[OPE-L:5739] The vortex of the world market

Your_name Last_name (m.deangelis@btinternet.com)
Sat, 22 Nov 97 14:48:53 GMT

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>> So, question for everybody. To what
>> extent the spreading militancy in East Asia and South East Asia has
>> affected economic performance and therefore contributed to shake the
>> markets and worrying the speculators? If we look at the stats on
>> strikes, the upward trend all during the 1980s is remarkable in East
>> Asia and South East Asia.

>Two comments:

>1) Capital invested on stock markets is by its very nature a flow of money capital. Thus, if
>the problem was specific to certain markets, then one might anticipate withdrawal of
>funds from those markets (e.g. Hong Kong, S. Korea) and *investment* in other markets
>(e.g. on Wall Street, London stock market). That did not happen. Rather, there was a
>general (although, perhaps transient) decline in all stock markets. This suggests both

> a) the fundamental cause for the crash was not nation or region specific, and;

> b) activity on all of the stock exchanges is strongly linked in the sense that movements in
>one direction on one exchange tend to influence strongly (at least temporary) movements
>.on the other
> exchanges.

[Jerry, you dont consider this possibility: the fact that there was not an increase in
investment in other markets may indicate that the S. Korea, Malaysia etc. economies are
part of a increasingly interdependent global economy. Investors have also penalised
Western companies showing past "robust" performances but with their prospect of growth
almost entirely linked to the south East and east Asia growth (just as one example take coca
cola). Also, we should look at the role/incidence of east-Asian economies within the "global
factory" to see that the downturn of their stock markets may express the uneasiness of
investors/speculators with the declining prospects of growth in the region and inability to
promote harsh reforms in the labour market (remember last attempt in this direction was met
by a widespread opposition in South Korea.) .
In this region, what has been under attack has been the pegging of their currencies to the
US dollar (the last case in yesterdays and todays news is the South Korean Won). The
maintenance of the pegging is for this region crucial especially as far as the long term
prospect of foreign direct investment, that is the safeguard and expansion of their role within
the global factory. The currency devaluation that has followed will certainly promote a short
term boost in their export, but a short lived one, as pressure is already mounting in the U.S.
to take action against the growing deficit toward East Asian economies (Japan, China and
South Korea are at the top).

I feel instead that the real issue here is the strategic role of these economies within the
global factory. If there is any sense in all this financial mess that I can make, is what I read
in todays The Guardian about the recent South Korean crisis:

"Seouls economic woes which have been gathering pace for a year, have done what tear
gas, draconian laws against subversion, and an army of police with water cannon never
achieved. The crisis has halted the pitched street battles which have wracked the capital all
year. . . . Anger has shifted from the campuses to the market, where foreign bankers and
multinationals make an easy target."

So, let us take S. Korea case. The fact is that Japan and US had refused a financial help to
SK until this started negotiation with IMF. Today the news that request was made to IMF and
rumours that financial help may escalate to $100 billion , one of the biggest since W.W.II..
As we all know, the cost of this adjustment program is that, in the words of IMF managing
director Michel Camdessus, the Korean "authorities are resolved to put in place a strong
adjustment programme that will restore confidence, recreate the ground for sustainable
growth, and contribute significantly to financial stability in the region". I dont know how you
read it, but I read it screw the working class. And if this is so (via an acquired legitimacy to
restructure labour markets and blaming it all to the foreigners; via an acquired legitimacy in
cutting public expenditures etc.), isnt this crisis the result of the growing "RIGIDITIES"
posed in the last few years by S. Korean students, workers, etc. to the requirements of the
global factory? Isnt this crisis allowing a more powerful weapon against those forces like
last winter movement of South Korean workers refusing to bow to more "flexible practices"
to allow corporation to gain competitiveness (vis a vis the massive increase in wages in the
last 15 years)? ]

>2) If strikes and worker militancy brings about crashes on stock exchanges (which
>Massimo seems to be suggesting), then:

[Jerry, I think you should give me a bit more credit. I am not trying to substitute a sterile
economic determinism with another sterile sociological determinism. That is, I am NOT
suggesting that

CSMt = f(WCSt-1); f< 0

where CSM = collapse of stock market and WCS = working class struggle. I am simply
asking a question within the framework of what to me is an obvious truth. However capital
is growing, and however capital is moving, its substance is alienated labor. But those who
perform alienated labour are human beings, whose existence is indefinably richer and cannot
be confined into an alienated existence. Therefore, struggle (in whatever form "level" and
intensity) is always a characteristics of the capital relation. (Now this is in a nutshell my
"pre-analytical vision", I wonder what is yours, since each of us has one). Thus, workers
militancy may not necessarily bring about crashes on stock markets if, for example, there are
other ways to recuperate these struggles (the police, trade union bureaucracy, the church,
the army, a war, etc.), and if the stock market is not a relevant instrument of investment
liquidity. You see, I am not suggesting any one unique relation, but I am stating that the only
interest I have in this recent crash is its influence/effect/role within the dynamic of class
relations both at the level of South Korea and, indeed, within the global economy.]

> a) why didn't stock exchanges crash 80 years ago?

[Ah ah, so you are asking for unique casual/effect relations throughout time. Jerry, I think
the only fundamental unique thing within capital mode of production is that it sucks (read
value theory, falling rate of profit tendency, etc.) , but the forms it sucks in a particular time
we must find out for ourselves.]

> b) the level of militancy in the US increased in the 1930's, well after the beginning of the
>Depression. Yet, if strikes and militancy can help bring about a crash, shouldn't the
>radicalisation have begun before 1929?

[Again, I may read the 1930s **depression** being a result of the rigidities posed by the
working class. So, in THAT case the real interesting question would be not why the 1929
crash came about but why it did turn into a 10 years depression. And can you tell me how
capital can even think to resume strong growth in presence of the kind of militancy wave it
occurred in the U.S. in the 1930s (without the help of fascism, or war, or Stalin)?]

> c) there were lots of strikes, militancy, and even some pre-revolutionary situations in a
>number of countries in 1968. Yet while there was a political crisis, this militancy didn't bring
> about a stock exchange crash, did it?

> Thus, from a historical perspective I think the empirical evidence linking strikes/militancy
>to stock crashes is very weak. Nonetheless, I will admit that such a link is conceivable.

[Again, read my point above]

>btw, it's good to hear from you again, Massimo.

[Thanks, good to be back,