{"id":866,"date":"2023-05-05T03:53:04","date_gmt":"2023-05-05T03:53:04","guid":{"rendered":"https:\/\/jabardakhal.in\/english\/?p=866"},"modified":"2023-05-05T03:54:59","modified_gmt":"2023-05-05T03:54:59","slug":"is-crisis-knocking-at-the-door","status":"publish","type":"post","link":"https:\/\/jabardakhal.in\/english\/is-crisis-knocking-at-the-door\/","title":{"rendered":"Is Crisis knocking at the door?"},"content":{"rendered":"

A spectre is haunting the West \u2014 the spectre of crisis!<\/span><\/p>\n

It is apparent where the line is borrowed from. Is the situation so as well? Let us take a look. Inflation in the West, especially in the leading nations of globalized capitalism, i.e.<\/em> those belonging to G-7, is already at stake. The inflation in the past decade was only 2-3% or less on an average in each of such nations; however, the last financial year has already exhibited an inflation of 9% in USA, 8.1% in Canada, 11% in UK, 8.8% in Germany, 6.2% in France and 12% in Italy [1]<\/strong>. Even after tightening the monetary policy by their central banks, the inflation has come down to only ~5-7% by now. Evidently, the \u2018spectre\u2019 is natural!<\/span><\/p>\n

Interestingly, Claudio Borio, the head of Monetary and Economic Department of the Bank for International Settlements is confessing: \u201cWe don\u2019t know for sure why inflation suddenly reemerged, and with such vigor, after being dormant for so long<\/em>\u201d [2]<\/strong>. The \u201cinflation surprise was global<\/em>\u201d, says Jonathan D. Ostry, the former acting director of IMF\u2019s Asia-Pacific department, disclosing that \u201cFed <\/em>[Federal Reserve] was not alone in misreading the implications\u2026 The IMF\u2026 described the inflationary surge in a blog by its (then) chief economist, Gita Gopinath,\u2026 pointing to transitory causes and taking comfort in the anchoring of inflation expectations<\/em>\u201d [3]<\/strong>. The same misreading is admitted by Greg Kaplan from University of Chicago, Benjamin Moll from London School of Economics and Political Science, and Giovanni L. Violante from Princeton University in an article published by IMF [4]<\/strong>. Nevertheless, all of them have attributed such catastrophe to the COVID-19 pandemic followed by Russian invasion to Ukraine.<\/span><\/p>\n

But, is this the story?<\/span><\/p>\n

Factually, neither the so-called \u2018pandemic\u2019 nor the Russian invasion to Ukraine is the \u2018cause\u2019 of the crisis; rather, they are the very \u2018effects\u2019. Just before the pandemic-game started (now majority of the common people understand this, although we have been claiming this from the very beginning), in October 2019, the IMF chief Kristalina Georgieva clarified that they were expecting a \u201cslower growth in nearly 90% of the world<\/em>\u201d and the global economy were to exhibit \u201ca synchronized slowdown<\/em>\u201d [5]<\/strong>. However, since then we had loudly expressed our concern on the concern of the bourgeoisie economists who were \u201cdemanding serious makeover of the current economic policies<\/em>\u201d [5]<\/strong>. And very soon it came, through the world-wide lock-downs in the name of COVID-war. Astonishingly, it is possibly the first global pandemic in the history of mankind that did not exhibit any death rate surge over the yearly averages! But more amazingly, can anyone believe that GDP can observe a surge through such lock-downs! In fact, it has happened (except in Germany, possibly due to its older resistance from its eastern bloc). The GDP growth rate in 2021 has become 5.9% in USA, 4.5% in Canada, 7.5% in UK, 2.6% in Germany, 6.8% in France and 6.7% in Italy, all being only \u00a32% over the last decade [1]<\/strong>.<\/span><\/p>\n

Therefore, it is evident that lock-down did not stop the production. In fact, it just shifted the paradigm of production toward ultra-neoliberalism. Here, by neoliberalism we mean, as we have already described in [5-7]<\/strong>, the trend of \u201cproducing costly commodities in relatively smaller numbers but repeatedly by updating or remodeling<\/em>\u201d (i.e.<\/em> the \u2018temporal mode of production\u2019) leading further to the tendency \u201cto make profit out of those commodities which are not even produced presently<\/em>\u201d (i.e.<\/em> derivative trading). Such paradigm of production evidently needs to be based upon enormous collection and manipulation of information. Lock-down has contributed to this through engulfing everything into an \u2018on-line\u2019 system with a gigantic volume in an extremely high speed. Eventually the effect has been observed in the wealth of the few topmost capitalist owners. For instance, we have shown in the following figure how the wealth of the capitalist owners, who became richest five around the world in 2021, have varied with time in last 10 years [8]<\/strong>. It is apparent from the figure that firstly, the owners of Amazon, Tesla, LVMH, Microsoft and Facebook, who are in the business of costly and\/or information related commodities, could make the highest profits within the period of lock-down; and secondly, the wealth of each of them exhibited a jump in 2021. What a blessing of coronavirus!<\/span><\/p>\n

\"\"<\/p>\n

Such speeding up of neoliberal profit making through lock-downs led to the astonishing GDP growth in 2021, which has been followed by the unexpected (according to mainstream economic theories) inflation in 2022, which is still annoying the global capitalist system. However, we had already explained in [7]<\/strong> that \u201cin the era of such temporal mode of production, the GDP growth rate and inflation are tied together in a manner so that one follows the other\u2026 if the growth rate increases, it suffers from greater inflation; and if it tries to lessen the inflation, growth rate falls down. Thus fortune never comes alone in the current neoliberal phase of capitalism, rather, brings with it an unavoidable misfortune<\/em>\u201d. It was also shown in [7] <\/strong>that since the abolition of Bretton Woods system, such inflation, nevertheless, can be transported from one nation to the other by cross-border trading. However, the \u2018export of inflation\u2019 from the West has been significantly interrupted by the surge of shipping cost due to Russian invasion to Ukraine. The UN Conference on Trade and Development (UNCTAD) has made it clear: \u201cThe war in the Ukraine is stifling trade and logistics of Ukraine and the Black Sea region\u2026 This has increased global vessel demand and the cost of shipping around the world<\/em>\u201d [9]<\/strong>. On the other hand, Russia has been successful through this war (in fact a war not against Ukraine but a trade-war with the West) to control its inflation from 18% in April 2022 to 3.5% by this March. However, be it Russia, be it the West, or be it any of the hundreds of nations in the trade chain, the crisis is not going to die.<\/span><\/p>\n

As we have pointed out in [5]<\/strong> that, the \u201crepetitive scheme of production with newer applicative quality in this temporal mode of capitalism has led to generating enormous numbers of contracts regarding production and trade in future<\/em>\u201d which obviously leads to \u201cthe \u2018overproduction in time\u2019 in the current neoliberal regime<\/em>\u201d that \u201cis manifested as the global stocks trades overshooting the real world GDP resulting to periodic financial crises<\/em>\u201d. We have shown a ~8 years period for such cycles of crises along with its continuously increasing baseline. We are predicting the next d-day to come in around 2024 with an enormous amount of public debt completely transforming into non-performing assets on the date of maturity of the contracts.<\/span><\/p>\n

And what about the effects? Not any Marxist but Harold James, the IMF historian, is telling us: \u201cIn the ensuing spiral, increased spending led to more demand, which led to more shortfalls. Another vicious spiral may follow. Rising food and fuel prices could spark discontent, protests, even revolutions and government breakdowns around the world<\/em>\u201d [10]<\/strong>.<\/span><\/p>\n

You don\u2019t need to be a Marxist; reality will make you one.<\/span><\/p>\n

References:<\/strong><\/span><\/p>\n

    \n
  1. https:\/\/tradingeconomics.com<\/a>.<\/li>\n
  2. Claudio Borio, \u201cMonetary policy under test\u201d, IMF publication (March 2023).<\/li>\n
  3. Jonathan D. Ostry, \u201cThe costs of misreading inflation\u201d, IMF publication (January, 2023).<\/li>\n
  4. Greg Kaplan, Benjamin Moll, Giovanni L. Violante, \u201cThe very model of modern monetary policy\u201d, IMF publication (March 2023).<\/li>\n
  5. https:\/\/jabardakhal.in\/english\/neoliberalism-no-reformist-solution-to-its-crisis\/<\/a>.<\/li>\n
  6. https:\/\/jabardakhal.in\/english\/chapter-02-neoliberalism-the-temporal-mode-of-production\/<\/a>.<\/li>\n
  7. https:\/\/jabardakhal.in\/english\/chapter-03-impact-of-temporal-mode-of-production-on-gdp-and-inflation-transportation-of-inflation\/<\/a>.<\/li>\n
  8. https:\/\/www.forbes.com\/real-time-billionaires\/#fa142693d788<\/a>.<\/li>\n
  9. https:\/\/unctad.org\/publication\/maritime-trade-disrupted-war-ukraine-and-its-effects-maritime-trade-logistics<\/a>.<\/li>\n
  10. Harold James, \u201cIn Defense of Globalization\u201d, IMF publication (March 2023).<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

    A spectre is haunting the West \u2014 the spectre of crisis! It is apparent where the line is borrowed from. Is the situation so as well? Let us take a … <\/p>\n","protected":false},"author":6,"featured_media":867,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[30],"tags":[60,39,37,53,40,54],"_links":{"self":[{"href":"https:\/\/jabardakhal.in\/english\/wp-json\/wp\/v2\/posts\/866"}],"collection":[{"href":"https:\/\/jabardakhal.in\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jabardakhal.in\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jabardakhal.in\/english\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/jabardakhal.in\/english\/wp-json\/wp\/v2\/comments?post=866"}],"version-history":[{"count":3,"href":"https:\/\/jabardakhal.in\/english\/wp-json\/wp\/v2\/posts\/866\/revisions"}],"predecessor-version":[{"id":869,"href":"https:\/\/jabardakhal.in\/english\/wp-json\/wp\/v2\/posts\/866\/revisions\/869"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/jabardakhal.in\/english\/wp-json\/wp\/v2\/media\/867"}],"wp:attachment":[{"href":"https:\/\/jabardakhal.in\/english\/wp-json\/wp\/v2\/media?parent=866"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jabardakhal.in\/english\/wp-json\/wp\/v2\/categories?post=866"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jabardakhal.in\/english\/wp-json\/wp\/v2\/tags?post=866"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}