After listening to Pedro Páez, ex minister for Economic Policy Coordination in Ecuador and current delegate of President Correa for the new financial architecture, I was able to verify how much ignorance there is in Chile about the new economic proposals for the region. Therefore I would like to share some reflections on the issue.
Situated in the historic moment of a change civilisation, we are analysing the current crises from certain budgets and a certain system of beliefs that are also in crisis and do not work. The current crisis is not a product of a technical or natural problem. This is a crisis of hegemony; it is a process of expropriation of wills. There are sectors of power that time and time again are tempted to use destructive force in their favour.
If we review the process of the capitalist system we observe that its golden age was the post-war era in which capital produced industrialisation and, discovering that it needed to increase the consumption capacity, it turned part of its profits into salaries for the same workers, to recuperate it by selling them what they were producing. However, with the subsequent rise of raw materials, the rate of profit of capital plummeted and only recovered again with the neoliberal system. The neoliberal system is the exacerbation of monetarism and the conversion of all assets and all commodities produced into a financial asset. The transaction of these financial assets made the rate of profits rise exponentially until reaching the current situation.
The financial system means the concentration of wealth and control of states. The financial system is acquiring all the sources of natural resources and systems of production. It resolves any difficulty in its rate of profit by creating financial crises, thereby accelerating the extraction of capital from the people and acquiring state assets through forced privatisations.
Consumption needs to be increased to maintain the rate of profit and therefore the economy of waste begins, in other words, a structure of production designed so that things do not last. Research is oriented towards everything produced being disposable. Large companies employ their engineers to design products that do not last. That is the logic of capital. Then dislocation of the economy gets production to take place where labour is very cheap. The wealth is concentrated and social polarisation is produced.
To maintain consumption with low salaries, a lack of income is replaced with credit. Salaries that were the engine of the economy in the capitalism of the 60s are replaced by credit thereby increasing even further the rate of profit of financial capital. Productive capital is also subordinated to financial capital, thereby recuperating the rate of profit, managing to sell and buy the same asset several times over but reducing the rate of investment. Everything is compromised with speculation. The golden years of capitalism were achieved through the redistributive effort that produced the increase in salaries with the “new deal” of the post war era. Debt is not a problem of the system, it is the method used to extract wealth from the people and it is the current mode of capital concentration. It is a form of power. Inequality is systematically created by the generation of debt. We would have to stop eating for ten years to pay off the accumulated debt.
Today it is a crisis of overproduction where corruption and immorality have been institutionalised. In reality the actual economy, especially in Latin America, is sustained thanks to the high prices of the raw material, in other words, an exogenous factor over which there is no control. This shows the weakness of the current situation.
The issue at heart is Sovereignty and Integration. Sovereignty means the ability of people, of individuals, to decide. It is about self-determination. What sovereignty can an unemployed person have? What freedom can we talk about if anonymous market forces impose what must be done?
The direction of change that we have to produce is towards a New Financial Architecture that promotes freedom and human creativity, that guarantees the right to work, that strengthens sovereignty and integration and that generates a productive transformation. This New Architecture must include:
A new articulation between State and the Market: Improve the State and create more Markets; a new relationship between financial capital and productive capital; new kind of development bank that enables diverse forms of production to flourish; new system of compensation payment, with a currency founded on trust and work: an armoured plate from the speculative attacks of big capital.
A strategic political alliance is needed that enables a reduction in risks, a reduction in middle-men, a reduction in operation costs and time to be saved.
The above is translated into the following immediate measures for Latin American Regional Integration:
– the Southern Bank
– the Southern Fund (replacing the IMF)
– the Networks of Central Banks
– Inconvertible money (Sucre).
The Southern Bank has to have priorities in developing projects to avoid concentration again. These priorities are food, energy and knowledge sovereignty.
Energy sovereignty means a complete change in the way energy is obtained. First of all, it means creating an interconnected regional energy model and not an isolated national one.
Finally, the real sovereignty today is knowledge; sovereignty is not synonymous with property, in a world where seeds and species, chemical and technical processes are patented. Sovereignty in knowledge is perhaps the key factor in developing the Southern Bank.
The Network of Central Banks that can export and import directly without needing banks in the US. This brings down costs, saves time and simplifies operations.
Inconvertible money which is not obligatory currency, but imposed by direct commercial advantage, to bring down costs and enable surplus money to be reinvested in the same region.
These initiatives are beginning to take shape and take off in the region. However, Chile has been notoriously absent from them, remaining evermore isolated and at the risk of having to confront the tremendous challenge of the developing crisis alone, with the danger that this entails. We are convinced that it is people coming together which will make an exit from this global crisis possible.
*Translated from Spanish by Rhona Desmond*