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Earlier this year I was in Ethiopia, one of the worst-hit countries, and people there remember the food crisis as if they had been struck by a tsunami. "My children stopped growing," a woman my age called Abiba Getaneh, told me. "I felt like battery acid had been poured into my stomach as I starved. I took my two daughters out of school and got into debt. If it had gone on much longer, I think my baby would have died."

Most of the explanations we were given at the time have turned out to be false. It didn't happen because supply fell: the International Grain Council says global production of wheat actually increased during that period, for example. It isn't because demand grew either: as Professor Jayati Ghosh of the Centre for Economic Studies in New Delhi has shown, demand actually fell by 3 per cent. Other factors - like the rise of biofuels, and the spike in the oil price - made a contribution, but they aren't enough on their own to explain such a violent shift.

To understand the biggest cause, you have to plough through some concepts that will make your head ache - but not half as much as they made the poor world's stomachs ache.

For over a century, farmers in wealthy countries have been able to engage in a process where they protect themselves against risk. Farmer Giles can agree in January to sell his crop to a trader in August at a fixed price. If he has a great summer, he'll lose some cash, but if there's a lousy summer or the global price collapses, he'll do well from the deal. When this process was tightly regulated and only companies with a direct interest in the field could get involved, it worked.

Then, through the 1990s, Goldman Sachs and others lobbied hard and the regulations were abolished. Suddenly, these contracts were turned into "derivatives" that could be bought and sold among traders who had nothing to do with agriculture. A market in "food speculation" was born. So Farmer Giles still agrees to sell his crop in advance to a trader for £10,000. But now, that contract can be sold on to speculators, who treat the contract itself as an object of potential wealth. Goldman Sachs can buy it and sell it on for £20,000 to Deutsche Bank, who sell it on for £30,000 to Merrill Lynch - and on and on until it seems to bear almost no relationship to Farmer Giles's crop at all.

If this seems mystifying, it is. John Lanchester, in his superb guide to the world of finance, Whoops! Why Everybody Owes Everyone and No One Can Pay, explains: "Finance, like other forms of human behaviour, underwent a change in the 20th century, a shift equivalent to the emergence of modernism in the arts - a break with common sense, a turn towards self-referentiality and abstraction and notions that couldn't be explained in workaday English." Poetry found its break with realism when T S Eliot wrote "The Wasteland". Finance found its Wasteland moment in the 1970s, when it began to be dominated by complex financial instruments that even the people selling them didn't fully understand.

So what has this got to do with the bread on Abiba's plate? Until deregulation, the price for food was set by the forces of supply and demand for food itself. (This was already deeply imperfect: it left a billion people hungry.) But after deregulation, it was no longer just a market in food. It became, at the same time, a market in food contracts based on theoretical future crops - and the speculators drove the price through the roof.

Here's how it happened. In 2006, financial speculators like Goldmans pulled out of the collapsing US real estate market. They reckoned food prices would stay steady or rise while the rest of the economy tanked, so they switched their funds there. Suddenly, the world's frightened investors stampeded on to this ground. So while the supply and demand of food stayed pretty much the same, the supply and demand for derivatives based on food massively rose - which meant the all-rolled-into-one price shot up, and the starvation began. The bubble only burst in March 2008 when the situation got so bad in the US that the speculators had to slash their spending to cover their losses back home. When I asked Merrill Lynch's spokesman to comment on the charge of causing mass hunger, he said: "Huh. I didn't know about that." He later emailed to say: "I am going to decline comment." Deutsche Bank also refused to comment. Goldman Sachs were more detailed, saying they sold their index in early 2007 and pointing out that "serious analyses ... have concluded index funds did not cause a bubble in commodity futures prices", offering as evidence a statement by the OECD.

How do we know this is wrong? As Professor Ghosh points out, some vital crops are not traded on the futures markets, including millet, cassava, and potatoes. Their price rose a little during this period - but only a fraction as much as the ones affected by speculation. Her research shows that speculation was "the main cause" of the rise. So it has come to this. The world's wealthiest speculators set up a casino where the chips were the stomachs of hundreds of millions of innocent people. They gambled on increasing starvation, and won. Their Wasteland moment created a real wasteland. What does it say about our political and economic system that we can so casually inflict so much pain?

If we don't re-regulate, it is only a matter of time before this all happens again. How many people would it kill next time? The moves to restore the pre-1990s rules on commodities trading have been stunningly sluggish. In the US, the House has passed some regulation, but there are fears that the Senate - drenched in speculator-donations - may dilute it into meaninglessness. The EU is lagging far behind even this, while in Britain, where most of this "trade" takes place, advocacy groups are worried that David Cameron's government will block reform entirely to please his own friends and donors in the City.

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Only one force can stop another speculation-starvation-bubble. The decent people in developed countries need to shout louder than the lobbyists from Goldman Sachs. The World Development Movement is launching a week of pressure this summer as crucial decisions on this are taken: text WDM to 82055 to find out what you can do.

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Who's going to make or buy there stuff?

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Originally posted by Fremdfirma:

Lemme boil it down for the morons, Siggy.

Capitalism = import the loot, export the waste and consequences.

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Basically a form of Piracy, always has been.
It is what it is - and that's WHY I use a very different set of terms, that's WHY I say "private enterprise" instead of "free market" cause that "free market" has been backed by government guns and monopoly sponsorship and support since the fuckin Whiskey Rebellion, and brought of the horror of a Civil War besides.

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Tell me, do you have a CHOICE in your local power company, is there ANY COMPETITION WHATSOEVER, do you have any real control over the rate you pay ?
Or is it a state-backed monopoly with a little baksheesh on the side in exchange for not being too obviously rapacious, well, on your bill at least, they suck the rest up outta tax breaks and grants and all kinds of shit which if they DID put on your bill where you could see it, would start a pocket revolt in short order.

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Originally posted by dreamtrove:
If those are the only two options, the choice is obvious.

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Originally posted by antimason:
capitalism, in itself, doesnt garauntee liberty, freedom, or prosperity. look at China, its a communist regime with a relatively capitalist business climate. did capitalism insure political freedom? no. but as a mechanism of the market, it was sufficient to bring millions of people out of deep, grinding poverty. on the other hand, show me an affluent, prosperous, or even relatively free soceity that is not capitalist?

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Signy has for years maintained a consistent love of socialism and a hatred of capitalism.

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The problem with the current mode of thinking is it assumes lower pay for employees is equal to more money for the business. This kind of thinking is flawed in that the employee IS the “consumer.” The greatest period of economic expansion came when labor laws allowed the Workers a taste of the Wealth they create. This is not Marxist unionist propaganda it is a Capitalist fact.

If the core of Capitalism is self interest (greed) why should the worker be any less greedy than the Capitalist? Marx wanted some sort of Utopia where fuzzy bunnies and happy kittens frolic and people work all day for the good of the collective. Screw that. I’m in it for me. I’ll work my rear off to make you rich as long as you take me along for the ride. I am not pro-union because I think Socialism Rocks. I am pro-union because I think Capitalism Rocks and I am as greedy as the next guy. Maybe more so. I am not working to make you rich. I am working to make me rich and I want my share of the wealth I earn for you. Capitalist Greed. Consumer Greed. Worker Greed. It is all Capitalism to me. I am not going to give away money I deserve just because someone calls me a “Socialist.”

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Originally posted by SignyM:
Geezer, weren't you the one who supposed that the videos of cops beating peaceful protesters at the G20 could "somehow" be fake?

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All you ever due is obfuscate, minimize, twist, and in general set aide obvious fact and common sense.

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Why should I... or anyone here... pay the slightest attention to your whinging and apologism, when you are clearly as unbalanced as rappy?

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Originally posted by SignyM:
Well, maybe this will screw with a few people's heads. Wulfie child, ready for some reading?

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Originally posted by SignyM:
My opinion is that, as N American and European economic activity is moribund (due to regressive taxation and lack of planning) and that real investment is at a near standstill, the only way to "make money on money" is speculation. (That, and illegal activities.... the end stage of any economic depression). The trick is to be speculating in whatever it is the ultra-wealthy are speculating in, but to be there FIRST, not to get sold the leavings while the market collapses and the ultra-rich bail out.

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Capitalism is the antithesis and enemy of Industrialism, as Henry Ford pointed out

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Originally posted by AnthonyT:


Hello,

For the record, this man has never told me to go fuck myself long and hard for daring to disagree with him. He has never been anything but civil with me in his discourse, and has always attempted to provide a logical (even if not always correct) argument.

I do not find the comparison valid.

--Anthony

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Originally posted by Fremdfirma:

What, and it never occurred to you WHY imma Kropotkinist-Anarchist there, DT ?

As for putting a spike in the primary flaw of that religious philosophy known as Capitalism...

And I say religious philosophy cause yanno, in THEORY, it could work, if people weren't human, if nothing unexpected ever happened, if it were not possible to cheat the system, if, if, if...

But it sure as shit ain't never ever once worked that way in practice - a viable system has enough slack in it to account for stuff like that, which is the flaw of BOTH Keyesian and Austrian economics.

But if you wanted to put a spike in the worst flaw of capitalism, that's EASY...

Give money an expiration date - use it or lose it.
Say ninety days from coming into your possession, for example.

-Frem

I do not serve the Blind God.

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Every advance in human life, every scrap of knowledge and wisdom and decency we have has been torn by one side from the teeth of the other. Every little increase in human freedom has been fought over ferociously between those who want us to know more and be wiser and stronger, and those who want us to obey and be humble and submit.

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Sig You have supported socialism over the years so its natural for people to make the supposition that when you say capitalism has to go your back to that old drum.

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Anthony is right, Geezer is pretty civil, perhaps overly so. He is also one of the more centrist members of the forum

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For the record, this man has never told me to go fuck myself long and hard for daring to disagree with him.

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Originally posted by SignyM:
Not saying this lightly, but he always has an excuse as to why it's OK for us to overthrow democratically-elected governments and replace them with dictators who torture, rape, and massacre large portions of their population to protect and serve landowners, foreign corporations, banks and other wealthy elites.

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So when pictures show up of police macing and beating peaceful protesters, he wonders if somehow they are "fake", or what the protesters did to "deserve it".

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Originally posted by dreamtrove:
Geezer,

You did say something to that effect ove the g20 protesters. The globalist jackboots were some of the scariest Nazis vie seen in a while, you lost some points with me for supporting them. Overall you're okay. Ah well, so it goes,

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Well, if that's what you call showing that the folks you call DEMOCRATICALLY ELECTED PRESIDENTS were often actually dictators appointed by the previous dictators, winners of elections with one candidate, or collaborators with the Japanese during WWII - or providing quotes from folk you say the CIA overthrew saying the CIA had nothing with their removal from office...

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I'd appreciate a cite of where I said peaceful protestors were maced or beaten because they "deserve it". Or that I "support people being billy-clubbed in a park". I believe that happened only in your mind.

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On another point, guess I'll have to point out that, according to your posts above, you risk your capital in investments in the stock market or commodities market, hoping that the return on your investment will make you a profit. In other words, you're a Capitalist. Does this make you feel like a hypocrite?

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no economic system can be totally perfect because it has people running it. capitalism will have the people eith the money calling the shots whereas a marxist system will mean the people on the bottom, who have no idea about how to successfully run a company and make money, will have control.

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Originally posted by dreamtrove:
Geezer

I reviewed it again. It looked to me how it looked the first time.

You introduced anarchists causing damage to counter a story of jackboots squashing innocent peoplein a park. This does not logically follow that the behavior by the police would in any way be triggered by the vandalism.

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When you provided this as a counterbalance, it certainly appears to me as if you were taking the side of the jackboots.

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Originally posted by SignyM:
Hmm... I posted at least a couple of dozen of examples of leaders that OTHERS called democratically-elected. Out of that couple of dozen, you had maybe two legitimate, specific objections. Now suddenly, through the magic power of innuendo, you paint a picture that ALL of those democratically-elected leaders (who we deposed and replaced with out-and-out tyrants) were somehow illegitimate to begin with?

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"Does this make you feel like a hypocrite?"

Not at all.

Do you?

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