The biggest speculators and profiteers are none other than the corporate houses and the financial institutions they control

Why are the prices of food and fuel so high, and who is to blame?  This is a question that is bothering the vast majority of people in the world and in our country. 

All those who live on wage or salary income are finding their monthly budget as well as savings for the future being devalued.  They cannot purchase as much as they did the previous month.  Small producers are facing growing risk and indebtedness, as they are systematically cheated in the market by the oligopoly of big moneyed players.  Thus, for instance, majority of Indian peasants have not benefited much from the recent rise in prices of agricultural crops, while various middlemen and speculators have pocketed windfall gains.

A change in prices, of all commodities or of a group of commodities more than others, does not create any new value.  It does not destroy any existing value either.  It only redistributes the value that has already been created by human labour. 

Redistribution means that value deducted at one place is accumulated at another place.  We know that value is being deducted from the wages and earnings of workers and peasants.  Who are the robbers who are pocketing additional profits as a result?  If majority of people are being robbed, there must be a minority of robbers benefiting from this robbery.  Who are they?

The bourgeoisie and its spokesmen in the government try their best to skirt around this question.  Bourgeois economists talk as if rising prices are hurting everybody in society.  They thus try to hide the class contradictions.  In actual fact, one section of society is suffering while another section is benefiting.  Majority of people are suffering while a minority is enriching itself.  And it is precisely the unlimited greed of this minority, for the maximum rate of profit within the minimum length of time, which has led to the boom in commodity prices in the first place.

The chain of events over the past few years, starting with the bursting of the dotcom bubble, followed by the rise and fall of housing finance in the US, and now the commodities bubble, shows how parasitic the global capitalist economy has become in this first decade of the 21st century.  A tiny minority of people in this world have been pocketing huge profits from speculative futures trade.  They have been robbing the value of working people’s wages and savings, and net returns to peasants and other small producers. 

A major spike in commodity prices, such as of food and fuel as is happening this year, redistributes value from the pockets of the working people into the pockets of big time speculative and profiteering enterprises.  It increases the degree of exploitation of labour.  It also redistributes surplus value from one set of capitalists to another, intensifying the contradictions among them. 

Much of the international speculation in food commodities takes place on the Chicago Stock Exchange, where a number of hedge funds, investment banks and pension funds have substantially increased their activities in recent years.  Such large-scale investors buy futures, which are claims on goods to be delivered at a fixed date and a pre-determined price in the future. When the price of the commodity rises even higher than predicted between the time of the investment and the time of delivery, the investor is able to take home a large profit (see Box on Futures Trading).

According to the Bank of International Settlements, as of December 2007, the total value of futures contracts stood at a staggering $ 516 trillion. This is 10 times larger than global GDP ($ 50 trillion). What this means is that the extent of speculation is not limited by the physical stocks that one can hoard. The biggest speculators today are hoarding not only the available physical stocks but also future claims on commodities. And these future claims amount to a large multiple of the physical stocks available.

In India, the central government headed by Manmohan Singh remains committed to the path of liberalisation and privatisation, which means to open the field further for the speculators and profiteers to invest in whatever and wherever they please.  When people’s anger rises as a result of skyrocketing prices of essential commodities, the politicians of the ruling class shout empty slogans against hoarders and profiteers. 

The fact is that the biggest speculators and profiteers are none other than the corporate houses and the financial institutions they control.  The big capitalists are the culprit and it is they who control central state power.  This is the reason that the Government of India only has empty slogans and hot words, but never any concrete action against the biggest robbers of people’s livelihood and savings.

The working class, peasants, women and youth must not believe in the empty slogans of the bourgeoisie and its politicians.  We must not lose sight of the basic fact that it is the capitalist class, Indian and international, which is robbing all of us of our hard won rights and claims on the social product. 

The alliance of parties in power, headed by the Congress party today, defends this system of large-scale robbery, and wants to expand the space for it even more.