RECESSION DOESN'T HIT BIRDS, ANIMALS

Global meltdown precipitates
Dhaka's export fall

Maswood Alam Khan

Bangladesh may have to feel a little jolted if the global financial meltdown precipitates our country into temporary hardship due to a sudden fall of our exports, but under no circumstances we Bangladeshis will be hit hard by the impending recession however severe or prolonged the recession may turn into. Because we are exceptionally resilient and we can eke out our living depending on what nature will offer us; and also because unlike ravenous gamblers of the capitalistic world we have not yet mastered the scam of 'naked short selling', a mischievous practice of selling a financial instrument that the seller does not own at the time of the sale.
   However, with almost all the major countries already in the grip of recession, governments have been bracing themselves for long economic battles and companies have already started retrenching by slashing jobs, paying lower wages and cutting corners on other expenses. Ripples of recession have not yet passed through Bangladesh; but we have already been feeling some pinches in our shoes. Companies in Bangladesh seem to have taken a break in their development spree and are about to lay off workers and slow down productions as dark clouds of recession are engulfing the sky of the economic world.
   Commoners, especially those with their fixed monthly incomes having no alternative source of earnings other than their own jobs, like you and me, would gradually be driven into corners. Only those urban people who, on the strength of their money, muscle, or special skills, would be able to find their ways out of tight corners and those rural people, the overwhelming majority of our population, who are rooted in their villages will somehow survive in the next few months or years should the present recession, which seems poised to be prolonged, continue hitting us below the belt. The rule "survival of the fittest" will reign supreme. The weak will fall off the cliff on their run for relief.
   Economists and financial analysts, like doom merchants, are quick in exuding a sense of impending gloom at the slightest signs of economic downturn and we are also acclimatized to letting their pessimisms go in one ear and out the other. But, this time the prophets of doom who are saying that the sky of the economic world has truly turned stark dark and soon the inevitable economic fallout would overwhelm the whole world are not wrong. We are getting telltale smell of a huge impending recession, as massive as that in 1930s, as we read and hear how big players in the business world are screeching brakes to slow or stop the wheels of their factories.
   Toyota, a Japanese giant in the auto world, has warned that it will post a net loss of US$ 3.6 billion. It has already halted work at its 12 auto plants in Japan. "Schutte" of Germany, which makes capital machineries that churn out 80 percent of the world's spark plugs, is contemplating to lay off workers in a big scale as orders are down 50 percent from a year ago. In Europe, industrial production is down 12 percent from a year ago. In Brazil, it has fallen 15 percent and in Taiwan, a stunning 43 percent. In fact, fall of trade is faster than the fall of production. Exports out of China, which is known as the workshop of the world, have fallen more than 25 percent and millions of workers are being laid off from the Chinese factories. Germany's exports have been down 20 percent from a year ago and Japan's have plunged a staggering 46 percent. So, more workers can expect to lose their jobs around the world in coming months as manufacturers continue to cut production and global trade continues to contract.
   Not only manufacturers supplying the auto industries and other so-called big iron manufacturers of products like locomotives, jet engines and power turbines are screeching the brakes of wheels in their factories, makers of a variety of other products like readymade garments, handicrafts, clothes, toys and jewellery are suffering too. More than 50 percent of toy manufacturers have shut down their factories in China-a tragic demise of a burgeoning Chinese industry that fetched for China US$ 5.17 billion in the year 2007 through exports of toys. Exports of handicrafts from India, since last April, have fallen by 55 percent to US$ 1.35 billion. Millions of jobs in India have already been slashed. Despite tax cuts and a US$ 64 million stimulus package announced in February, Indian textile makers are pushing for more government help.
   Growth of exports from Bangladesh has fallen 2.5 percent in the current one-year period ending February compared to the corresponding period of the previous year. Pakistan exported in the month of February, 2009 goods worth US$ 1.266 billion against exports of US$ 1.538 in the same month of the previous year. Though our exports are less exposed to the worsening global financial downturn (due mainly to our low-ended products at cheaper costs) we may find it difficult to achieve our annual export target of 16.3 billion for the current fiscal year and our fate may mimic India's or Pakistan's, if we fail to adopt measures to stimulate our nascent export industries.
   Decline in trade and manufacturing is nothing new or surprising to shout about; swings in business upward or downward are normal trends in hill- and valley-like global economic landscapes that should not herald or portend a heartening or menacing signal that something hilarious or horrible is going to happen in near future. What really are shocking the pundits and chilling their blood are the depth and the speed of the plunge-the biggest since the World War II-and the self-reinforcing trend that ominously recall how successive busts during the financial crisis of 1929 grew into the Great Depression that had led to tightening of credit and a resultant consumer fear that ultimately reduced demand for manufactured goods in one country after another in a cascading effect, creating a downward spiral that reduced global trade to an abysmal depth.
   Our blood runs cold and gets clotted as we attempt to revisit those dark days of economic depression in 1930s when housewives would find paper currencies cheaper than conventional fuels to burn in their ovens to cook their meals and when factory owners used to carry truckloads of money to pay wages to their hungry workers!!
   This time around the spectre of recession may not be as horrendous as that of the early 1930s.
   There are people who don't perish in perils and there are businesses which don't sink in economic hardships. Workers and businessmen who were engaged in repair shops, bicycle shops, healthcare services, second hand stores and bus transportation, to cite a few examples, survived the Great Depression. So were professionals who were engaged in legal services since a higher crime rate is inevitable in bad economic times.

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Peter Custers

The German system thus appears to be well fit for the task of achieving a historical transition in the use of energy sources, - from a highly polluting source of energy, i.e. the fossil fuels which threaten to cause climate catastrophe - towards the use of forms of energy which are not accompanied by emissions of CO2. Hence, the green significance of the given measure can hardly be slighted.
   Yet proponents of the system also argue that the system has social significance, since the legal rule regarding the feed-in-tariff system tends to enhance employment opportunities. In reports on the tariff system, it is argued that no less than 60 percent of employment in the industrial sector where means of production to generate alternative energy such as windmills and solar panels are manufactured (234 thousand employees in 2006), can be ascribed to the given tariff system. In addition, a Green New Deal could propose government investments which further facilitate the transition in the use of energy sources, and which help to fight unemployment under today´s crisis conditions. In any case, the German example is meaningful, since it has already has proven its effectiveness in practice.
   One critical point that needs to be added is this. The staging of a transition from an economy based on the use of fossil fuels towards an economy based on alternative energy sources is admittedly radical. If the process as initiated is completed, it would herald a rupture with a practice which capitalist economies initiated way back, at the time of the 18th century Industrial Revolution. Some specialists further argue that the stated transformation inter alia implies a transformation towards a more independent type of production of energy by central capitalist economies. This then would contrast with the present global pattern of energy production, which is based on extraction and on the import/export of fossil energy sources. Nevertheless, we should not overlook the fact that the production of raw materials required to manufacture solar panels and windmills requires extraction as well, i.e. extraction of raw materials for alternative energy technology, which too will get exhausted in the foreseeable future. In other words: in order to ensure sustainability,- the transition towards renewable energy use, such as solar, wind and other alternative energy sources, does need to be accompanied by a transition towards an economy without growth, i.e. a 'stationary' economy.
   
   Clear definition needed
   Let me now try to summarise my discourse. First: any use of the term Green New Deal should be avoided, unless and until the concept is clearly defined and its parameters set. Originally, i.e. speaking from a historical point of view, the concept of New Deal hails from the US. It was coined during a period of history, the 1930s, when the American economy had not yet been militarized, as it has been since. Consecutive American governments, ever since World War Two, have employed mechanisms of economic stimulation, which were not just keynesian in kind, but should properly be termed military keynesian. In contrast, the specific measures employed by President Roosevelt during the 1930s were characterized by the fact that they were primarily civilian in nature. It would be extremely cynical, if a present day version of the New Deal would fail to implement a dramatic reduction in the size of (the US's) military allocations, for it is outright impermissible to label the production of weapons and of armament systems as ´green´. Hence, organizations wishing to go along with the discourse in favor of a Green New Deal should realize that such a Deal inescapably demands the scrapping of military keynesianism.
   
   Paradox
   A Green New Deal further should also possess the criteria that only investments and transfer measures which are clearly productive, are acceptable. Productive investments refer to those investments that unequivocally aim at sustaining life on earth; they exclude investments and forms of manufacturing that express a paradox. This, for instance, means that all production of nuclear energy is to be cancelled. It is true, of course, that nuclear reactors do produce energy - energy which can be utilized to enhance human welfare. Yet the production of nuclear energy up to today continues to result in manifold types of nuclear and chemical waste. In the course of the mining of uranium, vast mountains of radioactive waste are generated. Also, when nuclear fuel rods are reprocessed in reprocessing facilities, - high-level nuclear waste that is intensily radioactive is generated, which waste cannot be deposited without risks to human health and to nature. Clearly, all public investments which tend to aggravate society´s problem of waste, or lead to an increase in the emissions of greenhouse gases, should be averted under a Green New Deal.
   Measures that can be defended, are measures which tend to facilitate the transition towards an economy based on renewable energy. A concrete example in mind is the German feed-in-tariff system. Under this system, the additional costs incurred via production of solar energy, wind energy and other forms of alternative energy, are transferred from the producers of these forms of energy towards the consumers of all electricity that is sold in the German economy. This system helps accelerate the transition - from an economy based on fossil fuels emitting a massive amount of C02 into the atmosphere, towards an economy without greenhouse gas emissions. The privileging of the producers of renewable energy, as happens under the German feed-in-tariff system, also results in the creation of employment, notably employment by companies which manufacture windmills, solar panels, and other alternative energy technology. The given type of transfer measure thus contains both a green and a social element. Moreover, a Green New Deal can be further strengthened through the granting of subsidies, or via direct investments by the state in the sector where alternative energy technology is produced.
   In the end, a Green New Deal if conceived as purely keynesian, does not constitute a solution for this reasons that Keynes took the economy of exponential growth as his starting point. Yet the capitalist economy with its drive to accumulate, in the course of time is bound to get derailed, since it will gradually lead to the exhaustion of raw materials, and to ever rising expenditures and energy use in connection with extraction of raw materials. In other words: it is high time a transition be staged away from the present economy of capital accumulation - towards an economy which is stationary, which refuses to grow.
   This transition, moreover, needs to be staged at the world level, and needs to be strategized in a manner which will protect the global South. At present, the given perspective may sound very utopian, exactly the way the concept of a Green New Deal would have sounded utopian if proposed a few years back. Yet it is truly important that climate activists and environmentalists start discussing the given perspective, as part of their struggle to defend planet earth. In a period of economic crisis such as now exists, when dramatic changes and transformations are inevitable, we need a new vision, one that helps protect all forms of life on planet earth.
   Dr. Peter Custers is Affiliated Researcher, International Institute for Asian Studies (I.I.A.S.),Leiden, the Netherlands. www. petercusters.nl/Email: antimil@hotmail.com
   
   References:
   (1) on the acceptance by the governments of capitalist states, of the concept of a Green New Deal, see for instance Antoine Reverchon, 'Le Pari Mondial de la Croissance Verte' (Le Monde Economie, February 3, 2009);
   (2) for Keynes' theory, see John Maynard Keynes, The General Theory of Employment, Interest and Money (Harvest/Harcourt, Orlando, Florida, USA, 1964);
   (3) data cited from Paul A.Baran and Paul M.Sweezy , Monopoly Capital. An Essay on the American Economic and Social Order (Monthly Review Press, New York., USA, 1964, p.159-160); for an elaborate analysis of the policy pursued by the US government during the depression of the 1930s, see Alvin H.Hansen, Fiscal Policy and Business Cycles (W.W.Norton & Company Inc., New York, 1941 - in particular Part One, Chapter IV, 'Fiscal Policy in the Recovery', p.83);
   (4) Paul A.Baran and Paul M.Sweezy (1964), op.cit., p.160;
   (5) for a recent theoretical analysis of military keynesian policymaking, zie Peter Custers, 'Military Keynesianism Today - An Innovative Discourse' (Leiden, December, 2008 - see the website of the 'Tilburg Declaration': www.economischegroei.net );
   (6) for data on the US's military allocations under Bush jr., see eg. Chalmers Johnson, 'The Economic Disaster Which is Military Keynesianism. Why the US has Really Gone Broke´ - http://mondediplo.com/2008/02/05military ;
   (7) for a critical discussion regarding the role of the concepts 'productive' and 'unproductive' in economic theory, see Peter Custers, Questioning Globalized Militarism. Nuclear and Military Production and Critical Economic Theory (Tulika Publishers, New Delhi/Merlin Press, Londen, 2007, Chapter Six, p.82);
   (8) for data on the dispropoprtionate growth of the capital of financial institutions during the era of neoliberalism, see eg. the document of the Euromemorandum Group, 'Democratic Transformation of European Finance, A Full Employment Regime and Ecological Restructuring. Alternatives to Finance Driven Capitalism ´- www.memo-europe.uni-bremen.de ;
   (9) for the concept of 'stationary state' economy, see for instance Herman E.Daly and Kenneth N.Townsend, Valuing the Earth. Economics, Ecology, Ethics (MIT Press, Cambridge, Massachusetts, 1993, in particular the Chapters 13, 15 en 19; and John Stuart Mills, Principles of Political Economy. Books IV and V (Penguin Books, London, 1988, Chapter VI, p.113); on the idea of a stationary effective money supply, as discussed during the depression of the 1930s, see Alvin H.Hansen, 'Recent Trends in Business Cycle Literature' (in Alvin H.Hansen, Full Recovery or Stagnation? - Adam and Charles Black, London, United Kingdom, 1938, p.111);
   (10) a neat summary on the functioning of the German feed-in-tariff system is provided in: ´Success Story: Feed-In-Tariffs Support Renewable Energy in Germany´ -
   www.e-parl.net/eparlineages/ general/pdf/0806 ;
   (11) ibid;
   (12) on the historical transition from reliance on renewables towards reliance on fossil fuels that accompanied the Industrial Revolution, see for instance Clive Ponting, A New Green History of the World. The Environment and the Collapse of Civilizations (Penguin Books, London, 2007). (Concluded)

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