Global warming and capitalism
Speculators feast on Russian disaster
Published Aug 11, 2010 6:12 PM
The race is already on in commodities markets worldwide to wring new fortunes
out of the climate catastrophe now raging in Russia. It’s a chilling
example of how capitalism works in a time of crisis.
Russia is in the middle of the worst heat wave ever recorded in that vast
country, most of which lies far to the north and historically has experienced
relatively cool summers and frigid winters.
Over the 130 years that records have been kept, Moscow had a pleasant average
of 75 degrees Fahrenheit in the summer months. This July and early August the
thermometer spiked at 100 degrees — and is staying there. Hundreds of
wildfires are raging in the parched forests, causing deadly smog throughout the
area. The death rate in Moscow has doubled to 700 a day, which health officials
blame on the smog.
Further south, in the breadbasket steppes of Russia that have made it the
world’s third-largest exporter of wheat, temperatures have been even
hotter and crops are failing. Cattle and poultry are dying from the heat, the
drought and lack of fodder. Some automakers temporarily halted production
because of the extreme heat in southern Russia. (Bloomberg BusinessWeek, Aug.
The Russian government announced in early August that, due to this crisis, it
would not be exporting any more wheat this year.
Capitalist vultures feast
Immediately, the speculators went to work.
In the Chicago Mercantile Exchange and other markets around the world where
betting goes on over the future of crops, huge sums began changing hands as
capitalists gamble over how high the price of wheat will go if the devastating
heat wave and drought do not end in time to rescue most of this year’s
Relief does not appear to be in sight. The state weather service predicted that
temperatures in most parts of central Russia would run about 14 degrees above
average through Aug. 12, rising to as high as 108 degrees Fahrenheit in some
areas. And only the privileged have air conditioning in most of Russia.
The weather service also reported that rainfall in July in central Russia and
along the Volga River, the areas hardest hit by fires, ranged from 10 percent
to 30 percent of the long-term average.
“Futures prices [of U.S. wheat] fell sharply in the financial crisis,
from nearly $13 a bushel in early 2008 to around $4.50 a bushel less than 10
months later. In early June, they were trading around $4.28 due to an apparent
glut,” reported the Wall Street Journal on Aug. 9, which hastened to add
that, with the Russian disaster, “Prices surged above $7 last
Speculators who are betting that wheat prices will go even higher hope there
will be no rain.
But others are betting that the rains will come, the Russian crop will be
saved, and there will consequently be a glut on the market next year, causing
prices to fall.
Farmers in grain-exporting countries all over the world, especially the U.S.,
Canada and Australia, are trying to figure out whether wheat will be making
money next year or prices will continue to be low. If the latter, they are
likely to plant corn instead of wheat, figuring they can sell it to the energy
market for ethanol.
The irony is that world grain stocks are now at the third-highest level on
record and prices have been dropping, even though in the U.S. farmers have
pulled back from wheat in favor of corn. The size of the wheat crop shrank 11
percent in the past two years, to 2.2 billion bushels, according to the U.S.
Department of Agriculture. Whatever happens over the next year, the world will
not run out of wheat, but poorer countries and people may not be able to afford
The speculators and exploiters of human labor don’t look at the problem
from the point of view of hunger and suffering. They’re concerned only
about profits. “A titanic 2011 U.S. acreage battle is brewing,”
said Rich Feltes, senior vice president for research at MF Global, a
commodities brokerage firm. (Wall Street Journal, Aug. 9)
This means that it will be the speculators, not the farmers, who in the end
determine which crops are grown — and it will be based on how much profit
they think can be made. They are also already speculating in the currencies of
the countries involved, anticipating that inflation will depreciate the
Capitalism and climate change
It is the drive for profits that has pushed capitalist expansion in both
industry and agriculture in the modern age. This drive for profits is not only
behind the speculation that is driving up wheat prices — it is also
behind the climate change that is so cruelly buffeting Russia this summer.
The National Oceanic and Atmospheric Administration, a U.S. governmental body,
released a report on July 28 that confirmed the planet is heating up rapidly.
The report got scant attention in the corporate media, even though it
summarized the findings of more than 300 climate scientists in 48 countries who
measured 10 separate planetwide features, including air and sea temperatures,
humidity, Arctic sea ice, glaciers, and spring snow cover in the Northern
The impact of continuing change, it says, will be extreme heat waves, heavy
downpours in some areas and drought in others, rising ocean temperatures and
acidification, insect infestations and wildfires, and sea level increases of
more than three feet in some areas. (noaanews.noaa.gov) It all adds up to
widespread disasters unless governments rein in greenhouse gas emissions
— which appears remote, as that would threaten the interests of the
ruling classes that dictate the economic policies of the capitalist countries
and have blocked any meaningful international treaties on climate change.
Do today’s leaders in Russia acknowledge this problem?
After all, Russia used to be part of the Soviet Union, which developed its
industry according to a plan, not according to the whims of the capitalist
markets. That economic plan was of course damaged by the vicious struggle of
the capitalist world against socialism — both the invasion by Hitler
Germany in 1939 that cost the USSR 20 million lives and much of its industry in
World War II, and then the U.S.-led Cold War. This unrelenting military
offensive forced the Soviet leaders to prioritize defense when the people
needed relief from extreme wartime scarcity.
The Soviet Union, despite many gains for the masses made possible by the
workers’ revolution of 1917, did not survive. Russia today is a
capitalist country where “entrepreneurs” look to profit out of any
disasters. This bourgeois view of “development” has been expressed
by its political leaders, who have looked for business opportunities in the
thawing of the permafrost and in the melting of sea ice north of Siberia that
now blocks potential navigation channels between Europe and Asia. But the
current crisis has forced a change.
President Dmitri Medvedev, who until now has been one of those leaders
ambivalent about global warming, said recently: “Our country has not
experienced such a heat wave in the last 50 or even 100 years. We need to learn
our lessons from what has happened, and from the unprecedented heat wave that
we have faced this summer.
“Everyone is talking about climate change now,” he continued.
“Unfortunately, what is happening now in our central regions is evidence
of this global climate change, because we have never in our history faced such
weather conditions in the past. This means that we need to change the way we
work, change the methods that we used in the past.” (“Russian fires
prompt Kremlin to abruptly embrace climate change,” Christian Science
Monitor, Aug. 9)
It is not likely that politicians who have embraced capitalism will learn the
real lessons of the growing disasters now plaguing the world. The future lies
instead with anti-capitalist forces that are growing, especially in the
oppressed countries, and that say, along with Bolivian President Evo Morales,
“Save the world — from capitalism.”
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