Greed always makes victims – both the person who is carried away by it as well as the persons targeted. Shrewd ones camouflage it in the name of development, nationalism, new source of capitals, and public welfare, while the unsuspecting innocent common people become their victims. The global finance industry is doing the same thing by demanding new sources of capital to satisfy investors’ greed, especially after the COVID-19 crisis.
The right to pollute and destroy nature has gradually been legitimized while access to safe drinking water and sanitation was recognised as human right in 2010 in the UN General Assembly, and to a clean, healthy, and sustainable environment just a few days ago in the UN Human Rights Council.
A group of 17 UN-appointed independent rights experts have recently warned that the trend has a serious negative impact on even basic human rights – such as the right to access safe drinking water and sanitation, food, adequate housing, development, and healthy and sustainable environment among others.
The rights at risk are due to increasing speculation in the financial markets by hedge and other investment funds, a joint statement of the group categorically states. The independent Special Rapporteurs and other experts have expressed their concern over the gradual encroachment of financial speculators into new areas of the economy.
They are trading in areas that are essential for human rights of marginalized, indigenous peoples, Afro-descendants, peasant communities, persons with disabilities and persons living even with Albinism, as well as those living in areas of conflict.
Such level of so-called financialisation has led to the growth of new financial instruments since the 1980s which are being managed by new financial services. It has disproportionately impacted the rights of women and girls, who are systematically victims of discrimination. The negative impact on older people was also highlighted by the experts’ group while urging the States to adequately regulate the financial services industry.
How the right to food has been curtailed and threatened by tampering the agriculture market can just be imagined by the fact that the same big international banks who were responsible for the global financial crisis of 2008 invested billions of dollars in food futures, which increased the prices of raw materials including wheat, corn, and soyabean, which doubled and even tripled in a few months.
It created a new speculative bubble, the experts said. It pushed millions of people into extreme poverty and hunger.
The markets for agricultural commodities were opened with the deregulation of global financial markets at the end of the 20th century, and particularly after the adoption in the United States of the Commodity Futures Modernization Act of 2000. Banks and institutional investors entered the food futures markets and identified them as a promising way to diversify their investment strategies.
As a result, in very short time, according to the World Bank, between 130 and 150 million more people were pushed into extreme poverty and hunger, mainly in low-income countries depending on food imports to feed their populations.
It does not end here. Along with food, financialisation of housing became a means of accumulating wealth. In recent years, massive amounts of global capital have been invested in housing as a commodity, as security for financial instruments that are traded on global markets. One can also remember that when the global financial crisis of 2008 hit, many houses suddenly lost much of their value, and millions of individuals and families became homeless overnight.
In the countries of the Global South, informal settlements in cities are regularly demolished for luxury housing and commercial development such as shopping malls and other high-end services intended for the wealthiest groups of the populations; a process of financialisation of development itself. Firms have aggressively entered into purchase and grabbing of social housing, while playing a key role in triggering evictions.
This process of financialisation of assets has only been reinforced during COVID-19 pandemic, and financialisation of the food and housing sectors has exacerbated inequalities and exclusion, disproportionately affecting heavily indebted households and those on low income. It violates the human rights of people in poverty, exacerbates gender inequality and aggravates the vulnerability of marginalized communities.
Moreover, the nature and the ecosystem have been increasingly managed as property and commodities to be used and exploited. The recent decades have seen the growing monetization and commodification of ecosystem services, such as carbon storage, which has become a serious threat to the sustainability of ecosystems.
It also marginalizes natural and cultural values that have no apparent economic value, and weakens the control of indigenous peoples and local communities over their territories. They said that the right to pollute and destroy nature is gradually being legitimized and commercialized.
As is happening with water, there is a serious risk that the commodification of ecosystems and nature will be exacerbated by financial speculations.
For example, the UN rights experts have pointed out, addressing the climate emergency, that through weakly regulated futures markets on emissions and energy raw materials, could allow large banks and institutional investors to follow a strict profit-maximisation logic, ignoring both the impacts on people in poverty of pricing policies, and the climate mitigation objectives, undermining the human rights and livelihoods of the poorest people.
Decisions made in distant boardrooms could result in the eviction of indigenous peoples from forests, their home for millennia, or the replacement of complex old-growth forests with monocultures of fast-growing non-native tree species.
On the other hand, this trend towards the “financialisation of nature” is one of the factors fuelling the growth of extractivism with its serious social and environmental impacts.
Recently, water futures were offered for trading on Wall Street futures markets under the pretence that speculative practices will help to better manage the expected water scarcity resulting from climate change by shaping prices in advance, known as “price discovery” and stabilizing them. In fact, this is the same logic, which when implemented in the food futures market pushed the prices up to unaffordable levels and millions fell into extreme poverty and hunger.
Treating housing, food, or the environment, as assets to be traded by hedge funds and other financial actors in financial derivatives markets, represents a direct attack on people’s exercise and enjoyment of human rights such as the right to housing, to food, to a healthy environment, or to drinking water and sanitation, the experts stated.
The perverse impact of the so-called financialisation has been proven over the last decades and will contribute to destabilizing rather than strengthening the global economy, which is still under the pressure of external debt and struggling to recover from the COVID-19 pandemic.
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