From: Patrick Bond (pbond@mail.ngo.za)
Date: Mon May 05 2008 - 14:58:57 EDT
Jurriaan Bendien wrote: > > "To build a new global social contract, the underlying logic of the > international financial system must be radically altered. > I was able to pay tribute to Jane on Friday, in spite of the fact that the prevailing adverse power balances make her proposal for a new social contract and Keynesian ICU appear far-fetched. Still, we have to join the top-down with the bottom-up, I'd want to argue. Here's the abstract and intro; the full paper's available from pbond@mail.ngo.za if anyone wants. Beyond Third World Debt Crisis: Financial Volatility and Social Power from the Bottom Up by Patrick Bond Director, Centre for Civil Society and Research Professor, School of Development Studies University of KwaZulu-Natal, Durban, South Africa Presented to the Conference on the Political Economy of Monetary Policy and Financial Regulation, in honor of Jane D'Arista Political Economy Research Institute (PERI) Gordon Hall, 418 N. Pleasant Street University of Massachusetts, Amherst 2 May 2008 Abstract The global economy’s vast financial sector expansion – in the context of productive sector stagnation tendencies - has increased the leading powerbrokers' capacity to devalue large parts of the Third World (including major emerging market sites), as well as to write down selected financially volatile and vulnerable markets in the North (e.g. dot.com and real estate bubbles). In contrast to the 1930s, this set of partial write-downs of overaccumulated financial capital has not yet created such generalized panic and crisis contagion as to threaten the entire system's integrity. Shifting and stalling the necessary devalorization of overaccumulated capital, particularly as it bubbles up via financial sectors into speculative markets, has entailed spatial and temporal fixes. In addition, extra-economic coercion has intensified, including gendered and environmental stresses. The result is a world economy that concentrates wealth and poverty in more extreme ways, geographically, and brings markets and the non-market spheres of society and nature together, but in a manner adverse to the latter. Reform of the system is long overdue, and Jane D'Arista's ideas for revitalized multilateral financial institutions, particularly following Keynes' International Clearing Union proposal, are worth revisiting. However, what good ideas 'from above' require for consideration are extremely powerful movements 'from below', whose own notions of global justice are already generating organic campaigns that disempower global capital, and build transnational links to movements. In a context of severe bias in multilateral financial and development agencies, amounting to a neoliberal-neoconservative fusion, the inability of reform at the global scale and the constrained space and political will at national level in most states compel us to consider the exercise of social power from below, against the worst depredations of oppression, which are often experienced through the financial circuit of capital. From below, grassroots reactions – especially, strategies for decommodification and 'deglobalisation of capital' – should become the basis for more serious strategizing, if we are to better ground a global movement for financial democratization. *** So the burden of reform devolves to others - those diverse voices around the world who are uniting now in a movement to challenge the corporate-capitalist version of globalization. These active citizens, of course, have very little power to change things themselves, except their intelligence and spirit, plus an ability to arouse the broader public. This new international movement understands that the maladies of global finance go deeper than recurring crises and the danger of a total breakdown. For decades, the poorer countries have lived with harsh dictation from global capital about what economic plans their governments may or may not pursue in behalf of citizens, with brutal discipline if they stray. The cheerleaders describe this as globalization's 'golden straitjacket' - follow our orders, and we will make you rich (someday, but people in most societies are learning that the consequences for humanity are often quite leaden. Some people do get rich, of course, or gain wage incomes. But as millions learned in Southeast Asia, their escape from poverty was a temporary thing, hostage to the anxieties of distant investors who are oblivious to their individual efforts and aspirations. William Greider, 'Time to Rein in Global Finance' The Nation magazine, April 24, 2000 Introduction I am second to none in offering admiration for Jane D'Arista's contributions to analysis of so many economic and especially financial phenomena. Her far-sightedness was especially stunning in an area I briefly worked with her on in 1986, the Third World debt. Much has happened in this area since that time, including dubious debt relief programs and amplified uneven development between regions of the South. But because, as D'Arista would agree, the Third World debt which emerged as an acute crisis in 1982 and has never ceased its harm, is a symptom of deeper economic imbalances, we have to spend some time at the outset establishing context, in both 'economic' and 'political' spheres. Only then can we properly proceed to consideration of D'Arista's global financial reform proposals to assess their feasibility, and then onwards to an alternative strategy – 'bottom up' - with the same aims as D'Arista but based upon different readings of the balance of forces and hence of the impetus for genuine reform. There is no doubt that financial volatility remains central to the way global markets are developing, and that such volatility constrains economic, social, political and environmental progress in the Third World. The grounding of volatility as a symptom of deeper economic tensions also requires setting the stage politically. These are the main objectives of the second section. Having done so, the third section allows us to consider two half-hearted and one visionary approach to global financial reform, from above. First, the status quo processes of the Monterrey Financing for Development agenda in 2002 led in 2005 to G7 finance ministers offering sufficient debt relief as to keep borrowers – especially in Africa - paying both large downpayments and high rates of export earnings. However, the experience of such extreme Northern domination through the International Monetary Fund was the main reason for Latin American countries (and a few others) repaying the IMF early, threatening its own revenue streams. With these divergent forces at work, there was very little on offer in multilateral reform. Second, at least one country, Norway, made some tentative steps forward (e.g. to defunding the World Bank due to its water privatization fetish, and to canceling earlier corrupt shipping loans), but these were half-hearted and contradictory. Third, we can turn to a much clearer agenda for reform, by D'Arista in 1999, as amplified by William Greider in his stirring call, at the outset. But no constituency for this project was built during the crucial early 2000s, as the Jubilee movement's weak Northern base and militant but strong Southern group found themselves marginalized, and as the rest of the global justice movement addressed issues not immediately concerned with finance. What might break the deadlock? The fourth section suggests that an approach more respectful of deep-seated popular challenges to commodification and globalization has enormous potential. Cases include the challenge to multinational corporate power in the sphere of AIDS medicines patents and reparations for past 'Odious Debts' to regimes like apartheid. In the sphere of consumer finance, we turn to experiences as diverse yet interrelated as the SA township 'bond boycott' and Mexico's 'El Barzon' movements. Finally, aiming again at global financial governance, activists' World Bank Bonds Boycott strategy, especially powerful during the early 2000s, is another way to disempower some of the most dysfunctional aspects of global finance (the Bretton Woods Institutions), and instead empower investors to do something more useful with their resources. Fusing D'Arista's ideas from above, with these from below, would be one way forward for a strategic discussion, aimed at democratizing finance. FULL AVAILABLE: pbond@mail.ngo.za _______________________________________________ ope mailing list ope@lists.csuchico.edu https://lists.csuchico.edu/mailman/listinfo/ope
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