Reviewing James Petras' New Book: Part I

James Petras is Binghamton University, New York Professor Emeritus of Sociology. Besides his long and distinguished academic career, he's a noted figure on the left, a well-respected Latin American expert, and a longtime chronicler of the region' popular struggles. He's also a prolific author of hundreds of articles and dozens of books, most recently his new one titled, "Global Depression and Regional Wars" addressing America, Latin America and the Middle East.

Part I - Global Depression

Variety's famous October 30, 1929 headline is again relevant: "Wall Street Lays an Egg," or as economist Rick Wolff puts it: "Capitalism hit the fan" following a familiar pattern of boom and bust cycles punctuated by bubbles that always burst. Petras explains it this way:

Samuel Boswell explained that "Patriotism is the last refuge of a scoundrel." Perhaps "psycho-babble" is its equivalent for "capitalist ideologues, academics, (self-styled) experts, and financial page editorialists, all of whom use "shoddy economic arguments" to pump life into a bankrupt ideology - one based on:

The World Depression: A Class Analysis

"It is a well-known truism that those who caused (today's) crisis are also (the) greatest beneficiaries of government largesse." Rulers create crises. Workers pay for them.

Since the early 1970s, capitalism went global at the expense of workers experiencing "a relative and absolute decline in (their) share of material income" and well-being. As business consolidated more power, it began "exercis(ing) near absolute control over the location and movements of capital" as well as the ability to exploit labor globally in newly industrialized countries like China, the Asian subcontinent, capitalist Russia, former Soviet republics, and undeveloped ones in Central America and elsewhere.

Huge profits came at the expense of growing inequality from wealth transfers to the rich. A race to the bottom cut wages and benefits, and lower living standards resulted from "the (permanent) conversion from high wage/high skill manufacturing jobs to lower-paid service" ones.

Financialization-caused speculative excesses were fueled by cheap credit and lax regulations. Bubbles resulted producing inevitable collapse. First felt "at the bottom of the speculative chain," they reached the biggest banks responsible for the crisis and major corporations as well - "all of which had been deeply engaged in leveraged buyouts and acquisitions" as well as other unsustainable excesses.

Depression indicators are everywhere, and the parallels to the early 1930s are ominous:

The toll is enormous. "Rising business inventories, declining investment, (business and household) bankruptcies, foreclosures, insolvent banks, massive accumulative losses, restricted access to credit, falling asset values, and a 20% reduction in household wealth (amounting to trillions of dollars) are the cause and consequence of the depression" that promises to be deep and protracted.

Globalization's toxic effects have exacerbated the crisis. Linked together under WTO rules and finance capital, what affects one nation affects all, directly or indirectly, to a greater or lesser degree. "At the same time, regions" were positioned differently so "the effects on them varied substantially."

Latin America

Brazil is faring poorly due to "its high velocity fall in exports and industrial production (and) All indications are that negative growth will persist and deepen during the rest of 2009." President Lula's privatization and globalization policies exacerbated Brazil's crisis. Everything is down except skyrocketing unemployment as growing hundreds of thousands lose jobs.

Growing poverty is also evident, including "5 million impoverished landless rural workers and the 10 million families living on a one-dollar-a-day food-basket handout (as well as) tens of millions of minimum wage workers living on $250 a month."

As the crisis deepens, new investments have stalled. Private credit evaporated. Foreign investment plunged, consumer spending declined, and what's true for Brazil affects other regional economies, especially in Central America and the Caribbean. Being "highly 'integrated' with the US and world economy (they're) experiencing the full force" of its collapse, including rising poverty, crime, and "a potential for popular social upheavals against the incumbent right and center-left governments....The depression demonstrates with crystal clarity the pitfalls of imperial-centered globalization and the stark absence of any remedies for its collaborators in Latin America."

It also augurs change with hard times "spurring the return of the nation-state, as 'de-globalization' accelerates." It's for Latin America to refocus, declare globalization dead, and democratically generate wealth and employment broadly, not shift it upward to the usual recipients.

Eastern Europe and the Ex-communist Countries

These nations experienced hardline shock therapy full force - a destructive cocktail of deregulation, mass-privatizations, state enterprise closings, wage cuts and loss of benefits, wealth transfers to the rich, millions thrown out of work, repressive laws to contain resulting unrest, unrestricted access for foreign corporations to pillage local economies, and arranging their need for foreign investment and credit under terms they negotiate for their own benefit.

As a result, when Western economies crashed, so did Eastern European ones, leaving them dependent on the IMF and other international lending agencies "on onerous terms" favoring capital over people. The same pattern played out globally, including in America where the Fed and Treasury direct public wealth to the top, mainly the giant Wall Street banks that plundered the country and are free to keep doing it, given that Obama facilitates the process.

Asia: The End of the Illusions of De-coupling and Autonomous Growth

"The Great Depression of 2009 (hit) every economy in Asia," including Japan, China, India, and Tiger countries showing even the mighty aren't immune, given their  dependency on export, financial and commodity markets. The global crisis left them vulnerable to lost trade followed by production cuts, bankruptcies, negative growth, mass-unemployment, and millions thrown overboard into deep poverty. Large public capital injections haven't been able to turn sick economies around.

Doing it requires measures not taken - shifting "capital back from private real estate, stock markets and overseas bond purchases (like US Treasuries)....to finance universal health care, education and pensions and the restoration of land to productive use rather than (to) real estate (and other) speculation." Instead strategies are based on "the usual capitalist solution" - aiding the privileged at the expense of all others in a part of the world where many countries have no safety net and those with them made big cutbacks. The human fallout is immense, much as in other parts of the world and America.