Ni Una Mas

Brenthurst Foundation: Ignoring Gender violence and environmental injustice in the maquiladoras


By Ismail Lagardien

13 November 2015. Cost-benefit analyses are fairly central to mainstream Economics. Even if one sets aside developments in Economics of Information or Behaviour Economics, which make room for irrationalities, social and psychological factors or asymmetries in information, most economists will insist, and most of us may agree, that “things have to be paid for”. There is, however, a big divergence when it comes to financial, or “purely economic” reasoning when we get to matters of policy. Put another way, just how much, of what are we prepared to pay for the things we buy?

Without drawing too crude and clumsy caricatures, it is fair to say that mainstream economists would look at profits, and many of us, the “others” of the Economics discipline, may look at social costs, especially issues like abuse, dominance, abused of dominance, willful exploitation, and somatic or structural violence. It is also fair to say that to the economics rationalist, as long as an enterprise is profitable (for the firm or investors), it is good, with the opposite view being, it may be profitable (for the firm or investors), but if the enterprise includes any of the above costs, let us call them the deep social and human costs, it is wrong. This is, of course, a moral position.

Morals, in the same way as “values”, have no place in the economist’s paradise dominated by selective and purposefully arranged (ahistorical) facts, and by rationalism. As Paul Krugman once remarked about his critics (people who objected to his praise of cheap labour): they have no right to moral outcry, and, he said, if everyone thought long and hard enough, they would agree with him – as if to say that all long and hard thinking by everyone, necessarily, ended up at Krugman’s wisdom.

Now then, after that long introduction, we can get to a recent article on Mexico, with a special reference to the maquiladoras, the Mexican incarnation of export processing zones, written by Greg Mills of the Brenthurst Foundation, and Lyal White of the Centre for Dynamic Markets at GIBS and published in the Daily Maverick. It is not a surprise that the Brenthurst Foundation is advised by, among other, a former US military general, Richard B Myers who served on George W Bush’s Joint Chiefs of Staff. Mills, himself, seems terribly proud of the role he played, as part of the Western forces who invaded Afghanistan, and Washington’s war against the people of that country, and in Prism, the massive, secret and indiscriminate, global surveillance by the US intelligence community on millions of people around the world.

Nonetheless, among the conclusions of Mills and White’s article was unflinching praise for the maquiladoras, which are, essentially foreign-owned factories, that have set up shop in Mexico to benefit from cheap labour, and lax environmental laws.  In their article, an unabashed paen to neo-liberal orthodoxy, Mills and White tell only the good stories about growth, the expansion of manufacturing and of exports, and deliver general praise for the North American Free Trade Agreement (NAFTA). For good measure, they threw in a rather dismissive statement on BRICS, with a snarky reference to “hyped-up acronyms and groupings”.

Special praise is reserved for the maquiladoras, with very thin references to costs, and glowing praise for general benefits to the United States and Mexico. There was, also, the de rigueur criticism of China, which is the bete noir of most Western economics rationalists and liberal internationalists,  who are, quite, unable to see another world, greater possibilities and a world order dominated by dark-skinned others. This always reminds me of the racist line which I paraphrase, here: “I’m not anti-Chinese, but….”

Mills and White’s article is available online, and can be readily accessed by anyone with a computer, an internet connection, a source of power, and who has learned to read. What is missing from the Mills and White article, unsurprisingly, is an evaluation of the deep social and human costs; none of which are considered or explained by the writers, and overlooked, or swept aside with references to “the American dream” and “the Mexican dream”. There is, however, another side of the maquiladoras; the part about the abuse suffered by women who work in these centres and the environmental injustice and racism of US corporations. Several research projects have been completed by legal scholars, human rights scholars, and by radical political economists, which produced evidence of systemic abuse of women.

Violence Against Women

About 3,000 maquiladoras operate in free trade zones in and around the border cities of Ciudad Juarez and Tijuana, along the Mexican side of the border with the US. According to the National Council of the Maquiladora Export Industry, they, employ around 1.5 million people, border. Many, if not all the companies that operate along the border, discriminate heavily against women through random checks to make sure that women have their periods, and when they are found to have missed a cycle they are fired. Some of these checks are quite invasive, and deeply disturbing. Before employment, women have to go through pregnancy tests, and tell company officers how many sexual partners they have had. Whereas Mexican labour law provides for maternity leave, US firms that run the maquiladoras along northern border of Mexico either do not employ women, without first discussing their sexual habits, or they force women to resign – if they do become pregnant.

During my visits, to Cuidad Juarez and Tijuana, in 1999 and 2000, I had access to evidence produced by human rights organisations which demonstrated cases of pregnant women being forced to resign because they were refused access to toilets, seating or light tasks. From very many workers in maquiladoras, I heard stories, and saw police records of sexual harassment of female workers by managers who offer women workers a smaller workloads in exchange for or sex. These practices have continued for most of the past 15 years, since my first visit to maquiladoras in Mexico. In 2013, the Berkeley Journal of Gender, Law & Justice, a respect peer-reviewed academic journal, published a set of findings, of which one relevant passage is worth citing, here in full:

“As part of the pregnancy screening, maquiladoras ask the applicant invasive questions such as when she had her last menstruation, what birth control methods she uses, how many children she has, and the extent of her sexual activity. Thereafter, women are commonly forced to take pregnancy tests every three months. If a woman becomes pregnant after gaining employment at a maquiladora, she may be harassed, compelled to work more hours without breaks, assigned more strenuous work, or she may be forced to resign because of her pregnancy. For example, when supervisors discover that one of their workers is pregnant, standard practice is to change the woman’s working conditions, sometimes forcing her to lift heavy boxes, or moving her into a smaller, less ventilated room so she becomes nauseous from inhaling chemical fumes.”

A study in the De Paul Law Review, in 2000, at about the time when I spent time with workers from maquiladoras in Tijuana, Mexico, I met women who suffered serious chemical burns on their hands and faces, because of handing errors; the chemical containers were labelled in English – in a Spanish-speaking country. Because of injuries to their hands sustained in contact with the chemicals, young women were fired from pharmaceutical and health care product manufacturing firms, because they were unable to use their hands.

Environmental Racism and Injustice

On the outskirts of Tijuana I was shown poisonous sludge, mainly lead and sulfuric acid, that workers at a US-owned battery recycling plant were asked to dump beside their own villages. This had disastrous effects on the villagers, some of whom became ill, and lost their jobs – precisely because of the reckless behaviour of US firms in Mexico. This type of environmental racism (I have provided a Wikipedia link, because the more respected scholarly references require subscriptions) that has been practiced by US companies in the Black Belt South, where toxic waste is dumped, and rivers and streams are poisoned, next to black residential areas, has come to define the practices of firms in Mexico. It is worth looking at the issue of environmental racism, and the way that the US has, now, exported this injustice to Mexico. See, for instance, Carl Zimring’s forthcoming book, Clean and White: A History of Environmental Racism in the United States.

In Alabama, Physicians for Social Responsibility found cases of respiratory illness and cancer as a direct outcome of environmental pollution. In the US, these issues are addressed through legal institutions. To avoid accountability, companies, like the ones praised by Mills and White, relocate to Mexico. All these practices continue, and research is readily available, Mills and White seem to have avoided the evidence, so as to support their obeisance to the orthodoxy of neo-liberal structuring of the global political economy. Yes, there is such a thing as neo-liberalism (For a definition, see a most conservative source) It helps, though, not to throw it about loosely; it just weakens your argument

The US firms in Mexico also have workers deported, for non-compliance. It might come as a surprise to Mills and White, that not everyone south of the US border is a “Mexican”. Human rights workers who investigate claims against corporations are also deported by the Mexican government, at the behest of US companies. Workers are not allowed union representation, and dismissal, for the most innocuous violations – going to the toilet when you are not allowed to – are arbitrarily implemented, and commonplace in the maquiladoras.

The Mills and White article was terribly one-sided and deeply ideological, heavily blinkered and blind to human suffering for the sake of profit. I have no problem with ideology, but honesty includes admission to one’s biases. Instead, the article is presented in the most eloquent language, and triumphalist tone – with no reference to the deep social and human costs of the maquiladoras. Then again, the article’s blindness may be expected, given the functional role that, especially Mills, plays in the dominant bloc of global political economy, how they engineer consent and work damn hard on strengthening the Foundations of the American Century – which is part of the neo-conservative strategy that gave as the wars against the people of Iraq and Afghanistan.

The article demonstrated, in so many ways, why good journalism is better than the work produced by think tanks, who are paid by people who expect you to shore-up their beliefs and values. With good, independent, journalism you, actually, have to walk around issues, and see, then report it intellectually honestly from as many positions as possible, to get as close to the truth as possible. Mills and the Brenthurst foundation are too closely linked to the dominant power bloc in the world. Mills’ bio on the Foundation’s website is a song of praise for his role in the war against the Afghan people. This might explain why he seems to care less about the deep social and human costs of corporate and capitalist enterprises in Mexico. These are the practices that Mills of the Brenthurst Foundation, and White of GIBS, want to encourage in South Africa, because there is money to be made from it.

Further Reading

See NSA Prism program taps in to user data of Apple, Google and otherson the global spying network, PRISM.

Maquiladoras at a Glance. http://www.corpwatch.org/article.php?id=1528. Accessed on 13 November 2015.

The Deadly Cost of Cheap Labour. Crisis Juarez. https://crisisjuarez.wordpress.com/2010/09/30/the-deadly-cost-of-cheap-labor Accessed on 13 November 2015.

Jessica Livingston. “Murder in Juarez: Gender, Sexual Violence, and the Global Assembly Line.” Frontiers: A Journal of Women Studies 25.1 (2004): 59-76

Katie Pantaleo, “Gendered Violence: Murder in the Maquiladoras.” Sociological Viewpoints22.2 (2006): 13-23.

Sara Grineski and Timothy Collins, “Exploring patterns of environmental injustice in the Global South: Maquiladoras in Ciudad Juárez, Mexico. Population and Environment, 29. 6, (2008) pp 247-270

Inderjeet Parmar Think Tanks and Power in Foreign Policy: A Comparative Study of the Role and Influence of the Council on Foreign Relations and the Royal Institute of International Affairs, 1939-1945. Palgrave Macmillan, 2004.

Inderjeet Parmar Foundations of the American Century: The Ford, Carnegie, and Rockefeller Foundations in the Rise of American Power (2012) Columbia University Press: New York.

Engels Statue

Piketty and his Discontents: The Nostalgics

Statue by Alfred Hrdlicka in the gardens of the Engels House, and Museum of Early industrialisation, in Wuppertal, Germany. Photograph by Ismail Lagardien

Statue by Alfred Hrdlicka in the gardens of the Engels House, and Museum of Early industrialisation, in Wuppertal, Germany. Photograph by Ismail Lagardien


By Ismail Lagardien

Published in the Daily Maverick on 05 OCT 2015 01:25

“Quite absurdly, if comically, the neo-liberal nostalgics (not all of whom are economists) slap the label of neo-liberalism on everything they don’t like, or that is wrong with humanity. The nostalgics always seem to be offended by anyone (other than themselves, of course) who dares say anything about injustice, inequality, exploitation and abuse of dominance – without referencing Karl Marx or the work of Marxist scholars. This is, of course, ridiculous; very many of us experienced prejudice, injustice, racism, abuse, structural inequality and exploitation before we read Marx or learned about socialism. As Marx may have said, our social existence determined our consciousness.”

Read the full column, Piketty and the Nostalgics



Between States of Emergency: Honouring photographers who risked all to expose apartheid

Picture of Jimi Matthews looking at my photograph at the exhibition, Between States of Emergency' hosted by the Nelson Mandela Foundation in Johannesburg

Picture of Jimi Matthews, an old colleague, looking at my photograph at the exhibition, Between States of Emergency’, hosted by the Nelson Mandela Foundation in Johannesburg

By Ismail Lagardien

2 October 2015. I was among generation of news and social documentary photographers who were invited to submit a picture to the Nelson Mandela Foundation for an exhibition, ‘Between States of Emergency: Honouring photographers who risked all to expose apartheid‘. Not sure I deserve it, but proud to be part of this distinguished group.

I missed the opening because I was in Berlin, chairing a roundtable discussion on South Africa’s future. The keynote address was delivered by Joel Khathushelo Netshitenzhe – on my right, in the picture below. Khathu has the finest mind in the South African ruling alliance. It was a privilege to chair a meeting with him as speaker. On my left is Yacoob Abba Omar, Operations Director at the Mapungubwe Institute for Strategic Reflection (Mistra), and Manfred Öhm, the Friedrich Ebert Foundation‘s head of Sub-Saharan Africa.

After chairing a roundtable on South Africa. With Joel Netshitenzhe and Yacoob Abba Omar of the Mapungubwe Institute for Strategic Reflection, and Manfred Öhm of the Friedrich Ebert Foundation in Berlin. 28 September 2015

After chairing a roundtable on South Africa. With Joel Netshitenzhe and Yacoob Abba Omar of the Mapungubwe Institute for Strategic Reflection, and Manfred Öhm of the Friedrich Ebert Foundation in Berlin. 28 September 2015

Update, 21 October.

I visited the Nelson Mandela Centre for Memory, today, and saw the exhibition, Between States of Emergency. The archives of the Centre are very impressive. The visit was quite stirring.

I should probably write something about the exhibition at some stage. Here are a couple of pictures I took, today. The one of me was taken by Gaia Manco (accidentallyinjoburg.com).









Prague Spring

Imagining Honesty and Courage

The car of a corpulent cadre.... Copyright ilagardien©engagé Please do not use without crediting source

The car of a corpulent cadre…. Copyright ilagardien©engagé Please do not use without crediting source

By Ismail Lagardien

11 February 2015. We live in a time of dimmed lights and diminished expectations. The political order has sapped the country of its energy, drained the people’s will to hope, and emboldened only the few, to whom it has become more and more difficult to explain the perils of the moral calamity that we face. Future generations might look back at our times, and recognise our avarice and greed, our crass displays of wealth, and our lack of humility.

Twenty five years ago, I read a speech that was as bold as it was honest. In his 1990 New Year’s message to the Czech people, Vaclav Havel started his speech with a daring declaration:

‘My fellow citizens. For forty years you heard from my predecessors on this day different variations on the same theme: how our country was flourishing, how many million tons of steel we produced, how happy we all were, how we trusted our government, and what bright perspectives were unfolding in front of us. I assume you did not propose me for this office so that I, too, would lie to you.

Our country is not flourishing. The enormous creative and spiritual potential of our nations is not being used sensibly. Entire branches of industry are producing goods that are of no interest to anyone, while we are lacking the things we need. A state which calls itself a workers’ state humiliates and exploits workers. Our obsolete economy is wasting the little energy we have available.

A country that once could be proud of the educational level of its citizens spends so little on education that it ranks today as seventy-second in the world. We have polluted the soil, rivers and forests bequeathed to us by our ancestors, and we have today the most contaminated environment in Europe. Adults in our country die earlier than in most other European countries.’

Havel’s legacy as a politician is mixed, but the honesty and courage of these opening passages of his 1990 speech to the people of the Czech Republic was admirable. If only we can expect such honesty from all political leaders.

*The ‘Featured Image’ in this post is a photograph taken during the Prague Spring of 1968.


Global Systemic Change And The End Of Capitalism: A Speculative Essay In Five Easy Pieces


1 Introduction

Pretoria, 10 November 2014. The crisis in the global political economy that started in the United States and spread to the world in about 2008 has drawn a lot of attention to the workings of capitalism. The crisis has generally dampened the appeal of ‘Western style democracy’ and shifted greater interest towards what is almost pejoratively dismissed as China’s ‘authoritarian model for growth’. For the most part, there (nonetheless) remains the quite unflinching belief that the current crisis will pass, and that there will be a return to equilibrium. In this respect, policy-makers and mainstream economists (and most rationalist public intellectuals, in general), may insist that things be left more or less as they are, but with some belt-tightening through strict austerity measures.

A more critical view, shared by many orthodox as well as heterodox economists and by some radical political economists, may accept that the current crisis is an affirmation, as it were, that capitalism is inherently unstable. Beyond this acknowledgement there is a parting of ways into two basic beliefs. One is that crises tend to shake inefficiencies out of the system, and they are, therefore, a ‘good thing’. True believers, infused with some liberal idealism, may argue that recurrent crises tend to affect the poor disproportionately. They may argue that those who can afford it have the social safety networks to help them recover from crises, or buffers to avoid the worst impact of contagion. Part of this argument is that states ought to create buffers to absorb the impact of crises, and establish social safety nets for the poor. They may insist that capitalism is a necessary and indispensable means of organising society, and acknowledge, nonetheless, that in the long run capitalism’s passage is marked by ‘boom, bust repeat’. At the extremes, they may suggest that protesters or capitalism’s critics simply shut up, because thousands of years ago we lived in caves. The argument is rolled out that many centuries there were no cars, no phones no television and, well, no internet, and of these were produced by capitalism. More specifically, they are the outcome of the research, innovation, competition, and investment that capitalist enterprise inspire. End of story!

The other view is that capitalism is ruinous. It may have produced unimaginable wealth for some, but it has left millions of people in poverty, created a world of vast inequalities, and as a social organising process it has created even greater iniquities and injustices, and placed the earth on a path to destruction. Among its fiercest critics there is a belief that capitalism has finally imploded, and that rescuing the system was futile. This view sometimes comes with suggestions – some of which seem rather under-developed and incomplete, and are shaped, very often by some type of liberal or socialist utopianism – which appear to be more opposed to capitalism, than producing a detailed alternative for a better world. There is no harm in that….

In setting out these views, I have, admittedly, tried to capture a wide swath of thought between two bookends. The issue is much more complicated and nuanced. In the wake of the crisis, these two positions do, indeed, seem to be the book-ends of the debate about capitalism. What I have tried to do is clear a path for the argument that unfolds over Parts II, III, IV and V; thatcapitalism may be in its final stages, that capitalists, themselves, are showing signs of insecurity about the future of capitalism, and that capital – the range of resources used to expand and accumulate wealth and property – may be moving underground, and into the shadows of an uncertain world. I cast this argument in global systemic terms, which refers to transnational forces unconstrained by national or territorial moorings, and the possibility of systemic change and transformation. Capitalism is conceived as a totality in which national or sub-national entities that seem discrete are connected in a global whole, with an attendant transnational class system.

  1. The Possibility of Global Change

The current crisis, which we can agree is systemic, is only the latest in a series of recurrent crises across the global political economy over, at least, the last three to four decades. Among many other, these systemic crises were caused by, or followed losses of confidence in banking systems, negative effects on ‘real economy’ disruptions in payments system, credit flows, and in asset values. Since the mid-eighties the most prominent among these crises have been the Savings and Loan crisis, systemic crises that started or reached a decisive point in ArgentinaEast Asia, Ecuador, Mexico, Russia, Turkey, Uruguay, the United States of America, the United Kingdom, and the European Union. If we go back to the 1970s, there have been systemic (banking or ‘economic) crises or ‘episodes’ across the entire banking system that have caused zero or negative net worth, across at least 70 countries.

The official view, emanating from the World Bank and International Monetary Fund, is that the origins of systemic crises stem from build-up of financial weaknesses over time; weak credit underwriting, and weak supervision. They are quite often triggered by ‘non-systemic’ events or shocks. First distress signals are typically problems with creditor runs. All of these point to underlying problems in the global political economy, and once they get underway there is a crisis of confidence that feeds on itself. It is this crisis of confidence which, I want to suggest may be leading us towards large scale global systemic change, and ultimately the end of capitalism.

In this respect, we may have reached a ‘turning point’ in world history, similar to what we experienced after the Second World War, and again when US president Richard Nixon unilaterally abolished the Bretton Woods system of fixed exchange rates that was established in the late 1940s.

In the current context, the idea of change has been given significant impetus by the rise of China, and the challenge it presents to United States hegemony. There may be little to fear about the shift from West to East; there seems to be a lot of racist hysteria around Chinese ascendancy in global affairs. Very many commentators conveniently ignore the wars, invasions, assassinations and manipulation of world affairs that were so central to US foreign policy in the post-war period. There is also a large amount of cognitive dissonance about the European theatres of bloodshed, and the way that war has shaped so much of that continent’s history. In truth, most of us have become way too comfortable with the social and historical dominance and control of the European world (including North America) and assimilated all the social and cultural habits that the media (in the broadest terms, not just the news media) present to us, daily. This makes it difficult to conceive of change; of a world in which English is no longer the dominant language (although the prospect of a decline in the use of English seems dim) or where dark- skinned ‘others’ and (especially) women gain prominence in world affairs. I have no such fears. We have to accept that global change is possible, and that the way we organise society may be different many years from now.

  1. Global Change and the Challenge to US Hegemony

Global systemic change is a slow process and has, sometimes, been accompanied by large-scale conflict. Arguably the best example of such systemic change was the shift of global power from Whitehall to Washington, sometime between 1918 and the late 1940s. An even more powerful argument can be made that the Europeans were engaged in almost perpetual war from the Anglo-Boer War at end of the 19th century, to the end of the Second World War in 1945. The English writer, John Hobson, following a stint as a journalist in South Africa at the time of the Anglo Boer war, concluded that it was a ‘conflict orchestrated by and fought for the preservation of finance capitalism’. Vladimir Lenin would base his theory of imperialism on Hobson’s ideas, and explained imperialism as the highest stage of capitalism. I suspect that capitalism, and the world, has moved on quite considerably since Lenin’s Imperialism.

Global systemic change does not always follow the patterns predicted by observers, nor does it happen as a result of large-scale warfare – as some of the more conservative theorists would have us believe. One standard text-book explanation (Robert Gilpin) can be summed up as follows: Change in the international system is described by a series of events where an established hegemon has its power undermined by differential growth rates among states. Consequently, the hegemon’s ability to fund its dominance falls relative to the costs involved. At the same time, a rapidly rising state will see the costs of a change in the international system fall relative to the benefits. The resultant disequilibrium can only be resolved through conflict between the hegemon and the challenger, a hegemonic war.

It’s important to note that hegemony is not inherent in international organisation, as process, it is often based on choice. Anyway, the validity or theories tend to rise and fall with power. Warfare, at the cusp or as catalyst for change, cannot be ruled out, though – at least not if we leave room for irrationalities, uncertainties, cowboy swagger and the attitude that ‘if we can’t have it ain’t nobody gonna’. These attitudes and approaches have characterised the foreign policy of some countries…. In particular, we cannot rule out conflict, if, for instance, the US remains loyal to the fear-mongering and self-righteousness of scholars like John Mearsheimer, who has been ‘predicting’ the inevitability of conflict between his country and China for several years. The problem is that the policy-making establishment could follow his ‘instruction’ – especially since so many of the apparatchiks in Washington pass through the academy that Mearsheimer (and his side kick, Stephen Walt), dominate.

Mearsheimer is part of the advisory team of the National Interest, a right-wing international affairs journal headed by Henry Kissinger. That Mearsheimer’s theories may influence the direction the US military machine takes, is not a terribly outlandish statement. One darling of the International Relations academy in the US, George Kennan, served as a key policy-maker in Washington. In 1948, when he served as Director of Policy Planning at the US Department of State for Foreign Affairs, Kennan told fellow government officials:

We have 50 percent of the world’s wealth, but only 6.3 percent of its population… Our real task in the coming period is to devise a pattern of relationships which will allow us to maintain this position of disparity… We should cease to talk about the raising of standards, human rights and democracy… The less we are … hampered by idealistic slogans, the better.

One way to prove one’s theories correct is to get access to policy-making. In his study of the Cold War, The United States and Right-Wing Dictatorships, 1965-1989, David Schmitz, explained, that Kennan provided the ideological coherence for US Cold War policies. With varying success, many a great thinkers across history conspired to, or actually influenced the leaders of their people or their countries. The great Indian thinker, Kautilya, played a definitive role the defeat of the powerful Nanda Empire, and advised Chandragupta on the establishment of the Mauryan Empire (321 – 185 BCE) on the Indian sub-continent. Niccolo Machiavelli was a philosopher and statesman who served the Florentine Republic.  One can never predict when, or whether a hegemonic force may get the hump because of its inability to accept change, or challenges to its dominance and control…. The Project for a new American century’ launched after the end of the Cold War, was precisely to re-establish US power and influence. The neo-conservatives who launched the PNAC had organic links to the academy and the Republican Party in the USA. The invasion of Iraq in 2003 was, arguably, part of that strategy to re-assert US dominance in the global political economy.

Nonetheless, there can be little doubt that following the epoch-making developments of the late 1980s, when the Soviet challenge to western global dominance came apart quite dramatically, we are in an interregnum of sorts. This interregnum may explain the discomfort of the US, and its efforts to (re) establish’ dominance in world affairs. As it goes, the US, as the epicentre of capitalist enterprise in the late 20th century, has been ceding a lot of what made that country powerful.

In September 2012, The Economist, bemoaned the fact that ‘the world’s most important growth machine since the second world war’ had declined, and that capitalist enterprise in that country was shrinking. It is worth citing the relevant passages in full:

In the 1950s and 1960s its GDP grew by 3% a year despite the economy’s maturity. In the 1970s it endured stagflation but the Reagan revolution revived the entrepreneurial spirit and the growth rate returned to 3% in the 1990s. The machine was good for the world as well as America – it helped spread the gospel of capitalism and transform the American dream into a global dream.‘Today the growth machine is in trouble. It all but exploded in the financial crisis of 2007-08. But even before then it had been juddering. Examine the machine’s three most powerful pistons—capital markets, innovation and the knowledge economy—and you discover that they had been malfunctioning for a decade.‘Venture capitalists have slashed their spending, dumping more adventurous companies in the process, not least because around 90% of them failed to produce a positive return. The number of initial public offerings is down from an average of 547 a year in the 1990s to 192 since then. This has dramatically cut the supply of new, high-growth companies. Given that companies less than five years old may have provided almost all the 40m net jobs the American economy added between 1980 and the financial crisis, that is dismal news for the unemployed.‘… America has long boasted the world’s most business-friendly universities. One-fifth of American start-ups are linked to universities, and great institutions like Stanford and MIT spawn businesses by the thousand. But the university-business boom seems to be fading. Federal spending on health-related research increased from $20 billion in 1993 to $30 billion in 2008, for example, but the number of new drugs approved by the Food and Drug Administration fell from a peak of 50 in 1996 to just 15 in 2008. University technology offices, which legally have first dibs at commercialising the faculty’s ideas, have evolved into clumsy bureaucracies.’ (Read full article, here. Subscription or payment is probably required.)

With US capitalism in retreat, and the architecture of global capitalism coming apart at its nodes, it becomes increasingly difficult to see a return to periods like the Golden Age of Capitalism, that drove massive expansion in six major members of the Organisation for Economic Co-operation and Development: France, Germany, Italy, Japan, the UK and the United States. This so-called Golden Age of capitalism (not everyone agrees that it was a great age) brought unprecedented prosperity to the world – notwithstanding vast inequalities and injustices.

The data shows that during the Golden Age, between 1950 and 1975 per capita income in developing countries increased on average by 3% a year, increasing from 2% in the 1950s to 3.4% in the 1960s. This rate of growth was historically unprecedented for these countries, and in excess of that achieved by the developed countries during their period of industrialisation In developed countries GDP and per capita GDP grew almost twice as fast as in any previous period since 1820. Labour productivity grew twice as fast as ever before, and that there was a massive acceleration in the rate of growth of the capital stock. The increase in capital stock represented an investment boom that was historically unprecedented over time and in terms of force.

This was outpaced by the growth in the volume of trade, which was eight times faster than in the preceding period (1913 – 195), and twice as great during the century from 1820 Trade between the industrialised economies of the West was the most dynamic element in this , with trade and output growth especially marked in manufactures. Globally, output of manufactures more than quadrupled between the early 1950s and the early 1970s, and world trade in manufactures grew eightfold. (Source: Follow this link)

From the 1970s onward, and more rapidly since 1980 global capitalism took repeated battering, to the extent that it became generally accepted that there was no way back to any golden age. The current crisis has done even more to shake capitalism. We’re fairly clear where we have been, but after more 25 years there is no clear sign of where we are heading. There is, however, slightest of indication that capitalism, as the most dominant form of social organisation, globally, may well be in its final stages. (No laughing at the back). This is the main contention of this little essay.

  1. Global Change and the End of Capitalism

To many people, the collapse of the Soviet Union, around 25 years ago, provided incontrovertible proof that communism had failed, and that capitalism had triumphed. The collapse of Soviet communism, once and for all, ‘proved’ that Karl Marx’s teleology, that capitalism contained the seeds of its own destruction, and that communism would, ultimately, become the natural successor, was wrong. Across a traditional spectrum of believers, from left to write, there was a shuffling of feet and many squeaky bums. Almost everyone with even the mildest interest in the tension between capitalism and communism, reconsidered their positions, if only to gloat. In fact, after the apparent triumph of capitalism, arch-capitalists had only to say: we told you so.

The social world is, however, not that easy to explain, understand or predict. Nevermind the bollocks emanating from market fundamentalists, capitalism as the basis for organising society might, yet, fail. Remember, Marx did not provide any fixed date for capitalism’s collapse and, as history has shown, mass-scale change does not happen instantly. What can be said with some certainty is that change is always possible, and that capitalism, in the form that it did when Soviet communism collapsed, may not last forever. It is clear that capitalist orthodoxy in the most advanced capitalist society, the USA, has changed considerably since the mid-1970s, when there was a pronounced shift towards monetarism, that actually fell into place under the Reagan administration, it was consolidated during the Clinton presidency, and by 2008, the deregulation that was so central to the broad monetarist ideology came under serious attack.

In October 2008, Alan Greenspan, chairman of the US Federal Reserve was questioned in that country’s legislative Committee on Oversight and Government Reform about his role in the economic crisis that resulted in bank closures and defaults, all of which contributed to tipping the US into recession:

‘You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry A. Waxman of California, who chaired the committee. ‘Do you feel that your ideology pushed you to make decisions that you wish you had not made?’ Mr. Greenspan conceded: ‘Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.’

A detailed description of this lineage of capitalism, especially over the post-war period, would be helpful, but in a later conversation. A most elementary timeline would show a transition from merchant capitalism to industrial capitalism, to the financial capitalism that dominates early in the 21st century. What is open for discussion, here, is the likelihood that global capitalism, as it has been understood and practiced since the end of the Cold War, may end in stages over the coming period; perhaps sooner than later.

What could follow, after the end of capitalism, may be a shift to the left, towards a more equitable more socialist system, where the benevolent state plays a larger role in political economy. Given the deep vested interest in maintaining the status quo this is hardly conceivable. Alternatively, any ‘collapse’ may result in a shift to the right, where powerful vested interests conspire to save or preserve in some form the system that has rewarded them. It is not inconceivable that capitalist would fight one another to rescue the system. The latter seems more likely – although predictions are the preserve of prelates, prophets, neo-classical economists and boardwalk fortune tellers. Should this occur, capitalism, perhaps a cruder version, finally unfettered from state regulations, may slip ‘underground’. Under such conditions, the state remains active, and governments may serve, more directly and unabashedly, to protect and serve corporations and banks. Banks, or at least the people involved in the shifting of stockpiles of money, may go to the mattresses to protect their own wealth or the wealth of their clients.

  1. Future Uncertain: Going Underground and Into the Shadows

It is hard to think in futuristic terms, and not sound, well, conspiratorial, dramatic or having smoked too much majat. This has never stopped mainstream economists from predicting all kinds of shit, though. We can find some solace – confidence is a better word – in the fact that speculations of space flight, landing someone on the surface of the moon, heart transplants or hip replacements were, at one time or another, the stuff of imagination – or majat dreams. (We may, yet, find out, someday, whether androids dream of electric sheep) The social world is, however, infinitely more difficult to ‘predict’. This part of the essay is submitted, therefore, as purely speculative. I will make two basic points, that cornerstone aspects of late capitalist practices could move ‘underground’ (or stay above ground while non-capitalist or contra-capitalist enterprises move into the shadows) and that there is evidence to suggest that capitalists, especially large corporations, may have lost confidence of a capitalist future. So….

Axiomatically stated, most capitalists would prefer it if they were allowed to operate in an environment that has little to no regulations. At the base of this preference is a solid belief in the ‘free market’ – although there is no place or time where ‘markets’ have been completely free. It is an ‘impossible utopia’. Karl Polanyi, the political economist I have come appreciate more and more over the past three decades, referred to free markets as a ‘stark utopia’. This notwithstanding, free marketers and market fundamentalists would do all in their power to avoid what they consider to be unnecessary regulations, taxation and state oversight. We speak, therefore, of a ‘black economy’ (Sometimes also referred to as a parallel economyshadow economy, or underground economy) which the Business Dictionary describes in the following manner:

Usually untraceable, and hence untaxable, business dealings that are not reflected in a country’s gross domestic product (GDP) computations. An integral part of most third-world and many first-world economies, it is a cash based system in which records are kept in secret account books (called number two accounts). Though it employs illegal (and even criminal) methods it is a survival practice in repressive tax regimens or where legitimate expression of entrepreneurial activity is made unnecessarily difficult by a maze of regulations. Black economy and black money go hand in hand. 

For now, it seems, there is little ‘illegal’ about the function of shadow or black economies. The investor’s encyclopaedia makes a clearer statement on this:

For instance, a construction worker who is paid under the table will neither have taxes withheld, nor will the employer pay taxes on his earnings. The construction work is legal; it is the nonpayment of taxes that classifies the event as part of the black economy. The illegal-weapons trade is an example of black-economy activity that is illegal.  Black markets are those goods and services that form the black (or underground) economy. Typically, black markets arise when a government restricts economic activity for particular goods and services, either by making the transaction illegal or by taxing the item so much that it becomes cost-prohibitive. A black market may arise to make illegal goods and services available or to make expensive items available for less money (such as pirated software).

The most aggressive legal strain of this tax avoidance may well be the way(s) in which banking, or institutional money lending has slipped into the shadows of the formal economy. Enter Shadow Banking, formally described as credit intermediation involving entities and activities (fully or partially) outside the regular banking system. In this sense, shadow banking refers to unregulated activities by regulated institutions. It involves the legitimate movement of money within countries or around the globe, and avoiding regulation by the state. Intermediaries facilitate the creation of credit, like hedge funds, unlisted derivatives and other vehicles, instruments or activities (like credit default swops) across the global financial system, and its members are not subject to regulatory oversight. This system avoids regulation by not accepting traditional bank deposits.

There has been a steady increase in shadow banking since the onset of the current global crisis risks. (See chart, courtesy of the Financial Stability Board) Reform of shadow banking has been a core part of the Group of 20’s agenda to overhaul the global financial system since the Pittsburgh Summit of 2009.

In Pittsburgh, G20 leaders established the Financial Stability Board, (FSB) as a means to deliver a transparent, resilient, sustainable source of market-based financing for real economies. More specific objectives were: to establish common policy standards and arrangements for co-operation, to help to avoid fragmentation of the global financial system, and to build a mature framework for monitoring and addressing financial stability risks arising from shadow banking.

What this regulation appears to do, is bring shadow banking from the underground, as it were. According Mike Carney, Governor of the Bank of England, the objective of oversight and regulation of shadow banking is to strengthened the practice so that authorities can be alerted to the excessive growth of leverage and liquidity risks. System-wide oversight is being established and a global monitoring exercise is under way, in order ‘to keep pace with the constant innovation and arbitrage that has been a hallmark of shadow banking’.

‘The goal is to replace a shadow banking system prone to excess and collapse with one that contributes to strong, sustainable balanced growth of the world economy. While much has already been achieved, because the G20 has been alert to these risks since the crisis, the job is not yet complete. As the G20 completes work on the core of the financial system, reforms to shadow banking must, and will, progress. Now is the time to take shadow banking out of the shadows and to create sustainable market-based finance.’(Read the text of Carney’s speech, here

In short, then, shadow banking is accepted as a norm, but efforts must be increased to bring it out of the shadows. This, we see, is an example of capitalists who ‘fight’ one another over how best to preserve and promote the system. Shadow banking, and shadow or black economies, may be fairly clear signs of capitalism slipping ‘underground’.  There are at least two reasons for this – besides greed and accumulation. One has been discussed (to avoid taxation) and the other is a growing lack of confidence in the future

There are at least two prominent signs that capitalists may be losing confidence in the future. One is that many large corporations are (reportedly) sitting on vast reserves of cash, with Apple being the most developed example, and not investing in the future. Related to this, they are, also, not investing in the youth, arguably the workers and consumers of the future. Let us firm up some links between theory and practice. Capitalism, in theory, is self-sustaining and reproductive system. Capitalists invest time and money in shoring up the system, and ensuring its own future. This means they have to, in the least, spend money on new ventures, innovation, research and development, and in the next generation of consumers and producers. Evidence shows that neither one of these is happening.

In Part III the decline of the US, as the engine for liberal growth, innovation and entrepreneurship was explained, based on a report by The Economist.

In terms of employment creation, the gains that have been made in the global political economy since 2008, has generally failed to lead to an improvement in global labour markets. This is especially critical among the youth of the world.


The statistics shows the global youth unemployment rate from 2008 to 2012 with a forecast up to 2018. The global youth unemployment rate was at 12.4 percent in 2012. Source: http://www.statista.com/statistics/269636/global-youth-unemployment-rate/ 

There is an estimated 75 million young people in the developing world who are unemployed, and hundreds of millions who are underemployed, making it one of the most pressing problems of the early 21st century. A single passage from a World Bank report, sums up the issue:

Every year, 20 million young people enter the labor force in Africa and Asia alone. In the Middle East and North Africa, 80 percent of young workers work in the informal sector. One in four young people cannot find work for more than US$1.25 a day. Yet global growth and poverty reduction over the next 15 years will be driven by today’s youth.’

To the extent, then, that capitalism has to invest in its own future, and ‘today’s youth’ will be driven by this cohort, capitalists do not seem to have much faith in the future of the system that has rewarded them so well. Between this insecurity or lack of confidence, and shifting its machinations underground, as the increase in shadow banking may suggest, capitalists may well be trying to get out of the system while they’re ahead.


All comments and suggestions are encouraged, and welcomed. Please be nice, in your comments and in life, in general.

Barefoot on a Bench at the Oriental Plaza

Reading Images: Cultural Curiosities and Continuities

By Ismail Lagardien

2 November 2014. When I visited Dubai, a couple of years ago, I photographed men seated on benches and on carts, barefoot, and with their shoes or slippers neatly placed on the ground beneath them. I took the photographs in the part of Dubai where mainly South Asians lived and worked. See the first couple of pics.

Sitting on benches, barefoot, and with shoes down below.

Barefoot on a bench in Dubai

Barefoot on a cart in Dubai

A couple of weeks ago, I visited Johannesburg’s Oriental Plaza, and captured the picture below. I have mixed feelings about the Oriental Plaza. I was born and spent some of my early childhood in a part of Johannesburg called Fietas, which was integrated much like Sophiatown and District Six, in Cape Town. When the apartheid government began to implement the Group Areas Act policies, we were ‘moved’ to Eldorado Park. We were classified ‘Malay’ and were part of South Africa’s ‘coloured’ community. Those whom the state had classified Indian, were moved to Lenasia, and Indian shopkeepers from Fietas, mainly the vibrant 14th Street community of tailors, seamstresses, haberdashers and  clothiers, in general, were moved to the Oriental Plaza. (Read this)


(The clip, above, is from the film, Material, which deals with some of the issues that beset the community)

From the Website, Newtown Heritage

The Oriental Plaza, a well-known conglomerate of shops and stalls which stands in the heart of Fordsburg today, also has its roots in the Group Areas Act. Traders of the popular ‘Petticoat Lane’ of 14th Street in Fietas, Pageview (the area abutting Fordsburg) were forcibly removed in the 1970s along with the rest of the neighbourhood’s diverse and tight-knit community. Protests against the apartheid government’s cruelty fell on deaf ears. The traders were forced to relocate their well-established businesses to the newly built and then sterile Oriental Plaza.

Some of the traders unfortunately lost their businesses, however due to the surviving traders’ sales magic, determination and perseverance, the Fietas traders managed to win back many of their 14th Street customers. The traumatic history has had a huge impact on the shopkeeper … they have had to walk a long and difficult road before they could finally buy their stores. Today, the Oriental Plaza has the unique and appealing characteristic of each store being owned by the shopkeeper, which makes them all the owners of the shopping centre. This system is unusual for shopping centres.’

Barefoot on a Bench at the Oriental Plaza

Barefoot on a Bench at the Oriental Plaza