[OPE-L:5714] Re: Real under attack

Paul Cockshott (wpc@CS.STRATH.AC.UK)
Fri, 14 Nov 1997 08:47:06 -0000

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> >b) reduction in interest rates and faster devaluation of the currency,
> I find this the least compelling suggestion, since it seems to promise a
> renewal of uncontrolled inflation, which I think would be very unpopular,
> and, as a purely monetary effect, to have little impact on the growth
> or the distribution of income.
If the currency is seriously overvalued on the foreign exchanges
the only way to stop devaluation is through increased foreign borrowing.
I think that as a matter of principle socialists should be opposed
to countries running up international debt. Such debts are currently
the main way in which the worlds banking centers exploit whole

> >c) increase in taxation, especially of capital gains and large
> The main problem here would be capital flight, I suppose.
Taxes would have to be imposed on
a) transfers of Real out of the country
b) purchases of Real using foreign exchange, this would bring in
large revenues and impede speculative capital flows.
> >g) suspension of the privatisation programme, at least until a
> >framework has been legislated, in order to prevent the transformation of
> >state-owned monopolies into private ones.
> This policy is closely linked to the previous one in several ways. The
> theory of privatization is that trade liberalization will introduce
> international competitive forces to prevent the exercise of monopoly
> pricing power.
That may be the gloss put on it by the right, the underlying class
motivation is to restore private control of the means of production.

> What's the record on the performance of state monopolies in
> Brazil? Have they acted effectively to prevent the concentration of
> in the past?

To the extent that the profits of state monopolies remain in the hands
of the state their disposition is subject to political pressure.
This allows, given the appropriate political conditions, for them
to be used to subsidised general public expenditure.
When they are privately owned they go straight to the rich.