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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. 5)

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 harvest.

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 week.”

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 it.

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 money.

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 hemisphere.

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.”