Don’t worry, it will get worse than you think…

Do you want the good news or the bad news? Well, I always like to start with the bad news first. Things are going to get worse than you think. I mean bad, really, really bad. The good news? All I’ve got to give you is some guff about crisis and opportunity pretty much being soul-mates.

How dire am I talking about? Think the full force of the global Great Recession (call the systemic crisis what you will) finally unleashed on Australia combined with an Abbott-led government with an historic parliamentary majority. Now, put yourself in Peter Reith’s shoes, with Peter Reith’s ideology. Your mental Peter Reith should be <censored>, while the real you shudders with the thought of imminently being absolutely <censored> by Big Capital/the State.

I suspect there may be millions of you craving just one more blog post about Labor’s troubles. But let’s take that as read for now. The deeper question, is why should we in Australia feel the full force of the continuing crisis soon when, largely until at least this point we have been insulated from it? Because we were in the middle of a different bubble when another one (the US housing market) collapsed. Ours is “the commodity price boom” – more and more capital was being invested into staple food products such as wheat, and minerals such as gold, copper and iron ore. Our economy ‘survived’ the collapse, at least in part, due to historically high prices.

The Conventional Narratives

According to the conventional narratives about the Australian economy we shouldn’t be in this position. A large growth in demand for our export goods, especially from emerging markets such as China, has underpinned Australian prosperity. As China (and the rest of the developing world) grow in number and wealth there is a larger market for what we have. People need to eat, and modern economies require mineral inputs. In short, we (and by we I mean a handful of billionaires and large corporations) have made a lot of money because more people need what we’ve got. It’s the law of supply and demand. On top of that you add in some stuff about how great Hawke/Keating/Howard/Rudd/Gillard have been according to your political proclivities.

The power of this narrative is that (a) it fits with our instinctive understanding of capitalism, and (b) to some degree it’s true. Have a look at the map below from the Footprint Network.  Australia is one of a few ecological creditor nations feeding/supplying India/China/Europe/North Africa/United States (you know where everybody lives).


When you see the map it shouldn’t be hard to figure out why Australia is so prosperous and will be so forever more into the future without any problems ever…like Argentina or Angola. And there our heads butt firmly up against the limits of the conventional narratives of prosperity.

An Alternative Narrative

One reason the conventional narratives fails is a limited understanding of the commodity. There is a conflation of the end ‘use-value’ of the commodity with the monetary ‘exchange-value’ the commodity can command at any one point in time. The two are inter-related but separate.  Use-value fulfills human need. Exchange-value is where you make the money – it’s the engine room of capitalist profit.  The conventional narrative above assumes that only expanding human need has pushed up the exchange-values of our exports. What it misses is the role that big finance capital can play over and above a regular consumer market of high street shops that we were taught to believe in at primary school. You see, since the deregulation of commodities trading large, investment firms such as Goldman Sachs and pension funds have been investing increasingly large amounts of money. Thereby pumping up the value of these commodities. As I’ve written earlier, over the last ten years,  “investment” in commodities such as foodstuffs has increased 40 times to US$451 billion.

That’s a large bubble, and there are signs that it’s reached bursting point, as Malcolm Maiden wrote in the Fairfax papers a couple of days ago, “(m)arket-traded commodities are about to close one of their worst months ever”. When I look back up at the map, I see Australia as an investment life boat in a sea of economic struggle – the commodity price bubble has provided us temporary refuge from a crisis – but it can only be a matter of time before we are overwhelmed as well. The irony and the tragedy is that in Australia at least we will be made to suffer in amongst our relative abundance of natural resources. All so a few can reap the maximum amount of profit.

It will be then, as many insightful bloggers have already pointed out, that we will face the full force of a politics of austerity. Big capital will use their crisis as an opportunity to make more money. We know this because it’s already happening around the world and in #nswisconsin. In Australia, though all we have seen and heard are the opening gambits of a much larger game.

For all of this I am passionately hopeful about the future. The good news is that we will no longer have the luxury of arguing about whether real change is possible, being distracted by Andrew Bolt, or fretting about whether we have enough power to win. We will have no choice but to fight for freedom or face a future of semi-slavery. The courageous Americans who continue to @occupywallst provide me with hope that our collective power can transform the world.

Mark my words though, we will be tested before we get there, it’s just that we already have less to lose than we think.


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