the Voice of
The Communist League of Revolutionary Workers–Internationalist
“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx
May 16, 2011
One reason why prices all over the world on such basic necessities as gasoline and food have skyrocketed has been Wall Street greed.
For more than a decade, Wall Street companies, led by Goldman Sachs, have set up big investment funds that have bet on the prices of raw materials from precious metals and energy to coffee, cocoa, cattle, corn, hogs, soy and wheat.
Of course, speculation in these markets is nothing new. For more than a century, for example, farmers in this country sold their crops to speculators before the harvest. These “future” contracts were a way that the farmer hedged against lean times, not to speak of pay their production costs. As for the speculators, they made their money by buying low and selling somewhat higher. But with the rise of these investment funds, Wall Street companies and speculators, who have nothing to do with actual production or distribution, set up a scam that has done nothing but push prices up, higher and higher still.
When the global financial crisis hit in late 2007, speculators, fearing the financial meltdown, began to pour their money into what they considered safe places to park their cash: starting with basic commodities–including food and fuel. There was a 50-fold increase in dollars in these Wall Street investment funds. So, while real estate and stock prices plunged, food prices skyrocketed, creating new bubbles. The price of hard red spring wheat more than quadrupled on commodity markets. And from 2005 to 2008, the worldwide price of food rose 80%–and has kept rising.
As the money flowed, the bankers put together sparkling new investment products, spearheaded by oil and gas products, as well as various grains, to attract more money. Speculators, who used to account for one-fifth of the traders in the market for grains, now outnumber the real producers and distributors by a four-to-one margin.
Investment bankers engineered an artificial upward pull on the price of grains and other products. As prices rose, more speculative money was pulled in, which pushed prices still higher. And this created a shock to the global food production and delivery system.
Wall Street companies, bankers and traders made huge profits from these speculative bubbles, devouring everyone and everything. Smaller farmers gained nothing from the sharp rise in food prices. Whatever increase they got was erased by bigger increases in their cost of production, such as energy, fertilizer, pesticides–not to speak of their financing costs.
As for the working class and poor, the rise in food and fuel costs comes on the heels of the jobs crisis, the housing crisis and all the rest. In the U.S., some of the worst hunger has increased by 39% over the last three years–according to the U.S. Census Bureau. Currently, about 17% of the U.S. population is classified as “food insecure,” which means that at times during the year, they don’t have enough to eat.
But for the roughly two billion people across the world who spend more than 50% of their income on food, the effects have been staggering: 250 million people joined the ranks of the hungry in 2008, bringing the total of the world’s “food insecure” to a peak of one billion–a number never seen before.
And yet, none of this crisis is due to an actual lack of food. On the contrary, food production has increased faster than population growth. No, it is because the capitalists squeeze the world markets of the most vital necessities simply for their own profit.