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).
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.
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.
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