Pakistan: The Investment "Syndrome"

The strategy of investment is the core economic policy of Pakistan’s political elite and our domineering intelligentsia. They portray investment as the only means of growth and development, a way to generate employment and to alleviate and poverty. This would be hilarious nonsense were it not so devastating for the working masses.

The results of this vicious policy of neoliberal economics contradicts the elite's propaganda. This policy is not only flawed, but has disastrous ramifications for the working masses and society as a whole. Yet from the religious right-wing political parties to the liberal, ‘progressive’ and secular politicians, all subscribe to this Thatcherite doctrine. There is an unending din in the media as ‘experts’ drone on about the advantages of private enterprise and direct foreign investment which will magically cure the catastrophic state of the economy.

What these masters of our destiny don’t want to admit is that the coercive capitalist system, which they serve and protect and whose vicious exploitation they perpetuate, is historically redundant. It ravages society and torments human existence not just in countries like Pakistan where capitalism is at its most rotten. Even in the most advanced countries, capitalism has abjectly failed to sustain social development and failed to improve living standards for the vast majority of the population. In its quest to increase the rate of profit, capitalism goes to every extreme. It takes advantage of devastating wars and uses the most brutal methods to squeeze the last drop of human labour value at minimum cost to the capitalists and in the shortest possible time. Capitalism uses the most modern technological developments and creations for this and only this purpose.

In the last few decades, corporate investment has radically shifted from being labour-intensive to capital-intensive in character. Even the bosses of the latest technology giants such as Google have admitted that this advancement of technique is leading to a ruin of workers and society more generally. Ever fewer workers are being employed in new capital investments and in newly privatised companies. They are being replaced by robots and other modern gadgets to reduce ‘variable’ capital costs and hence make these firms more competitive. From manufacturing to the agrarian and services sectors, this transformation is rapidly taking place. This is leading to massive redundancies of workers with unemployment rising to levels unforeseen previously.

The most advanced multinational corporations, which are the biggest investors, are the ones who have been cutting jobs ferociously in the last few decades. At its prime in 1988, Kodak, the iconic American photography company, had 145,000 employees. In 2012, Kodak filed for bankruptcy. The same year Kodak went under, Instagram, the world’s newest photo company, had 13 employees serving 30 million customers. The ratio of producers to customers continues to plummet. When Facebook purchased “WhatsApp” (the messaging app) for $19 billion last year, WhatsApp had 55 employees serving 450 million customers.

In the automobile sector, Daimler Chrysler cut 6,000 jobs in 2006 and this process has continued since. The Ford Motor Company fired 30,000 employees in 2012, shutting down 14 plants. Indian Two-Wheeler maker, Bajaj Auto is embarking on a major cost-cutting drive which includes trimming their workforce and reducing their vendor base. The company vice president of Bajaj Auto, Sanjiv Bajaj, said: “We want to rationalise our workforce to about 10,000 people from the present 13,500 workers. Our vendor base should also be reduced to 200 from 285 in about a year or two".  

The electronic giant Sony cut 20,000 jobs in 2006 in a ‘cost-cutting’ exercise. Sanyo, its main rival, reduced its workforce by 14,000 in the same year. In the steel industry, the largest steel producer, Alcelor-Mittal, owned by India’s billionaire magnate Laxmi Mithal, has boosted profits by cutting labour costs. From 2005 to 2010 it sacked 45,000 workers from its factories worldwide. In the InfoTech industry, Oracle Corporation made 5,000 redundancies in 2005. Its rival Hewlett Packard cut 19,500 jobs in the same year. The CEO of Procter & Gamble and Gillette Corporation, James M. Kilt, on March 31, 2005 bragged  that: “we have taken the company from 40,000 employees to 28,000”.

In the banking sector, just to cite one example, the Bank of America Corporation netted a profit of 21 billion dollars and acquired one of the largest credit card providers, MBNA, with a 35 billion dollar cash and stock deal in 2006. It fired 6,000 employees shortly after the merger. In the telecommunications sector, during the merger of AT&T and SBC in 2005, SBC announced plans to eliminate 7,500 jobs while AT&T cut 5,100 workers jobs. In the media industry the story is no different. As AOL acquired MCI Corp. on 14th February 2005, 7,000 workers were laid off, despite the expansion of this firm.

In an article on the World Economic Forum website, Robert Reich wrote:

“It’s now possible to sell a new product to hundreds of millions of people without needing many, if any, workers to produce or distribute it. New technologies aren’t just labour replacing. They’re also knowledge-replacing. The combination of advanced sensors, voice recognition, artificial intelligence, big data, text mining, and pattern-recognition algorithms, is generating smart robots capable of quickly learning human actions, and even learning from one another. If you think being a ‘professional’ makes your job safe, think again…The two sectors of the economy harbouring the most professionals — health care and education — are under increasing pressure to cut costs. And expert machines are poised to take over…This is obviously fanciful, but when more and more can be done by fewer and fewer people, the profits go to an ever-smaller circle of executives and owner-investors…Meanwhile, the rest of us will be left providing the only things technology can’t provide — person-to-person attention, human touch, and care. But these sorts of person-to-person jobs pay very little”.

The supposed virtuous cycle is now falling apart. A future of almost unlimited production by a handful for consumption by whoever can pay is a recipe for economic and social disaster. Our underlying problem won’t be the number of jobs. It will be — it already is — the allocation of income and wealth. This crisis-ridden capitalist economy is lurching towards a situation where more and more is generated by fewer and fewer people who reap almost all the rewards, leaving the rest of society without enough purchasing power to keep the game running. The economy simply can’t function like this indefinitely. In the ten years since 2005, there was the biggest financial crash in the history of capitalism (in 2008) and subsequently unemployment and deprivation soared. The exploitation of labour has increased tremendously. Capitalism is in an organic crisis with bleak prospects of recovery and an even bleaker chance of producing a healthy growth-rate that can result in social progress. The crushing drudgery of workers is also increasing in the largest capitalist economy in the world, the USA.

An article in Forbes magazine said the following:

“In 1950, the average U.S. factory worker produced $19,500 (in 2011 dollars) of output, and by 1976 the amount of output per worker had doubled to $38,500. Output per worker doubled again to $74,400 (in 2011 dollars) by 1997 (21 years later) and then doubled again to $152,800 by 2010, but it only took 13 years for the last doubling because worker productivity has been accelerating. Last year, manufacturing output per worker increased to a new record high of $156,500), and almost ten times the output per worker in 1947”.

If this is the situation in the advanced capitalist countries, the exploitation and coercion of the toilers in countries like Pakistan is much more harrowing. Yet here political leaders have the cheek to talk about foreign investment and privatisation as remedies to the crisis in this tragic land. It is almost impossible to get correct unemployment or even the exact population figures for Pakistan. An historically obsolete, economically redundant and morally sick system is the only choice being put forward to the oppressed masses by these reactionary rulers at the helm of politics and by the bosses of the media.

The crisis of this system has caused havoc; conflagration, terrorism, and bloodshed have become the norm in Pakistan society. The so-called ‘learned’ of the land venomously reject any talk about putting an end to this misery and destitution. They reject the transformation of the economy from its current basis of crushing domination and extortion by the free market into a planned economy. They have no alternative and their only perspective for their system is one of doom and gloom. Yet they are desperately trying to defend capitalism in its epoch of terminal decay while it pulverises society and torments human existence. This obsession with investment, this ‘investment syndrome’, demonstrates their psychopathic sickness. To counter-pose scientific socialism or communism as a way out of this misery is made into a social taboo by them - insanity. Yet the socialist revolution and the setting up of a planned economy under workers’ democratic control and management, in which all production is not for profit but for the fulfilment of human needs, is the only road to emancipation.