PETER TAAFFE reviews an impressive analysis of the role of commodity traders in ‘modern’ capitalism.
The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources
By Javier Blas and Jack Farchy
Published by Random House Business, 2021, £20
The World for Sale is an impressive, illuminating analysis of the corrosive rottenness and the corruption of ‘modern’ world capitalism. It couldn’t have come at a more appropriate time for Britain, where the Johnson Tory government is engulfed in allegations of gross influence-peddling, ‘chumocracy’ and outright bribery.
Written by two former journalists from the Financial Times, Javier Blas and Jack Farchy, with expert and inside knowledge of the workings of the system, it reveals the corruption of world capitalism – on an absolutely gargantuan scale! The book describes in nauseating detail how a handful of ‘commodity traders’ facilitated the theft of the world’s resources, further impoverishing the masses in the collapsing ex-Stalinist states and in the neo-colonial world. Their work allows us to understand how these gangsters gained through the colossal theft of previously nationalised industries and economies in the ex-Stalinist states. At the same time, there were opportunities resulting from a new imperialist scramble for Africa, Asia, Latin America and indeed the whole world. This was facilitated by these traders. This new stratum of the international capitalist class exploited the lucrative niches in finance capitalism, stacked up riches for themselves and, in the process, has in effect carried out a new re-colonisation of the world.
These characters exist in advanced capitalist countries like Britain with close links to the Tory party. For instance, one Ian Taylor “transformed a mid-sized fuel distributor… into an oil-trading giant. In the process making it into a potent force in the global economy, and with enough oil every day to supply Germany, France, Spain, the UK and Italy combined”. He was “a gifted social operator with the charisma of a born politician, and a leading donor to the ruling Conservative party”.
Taylor blatantly intervened in the developing civil war in Libya in 2011, acquiring permission for his dirty work by “a covert ‘oil cell’ at the British Foreign Office. This foreign state-endorsed theft came from the top… He dined with the prime minister in 10 Downing Street”. He was given the okay to intervene in Libya and Qatar, as the book makes clear: “Obviously, I got permission from the Brits to go in”. Later, former British prime minister Tony Blair also dipped his snout in the trough. Due to his close relationship with the Qataris, he was called into a meeting in Claridges to “help smooth things over” when hordes of investment bankers had tens of millions of dollars riding on a particular deal.
The authors describe how “out of this lawless environment would emerge the armed mob that a year later, stormed the US consulate and killed Chris Evans, the ambassador to Libya”. Nevertheless, through wheeling and dealing, his (Taylor’s) tankers made a financial killing by supplying illegal oil to Libya’s rebels to the tune of an estimated $1 billion which avoided a certain “defeat”. The authors comment: “It was not the first time an oil trader had shaped the history of the Middle East, and it will not be the last”. They admit: “The story didn’t have a happy ending as [Libya] lurched from one crisis to another, resulting in the fall of Gaddafi himself”. In fact, the overall result was “wide de-stabilising effects across the whole region, as the Libyan army’s arsenals were smuggled out to conflict zones including Syria, where the terrorist group Islamic State was beginning to gain a foothold”.
The ‘great grain robbery’
The authors show in astonishing detail how the influence of the commodity traders became essential to the functioning of the modern capitalist economy. They argue that, without the traders, petrol stations would run out of fuel, factories would grind to a halt, and bakeries would run out of flour. Moreover, the difference was not limited to the economy: “The commodity traders’ control of the flow of the world’s strategic resources has also made them powerful political actors… They usually say they are apolitical, motivated by profit rather than the pursuit of power” – which is just not true!
In Iraq, commodity traders helped Saddam Hussein to sell his oil, bypassing UN sanctions; in Cuba, they swapped sugar for oil with Fidel Castro which, they claimed, “helped to keep the Communist revolution alive”. They sold millions of tons of US wheat and corn to the Soviet Union which propped up Moscow at the height of the Cold War; and when “the Russian oil giant Rosneft, whose ‘owner’ was an ally of Putin, needed to raise $10 billion in short order, whom did he call? The commodity traders”.
The claim is made that these traders are “the last swashbucklers of global capitalism only willing to do business where other companies don’t dare to set foot”. The authors concede that the overall influence of the traders has grown but that they have remained “relatively small” in number. Just a few companies, many of them owned by just a few people, still control the world’s resources. For instance: “The seven leading agricultural traders handled just under half of the world’s grain and oilseeds. Glencore, the largest metals trader, accounts for a third of the world’s supply of cobalt, the crucial raw material for electric vehicles… and yet even those numbers underestimate the traders’ role: as the fastest and most aggressive participants in the market, it is often the traders that set the price…”
“Most of their activity is hidden, particularly from public examination… One former trader began his conversation with us with the words: ‘What I’m going to tell you is not going to be the whole truth and nothing but the truth. There are things I’m just not going to tell you’.” No doubt for very good reason, ie because of the fear of public outrage leading to action against these leeches, who compound the problems and ultimately worsen the conditions of working people – worldwide.
Their main activities consist neither in producing or consuming commodities but as middlemen, facilitating trade on a world scale and, as a result, being prepared to use any methods to pile up huge wealth and power. The authors spell it out: “The basic business of the commodity traders is disarmingly simple: buy natural resources in one place and time and sell them at another – hopefully making a profit in the process”. They should have added, “in the process making super-profits”! And for doing what? Traders are “companies and individuals whose main activity is neither producing nor consuming commodities but trading them”.
This book concentrates on the biggest most influential of the traders – which in reality is a very small number of very big powerful firms. One such is Cargill, ‘king’ in agriculture: “The US company, the world’s largest trader of grains, carries itself with the quiet self-assurance of mid-West wealth on which it was built”. It is a major trading house, “with its own archivist and its authorised company history, which runs to three volumes, a total length of 1,774 pages”.
Companies like this – a state within a state – were involved in trading and swindling which in turn led to a disaster called “the great grain robbery”. The authors record: “The sale of roughly $1 billion of grain to America’s biggest geopolitical rival the Soviet Union – under the nose of the US government – was a demonstration of the power that had accumulated in the hands of the commodity traders… Soviet purchases made at rock-bottom prices are being funded to the tune of about $300 million by US taxpayers”. US public reaction was instantaneous and damning: ‘Soviet grain deal called a coup’, blared a headline on the front page of the New York Times in 1972.
However, the real fireworks began once the formerly stable world price of oil began to rise, because of a series of geopolitical factors, and the colossal opportunity this opened up for traders. “Oil is just a form of money”, commented one prominent trader. The dominance of the largest oil companies, known as the ‘Seven Sisters’, was loosened by the wave of nationalisations that swept the countries of the Middle East in the 1970s. Middle Eastern and Latin American leaders now had oil to sell and, in the process, they helped to create a new form of global power, the petro-state.
Another crucial factor was the collapse of the Soviet Union in 1991 which initiated a gangster-style scramble to steal the resources which had been assembled historically by the herculean labour and sacrifices of the peoples of the Soviet Union. In reality, the ‘Soviet Union’ by this time had no real soviets – workers councils or real democracy – and was dominated by a greedy and increasingly inefficient bureaucracy, resulting in economic stagnation. Without control from below, Russian and Eastern European kleptocracies were able to amass huge wealth while the masses in many parts of the former Soviet Union barely had enough to eat.
The economies of these countries began to stagnate and even fall apart, which allowed the bureaucracy to seize ownership and control of formerly nationalised industries, technically the property of ‘the people’. However, this theft of state-owned resources was not achieved without opposition from the population and even those sections of the bureaucracy who had been elbowed aside. Although Stalinist, bureaucratic control of the state had become increasingly unpopular, there was public awareness of what the former bureaucracy was undertaking, the biggest robbery in history!
This was not achieved without extreme violence by the dominant group of ex-bureaucrats that came out on top. Many examples of the violent methods used to loot the assets of the former Soviet Union at this time are given. Genuine Marxists were aware of what was taking place when we travelled to parts of the ex-Soviet Union. However, we had an entirely different method of trying to convince workers and youth that the restoration of capitalism would prove to be a disaster, even worse than the dead-end of Stalinism itself. Ex-KGB agents were used as ruthless killers by the rising new class of capitalists and would-be new owners. The authors give just a flavour of the conflict which broke out at this time: “Violence spilled into the streets of Moscow resulting in a confident and charming representative of a Moscow commodity trading house so fearful for his life [that] he hired bodyguards when he went to a Moscow airport to fly to Kazakhstan”. (I and my wife, and other members of the CWI, travelled to Kazakhstan from this same airport! Although we were supporting attempts to form independent trade unions and organisations of the working class!)
This particular trader, however, accompanied by ‘hired muscle’, never boarded the plane. Somewhere between security and the departure gate he was approached by two men in uniform who told him to follow them. A day later, his body was found, riddled with bullets. The authors comment: “The Russian press counted dozens of murders connected to the metal trade, dubbed the ‘great patriotic aluminium war’.” The authors comment, “a political shift was taking place in Russia, where ageing leader Boris Yeltsin was waning and Vladimir Putin was waiting in the wings to become the next president, with people around him wishing to build a stronger Russian state influence in opposition to foreign ownership. One such group sold their aluminium assets to Roman Abramovich – present billionaire owner of Chelsea Football Club and much else besides. Some made millions and billions from the fire sale of formerly state-owned assets in Russia and invested them in the London property market, buying up large swathes of Mayfair”. They comment further, “some also became major donors to the Conservative Party”! The collapse of the Soviet Union “had redrawn the world map… replacing a crumbling empire with new nations and creating a new set of billionaire oligarchs whose money would flow around the world over the coming decades”.
The same process was attempted in relation to Cuba. The traders stepped in to facilitate the market for sugar, which had spitefully been withdrawn by the increasingly capitalist Russia. Jamaica was given a helping hand as well – of course at a hefty price and with gigantic financial rewards to the traders. The same process was repeated in the Middle East, following the setting up of OPEC and the increase in the price of oil. The traders bailed out Saddam Hussein and many other authoritarian regimes – helping Iran even if it meant breaking the embargo on the Iranian regime, thus earning the wrath of the US. “The commodity traders that emerged from the wild and dangerous deals of the 1990s with business stretched across the world, from Communist Cuba to the rapidly growing capitalist nations in Eastern Europe, with a whole array of dictatorships and failed states in between… had become mighty merchants of natural resources larger in scale and more global than ever… [However] they may not have realised it yet… [but] a major new source of demand for natural resources was just about to emerge that would revolutionise their business: China”.
In the world’s most populous country a huge transformation was underway, with the economy expanding by an average of 10% a year between 1980 and 2010. “In the biggest economic metamorphosis since the industrial revolution in Europe and America in the 19th century, China became the world’s factory producing everything from household appliances to the iPhone. By 2008, China was exporting more in the single day than it had done in the whole of 1978! The impact on commodity demand was seismic. In 1990 China consumed roughly as much copper as Italy, accounting for less than five percent of the world’s demand. By 2000, China’s consumption was nearly three times as much as Italy’s. By 2017, China accounted for half of global copper demand, making its consumption nearly 20 times that of Italy”. Moreover, China has become a net exporter, “selling more oil on the world market and some members of the OPEC cartel”. However, “China’s oilfields were soon unable to meet its domestic demand. From 1993 the country became a net importer”. In fact, by 2018 China had become the world’s largest oil importer.
Hunt for resources
Commodity traders had become important facilitators of deals, ferreting out locations of resources and directing buyers towards food, metals, and grain. Their importance was enormously enhanced by the boom times in the latter part of the twentieth century and the beginnings of this century, when buyers were worried about running out of raw materials. The traders “set off on a hunt for resources that encompassed every country on the globe. It went to new oil nations, such as Chad and Sudan and to established producers such as Russia, Azerbaijan, Kazakhstan, Yemen, Brazil, equatorial Africa, Angola: anyone who had access to commodities was suddenly in a privileged position thanks to the Chinese demand boom”.
At the same time “it was a process that brought the traders even closer into the world of oligarchs, despots and dictators who were getting rich on the commodity boom… Others navigated all kinds of dicey situations: wars, coup d’états, corrupt governments and chaotic nations. All in the quest to secure natural resources”. Moreover, “the traders played an increasingly important political role in many parts of the world. The ability to keep the money flowing into the coffers of the oil-rich potentates made them powerful and rich allies”. The traders also received hugely favourable prices and kickbacks for the role they played as facilitators in the swindles and deals that were secretly made and never fully made public – except in books like The World for Sale.
Intrinsic corruption was not restricted to the neo-colonial world. It developed on a monumental scale in the countries that made up the former Soviet Union. Many of them were extremely rich in natural resources including oil, which were now up for grabs in the disintegration of the former planned economies. This is shockingly spelt out in a chapter appropriately entitled ‘Petrodollars and Kleptocracies’. The extent of widespread corruption is explained in relation to the former Soviet Union in particular: “After Russia’s chaotic 1990s, Putin promised order, stability and strong leadership. Like many ordinary Russians he was resentful of the oligarch class and the way they had taken advantage of a weak Russian state… under Yeltsin”. The authors correctly write: “When he first came to power at the turn of the millennium, Putin offered the oligarchs an implicit deal: he would not seek to reverse the privatisation deals through which [the oligarchs] acquired their fortunes, but they in turn should stay out of politics”.
Putin represented the newly emerging capitalist class and state, attempting to stabilise the situation in their favour. He was bound to clash with those like Mikhail Khodorkovsky who had become “Russia’s number one oligarch… He had snapped up a controlling stake in the oil company Yukos for $309 million which climbed to a market value of $20 billion”. He clashed with Putin and lost out, but the traders as a whole didn’t: “Russia and the rest of the former Soviet Union delivered great riches to the commodity traders. In the ten years to 2018 the two companies specializing in oil had combined profits totalling $6.6 billion, most of this accruing to just six individuals – with an income of $1 million each!” This at a time when millions in the former Stalinist states – which I and others witnessed at first hand – were cast into the pit of despair at their drastic reduction in living standards and grinding poverty.
The same nauseating picture is drawn by the authors when they detail the systematic exploitation, and what amounts to the rape of Africa, the Middle East and Asia by capitalism, enormously facilitated by the commodity traders. With commodity production falling throughout the 1980s and 1990s there wasn’t that much to buy in Africa: “And with economic activity falling, there wasn’t much to sell to Africa, either”. But all of that changed in the early 2000s with the China-led boom. This meant that the rich natural resources of the African continent that should have been used as a lever to transform the poverty-stricken conditions of the masses were instead drained away from the continent with little benefit accruing to the broad mass of the population.
This went hand in hand with terrible pollution, which devastated the populations of some African countries. The lingering effects of dumped toxic waste had deleterious effects on the health of the population that is still evident today. When one company was found out and their local representative consequently jailed for five months, the company paid $198 million for his release, and clean-up costs as well as compensation for more than 95,000 of their victims made ill by their activities. One observer correctly exclaimed: “It was a Mafia”.
The chapter headings tell their own story: ‘Hunger and Profit’ reads one, while another describes ‘The Billionaire Factory’ and yet another ‘Merchants of Power’. More and more of the activities of the traders were inevitably in the spotlight, which they found “uncomfortable” to say the least, because of the publicity this attracted. The “scale of the riches… would shock even some old hands”. One of these traders controlled 18.1% of a trading company, giving him a fortune worth $9.3 billion, making him one of the richest 100 people on the planet. The top 13 employees – partners who owned 56.6% of Glencore, the leading trading company – received $29 billion. Below them there were dozens with stakes in the company worth tens of hundreds of millions.
These ‘masters of the universe’ farcically presided over companies where board meetings typically lasted about ten minutes and where the fate of millions, particularly in the neo-colonial world, were decided in the blink of an eye. They contemptuously referred to Africa as “the hopeless continent”. Yet they were the ones mainly responsible for draining away the wealth of these countries, and the continent as a whole: “The Democratic Republic of the Congo had been one of the world’s largest copper producers, accounting for more than 7% of global supply in 1975. Twenty years later, its output plunged to just 0.3% of the world’s total. Zimbabwe went from the breadbasket to a basket case. Nigeria pumped less oil in 1999 when democracy returned after decades of kleptocratic military rule”.
This book demonstrates very clearly that the negative impact of the commodity traders’ work was not restricted to the neo-colonial world but seriously affected the working class in the advanced industrial countries. For example, the teachers in the state of Pennsylvania USA discovered that their pension fund had been invested, without their knowledge or agreement, in the highly unstable Kurdistan region of the Middle East, with the ongoing threat that it could be expropriated at any time. It is a crushing indictment, not just of one group of capitalist parasites but of the capitalist system as a whole, that has brought nothing but misery and disappointment to the working class and the toiling masses world-wide. This tremendous investigation shows that the planet is not safe in the hands of the commodity traders or any of those they work on behalf of – the handful of parasitic capitalists, who hold the world and its riches in a vice.
The two authors may wish that, by detailing the work of a group of bloodsuckers – which is what the commodity traders are – a new ‘cleaner’ capitalism will emerge in the next period. The pandemic has had a massive effect on the economic prospects for world capitalism, and for the commodity traders. Demand for oil and other commodities has slumped. However, economic activity will resume and is already doing so. With this, the stranglehold of the traders will also grow – unless their powers are abolished. The only force capable of doing this is the working class and its allies organised in a national and international socialist and democratic confederation.
This book, perhaps inadvertently on the part of the authors, shouts from every page for the taking of control, management and ownership of the resources of society and the world out of the hands of selfish narrow groups of the rich, the capitalists, and placing them under the democratic control and management of working people and their allies. Each country, and indeed each continent affected by the criminal activity of the traders, should inscribe on their banner the idea of a socialist confederation.