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Letters, July/August 2012

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Issue 371

Rio not so Grande

Ian Rappel’s excellent article in last month’s Socialist Review (Frontlines, June 2012) detailed the limited expectations that many had for the Rio+20 Earth Summit. In the 20 years since the first conference inaction over environmental questions has become the norm and, despite the growing threat from climate change, this will continue to be the outcome of the 2012 event.

Yet the scale of the failure at Rio this time surprised even seasoned observers of international environment conferences. Writing in the Guardian, George Monbiot called the draft document “283 paragraphs of fluff”.

In a desperate attempt to ensure that a document was agreed, the draft statement was stripped of anything even remotely contentious. As a result, the document contained no time frame for action. This is a step backwards. In the past there has at least been an acknowledgement of the need for urgent action, even if the solutions were limited.

In reality, Rio+20 represented the constituent nations attempting to protect their own narrow interests. In particular, the richer nations refused to offer concrete support to the developing world. At the heart of the UN conference was the idea of a “green economy”. But this is very much a green world which is opened up even more to the multinationals. The conference too was opened up – not to journalists, who had even less access than previously, but to thousands of corporate lobbyists, from Nestlé to Pepsi, who pushed their interests.

The British government put itself at the forefront of arguing for the further privatisation of nature, with Nick Clegg warning that countries must not ignore “the state of assets like forests or coastal areas – vital natural capital”. Such commodification of nature was blocked from the final declaration, but remains at the heart of many governments’ policies.

Outside the UN, the alternative People’s Summit which I was able to attend attracted thousands who debated the alternatives, and on the opening day tens of thousands of trade unionists, peasant organisations and environmentalists marched demanding real action. The protest turnout was impressive, yet sadly it was not reflected in the People’s Summit itself which failed to attract more than token representation from the Brazilian workers movement and the South American left. This was a shame.

There is a growing understanding that the struggle to prevent environmental catastrophe cannot be separated from the struggles against capitalism. Now, more than ever, we need unity in action to stop the destruction of the planet.

Martin Empson


Credit to Creagh

Sarah Creagh provides a good overview of the key role of credit in the everyday workings of capitalism (Economy Class, June 2012), but we also need to address how the system has changed since Marx’s day – in particular the role of central banks, economic wings of the state, that attempt to control and regulate the system using interest rates. For Marx credit becomes more expensive (interest rates go up) as the demand for it increases. This happens when a boom intensifies and more and more capitalists seek funds to invest. Eventually, rising interest rates become another factor in the more general squeeze on profits that tips a boom over into a slump.

Although we can still see this process operating (like just before the credit crunch), the picture is often complicated by the role of central banks intervening to “speed up” or “slow down” the economy as they see fit. One consequence of this intervention in recent years has been the creation of financial bubbles that generate fragile booms.

So at the end of the 1990s the US Federal Reserve Bank’s policy of low interest rates helped create the dotcom bubble. When this crashed credit did not become more expensive; it became even cheaper as the Fed slashed interest rates to a record low. This led to the disastrous real estate bubble that led to the crash and crisis of 2008 onwards.

Today low interest rates are failing to revive the economy, as a bloated financial system that has been gorging for decades on central bank cheap credit policies tries to save itself from collapse by hoarding cash rather than circulating it. Even so, from past experience it looks like the best governments are hoping for is to inflate another bubble, rather than solve any problems. Marxists can conclude that attempts by the state to regulate the credit system in the interests of the capitalist class have contributed to the current mess and that tinkering in the financial sector does not alter the fundamentals of a system driven towards crisis.

Joe Hartney


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