their holidays on the Adriatic despite the damage.

Last Thursday, EU Commission President Ursula von der Leyen (CDU) visited the affected region together with the neo-fascist head of government Giorgia Meloni. “Europe is with you,” von der Leyen declared afterwards at Bologna airport. She boasted about the pumping equipment that the EU Civil Protection had provided to Italy and announced aid from the EU Civil Protection Fund.

Meloni, who heads the neo-fascist party Fratelli d'Italia, had left the G7 summit in Hiroshima early, after the extent of the disaster became known. Together with the long-time president of the Emilia-Romagna region, Stefano Bonaccini (Democratic Party-PD), Meloni then trudged through the area in rain boots, shedding crocodile tears and promising the region two billion euros in financial aid, promised by the Council of Ministers.

All the promises made by Meloni, von der Leyen and others cannot hide the fact that all capitalist government politicians, regardless of their respective party, have shown themselves incapable and unwilling to take the rational and necessary measures to prevent such a catastrophe.

This also applies to regional president Bonaccini, who is considered “left-wing” and was once a member of the PCI, the Italian Communist Party. In Emilia-Romagna, the supposed “leftists,” the PD and previously the PCI, have been in government for 78 years. During that time they did virtually nothing to prevent floods, landslides and other disasters.

Especially in the tourism strongholds near the coast, the soil has been concreted over on a large scale and rivers straightened. In the mountains behind, the forests have been cut down and the infrastructure as a whole has been neglected for decades. Long overdue dam works have been delayed and necessary retention areas and other projects put on a back burner.

Politico referred to an €8.4 billion flood protection programme set up by then-head of government Matteo Renzi in 2014. This was left virtually unused after a series of governments diverted the money to other, seemingly more urgent projects.

Italy is particularly vulnerable to environmental disasters. According to a 2021 report by the national environmental protection institute ISPRA, 94 percent of its municipalities are at risk of being affected by landslides, earthquakes, floods or tidal waves. No less than 8 million inhabitants live in vulnerable locations. The report lists more than 11,200 projects allocated over 10 billion euros during the last 20 years. Less than half of the projects have been implemented and only a third of the money used on environmental projects.

Corruption, greed and indifference are among the causes of the disaster that scientists and researchers had long warned of. Added to the neglect of infrastructure is the utter indifference with which capitalist government politicians approach climate change.

Climate change has clearly exacerbated recent environmental events in Italy, as the European Mediterranean Climate Policy Institute, the Centro Euro-Mediterraneo sui Cambiamenti Climatici (cmcc), has now confirmed. In the last two years, high temperatures and the absence of rainfall had led to unusual dryness and drought. This has reduced the soil’s ability to absorb water and increased the formation of cracks. The first heavy rains in early May then saturated the upper layers of the earth and created ideal conditions for landslides. Following this, it only took new heavy rains, such as those that began in the third week of May, to cause a catastrophe throughout the region.

The floods and landslides in Emilia-Romagna are only the latest of a series of natural disasters in Italy in recent years. They are harbingers of what will happen if global warming continues. It is precisely because of its long and densely populated coastal strips that Italy is particularly at risk, as the example of the lagoon city of Venice vividly shows.

Australian Rich List shows growing concentration of wealth at the very top

Mike Head

This year’s Australian Financial Review (AFR) Rich List underscores the parasitic character of the ruling class. Australia’s wealthiest billionaires primarily derive their fortunes from mining and property, followed by finance market-backed technology start-ups.

Gina Rinehart and Twiggy Forrest

“The rich keep getting richer,” the newspaper crowed, although “only just.” The $563 billion represented by Australia’s 200 largest fortunes on the 2023 list, is only a 1 percent increase on last year.

But wealth inequality grew among the rich. The holdings of the 10 richest people increased by an average of 10 percent, to over $200 billion in total, during the past 12 months, while the rest of the list went slightly backwards.

“Bubbling property wealth” accounted for a quarter of the Rich List membership, helping make Australia one of the most expensive and debt-ridden housing markets in the world. But the biggest gains were enjoyed by mining magnates, especially those exporting iron ore.

The valuations of two iron ore barons, Gina Rinehart ($37.41 billion) and Andrew Forrest ($33.29 billion), the richest and second-richest Australians for the fourth year in a row, surged 10 percent and 8 percent respectively as “market analysts” re-rated the outlook for global iron ore prices.

That outlook, mostly buoyed by predicted rises in Chinese demand, also highlights the precarious dependence of the Australian capitalist class on exports to China, even as the Albanese Labor government escalates its commitment to US war preparations against Beijing.

Not far behind came Clive Palmer, whose royalty deal with Chinese-owned Citic, which mines the Pilbara tenements he claimed nearly 40 years ago, is linked to the iron ore price. The annual cheques Palmer receives from Citic now exceed $500 million. This, with a $1.4 billion sale of his Queensland Nickel business—at the expense of workers’ jobs—sent his “worth” up 21 percent to $23.66 billion, and his ranking from seventh to fifth.

Palmer, who also heads and finances the far-right United Australia Party, leapfrogged over two technology billionaires, Atlassian software founders Mike Cannon-Brookes and Scott Farquhar. Their wealth fell more than 30 percent each, in line with the Nasdaq-listed shares of Atlassian, launched in 2002. This year they retrenched 500 workers, or 5 percent of their workforce, albeit “with the heaviest of hearts.”

Third and fourth on the list were packaging industry owner Anthony Pratt and his family, valued steady at $24.3 billion, and Meriton apartment tycoon Harry Triguboff, whose valuation, based on exorbitant home prices and rents, rose 12 percent to $23.8 billion. “Higher returns from an extensive build-to-rent portfolio helped” Triguboff, “as did a sizeable land bank,” the AFR enthused.

There has been an astronomical rise in wealth at the top over the past four decades. The first Rich List, published 40 years ago in 1983, contained total fortunes of $4.6 billion. If that had simply kept pace with the long-term average inflation rate of 2.5 percent, the Rich Listers would now be worth a total of about $15 billion. That is dwarfed by the $563 billion that the richest 200 have amassed today.

According to the AFR, this is a “welcome statistic.” It “highlights the role that Rich Listers have played in creating prosperity in Australia.” This “prosperity” is confined to the most affluent layers of society, extracted at the expense of the working class, whose labour power is the source of the proceeds.

Two items in the Rich List articles, glorifying the acquisition of personal wealth, illustrate the real character of this prosperity. First, the AFR reports that “a growing number of ultra-wealthy Australians have caught the island bug. Over the past 18 months, major island properties worth more than $120 million have changed hands.”

Billionaires are buying up offshore tropical islands, either for personal use or to set up luxury resorts, or both. Among them is Forrest and his wife, Nicola, whose private investment company Tattarang bought Lizard Island in north Queensland for $42 million in 2021.

The AFR explains: “A protected national park with white sand beaches, Lizard Island is home to a luxury resort that’s leased to US hotel management company Delaware North. Its rooms, and villas perched over the Great Barrier Reef, cost between $2,000 and $16,000 a night.”

The expanding number of island owners includes some of the relatively more recent technology billionaires. Atlassian co-founder Cannon-Brookes and his wife, Annie, purchased Dunk Island, off the north Queensland coast last year for just under $25 million. 

Second, the AFR reports that collectible luxury cars are among the many things that have become speculative sources of wealth. “Vintage cars have risen 185 percent in value during the past decade, outperforming the growth in wine, watches and art, and ranking second only to rare whiskies, according to Knight Frank’s 2023 The Wealth Report.”

A Rich Lister, Lex Pedersen, has jumped into this market. “The 47-year-old is best known in investment markets as co-founder of online retailer SurfStitch, one of the most hyped stocks of 2015 which entered administration two years later. In 2021 he set up Chrome Temple, a business idea that stems from his love of cars and motorbikes. The fund’s marketing line is ‘nurture your passion, grow your wealth.’”

Alongside this parasitic activity, the gulf between the rich and the working class has accelerated. In January, the Oxfam charity reported that the richest 1 percent of Australians had accumulated 10 times more wealth than the bottom 50 percent in the past decade.

On top of a decade of falling real wages, there is a worsening cost-of-living crisis, rising financial stress and outright hunger. By the end of last year, research by Foodbank, another charity, found more than two million Australian households (21 percent) had experienced severe food insecurity in the previous 12 months, meaning they could not afford to eat.

During the COVID-19 pandemic and the US-NATO war against Russia in Ukraine, the widening social gulf has been intensified by corporate profiteering on the most basic human necessities—food and energy. Oxfam’s report showed that “95 food and energy corporations more than doubled their profits in 2022, driving major inflation in Australia and around the globe and leaving millions struggling to feed themselves and their families.”

There is also a direct connection between this colossal social polarisation and the role of capitalist governments in slashing corporate and income taxes, deregulating financial and big business operations, privatising basic facilities and pouring trillions of dollars into the money markets.

Significantly, the Rich List—openly celebrating private wealth—was launched in 1983, the year in which the Hawke and Keating Labor government took office in Australia. It pioneered this offensive, working hand in glove with the trade union bureaucracy, under the banner of making Australian capitalism “internationally competitive.”

The current Albanese Labor government is deepening this process, allocating $313 billion over the next decade for “stage three” income tax cuts, overwhelmingly to benefit high-income recipients. These handouts will be made alongside $368 billion for AUKUS nuclear-powered submarines to prepare for war against China, while billions are cut from public health, education and disability services.

After regional election defeat, Spain’s PSOE-Podemos government calls snap elections

Alejandro López & Alex Lantier

Yesterday, Prime Minister Pedro Sánchez of Spain’s Socialist Party (PSOE)-Podemos government reacted to its debacle in Sunday’s regional and local elections by suddenly announcing a snap general election for July 23. Elections were previously scheduled for December 2023.

Prime Minister of Spain Pedro Sanchez speaks to Spanish troops during his visit to Adazi Military base in Kadaga, Latvia, Tuesday, March. 8, 2022. [AP Photo/Roman Koksarov]

In defeat as in office, the PSOE and its pseudo-left coalition partner Podemos adopted an utterly reactionary position. Sánchez said his government had imposed the most urgently necessary attacks on the working class, and that the right-wing Popular Party (PP) and the fascistic Vox party could now be allowed to rule.

He said, “Many socialist [regional] premiers and mayors with impeccable management will be displaced, even despite seeing their support increase. These institutions will become governed by the PP and Vox. The meaning of the vote conveys a message that goes further. I assume responsibility for the results firsthand and I believe it is necessary to give an answer and submit our mandate to the popular will. The government has already carried out the major reforms it committed to.”

The PSOE-Podemos government’s defeat is the product of its policy of imperialist war abroad and class war on workers at home. Sánchez’s “reforms” are brutal attacks on the working class. Its pension cuts raised the retirement age to 67, it imposed below-inflation wage increases on broad layers of workers, and passed a labour law reform slashing workers’ legal protections in the workplace. It imposed the largest military spending increase in Spanish history, to over €27 billion per year.

The PSOE-Podemos’ fascistic indifference to human life was expressed in its profits-over-lives policy in the COVID-19 pandemic, which led to over 160,000 excess deaths and tens of millions of infections; and the barbaric incarceration and murder of migrants, including the infamous massacre of 37 refugees on the borders of Spain’s Melilla enclave in Africa.

The PSOE and Podemos aggressively joined in NATO’s war against Russia in Ukraine, sending rocket launchers, armored vehicles and tanks and training over 850 Ukrainian troops on Spanish soil. Weapons sent by the PSOE-Podemos government went to the neo-Nazi Azov Battalion. This conflict and the rising danger of a direct clash between NATO and Russian forces will be at the centre of Spain’s six-month stint in the rotating presidency of the European Union (EU) in the second half of 2023.

Indeed, as he dissolved his government, Sánchez said: “Our country is preparing to carry out a very important responsibility, the rotating presidency of the Council of the EU. All this requires clarification of Spaniards on the political forces that should lead this phase and the policies to be applied.”

Sánchez’s proposal is to “clarify” who will lead Spanish and EU participation in NATO’s war on Russia. One contestant is the alliance between Vox, the open admirers of General Francisco Franco’s bloody 40-year old regime that crushed the workers in the 1936–1939 Spanish Civil War and sent its Blue Division to assist Hitler’s war on the Soviet Union, and the Popular Party (PP), a party founded by Francoite ministers. Another is the PSOE and Podemos, the discredited descendants of the social-democrats and Stalinists that worked with the Francoites in 1978 to set up Spain’s current parliamentary regime.

The Spanish right celebrated the snap election call. PP leader Alberto Núñez Feijóo said that “the sooner, the better” while Vox leader Santiago Abascal pledged to make “Kicking out Pedro Sánchez to repeal each and every one of his policies” Vox’s political focus.

“We are sad,” blandly declared Podemos spokesperson Pablo Echenique. Apparently in an effort to blame the election fiasco on the PSOE, he said: “If the progressive bloc as a whole had been more courageous when it came to expanding rights… surely we would not have reached this point.” He added that the PSOE-Podemos government “does not solve problems.”

In reality, the PSOE-Podemos government is calling snap elections not to campaign and mobilize voters against the right, but to hand over power to the right so it will pursue policies agreed upon by the entire political establishment.

Whichever party wins the July 2023 elections and becomes a European figurehead for NATO war on Russia will also brutally attack the working class at home. In this, it will work in the direct continuity of the policies of the PSOE-Podemos government. Indeed, Sánchez did not suddenly move the elections up from December to July in order to mobilize the population against the danger of fascism and war, but because it saw an opportunity to hand over power to the right to pursue policies supported by the entire political establishment.

In the elections, the PP won 31.5 percent of the votes against 28.2 percent for the PSOE. Compared to the same elections in 2019, PSOE support fell 1.2 percent, while the PP rose almost 9 percent, securing absolute majorities in the Madrid region and Madrid capital, and taking Aragón, Valencia and the Balearic Islands regions. Vox doubled its vote, going from 47 regional lawmakers to 119. Above all, Podemos suffered an electoral collapse of, from 47 regional lawmakers to 15. It was wiped out in Madrid, Valencia and the Canary Islands.

Sánchez is not campaigning to reverse this defeat in the next elections, but preparing a common war policy with Podemos, the PP and Vox. His first public meeting after announcing the snap elections will be tomorrow’s event organised by the Cercle d'Economia, the Catalan business organization founded in 1958, during the Franco dictatorship, to open Spain to international capital. Central to the discussion according to the meeting’s agenda will be the war in Ukraine.

Its attendees include PP leader and potential future prime minister Feijóo, Podemos-backed interim mayor of Barcelona Ada Colau, Spanish King Felipe VI, EU for foreign affairs commissioner and PSOE official Josep Borrell, senior investigator for the pro-imperialist Chatman House think tank Yu Jie and NATO Deputy Assistant Secretary General for Public Diplomacy Carmen Romero.

The Spanish stock market reacted with what right-wing daily ABC described as “apathy” in the face of Sánchez’s surprise announcement, which was no doubt carefully discussed with the banks in advance. Bankers and investors are confident that whether Sánchez remains or not after July 23, they will continue to reap record profits. Under the PSOE-Podemos government, corporate profits rose to €56 billion in 2022, on revenues of €629 billion. This was a 35 percent increase over 2021.

The force emerging as the opposition to the reactionary intrigues of the political establishment is the European and international working class. Even as NATO escalates its war with Russia, a wave of class struggles is unfolding across Europe, from the struggles of French workers across the Pyrenees against President Emmanuel Macron’s pension cuts to mass strikes against inflation in Germany and Britain. In Spain, the PSOE-Podemos government sent tens of thousands of riot police to attack mass strikes by metalworkers and a nationwide truckers strike.

What next in the growing dollar crisis?

Nick Beams

When the major imperialist powers, led by the US, imposed economic and financial sanctions against Russia at the start of the Ukraine war, they believed these measures would quickly cripple the Russian economy, leading to a capitulation or a move for regime change from within the ruling oligarchy.

That has not taken place. Russia has found ways of getting around the sanctions, at least so far. But the US-imposed measures have had some unintended consequences. They have led to efforts to shift away from dependence on the dollar as the preeminent global currency, which, if continued, will have major consequences.

Treasury Secretary Janet Yellen testifies before the Senate Finance Committee March 16, 2023. [AP Photo/Jacquelyn Martin]

In an interview with CNN’s Fareed Zakaria last month US Treasury Secretary Janet Yellen raised this danger.

“There is a risk when we use financial sanctions that are linked to the role of the dollar that over time it could undermine the hegemony of the dollar,” she said.

The most significant decisions were to cut Russia out of the SWIFT global payments system and to freeze the $300 billion worth of financial assets held by the Russian central bank.

These measures were able to be undertaken because of the role of the dollar as the world’s global reserve currency. Freezing the assets of the Russian central banks sent a shock wave throughout the global financial system—going well beyond Russia—because it was recognised that such an action could be taken against other countries that crossed the US path.

Over the past year, Russia, China, Saudi Arabia and Brazil among others have been seeking to make trade deals which are carried out in their own currencies, rather than the dollar. The moves made so far fall well short of replacing the dollar, but there is no doubt about the trend of development.

Another expression of concern is the increase in the price of gold and, most significantly, the increase in gold purchases by central banks.

In the aftermath of World War 2, the dollar become the major global currency and store of value. It was able to play this role because of the vast economic supremacy of US capitalism and the decision taken at the Bretton Woods conference of 1944 that the dollar would be redeemable for gold at the rate of $35 per ounce.

That system was ended in August 1971, when—because of the relative decline of the US vis-à-vis its major competitors, reflected in the emergence of a balance of trade deficit, replacing the surpluses of the immediate postwar years—President Nixon unilaterally closed the gold window.

Since then, the dollar has functioned as a fiat currency, that is, without the backing of a material commodity, such as gold, embodying value. Rather, it rested on the financial and political power of the US.

In a recent comment in the Financial Times (FT) dealing with the global position of the dollar, financial analysist Mohamed El-Erian noted its role as the global reserve currency rested on three US attributes. These have been “its status as the world’s largest economy, the depth and breadth of its financial markets, and the predictability stemming from institutional maturity and respect for the rule of law.”

The three conditions for dollar stability he lists have been shaken to their foundations.

The US will soon be overtaken as the world’s largest economy by China, and, according to some measures, it already has been.

Its financial markets have been subject to ever increasing shocks, threatening the entire global financial system.

In 2008, growth of financial parasitism over the previous period of 20 years – following the turn by the US Federal Reserve to pump money into the financial system in response to the October 1987 stock market crash – resulted in the most serious banking crisis since the Great Depression of the 1930s.

In March 2020, at the start of the COVID-19 pandemic, the $22 trillion US Treasury market, the basis of the US and global financial system, froze such that for several days there were no buyers for US government debt, supposedly the safest financial asset in the world. The disintegration of the entire financial system was only averted by a massive intervention by the Fed, buying up a further $4 trillion of financial assets.

Then, starting in March, the Fed’s interest rate hikes of the past year set off three of the four largest bank failures in US history, demonstrating that the post-2008 regulatory measures were essentially worthless as government authorities had to step in again to prevent a “systemic” breakdown.

And the notion that the US enjoys “institutional maturity” and “respect for rule of law” has been shattered by January 6, 2021 attempted coup by Trump. It has suffered another blow due to the conflict over the US debt ceiling—the mechanism by which extreme right-wing and outright fascist forces in the Republican Party are seeking to impose the demands of powerful sections of the financial oligarchy for a frontal attack on what remains of the social services system.

In addition to the factors listed by El-Erian, there is another he did not mention but which is no less decisive as workers strive to combat the highest inflation in four decades.

The ability of the government and the capitalist state to regulate the class struggle is crucial because there is nothing more destabilising to the financial system if it gets out of control and the working class breaks out of the straitjacket imposed by the trade union bureaucracy.

The growing lack of confidence in the US dollar is reflected in the gold market, where not only speculators and traders are making increased purchases but central banks.

A recent report in the FT on what it called “the new gold boom” noted that last year central banks bought 1079 tonnes of bullion, the most since records began in 1950.

Back in January, Krishan Gopaul, senior analyst at the World Gold Council (WGC), pointed to “colossal” central bank buying and that since 2010 they had become net purchasers of gold following two decades of net sales.

Gold is trading around $2,000 per ounce, close to its record high, its price having risen by more than a fifth since November last year.

As one would expect, various representatives of the gold industry, such as the WGC, are talking up the prospects for a further surge. But the issues to which they point are not mere hype.

Mark Bristow of Barrick Gold, the world’s second largest gold producer, noted the effects of inflation in a comment to the FT, saying the “genie was out of the bottle.”

“The harsh reality is when you have more debt than GDP, there’s only two ways to get out of it: have a major financial correction or grow your way out. We can’t grow out of this. The only way out is a hard global landing,” he said.

The warnings on debt are highlighted in findings by the global consultancy firm McKinsey, reported by FT columnist Gillian Tett.

According to the McKinsey analysis, “since 2000, the world’s stock of paper wealth (the speculative, unrealised price of all its financial assets) has jumped by some $160 trillion.”

Tett noted that while some of the rise reflected growth, “it primarily stems from a sharp rise in global debt and in the supply of money through quantitative easing.” For every dollar of global investment since 2000 some $1.90 of debt has been added and in the 2020 and 20121 period this rose to $3.40 for every dollar of net investment.

A dollar crisis, either because of some unexpected shock, such as a large withdrawal from the US debt market by a major investor such as China or Japan, or because of a steady erosion of confidence, would have far-reaching political implications. This is because in both its domestic and foreign policy, the US had become evermore dependent on global dollar hegemony.

In a Washington Post comment published last month, Fareed Zakaria said while there was not a single replacement for the dollar and there would not be one, the US currency could “suffer weakness by a thousand cuts.”

He explained that the ability of the US government to spend money seeming without any concerns about deficits, increasing public debt five-fold to $31.5 trillion today over the course of 20 years, and lifting the size of the Fed’s balance sheet 12-fold to deal with financial crashes, was only possible because of the dollar’s unique global status.

“If that wanes, America will face a reckoning like none before,” he concluded.

Over the course of many decades Marxist political economy has been engaged in a battle with the representatives of bourgeois economics over the inherent contradictions of the capitalist system.

Marxists have continually drawn out that, whatever the political and economic manoeuvres undertaken to try to alleviate them, these contradictions—between socialised production and private property and the world economy and its division into rival nation-states—fester and grow, leading, at a certain point, to a catastrophic breakdown of the capitalist economic order.

That argument has been settled not only theoretically but by the test of events. Anyone who is in any way economically literate is forced to the conclusion there is a deep-seated crisis of global capitalism.

Writing on the outcome of the G7 meeting in Hiroshima earlier this month, Financial Times economic columnist Martin Wolf noted that “hopes of a co-operative global economic order … have evaporated” and that “neither global cooperation nor western domination look feasible.”

“What might follow?” he continued, “Alas, ‘division’ might be one answer and ‘anarchy’ another.”

The crisis has arisen despite the efforts to counteract it, measures which, while they may have provided short-term fixes, have only intensified the basic trends.

For example, after the crisis of 2008 the major powers sought to prevent a total meltdown of the financial system through the injection of trillions of dollars of essentially free money. But as the escalation of debt indicates, this has only intensified the underlying crisis.

And even the so-called regulatory reforms in the US supposedly aimed at preventing a repetition of those events have failed—evidenced by the “systemic” banking crisis that erupted this March.

Moreover, it is widely acknowledged that the limited curbs on the activities of major banks have given rise to continuous liquidity problems in the existentially important $22 trillion US Treasury market.

The question which therefore arise is: What next?

On the one side the imperialist powers, with the US playing the central role, are being propelled by the insoluble contradictions of the profit system over which they preside on to the path of world war—as they were twice during the 20th century—accompanied by evermore frenzied efforts to make the working class pay.

There are no compromises waiting in the wings to be implemented if only a more rational outlook prevails. The refusal by the US to entertain any prospect of negotiations to end the bloodbath in Ukraine and the growing economic warfare against China, accompanied by military preparations, demonstrate that rationality has been cast aside.

Global crisis in early years childcare highlighted by report

Harvey Thompson

The international children’s charity Theirworld has painted a devastating picture of the early childhood of most of the world’s children.

The charity, which is pledged to “ending the global education crisis and unleashing the potential of the next generation”, began its recent report, “Act for Early Years - A call for a global movement to support the world’s youngest children”, with the following assessment:

“Around the world, the situation for the youngest members of society and the people who take care of themparents, carers, nursery teachers, teaching assistants—is worsening and suffering from a lack of investment and interest. There is truly a global crisis in the early years.”

The report "Act for Early Years - A call for a global movement to support the world’s youngest children", authotred by international children’s charity, Theirworld [Photo: screenshot: Theirworld]

The study collated stark findings on conditions currently facing the world’s population under the age of five:

• Malnutrition and stunting impact an estimated 250 million children under five years-of-age, “thwarting their development at a critical moment in their lives” (Ndayizigiye, et al 2022).
• Of the global population of 100 million displaced people, almost 12 million are estimated to be children under the age of five (Moving Minds Alliance, 2022).
• Almost half of all children (250 million) under five years-of-age, in low and middle-income countries, are at risk of not reaching their “development potential” (The Lancet, 2016).
• 350 million children below primary-school entry age globally do not have access to needed childcare (World Bank, 2021).
• Over 175 million children globally (almost half of all pre-primary-age children) are not enrolled in pre-school. In low-income countries, the figure is only one in five (UNICEF, 2019).
• In European countries of the Organisation for Economic Co-operation and Development (OECD), children under the age of three years in low-income households are one-third less likely to be able to participate in early childhood education and care than those in high-income households (OECD, 2020).
• In Cameroon, 69 percent of the richest percentile of three to four-year-olds attend pre-school compared to 2 percent of the poorest. In Malawi, 67 percent of the richest percentile attend pre-school compared to 27 percent of the poorest (World Inequality Database on Education).
• The share of humanitarian aid supporting early childhood development in emergencies is just 2 percent (Moving Minds Alliance, 2020).

The report acknowledges that much of this data has already been superseded by world events—most notably by the effects of the COVID-19 pandemic—and social conditions for the world’s youngest inhabitants has undergone a drastic deterioration, as the world’s governments withdrew from even the modest commitments of former years.

The study does not allude to the stratospheric rises in military spending of these same governments while they eviscerate social programmes for their populations. OECD countries (which in 2017, collectively comprised 42.8 percent of global GDP) spend on average of only 0.7 percent of GDP on early childhood education and care (OECD, 2022); the US and the UK spend less—0.3 percent and 0.5 percent respectively. Even before the recent massive increases in military budgets to wage war against Russia in Ukraine, OECD states spent on average 2.4 percent of their GDP on their military. Central and Western European military budgets have now climbed to a combined $345 billion; 30 percent higher than a decade ago.

As part of the study, a survey was commissioned by Theirworld, and conducted by Hall + Partners. The survey talked to more than 7,000 parents and carers in the UK, US, Nigeria, Brazil, Turkey, India and the Netherlands; the countries being chosen to “represent geographically and economically diverse regions.”

The authors describe “a global early years crisis in which children are being deprived of education and care in their most formative years due to the spiraling cost of nursery and preschool fees.”

Unaffordable childcare fees have forced most parents to take on more work, or either reduce or entirely abandon accessing formal childcare.

• Eight in 10 parents in Nigeria (85 percent) have had to make major financial sacrifices in order to afford childcare, along with 82 percent in India, 81 percent in Turkey, 73 percent in Brazil, 66 percent in the US and 65 percent in the UK.
• A rising proportion of parents with children under five are being forced to quit employment or drop out of higher education to avoid paying childcare fees.
• A third of parents in India (33 percent) have had to do so, while in the US, the figure stands at 27 percent, in the UK; 23 percent, in the Netherlands; 22 percent, in Brazil; 17 percent, in Turkey; 16 percent and in Nigeria; 13 percent.

Parents in the UK face a “tougher struggle” to afford nursery and child-minder fees than those in the Netherlands, US, India, Brazil, Turkey and Nigeria.

• Almost three-quarters of UK parents (74 percent) said they find it difficult to meet childcare costs, compared to 52 percent in India, 57 percent in the Netherlands, 60 percent in Nigeria, 68 percent in the US and Brazil, and 72 percent in Turkey.

This last statistic points directly to the decade of social austerity in which around 1,500 children’s centres—predominantly in the poorest areas of the UK, have closed since 2010. Recent freedom of information requests to local authorities in Birmingham (the UK’s second largest city with a population of over 1 million) show that in 2010 there were 189 council-run children centres, but only 75 remained by 2021.

A closed down Sure Start children's centre and adjoining play area in Ardwick, Manchester. The Bushmore Sure Start site was one of two children's centres closed in Ardwick in 2013 by Labour Party-run Manchester City Council. [Photo: WSWS]

The cull continues. In January, Kent County Council announced plans to close 35 children’s centres as part of an operation by its Conservative Party leaders to save £6 million this year.

An estimated 43,000 working mothers dropped out of the UK workforce during 2022 to look after family. Net childcare costs represented almost a third of the income of a family on the average UK wage, according to OECD figures, compared to 1 percent in Germany. This is due to the lack of free childcare from ages one to three years.

The OECD found that that Britain had slipped down five places to 14th among wealthy nations on the table of women in work. Some women workers might not even show up in the statistics as economically inactive if they work fewer hours to fill childcare gaps.

Theirworld’s report offers only the most timid prescriptions that would hardly inconvenience the world’s governments. The foreword to the study was written by Theirworld’s current chair, Sarah Brown; the wife of former UK prime minister and chancellor, Gordon Brown. As prime minister during the global financial crisis of 2007-2009, Brown enacted the multi-billion pound bailout of the failing banks. At its peak, the cash cost of these interventions was £137 billion.

Broadly similar measures were implemented by governments in the US and the European Union. In addition to the vast cash subvention to the banks, the Brown government enacted financial guarantees with the aim of restoring confidence which the National Audit Office estimated at over £1 trillion at peak support.

This constituted the then largest redistribution of wealth from the working class to the financial elite in British history. It inaugurated an era of mass austerity carried out by every government since, with Brown’s government announcing that the National Health Service had to find 20 billion in efficiency savings.

Brown was previously chancellor in the Tony Blair’s government and co-architect with him of “New Labour”. They carried out a Thatcherite privatisation binge across whole swathes of society, including education and the early year children’s services.

The household of current Conservative government Prime Minister Rishi Sunak was recently discovered to be directly profiteering from the privatisation of children’s services. Sunak’s wife, heiress and multi-hundred millionaire Akshata Murty, is a shareholder in Koru Kids, which stands to financially benefit from a government policy announced in the last budget.

When the most powerful in society carry out such a merciless assault on the conditions and life chances of society’s most vulnerable members—the very youngest—the social order condemns itself.

A new interpretation regarding the origin of Homo sapiens

Philip Guelpa

Newly published research appearing in the journal Nature (Ragsdale, A. P. et al., “A weakly structured stem for human origins in Africa,” Nature [2023]) proposes a new interpretation regarding the origin of our species—Homo sapiens. 

The current dominant theory holds that Homo sapiens evolved from a single, local population of a previous species of the genus Homo somewhere in Africa, between roughly 300,000 and 100,000 years ago. According to this scenario, the new species then spread widely, eventually replacing the other existing species of genus Homo. However, the relatively small number of human fossils known from Africa and the lack of ancient DNA during that time period have made a more precise tracing of the evolution of modern humans problematic. The new interpretation, based primarily on detailed genetic studies of recent populations, posits that Homo sapiens emerged from the interaction of a number of regional populations which, despite some morphological differences, engaged in sufficient contact with each other that gene flow between them resulted in roughly simultaneous evolution. 

The authors of the new study characterize human evolution as a “weakly structured stem” which more closely resembles a tangled vine, consisting of multiple, interacting regional populations, rather than the more traditional “tree of life” model, in which local populations branch off and become genetically isolated, giving rise to new species. Although not explicitly called out in the Nature article, if supported by continuing research, this new model has significant implications for understanding how human evolution was based on a complex dialectic between culture and biology, rather than the more purely biological mechanisms of natural selection which govern the evolution of other species. This tangled vine view resembles what has been known as the “single-species hypothesis,” which had fallen out of favor in recent decades but has now received new support.  

This new interpretation is based on statistical analysis of a large database of genetic information drawn primarily from African and some Eurasian populations as well as from Neanderthal fossils. It employs modeling of genetic variation between contemporary populations which can be projected back in time to trace migrations and interactions between groups over the last 150,000 years to a greater degree than was possible for earlier studies. The result demonstrates a significant amount of gene flow between regions over time. This finding reinforces the view that current physical variations between populations are superficial and merely represent the temporary state of a constant shuffling of populations that has been ongoing for hundreds of thousands of years. 

A composite reconstruction of the earliest known Homo sapiens fossils from Jebel Irhoud (Morocco) dated to 300,000 years ago. [Photo: Philipp Gunz, MPI EVA Leipzig ]

Although the theory that H. sapiens originated in one local population and then spread has been the dominant interpretation for some time, according to the authors it does not fit well with either the archaeological or fossil evidence. Indeed, the physical record indicates a relatively synchronous (on a geological time scale) appearance of both artifacts and fossils attributable to modern humans across a wide area of Africa, rather than a single point of origin followed by a gradual dispersal.

The existing model, postulating one local point of origin, had gained favor since it conforms to the general pattern of biological evolution in which geographically dispersed groups of a given species are largely genetically isolated, with little or no mating between individuals belonging to these distinct populations. This lack of gene flow promotes what is known as “genetic drift,” the gradual accumulation of random mutations which tend to differ from one population to the next. This combines with different selective pressures created by variations in local environments. Together, over time, genetic differences tend to increase to the point where members of these different populations become genetically incompatible and can no longer produce viable offspring with each other. This is known as “speciation.” 

Mules are a good example of this process in an advanced but not completed stage. The offspring produced by matings between horses and donkeys, mules are viable as individuals but are almost always reproductively sterile. Therefore, there is no effective gene flow between the two parent species. Coydogs, on the other hand, the products of matings between coyotes and domestic dogs, do produce reproductively viable offspring. Therefore, the two are not distinct species.

The newly proposed theory of modern human origins supports the view (not explicitly referenced in the Nature article) that the genus Homo, at least in the later period of its evolution, does not entirely conform with the standard model of speciation. This is likely due to the fact that humans rely to a large extent on changes in culture rather than the modification of their physical features to adapt to their environment. The former (culture) is much more flexible and rapid than the latter (biology) and can more easily be shared between populations. Tools and techniques as well as patterns of social organization can be modified using abstract thought to interpret the features of novel environments and develop appropriate adaptations. This has allowed humans to successfully occupy a wide range of environments, from the arctic to tropical rainforests and deserts with relatively little physical adaptation and, therefore, without speciation. 

Other research in recent years tends to support the view that many, though not necessarily all earlier populations of the genus Homo (e.g., Homo naledi and the Flores “hobbits”), even in far flung regions, while exhibiting some genetic variation, did not undergo the degree of change resulting in speciation. A prime example of this is the finding that modern Eurasian populations of Homo sapiens carry approximately 2 percent of Neanderthal DNA, thus demonstrating that these populations, despite morphological differences, were not genetically isolated and were able to successfully interbreed when modern humans migrated out of Africa. Therefore, they did not represent distinct species.

As indicated, the proposed “tangled vine” model of Homo sapiens evolution not only is more in accord with the available archaeological and biological evidence, it supports the view that modern humans are the product of a complex, dialectical interaction between physical and cultural adaptation to a degree qualitatively distinct from all other animals.