Narcomafias and senile capitalism

What is a narcomafia and how does it relate to the global economy?

There are two ways to explain it. The first would simply give an account of the capital managed at a global level. According to UN data, strictly illegal mafia business amounts to a billion dollars worldwide by the end of the last decade. If we add to that number the many other legal or semi legal businesses which the mafias control, it sums to nearly 3 billion, which would be the equivalent to about 10 percent of the Gross World Product (GWP).

The other way would be to analyze the narcomafia phenomenon from a capitalist view and then wonder why the subject has gained such notoriety. In order to understand the global process of the world's slow economic growth, we must go back to the 70s and more importantly, the 80s, when financial gains from production became more and more difficult to relocate back into industrial production and were advanced to investors. At this time, a second financial realm began to expand, favoring mainly a wide variety of corporations and their affiliates, which found a way to compensate the drop in profits by transferring gains onto the speculative market. It is important to point out that the deficit growth, as well as corporate welfare for those companies that needed to release capital onto the markets in order to obtain loans played an important role, allowing them to gain currency, invest and participate in financial warfare.

Problem is: the business of financial expansion comes with a ceiling, because it's not an endless elastic medium where you can pile profits perpetually. An example of the highest level of financial folly of our time is the so-called "derived product," which can be chain- marketed twenty, fifty or a hundred times to reach the highest yield. This type of business currently amounts to double the GWP.

In other words, we may first observe a decrease in production and then an expansion of the financial bubble, which is insufficient in the long run, creating bottlenecks and also predicaments regarding placement of the profit generated by the financial hypertrophy. As a result, a third domain begins to gain prominence; this area I would term illegal, semi legal, illicit, exploitative or mafia related business, which is concerned with illegal trade and is usually protected, such as drugs, which although they are illegal, their trade is bound with a rather sophisticated mechanism of supply management, and the arms trade, which operates under very similar mechanics. Those are markets that yield 100 percent annually and more.

However, financial enterprise and mafia rackets operate on the premise of economics as a plundering device; therefore the 3 billion dollar figure suggested earlier is not a result of the perversion of capitalism, neither does it represent a decay of government or morality: it simply reveals the fabric within the crisis of capitalism. This crisis emerges from the financial hypertrophy which shows as a corollary the urgency of mafia bureaucracies intrinsically affiliated to economic hegemony: corporations are financed by governments, which in turn become embedded with various mafias, causing political power to become progressively enmeshed in a financially illicit collusion.

In the past, US Republicans were convinced that they represented the interests of the high bourgeoisie and American capitalism in general. Today, Republicans defend the interests of their close "friends," handing over political power to the mob in a decadent procedure. This transaction of political affiliations is directly related to the financing of corporations and to the practice of plunder the mafias implement. Two good examples would be Bush in the US and Berlusconi in Italy. Russia is another case.

Is there a long term possibility for the economic crisis to subside or is it terminal?

A crisis in a fledgling capitalism is very rapid, hits with dreadful violence but also brings elements for a swift recovery. We could compare it to a kid who falls terribly ill with a 104 degree fever and apparently close to dying. Next day, he's perfectly fine and in a week he's an inch taller; in other words, we're witnessing a case of growing pains. An adult would hardly ever suffer a 104 degree fever; he would die. A lower fever may occur in a system with a lower metabolism. Older people are usually aware of their symptoms; they're familiar with their bodies and their processes. Yet, even if they have exceptional control over their bodies, they can't avoid a certain amount of deterioration after a fever.

Back to world economy, we see that Japan didn't collapse in 1990, but it did suffer. It is not possible to rehabilitate Japan as a productive entity; the world would have to be four times bigger in order to absorb the exports of that country, allowing its economic might to be restored. However, Japan has many resources available to regulate its decadence, even now, when the crisis has gained ground, having lost the Middle East and American lifelines. I really believe that Japan, overcoming circumstances and conditions which in any other country would have occasioned a thundering economic collapse, is preparing to succumb with dignity. This is why I regard our present predicament as a stage of total parasitic supremacy; there is no possibility of capitalist revival: it will be a long agony.

What would be the difference between classical Imperialism and senile Capitalism?

From the perspective of economic history, towards the end of the 19th Century, two very important elements arise. First, the West acquires dominion over the world. If we look at a map of 1900, the world belongs to the West, except for Japan. Never was the West so powerful in terms of land dominance, before or after. Also, a certain phenomenon begins to take place at a small scale since 1870: the financing of Capitalism. This is when we begin to notice the financial intrigues that eventually would regulate the market by integrating capital and industry. This is considered a decisive move in the history of capitalism and many observers at the time, such as Rudolf Hilferding, provide us with their accounts. Vladimir Lenin and Nikolai Bukharin also reflect on the issue on a more political and economic language. They described the influence of financial capital at the end of the 19th Century and the beginning of the 20th, i.e.: the definition of "imperialism" in its most recent, modern sense. This emerging financial power, which Lenin defines as decadent or degenerate capitalism, is interpreted in a theoretical analysis by Bukharin in his book Economic Theory of the Leisure Class as a development of the profiteering parasitic capitalism which results in the alienation of capital from the production process.

That was the perception on the early 1900s, because when we think of a landlord today, we picture a laid back gentleman who calls to collect rent once a month; a conservative, stable, parasitic capitalist. In reality, the image is deceiving because the basic difference between financial and industrial capital is that the first operates at a faster velocity. In a productive culture, even with a short process rate, there will be a reasonable amount of time before the investment matures, so there will be at least a medium term perspective. The financial world is completely different in that the moment capital is placed on the table, the returns begin; there's nothing to expect in the long run. Such paroxysm creates a culture separate from productive capitalism; it is merely a "shorterm" culture that tends to leap outside the traditional boundaries of bourgeois society. Financial activity carries a seemingly "natural" proclivity to indulge in illegal activity, even if the rules were laid out by George Soros himself.

So we're confronted with an adventurer, a speculator who doesn't care about production processes; he only cares about weekly, monthly or quarterly gains, depending on markets. That is the cancer of capitalism.

During the 20th Century, the most noticeable characteristic of capitalism is an upward, nonlinear, financial curve. There isn't a perfect explanation for such constant surge. Yet, we also find reversals, especially during the great Keinesian revolution, when financing advanced more slowly.

From the end of World War II until the late 60s and early 70s, two events take place: the acquisition of financial markets by the countries that regulate them, and the advance of productivist capitalism. Subsequently, capitalism implemented an intractable policy which, when crisis struck, it occasioned an astronomical financing leap.

In the 70s, the accelerated financing of the economy and the mafia involvement begin.

So we're talking about a "long century" spanning approximately 120 years from the rise of financing capital, which because of its emerging prominence, it is the most dynamic; it becomes dominant and, from a Gramscian perspective, becomes the most homogeneous.

Capitalism developed from childhood to adolescence, reaching its maturity roughly in the 19th Century; towards the end a parasitic, financial cancer begins to develop and to expand. In conclusion, in our present times the parasitic onset has completely captured the organism, governing the system which in turn has been rendered senile.

Are we then facing a crisis of civilization?

Any organized society, not only capitalist society, contains parasitic elements analogous to those in living organisms and there are theories which suggest that a certain level of parasitism may have a compensatory function and if completely eliminated, there would be a risk of tampering with the organic equilibrium of the entity in question. The problem would be to ascertain when the parasitic components begin to subdue the organism and when each and every activity begins to be dictated by the parasitic nucleus.

The example of Imperial Rome is well documented. There is a point in the history of known civilizations when parasitic elements begin to dominate the structure and begin to plunder the productive sector, collapsing the very system which sustains them.

In the context of capitalism, we must situate the "long century" of financing within a much broader cycle spanning thousands of years, beginning with the primeval forms of accumulation at the "edge" of the Mediterranean, where the first known embryos of capitalism emerge. It is there that a vigorous commercial culture develops, expanding into Western Europe, reaching Spain and wrapping the west of Africa. Then the process of western expansion and the plunder begins, along with the accumulation of capital. In a sense, this is where history begins, an ancient history which culminates in extensive land dominance by the 20th Century and coinciding with the introduction of financing, which now has reached its senility.

The agony may extend over a long period of time and I would add (since you didn't ask) that the agony of capitalism wouldn't necessarily allow for an automatic recovery. In the history of the world, there are civilizations which collapse never to rise again, and there are in capitalism certain mechanisms of regulation and control that would impede any improvement, embracing the planet and dragging it into a barbaric frenzy in its demise.

This is possible; and I believe the 20th Century has been both negative and positive. It's been positive because the growing decadence and parasitic convulsion of the bourgeoisie has produced disruptions in the capitalist doctrine; the fallout engendered the breakup of the USSR, China, Cuba, et cetera.

In the context of my previous question, how viable is the hypothesis that there is a crisis of hegemony and what are the chances of another top capitalist nation for restoring such power?

The most ominous problem of the 20th Century is that capitalism collapsed, but it did not loose its grip. This singularity caused the Russian revolution to be an anticapitalist fight, beyond the inside argument of the left regarding the viability of Russian socialism apart from the rest of the world and those who proposed that Russia was a prominent element for international proletarian revolution, regardless of the viability of autonomous socialist reform.

When observed from a historical perspective, Lenin and Trotsky begin to reveal certain "eurocentrist" elements in their discourse, regarding Russia as a "backward", and as an "underdeveloped" country. If the last assertion is true, any discussion about development stages goes to the trash, because the Russian revolution was not a war waged against underdevelopment, but against capitalism; it was from its very inception an anticapitalist revolution, not a bourgeois-democratic revolution. The Russian revolution aspired to a modern society which would break away from capitalism as a global cult, but it failed in the long run because it didn't develop an alternative culture.

What will happen in the 21st Century? I would conclude there's a fundamental element: the senility of capitalism is beginning to implode, fracturing its cultural hegemony and that would demand an evolution. The possibility exists, yet it doesn't necessarily imply such development, in which case, socialism would again be viable; a strand of socialism with peripheral roots, devoid of bourgeois encumbrances, pluralistic, deeply democratic. In short, it would imply the "abolition" (liberation) of capitalism as an alternative for civilization.

Karina Moreno is a Political Science Major (UBA), Master in Latin American Studies (UNAM) and soon a Doctor in Latin American Studies (UNAM).

Jorge Beinstein is an economist and his latest work focuses on Global Economy.

Translated by Miguel Alvarado