The Root Cause

of Hunger and Poverty

By Ramon T. Ayco, Sr.
June 2008
Hunger is everywhere in the world, not only in the poorest countries where the poorest
people live but also up to the wealthiest nations where the world’s richest people
resides. There might be many causes of hunger, but undoubtedly there is only one
principal cause, and that is poverty. People are hungry because they cannot afford to
buy foods even though there are plenty of these around.

Different people gave different opinions regarding the causes of poverty, but not all of
these are real, some are only myths. If we trace in history the root cause of poverty, we
will surely find out that poverty started when the system of society base on exploitation
and oppression of human to human began. And from that, we will find out that the
number one root cause of today’s worldwide poverty is the world capitalist system in its
highest stage, imperialism.

Ten years after the 1996 Rome World Food Summit (WFS), the number of undernourished
people in the world remains stubbornly high, said the 2006 report of the Food and
Agriculture Organization (FAO) of the United Nations. In 2001–03, FAO estimates there
were still 854 million undernourished people worldwide1: 9 million in the industrialized
countries,2 25 million in the transition countries, and 820 million in the developing
countries. Of the latter’s 820 million people: 212 million live in India; 206.2 million live
in Sub-Saharan Africa; 524 million live in Asia and the Pacific; 52.4 million live in Latin
America and the Caribbean; and 37.6 million live in the Near East and North Africa.

In the developing countries, out of 5.1 billion people (approx.)3 or 3/4 of world
population: 1 billion people live on less than $1/day; 146 million children under age 5
are underweight; 10.1 million children under age 5 die every year, over half of hunger-
related causes; 1 in 6 people is hungry; 1 in 6 people lacks safe drinking water.

In the United States, the U.S. Department of Agriculture (USDA) reported that in 2006:

• 35.5 million people lived in households considered to be food insecure.

• Of these 35.5 million, 22.9 million are adults (10.4 percent of all adults) and 12.6
million are children (17.2 percent of all children).
• The number of people in the worst-off households increased to 11.1 from 10.8 in
2005. This increase in the number of people in the worst-off category is consistent
with other studies and the Census Bureau poverty data, which show worsening
conditions for the poorest Americans.
• Black (21.8 percent) and Hispanic (19.5 percent) households experienced food
insecurity at far higher rates than the national average.
• The ten states with the highest food insecurity rates in 2006 were Mississippi, New
Mexico, Texas, South Carolina, Oklahoma, Utah, Louisiana, Arkansas, Kentucky,
and Arizona.

Nearly half of those lining up outside soup kitchens in the United States (U.S.) have one or
more family members employed, but most of them are simply too poor to buy food. They
are the people who scavenge in dumpsters outside restaurants. They’re the schoolchildren
who cannot pay attention in class because they did not have dinner or breakfast.

According to the United Nations (UN) the number of chronically hungry people worldwide
is growing by an average of four million per year at current trends, and about 25,000
people die every day of hunger or hunger-related causes.
In the Philippines

In October 2007, the Social Weather Stations (SWS) reported that about 3.8 million
Filipino families experienced involuntary hunger without having anything to eat, at least
once in the three months previous to the latest SWS survey of Sept. 2-5, 2007, hitting a
new record-high of 21.5 percent.

This was a “dramatic” reversal of gains in June where hunger fell to 14.7% from
19% in February 2007 and November 2006. The 21.5% was almost 10 points above
the 11.8% average for the 38 hunger surveys SWS had conducted quarterly starting
mid-1998. This was despite government’s implementation of anti-hunger programs
like the food-for-school program and the Gulayan ng Bayan to encourage backyard
farming.

This May 2008, a new SWS survey was released showing that fewer Filipino families,
around 2.8 million of them, experienced involuntary hunger in the last three months
but a majority are dissatisfied with the way the Arroyo administration is addressing the
problem.

The national percentage of families who experienced involuntary hunger eased to 15.7%
from 16.2% in December, the survey, made exclusive to BusinessWorld, showed.

The latest result, however, was still four points above the 12% average for 40 quarterly
SWS surveys from mid-1998 to the present, the independent research institution said.

Food shortage

In this era of highly developed science and technology, it is not logical to think that food
shortage will be the cause of hunger anywhere in the world. As a matter of fact, FAO
studies confirmed that food shortage is not and will never be the cause of hunger in the
world, at least up until 2030.

According to 2000 technical interim report from FAO, the long-term food security outlook
for developing countries is good. While the world population is expected to reach eight
billion by 2030, growth in global agriculture should be more than sufficient to meet
world demand.

The FAO report is relatively optimistic that, at the world level, there will be sufficient
agricultural production to meet increases in demand over the next thirty years. By 2030,
for example, crop production in developing countries is projected to be 70 percent higher
than in the 1990s. Still, this increase in production will be far lower than the increases
seen during the “green revolution” begun in the 1960s.

The report indicates that while the predictions in the rate of annual growth in global crop
production is expected to decrease over the next 30 years relative to those advances
seen in the previous 30, it will still exceed the demand for increased agricultural
production. With lower population growth and the gradual attainment of medium to
high food consumption levels in most countries, crop productivity will continue to
outpace the overall growth rate in the demand for food. The report acknowledges the
persistent contradiction between having sufficient food production at the world level
and food shortcomings in developing countries, and recognizes the need for increasing
productivity in developing countries.

It is important to note that FAO’s prediction of an abundant world food supply is based
solely on the availability of present day technical knowledge. The potential agricultural
benefits of genetic engineering were intentionally not considered. Genetically engineered
crops, livestock, and fish were omitted by FAO due to ambiguities over the long-term
promise, safety and consumer acceptance of this technology.

Again in 2002, FAO reports that the world produces enough food to feed everyone. World
agriculture produces 17 percent more calories per person today than it did 30 years
ago, despite a 70 percent population increase. This is enough to provide everyone in the
world with at least 2,720 kilocalories (kcal) per person per day (FAO 2002, p.9).

Yes, there is food abundance not scarcity in the whole world. But why are so many
people still getting hungry? The problem is that the world’s food supply is not evenly
distributed. Those who have much accumulate more, while those who have little edge
toward starvation.

Actually many “hungry countries” have more than enough foods but for export, not for
domestic consumption. Many of them are net exporters of food and other agricultural
products. In 1997, for example, the American Association for the Advancement of
Science found that, in the developing world, 78 percent of all malnourished children
aged below five live in countries with food surpluses.

In one interview, Anuradha Mittal4 relates the following story:

“In other developing countries … around three-quarters of the countries that report
child malnutrition are exporting food. Remember the much-publicized famine in Ethiopia
during the 1980s? Many of us don’t realize that, during that famine, Ethiopia was
exporting green beans to Europe.

“In 1999, a UN Population Fund report predicted that India would soon become one of
the world’s largest recipients of food aid. The report went on to blame the increasing
population for the problem. What it did not mention is that the state of Punjab, also
known as “the granary of India,” grows abundant food even today, but most of it is
being converted into dog and cat food for Europe. Nor did the report mention that the
neighboring state of Haryana, also traditionally a fertile agricultural state, is today one
of the world leaders in growing tulips for export. Increasingly, countries like India are
polluting their air, earth, and water to grow products for the Western market instead
of growing food to feed their own people. Prime agricultural lands are being poisoned
to meet the needs of the consumers in the West, and the money the consumers spend
does not reach the majority of the working poor in the Third World.

“Of the 830 million hungry people worldwide, one third of them live in India. Yet in 1999,
the Indian government had 10 million tons of surplus food grains: rice, wheat, and
so on. In the year 2000, that surplus increased to almost 60 million tons — most of it
left in the granaries to rot. Instead of giving the surplus food to the hungry, the Indian
government was hoping to export the grain to make money. It also stopped buying grain
from its own farmers, leaving them destitute. The farmers, who had gone into debt to
purchase expensive chemical fertilizers and pesticides on the advice of the government,
were now forced to burn their crops in their fields.

“At the same time, the government of India was buying grain from Cargill and other
American corporations, because the aid India receives from the World Bank stipulates
that the government must do so. This means that today India is the largest importer of
the same grain it exports. It doesn’t make sense — economic or otherwise.

“This situation is not unique to India. In 1985, Indonesia received the gold medal
from the UN Food and Agriculture Organization for achieving food self-sufficiency. Yet
by 1998, it had become the largest recipient of food aid in the world. I participated
in a fact-finding mission to investigate Indonesia’s reversal of fortune. Had the rains
stopped? Were there no more crops in Indonesia? No, the cause of the food insecurity
in Indonesia was the Asian financial crisis. Banks and industries were closing down.
In the capital of Jakarta alone, fifteen thousand people lost their jobs in just one day.
Then, as I traveled to rural areas, I saw rice plants dancing in field after field, and I saw
casava and all kinds of fruits. There was no shortage of food, but the people were too
poor to buy it. So what did the U.S. and other countries, like Australia, do? Smelling an
opportunity to unload their own surplus wheat in the name of “food aid,” they gave loans
to Indonesia upon the condition that it will buy wheat from them. And Indonesians don’t
even eat wheat.”

The Rice Crisis

But how about this 2008 rice crisis, is it real or artificial?

Today’s world rice crisis is real. While FAO assures that there will be no food shortage
at least up to 2030, it seems the studies discussed above fail to consider the abrupt
reduction of areas use in food production as possible factor of food shortage. One big
factor in today’s rise crisis is the switch from food to biofuel5 production in large areas
of the world, in particular to fulfill the US energy demands. Also related to this is the
continuing loss of agricultural land to residential and industrial development,[6][7]

Other factors cited for the rice crisis includes global population growth,8 rising world oil
prices at nearly $100 a barrel,9 rising fertilizer expenses, climate change,10 and growing
consumer demand in China and India11. But most if not all of these factors were already
considered in FAO studies.

The international rice crisis was triggered by a global rice shortage. With rice stocks at
their lowest for 30 years, prices of the grain rose more than 10 per cent on April 2008 to
record highs and are expected to soar further up to 40 per cent in the coming months.
Already China, India, Egypt, Vietnam and Cambodia have imposed tariffs or export bans,
as it has become clear that world production of rice this year will decline in real terms
by 3.5 per cent. Most countries are threatening serious punishment for hoarders. Food
riots have recently taken place in many countries across the world like Egypt, Uzbekistan
and Ivory Coast. In February, riots over food price increases in Cameroon left 40 people
dead.[12][13][14]

The increase in rice prices has matched sharp inflation in other key food products. But
with rice relied on by more than half the world’s population, the impact of a prolonged
rice crisis for the world’s poor - a large part of whose available income is spent on food
- threatens to be devastating.

The consequences are visible across the globe. In Bangladesh, government-run outlets
that sell subsidized rice have been besieged by queues comprised largely of the
country’s middle classes, who will queue for hours to purchase five kilograms of rice sold
at 30 per cent cheaper than on the open market.

In Thailand this April 5, 2008 - where the price for lower-quality rice alone has risen by
between $70 and $100 per ton in the past week alone - Deputy Prime Minister Mingkwan
Sangsuwan convened a meeting of key officials and traders to discuss imposing
minimum export prices to control export volumes and measures to punish hoarders. The
meeting follows moves by some larger supermarkets in Thailand to limit purchases of
rice by customers.

The shortage has afflicted India, too: on March 31, the government banned the export of
non-basmati rice and also raised the price of basmati rice that can be exported.

And although China has said it is secure in its supplies of rice, the fact that the
government has offered to pay farmers more to produce more rice and wheat suggests
otherwise. A continuing change in the global diet is also putting a further squeeze on
rice. In China, for example, 100 million rural migrants to the country’s big cities have
switched from a staple of wheat to rice as they have become wealthier.

Fears over the potential impact of the rice crisis has been heightened by estimates by
both FAO - which has predicted the 3.5 per cent shortfall - and comments from the
World Bank president, Robert Zoellick, on the organization’s website, estimating that “33
countries around the world face potential social unrest because of the acute hike in food
and energy prices.”

In the Philippines, the National Bureau of Investigation has been called in to raid
traders suspected of hoarding rice to push up the prices. Meanwhile, activists have
warned of the risk of food riots.

Fear is so deep that the country’s agriculture secretary, Arthur Yap, this month (April
2008) asked fast-food restaurants including McDonald’s and KFC - which generally
supply a cup of rice with their meals in Asian branches - to halve the amount of rice
supplied, so that none would be wasted. In addition, traders who try to stockpile
rice have been warned that they face a charge of ‘economic sabotage’, which in the
Philippines carries a life sentence.

Rice is the most important food commodity in the Philippines; a shortage would mean
hundreds of thousands, if not millions of Filipinos going hungry.

The Philippines consumes about 11.9 million metric tons (13.12 million U.S. tons) of
rice annually, most of which is grown domestically. But dwindling domestic production
and corruption in the rice supply chain have created a recurrent shortfall of about 10
percent. The government has to purchase about 2 million metric tons (2.20 million
U.S. tons) from the international market every year, making the Philippines the world’s
biggest rice importer.
Now, while President Gloria Macapagal-Arroyo (PGMA) assures the Filipino people that
there will be no rice shortage in the country, rice prices have started to inch up already
in the local market. From the lowest P25 per kilogram a month ago, it went up to P35
– P45 per kilogram this April 2008.

While PGMA assures the people that there will be no rice shortage, the government
is now facing the problem of distribution of the remaining stocks. Huge queues form
wherever government stocks are being sold at subsidized prices of P18.50 per kilogram.
The Department of Agriculture (DA) has tapped the Catholic Church in the distribution of
government-subsidized rice, assuring it a weekly allocation of at least 50,000 sacks for
the poor in various parishes in Metro Manila.

“There’s no shortage,” insist Agriculture Secretary Arthur Yap. ‘The problem is not
with supplies, but with price.” PGMA has assured that the country would weather the
rice crisis, telling the people not to panic over the lack of supply of the staple. At least
500,000 metric tons (MT), 70 percent of which are from Vietnam and 30 percent
from Thailand, have arrived. And the government assures that in April, May and June,
700,000 MT more are arriving from Vietnam and Thailand and 30,000 MT from Pakistan.

But as pointed out earlier, there is a world rice crisis today caused by factors already
stated above. Specifically in the Philippines, the main cause of the crisis is the backward
and feudal state of agriculture in the country and is worsened by neo-liberal policies of
the Macapagal-Arroyo regime and trade liberalization that has drastically cut rice lands
through land-use conversions and crop conversions. Now this was further aggravated by
the rice cartel by their control of the rice industry and their hoarding practices today.

Rafael “Ka Paeng” Mariano, chairman of Kilusang Magbubukid ng Pilipinas (KMP), said:
“It is crystal clear that there is an actual crisis that is why Malacañang is trying to
increase our rice stock through importation. The rice cartel or the Binondo 7 knows this
and that is the reason why they are hoarding and increasing their prices. Now, importing
more rice from other countries will only make matters worse because there is no more
rice supply in the world market available for export and second a food security program
based on imports is not food security at all. It will only make us more dependent on
other countries and hold our food security hostage to other interests. What we need
now are immediate rice price controls and at least a 25 percent increase in the local
procurement of rice of the National Food Authority (NFA), so that the cartel cannot get
their hands on the April-June harvest.”

PGMA has vowed to crack down on rice hoarders, people who buy rice at a subsidized
price from the NFA and sell it at a higher price in markets. “Though no charges have yet
been filed, Yap was staking out warehouses and following trucks to see where the rice
was going,” the President said.

But KMP is accusing the government officials as the main culprit and they asked
Congress to investigate Agriculture Secretary Arthur Yap for the reported hoarding of the
government-subsidized rice by some unscrupulous rice traders.

“It’s Secretary Yap who assigns the rice quotas in regions, so he himself should be held
accountable why so much rice is being diverted. This has been occurring even when he
was still NFA administrator,” KMP said. “These are known at the top of the NFA and DA,
at least. As we found out, this practice of diverting NFA rice to commercial sales has
been happening for a long time and has already been exposed by the NFA Employees
Association,” KMP added.

The real cause of hunger is poverty

Poverty is the condition of having insufficient resources or income. In its most extreme
form, poverty is a lack or deprivation of basic human needs, such as adequate
and nutritious food, clothing, housing, clean water, and health services, and also
“intangibles” such as the opportunity to learn and to enjoy the respect of fellow citizens.

Extreme poverty can cause terrible suffering and death, and even modest levels of
poverty can prevent people from realizing many of their desires. Relative poverty is
the condition of having fewer resources or less income than others within a society or
country, or compared to worldwide averages. In developed countries, relative poverty
often is measured as having a family income less than one-half of the median income for
that country.

A common method used to measure poverty is based on incomes or consumption levels.

A person is considered poor if his or her consumption or income level falls below some
minimum level necessary to meet basic needs. This minimum level is usually called the
“poverty line”. What is necessary to satisfy basic needs varies across time and societies.
Therefore, poverty lines vary in time and place, and each country uses lines which are
appropriate to its level of development, societal norms and values.

Information on consumption and income is obtained through sample surveys, with

which households are asked to answer detailed questions on their spending habits and
sources of income. Such surveys are conducted more or less regularly in most countries.
These sample survey data collection methods are increasingly being complemented
by participatory methods, where people are asked what their basic needs are and
what poverty means for them. Interestingly, new research shows a high degree of
concordance between poverty lines based on objective and subjective assessments of
needs.

Poverty Statistics
• Half the world — nearly three billion people — live on less than two dollars a day.
• The GDP (Gross Domestic Product) of the 41 Heavily Indebted Poor Countries (567 million people) is less than
the wealth of the world’s 7 richest people combined.
• Nearly a billion people entered the 21st century unable to read a book or sign their names.
• Less than one per cent of what the world spent every year on weapons was needed to put every child into school
by the year 2000 and yet it didn’t happen.
• 1 billion children live in poverty (1 in 2 children in the world). 640 million live without adequate shelter, 400
million have no access to safe water, 270 million have no access to health services. 10.6 million died in 2003
before they reached the age of 5 (or roughly 29,000 children per day).

When estimating poverty worldwide, the same reference poverty line has to be used,
and expressed in a common unit across countries. Therefore, for the purpose of global
aggregation and comparison, the World Bank uses reference lines set at $1 and $2
per day (more precisely $1.08 and $2.15 in 1993 Purchasing Power Parity terms). It
has been estimated that in 2001, 1.1 billion people had consumption levels below $1
a day and 2.7 billion lived on less than $2 a day. These figures are lower than earlier
estimates, indicating that some progress has taken place, but they still remain too high
in terms of human suffering, and much more remains to be done.

The world’s poorest people—many of whom live in developing areas of Africa, Asia,
Latin America, and Eastern Europe—are struggling daily for food, shelter, and other
necessities. They often suffer from severe malnutrition, epidemic disease outbreaks,
famine, and war. In wealthier countries—such as the United States, Canada, Japan,
and those in Western Europe—the effects of poverty may include poor nutrition, mental
illness, drug dependence, crime, and high rates of disease.

In the Philippines, according to assessments from the World Bank (WB), 10.8 percent
of the total 87 million population of the country survive or manage to survive on $1
(P48) per day and 41.2 percent make do with less than $2 (P96) per day.

But while UN agencies use indicators that can compare performance across countries,
such as population below an international poverty line of $1 per day as pointed
earlier, in the Philippines, there was an attempt to make use of commonly available
indicators. In measuring extreme poverty, instead of the $1 per day benchmark, the
Government decided to use the national poverty threshold.15 These differences must
be noted if Philippine progress is to be compared to other countries using different
indicators.

Based on the said national poverty threshold, the magnitude of poverty in the Philippines
increased from 23.8 million in 2003 to 27.6 million (or 32.9% of the population) in 2006,
according to the official figures by the National Statistical Coordination Board (NSCB).
This was a reversal of the trend experienced in 2003, when the poverty incidence fell
to 30% from 33% in 2000. It should be noted that there were actually more Filipinos in
2006 than in 2000 (when some 25.5 million Filipinos were poor).

This increase in poverty incidence occurred despite the much publicized high economic
growth by the Macapagal-Arroyo administration.16 One reason is that the official poverty
figures may actually be understated because of the low poverty threshold the NSCB uses
to estimate the extent of poverty. For 2006, the NSCB pegged the per capita poverty
threshold at P15,057 per year or P1,254.75 per month (more or less P41/day). For a
family of five, this is equivalent to P75,285 per year or P6,274 per month. This is way
below the $1 (P48) a day set by the World Bank.

According to independent think-tank Ibon Foundation, the use of the term minimum
basic needs (see footnotes 15) highlights the limitations of the government’s definition
of poverty. The government considers only minimum survival standards to measure
poverty, thus capturing only those who are desperately poor and cannot meet even
their most basic needs. But those individuals and families who fail to meet decent
living standards should also be considered poor. For example, families with one or two
minimum wage earners whose incomes fail to meet their needs are also poor, even if
their income is above government’s poverty line.

In fact, the government’s own National Wages and Productivity Commission (NWPC)
accepts this reasoning. Thus, the NWPC releases regular estimates of family living
wages; such figures measure what is needed for a decent standard of living plus a 10%
allowance of total expenses for savings or investments.
As of 2005 (to ensure compatibility with the 2006 poverty threshold since the next
estimate was as of December 2006), a family of five needs a monthly P16,218 for
decent living, or 258% of the P6,274 per month that the NSCB claims that a Filipino
family needs to stay out of poverty in 2006. If only the NWPC’s food and non-food
expenses estimates are considered, then the poverty incidence is 42.5% of NWPC’s
estimates.

Thus, it is clear that the actual extent of poverty in the country is grossly understated.
In IBON’s January 2008 nationwide survey, 7 out of 10 Filipinos rated themselves as
poor.

The increased poverty incidence also raises the question of why the number of poor
increased even as government figures showed increasing economic growth. The NSCB
attributed the higher poverty incidence to the insufficient rise in personal incomes
coupled with higher prices, thus making it difficult for poor Filipinos to meet their basic
needs. NSCB also admitted that the implementation of the reformed value-added tax
(RVAT) increased prices.

But what economic planners failed to point out was that government itself is responsible
for low wages prevailing in the country. Government actually uses the poverty threshold
as the basis for setting the minimum wage -- thus, a low poverty line justifies low
subsistence-level wages as part of government’s foreign income-driven development
strategy. Despite this, the NSCB still said that a worker in the National Capital Region
earning the minimum daily wage of P362 (or P9,412 a month) can support a family of
five based on a monthly poverty threshold of P8,569.

Also contributing to the rise in poverty figures was record-high unemployment rates.
From 2001 to 2006 the country suffered from an average of 11.3% unemployment
and 18.5% underemployment, the worst such six-year period recorded in the country’s
history.

If jobs were created during the period, these were mostly poor quality, low-paying jobs.
According to the NSO Labor Force Survey, from 2001 to 2006 the most number of jobs
created were in agriculture, wholesale and retail trade, and private households with
employed persons. These were among the lowest paying and most insecure jobs in the
country.

Thus, majority of Filipinos did not enjoy the benefits of growth. And what growth there
was did not result in an improvement in income inequality. According to the 2006 Family
Income and Expenditures Survey (FIES), which is used to compute poverty, the richest
20% of families (accounting for some 3.5 million families) account for 52.8% of total
family income.

It should not really be surprising that the numbers of poor Filipinos increased.
Agriculture and manufacturing, which should experience growth in order to generate
jobs and contribute to overall national development, continue to experience moribund
growth. In fact, the number of new manufacturing jobs from 2001 to 2006 was just
153,000 and the sector even lost 18,000 jobs in 2006. Sectors driven by speculation and
with uncertain contributions to real development, on the other hand, were the ones that
drove the increased GDP growth.
Root cause of Poverty

Some people believe that poverty results from a lack of adequate resources — resources
such as land, food, and building materials — that are necessary for the well-being or
survival of the people. Others see poverty as an effect of the uneven distribution of
resources around the world on an international or even regional scale. This second line
of reasoning helps explain why many people have much more than they need to live in
comfort, while many others do not have enough resources to live. Other cited causes
of poverty include low income that resulted in the inability to meet standards of living
and costs of living, inadequate education and employment opportunities, globalization,
overpopulation, environmental degradation, and many more.

Poverty has been a concern in societies since before the beginning of recorded history.
If we trace the roots of poverty thru history we will find out that poverty begins when
some people started to exploit and oppress other people.

In the early stage of human society, the people don’t produce their needs. They just
gather the fruits of nature which can be found everywhere. They don’t keep food for
reserves. They stay in one place until they consume all the foods there. After that, they
will look again for foods in some other places. They are nomadic. If one group of people
failed to find foods, all of them in that group will die in hunger.

Then comes a time when some groups of people learned and developed how to culture
edible plants and animals. This knowledge of agriculture brings big changes in the way
of life of primitive people. They ceased to be nomadic and settled permanently in definite
territories which they began to claim as their property.

When people developed agriculture, they began to produce surplus products which they
kept as reserves. This is what we call social surpluses. In having social surpluses, they
had prevented hunger within their group, and also gave them free time from economic
production. More social surpluses mean more free time. Free time gave them the
opportunity to develop more their economy as well as create and develop other aspects
of life especially politics and culture. In this way human society develops.

But the developments of different groups of people were uneven. While there were some
groups who discovered and developed new ways of living, more groups of people stayed
in old nomadic way of life. They knew nothing about territorial property ownership.
What they knew is that all fruits of nature in any place belong to everyone. Whoever
found it can take it. They still cannot comprehend and cannot recognized territories with
permanent settlers doing agriculture as livelihood. As a consequence, trouble arose that
resulted into fighting whenever nomadic people came across territory of a permanent
settlers and start gathering foods there.

In the early fighting, each of the contending groups just killed their enemies. But there
comes a time when some groups, especially the agriculturists, began capturing their
enemies and use them as slaves to work for their economic production. At first, the
permanent settlers developed their armed groups just to defend their territories and
livelihood. But as they realized the value of slaves in their economy, they began to
develop their armed groups for defense into an army of conquerors to capture more
slaves by conquering not only nomadic people but also other permanent settlers as well.
As the history of the development of human society unfolds, small fighting grew bigger
and bigger into battles and wars. Battles and wars primarily to gather loots and slaves
with corresponding expansion of the controlled territories and level of rules for the
victors: from tribe to kingdom; and from kingdom to empire. From this arise a series
of human society based on the exploitation of human to human -- richness and poverty
began. Whereas the earlier society is called the primitive communal society, these next
societies based on exploitation of human to human are called: the slave society, the
feudal society and the capitalist society.

Conquering territories and then later colonizing to gather loots continues all throughout
history from slave society to capitalist society, and this is the primary reason why
there are rich and poor countries in the world. This is a kind of what they call primitive
accumulation of capital in which the capital use by the highly industrialized nations today
originated. The wealth of the rich nations came no other than the poor nations. The
rich nations become rich because, as they conquer, they plunder, grab, stole the wealth
of the poor nations. The poor nations become poor because they were the victims of
plundering, grabbing, and stealing. And that was the origin of worldwide poverty.

1. Slave society

To continue our story on the development of human society: conquering to gather loots
and slaves in the early stage of society means wiping out the whole conquered tribe or
community. Adults were hard to train as slaves as well as heavy burden as prisoners, so
they have to be killed. Usually, the children and women (virgins) were the best captures
to become slaves. The children are the easiest to train as slaves and the women to be
the slave wives of the conquerors.

As time goes on, when the slave children became parents, and their offspring became
parents too and bear new generation of slaves, the history of their original free tribal
communities which were wiped out were forgotten. What this new generation of slaves
knew was that all their ancestors were slaves. From this came the belief that being
slaves with corresponding masters are natural and is set by destiny.

Slave Society is the first society where the fundamental class conflict is based on the
division of people into masters and slaves, with slaves being the dominant producing
class. The masters owned the slaves and treated them just like any other ordinary
properties rather than people.

While the slaves have no rights at all, the masters have the obligations to provide them
the necessities for subsistence, or else they cannot use them in production. Of course
these necessities for subsistence came from no other than the products or wealth
produced by the slaves themselves. What the masters took for themselves are the social
surpluses of which their wealth came from. But the masters can stop providing the
necessities for subsistence to their slaves whenever they please, as a punishment for
disobedient for example or even just for caprice. And in times of incapacity or old age
were the slaves can no longer do their job in production, the masters can leave them to
death just like useless rags thrown out of garbage.

So in slave society, the existence of rich people (the masters) hand in hand with
the poor people (the slaves) began. They live together symbiotically. But in the final
analysis, without poor people (the slaves), rich people (the masters) cannot exist. On
the other hand poor people (the slaves) can live freely without having any master.

2. Feudal Society

In feudal society, it is not the human beings (serfs or peasants) who are owned by the
exploiter (the landlords) but the lands as the principal means of production. The serfs
or peasants, who were the primary forces of production is relatively free compare to the
slaves. But the serfs or peasants (specifically in Europe) were forcibly tied to the land.
When the land is sold to other landlords, for example, the peasant must be included.
The serfs cannot abandon the land they were tilling. If they do, they will be chased and
captured as criminals and will be forced back to till the land or face the penalty of death.

Not like in slave societies where the slave owners have direct hand in economic
production, the landlords have nothing to do with the production and leave them all to
the peasants. What the landlords were only up to was their share in production. They
are almost parasites. And not like in the slave society where almost all the necessities of
life came from their masters, the landlords have no obligation to give the necessities for
subsistence to their serfs or peasant. The latter should produce all their needs as “free
people”.

Because the landlords are the nominal owners of the lands or they claim to be the
owners of the lands, by force (militarily) they oblige the peasants to give them share
of their produce. The part that goes to the landlords are the social surpluses and what
remains to the peasants are their needs for subsistence. In some part of Europe during
the early stage of feudalism, the serfs or peasants cultivate the lands of which all the
products produced goes to the landlords. The serfs or peasants were just given a small
parcel of lands where they can produce their needs. But they can cultivate these lands
only after they finished working in landlord lands. So the social surpluses which go to
the landlords have to be secured first before the production of the producers needs for
subsistence.

The feudal system resulted in poverty on the part of the serfs or peasants on the one
hand, and richness on the part of the landlords on the other hand. While the produced
that goes to the former were barely enough for their needs most of the time, the latter
accumulate wealth out of the products they have continuously collected without a sweat.

3. Capitalist Society

Capitalism is the socio-economic system where social relations are based on

commodities for exchange, in particular private ownership of the means of production
and on the exploitation of wage labour.

In the micro level, here’s how capitalism operates. The capitalist or the bourgeoisie
owns the means of production (the capital) which includes money, machineries, land,
buildings, etc., depending on what commodity the capitalist are producing or want to
produce. The means of productions alone cannot produce a single commodity without
the labour power. It is the labour power that gives life to the means of production in
order for this to become productive. So the bourgeoisie needs labour powers to operate
a business and make profits.
The labour power is owned by a worker or proletariat. The working class or the
proletariats was principally created out of the peasants who lost or ejected to the land
they were tilling. They become property-less, that’s why they are called proletariat. The
only property a proletariat possesses which he/she can use for making a living is his/her
labour power. The condition in the capitalist society is that the bourgeois class has the
monopoly of the ownership of the means of production. In order to live, an individual
proletariat has no option but to sell his/her labour power to the bourgeoisie.

The sold labour power became wage labour as the proletariat became wage labourer.
Wage labour is use by the bourgeoisie to increase the value of their property (capital). In
pre-capitalist societies, the labour of the producers was rendered to the ruling class by
traditional obligations or sheer force, rather than as a “free” act of purchase and sale as
in capitalist society.

Value is increased through the appropriation of surplus value from wage labour.
As have been pointed out earlier, in earlier societies the producers produce beyond
necessary level of subsistence, and this is what we call social surplus, i.e. people
produce more than they need for immediate reproduction. In capitalism, surplus value
is appropriated by the capitalist class by extending the working day beyond necessary
labour time. That extra labour is used by the capitalist for profit; used in whatever ways
they choose.

As what have been said, the main classes under capitalism are the proletariat (the
sellers of labour power) and the bourgeoisie (the buyers of labour power). The value of
every product is divided between wages and profit, and there is an irreconcilable class
struggle over the division of this product.

In the macro level, capitalism develops through various stages. Since capital is both a
pre-condition and outcome of capitalism, a period of primitive accumulation marks the
beginning of capitalism; this may involve outright theft and plunder (as pointed out
earlier), and in particular the creation of a class of people who no longer own any means
of production – a proletariat.

By freeing the labour process from traditional forms and expanding labour cooperation
through world trade, capitalism initiates a rapid transformation in the labour process and
promotes the development of science and technology. Meanwhile, religion and kinship
ties are continuously undermined.

Imperialism is the root cause of today’s worldwide poverty

Capital is built up in a few countries at the expense of other countries which are used
as sources of cheap labour and raw materials and dumpsites of overflowing surplus
products.

The competition between millions of small-scale producers which was characteristic of the
early days of capitalism leads to the concentration of capital in the hands of just a few, as a
more efficient means of production. At a certain point (the beginning of the 20th-century),
the entire globe had been divided up between a few great powers. Thus begins the final
stage in the development of capitalism, imperialism, characterised by the domination of
the banks, the formation of large multi-national corporations, by war and revolution.
The epoch of imperialism opens when the expansion of colonialism has covered the
globe and no new colonies can be acquired by the great powers except by taking them
from each other, and the concentration of capital has grown to a point where finance
capital becomes dominant over industrial capital. Lenin enumerated the following five
features characteristic of the epoch of imperialism:

(1) the concentration of production and capital has developed to such a high stage that
it has created monopolies which play a decisive role in economic life; (2) the merging of
bank capital with industrial capital, and the creation on the basis of this “finance capital”,
of a financial oligarchy; (3) the export of capital as distinguished from the export
of commodities acquires exceptional importance; (4) the formation of international
monopoly capitalist associations which share the world among themselves, and (5) the
territorial division of the whole world among the biggest capitalist powers is completed.
Imperialism is capitalism at that stage of development at which the dominance of
monopolies and finance capital is established; in which the export of capital has acquired
pronounced importance; in which the division of the world among the international
trusts has begun, in which the division of all territories of the globe among the biggest
capitalist powers has been completed. [Lenin, Imperialism the Highest Stage of
Capitalism, LCW Volume 22, p. 266-7.]

“The development of capitalism has arrived at a stage when, although commodity

production still “reigns” and continues to be regarded as the basis of economic life,
it has in reality been undermined and the bulk of the profits go to the “geniuses” of
financial manipulation. At the basis of these manipulations and swindles lies socialized
production; but the immense progress of mankind, which achieved this socialization,
goes to benefit... the speculators.” (p. 206-207)

The surplus capital of these corporations, which arose from the exploitation of Labour,
is exported to less developed countries where capital is more scarce, the price of land
lower, wages lower, and raw materials cheaper; all resulting in a widening of profit
margins. Capitalists need to export capital because in the most developed countries
capitalism has become “overripe”, the working class consciousness too advanced for
heavy exploitation (i.e. huge profit margins), and while finance capital has a breeding
ground for growth, productive capital (computer and clothing factories, etc) can be much
more profitable elsewhere.

Thus, the history of capitalism generally begins with free competition; i.e. petty-
bourgeois production), which naturally progresses to a concentration of production
(bourgeois production), which continually strive towards monopolies (socialized
production). Monopolies, being so contrary to the foundations of capitalism, are the
greatest contradiction of capitalism, a contradiction rampant in the imperialist stage
– for every business not only strives toward, but needs to dominate markets completely,
to become a monopoly, while government must do everything it can to prevent this in
order to survive, realizing this social form of production ultimately destroys the capitalist
system.

“[Imperialism] is something quite different from the old free competition between
manufacturers, scattered and out of touch with one another, and producing for an
unknown market. Concentration [of production] has reached the point at which it is
possible to make an approximate estimate of all sources of raw materials (for example,
the iron ore deposits)... [throughout] the whole world. Not only are such estimates
made, but these sources are captured by gigantic monopolist associations [now called
multi-national conglomerates]. An approximate estimate of the capacity of markets is
also made, and the associations “divide” them up amongst themselves by agreement.
Skilled labor is monopolized, the best engineers are engaged; the means of transport
are captured – railways in America, shipping companies in Europe and America.
Capitalism in its imperialist stage leads directly to the most comprehensive socialization
of production; it, so to speak, drags the capitalists, against their will and consciousness,
into some sort of a new social order, a transitional one from complete free competition to
complete socialization.

“Production becomes social, but appropriation remains private. The social means of
production remain the private property of a few. The general framework of formally
recognized free competition remains, and the yoke of a few monopolists on the rest of
the population becomes a hundred times heavier, more burdensome and intolerable.” (p.
205) [Vladimir Lenin; Imperialism: The Highest Stage of Capitalism]

The free market that had been envisioned by Adam Smith was shown impossible by
the late 19th and early 20th century, when monopolies dominated nations causing
massive Economic collapses in the 1890s, a world production crisis during World War I,
and the worldwide depression in the 1930s. Thereafter national, and later international,
regulation of the capitalist marketplace became necessary (SEC, International Monetary
Fund, the World Bank, etc.); while the growth of militarization remains a necessity to
expend excess production. For example, the United States having overspent the Soviet
Union in militarization, in the last decade of the 20th century continued to create wars
throughout the world – Panama, Iraq, Bosnia, etc. – unleashing double and triple the
firepower in all of World War II. After the incredible expenditure of vast munitions and
weapons (over $300 billion per year), the subjugated and destroyed nations are then
offered contracts and infiltrated by capitalist business for the process of “rebuilding”.

Today imperialism continues to manipulate every countries of the world thru

globalization by imposing liberalization, privatization and deregulation. This is done
primarily thru their instruments of globalization like the International Monetary Fund
(IMF), World Bank, and World Trade Organization (WTO) with General Agreement on
Tariff and Trade (GATT).

• Liberalization: giving up domestic control over essential sectors such as trade and finance,
permitting foreign companies to own key enterprises such as national banks, easing
controls on foreign investment and capital, reducing trade tariffs, duties, restrictions and
barriers, etc.
• Privatization: increased role of the private sector in providing all types of goods and
services, transfer of ownership and management of public enterprises to private companies,
change in operational aspects of public/state companies with increased stress on full cost
recovery, efficiency, etc.
• Deregulation: a general withdrawal of the State from providing control or oversight over
economic and financial transactions, the removal of all government/public “interventions”
that might affect the free functioning of the market; for e.g., removal of price controls on
goods and services, dismantling of public subsidies, etc.

The Destruction of Capitalism: In capitalist society the working-class continues to grow,

and ownership over the means of production continually dwindles into fewer and fewer
hands. One example of this is the stock market, where the finance banks emphasize
that “all workers” can own a piece of various companies. In fact, through offering
“ownership” of these companies to more people, financial oligarchies are able to gain
greater control over these companies by diluting the ownership amongst an unorganized
group while also extracting capital from this large group for further investment. For
example, a bank need only own 10 or 15 percent of a certain company to have an
enormous controlling interest over that company, so long as the vast majority of stocks
in that company are owned by thousands and tens of thousands of different people,
people who do not have the time to attend shareholder meetings and are not united and
unorganized on how to exert control over the company.

Furthermore in capitalist society, the value of labour increases while labourers

continually receive a smaller portion of that value they create. The selling of labour
itself is continually reduced from something that is sold on a monthly or yearly basis
to something that is sold day by day, and hour by hour, piecemeal or in short term
contracts. As a result, the income gap grows continually larger. For example in the
United States (from 1988-1998) income for the poorest 20 percent of the population
rose a meager $110 to $12,990. For the richest 20 percent it increased by $17,870
to $137,480. (Data according to the Center on Budget and Policy Priorities and the
Economic Policy Institute, checked with U.S. Census data; January, 1999).

Capitalist ideology attempts to refute Marxism on the basis that the biggest class in
capitalist society is the “middle-class”. This class conception however is based purely
on economic wealth (two cars in the garage, an income of x amount of dollars, etc.)
and not on that person’s actual relations to the means of production (See definition on
class). The enormous majority of the population in a capitalist society is proletarian
– however through imperialism some highly specialized proletarians (from executive
officers to autoworkers, information technology workers to industrial foremen, etc.)
are paid very well (not by the full value of what they actually produce, but by a higher
percentage of that value when compared to unskilled workers and workers in nations
subjugated to imperialist exploitation).

In order for capitalism to function correctly, the petty-bourgeois class must be in

existence. This is one of the great contradictions in capitalist society, because on the
one hand while capitalist production continually pushes small-business people out of
the market (for example, the owner of the general store, vegetable shop, small grocery
store owner – all are wiped out by corporations who establish enormous shopping
centers to meet a large variety of consumer needs, with products of higher quality at
a cheaper price); while on the other hand capitalism cannot survive without a class of
people establishing new businesses to fill new consumer needs; and from a very select
few of those businesses to recruit new bourgeois, forming large corporations (in U.S. this
is referred to as the “American dream”).

The ultimate failure of capitalism is brought about by capitalist production itself – the
further technology advances, the more expensive and powerful are the machines needed
for production, while at the same time, as a result of technological advances, products
produced by more efficient machines become cheaper and cheaper. This has the effect
of firstly driving the petty-bourgeoisie into extinction (who cannot afford to constantly
upgrade their productive forces, while their products continually become cheaper (the
reason they are heavily subsidized by advanced capitalist governments); and further
the creation of larger corporations, which in turn must not only shrink internally to
maintain “efficiency”, but must also merge with other companies, forming multinational
conglomerates, etc. The further this process continues, production becomes increasingly
centralized, and when controlled by the capitalist, the more oppressive and backward
production becomes (Microsoft at the end of the 20th century).

As the production becomes more and more concentrated and sophisticated, the
accumulation of wealth and capital becomes faster and faster and the fewer and fewer
victorious bourgeoisie becomes richer and richer. On the other hand, the impoverishment
of the majority of people in every country the imperialists penetrated all over the world
as well as people within the imperialist countries themselves becomes faster and faster
and more and more intense. Today everywhere in the world we can see people without
food to eat and house to live. They are like nomadic people looking for foods from
garbage to garbage and rest wherever there are vacant spaces for the purpose like
public parks, under bridges and overpasses, sidewalks, abandoned buildings etc. Many of
them suffer insanity because of hunger. Many just die because of hunger, food poisoning,
sickness, accident, and other simple causes.
Today, capitalist system in its imperialist stage, as it penetrates every country all over
the world, is the root cause of poverty worldwide and in every country. If poverty has to
be eradicated, imperialism must be brought to an end.

In the Philippines

The root cause of hunger and poverty in the Philippines is the neocolonial and semi-
feudal system of society which is dominated by US imperialism in alliance with the local
ruling exploiters, the comprador big bourgeoisie and the landlord class.

Historically, the Philippines was one of the source of Western primitive accumulation.
Thru bloody conquers, it has became a colony of Spain for about 300 years, by the
United States of America starting at the beginning of the 20th Century, by Japan for just
about 3 years during World War II, then back to the United States until it was given a
nominal independence on 1946.

But even after the giving of this nominal independence to the Philippines, the United
States retain its significant control over the country’s economy thru the support of the
local ruling class whose interests are identical to US imperialist interests in the country.
From colony, the Philippines was transformed into a neocolony. Today’s Philippine
economy is a neocolonial appendage of US imperialism and world capitalist system. It
is exceedingly dependent on direct investments, loans and trade with the global centers
of capitalism. It is bound by policies dictated by major capitalist countries bilaterally or
through multilateral agencies like the International Monetary Fund (IMF), World Bank
(WB) and the World Trade Organization (WTO).

This neocolonial set-up has stunted our country’s economic growth and made it
subservient to the economic interests of US imperialist and its allies. It has tied our
country to their needs, making the country a rich source of cheap raw materials, cheap
labor and dumping ground for their surplus products.

Despite its external linkages, our country retains a distinct system of socio-economic
relations. These are precisely called semi-feudal. The basic exploited classes are
the workers and peasant, the direct producer and yet the classes who suffers from
hunger and poverty. The comprador big bourgeoisie and the landlord class are the
basic exploiting classes, the owner of the means of production who, together with the
imperialists, collects and accumulate social surpluses. From these classes came the
bureaucrat capitalists who amass wealth through graft and corruptions. The intermediate
social strata are the middle bourgeoisie and the far more numerous urban petty
bourgeoisie.

The Philippine social economy remains underdeveloped. It is still basically agrarian and
pre-industrial in terms of the development of the productive forces. The principal means
of production is still agricultural land, which is mainly for domestic food consumption and
secondarily for export crops (coconut, sugar, bananas, pineapple, etc.).

The degree of mechanization in agriculture is limited and is concentrated on estates

for export crops. In 2001, only some 11,500 tractors and 700 powered harvester-
threshers were available for over 13 million hectares of agricultural land. Only 30
percent of the country’s total farm area is irrigated as of 2002. Land ownership is
heavily concentrated with less than 1/3 of landowners owning more than 80 percent of
all agricultural land. In addition, vast tracts of lands are controlled by big multinational
corporations.

The Philippines has rich natural resources and most of the minerals for industrialization.
But after extraction, the mineral ores do not go beyond the primary stage of processing
and are exported as raw materials. There is a certain amount of modern industry but
this is based on equipment, fuel and other inputs from abroad. The industrial sector
produces neither capital goods nor basic metals and chemicals.

Export-oriented low-value added semi-manufacturing, which have come into favor

with policymakers and investors since the late 1970s, is far more import-dependent
and provides less regular employment than the repackaging and reassembly for
import-substitution and domestic consumption in the 1950s and 1960s. It has
reduced output value and employment since the 1997 economic and financial crisis in
Southeast Asia.

The crisis of overproduction of semi-manufactures for re-export since the middle of the
1990s (1994 for garments and 1996 for electronic assembly) has come on top of the
earlier crisis of overproduction of raw materials since the late 1970s. However, despite
the continuing global oversupply of low value-added semi-manufactures, the Philippines
has continued to stick to electronic assembly and garments. These account for 75
per cent of gross export earnings. However, the high imported content of the semi-
manufactures – up to 85-95 percent in the case of electronic equipment – yield a very
small amount of net export earnings.

The Philippine economy is in a chronic state of crisis. This has rapidly deepened and
aggravated under the current policy regime of unbridled “free market” globalization
under which foreign monopoly capitalism is actually on a rampage. The semi-feudal
economy is incurring huge foreign trade deficits faster than ever from the unequal
exchange of its raw-material exports and consumption-driven manufactured imports.
The foreign trade deficits have not been relieved but in fact been aggravated by the
export-oriented low-value added semi-manufacturing because this involves a high
amount of overvalued imported content.
The huge trade deficits and rising debt service result in chronic current accounts
deficits and unfavorable balance of payments. But the deficits are often covered by
new debts at more onerous terms, including short-term portfolio investments and
the flotation of bonds by state corporations in the capital market. These render the
economy more vulnerable. The foreign debt is ever mounting. The foreign exchange
remittances of overseas contract workers are in fact used for further import-
dependent consumption but are often cited as resources for paying a major part of
the foreign debt.

The high level of government budgetary deficit (which was trimmed down at least to
P51.559 billion in the first quarter of 2008, from P51.968 billion in the same period
last year as reported by the government) is due to economic depression, the sale
of income-generating state assets, reduction of tariffs, tax evasion by the exploiting
classes including tax holidays and exemptions, bureaucratic corruption and high military
expenditures. Moreover, the reactionary government and its various corporations enter
into onerous loan and supply contracts with foreign banks and companies that aggravate
the deficits to be covered by local public and foreign borrowing.

The Philippine economy and the reactionary government in particular are bankrupt. But
they are kept afloat by exporting ever larger volumes of certain goods whose prices keep
on sinking, by rescheduling of old debts and incurring new debts at ever more onerous
terms under various programs dictated by the IMF and the World Bank, by privatization
of government assets and by capturing the foreign exchange remittances of Filipino
overseas contract workers who now constitute 10 per cent of the population and whose
annual remittances have grown to USD 8.5 billion in 2004.

We can trace the deterioration of the Philippine economy by looking at the growth
and uses of foreign and domestic borrowing, from one regime to another. The
Marcos regime was the very first one to dramatically raise the level of foreign
borrowing from the level of USD 600 million in 1965 to USD 27.2 billion in 1986.
The regime used the foreign funds to finance the graft-ridden construction of sugar,
coconut, copper and nickel mills, irrigation systems, roads and bridges and tourist
facilities. This was mainly under the auspices of the Keynesian policy stress of the
World Bank before 1980.

But at the onset of the 1980s, economic policy stress would shift to monetarism and
neoliberalism in the US and in the world capitalist system. Supposedly the time had
come to act decisively against so-called wage inflation and social spending by the state.
Both were blamed as the cause of the stagflation problem. While the US sought to
attract funds from abroad by offering high interest rates in the market, the World Bank
was made to cut down on concessionary official lending and the IMF was made to whip
up trade and investment liberalization, privatization and deregulation as payback from
the third world debtors.

The tight international credit situation in the 1980s compelled the Aquino regime to raise
the level of local public debt from PhP 144.4 billion in 1986 to PhP 521 billion in 1992.
The Aquino regime restricted imports and brought the level of foreign debt to USD 29.9
billion in 1992. To countervail depressed prices in the global market, the raw material
exports of the Philippines had to be increased. Still the financial crisis sharpened in the
early 1990s.
The Ramos regime harped on “free market” globalization. It outstripped the Marcos
regime in foreign borrowing and the Aquino regime in local borrowing. It brought the level
of the country’s foreign debt to USD 46.2 billion and total domestic public sector debt to
PhP 922 billion in 1998. These borrowings were made in order to cover foreign trade and
budgetary deficits, respectively. The deficits grew as the regime promoted the export-
oriented low-value added semi-manufacturing and private construction of high-rise office
buildings, residential towers, hotels, golf courses and other recreational facilities. The
economic and financial collapse came as a major part of the 1997 Southeast Asia crisis.

The bankruptcy of the Philippine economy and state was conspicuous when the Estrada
regime took over. Government expenditures went too far ahead of tax revenues. The
IMF kept on pressing the regime to reduce government expenditures, adopt new tax
measures and give priority to debt service. To pursue its bureaucrat capitalist purposes,
the regime engaged in scams by raiding the pension funds of state and private
employees and collecting money from the underworld. The Estrada regime raised the
level of the country’s foreign debt to USD 51.2 billion and local public debt to PhP 1.068
trillion by year end 2000.

The Arroyo regime raised the level of the country’s foreign debt to USD 56.3 billion and
the local public debt to PhP 1.833 trillion in June 2004. The compounded foreign and
local public debt is PhP 6 trillion. In fact, the foreign debt has gone beyond USD 60
billion and the local public debt beyond PhP 2.5 trillion. In terms of the size of the total
public debt, the Philippines is in a worse situation than Argentina. The Philippine public
debt/GDP ratio has risen from 56 per cent in 1997 to 80 per cent in 2004. Last year, the
reactionary government paid 81 per cent of its revenues for both interest and principal
amortization. This year it is allocating 94 per cent of revenues for debt service.

Since 2001, the Arroyo regime has over borrowed from the private capital market,
mainly US, by floating bonds. It is now given a low credit rating and is being forced
by the IMF to raise taxes amid a depressed economy. The value added tax is being
raised by 20 percent. Other measures for raising taxes are being implemented. Under
conditions of deregulation, the oil companies are allowed to freely raise their prices and
so are the power, water and other public utilities, their service rates. The reactionary
government is raising the fees for services it provides.

The IMF and WTO require the regime to undertake further denationalization, liberalization,
privatization and deregulation. State assets such as those in the National Power
Corporation are being bargained away. Debts of state corporations being auctioned off
remain as sovereign debt and do not become the liability of the new private owners.
The mineral, forest and water resources of the country are further being opened up for
unrestricted exploitation by the foreign monopolies. Mimicking the Bush regime, the
Arroyo regime is planning to privatize the social security agencies of the state.

Major official statistical data in the Philippines are falsified to conjure the illusion of
achievement. The Arroyo regime claims that the GDP grew by 6.1 percent in 2004. The
Employers Confederation of the Philippines describes this as jobless and industry-less
growth. The regime pretends to surpass by so many times the stagnant growth rates in
the most advanced capitalist countries. It absurdly cites the heavy electoral spending last
year, the proliferation of international call centers and false estimates of production rises
in agriculture and service sectors of the economy as major items in the GDP growth.
The chronic rate of mass unemployment in the Philippines goes beyond 40 per cent.
One can arrive at this rate by compounding the officially admitted unemployment
and underemployment rates (the latter is actually unemployed). Unemployment has
increased conspicuously since the 1997 Asian financial crisis, with the formal sector
shrinking fast. The claimed unemployment rate of 11.7 per cent in 2004, which is
comparable to that of Germany, is simply unbelievable. Supposedly “employed” by some
specious definition are 30.635 million workers out of a total labor force of 34.571 million.
But only 18.62 percent (5.067 million) are verifiably employed in the formal sector, while
67.47 per cent (20.670 million) are in the informal sector, which is a realm of random
surveys and false estimates.

The real value of nominal wages has drastically gone down due to the rapidly soaring
prices of basic commodities and services. Inflation has been pushed by the peso
devaluation, the scarcities in import-dependent basic producer and consumer goods and
the heavy electoral spending by the regime. The inflation rate of 5.4 per cent for 2004 in
IMF and government statistics is simply unbelievable.

The peso has been devalued vis-à-vis the US dollar and is now less than half its value
in 1996 and only a third its value in 1985. Funds for essential producer and consumer
imports have become scarce because of superprofit-taking by the monopoly firms, the
huge amounts of debt service, spending for foreign-made luxuries and weapons and
salting away of dollars by big Filipino businessmen and high bureaucrats.

The broad masses of the people suffer the rising costs of basic commodities and such
services as transport, water and electricity. Since the privatization and deregulation of
public utilities in the 1990s, the price of oil products has increased on average by 160
percent, of electricity by 175 percent, and of water services by 450 percent. The social
infrastructure is breaking down and the allocations for such social services as health,
education, unemployment relief and housing are being cut back. The Arroyo regime has
drastically slashed real spending on education by 3.2 percent, on health by 24.5 percent
and on housing by 61.0 percent from 2001-2004.

Contrary to absurd government claims that poverty has fallen from 40 per cent to just
30.4 percent of the population in 2003, some 90 percent of the population live on the
equivalent of around USD 3 a day. A recent report by the Asian Development Bank
points out that the Philippine government achieved the reduction of the poverty level
not by raising the people’s income but by lowering the poverty line (as what we have
discussed earlier). Indeed, while the general price level supposedly rose by some 15
percent between 2000 and 2003, the government raised the poverty line by just 7
percent – to just PhP 33.60 or some USD 0.60 a day.

Millions of children are subjected to forced labor, malnutrition, deprivation of education,

military assaults on rural communities and forced evacuation. Women are degraded and
forced to leave their families in order to earn a living abroad. Large numbers of women
and children are forced into prostitution. The environment is being damaged by logging for
export and foreign mining pesticide-dependent plantations and other pollutant enterprises.

These sufferings of the Filipino people occurs vis-à-vis the continued amassing of wealth
by the imperialists and the local exploiting classes. This neocolonial and semi-feudal
system of society makes the rich people richer and the poor people poorer. The latest
Family Income and Expenditures Survey (2006 FIES) shows that the 10% richest Filipinos
in the country earns more than a third of the country’s total income or 19 times more than
the poorest 10%. According to Forbes Asia, the combined wealth of the 40 richest Filipinos is
$17 billion (PhP 714 billion at PhP42:$1) which equal to the total incomes of nearly 60% of
Filipino families or almost 52 million Filipinos.

-o0o-

REFERENCES:

1. The State of Food Insecurity in the World 2006; Food and Agriculture Organization of
the United Nations (FAO) 2006 Report

2. World Hunger Facts; ELCA World Hunger Online, April 2008

3. Hunger and Food Insecurity in the United States; Food Research and Action Center;
January 17, 2007

4. On The True Cause Of World Hunger; An interview with Anuradha Mittal by Jensen;
published in “The Sun”; February 2002

5. Hunger rises to record high 21.5% – Social Weather Station; Helen Flores;
Philippine Star; October 2nd, 2007

6. Hunger - One in five, or 3.8 million Filipino families; SWS: Hunger hits record high,
afflicts 3.8M Pinoy families; Hand In Hand Ministries, International; Sunday, October
07, 2007

7. Hunger measure improves; By Alexis Douglas B. Romero; Business World - Vol. XXI,
No. 194; Manila, Philippines; May 5, 2008

8. FAO Report: Enough Food in the Future--Without Genetically Engineered Crops;

Food and Agriculture Organization (FAO) of the United Nations, Economic and Social
Department. 2000;Union of Concerned Scientist Website; April 2000

9. Food First: Beyond the Myth of Scarcity, and World Hunger: Twelve Myths; by Frances Moore Lappe’
and Joseph Collins,

10. FOOD: New Report Exposes Myths About World Hunger; by Danielle Knight; The
Progress Report; The Real Problem: Lack of Economic Justice

11. Hunger: Myths & Realities ; 12 Myths About Hunger; Rehydration Project; Summer
2006; Updated by Holly Poole-Kavana

12. Food riots fear after rice price hits a high; The Observer; World news section;
guardian.co.uk; April 6 2008

13. Food security; From Wikipedia, the free encyclopedia

14. Food riots fear after rice price hits a high; The Observer; World news section; April 6 2008

15. Farmers warn that Philippines faces rice shortage, as government signs import deal;
The Associated Press; March 26, 2008

16. Farmers’ group calls for rice price controls; By Jerome Aning; Philippine Daily
Inquirer; March 27, 2008

17. Gov’t taps Church in distribution of NFA rice; By Jeannette Andrade; Philippine Daily
Inquirer; 04/08/2008

18. Arroyo assures people anew against rice crisis; By Lira Dalangin-Fernandez;
INQUIRER.net; April 8, 2008

19. A rice shortage?; Editorial; Philippine Daily Inquirer; March 25, 2008

20. There is an Actual Rice Crisis Aggravated by an Artificial One - Rice importation
fosters crisis; by Kilusang Magbubukid ng Pilipinas; April 2008

21. Hunger and World Poverty; United Nations World Food Program (WFP), Oxfam,
UNICEF

22. Poverty; from MSN Encarta

23. Understanding Poverty; World Bank

24. I have known hunger - here’s what it looks like; by Hayao; February 5, 2007

25. 2006 Official Poverty Statistics: Worse Than It Looks; by IBON Media; IBON
Foundation; March 18, 2008

26. Capitalism, Imperialism; Encyclopedia of Marxism; Marxists Internet Archive

(www.marxists.org); 1999-2008; Editor: Andy Blunden

27. Imperialism the Highest Stage of Capitalism: by V.I. Lenin; Lenin’s Collected Works
Volume 22

28. Socio-Economic And Political Realities And The Need For Peace Negotiations; By Prof.
Jose Maria Sison; Delivered at the International Peace Research Institute in Oslo,
Norway; June 1, 2005

29. Peasant Women’s Agenda For Food Security and Self Sufficiency; by AMIHAN,
National Federation of Peasant Women; Asia Pacific Forum on Women, Law and
Development (APWLD)

30. RP gov’t trims budget deficit to P51.559B in Q1; GMANews.TV, with Associated
Press; April 24, 2008

31. A Philippines Free from Poverty and Inequality is Possible, But Not Under Gloria;
Global Call to Action Against Poverty-Philippines; Tuesday, February 5, 2008
(Footnotes)
1
In 2003, the total world population is 6,295,934,476; and this year 2008, it reaches
6,677,563,921 according to the U.S. Census Bureau, International Data Base.
2
The industrialized countries include Australia, Austria, Belgium, Canada, Denmark, Finland,
France, Germany, Greece, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Malta, the
Netherlands, Norway, Portugal, South Africa, Spain, Sweden, the United Kingdom and the
United States of America. The undernourishment figures for these countries are not estimated
separately but as a group of countries.

3
Human Development Report 2006. United Nations Development Programme. November 2006.

4
Anuradha Mittal, a native of India, is an internationally renowned expert on trade,
development, human rights, democracy, and agriculture issues. After working for ten years as
the policy director and then the co-director at the Institute for Food and Development Policy/
Food First, Ms. Mittal established The Oakland Institute in 2004.

5
2008: The year of global food crisis

6
Experts: Global Food Shortages Could ‘Continue for Decades

7
Has Urbanization Caused a Loss to Agricultural Land?

8
Food crisis will take hold before climate change, warns chief scientist

9
The global grain bubble

10
Global food crisi looms as climate change and fuel shortages bite

11
The World’s Growing Food Price Crisis

12
Riots and hunger feared as demand for grain sends food costs soaring Riots and hunger feared

13
Already we have riots, hoarding, panic: the sign of things to come?

14
Feed the world? We are fighting a losing battle, UN admits

15
The poverty threshold is defined as the minimum income/expenditure required for an
individual to meet its basic food and non-food requirements. The poor are thus considered
as those individuals or families whose incomes fall below the official poverty threshold and
cannot afford to provide in a sustained manner for their minimum basic needs for food, health,
education, housing and other social amenities of life.

16
Gross domestic product (GDP) grew an average of 4.6% from 2001 to 2006, while gross
national product (GNP) grew by 5.1% over the same period. From 2004 to 2006, when the
poverty increase was recorded, GDP and GNP grew by 5.5% and 6.1%, respectively; this was
substantially higher than the 3.7% and 4.1% recorded from 2001 to 2003.