Big Tech Large Gig – Labour under Infrastructural Platforms

PROLOGUE

Malaysia is at a crossroad in its politico-economic path with fractious politics and a contracting middle class. The socio-economic conditions are becoming precarious. This is because of a stagflation risk arising amid sharp slowdown in growth that is accompanied by an accelerated inflation runaway globally, (World Bank, Global Economic Prospects, June 7, 2022); this is confirmed by the Bank of International Settlements in its Annual Economic Report, 26 June 2022; Prof. Adam Tooze‘s detailed write-up in Chartbook# 131.

In 2020, the Department of Statistics Malaysia (DOSM) indicated that there were almost four million people working in the gig economy in Malaysia; independent think-tank, Emir Research, confirmed about 26% of the Malaysian labour
force were full-time gig workers, reaching 30% by 2021.

1 BIG TECH

Tech capital flows unencumbered trans-borders where new ecosystem of digital platforms has emerged over the past decade that is transforming the very infrastructures of capitalism. This new business model of large monopolistic digital platforms are capable of extracting immense amounts of data overwhelming legacy enterprises and suppressing labour empowerment, (Paul Langley and Andrew Leyshon, 2020). This is “netarchical capitalism” , where infrastructure is “in the hands of centralized privately owned platforms”, (Nick Srnicek, Platform Capitalism, 2017).

Information and infrastructural platforms have empowered a new kind of ruling class. Through the ownership and control of information, this emergent class dominates not only labour but capital. It is not just tech companies like Amazon and Google; even Walmart and Nike can now dominate the entire production chain through the ownership of brands, patents, copyrights, and logistical systems – all “soft” elements than physical end-products, all accumulated through financialization capitalism through a neo-imperialism monopoly-capital pathway.

Digital technology has already indeed transformed the world economy; the decade leading up to 2019, the largest 100 firms in the world had increased their total market capitalisation by US$12.7 trillion. A third of that increase (US$4.2 trillion) can be accounted for by just seven firms: Facebook, Amazon, Apple, Alphabet, Microsoft (the famous quintet ‘FAAAM’), Tencent and Alibaba. The aggressive rally of tech stocks during the COVID-19 pandemic had given due recognition that an entirely new model of value creation was enabled, and primarily all enhanced, by digital technology.

**Tech companies are the new empires of today**: Alphabet revenue surpassed Hungary’s GDP, ***Facebook*** employs over 15000 content moderators around the world, and Microsoft has built datavcenters in nearly every corner of our planet.

This new ruling class extracts the content capacity of information to route around worker and social movements to barricade labour participation and involvement. The emerging ruling class is the digital feudal lords overseeing a common of digital infrastructure where bands of peasantry-labour are the digital gig-slaves to be exploited. In this digitalized business model, returns do not diminish as businesses scale up but increase exponentially. Geared towards the exploitation of digital-dehumanised workers where they are mere interfacing intermediary conduits to big data storage and retrieval by infrastructural platforms that are so overwhelmingly powerful in exploiting surplus value of labour relentlessly, and with brutal efficiency, it is the accumulation of capital, through and thoroughly (Ursula Huws, Labor in the Global Digital Economy: The Cybertariat Comes of Age, 2014).

To compound developmental efforts, TNCs exploit legal loopholes in low-income countries (LICs) to avoid or minimize tax liabilities by applying a practice known as ‘base erosion and profit shifting’ (BEPS). Under such circumstances, tax havens collectively cost governments US$500–600B yearly in lost revenue. Low-income countries will lose some US$200B – more than even the foreign aids of US$150B that they received annually, (Jomo, June 2022). Indeed, TNCs-supported agents, and lobbies, have blocked the International Tax Cooperation initiative, (Anis Chowdhury and Jomo Sundaram, June 2021) to ensure tax equity and revenue intake equality.

2 GIG LABOUR

Nested in the platform capitalism model is the software component and the associated IT infrastructural platforms’ solutions. Unlike in the manufacturing sector where labour is kept within borders while capital moves freely, in Big Tech there is this process ability to intrude into a target country to install infrastructural platforms as well as troll the planet for cheap labour in any part of mother Earth at any time.

Corporate capital having solidified respective infrastructural platforms which are acquired through IT/IS competitive endowment, now have undue advantages over labour: labour control and supervision, labour harvest and deployment, labour usage and exploitation thereon. Labour, as digital-dehumanised workers, has to process raw data into timely, accurate, relevant and complete information under the control of these infrastructural capitalism platforms.

The resultant, and a transformed economy, is the gig economy, also widely defined as “platform economy”, “on-demand economy” or “sharing economy”, synchronises to the demand and supply of short-term or task-based work activities, and as a part of the national economy where freelancing workers use digital platforms to participate in the national economy, including their connections with the traditional yet formal businesses.

This business model is what technology expert Azeem Azhar names as the ‘AI lock in loop’ where, as the tech companies deploy products and services, they also collect data about their consumers’ use of those products and services. Through machine-learning processes performed on those collated data, these business entities envisage in presenting opportunities towards the development of better products and services. It is by integration of multiple data-rich digital assets into a single platform that gives such tech companies access to the entire vertical product chains (examples like Google or Grab siphoning off personal biodata and geographical locations) and the supply-chain capacity to expand horizontally into new products and services with relative ease and effectiveness. For examples: Google, Facebook, WeChat or Grab becoming cloud-servers, WhatsApp communications and Instagram media aggregator), (Social Europe, Gig Workers Guinea Pigs of the New World of Work, February, 2021; Foundation for European Progressive Studies, Governing Online Gatekeepers: Taking Power Seriously, 2021; see also ILO 2021 report on the states of precarious digital labour).

However, with jobs becoming more and more precarious in a post-pandemic economic recovery phase (see STORM, Capitalism: Crisis to Crisis) and there is this stagnant category of the reserve army of labour or relative surplus population – characterized by low and static wages, low hours, and unregulated, unstable working conditions – are becomong realities in the gig-labour environment (Karl Marx, Capital, vol. 1 [Penguin, 1976], 796–98).

Since the new platforms are monopolies that are created by venture/finance capital – the same ones that helped Google, Amazon and Facebook to build their initial monopolies – which helps to enclose the informal sphere of the economy. Uber and Airbnb convert individual vehicle and house owners to what they believe as independent contractors, but in reality are glorified yet untitled serfs! This semblance of a ‘sharing economy’ is, in reality, the enclosure of personal property by digital monopolies and creating new forms of casual labour.

Monopoly-capital radiates to Global South in search of low unit labour costs worlwide to get higher profit margins whilst attaining overall profits. Data on unit labour costs show that countries with the highest participation in labour-value chains – the top three being China, India, and Indonesia – also have very low unit labour costs, (Intan Suwandi, 2019). The neo-imperialism economics is still relevant in today’s digital economy with the generation of, and by, “soft” intellectual elements, but higher, and with the immediate instancy of capital accumulation. That the wealthiest figures in the world today are tech capitalists are unsurprising. The top nine wealthiest people include : Elon Musk, Jeff Bezos, Bill Gates, Mark Zuckerberg, Larry Page, Pony Ma and Jack Ma (not related to each other). Their excessive wealth points to the tensions within private ownership of the means of production, where competition leads to monopolies and oligopolies. The infrastructural platforms have indeed became double-sided monopolies, a monopoly to their suppliers and monopoly to their buyers, for examples, Alibaba and Amazon not only holds inventories in their warehouses, but also sells goods that it does not store.

Then we have the Jeff Bezos Amazon factor where The Bezos’ rate is equivalent to US$149,353 a minute. To put things in perspective, Bezos makes more than three times what the median U.S. worker makes in year – US$45,552, according to data by the Bureau of Labour Statistics – in one minute, source: Business Insider 2019. Comparatively, at the centre of an Ecological-Epidemiological-Economic crisis, five captains of the corporate capital became the new millionaires in the country with 2020 ending while the income inequality in Malaysia continues to widen, see Khalid, lse.blog 2019).

Additional in the context of a capitalistic innovation-driven economy, Huws has also expressed her observation where “extraordinary ability of capitalism to survive through the centuries and generate newer commodities by redesigning the nature of work and labor, (Ursula Huws, Labor in the Global Digital Economy: The Cybertariat Comes of Age, 2014).

3 INFRASTRUCTURAL PLATFORMS CAPITALISM FOUNDATION

**Tencent complex Value Creation model**

Large internet firms like Microsoft and Google outsource software development to IT service providers in India, such as Infosys, Cognizant and Wipro. Facebook, similarly, offloads whatever they can’t automate to customer service workers and content moderators, most of whom are based in English-speaking countries in the Global South, (JS Tan, 2021).

Indeed, the global network of tech capital is much larger than these tech giants themselves. The ride-hail industry, for example, is a good case study of how the venture-capital penetrares the Global South. The Japanese Softbank venture capital firm has controls stakes in Uber, Didi (China), Ola (India), and Grab (South-East Asia). Uber itself owns 28% of Grab and 12% of Didi. This means that the exploitation of drivers in China and South-East Asia (where Grab is the dominant ride-hail service) directly contributes to Uber’s bottom line. It is pertinent to acknowledge the struggle against Big Tech, US tech labour organizers should remember that US tech companies have built their fortunes off the exploitation of workers abroad, just as once the Roosevelt families built Boston on the maze of opium farms in India to daze Chinese smokers, (New York Times, 28 June 1997).

Platforms like Amazon’s Mechanical Turk can directly send work to anyone who has a laptop and an internet connection. Ride-hailing and delivery companies like Uber can onboard drivers around the world so long as the drivers have a car and a smartphone. With software development platforms increasingly standardized and accessible from anywhere in the world, even software engineering work has become easy to send overseas. On top of that, the tech industry has also benefited from outsourcing more traditional roles, such as Tesla’s new gigafactory in China, or in customer service work that is routinely outsourced to low-income English-speaking countries like the Philippines or India, (Tan, ibid).

In a contest over international labour arbitrage to stay competitive on the global stage, some American tech workers are forced to accept lower wages or risk losing their jobs entirely. After 80 Pittsburg-based Google contractors, employed by the contracting firm HCL, won their union in 2020, the company began to move work to a branch in Poland, discouraging their workers from further engaging in union activity, (theregister, 9 October 2020).

All the above case-country scenarios are accentuated by a Tech Cold War within a milieu of proxy warefare, (see ECONOMIC CONNECTIVITY IN GEOECONOMICS and Institut Francais des Relations Internationales, Geoeconomics and the Balance of Power in East Asia; newleftmalaysia, The Ukraine Conflict. For instance, TikTok is owned by China’s ByteDance. This video-sharing app has eclipsed Twitter, Facebook and Instagram in the number of downloads in 2020, making it the first major international social media platform that was not developed in the US. The Chinese telecom firm Huawei broke into the international market, which has been otherwise dominated by the US, becoming a major provider of smartphones and telecom infrastructure around the world. These advances have pushed the US government to recoil into a nationalist posture under the Trump administration. Even under the Biden POTUS, and US Indo-Pacific Basin Strategy, there is an intensification of policies that seek to undermine the growth of the Chinese tech sector. However, this nationalist posture has affected some US companies.

In an instance, Google has been reprimanded by politicians for terminating Project Maven (computer vision project for drones). During a tech antitrust hearing in US Congress, the company was questioned for opening an artificial intelligence lab in Beijing, which – according to critics – would allow the Chinese military to gain access to cutting-edge technology. Since then, Google has renewed its commitment to support the US military only.

In light of above case studies, what are the remedies to shackle infrastructural platform capitalism dominance?

i) Piketty has proposer that a capital-tax strategy as the only real alternative to an actual revolution against capitalism. He contends that such a global tax on capital or the implementation of similar taxes at the national level, for example, the Wealth Tax which is not in favour by our ruling regime, would not only restrain the current dysfunctional tendency to amass larger and larger shares of wealth at the top of the economic pyramid, but would also allow for the creation of a “social state” meeting social needs, (Piketty, Capital in the Twenty-First Century.

ii)That, digital labour by focusing on the primary social aims, putting the most essential needs of people and the environment before profits. Here “the alternative to stagnation” is to provide “jobs…for the unemployed, food for the hungry, houses for homeless, adequate health care and income security and a decent environment for all of us.” The implementation of these and other human and collective goals could be made the “highest priority” to which all special interests would be subordinated. (Magdoff and Sweezy, Stagnation and the Financial Explosion, 88–90).

iii) That TNCs in discouraging their workers from further engaging in union activity is used by digital owner-lordship to put a strain on the relationship between domestic and overseas workers. For digital labour to sustainably organise for their own empowerment, the question is how we can dismantle a system that pits workers against each other in a race to the bottom, and unite to fight for a higher share of income for all workers to build transnational solidarity.

iv) that there should be a national considerations in outreaching, mobilising and organising the mass of gig- workers in the country, too: see the manifesto proposal in Towards a post-2020 political economy and newleftmalaysia, Renewal of a Socialist Ideal

EPILOGUE

By perpetuating a “sustainable capitalism” ethos, this nation has to bear upon corporate capital and its oligarchy partners to support rakyat2 production. The monopoly-capital vagrants are profiting on our country’s resources, including talents and endowed skills, with expropriative excess, and havoc a nation state to its ecological destruction and politico-economic demise.

Any furtherance in the expansion of capitalism itself is self-defeating to humanity and has to be cleared of its excesses and excrescences. We believe that there is clear contradiction between the unlimited accumulation of capital and the preservation of society and mother earth.

Capitalism: Crisis to Crisis

1 INTRODUCTION

On the World Bank Malaysia Economic Monitor, June 2022, it highlights the incompleteness of task ahead in the political-economic state of nation. Post-Covid 19 pandemic, there is a continuing, and an increased, vulnerability among affected Malaysian households and businesses, basically, the relatively high levels of household and corporate debt. This comes about partly because there is insufficient higher inflow of foreign direct investments to stimulate a laggard economy as was during the 1970s boom :

Foreign Direct Investment (FDI) in Malaysia registered higher net inflow of **RM$48.1 billion in 2021** as compared to RM$13.3 billion in the previous year; the services sector, accounting for almost 43% of total FDI inflow followed by the manufacturing sector, which makes up less than 43% of total FDI inflow (*theedgemarkets* 4 March 2022).

Then, the reality of foreign direct investments has changed from importation of machineries to complete physical finished end-products to that of provision of soft elements in advisory or consultancy contents that requires less material and labour involvement.

With intermittently lockdowns under State of Emergency, political hucksters had only accentuated that wealth at the top of society, wallowing in ethnocapiral clientelship, ever more concentrated and consolidated. Whether it is installing lampposts following no open-tender procedure or by retaining the Jendela infrastructural platforms with broad exclusiveness or to fill the pockets of the chairperson and board members of FELDA Global Venture (FGV): the crisis in capitalism continues by cheating the Felda settlers again, see STORM, Felda to FGV: cultivators and capital.

2 POLICIES AND POLITICS

There is yet any defined – or executive determined – articulation of policies at this stage of economic recovery on ensuring sufficient social protection for lower-income groups to support an inclusive growth as rakyat2 have demanded, (GBM-CSO, Rakyat Manifesto 2021. The UNICEF 2020 Report had already indicated the persistence low income female-headed households are exceptionally vulnerable, with higher rates of unemployment at 32% compared to the total heads of households. Female headed households also registered lower rates of access to social protection, with 57% having no access compared to 52% of total heads of households.

It was reported recently that in the Federal Territories, at least 6,100 households are considered poor and 4,500 are hardcore poor, according to the National Poverty Data Bank System (eKasih). A poor household is one that earns less than RM$2,208 a month while the hardcore poor earns less than RM$1,169 monthly, (thestar, 4/04/2022). In fact, 20.0 per cent of households from the M40 group with income between RM4,850 and RM10,959 had dropped to the B40 group.

To be acknowledged that the national household debt-to-Gross Domestic Product (GDP) ratio had already surged to a new peak of 93.3% as at December 2020 from its previous record high of 87.5% in June 2020, according to Bank Negara Malaysia (BNM). The majority of urban low-income families are much more likely to be unemployed or have lower working hours with lower pay, and greater challenges in accessing healthcare.

The number of poor households had increased to 639.8 thousand households in 2020 as compared to 405.4 thousand households in 2019. Further, the incidence of **absolute poverty** had also increased from 5.6 per cent (2019) to **8.4 per cent**. *Source*: Department of Statistics, Malaysia, August 2021.

The second economic problems – even after +60 years of neocolonial economic development – that there are states, namely Kedah, Perlis, Kelantan, Sabah, and Sarawak, with the lowest average income and highest incidences of poverty, (World Bank Press Report “Catching Up: Inclusive Recovery & Growth for Lagging States”).

This uneven spatial economic landscape is the hallmark of development of underdevelopment much acutely felt in Sarawak and Sabah, even though “by allocating at least 50 percent of the government’s basic development expenditure, such as the construction of schools, hospitals, and roads,” as said by Dato’ Sri Mustapa Mohamed, Minister in the Prime Minister’s Department (Economy), these twin states are still lagging well behind since their incorporation into the formation of Malaysia in 1963. In 2020, the East Malaysian state of Sabah had the highest rate of poverty in Malaysia, with 25.3 percent of the population living below the poverty line. Sarawak is ranked third in having the highest number of poor families among all the states in Malaysia, despite Sarawak government’s reserves of RM$31 billion, whereby Sarawak is ‘a rich state with poor people’.

The third problem, inherent to weakened governance, lies with politicians being too fetish eye on their electoral fortunes and their endowed, and enduring, largess as parliamentary representatives. The third Prime Minister – post GE14 – Ismail Sabri Yaakob’s government is more focused on perpetuating its time in (and benefits therefrom) office, (Bridget Welsh, June 2022). It seems that there is little stomach for needed policy reviews and interventions, except an appetite to witness, hear and view the gouging of national assets by a past premier passing times :

that 1MDB in 2009 wanted the bank to accelerate a US$1 billion remittance for a 40% stake in a joint venture company (JVCo) known as 1MDB PetroSaudi Ltd because then prime minister Datuk Seri Najib Tun Razak wanted to………

3 THE CAPITALISM CRISIS

With globalisation, rentier capitalism compradores colluding with neo-imperial monopoly capitalism – connecting linkages in the global commodity chains – only accentuate wealth disparity with the working class.

That capitalism fails as a good model is evidently clear that in capitalism, it is not about human development but privately accumulated profits by a tiny minority of the population. The most important implication, in our country, is that although the middle 40 per cent and the bottom 50 per cent have had benefited in some ways from economic growth, the Bumiputera in the top income groups (the top 1 per cent and the 10 per cent) benefited the most, (see Khalid lse.blog, 2019) or about 40,000 ethnocapital political families running and looting –and ruining – the national economy. The undeniable fact as to why many bumiputera had not attained parity despite +60 years of neo-liberal-enforced economic development is the existence of a new class of compradore capitalist which – in the pursuance of capital accumulation – has aligned with monopoly-capital to exploit the nation’s resources, and to dash her economic development potentialities: from the early days of the Development Advisory Service Harvard (DASH) to the present Google/Microsoft alliance in the design, development and deployment of infrastructural platforms henceforth.

This thrust in the social hierarchy from a class of clientel capitalists is to reinforce capitalism as the economic development agenda, and financialization capitalism as pathway towards the widening accumulation of capital. The ensuing profit generated in companies, and the rent elements received by oligarchy individuals, inevitably perpetuate the extraction of outsized surplus values relative to capital “invested”.

Thus, it is not surprising that the absolute gap across income groups in Malaysia has increased, contributing to widespread perceptions of the poor being left behind: The top 20% of population – the T20 – possess 46.2% of the nationalincome share, while M40 have 37.4% of the national income share but the bottom 40% of population – the B40 – only get 16.4% of the national income share of wealth; see Khalid 2019.

The present unpleasantness on uneven economic development and unequal sharing of a common wealth owes, therefore, on one part to clientel capitalism (see James Chin, The Costs of Malay Supremacy, New York Times, Aug. 27, 2015) and, on another part, to the Burden of Privilege on the Malaysian Economy as articulated by Sudhave in 2021. This is correlated to the prematurely de-industrialisation in the 1990s. Deindustrialisation happens when there is a reduction in industrial activity or capacity, which Dr Jayant Menon – an Asian Development Bank (ADB) economist – said it was too early for Malaysia to have turned a major shift from manufacturing to the FIRE services (Finance, Insurance, Real Estates) because its manufacturing sector has yet to mature to a point where it could possibly achieve an advanced level of technological sophistication, and an educational ecosystem to support, and absolve to apply – with talented manpower – a transfer of technology strategy. The scarcity – and even inappropriateness of the national education system – of skilled workers have also been identified prevously, and in the present World Bank Report : one major impediment faced by these states is their lower levels of human capital development.……(whence) in the longer term, broadening access to quality education and skills training would raise the quality of human capital.

Throughout the1960-1970 era, the international concentration of capital invertibly had given birth to international monopoly-finance capital that ensues the emergence of financialization capitalism (see John Bellamy Foster, The Financialization of Accumulation, Monthly Review vol:62, issue 05 October 2010). Financialization capitalism becomes prominent because the transnational corporations (TNCs) were unable to find sufficient investment outlets for their huge economic surpluses from production, increasingly turn to speculation within the global financial sphere, (see John Bellamy Foster and Fred Magdoff, The Great Financial Crisis (New York: Monthly Review Press, 2009). Local capitalists were mersimerised, and so entrapped by financialisation capitalism attributes, especially in property development with its real estates investment trust (REIT) that even households had become financialized, (see Costas Lapavitsas, Financialised Capitalism: Crisis and Financial Expropriation, Historical Materialism 17 (2009), School of Oriental and African Studies, London and Costas Lapavitsas, The Era of Financialization, Part 3, TripleCrisis). In the country, financialization capitalism is engaging – and entangling – the political economy of Malaysia even during a Covid19 pandemic when such mode of capitalism is as contiguous as the virus itself.

It is capitalism – not competition between Malays and the other races – that is the source of our grave political-economic problems. The ethos of capitalism – from the forward movement during British colonialism to our present sluggish ruling regimes – is to insert clientel-capitalism to colonialise the minds of the unrepresented destitutes. This is capitalism at its heights to retain and sustain political power, immiserising countless land-settleless rakyat2 and urban destitutes. The capitalism in crisis would continue impoverishing the poors in order for capitalism, specifically ethnocapital clientel capitalism – with the political fabrication and construction that had rapidly metamorphosed into policy constructs in the 1970s (Lim Teck Ghee) ensuing as an economic entrenchment of the NEP construct (Woo 2015, James Chin 2016, KBN 2018, Khalid 2019, KRI 2020, Kua 2021 & Diam 2021) which clearly is divisive to the nation’s unity and sense of belonging – to exist and flourish.

Dr. Rashed Mustafa Sarwar, Representative for UNICEF in Malaysia, had once said the country must and should take opportunities created by the budget and within the 12th Malaysia Plan to rethink social protection in Malaysia “to ensure that no family, and no child, is left behind” (see Towards A Post-2020 Political Economy; REFSA April 2021; blogs.World Bank 2021; PSM 2021, For a better Malaysia; Re-examining Urban Poverty : 2-hour webinar organised by the Center for Market Education, Embassy of Belgium and Bait Al Amanah, KualaLumpur, 15/4/2021) and to better resolve the multidimensional multi-ethnic problems in the country.

Malaysia is at a crossroad in its politico-economic path. With fractious politics and a shrinking middle class, socio-economic conditions could become even more precarious because of the imminent stagflation risk arising amid sharp slowdown in growth accompanying accelerated inflation, (World Bank, Global Economic Prospects, June 7, 2022).

Malaysia ambition to become a leading edge in competitiveness is now well blunted with a stagnated economy, (Sudhdave 2020); that the economy direction needs to be changed, (Kamal Salih, 01/06/2022) because the Vision 2020 is already blinded, and betrayed (Jomo, 10/12/2020).

Financialisation Capitalism of Biodiversity

1 Financialization capitalism emerges during the 1970s and ’80s when corporations sought to hold onto and expand their growing economic surplus in the face of diminishing investment opportunities. The transnational corporations (TNCs) poured their massive accumulated capital surpluses into the financial structure, seeking – and obtaining rapid returns – from the securitization of all conceivably ascertainable future income streams. Increased concentration (“mergers and acquisitions”) and its attendant new debt, these securitizations representing the income stream of already-existing mortgages and consumer debt that piled new debt on old, and new issues of debt and equity that capitalized the potential future monopoly income of patent, copyright, and other intellectual property rights, all followed one another.

The financial sector provided every sort of financial instrument that could arguably be serviced by a putative income stream, including from the trading in financial instruments themselves. The result, as Magdoff and Sweezy already documented in the early stages of the process from the late 1970s to the ’90s, was a vast increase in the financial superstructure of the capitalist economy. This financialization of the economy had three major effects:

i) First, it served to further uncouple in space and time – though a complete uncoupling is impossible – the amassing of financial claims of wealth or “asset accumulation” from actual investment, that is, capital accumulation. This meant that the leading capitalist economies became characterized by a long-term amassing of financial wealth that exceeded the growth of the underlying economy (a phenomenon recently emphasized in a neoclassical vein by Thomas Piketty) – creating a more destabilized capitalist order in the center, manifested in the dramatic rise of debt as a share of GDP.

ii) Secondly, the financialization process became the major basis (together with the revolution in communications and digitalized technology) for a deepening and broadening of commodification throughout the globe, with the center economies no longer constituting to the same extent as before the global centers of industrial production and capital accumulation, but rather relying more and more on their role as the centers of financial control and asset accumulation. This was dependent on the capture of streams of commodity income throughout the world economy, including the increased commodification of other sectors – primarily services that were only partially commodified previously, such as communications, education, and health services, see STORM: Financialisation of Healthcare: Capital and Health Equities in Malaysia.

iii) The third point is the relevancy of Paul A. Baran and Paul M. Sweezy assertions in their Monopoly Capital (New York: Monthly Review Press, 1966), 107–8; and Paul M. Sweezy, “Obstacles to Economic Development,” in C.H. Feinstein, Socialism, Capitalism, and Economic Growth (Cambridge: Cambridge University Press, 1967), 194–95, to get the underlying rationality, and that is, “the financialization of the capital accumulation process,” as Sweezy called it, led to an enormous increase in the fragility of the entire capitalist world economy, which became dependent on the growth of the financial superstructure relative to its productive base, with the result that the system was increasingly prone to asset bubbles that periodically burst, threatening the stability of global capitalism as a whole – most recently in the Great Financial Crisis of 2007–2009, (GFC 2007).

**source**: Panoramic view from ‘*Tower of Heaven*‘ (Menara Kayangan) on Mount Silam over Darvel Bay, Lahad Datu District, Sabah, Malaysia. By Photo by CEphoto, Uwe Aranas, CC BY-SA 3.0, Link

2 Capital of Biodiversity Conservation is financialised when an corporate entity is entitled to the management and marketing of natural capital, including ecosystem services. It is the transformation to a higher level of monopoly-capitalism with global speculative finance since the Great Financial Crisis (GFC 2007). Financialization capitalism has then acquired real assets in the physical environment to underpin continuing debt expansion.¹ The transmutation of so-called natural capital into tradable exchange value over the last decade is seen as opening up almost unlimited opportunities for corporations and money managers. In 2012, the Corporate EcoForum, a group of twenty-four multinational corporations including Alcoa, Coca-Cola, Dell, Disney, Dow, Duke Energy, Nike, Unilever, and Weyerhaeuser, published The New Business Imperative: Valuing Natural Capital in conjunction with the Nature Conservancy,² insisting that the then “estimated $72 trillion of ‘free’ goods and services” associated with global natural capital and ecosystem services be monetized for the purpose of more sustainable growth.”

This report did emphasized the enormous debt “leverage” opportunities represented by “emerging natural capital markets such as water-quality trading, wetland banking and threatened species banking, and natural carbon sequestration.” As a result, it was imperative to “put a price on nature’s value,” or, stated differently, “a monetary value on what nature does for…businesses.” Thus, increasingly, the future of the capitalist economy has laid bare “in ensuring that the market pay for once-free ecosystem services,” which could thereby generate new economic value for those corporations able to convert titles to natural capital into financial assets, (Corporate Eco Forum and the Nature Conservancy, The New Business Imperative: Valuing Natural Capital (Corporate Eco Forum, the Nature Conservancy, 2012).

As indicated in a Credit Suisse’s 2016 report, Levering Ecosystems, conservation finance is becoming increasingly reliant on debt financing, based on expectations of rapidly growing revenue from natural capital.³ Such approaches rely, in the first place, on the notion of the “innate power of capital” (what Marx called “the fetish character of capital”), coupled with a recognition of the increasing scarcity of natural capital, allowing for the widening of the circuit of exchange value to all ecosystem services. The financial goal in these circumstances is to “monetise ecological credits,” generating a “blended return” from natural capital management “that can be astronomical.”⁴ The ultimate result, however, is to impose a system geared to economic growth and debt expansion on top of natural systems, which are physically limited, and where the crucial conditions are those of reproduction and sustainability.

3 The Sabah Foundation Carbon Sensation broke out when Adrian Lasimbang – a senator in the Malaysian Parliament -asked whether the state foundation was consulted before being named as the local implementor of a carbon exchange deal with a transnational monopoly-capital to sell its natural capital of the Sabah forestry to other investors without governmental consent. The Natural Conservation Agreement between the Sabah government and Hoch Standard was brokered by the Australian consulting firm Tierra Australia, specializing in the financialization of natural capital, is to be a century-long concession of a million hectares of forest, to be managed on a sustained yield basis. On October 28, 2021, political leaders in the Malaysian state of Sabah on the island of Borneo signed an agreement with the Singapore shell company Hoch Standard, without the knowledge of Indigenous communities, giving the company title to the management and marketing of “natural capital/ecosystem services” on two million hectares of a forest ecosystem for one hundred to two hundred years.

Owing to outreach campaigns by non-government organisations, it was later reported in February 2022 the attorney general of the Malaysian state of Sabah has said that a contentious deal for the right to sell credits for carbon and other natural capital will not come into force unless certain provisions are met.

4 Capital accumulation from the rights to ecosystem services, such as water provisioning, carbon sequestration, sustainable forestry, and biodiversity conservation, over the next century was estimated at some $80 billion, with 30 percent, or $24 billion, not only going to Hoch Standard, but the rights of the Sabah indigenous community is being marginalised. Peter Burgess, CEO of Tierra Australia, has defended the exclusion of Indigenous peoples from the agreement on the neocolonial, racist basis that if it were necessary to “sit around every campfire” talking to Indigenous peoples about the “jungles” they happen to live in, nothing at all would be accomplished. Just as paternalistic as neo-imperialist of present, when negotiating with the national petroleum agency Petronas, it was reportedly stated by one TNC oilman, “I don’t think I am being unkind in saying that they (PETRONAS) would not know the difference between an olefin and a chocolate bar”.

According to Burgess, the Indigenous communities of whicy there are thirty-nine Orang Asal groups in the forest reserves of Sabah, making up a population of more than twenty-five thousand – “actually don’t know that their jungles…are going to be conserved for 200 years” by the agreement, which is aimed at “restoring [their] jungles,” providing benefits so as to “uplift” them, “bringing them back into normal society.”

Tierra Australia is closely connected to major multinational banks in the capitalist core, such as Credit Suisse and HSBC, along with major Singapore Banks, all of which have been heavily involved in investments in natural capital. It has partnered with Hoch Standard, along with Harvard, the Massachusetts Institute of Technology, and Cornell, in devising natural capital platforms for private investment.⁵ The two chief promoters of the Sabah-Hoch Standard deal were Stan Lassa Golokin, signing for Hoch Standard, and Jeffrey Kitingan, representing the Sabah government. Golokin is a business partner of Burgess at Tierra Australia and is linked to eleven companies registered in the British Virgin Islands. He was listed as an associate of four companies included in the Panama Papers, a leaked database on global elite financial dealings.

Kitingan is second deputy chief minister and state agricultural and fisheries minister in Sabah and was a witness to the signing of the agreement by Frederick Kugan, Sabah’s chief conservator of forests. Kitingan has emerged as the main defender of the deal within the Sabah government. In the 1980s and ’90s, both Kitingan and Golokin were involved in the Sabah Foundation, which was given a century-long concession to a million hectares of forest, to be managed on a sustained yield basis. Kitingan was director of the Sabah Foundation while Golokin was group general manager of a holding company for the Sabah Foundation’s commercial assets. As evidence of the extraordinary corruption at the time, some $1.6 billion in timber rent went missing under their management, while Kitingan’s personal wealth during his nine years as director of the foundation rose suddenly to $1 billion. During the same period, Kitingan’s brother was chief minister of Sabah.⁶

5 Ecological-Economic in a world of geoeconomic sphere cannot be separated from the geopolitical dimension, (see a previous posting, EXISTENTIAL ECOLOGICAL EXTINCTIONS); more so when US imperialism has once played a major role in Sabah history passed. Sabah – the former British protectorate in North Borneo was once under the sovereign of the North Borneo Chartered Company from 1882 to 1941; from 1946 to 1963, this state was turned into a Crown Colony of Great Britain that was regarded as the British North Borneo Crown, too.

In 1865, Charles Lee Moses (US Consul to Brunei) obtained a 10-year lease on some parts of North Borneo from the Sultan of Brunei, but later sold his rights to the Hong Kong-based American Trading Company of Borneo owned by foreign capitalists and Chinese mercantilists like one Tat Cheong. However, the rakyat-rakyat was against the colonial taxes and the loss of land to European plantation landlords, and a resistance war (1894-1900) was mounted by Mat Salleh. There was even the Rundum Uprising by the Murut community in 1915.

The rentier-clienteliship of ethnocapitalism continues – modified to a new formation of capitalism but still bears the mark of unceasingly expropriation – and through sheer exploitation of labour surplus value – lit the FIRE (financial interests and real estate amortisations) in extractive capital accumulation without a dose of socialism consciousness.

List of References

1 “The Growing Case for Conservation Finance,” Environmental Finance, April 6, 2017; World Rainforest Movement, “Growing Speculation: From the Appropriation and Commodification to the Financialization of Nature,” Monthly Bulletin 181, August 30, 2012; Philip Seufert, Roman Herre, Sofia Monsalva, and Shalmali Guttal, eds., Rogue Capitalism and the Financialization of Territories and Nature (Fian International, Transnational Institute, and Focus on the Global South, 2020). On the Great Financial Crisis, see John Bellamy Foster and Fred Magdoff, The Great Financial Crisis (New York: Monthly Review Press, 2009). On the failure of the 2009 climate negotiations in Copenhagen, see Naomi Klein, This Changes Everything (New York: Simon and Schuster, 2014), 8–15.

2 John Bellamy Foster, The Defense of Nature Resisting the Financialization of the Earth, Monthly Review, 01/04/2022.

3 Credit Suisse, Levering Ecosystems (Zürich: Credit Suisse, 2016).

4 “The Growing Case for Conservation Finance.”

5 As Herman Daly notes, “the term ‘natural capital’ was introduced in opposition to ‘financial capital,’ not as an extension of it, or advocacy for ‘monetizing nature.’” Herman Daly, “Contribution to GTI Roundtable “Monetizing Nature,’” Great Transition Initiative, August 2014. For a historically based critique of the concept of natural capital, see John Bellamy Foster, “Nature as a Mode of Accumulation,” Monthly Review 73, no. 10 (March 2022): 1–24.

6 Chris Lang, “Whistleblower on Sabah’s Nature Conservation Agreement: ‘An Obvious Con,’” REDD-Monitor, February 7, 2022.

EXISTENTIAL ECOLOGICAL EXTINCTION

1. CLIENTEL CAPITALISM in collusion with STATE GOVERNMENTS

At the Parliament’s first session in 2022, the National Forestry Act 1984 was amended to make public consultations on any proposed forest degazetting exercise mandatory.

A] Yet an ecological existential threat has arisen because the Malaysian Islamic Party (Parti Islam Se-Malaysia) PAS-led Kelantan state government has allowed logging in the Nenggiri permanent forest reserve in Gua Musang without such prior public consultations.

It needs to be that many of the logged trees in the 292ha of special forest reserve, gazetted as virgin jungle under the National Forestry Act 1984, are the merbau species which are valued at RM4,000 per log. An estimate of such illegal logging activities would likely ensure RM7 million in profits to the pockets of clientel capitalism.

The Kelantan state government had, in fact, suspended a certification requirement that would have compelled logging companies to meet sustainable forest management standards since 2016, according to an eco-activist NGO: Sahabat Alam.

The environmental watchdog said the PAS led administration had put a stop to the ‘Malaysian Criteria and Indicators for Sustainable Forest Management’ (MC&I) indefinitely for six years now, a policy that casts serious doubts over its forest conservation pledge.

The MCI, a programme under the Malaysian Timber Certification System for six years, was introduced as a way to bind logging firms to sustainable practices by reserving licences for those that meet the certification standards.

“If the Kelantan government is genuinely committed to ensure all permanent forest reserves are managed under the Sustainable Forest Management (PHSB) and meeting the annual logging quota target, then why is the MC suspended by the Kelantan Forest Management Unit since 2016?” Meor Razak Meor Abdul Rahman, an activist with the group, asked.

“Was the certification by the Kelantan UPH suspended because they have transgressed the logging quota and raised monoculture farms in forest reserves that are supposed to practice selective management system (SMS)”

B] Not forgetting that Nenggiri is also facing the construction of a RM$5 billion hydroelectric power plant which the local Orang Asli villagers have protested for fear of losing their ancestral land.
The villagers are concerned the dam, slated to be developed at Mukim Ulu Nenggiri, would submerge four Orang Asli settlements as well as inundate 5,384ha of forest land.

Indeed, one hundred villagers had submitted a memorandum to the Prime Minister’s Office amid their concerns, while Tenaga Nasional Berhad had vowed to address the issues raised.

C] Similarly, massive forest conversions are occurring in Pahang, peninsular Malaysia, second only to Kelantan in magnitude, raising the concurrent issue of the possible abuse of the environmental impact assessment (EIA) process when Big Farms’ plantation companies are dividing the size of their projects to not exceed 500 hectares. This practice, by permitting monoculture plantation project between 100 and 500 hectares in size, the EIA process would be bypassed as it does not require mandatory public consultation, (malaysiakini, March 22 2022).

D] Then, there is the emerging issue of illegal gold mining activities in the Tersang Forest Reserve in Raub located in Ulu Renggol, at the heart of Pahang forest reserve. The Pahang Forestry Department director had not deny that an experienced gold mining syndicate likely behind the illegal activities.

Peninsular Malaysia will see deforestation amounting to a minimum of 72,584.73ha in the near future, says an environmental group. This is about three times the size of Kuala Lumpur or nearly the size of Singapore.

E] A total of 1,547 lots of land in Kelantan needed for phase one of the East Coast Rail Link (ECRL) project have been acquired and gazetted under Section 8 of the Land Acquisition Act 1960, said energy and natural resources minister Takiyuddin Hassan, malaysiakini 17/06/2022.

He said the land acquisition in the districts of Kota Bharu, Machang, Bachok and Pasir Puteh were undertaken by the department of the director general of lands and mines (JKPTG) of Kelantan.

The expansive degradation of Malaysian natural resources is not a mere plot of deforestation, but a continuous extension of its neoliberalism economic expression to support capitalism in an alignment connecting to neo-imperialism monopoly-capital domination.

Neither is an attempt to avoid the EIA process a new matter. State and Federal governments have to be held responsible in failing to ensure that such manipulation does not take place. That it exists is because increasingly fewer hands (belonging to clientel capital for instance, and ethnocapital specifically with its dominance on economic affairs and activities – assuming entitled positions – that enforce political power to redefine economic dominance) that are incapable of balancing the needs of profit with the genuine needs of society as a whole; read STORM, PLACE POSITION POWER – A CLASS ANALYSIS OF ETHNOCAPITAL RELATIONSHIP, April 2021.

The whole spectre of development of underdevelopment can, therefore, be discerned in the relentless, and irreversible, Global North intrusion into our land to exploit, and disfigured, our pristine environment – whether it is the Lynas case, the gold mine in Pahang or copper mining in Sabah, and meanwhile, taking everyone for a ride along the Borneo Highway.

On Malaysian **ponds of kleptocracy illegal activities**, it is not that difficult to find **clientel capitalism** submerged underneath every lump of fertile soil.

2. EXTENSIVE ECOLOGICAL EXPLOITATION

While we try to move forward to amend the forestry law to enforce mandatory consultations, at the same time, our existing consultation spaces are being circumvented through sheer capitalism encroachment,influence and manipulation.

The existing Ecological-Epidemiological-Economic crisis can be related to “the global ecological rift,” where the disruption and destabilization of the human relationship to nature on a planetary scale, emerging from the process of capital accumulation without end, (Foster, Clark, and York, The Ecological Rift, 14–15, 18). In The Return of Nature, Foster has explored how socialist analysts and materialist scientists of various disciplines, first in Britain, then the United States, from William Morris and Frederick Engels to Joseph Needham, Rachel Carson, and Stephen Jay Gould, sought to develop a dialectical naturalism, rooted in a critique of capitalism. In the process, Forster delivers a far-reaching and the fascinating exploration in reinterpretation of the radical and socialist origins of ecology.

This argument is reinforced by Japanese Marxist-author, Kohei Saito who has shown from researching on Marx-Engels Gesamtausgabe (MEGA) Volume IV/18, that the nature-human interaction and Marx pointed critique of the ecological harm produced by capital accumulation. This concept of ‘metabolic rift’ (Stoffwechsel) lies in the understanding on circulation of soil nutrients between countryside and town thereby contributing to human disharmonies from the natural world, (Kohei Saito).

It is in this context that Marx’s central concepts of the “universal metabolism of nature,” “social metabolism,” and the metabolic “rift” have come to define his critical-ecological worldview, (Karl Marx, Capital, vol. 3, London: Penguin, 1981), 949; Marx and Engels, Collected Works, vol. 30, 54–66).

The totality of ecological Marxism elsewhere: in China as explained by Zhihe Wang and expanded by Zhihe Wang, Huili He and Meijun Fan; and the extension to Iran with Persi interest in John Bellamy Foster’s The Ecological Revolution: Making Peace with the Planet bears witness to a need in this country of that rising consciousness in preserving our Mother Earth.

3. EXISTENTIAL ECOLOGICAL EXTINCTION

Since implementation of the enthnocratically-administrative National Economic Policy in 1970, (Navaratnam 2020, Zainuddin 2019, Jomo 2005,) succeeding kleptocractic regimes had continued maintaining a clientel ethnocapitalism domain over the working class rakyat2 with 1% of the bumiputera population of about 40,000 ethnocapital families of the ruling class running and looting – and ruining – the national economy in alliance with Global North monopoly-capital.

In reality, Global North monopoly-capital investment in Global South is little more than a collaborating strategy for profiting on planetary destruction.

“Agribusinesses,” Rob Wallace writes, “are moving their companies into the Global South to take advantage of cheap labor and cheap land,” and “spreading their entire production line across the world.”

For instance, soy has become one of the world’s most important agroindustrial commodities – serving as the nexus for the production of food, animal feed, fuel and hundreds of industrial products – and South America has become its leading production region. However, the soy boom on this continent entangles transnational capital and commodity flows and disrupted social relations deeply in contested ecologies and economies, see The Journal of Peasant Studies Soy Production in South America: Globalization and New Agroindustrial Landscapes and John Wilkinson, The Globalization of Agribusiness and Developing World Food Systems, Monthly Review, Sep 01, 2009.

The outcome is that, for instance, prominent transnationals have had an important presence in the Brazilian agrifood industry since its birth; players that include: Nestlé, Unilever, Anderson Clayton, Corn Products Company, Dreyfus, and the Argentine transnational Bunge y Borne (now simply Bunge). They were later followed, as different markets matured, by Kraft, Nabisco, General Foods, and Cargill from the United States, and United Biscuits, Bongrain, Danone, Parmalat, and Carrefour from Europe.

The consequences are that uneven and often uncoordinated foray of metropolitan corporate capital is subjugating the agriculture and domestic food markets of many developing countries, particularly smaller, peripheral ones undergoing rapid urbanization, to the needs of global agribusiness monopoly-capital.

Indeed, it seems the Brazilian government remains firm in its objective of handing over indigenous lands, which make up 12% of Brazilian territory, to private hands, preferably agribusiness and mining. In other words: it is not enough to steal, it has to destroy. Since he took office, Jair Bolsonaro has accumulated a long history of attacks on indigenous peoples with the argument that they do not offer any benefit to society, so they have to be “integrated” to become workers. With that logic, the government dismantled the Funai (the body that should protect the indigenous people) and has turned a blind eye to all the attacks by grileiros (landowners thanks to false documents), jagunços (gunmen) and fazendeiros (landowners) on indigenous lands. The clandestine mining continues at full steam.

Munduruku people gather along the Tapajós River to protest a proposed dam on Nov. 27, 2014, in Pará, Brazil.“*We are protecting our land and the life on it. We have to preserve this life for our children’s future.*”

Similarly, in our country, for every far-sighted decision that has been made in previous years that can ensure the greater protection of forests, there had been contradictory direction leading to further forestry degradation and forest destruction.

In the past years, we witnessed, and many rakyat2 had experienced, floods, landslides, logjams and mudflows, in particular during monsoon seasons. From rural Kedah to rural Pahang, across urban parts of Selangor and the suburbans of Negeri Sembilan, these natural disasters have their roots in rampant deforestation and the failure in appropriate economic development planning. If state governments continue to allow forest conversions despite our international commitments on forests, biodiversity and climate change; and Big Farms elements of the plantation sector continue to disrespect the law and community rights, how can international climate funds be sufficient to protect us from future climate impacts – and the imminent existential ecological extinction in our tanah-ku?

EPILOGUE

Inherent to capitalism is inequality, social exclusion and environmental degradation by abuses to the soil as much as it exploits the worker. Under the Global North domain, with monopoly-capital supporting repressive states in Global South, the transnational corporations are applying destructive patterns of resource extraction to perpetuated their neo-imperialism domination indefinitely.

Bibliographies

LH Aun, Fifty Years of Malaysia’s New Economic Policy, ISEAS-Yusof 2021, Singapore

James Chin, ‘NEW’ MALAYSIA: FOUR KEY CHALLENGES IN THE NEAR TERM, Lowly Institute 2019, Australia

Edmund Terence Gomez, New Economic Policy @50: Looking back and forward, Economic History of Malaya: Asia-Eutope Institute 2022

KS Jomo, The New Economic Policy and Interethnic Relations in Malaysia, United Nations Research Institute for Social Development 2004

Lim Teck Ghee, Deconstructing the bumiputera construct, malaysiakini March 11 2021

Capitalism, Capital Accumulation and Clientele Capitalism

1 INTRODUCTION

Since the premature de-industrialisation beginning in 1990s, and the insurgence of financialization capitalism with state-incorporated capital in GLCs (government-linked companies) as majority intermediaries in the transnational corporations (TNCs) global monopoly-capital supply chain, there is a change from the export-oriented anchor to one of domestic-generated economy where domestic demand growing – since 2011- at a compounded annual growth rate of 9.1%, contributing a signiﬁcant 74% of GDP growth. With this economic development approach, the state corporations have enthrusted with, and encasted in, rentier capitalism being pervasive in the economic activities of compradore capital enterprises.

The circuitry of capitalism is facilitated with GLCs and or local compradore capital as the intermediary to collude and conclude transactions between monopoly-capital of the Global North and the nation’s ethnocapital as representative in the Global South.

A monopoly-capital enterprise is usually a Global North transnational corporation (TNC) suiting in a new format of imperialism through financialization capitalism which collaborates with local compradore capital in the Global South while exploiting workers through the arbitrage of labour in depriving rakyat2 of their earned dues as a human producer.

Ethnocapital is a (malay) bumiputra owned and controlled entity performing under a rentier or clientel capitalism as a public agency, a government-linked company (GLC) or as a government-linked investment corporation (GLIC), and it can also be a privatised and or commercial enterprise like Pharmanagia or a telecommunications service provider like TM, the digital knight as an intermediary to the throne of Global North-dominated infrastructural platforms.

Capitalism is driven by the determined goal of enterprises for ever-greater accumulation of capital through an increase in the value and a return on that investment, whether as or part of appreciation, rent, capital gains or interest.

2. CONSEQUENCY OF COMPRADORE CAPITAL WITH MONOPOLY CAPITAL

The principles of economic development includes a theory of value and distribution and a theory of accumulation on a world scale. Emmanuel’s theory of unequal exchange has explained the general character of the process of uneven development of the capitalist countries and backward economies which surround the capitalist world. In this way, Emmanuel’s theory of unequal exchange as inseparably linked to the original economic insights of Prebish, Singer, Lewis and Baron on trade and development.

It is “by transferring through non-equivalent exchange, a large part of its surplus to the rich countries, the periphery deprives itself of the means of accumulation and growth.” Thus, an important implication of Emmanuel’s Unequal Exchange theory – in the application of unequal exchange characterises the trade relation between the centre (Global North) and periphery (Global South consisting of developing countries or newly emerging countries) – that a widening wage gap leads to a deterioration of the periphery’s terms of trade, and a subsequent reduction in its rate of economic growth.

Broadly, the unequal exchange occurs due to differences in the organic composition of capital. This type of unequal exchange can also exist within a country if there are differences in the organic composites of capital among sectors. In Malaysia case, the share of the TNCs together with the political-endowed clientelship in GLCS constitute the major ownership and control of a national economy. This block of capital, the likes of Digi, Nestles and British American Tobacco are, by market capitalisation, leading the list of foreign companies that dominate local businesses nowadays, see STORM 2021, Dominance of Financial-Monopoly Capitalism, whereas the GLCs and GLICs (government-linked investment corporations) controlled 68% of the Kuala Luimpur Stock Exchange: commanding more than RM$440billion in total assets. Further, this overwhelming overall control of government agencies and state corporations is connected to the Prime Minister Department and the Ministry of Finance :

**Capitalism State Corporations**, *newleftmalaysia* 30th November 2021

The second premise of uneven, and unequal, economic development, rests on ‘the inequality of wages as such, all other things being equal, is alone the cause of the inequality of exchange.’

In a world capitalist system consisting of the centre (A) and periphery (B) consisting of collaborating partners, unequal exchange is defined as the difference (d) between the Marxist product prices and values:

di = Pi – ti ; i = A, B

A positive ‘d’ denotes a surplus gain for exporters, while a negative ‘d’ denotes a surplus loss.

If there is a surplus extracted, thus a surplus loss because

(i) owing to international capital mobility, there exists a single worldwide profit rate;

(ii) owing to immobility of labour from the periphery to the centre, there exists a wage gap between the two areas.

(iii) The wage rate is an independent variate.

Based on these assumptions, that unequal exchange depends on a country’s rate of surplus value and on its organic composition of capital (that is, the ratio of fixed to variable capital):

machinery used in production would be considered **fixed capital**; whereas **variable capital** is the cost and level of which *change over time*, and with the *scale of a company’s output*.

Three Definitions:

To reinterate, there will be surplus gain through trade where the world average rate of surplus value exceeds the individual rate.

The periphery (countries in the Global South) tends to transfer surplus through trade because its rate of surplus value is higher than the world average due to an international wage gap, which favours workers in the centre (the Global North). Therefore, even if the organic composites of capital are equalised, unequal exchange results from the existence of a wage gap between the centre and the periphery.

This gets reflected in the fact that the rate of surplus value is lower in the centre (due to higher wage) than is the periphery (where the wage rate is much lower) as the rate of surplus value can be expressed as

where, w = the wage rate, q = output, w = wL = total wage bill, p = price of product. Here we derive that 1 unit of labour is required to produce 1 unit of output therefore q = L. Thus we get

This is visualised demonstratively by the presentation of wage component of an earlier generation of a Apple’s manufacture as:

where labour cost in China is *one-quarter* of US labour cost, and constitutes just 1.6% of product sales price.

The high profit margin is due to the gain associated in the global value chain process, see STORM, GLOBAL LABOUR ARBITRAGE IN GLOBAL VALUE CHAINS, 6th June, 2021.

The third element lies in the fact that not only considerable profit margins for the transnational corporations leading to the amassing of wealth in the Global North centre in a transactional unequal exchange process of profiting through and by sheer exploitation of resources, but also a reality that it is not uncommon for TNCs to advocate alternative assembly sites or state departure from invested country. Indeed, recently Apple had asked its major suppliers to evaluate the cost implications of shifting 15-30% of their production capacity from China to Southeast Asia as reported by Li, K, and T Cheng , “Apple weighs 15%-30% capacity shift out of China amid trade war”, Nikkei Asian Review, 19 June, 2019, and also due to the changing dynamics of global value chain analysis as illustrated by Yuqing Xing in Decoding China’s Export Miracle, April 2021.

The fourth factor is that contemporary imperialism has a new face and direction (Suwandi, Jonna and Foster, 2019) with global monopolies capturing the value generated by labour in the periphery on an unequal exchange basis. Labour has to be organised to fight for its rights; read further : STORM, UNEQUAL BASKING IN UNION BUSTING, 1st June, 2021.

The fifth dynamics are the employment, and the related labour productivity factors that have contributed to capitalism dilemma, and the continuing clientel capitalism crisis which has a class-based narrative within.

Increasingly, as the national economy is dependent on its domestic productions, duly the circuitry of capital is now tightly linked to GLCs’ appropriate performance. The acute processes demanded is connected tightly to their supply chains of transnational corporations’ monopoly-capital. On one side, MIDA (the Malaysia Investment Development Authority) has noted that foreign direct investments (FDI) 2021 contributed RM27.8 billion (65%) of total approved investments, while domestic direct investments (DDI) accounted for RM$15 billion (35%); the top five sources of FDIs are Germany (RM$8.9 billion), followed by Brunei (RM$5.1 billion), the US (RM$3.9 billion), Hong Kong (RM$3.3 billion) and Japan (RM$3.2 billion); the latter had decreased substantially since the 1970s, (theedgemarkets 14/06/2022).

However, the approved investments for this period have created only 24,906 new jobs in the country not unlike in the 1970s industrialisation initiatives that the uneven labour employment as can be seen in the Second Malaysia Plan, 1971-1975, where it had proposed that 22% of the 495,000 new jobs to be created in peninsular Malaysia would be in the manufacturing sector. This means a three folds increase in employment in the manufacturing sector from the 1960 figure of 121,000 to 378,000 by 1975. Past performance had shown that the low employment absorption capacity in the manufacturing sector, especially in the pioneer companies; in fact, the manufacturing sector provided only 5,500 new jobs per year during 1966/67,(Lo Sum-Yee, The Development Performance of West Malaysia, 1955-1967, with special reference to the industrial sector, Heinemann, Kuala Lumpur, 1972, Chapter 7, pp.66-73 and E.L. Wheelwright, Industrialisation in Malaysia, University of Melbourne Press, 1965, Chapter 4, pp.62-70).

Furthermore, it has to be said often than not, there is this ‘stalling’ effect – when there might be MOUs between enterprises but no ramping up or even the temporarily or complete closure of factories – of the many Malaysian industrial projects that could have weakened workers employment, (Jeffrey Henderson et. al., Capitalism and Industrialization in Malaysia in Economy and Society, Volume 36, 2007 – Issue 1).

Then, the issue of unemployment, or even the contending issue of ‘unemployables’ due to graduad mismatched between educational institutions and the private sector. Already the civil service is stuffed with unproductive staff especially as it constitutes 1 in 5 labour in the country.

The various World Bank, IMF and UNICEF reports have dissected the various inadequacies in the labour market to which, on a refreshing, here are those persistent problems:

i) Compared to many other countries that have graduated from middle-income status, Malaysia has a lower share of employment at high skill levels and higher levels of inequality;

ii) There is a growing sense that despite economic growth, the aspirations of Malaysia’s middle-class are not being met and that the economy did not produced enough well-paying and sufficient high-quality jobs. There is a widespread sense that the proceeds of growth have not been equitably shared and that increases in the cost-of-living are outstripping incomes, especially in urban areas, where three-fourths of Malaysians reside. The UNICEF 2020 Report has shown that low income female-headed households are exceptionally vulnerable;

iii) The country shall, increasingly, need to depend upon more knowledge-intensive and productivity-driven growth, closer to the technological frontier and with a greater emphasis on achieving inclusive and sustainable development;

iv) According to the World Bank’s Human Capital Index, Malaysia ranks 55th out of 157 countries. To fully realize its human potential and fulfil the country’s aspiration of achieving the high-income and developed country status, Malaysia will need to advance further in education, health and nutrition, and social protection outcomes;

v) Key priority areas include enhancing the quality of schooling to improve learning outcomes, rethinking nutritional interventions to reduce childhood stunting, and providing adequate social welfare protection for household investments in human capital formation.

[ Key issues towards higher growth rate may be previewed in a STORM, May 2021 paper ]

There is emerging discourse on a sixth dimension that was not pointed out during the covid-19 pandemic because of then extraordinary implementation of ordnanced lock-downs that limited young Malaysians seeking for jobs (and even among migrant labour).

This, along with a number of public policy presentations, indicates that many governments did not conduct the costs and benefits analysis before imposing lockdowns upon the general population and closing of the economy: what were the collateral health effects from a lockdown?, and the related question of what would be the financial effects to families? and, also whar are the aggregate economic effects of such lockdowns? All these uncertainties appear to have not been examined appropriately, and again, appeared to have been even neglected by relevant financial institutions and other government agencies during the three succeeding governments, post-Sheraton (ISEAS, April 27, 2022) political maneuvers (Asia Times, February 24, 2021).

3. UNEQUAL EXCHANGE UNEVEN DEVELOPMENT

The consequences are that the Malaysian economy is in a bad shape and rakyat2 are understandably seeking solutions. Many, confrounded by capitalism crisis after crisis to believe succeeding ruling regimes’ policies through the last six decades had not completely execute the recommended proposals – even by such neoliberal entities consultancy like the Development Advisory Service Harvard (DASH) or the World Bamk/IMF twin – that structural decadence in our economy not only remains, but persisted.

On one plane, taking a flight to financialization capitalism had enabled a core of rentier capital to suck in the FIRE (extracting inappropriate surplus values from working rakyat2 through financial interests, insurance premiums and real-estate amortisations). It also signifies, unequivocally, that this clientel capital cohort are maximising capital accumumulation through a hive of rent-seeking economic activities across various sectors of the economy – from plantations to petroleum, (STORM, Rentier Capitalism in Accumulation, 22/01/2021).

Then, to the despaired disadvantages of Malaysian workers, is the role of clientelship capitalism that had inserted into the monopoly-capital supply chain in an age of new economic imperialism, (Suwandi, 2018). Corporate capital in the small manufacturing enterprises (SMEs) collaborates with Global North to tighten the commodity supply chain with monopoly-capital with M&E vendors like AIDA, SKF, Cohu, VAT, Oerlikon Balzers, Favelle Favco, Bromma, Vitrox, etc. The recent banning of unprocessed chickens to Singapore, but later the embargo was lifted only points to the vested and connected supply chains of clientelship in the ethnocapital political-economy. Similar incidents, in the past and presently, on the import of halal beef also displayed the close collusion between clientel capitalism and monopoly-capital in their corrupted collaboration to extract surplus value.

Succeeding oligarchy regimes had continued maintaining a clientel ethnocapitalism domitnation over the working class rakyat2 with 1% of the bumiputera population (see Khalid lse.blog, 2019) or about 40,000 ethnocapital political families running and looting –and ruining – the national economy. The undeniable fact as to why many bumiputera had not attained parity despite +60 years of neo-liberal-enforced economic development is the existence of a new class of compradore capitalist which – in the pursuance of capitalism expropriation – has aligned with monopoly-capital to exploit the nation’s resources, and to underdevelop her economic development potentialities.

Rentier capitalism, therefore needs be underscored as part of political clientelism where over time, “citizens came to expect and rely on patron-client relationships, nested within party machines, albeit reinforced by carefully structured distributive and development policies”, (Meredith L. Weiss, The Roots of Resilience: Party Machines and Grassroots Politics in Southeast Asia, Cornell University Press and the National University of Singapore Press, 2020, p.76), where clientelism is the feature of Malaysian politics, fostered forcefully by the BN and UMNO ruling elites, whence even opposition parties had began to replicate that behaviour, too.The central outcome of such rentier capitalism is introduction of economic inequality and injustice in the country thus deepening the class power struggle within.

In a sense, the ruling class is part of a kleptocractic governance. An ethnocratic governance is where representatives of an ethnic group is holding a disproportionately large number of public posts to advance their ethnic group to the disfranchisement of others, (see Winter, J.A., Oligarchy, Cambridge University Press, 2011 and Wade, G., The Origins and Evolution of Ethnocracy in Malaysia, Asia Research Institute, National University of Singapore, Working Paper Series 112, April 2009).

Oligarchy in Malaysia consists of wealthy individuals and unmeritorious groups with political influence and/or economic power who construct public policies primarily to benefit themselves financially whether through direct subsidies to their agricultural estates (for examples, FGVH and Rimbunan Hijau, Cahaya Mata Sarawak Berhad), business firms (YTL, NAZA, the Petra Group and Ananda Krishnan conglomerates), lucrative government contracts (UEM-Sunrise, Gamuda), and protectionist measures (as Sapura-Kencana in the oil and gas sector) while displaying no concern for the marginalized Malaysian.

They – as conduits to Global North monopoly-capital and intermediaries to compradore capital varied supply chains – are pure and unadulterated rentier capitalists.

The rentier capitalism ecosystem is dominated by a few wealthy companies and individuals with amble access to key scarce assets (such as land, natural resources, financial means, licences, intellectual properties and digital platforms) and, in doing so, siphoning national wealth without societal care nor contributions to rakyat2 wholesome wellbeing.

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Ethnocapital Capitalism Crisis in Calamity

10th June 2022

“Pagar makan padi”

a betrayal of trust

where the fences have been the rice crops

INTRODUCTION

To critically indicate the defects in the New Economic Policy (NEP), one needs to probe the economics of ethnocapital, and understand the binding frameworks of capitalism, monopoly-capitalism, ethnocapitalism and the class structures that surround these parameters especially when the eradication poverty initiative – regardless of race – is a faulted policy based on a false promise.

Capitalism is the determined goal of businesses to greater accumulation of capital by increasing the value and a return on that capital asset through appreciation, rent, capital gains or interest.

The circuitry of capitalism is facilitated with monopoly-capital as the intermediary to collude and conclude transactions between capital and the ethnocapital.

A monopoly-capital enterprise is usually a Global North transnational corporation (TNC) serving a new format of imperialismu through financialization capitalism which collaborate with local compradore capital in the Global South while exploiting workers through the arbitrage of labour in depriving rakyat2 of their earned dues as a human producer.

From Capitalism in Crisis: Ethnocapital and Class, we have presented a macro-level overall view of ethnocratic regimes where ethnocapital is colluding with Global North monopoly-capital in depriving Global South counties of their due and fair exchanges in international trade. This article shall assess the problems on bumis‘ wealth and equity status that exist in the midst of operation of a transnational, corporate-shaped, capital-monopoly production system whereby Malaysia serves as the region’s assembly platform to service the financial capitalism in the Global North, but more importantly, it is to highlight the operational effect of such procedural activities and the consequential rent-seeking ethos effects had on racial equality and wealth equity in nation-building.

Many shall visualise a feasible, and viable, solution to the problem of wealth inequalities is to enlarge the economic pie, but persistently unfortunate is that members of the political elite are makan kueh itu (eating the cake), too, leaving rakyat2 to scramble for scraps – in a most resourceful-rich country in southeast Asia – even prior to the existence of the Majaphahit-Srivijya empires, and well before the forward advent of the western colonialists.

2. WORKERS AND CAPITALISTS

Workers under capitalism are compelled by their lack of ownership of the means of production to sell their labour power to capitalists for less than the full value of the goods they produce. Capitalists, in turn, never produce anything themselves but are, instead, able to live off the productive energies of each and every worker’s effort.

The predatory – and extractive – nature of capitalism means that the capitalist fundamental class processes are productive workers (performers) and productive capitalists (extractors). Capitalists appropriate surplus value from the consumption of labour power during the production of commodities or processing of services. The surplus is distributed among occupants of the subsumed class positions like the state, merchants, bankers, landlords, managers and monopolies. Therefore, a class position is determined by the relationship of the individual to the appropriation and distribution of the surplus value through exploitation.

In Marxian economics, the rate of exploitation is the ratio of the total amount of unpaid labour done (surplus-value) to the total amount of wages paid (the value of labour power). The rate of exploitation is known as the rate of surplus-value.

With this type of capitalism exploitative process, immiseration of the many, and alienation of everyone from the dignity of workers is ensured thoroughly.

3. NEW ETHNOCAPITAL POLICY

The New Economic Policy implemented is regarded by many rakyat2 as the new ethnocapital policy that benefits a class of ethnically capitalists – and their cohort of thieves -over the poverty poors of their own kind.

Though any of the country’s race-based policies can be traced back to the New Economic Policy (NEP), which was announced in 1970, the execution in eradicating poverty and redesigning a society by eliminating the association of any one race with specific economic functions, is deemed to fail inevitably.

Firstly, to reflect momentarily, the term Bumitisation refers to the process whereby bumiputeras (“sons of the soil”) are given preference in the control and participation of the Malaysian economy. This may take the form of equity ownership or employment opportunities at the managerial level.

This process in “malaysianisation”, however, involves, and entails, two prime aspects: firstly, the accumulation of capital on behalf of the bumiputeras; this would often means that the appointment of bumiputeras at the decision-making and managerial levels, thus structuring and managing economic nationalism within an ethnocratic (race-based) economy destiny.

That directive shall mean stuffing the civil service with a core racial identity once the private sector is fulfilled, and the Government-linked companies are overwhelmingly filled with political elites and their cohorts, most of the time with a mono-race identity.

Secondly, Malaysia’s affirmative action policy differs from those of other countries in one extremely crucial respect, and that it is “the politically dominant majority group which introduces preferential policies to raise its economic status as against that of an economically more advanced minorities“ (see Puthucheary seminal work, written while in a prison, on the Ownership and Control of the Malaysian Economy, and the continuous in-depth studies by Gomez and Jomo – collectively critical of selective privatisation and bumiputera equity quotas, and in the promotion of money politics that are detrimental to the wholesome national economic development.

Thirdly, owing to a feudal-clientiel relationship bond during colonialism, and a rentier-clientelism domain post independence but continued as neo-colonialism, we have the spectre whereby in a post-colonial society, the capitalist class in charge of the state-directed capitalism is sometimes termed the ‘bureaucratic bourgeoisie’ to represent the ruling section of the petty bourgeoisie, which is noted for its control or proximity to the state apparatus. The new ruling class in post-colonial Malaysia would comprise (political-orientated) bureaucrats, businessmen, leading politicians and professionals; where membership of such a class is determined by the criteria of occupational status, income status, education and business ownership or control over or closeness with the state apparatus, overtly or covertly, (Ahmad Fauzi Abdul Hamid, “Development in the post-Colonial State: Class, Capitalism and the Islamist Political Alternative in Malaysia“, Kajian Malaysia, Jld. XVIL No.2, Disember 1999).Therefore, it is not surprising that certain British business interests did appreciated the importance of alliance of the emerging new Malayan capitalists under a post-colonial regime, thus widening the unequal exchange in a neo-Imperialism domain.

According to a past Malaysian Institute of Economic Research (MIER) chairman, the recalcitrants responsible for implementing the NEP had caused its failure by letting political-oriented interests taking over economic, and economic development proper, interests.

Once this situation occurs, through the venom of unadulterated greed, the rent-seeking mentality among politician-pirates started growing to a marauders’ stage – and in expansion, coraling in, and collaborating with, every undesirables – and has since infested every layer of society – leading to corruption, odious activities and various forms of financial leakage flowing out of the country, and floundering, abroad.

4. THE ETHNOCAPITAL CLASS IN CRISIS

i] Several policies of the NEP give economic advantages to the rich Bumiputras, such as Bumiputra quotas in ownership of public company stock, and housing being sold exclusively to Bumiputras, are viewed as discriminatory. It has to be said again that when NEP was announced its goals was to have 30% of all equity in Bumiputra hands. However, NEP critics have argued that setting a target of 30% of Bumiputras trained and certified to run companies would represent a better equality in terms of opportunity.

ii] The NEP is also criticised for not dealing directly with issues of wealth distribution and economic inequality; that the policy directives no longer helps the poor but is instead an institutionalised system of handouts for the largest ethnic community in Malaysia as the NEP does not discriminate based on economic class, but whom one knows or favoured by the kleptocractic elites.

iii] there was even the setting up of a Bumiputera Prosperity Council (MKB) to empower the development of Bumiputera socio-economy, once promoted by a then Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed, in line with the Shared Prosperity Vision 2030 (SPV 2030). However, we need to ask what is “shared” : when it’s an ethnocratic collusion in social engineering on affirmative-actions – from NEP to NEM to ETP – that have morphed into a casted, and encrusted, cronyism.

iv] then, there is the statistical problems of categorising wealthy and disadvantaged Bumiputras in one group had also meant that the NEP’s goal of having 30% of the national wealth held by Bumiputras was not indicative of a median 60% of Bumiputras holding 28% of the national wealth, but could theoretically translate into one Bumiputra holding 29% of the national wealth, with the remaining Bumiputras sharing 1%.

v] Another criticism is that because of this imbalance, some Malays remain economically marginalised. In 2006, a major dispute arose when the Asian Strategic and Leadership Institute (ASLI) issued a report calculating Bumiputra-held equity had reached the 45% threshold already.

vi] This suite of figures is in fact on track with the 1997 University of Malaya study that had calculated the Bumiputra share of equity to stand at 33.7%, using par value with the bumi equity reaching the NEP target 19 years ago! (A Malaysiakini 1st. November 2006 report by Beh Lih Yi).

vii] Abang Bennet, with a piece in the
Aliran Monthly Vol 25 (2005): Issue 7 entitled UMNO: A threat to prosperity

“Umnoputeras are deeply addicted to their ethnic privileges and subsidies – but what happens when the petroleum runs out?“

viii] thus, as many has stated many a time, it is definitely associated to the differentiated social classes within the nation populace as the main problem: Alatas ,

Soong , Jomo.

ix] indeed, Abang Bennet had also expressed that a Martin Jalleh in the previous month issue of Aliran had provided, and presented, an astonishing account of expensive government bailouts of bungled privatisations mainly involving the crème de la crème of the crony Malay-Bumiputera community.

x] It is not a good testimony to a nation economic development when Malaysia is not only having a Malay Dilemma, but a dilemma over the continuance of an economic nationalism resting on mere ethnocratic economics.

In short, the stated elements are the indicative yet convoluted linkages between local compradore capitalists and foreign monopoly-capital enterprises that Gomez stated as “the resurgence of foreign ownership in the Malaysian economy, with companies such as Digi, Nestlé, and British American Tobacco leading the list of Malaysian companies by market capitalisation, highlighting the continuing dependence and openness of the Malaysian economy.
Rather, the state, in alliance with wealthy tycoons, was to play an increasing role in the economy, maintaining a centralisation and inequality of assets and wealth, both through systems of selective privatisation and later through the GLCs, Ownership and control in 21st century Malaysia, in newmandala as summarised by Charles Brophy, 17 JAN, 2018.

Recently, even a coalition of Malay-Muslim NGOs has objected to de facto Law Minister Takiyuddin Hassan’s statement that all Perikatan Nasional (PN) MPs who do not presently hold positions in government will be made heads of government-linked companies (GLCs) as imperfectious because GLCs performance has adequately argued by Gomez as power consolidation by a ruling regime or from Jomo urging to reconsider and undertake a GLC stake divestment strategy otherwise there could be consequential dire ramifications IDEAS.

5. WORKERS DILEMMA

With the inherent capitalism negative atrributes, many may be unaware that there are also CEOs in the GLC who take advantage of the rakyat2 toils and sweat, unmerited and unmercilessly. Those in high positions would, without any hesitation, do not care about the misery of the people who are being oppressed. In 2018 after GE14, as an example, new members of the Tabung Haji board of directors have to struggle to bring the sacred institution onto a right track. The institution was robbed several times during the previous years of Barisan Nasional administration, losing billions of dollars. Malaysians, whether Malays, Chinese, Indian, Kadazan or Iban and every other nationalities had to “bail-out” Tabung Haji RM$19 billion.

When someone in the kampung (village) got a 1.25% grant and had to wait ten years to save RM10,000 to perform the pilgrimage, then Takaful Malaysia CEO Mohamed Hassan Kamil’s income was equivalent to RM903,000 a month or RM10.84 million a year. Worse still, his income in 2019 rose by almost 17%, thus making his average monthly income in that year RM$1.05 million a month.This is equivalent to an average income of RM30,000 a day, while the majority of the pilgrims’ savings for ten years do not even reach RM700! This CEO’s salary for one day is equal to the savings of a lifetime savings of any ordinary muslim rakyat2.
Why is this allowed to happen?

At another case-company, a Tabung Haji subsidiary: the BIMB Holdings Berhad where its CEO, Mohd Muazzam Mohamed’s income in 2018 (at a time, incidentally when Tabung Haji only payout a 1.25% of grants to every poor Malays) was RM$3.12 million a year. When its annual revenue in 2017 to was increased to a mere RM$855,000, the CEO of a Tabung Haji’s subsidiary obtained a double pay increases instead.

In totality, the total remuneration for board members of Takaful Company was close to RM$1.5 million, while for BIMB Holdings it was RM$4.1 million.The chairman of BIMB Holdings earns RM375,000, while other Board members earn between RM375,000 and RM768,000 a year.

On another case-company: Sime Darby Plantation’s (SDP) annual report shows a remuneration to its then CEO, Mohd Bakke Salleh, the former Chairman of 1MDB (who was later named Telekom Chairman in a political music-chair switch). When Bakke took over as CEO at Sime Darby Plantations (SDP) his annual income was almost RM$8 million a year. His total income from being CEO there from 2011 to 2017 was RM$64 million. Yet, imterestingly, when he became CEO in 2011, SDP’s cash reserves were about RM5 billion, but it slipped to RM$500 million in 2018, while debt had risen to RM$15 billion by then.

Meanwhile, as workers are loosing their jobs, struggling to find padi and ayam (rice and chickens) for their families, and savings are running low, the EPF CEO could still afford more than a smile happily every month because according to the latest EPF annual report, the salary of the CEO and his deputies reached RM$6.1 million at one year, or an average of almost RM$130,000 per person or RM$4,300 a day. The class division between the ruling elites and ordinary rakyat2 when compared, it is an undeniable fact that 1 in 5 EPF Malaysian savers have a savings of just RM7,000!

It was reported on April 29, 2022 that Fernandes – the CEO of Capital A, formerly known as AirAsia Group Bhd – received RM14,947,213 in addition to RM124,781 in allowances for meetings, travel and other matters. Kamarudin, the executive chairman of Capital A, meanwhile received RM14,051,429.

A gig-worker earns an average of RM$3,500 per month in the Klang Valley.

6. CONCLUSION

The poor implementation of good policies, such as those related to education and technology adoption, would presently see the NEP not only failing to serve poor Bumiputera interests but also hampering the growth of the country’s economy.

Investors are already deterred by the rent-seeking and politically driven economy and, because of this political-economic direction, no jobs would be created and no skills nor technology would be transferred, resulting in the deepening of deprivation of rakyat2 in the Bottom 40 (B40) income group – the majority in this B40 group being bumiputra.

That rent-seeking is costing Malaysia easily more than 2% of its gross domestic product (GDP) is a factual reality, whereas the economy should be growing at 7% of the GDP per year, not 4.7%.

The ethnocapital capitalism crisis is creating a catastrophic case of a country in calamity.

Source: *Northern Corridor Economic Region 2020*. Further, capital accumulation, averaging 16% annually from 1989 to 1997, fell to around 6% yearly from 1999 to 2019.

BIBLIOGRAPHY

Gomez and Saravanamuttu, The New Economic Policy in Malaysia Affirmative Action, Ethnic Inequalities and Social Justice, (ISEAS 2013); KS Jomo, The New Economic Policy and Interethnic Relations in Malaya, (UNRISD 2004), and Lee Hock Guan, Affirmative Action in Malaysia, Southeast Asian Affairs (2005).

R. Thillainathan and Kee-Cheok Cheong, Malaysia’s New Economic Policy, Growth and Distribution: Revisiting the Debate, Journal of Economic Studies 53(1): 51 – 68, 2016 ISSN 1511-R.

CIA, Malaysia’s Unfulfilled Promise: the New Economic Policy in Arrears, October 1985; sanitized copy approved for release on 2011/01/04.

Jomo‘s The Edge 8/01/2020 piece: https://www.theedgemarkets.com/article/my-say-poverty-inequality-and-expectations

Malay Mail: https://www.malaymail.com/news/malaysia/2015/09/13/economist-nep-has-outlived-its-relevance-malaysia-must-end-it-to-progress/968981 NST 14/07/20; a critique of similar model, the Pemandu’s Economic Transformation Plan (ETP) can be found in Research for Social Advancement (REFSA), A Critique of the ETP, Part I and Part II, 25/01/2012.

STORM, Illicit Capital, Illegal Trade and Inequality – Kleptocracy in Malaysia, monsoonsstorms.wordpress.com).

Capitalism in Crisis: Ethnocapital and Class

1st. June 2022

1. INTRODUCTION

Capitalism is driven by the determined goal of enterprises for ever-greater accumulation of capital. By accumulation of capital, we mean an increase in assets from profits or investments.

The objective is to increase the value and a return on that profit, whether through appreciation, rent, capital gains or interest.Once we have the growth (capital formation), the accumulation of these assets (capital) can be further obtained or the value extracted.

2. CAPITALISM CRISIS

The Malaysian economy is in a bad shape and rakyat2 are understandably seeking solutions. Many, encouraged by mainstream media and multimedia, believe that ruling regimes’ policies through the last six decades shoulder prime responsibility for the structural decadence in our economy and that any salvation to recovery will require, above all, policy changes that will bring the inter-ethnic equality relationship into balance.

Despite its initial popularity with the introduction of the New Economic Policy – to eradicate poverty and ensuring equity without race identification – this nation-state approach to resolve the dynamics of the poverty poors and to ensure wealth-sharing is seriously flawed. It encourages rakyat2 to see the national problems, falsely, as the outcome of a contest between those who have and those in needs, in which the Malay-dominated government has to boost the well-being of its bumi constituents at the non-bumi expense, through “fairer” practices. As a consequence, it leads to counterproductive policy recommendations.

In this article, we offer an alternative approach to understanding the wealth generation process; one that relies on a class-based analysis of (global) capitalist dynamics impacting upon the (local) compradore capital enclave where they lead, not surprisingly, to a very different economic insights and political challenges. That the threat to bumi share-holding comes not from the non-Malays, but from the operation of a transnational, corporate-shaped, capital-monopoly production system, in which Malaysia serves as the region’s assembly platform to service the financial capitalism in the Global North. In fact, globally, the top 737 multinational corporations controlled 80 percent of total global output,” as cited by (Cheng Enfu and Lu Baolin in Monthly Review May 2021).

While both transnational capital and capital of ruling elites in Malaysia have greatly benefited from the operation of this system, Malaysian workers have paid a high cost; in fact, Malaysian workers experience many of the same negative consequences from its operation as do other indudtrial workers in the Global South., read STORM, Union Bustings in southeast Asia, February 2021.

It also explains why existing governance and preceeding ruling regimes have responded to the current national crisis (higher consumer inflation, high petroleum prices, eminent food insecurity, intermittent floods in township, collapsed houses, congested roads, inefficient mass transit systems and inadequate digital communications accessibility) with tactics designed to retain and maintain the status quo, despite the tremedous negative effects of this capital-led approach on working rakyat2.

In short, it is capitalism – not competition between Malays and the other races – that is the source of our grave political-economic problems.Therefore, Malaysia ambition to become a leading edge in competitiveness is stuck with a stagnated economy, (Sudhdave 2020); that the economy direction needs to be changed, (Kamal Salih, 01/06/2022) because Vision 2020 is blinded (Jomo, 10/12/2020).

Our challenge is to draw on the above insights to develop a strategy capable of both illuminating and contesting capitalism’s destructive logic – a task that puts Malaysisn workers in solidarity, rather than competition, with all workers in the country – and around the world.

3. AN ETHNOCAPITAL NATION-STATE

There are those who argue that Malaysia problems owe much to its growth strategy as follows: the then newly-independeny state neocolonial policies have transformed the nation into an industrial production powerhouse and commodity-led export hub, with the global market as her targeted preference. Initially, our exports were predominately labour intensive, low-technology products, such as electrical and electronic, rubber-based products like gloves and shoes. However, by late 1980s, instead of being a major exporter of higher valued added and high-technology products, the country de-industrialised prematurely from that typical normal developmental trajectory when local compradore capital objecting to the incursion of transnational corporations (TNCs) and low preference given to the emerging bourgeoisie capital base.

The ultimate outcome, to the despaired disadvantages of Malaysian workers, is the role of clientelship capitalism that had inserted into the monopoly-capital supply chain in an age of new economic imperialism, (Suwandi, 2018). Corporate capital in the small manufacturing enterprises (SMEs) collaborates with Global North to tighten the commodity supply chain with monopoly-capital. M&E vendors like AIDA, SKF, Cohu, VAT, Oerlikon Balzers, Favelle Favco, Bromma, Vitrox, etc.; recently, Digi, Nestles and British American Tobacco are, by market capitalisation, leading the list of foreign companies that dominate our local businesses nowadays. A TNC can be a 100% foreign-equity company; and there are over 5000 such sendiran berhad in the country, commanding an overarching external ownership and control of the national economy.

The government’s sentimental weakness for foreign investment over local capital investment is, to be grudgingly acknowledged, seeing Malaysian entrepreneurs taking their businesses offshore. Even new business concepts like Grab car-hailing moved to Singapore, Phison pen-drive to Taiwan, SP Setia real estate group to re-develop the Battersea Power Station, United Kingdom, have transferred activities abroad to more conducive business-friendly environment.

Further, industrialisation had not ensured the mass employment as was expected; the Federal Land Development Authority (FELDA) did not encourage nor retain its owner-tenants to cultivate palm oil produces on their own land, but cater for the Big Farms resulting in settlers migrating to towns in search of better job opportunities which are not easily forthcoming. One has to accept, under kleptocractic capitalism, politically connected cartels have even taken over the poultry industry, resulting in dire shortage supply, rising the price of this common diet that compounded workers continuous class struggle for decent shelters in urban enclaves with a higher cost-of-living environment.

The UNICEF 2020 Report has already shown that low-income female-headed households are exceptionally vulnerable, with higher rates of unemployment at 32% compared to the total heads of households. Female headed households also registered lower rates of access to social protection, with 57% having no access compared to 52% of total heads of households.

Concurrently, with diminishing job outlets, more Malaysians are migrating abroad, (CIPD Asia, The future of talents in Malaysia 2035), thus depleting the talented homeland resources; this skills outflow is further exacerbated by a recent decision that skilled workers shall be employed in a monopoly-capital controlled (The Triad) country – Japan – under a MoC between Malaysia and Japan, thus perpetuating a neo-Imperialism human resource exploitation process, (themalaysianreserves 30th. May 2022).

The way that ethnocapital is capable of siphoning national resources is easily highlighted by existing Government-linked companies (GLC) which, together with the Government-linked Investment Corporations (GLICs), controlled 68% of the Kuala Luimpur Stock Exchange commanding RM$440.4 billion in total assets. The overall control of government agencies connected to the Prime Minister Department and the Ministry of Finance is overwhelming :

4. CAPITALISM AND CLASS

The GLCs like Petronas are a major source of government revenue; Khazanah is often used to bail out other (especially crony) companies. Indeed, the GLCs, respresenting surrogates of ruling elites, are maximising capital accumumulation through a hive of rent-seeking economic activities across various sectors of the economy – from plantations to petroleum, (STORM, Rentier Capitalism in Accumulation, 22/01/2021).

The emergence of this ethnocapital-defined class which ostensibly sought to ‘eradicate poverty’ and ‘restructure society to eliminate the identification of race with economic function’ in order to create the conditions for national unity is less than half truth. That ‘restructuring’ has, inadvertently and unfortunately, come to be associated with ‘positive discrimination’ or ‘affirmative action’ on behalf of the ethno-Malay Bumiputeras whereby state interventions have resulted in significantly greater bumiputera wealth ownership – but restricted to top 1% of constricted beneficiaries – business participation, education opportunities, as well as representation among professionals and managers/administrators. The public sector employment and staff promotions – at Federal and state levels – are extraordinary mono-ethnic-embedded; there are 5.7 million staff (17.6% of labour employment) in the public sector – 23% higher than its minimum in 2016.

The country’s business sector is strangled with APs, approval-import permits, and other licensing, restricting markets and business operations. The layers of administrative controls bear the elements of class division within the Malaysian society.By ethnocapital we mean a (malay) bumiputra owned and controlled an entity performing under a rentier or clientel capitalism approach whether it is a public agency, a government-linked company (GLC) or a privatised and or commercial enterprise.

Between the dominating and the dominated, under capitalism the capitalists are dominant at each level, the proletarians are dominated at each.To comprehend the controlling class, this can be identified from the stronghold of clientelism and the ensuring political clientel relationship where ruling elites in the United Malay National Organisation (UMNO) [place] had aligned with economic oligarchs [positions] in accepting rentier capitalism to sustain their hold on [power]. They adopt this clientelism as solicitations for votes at the grassroots level, allowing ruling elites [place] the party patronage [position] and political [power] to “effectively partisanizing them and ensuring ground-level officials with whom most voters interacted with ……are political party loyalists” (Weiss, 2020), resulting in the skewed distribution of profits by political stakeholders – and the stark inequality of wealth permeating in the country (Khalid 2019):

This is a decomposition of growth rate of real income per adult, 2002 to 2014 (pre-tax national income) : Khalid 2019.

Bumiputera in the top income groups (the top 1 per cent and the 10 per cent) benefited the most from economic development and its ensuing growth

There is every reason to say that patronage position is never moved from place prescence of ruling elite and the political power that oozes therefrom. Indeed, ruling elites are the biggest “owners” of divisional-level of UMNO constituency places with the office-bearing posts that defined political positioning posts with the ensuing power distributing spoils that emit therefrom. The ownership of the place loci, by situating in a position, the control of vested power elements is explicit.

To put it in another way, the strong growth in high-income Bumiputera occurred at the cost of a decrease in Chinese and Indians in the top income groups where the prime beneficiaries are the top 1% of the Bumiputera elites.

5 POSITIONING THE CLASS DIVISION

The two class processes of capitalism are defined as the extraction and distribution of surplus labour in the form of value. The class positions of the capitalist fundamental class processes are productive workers (performers) and productive capitalists (extractors). Capitalists appropriate surplus value from the consumption of labour power during the production of commodities. The surplus is distributed among occupants of subsumed class positions associated with say the state, merchants, financiers, landlords, managers and monopolies.

Therefore, class position is determined by the relationship of the individual to the appropriation and distribution of surplus value.That positioning presupposes a “place” is already in place or existence.

Thus, when AMMB Holdings Bhd agreed to pay RM2.83 billion to the Malaysian government as settlement on all outstanding claims and actions in relation to the AmBank Group’s involvement in the 1Malaysia Development Bhd (1MDB) corruption scandal – it is a distinctive demarcation of exploitative – and expropriative – capitalist banker’s class from the hardworking dues of the ordinary rakyat2.

Indeed, GLCs have always been used to aid the vested interests of power elites in three ways: first, to channel government-generated concessions to key constituencies to garner electoral support. Second, to allow for the appointment of politicians to the boards of GLCs to sustain party support. Third, to offer lucrative directorships to pre-empt party hopping.

6 TOWARD A SOCIALISM IDEAL

Any change to the capitalism mode shall require an introduction to socialism in the future. There is the consolidation of neoliberalism policies permeating throuhhout the whole country, and the stranglehold of parliamentary democracy with emergency ordanances; and the maintaining of a new stage of ethnocratic hegemonic leading to economic despair even among urban poors and instability in youth employment today.

Toward any sustainable high growth economic development there needs an assurance, and in place, of good governance and that rakyat2‘s money is optimally expended on socioeconomic wellbeing otherwise aiming high with neoliberalism economic policies shall undermine, and underdevelop, Malaysia developmental effort under capitalism.

Long-term – strategically – we need to visionise on building communal organizations and responsive governance to step onto a progressive path beyond capitalism and the capitalist state in economic development and socioeconomic management, and towards a socialist undertaking that shall benefit everyone than the very few, (Fred Magdoff, Ecological Civilisation; Ken Hammond, Beyond the Sprouts of Capitalism; Samir Amin, The Trajectory of Historical Capitalism).

7. Towards Socialism with Malaysian characteristics

Towards this process in striving the Socialism with Malaysia characteristics goal, there shall be a combination of planning and markets forming the basic socialist economic system. Second, we need to keep in mind the dialectical relation between ownership and the liberation of the productive forces that shall entail, then

(1) the system contains a multiplicity of components, but public ownership remains the core economic driver, with corporate capitals supplementing capital formation but without undue surplus value extracted from labour;

(2) while both state owned and private enterprises must be viable, their main objective is not profit at all costs, but social benefit that meets ‘people-centred’ needs from appropriate shelter, education equity to community-base healthcare, harnessing modern technologies towards social needs;

(3) it employs the primary socialist principle of from each according to ability and to each according to work, limiting exploitation and wealth polarisation, and ensuring common prosperity and wealth sharing for every rakyat2 wellbeing;

(4) the primary value should always be ‘socialist collectivism’ – gotong royong than bourgeois individualism and inflicted neoliberalism ethos.The emergence of such socialist democratic political practice shall embrace an organic unity of the components of socialist democracy which entails that the people are masters in the house supervising the servants of society through the socialist rule of law and the Federal institutional guarantees.

EPILOGUE

For socialism to work , one must have the culture of sharing, caring and an indelible sense of fairness .These cultures should be nurtured from young through an education journey that is participative and collaborating, joyful sharing in all challenges together.

Capitalism – by which people are less governed by social or religious ethic and more by politico-bureaucratic norms of efficiency and capital calculability – has, through alienation in labour, that sense of dehumanisation, a decline in enthusiasm for work and, eventually, a drop in productivity. The culture of caring and sharing is anathema to capitalism.

Socialist culture would, and can, universalise the positive values of cooperative sharing in community involvement for the better goods of everyone in a society, gaining a common prosperity to be equally shared by one people one nation in a common wealth.

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	FRIDAY FILES 1… on China’s growth strategy in the…
	SATURDAY SURGE:11/03… on The Big Push – A Little…
	M137 4th – 10… on The Big Push – A Little…
	The Big Push –… on Towards structuring economic d…
	Financial Monopoly C… on Sovereign Debts, Debt Dependen…

Towards The Malaysia Narrative

Study Team on Rakyat2 Malaysia

Monthly Archives: June 2022