At the G20 steel summit in Berlin last week, the world’s largest steel-producing countries agreed to dismantle market-distorting subsidies. This has been done to tide over the phenomenon of overcapacity that has pit different capitalist countries against one another. China and the US have been at loggerheads over the issue of overcapacity, with Washington accusing Beijing of dumping cheap steel into the US market. The representatives of the 30 countries that attended the meeting failed to evolve a consensus over a mechanism that could reduce steel overcapacity. China has been trying to appease its Western rivals by reducing production. Beijing has already shed 100 million tonnes of excess steel capacity. But this hasn’t addressed the issue of the global overcapacity of steel, which stands at 800 million tonnes. The total production of steel in 2016 was 1.6 billion tones. This is likely to rise in the future and create more problems for a world market that is still grappling with the impacts of the global financial crunch. The crisis has exposed the real character of the free-market champions. The godfather of laissez faire – the US – has threatened to take punitive actions against China for apparently following the principles of the market. The Trump administration has repeatedly warned against adopting a tough line on the production of excess steel and has even launched an investigation into whether US steel imports from China pose a risk to national security. The Europeans, who are also believers of the free-market gospel, have also asked Beijing to cut subsidies to its mostly state-owned steel companies, stop dumping cheap steel into the world market and reduce more steel capacity in addition to the 100 million tonnes that it has already clamped down on. The trade war between the world’s largest steel producer and its capitalist rivals has raised some important questions. Beijing’s rivals claim that government subsidies have led to excess production. But have there not been similar crises in the past when China was practically living in the Stone Age? On average, there has been a crisis in the capitalist economy every 10 years since the beginning of the 19th century. Are we not taught at university that everything under capitalism has to be left at the mercy of the market and it is the invisible hand cures the malaise that the system might encounter? We are told that it isn’t the job of the state to intervene in economic affairs. But here, we see the heads of the state and the representatives of countries issuing warnings to companies that are struggling to outwit their trade rivals. We are also made to believe that the intense competition among companies drives down prices. However, we have witnessed that Beijing is being threatened for bringing the prices down. This flies in the face of those who claim that capitalism lower prices. In fact, the respected heads of various countries shouldn’t turn against China alone but should also point a finger at the very system which generates this over capacity – a system that is based on profit-making rather than meeting people’s needs. The fault lies in the basic economic philosophy. If profits are the cornerstone of the business world, then anything can be legitimised for the sake of making money. It was the gargantuan appetite of the capitalists for profit that led to the decimation of over three million black slaves, the annihilation of 35 million people in Ireland, India and other parts of the world in man-induced famines, and the plundering of third world countries. Marx considered man and nature to be two crucial elements for creating wealth and under capitalism both aspects are ruthlessly exploited. World leaders need to understand that every sector of economy – and not just the steel industry – suffers from overcapacity or overproduction. In China, the overproduction rate of iron, glass, cement, aluminium, solar panel and power generation equipment surpassed 30 percent two years ago. Japan is also facing overcapacity and has reduced the demand in its automobile sector. The country has 13 million units of installed capacity – 30 percent more than what is necessary. The working class is the first casualty of this reckless competition for the sake of profit. The jobs of around 12,000 workers in the US and 15,000 others in the EU have been threatened over the past few years owing to overcapacity in the steel industry alone. Thousands of people might also lose their jobs in China if the second-largest economy is forced to curb capacity. These worrying statistics have been reported even though only 22 percent of the world’s population is engaged in manufacturing. The vicious cycle of crises and overproduction aren’t the only problems of this economic system. The waste of resources, the futility of human labour and the destruction of nature are also an outcome of the gospel of laissez faire. According to Fred Magdoff and Chris Williams, between 30 and 50 percent of the food grown in America goes to waste. The system is full of distortions. For instance, it claims to be the champion of the free market economy. But the US, the UK and France – the bastions of modern capitalism – flourished under protectionism, which Trump is trying to re-impose. The defenders of this system claim that it was the tireless efforts of the entrepreneurs that turned the Western world into what it is today. But it was the ruthless exploitation of the working classes of their countries in general and the colonies in particular that led to the advancement of the modern capitalist world. It isn’t a coincidence that all the colonial powers of the past are the industrial giants – or at least the developed states – of the modern times. The West had occupied 35 percent of the world prior to the Industrial Revolution. By 1945, 85 percent of the earth’s landmass was under the domination of Western countries. This system has enriched a few millions and pushed more than two billion people into a state of misery. This brutal system pumped over $3 trillion into the destruction of Iraq and Afghanistan but is reluctant to allocate $50 billion to provide primary healthcare and basic education to all. This greedy philosophy permits lavish spending on upgrading British nuclear arsenals, testing America’s National Missile Defence System and on Chinese defence. But it has no mercy for the more than two billion people who are living on just a few dollars a day. So, the fault does not lie in state subsidies or unfair trade. Instead, it lies in the very system that the world leaders seek to protect.
The writer is a freelance journalist. Email: egalitarianism444@gmail.com
