Public debt, global hunger and neoliberalism

Wols (Alfred Otto Wolfgang Schulze), [untitled], 1988
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By JOSÉ RAIMUNDO TRINDADE*

The public debt crisis has the potential to worsen social contradictions and expand poverty and hunger

“If you can look, see. If you can see, notice” (José Saramago, Blindness essay).

Together with the current US financial crisis, manifested in the collapse of the Silicon Valley Bank (SVB) and the Signature Bank, which spread to Europe with the bankruptcy of the secular “Credit Suisse”, another crisis is added, in many ways much more serious and of far superior human impact, however umbilically interconnected the financial crisis of the banks of the world capitalist center, but little treated by the big corporate media: it is the public debt crisis of a great number of countries, with a new potential point of aggravation of the contradictions and the expansion of misery and hunger in dozens of countries on the periphery of capitalism.

In February 2023, the International Panel of Experts on Sustainable Food Systems (IPES-Food), released the reportBreaking the cycle of unsustainable food systems, hunger, and debt"(https://ipes-food.org/reports/ ). The Report integrates the logic of the food insecurity and hunger crisis with the pre-bankruptcy crisis (default) of many underdeveloped national states, specifically in Africa and Asia, but also in Latin America.

According to IPES-Food, around 60% of low-income countries and 30% of middle-income countries would find themselves over the years 2023 and 2024 at high risk of a public debt crisis, based on a category developed in the report of “unsustainable debt”, that is, the maintenance of debt service payments that make the populations of these countries increasingly poor and subject to hunger. As the document recalls, the reasons for these nations' indebtedness can be diverse, but undeniably what weighs most is the condition of subordination to the interests of “powerful global governments and creditors”.

The base of the world's hungry population expands over the four decades that circumscribe the current pattern of neoliberal accumulation. Pierre Salama and Jacques Valier already showed in a text from the late 1990s, that the liberal economic policies of orthodox adjustment applied in many countries and that at that time already had the tone of establishing alleged “fiscal balances” and the payment of foreign debts, would have a high social cost, with increasing impoverishment of the population of many countries.

The IPES-Food Report only confirms the predictions that neoliberalism and financialization have not only increased the indicators of poverty and concentration of income and wealth, but have led millions to a situation of hunger. Thus, “as of November 2022, an estimated 349 million people face acute food insecurity, with 49 million on the verge of starvation and 45 countries in need of external food assistance”.

The key issue addressed refers to the vicious circle of how public debt ratios and the maintenance of a fiscal logic of dependency establish the continuous transfer of public funds from these underdeveloped nations to the controllers of the respective debts, implying the deepening of hunger and unsustainable food security for these populations.

The document explains that the global public debt reaches its highest level in the last sixty years and that the poorest countries commit a growing portion of the public fund to debt services, and in the year 2022 “these costs have increased by 35%” . The "UN Global Crisis Response Group" linked to UNCTAD (United Nations Conference on Trade and Development), warns that the "continued monetary tightening", with rising global interest rates, will "increase the risks of a systemic debt crisis" .

It is worth noting that this would not be the first manifestation of a systemic public debt crisis in the global South, as its characteristics are always accompanied by the worsening of hunger and misery. Still in the 1980s, the inability to refinance the so-called emerging economies manifested itself in several crises, and in the 1990s the localized crises were particularly acute: Mexican, Russian, Brazilian and which culminated in the collapse of the Argentine economy in 2001. In 2014, the almost “default” of Greece and the difficulties faced by the Central European economies (Portugal, Spain, Ireland) demonstrated that the pattern of financialization of public debts has limits and a generalized spread was not ruled out.

In the current framework, Lebanon, Sri Lanka, Suriname and Zambia are already in “default”, and another 12 (twelve) governments already show signs of possible “default”, considering that economies of greater regional weight such as Pakistan and Ghana present serious risks, all this in a context of the spread of poverty and hunger in these countries. The IPES-Food Report, still based on the UN's "Global Crisis Response Group", notes that "69 countries, home to 1,2 billion people, are subject to serious forms of food, energy and financial instability public”.

The established picture reveals the risks that we face, not only in face of the limits posed by the continuity of the rules of wealth concentration that led us to the awkward number in which the “2.153 billionaires in the world have more wealth than 4,6 billion people (60% of the world population)” (https://www.oxfam.org.br/), as well as, and mainly, the loss of any civilizing possibility.

The conditions of what is called “unsustainable debt” in the report is similar to the Brazilian pattern of social dispossession. Basically, the debt mechanism revolves around stimulating international borrowing or even issuing debt securities, whose condition for using the resources does not refer to the expansion of social infrastructure or new investments, but only to guarantee the payment of debt services. previous ones, such as the metaphor of the dog chasing its own tail. The debt becomes unsustainable in the face of the global financial logic of an appreciated dollar and the high interest rates needed to satisfy the never-satisfied appetite of large international and national creditors.

Some of the points proposed in the document as possible ways forward to be adopted internationally would be: (i) establishing debt relief for a group of countries, including their cancellation; (ii) establish “historic reparations” and ensure the flow of resources to the Global South (capitalist periphery) that would make it possible to equate the food crisis and development conditions; (iii) constitute an “autonomous sovereign debt authority”, with the role of ensuring that “never again should countries decide between paying debts or ensuring that their populations are fed”.

These points are, even if still very tenuous, quite difficult to achieve in the face of the current neoliberal “satanic mill”, which prefers to guarantee the interests of bankers, even if bankrupt by speculative action, than to guarantee the right to food for millions of people . The current world capitalist crisis exposes in a very clear way the interaction between the financialization of capitalism, the deregulation of the system, the transfer flow of wealth from peripheral countries to central capitalism, leading to the growing impoverishment of large sections of the world population, with the own interaction between the use of State finances and the maintenance of an expansion circuit of hunger. This set of aspects demonstrated in the IPES-Food document are parts of a senile and anti-civilizational capitalism.

*Jose Raimundo Trinidad He is a professor at the Institute of Applied Social Sciences at UFPA. Author, among other books, of Critique of the political economy of public debt and the capitalist credit system: a Marxist approach (CRV).

References

IPES-Food. Breaking the cycle of unsustainable food systems, hunger, and debt (2023). Access at: https://ipes-food.org/reports/.

Pierre Salama and Jacques Valier. Poverty and inequalities in the 3rd world. Sao Paulo: Nobel, 1997.

Jose Raimundo Trinidad. Critique of the political economy of public debt and the capitalist credit system: a Marxist approach🇧🇷 Curitiba: CRV, 2017.

Jose Saramago, Egas Moniz. Blindness essay🇧🇷 São Paulo: Companhia das Letras, 2008.


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