Global Debt and the Unsustainable Amount of Social Wealth Expropriated as Interest Profit
Necessity for a moratorium on paying interest on government debt and government
borrowing from private interests
Accumulated global debt owed by governments, enterprises and individuals reached a record $307.4 trillion last September. The total accumulated debt surged by $100 trillion from a decade ago.
The expropriation of interest profit from this colossal debt has been exacerbated recently by an increase in the average rate of interest the moneylenders charge. The interest rate on debt worldwide is now calculated at an average 5.2 per cent and rising as existing debt is reset at higher rates.
Using 5.2 per cent, the annual interest profit expropriated on global debt of $307.4 trillion is approximately $16 trillion. The amount expropriated as interest profit is taken from the social value workers produce. The $16 trillion of newly-produced social wealth expropriated as interest profit becomes unavailable for the people and governments to use for the common good.
The $307.4 trillion in global debt far outstrips annual global production of social value or global Gross Domestic Product (GDP) estimated at $100 trillion for 2023. Imperialist economics calculates global new production of social value or GDP as exchange-value at market prices, not use-value at its price of production. Only social product sold and realized in a marketplace is considered produced and worthy to become a factor in the GDP at its exchange-value. Total global social product for 2023, after what workers produced as use-value has been negated to become exchange-value, is calculated to be around $100 trillion. Deducting interest profit from the total GDP or exchange-value of what working people produce leaves $84 trillion in social wealth. This amount is expropriated as enterprise profit, ground rent profit, executive profit and government profit, leaving the rest for the claims of working people as wages, benefits, pensions and social programs.
The imperialist economy tends to concentrate social wealth in the hands of privileged sections mostly in the heartlands of the colonial exploiters from the U.S., UK and others in Europe and Japan. The accumulated social wealth in the hands of the ruling elite seeks places to put the expropriated social value in their own countries and throughout the world to gain maximum profit for themselves and otherwise to serve their private interests. The colossal amount under their control goes into yet greater global debt to them and into investments in their war economy to defend and expand their private interests at home and abroad. The social wealth they control goes into resource extraction for raw material they seek, into cheap workers to exploit, and into social production and markets to produce and sell the social product workers produce.
The imperialists lend the social wealth they own through international institutions they control such as the International Monetary Fund and World Bank and increasingly through privately held cartels. Moneylending on today's scale has created a situation where $16 trillion of social wealth is immediately deducted from the new social wealth working people produce. Interest profit flows into the coffers of the super-wealthy to further their domination, exploitation and endless competition and wars. This has worsened the recurring economic crises throughout the world and deepened the political, social and natural problems facing the people. It must be stopped as an immediate task of the revolutionary people! A moratorium on paying interest profit must be instituted as a matter of survival and all new government debt to private interests must be outlawed!
Data from the Institute of International Finance (IIF)
Global debt in recent years has surged and hit a record $307.4 trillion. The IIF reports global debt in dollar terms rose $10 trillion in the first half of 2023 and by $100 trillion over the past decade.
The U.S., UK, France and Japan account for more than 80 per cent of the increase in debt. U.S. government federal debt topped $34 trillion at the end of December. In 2023 alone, this debt grew by more than $4 trillion. China, India and Brazil saw the most pronounced growth of borrowings among developing countries.
Global debt is now approximately $207 trillion more than the global annual Gross Domestic Product (GDP) of $100 trillion. This marks "a staggering 336 per cent of global GDP compared to a debt-to-GDP ratio of 110 per cent in 2012 for advanced economies, and 35 per cent for emerging markets," says the IIF.
Annual interest payments to service the global debt have reached around $16 trillion. The U.S. government annual interest payments to service the debt have now surpassed $1 trillion. The $1 trillion in interest payment is less than most other countries would have to pay on a similar debt as interest rates are far higher in developing countries.
The moneylenders holding the debt expropriate the interest profit from the new value working people produce, either directly from enterprises where they work or from government taxation of the new value workers produce.
Global debt is divided approximately into three sections. The first two are government held debt and business debt, holding two-fifths each of the total, while household debt makes up the remaining one-fifth.
Private interests expropriate for their own use and control the $16 trillion in interest profit and other vast sums of the new value workers produce as enterprise profit, ground rent profit and executive profit. Governments also expropriate new value through taxation for pay-the-rich schemes, cheap infrastructure for the imperialists, government bureaucracy, and to service government debt to private interests and to pay for the vast war economy and ongoing wars. These amounts of social wealth under private and imperialist government control are used for purposes dictated by the ruling oligarchy to expand their private wealth, control and power and finance their privileged lifestyles.
These enormous sums of social wealth are not available for the people to use for the common good and their well-being as they see fit according to the public interest to solve problems the economy and society face and to humanize the social and natural environment.
To change the situation, the issue of working people's lack of political power has to be confronted. This requires further strengthening the unity of working people and organizing as a social force for political empowerment. It involves learning together through individual and collective acts of finding out how to wage revolutionary struggle to move history forward past the current imperialist domination.
These acts of finding out are already evident in demands and claims being made by workers on the value they produce in the here and now for wages, increased investments in social programs, for governments to stop paying the rich, disengage from the war economy, and begin a moratorium on servicing government debt and halt to government borrowing from private interests.
These individual and collective acts of working people of finding out involve organizing and educating themselves in how to prepare the subjective conditions for revolution to bring into being modern democratic economic and political forms that will allow working people to govern directly all the affairs that affect their lives, their society, and all humanity.
This article was published in
Volume 54 Number 29 - April 2024
Article Link:
https://cpcml.ca/Tmlm2024/Articles/MS54297.HTM
Website: www.cpcml.ca Email: editor@cpcml.ca