Don Flynn on the new instruments of conquest
Extractive Capitalism: How Commodities & Cronyism Drive the Global Economy by Laleh Khalili published by Profile
First expectations of a book with a title like “Extractive Capitalism” might be that its subject will be the despoilation caused by industries like metal and mineral mining, oil drilling and the new appetite for plundering something called rare earth on the lands where this is found in relative abundance. The wrecking of the environment is certainly one of Khalili’s concerns, but the extraction that really keeps her awake at night centres on the more abstract concept of value, the extraction of which is measured by the growth of poverty and inequality among human populations. The clue as to what the book is about is really in the subtitle, which lists “commodities and cronyism” as the drivers of the extractive process, as well as the reason why things seem to be getting so much worse for so many of us. Carbon-based fossil fuels like coal and oil cause damage by increasing the rate of global warming. The plunder of rare earth minerals gives rise to pollution from massive toxic waste, water and soil contamination from chemicals, habitat destruction, and ecosystem disruption.
But Khalili focuses mainly on how the value of the things needed to reproduce modern society is converted into income flows for investors and shareholders and from there into things like super yachts and privately-owned Caribbean islands. Moreover, this system of extraction also sucks legitimacy out of things like the rule of law, the operation of tax systems, and the ways in which democracy is supposed to operate for the benefit of the masses of people.
Her account of the ways in which corporate interests dominate the operation of trade traces the histories of oil production in Mexico, Iran and Saudi Arabia, where the assertion of sovereign rights over the resources in the territory of nation states has been contested by commercial arbitration panels which are biased in favour of the commercial conglomerates. Yes, bold measures like the nationalisation of a resource like oil have engendered pushback by some governments, but often at the considerable risk of incitement of trade blockades and internal coups, as seen in the overthrow of Mohammed Mussaddegh in Iran in 1953, and is being threatened in Venezuela at this present moment.
Circulating across the world in the form of commodities empowers financial interests to enter the market to grab their share of value. So-called futures markets endow the traders operating in their realm with the ability to make (and also lose) fortunes based on prices that might apply across the world at indefinite points in time to come. This was seen back in the days of the pandemic when the price of oil plummeted as countries withdrew from production processes. A group of traders based in Benfleet in Essex saw this as an opportunity to buy a rapidly depreciating asset and find cheap ways to store it in anticipation of the end of shutdowns and a return to full-steam-ahead. The result was a blitzed profit of $700 million, all magicked up in the frothy world of finance and none returning to the countries and workforces that had got the stuff out of the ground in the first place.
As Khalili puts it, commercial contracts and financial devices are the new instruments of conquest, colonisation and commodification. Whilst the benefits of global trade are innovatively snatched up by traders, the opacity of the wheeling and dealing creates ample opportunity for the liabilities arising from bad trades to be shucked off. Some of the more heartless examples of this come from the shipping trade, a business that remains lucrative as long as there is demand for its services and a workforce is on hand which has no choice but to endure a harsh work regime.
Every year, hundreds of vessels are stranded at sea when owners declare bankruptcy or just mysteriously vanish from their trading responsibilities. Ships are not able to proceed on any voyage until liabilities are sorted out, and wages due to crews will be withheld for months, and often not paid at all. At times like this, the real business of extraction is revealed, with phantom owners creaming off unimaginable profits, with the workers who dig or pump up the goods and transport them across oceans being abandoned to months of hardship and squalor, waiting for the miraculous moment when privileged owners are eventually made to pay their debts.
It’s not only an overheated planet polluted by toxic slagheaps which haunts our future prospects, but also a poverty-ridden, unjust, disfigured social and economic system which we are still being made to endure.