Tuesday July 29th, 2014, 2:52 pm (EDT)

Economic Illiteracy

In Zulia, Chavez made reference to “comrade Sarkozy,” and did so with a certain irony but he meant no offense. On the contrary, he was rather recognizing the sincerity of the president when he spoke in Beijing in his capacity as chairman of the European Community.

Nobody was saying what every European leader knows but is not confessing: that the current financial system is no good and must be changed. The Venezuelan president candidly proclaimed:

“It is not possible to re-found the capitalist system; it would be like trying to re-float the Titanic when it’s lying on the ocean floor.”

According to press dispatches, at the meeting of the European and Asian Nations Association attended by 43 countries, Sarkozy made some remarkable confessions:

“Things are going badly for the world, which is facing an unprecedented financial crisis marked by its magnitude, swiftness and violence, a crisis whose consequences on the environment call into question the survival of humankind, as 900 million people lack the means to feed themselves.”
“The countries taking part in this meeting account for two thirds of the global population and half its wealth. The financial crisis started in the United States, but it is now a global crisis demanding a global response:

“An 11-year-old child’s place is not in a factory but in school.”

“No region in the world has any lesson to teach others.” This is a clear reference to the United States.

Finally, he recalled before the Asian nations the colonizing past of Europe on that continent.

If Granma had written those words, they would have been considered a cliché of the official communist press.

German Chancellor Angela Merkel said in Beijing that it was not possible “to foresee the magnitude and duration of the current international financial crisis. We are actually dealing with the creation of a new constituent Charter of finances.” That same day the news revealed the general uncertainty unleashed.

In the Beijing meeting, the 43 countries from Europe and Asia agreed that the IMF should play a major role in assisting the countries most seriously affected by the crisis. They also supported an interregional summit to promote stability in the long term and the development of the world economy.

The President of the Spanish government, Rodriguez Zapatero, stated that “there is a crisis of responsibility in which a few have grown richer but the majority is growing poorer.” He also said that “the markets have lost confidence in the market,” and urged countries to flee protectionism, as he is convinced that competition will make the financial markets to play their role. He has not been officially invited to the Washington summit since Bush resents his withdrawing the Spanish troops from Iraq.
The European Community president, José Manuel Durão Barroso, supported his warning on protectionism.

For his part, UN Secretary General Ban Ki-Moon met with eminent economists to try and avert the developing countries becoming the principal victims of the crisis.
Miguel D’Escoto, former foreign minister of the Sandinista Revolution and current president of the UN General Assembly, demanded that the issue of the financial crisis should be discussed in the United Nations, not by the wealthiest nations and the group of emerging countries that make up the G-20.

There are disputes over the venue of the meeting at which a new financial system should be adopted on order to bring about an end to the chaos and the absolute lack of security for the peoples. There is a major fear that the wealthiest countries in the world, meeting with a small group of emerging nations hit by the financial crisis, might approve a new Bretton Woods, ignoring the rest of the world. President Bush said yesterday that the countries that will discuss the global crisis here next month should also renew their commitment to the basics of economic growth on a long-term basis: free markets, free enterprise and free trade.

The banks were lending tens of dollars for every dollar deposited by savers. They were multiplying money. They breathed and sweated through every pore… Any contraction would lead to ruin or to absorption by other banks. They had to be saved; always at the expense of the taxpayers. They were amassing great fortunes. Their privileged majority shareholders could afford to pay any money for anything.

Shi Jianxun, a professor at the Tongui University in Shanghai, stated in an article published in the foreign edition of The People’s Daily that “the crude reality has made people realize, amidst the panic, that the United States has utilized the hegemony of the dollar to plunder the riches of the world. He confirms the pressing need to change the international monetary system based on the dominant position of the dollar.”

With just a few words he explained the essential role of currencies in international economic relations. This was happening for centuries between Asia and Europe: it should be recalled that opium was imposed on China as a currency. I talked about that when I wrote The Chinese Victory.

The authorities of that country did not even wish to receive the metal silver initially paid by the Spaniards from their colony in the Filipinas for products acquired in China, because it was progressively devaluated due to its abundance in the so-called New World recently been conquered by Europe. Even today, European leaders feel ashamed at the things that they imposed on China for centuries.

According to the Chinese economist, current difficulties in the terms of trade between those two continents should be solved with euros, GB sterling, yens and yuans. Undoubtedly, reasonable regulation between those four currencies would aid the development of relations of fair trade between Europe, Britain, Japan and China.

Two countries that produce sophisticated equipment with state-of- the-art technology, both for production and services, such as Japan and Germany, would be included in that sphere, as well as China, the potentially largest locomotive of the world economy, with a population of close to 1.4 billion and over $1.5 trillion in its hard currency reserves, mostly in US dollars and Treasury bonds. Japan comes second with an almost identical total of hard currency reserves.

At the present juncture, as the Shanghai professor has rightly indicated and rejected, the value of the dollar is increasing due to this currency’s dominant position imposed on the world economy.

A large number of Third World countries, exporters of goods and raw materials with little added value, are importers of Chinese consumer goods which generally have reasonable prices, and technical products from Japan and Germany, which are constantly increasing in price. Even though China has tried to halt the overvaluation of the yuan, as the Yankees are constantly demanding in order to protect their industries from Chinese competition, the value of the yuan is increasing and the purchasing power of our exports is decreasing.

The price of nickel, our main export item, whose value recently reached $50,000-plus per ton, is currently barely fetching $8,500 per ton; that is, less than 20% of its maximum price attained. The price of copper has dropped at least 50%, and the same is happening with iron, aluminum, tin, zinc, and all the minerals indispensable for sustained development. And defying any rational or human sense, the price of consumer goods like coffee, cocoa, sugar and others have barely grown over more than 40 years. That is why, not long ago, I also warned that as a result of the impending crisis, markets would be lost and the purchasing power of our products would be considerably reduced. In that circumstance, the developed capitalist nations are well aware that their factories and services will be paralyzed, and only the consumption capacity of a large part of humankind already living on the poverty line or below it, will keep them operating.

That is the great dilemma posed by the financial crisis and the danger that social and national self-interest will prevail over and above the desire of many politicians and statespersons agonizing over the phenomenon. They do not have the least confidence in the very same system from which they emerged as public figures.

When the peoples leave behind illiteracy, know how to read and write and possess the minimum knowledge indispensable for living and producing in an honorable way, they will still need to overcome the worst form of ignorance in our times: economic illiteracy. Only in that way can we understand what is occurring in the world.

Fidel Castro Ruz
October 26, 2008
5:15 p.m.