was World Trade Organization Secretary General Renato Ruggerio
who simply stated; "We are writing the constitution of
a single world economy." (Chicago Tribune, "New Rules
for Global Economy", R.C. Longworth)
the neo-liberal structuralists is that this economy will spin
out of control. Every day over a trillion dollars electronically
rockets through the currency markets. For globalists the size
and speed of speculative activity needs to be regulated and
better managed. As George Soros noted; "Markets can move
like a wrecking ball, knocking over one economy after another.
The swings cannot be avoided altogether, but they need to be
brought under control." (Financial Times, 1-3-99) This
fear was brought home by the Asian crash, and so exposed developing
splits within the hegemonic bloc. Propelled by the lightspeed
devaluation of Asian currency and the tidal wave of bankruptcies,
the IMF stepped in to expand control over international monetary
policies. The huge $120 billion bailout of international finance
in Asia followed by another $42 billion to Brazil, are being
used to rewrite the way markets and governments operate.
sparked opposition by free market conservatives to the structural
bailout, and reawaken opposition by the liberals to IMF social
policies. The debate is also taking place among mainstream globalists,
exemplified by the growing differences between the World Bank
and IMF. Much of the discussion has focused on stricter regulations
of financial institutions, better market supervision of risk
management practices, and how to respond to the social fallout
resulting from IMF policies.
of this battle raged in Congress over further U.S. funding for
the IMF. Republican opposition surprised and angered the corporate
community which made its demands clear in a letter addressed
to the House of Representatives in which the National Association
of Manufacturers, the U.S. Chamber of Commerce, and the Business
Roundtable banded together and pronounced IMF funding vital
for the American economy. Transnationals are a major interest
within the neo-liberal sector and clearly want a stable and
structured economic environment for their investments. Furthermore,
the IMF has used the Asian crisis to demand that Third World
countries open up their national economies to greater penetration
from global corporations. Transnationals have not only been
able to seize former state assets through privitization, but
the bankrupcy of nationally based companies has resulted in
a huge transfer of power to global corporations.
among the global structuralists began to appear in the World
Banks's 1997 report The State in a Changing World. The Bank
questioned the promotion of the "minimalist state"
and argued for a larger governmental role in protecting and
correcting markets. The report sought to move "attention
from the sterile debate of state and market to the more fundamental
crisis of state effectiveness." (p. 25) While still insisting
on free market policies the report emphasized that "liberalization
is not the same as deregulation" and argued that the state's
purpose is in "safeguarding the health of the financial
system". (p. 65) In a second report in November, 1998 the
Bank focused its' criticism on particular features of IMF policies.
Targetted were the IMF's rapid push for total financial liberalization,
the need to control short-term investments, and greater aid
for the poor.
out by the Washington Post, "The differences here are more
of tactics than strategy". (12-7-98) The debate is not
over free trade, open markets, or long-term foreign investments.
Rather it centers on how best to protect the global financial
system. Camdessus believes that the current world crisis can
be tamed by changing aspects of international regulation and
oversight, but that IMF policies are basically correct and already
showing signs of stablizing the Asian problem. This is the same
approach taken by President Clinton's point men, Secretary of
Treasury Robert Rubin, his undersecretary Lawrence Summers,
and Britain's Prime Minister Tony Blair.
globalists grouped around the IMF the global crisis calls for
greater centralization. Italian Treasury Minister Carlo Azeglio
Ciampi called for the IMF's Interm Commmittee to become the
"embryo" of an economic government for the world.
The Interm Committee, which Ciampi chairs, seats finance ministers
from 24 major countries. Ciampi argues the Committee should
"become the main channel of communication between the international
financial community and national decision-makers" because
the crisis makes it "necessary to reinforce the instruments
for intervention by international financial institutions."
(AFP, 12-17-98) The IMF becomes this instrument circumventing
any real national dialouge over economic policy.
globalists like Wolfensohn, Henry Kissinger, and Harvard economist
Jeffrey Sachs, seem more concerned with cleaning up the political
and social fallout of the crisis. Wolfensohn, perhaps pushed
by liberals such as Joseph Stiglitz inside the World Bank, has
been expressing concern for those thrown into poverty by IMF
policies. Yet in a letter to the Mozambique government in March,
1998, Wolfensohn demanded a quintupling of patient fees for
public health services and privatization of the municipal water
works as conditions for marginal debt relief. Perhaps the riots
in Indonesia have helped Wolfensohn to rethink his concerns.
of Suharto certainly worried Henry Kissinger who joined the
debate with a colunm in the New York Post expressing fear that
"the indiscriminate globalism of the 1990s may generate
a worldwide assault on the very concept of free financial markets"
in the same manner that early capitalism "spawned Marxism".
(10-6-98) Upset over the political explosions sweeping Indonesia,
Kissinger complains that the "IMF has utterly failed to
grasp the political impact of its actions" because of its
"excessive emphasis on economics." (Ibid) Supporting
Wolfenshohn's position he argued that states should provide
a "social safety net and curb market excesses by regulation."
critical of the IMF none of these leaders question the basic
tenants of the Washington Consensus nor its economic orthodoxy.
Rather social entitlements are understood as necessary concessions
to achieve political stablility in order to continue on the
road to globalization.
While the globalist bloc is an international elite, there are
senior, middle and junior partners. The most senior and cohesive
sector is formed by American neo-liberals, and their version
of the free market dominates globalization. Although published
before the Asian crash, Rothkopt’s article provides an
excellent insight into what he calls "exporting the American
As he writes:
"Americans should not shy away from doing that which is
so clearly in their economic, political, and security interests--and
so clearly in the interests of the world at large. The United
States should not hesitate to promote its values…of all
the nations in the history of the world theirs is the most just,
the most tolerant, the most willing to constantly reassess and
improve itself, and the best model for the future…Good
and evil, better and worse coexist in this world. There are
absolutes, and there are political, economic, and moral costs
associated with failing to recognize this fact." (FA, Summer
’97, Pages 48-49)
of absolutes, the free-market conservatives are perhaps the
most ideologically driven sector within the globalists. Representing
this trend are former Secretary of State George Schultz, former
Citibank CEO and speculative guru Walter Wriston, former Treasury
Secretary and international speculator William Simon, Reagan
era economists Lawrence Kudlow and Martin Feldstein, President
of the Heritage Foundation Edwin Feulner, and Ian Vasquez of
the Cato Institute.
by Milton Freedman, this sector sees any bureaucratic central
planning as interference in the pure functioning of the market.
As Kudlow has stated; "IMF statism is no better than Soviet
statism." (Lerner News Hours, 1-18-98) Conservatives argue
that the market needs to carry its own risks, and firms must
be allowed to fail without being saved by international agencies.
Its within this process that "creative destruction"
occurs. Money is freed from bad management and goes to those
who know best how to invest. Bankruptcy, or the destructive
side of capitalism is necessary to free capital to be used to
create new wealth. For free market conservatives the Asian crash
is the golden highway to future profits.
this viewpoint with insightful honesty when he states; "Capitalism
without bankruptcy is like Heaven without Hell." (Lerner
News Hour, 1-18-98) Although this may echo Nike’s slogan
"no pain no gain", Kudlow is speaking for global speculators
who seem to delight in the destruction of people’s livelihood
in a Marat Sade model of creative economics. Schultz and Simon,
old friends of Kudlow from the Reagan administration, are so
deeply committed to the ideology of free markets that both have
made calls to abolish the IMF.
direct language Feldstein decries IMF central planning because
it has gone far beyond the role that it played in the 1980s
and: "has imposed programs requiring governments to reform
their financial institutions and to make substantial changes
in their economic structure and political behavior." (Foreign
Affairs, March/April ’98)
argued by Wriston, the power to change government policies is
best left to international financiers, not bureaucratic agencies.
Celebrating speculative might Wriston stated: "Money is
asserting its control over government, disciplining irresponsible
policies, and taking away free lunches everywhere…If your
economic policies are lousy, the market will punish you instantly.
I’m in favor of this kind of economic democracy."
(Wired, 10-’98, pages 202-203)
B.J. Habibie, Indonesia’s new president, must have been
listening to Wriston’s advice about taking away "free
lunches". Last fall he went on national radio and told
his people not to eat two days a week. This would save $1.4
billion per month on rice imports, money which then could be
used to pay-off Indonesia’s debt to foreign speculators.
Welcome to democracy in the new world order.
unregulated free-market ideology are fundamental economic interests.
Of the $1.3 trillion invested daily in currency markets an overwhelming
66%, (and by some estimates 80%), are held for seven days or
less. Only 1% of all speculative transactions stay put for a
year or longer. Huge profits are made possible because this
instability and quick movement of money results in rapid fluctuations
of currency values. If you are on the right side of the fluctuation
you can make billions. This has created a sizeable sector of
free-market conservatives. As pointed out by Paul Volcker, former
governor of the Federal Reserve: "The biggest concern today
is the growing constituency for instability." (Changing
Fortunes) Kissinger pointed to the same danger writing in the
New York Post that: "Hedge funds, the trading departments
of international banks and institutional investors possess the
reach, power, and resources to profit from market swings in
either direction, and even to bring them about. It is market
stability that they find uncongenial." (10-6-98)
Asian crash and Russian debacle the liberal regulationists have
been growing in importance. Liberals support free markets and
privatization. But with expanding poverty they have come to
question attacks on labor, cuts in social services, and government’s
abdication of regulating the free market. Liberals still support
all the basic features of the new global structure. But they
want to use these structures to tame the most destructive features
of the free market.
recognize the vast inequalities created by unregulated capitalism,
and fear the political upheavals that may result. As the crisis
in Asia spread to Russia and Brazil some mainstream globalists
like Kissinger and Wolfensohn have begun to share some of the
concerns of the liberals. But liberals have actually questioned
important aspects of the Washington Consensus as the best way
forward for constructing a global market. This liberal wing
of globalists includes a significant faction of the Democratic
Party with such spokespersons as Congressmen Dick Gephart and
Dave Bonior, former Secretary of Labor Robert Reich, plus a
growing number of influential economists and concerned business
have fought for better labor standards and environmental protection
in the growing number of international agreements. They also
seek to slowdown capital mobility using different regulatory
devices which would help protect national economies. At times
their opposition has been substantial, as reflected in the vote
against NAFTA and its fast-track extension. For example, under
Gephart and Bonior’s leadership 75% of all Democratic
members of Congress voted against NAFTA. But the liberal leadership
has agreed to support the IMF bailout because, according to
Bonior, they obtained concessions on labor and environmental
standards which allow people to organize, bargain collectively,
take on sweatshops and child labor, and set-up watch-dog groups
composed of business, government and labor. Critical support
from liberals is not new, Gephart voted for fast-track legislation
under Bush and also for the WTO. More progressive members of
Congress, Bernie Sanders (Vt), Dennis Kucinich (Oh), and Cynthia
McKinney (Georgia), are voting no on further funding for the
important voice in the liberal wing is Joseph Stiglitz, Senior
V.P. and chief economist of the World Bank, and former Chair
of the U.S. Council of Economic Advisors. In an April, 1998
speech delivered in Helsinki, Stiglitz launched a major criticism
of the Washington Consensus, calling it "incomplete and
misleading." While a firm supporter of free trade and privatization,
Stiglitz argues that "government has an important role
in responding to market failures…and in appropriate regulation,
industrial policy, social protection and welfare." He criticized
the IMF policy in Russia for pushing inefficient and corrupt
privatization without competition; and points out that China,
by avoiding the Washington Consensus, has become "the greatest
success story of the last two decades." Stiglitz is calling
for a post-Washington consensus that would expand the role of
government to provide universal education, transfer technology
to the public sphere, and enable "increases in living standards…improved
health…and a healthy environment." He has also challenged
the IMF's policy of enforcing high interest rates, which has
lead to the bankrupcy of nationally based business' and deepen
the depression in Asia.
chief economist, Michael Mussa, attacked Stiglitz saying that,
"those who argue that monetary policy should have been
eased rather than tightened in those countries are smoking something
that is not entirely legal." (Dow Jones Newswires, 10-2-98)
Stiglitz fired back that Mussa "hasn't looked at the econometric
evidence... looking at this approach not from an ideological
perspective but looking at it from the way anyone who is serious
about economics would look at it...you'll see that Mr. Mussa
is wrong." (Ibid) Stiglitz's ideas seem to reflect a growing
trend. Former World Bank staffer Veena Siddharth stated; "His
speaking out is just the tip of the iceberg. A lot of people
at the Bank are worried about the effects of IMF policies on
speculator George Soros has also been busy criticizing the IMF.
In an article in the Financial Times (12-31-97) Soros notes
that the prevailing system of: "international lending is
fundamentally flawed yet the IMF regards its mission to preserve
the system." Soros also understands that his fellow speculators
threaten to destroy the very system that has created their wealth.
In The Alchemy of Finance he points out: "Instability is
cumulative, so that the eventual breakdown of freely floating
exchange is ensured." As a result he argues the private
sector is "ill-suited to allocate international credit"
because its goals are to maximize profits not maintain macro-economic
is to create a new International Credit Insurance Corporation
that would guarantee loans by setting a ceiling on the amounts
insured. Speculative investments beyond insured amounts would
be lost through failures, rather than save by IMF bail-outs.
Soros understands that further regulation will "outrage
the financial community", but in his view: "The main
enemy of the open (democratic) society is no longer the communist
but the capitalist threat." (Chicago Tribune, 9-28-97)
a number of important economists who share the concerns of Soros,
linking economic balance to political stability. Stephen Roach,
the chief economist of Morgan Stanley Dean Whitter fears the
"slash-and-burn restructuring strategies of American business"
and predicts "some form of worker backlash as an inevitable
by-product of an era that has squeezed labor and yet rewarded
shareholders beyond their wildest dreams." (Chicago Tribune,
Hausman, chief economist of the Inter-American Development Bank,
is concerned that: "Emerging markets are not merely investment
opportunities they are entire nations with families, firms,
and political systems…if volatility remains unchecked
a backlash will build against the market-oriented, democratic
reforms." Perhaps this unease is why the New Yorker and
Chicago Tribune printed articles praising Karl Marx and his
insights into the problems of capitalism. Adding its voice to
the choir Business Week ran a lead feature titled, "The
Judas Economy," which called for a return to Keynesian
economist Paul Krugman has distanced himself from the neo-liberal
structuralists. In a major article for Fortune, Krugman called
for capital controls over foreign currency exchange. In particular
he praised the Chinese system of delinking internal interest
rates from foreign currency markets to help protect their economy
from international speculators. Says Krugman: "It’s
a dirty word, capital controls, but we need them to get out
of a bind." (CNBC, 8-29-98) Delinking domestic and foreign
rates would allow countries to expand investments through lower
interest rates, while protecting their currencies from speculative
freefalls. As the crisis grows there have been a number of uncomfortable
converts like Krugman, who says: "Why did I become a radical?
I didn’t want to be. But we are in a trap." (CNBC.
opposition to globalization comes from reactionary populism
and the anti-imperialist left. Of these groups the right wing
is far stronger and has greater media impact. Pat Buchanan has
become the leading voice of reactionary populism along with
a solid bloc of Republican Congressmen. In his weekly column
(3-23-98) Buchanan offered a sophisticated analysis of the growing
splits in the conservative movement. Titled, "Free-trade
Extremists Undermine Reagan’s Legacy", Buchanan argues
that unbridled capitalism set free by the Reagan-Thatcher revolution
contained the seeds of its own destruction. While global free
trade and cutting government safety nets created fortunes for
some, "in the middle and working classes they generate
anxiety, insecurity, and disparities in income. Since these
classes seek stability and order from their political systems
above all else, Thatcherism and Reaganism undermine the very
social structure on which they were built." It seems even
the right-wing can't escape dialectics. Confronting this contradiction
Buchanan concludes: "Conservatism is thus at a crossroads.
And if social conservatism is at war with unfetted capitalism,
whose side are we on?" This may poise an unsolvable contradiction
for the right-wing. Movement conservatives don’t see a
future without their social base, while free-market speculators
have no need for a movement.
direction of Majority Leader Dick Armey, 190 Republicans composed
the main opposition in the fight against further funding for
the IMF. In Congress it’s the right populous who criticize
the liberals for their weak opposition to the IMF bailout. Attacking
Robert Riech, Republican Walker Todd stated: "In the great
globalist economy, why should Heartlanders don the military
uniform or tax themselves to defend investments abroad of corporations
that consider themselves globalists - not tied to, say, the
USA?…The IMF has become nothing more than a debt collector
for the international banks."
Todd and Buchanan would ask Americans to don the military uniform
to fight for U.S. corporations that promote national power and
wealth. Their attack on globalization is not isolationism, but
a desire to maintain a world imperialist policy based on national
power as developed in the industrial era. An imperialist era
that brought home enough wealth to develop a social contract
with the white middle class. That class constitutes the political
base for right populism. Its the benefits of this social contract
that globalizaiton is destroying as it undercuts living standards,
shrinks the middle class and sends jobs abroad to low wage countries.
where the left and right intersect. Much of the American left
also desires a return to the industrial past and the benefits
won through unionization and the social struggles of the 1930s
and ‘60s. The political base of the right is in large
part the same political base for the left. But as the white
working class of the 1930s became the white middle class of
the 1950s it became satisfied, conservative, and bought into
the privileges of racism. Rather than develop a strategic vision
to transform the world that is, both the left and right are
fighting a rear-guard battle to defend the world that was. They
want to recreate the type of society that grounded their politics
and success. Thus we find Buchanan quoting from the Nation,
while Monthly Review denies that anything of significance has
developed since the advent of industrial age imperialism. Its
ironic that opposition to the IMF by both the right and left
parallels the demands of the most dangerous and speculative
wing of the globalists - the free-market conservatives who also
wish to rid the world of the IMF and all international regulations.
response to neo-liberalism is People’s Global Action,
formed to "launch a worldwide coordination of resistance
against the global market." This is a new world alliance
of mainly peasant based movements in the Third World. It includes
the Zapatistas, Movimento Sem Terra (Brazil), Peasant Movement
of the Philippines, Movement for the Survival of the Ogoni People
(Nigeria), Karnataka State Farmers Association (India), Indigenous
Womens’s Network (N. America and Pacific), the Sandinistas,
Foundation for an Independent Aotearoa (New Zealand), and Play
Fair Europe. This list of groups bears witness to the great
pressure points of globalizaiton and shows how the market is
now encompassing groups previously outside world capitalist
call for a decentralized and environmentally sustainable society,
and some have battled at the very heart of globalization. For
example, in Karnataka farmers have challenged biopiracy by transnational
agrabusiness, while the Ogoni people are fighting Shell for
control of their land. Yet post-modernists promote the local
nature of these struggles, romanticizing the autonomy of pre-capitalist
relations. This robs these movements of their anti-globalist
thrust and seeks to define and limit Third World movements to
a fragmented post-modernist mode.
another global challenge is the environmental movement with
its well-developed international ties. The inter-connected character
of the environmental crisis necessitates a united world movement.
The forces of globalization not only create a human disaster
but an equally serious ecological crisis. This deeply effects
economics and culture, rural and urban populations, new technologies
and old. A red/green strategy, or classed based environmental
movement, must be part of a long-term effort to build an alternative
to neo-liberal globalism.
also begun to show signs of new strategic initiatives. As a
result of globalized manufacturing the industrial working class
in the Third World has increased from 285 million to 400 million
over the past 15 years. In response union membership is rapidly
growing in S. Africa, S. Korea, Thailand, Zimbabwe, Bangladesh,
and the Philippines, even as it declines in the U.S. and Europe.
Current efforts by labor reflect these international changes.
The United Electrical Workers have started cross border organizing
efforts with Mexico’s Federation of Autonomous Workers.
The striking dockers union in Liverpool used the internet to
organize an international day of solidarity that shut-down 150
ports. And campaigns against Nike and the textile industry are
fighting for fair labor standards worldwide.
In the West
movements that battle for full benefits and equitable wage levels
for all temporary and part-time workers are responding to the
new conditions of labor. Already important reforms have been
instituted in parts of Europe, and provide a model for the U.S.
Also, as technology reduces the need for labor, people need
to fight for a greater social wage and shorter workweek. Others
are renewing the arguement for high wages, low interest rates
and full growth policies. These programs are outside the Washington
Consensus and envision global relations based on growing equality
between all nations.
left needs to target speculative capital as the main enemy.
This is the most dangerous, destructive and decadent form of
capital in the world economy. A good place to start is the Tobin
tax, a plan being suggested by some liberal economists and politicians.
The idea originated with Nobel Prize economist James Tobin in
1972, and calls for a tax of one-fifth of one percent of the
value of each financial transaction. If applied just in the
U.S. it would raise $20 to $30 billion a year, while a worldwide
tax would produce about $100 billion. The aim is to slow down
the size and amount of global transactions and push money towards
longer-term investments. Of course a larger tax would have a
greater effect and provide funds to create the types of social
and environmental programs needed to correct the destructive
aspects of globalization.
a high and low road to economic development. While low road
speculators dominate today the deepening dimensions of their
crisis is leading to political splits and economic ruin. Globalism
is a crisis-ridden system based on the overproduction of exports,
and rapid capital movements which produce instability. In opposition
there is a growing broad consensus to develop a socially just
economy that makes use of the market. The left needs to develop
a new transitional strategy that helps to build a participatory
and democratic economy, while working with all those, including
the business community, who wish to create an equitable and