Date: Sat, 19 Jul 2003 13:21:07 +0100 From: Mervyn Hartwig <mh-AT-jaspere.demon.co.uk> Subject: BHA: Bello on Crisis of the Globalist Project (I) From a-list-AT-lists.econ.utah.edu. Apologies for cross-posting. I think it's an outstandingly good analysis of the poltical economy of the crisis, and very relevant for understanding the limits and possibilities of emancipatory projects in the current epoch. Mervyn The Crisis of the Globalist Project & the New Economics of George W. Bush By Walden Bello - TNI Fellow. Focus on The Global South, 10 July 2003 (Prepared for the McPlanet Conference, Berlin, June 27, 2002. The original version of this piece will appear in the Fall issue of New Labor Forum.) I would like to thank the Heinrich Boll Foundation, ATTAC Germany, and all the other organizers of this conference for inviting me to this very important meeting. What I would like to do in this introductory talk is to discuss the key elements of the global conjuncture. I would like to paint, in broad strokes, the global political and economic context in which we must situate our environmental activism. Let me begin by taking you back to 1995, the year the World Trade Organization was born. The offspring of eight years of negotiations, the WTO was hailed in the establishment press as the gem of global economic governance in the era of globalization. The nearly 20 trade agreements that underpinned the WTO were presented as comprising a set of multilateral rules that would eliminate power and coercion from trade relations by subjecting both the powerful and the weak toa common set of rules backed by an effective enforcem ent apparatus. The WTO was a landmark, declared George Soros, because it was the only supranational body to which the worlds most powerful economy, United States, would submit itself. In the WTO, it was claimed, the powerful United States and lowly Rwanda had exactly the same number of votes: one. Triumphalism was the note sounded during the First Ministerial of the WTO in Singapore in November 1996, with the WTO, International Monetary Fund (IMF), and the World Bank issuing their famous declaration saying that the task of the future was the challenge now lay in making their policies of global trade, finance, and development coherent so as to lay the basis for global prosperity. THE CRISIS OF THE GLOBALIST PROJECT By the beginning of 2003, the triumphalism was gone. As the fifth Ministerial of the WTO approaches, the organization is in gridlock. A new agreement on agriculture is nowhere in sight as the US and the European Union stoutly defend their multibillion dollar subsidies. Brussels is on the verge of imposing sanctions on Washington for maintaining tax breaks for exporters that have been found to be in violation of WTO rules, while Washington has threatened to file a case with the WTO against the EU's de facto moratorium against genetically modified foods. Developing countries, some once hopeful that the WTO would in fact bring more equity to global trade, unanimously agree that most of what they have reaped from WTO membership are costs, not benefits. They are dead set against opening their markets any further, except under coercion and intimidation. Instead of heralding a new round of global trade liberalization, the Cancun ministerial is likely to announce a stalemate. The context for understanding this stalemate at the WTO is the crisis of the globalist project--the main achievement of which was the establishment of the WTO--and the emergence of unilateralism as the main feature of US foreign policy. But first, some notes on globalization and the globalist project. Globalization is the accelerated integration of capital, production, and markets globally, a process driven by the logic of corporate profitability. Globalization has had two phases: the first lasting from the early 19th century till the outbreak of the First World War in 1914; the second from the early 1980s until today. The intervening period was marked by the dominance of national capitalist economies characterized by a significant degree of state intervention and an international economy with strong constraints on trade and capital flows. These domestic and international constraints on the market, which were produced by the dynamics of class conflict internally and inter-capitalist competition internationally, were portrayed by the neoliberals as having caused distortions that collectively accounted for the stagnation of the capitalist economies and the global economy in the late seventies and early eighties. As in the first phase of globalization, the second phase was marked by the coming to hegemony of the ideology of neoliberalism, which focused on liberating the market via accelerated privatization, deregulation, and trade liberalization. There were, broadly, two versions of neoliberal ideology: a hard Thatcher-Reagan version and a soft Blair-Soros version (globalization with safety nets.) But underlying both approaches was unleashing market forces and removing or eroding constraints imposed on transnational firms by labor, the state, and society. THREE MOMENTS OF THE CRISIS OF GLOBALIZATION There have been three moments in the deepening crisis of the globalist project. The first was the Asian financial crisis of 1997. This event, which laid low the proud tigers of East Asia, revealed that one of the key tenets of the globalization -- the liberalization of the capital account to promote freer flows of capital, especially finance or speculative capital -- could be profoundly destabilizing. The Asian financial crisis was, in fact, shown to be merely the latest of at least eight major financial crises since the liberalization of global financial flows began in the late seventies. How profoundly destabilizing capital market liberalization could be was shown when, in just a few weeks time, one million people in Thailand and 21 million in Indonesia were pushed below the poverty line. The Asian financial crisis was the Stalingrad of the IMF, the prime global agent of liberalized capital flows. Its record in the ambitious enterprise of subjecting some 100 developing and transitional economies to structural adjustment was revisited, and facts that had been pointed out by such agencies as the United Nations Development Program (UNDP) and United Nations Conference on Trade and Development (UNCTAD) as early as the late eighties now assumed the status of realities. Structural adjustment programs designed to accelerate deregulation, trade liberalization, and privatization had almost everywhere institutionalized stagnation, worsened poverty, and increased inequality. A paradigm is really in crisis when its best practitioners desert it, as Thomas Kuhn pointed out in his classic The Structure of Scientific Revolutions, and something akin to what happened during the crisis of the Copernican paradigm in physics occurred in neoclassicaleconomics shortly after the Asian financial crisis, with key intellectuals leaving the fold--among them Jeffrey Sachs, noted earlier for his advocacy of free market shock treatment in Eastern Europe in the early 1990s; Joseph Stiglitz, former chief economist of the World Bank; Columbia Professor Jagdish Bhagwati, who called for global controls on capital flows; and financier George Soros, who condemned the lack of controls in the global financial system that had enriched him. The second moment of the crisis of the globalist project was the collapse of the third ministerial of the WTO in Seattle in December 1999. Seattle was the fatal intersection of three streams of discontent and conflict that had been building for some time: - Developing countries resented the inequities of the Uruguay Round agreements that they felt compelled to sign in 1995. - Massive popular opposition to the WTO emerged globally from myriad sectors of global civil society, including farmers, fisherfolk, labor unionists, and environmentalists. By posing a threat to the well being of each sector in many of its agreements, the WTO managed to unite global civil society against it. - There were unresolved trade conflicts between the EU and the US, especially in agriculture, which had been simply been papered over by the Uruguay Round agreement. These three volatile elements combined to create the explosion in Seattle, with the developing countries rebelling against Northern diktat at the Seattle Convention Center, 50,000 people massing militantly in the streets, and differences preventing the EUand US from acting in concert to salvage the ministerial. In a moment of lucidity right after the Seattle debacle, British Secretary of State Stephen Byers captured the essence of the crisis: [T]he WTO will not be able to continue in its present form. There has to be fundamental and radical change in order for it to meet the needs and aspirations of all 134 of its members. The third moment of the crisis was the collapse of the stock market and the end of the Clinton boom. This was not just the bursting of the bubble but a rude reassertion of the classical capitalist crisis of overproduction, the main manifestation of which was massive overcapacity. Prior to the crash, corporate profits in the US had not grown since 1997. This was related to overcapacity in the industrial sector, the most glaring example being seen in the troubled telecommunications sector, where only 2.5 per cent of installed capacity globally was being utilized. The stagnation of the real economy led to capital being shifted to the financial sector, resulting in the dizzying rise in share values. But since profitability in the financial sector cannot deviate too far from the profitability of the real economy, a collapse of stock values was inevitable, and this occurred in March 2001, leading to the prolonged stagnation and the onset of deflation. There is probably a broader structural reason for the length of the current stagnation or deflation and its constant teetering at the edge of recession. This may be, as a number of economists have stated, that we are at the tailend of the famous Kondratieff Cycle. Advanced by the Russian economist Nikolai Kondratieff, this theory suggests that the progress of global capitalism is marked not only by short-term business cycles but also by long-term supercycles. Kondratieff cycles are roughly fifty to sixty-year long waves. The upward curve of the Kondratieff cycle is marked by the intensive exploitation of new technologies, followed by a crest as technological exploitation matures, then a downward curve as the old technologies produce diminishing returns while new technologies ar e still in an experimental stage in terms of profitable exploitation, and finally a trough or prolonged deflationary period. The trough of the last wave was in the 1930s and 1940s, a period marked by the Great Depression and World War II. The ascent of the current wave began in the 1950s and the crest was reached in the 1980s and 1990s. The profitable exploitation of the postwar advances in the key energy, automobile, petrochemical, and manufacturing industries ended while that of information technology was still at a relatively early stage. From this perspective, the "New economy" of the late 1990s was not a transcendence of the business cycle, as many economists believed it to be, but the last glorious phase of the current supercycle before the descent into prolonged deflation. In other words, the uniqueness of the current conjuncture lies in the fact that the downward curve of the current short-term cycle coincides with the move into descent of the Kondratieff supercycle. To use the words of another famous economist, Joseph Schumpeter, the global economy appears to be headed for a prolonged period of "creative destruction." ENVIRONMENTAL CRISIS AND CAPITALIST LEGITIMACY I have been talking about moments or conjunctural crystallizations of the crisis of the globalization project. These moments were manifestations of fundamental conflicts or contradictions that were unfolding unevenly over time. A central smoldering contradiction was that between globalization and the environment. I would now want to devote a few words to how the environmental crisis has proven to be a central factor unravelling the legitimacy of the globalization project, indeed of capitalism as a mode of economic organization itself. Both before and after the World Summit on Environment and Development in Rio de Janeiro in 1992, the sense was that while the world environmental situation was worsening, consciousness of this fact was leading to the creation of the global institutional and legal mechanisms to deal with the problem. The Rio Summits agreeing on Agenda 21, a global program for environmental improvement that would have counterpart country programs, seemed to mark a major step forward in terms of global cooperation. The late eighties and early nineties were, moreover, a period when a number of multilateral environmental agreements were inked and appeared to be making headway in reversing the global environmental crisis, like the Montreal Protocol putting controls on the production of CFCs to preserve ozone layer, and the CITES Treaty putting tough controls on trade in endangered species. Also, with the coming to power of Bill Clinton and Al Gore in 1992, an environmentally correct administration seemed to be in place. Several moves stalemated this process. First, the establishment of the WTO. As Ralph Nader put it, the WTO placed corporate trade uber alles, meaning practically all dimensions of economic and social life except for national security. In other words, laws protecting natural resources and the environment needed to be changed if they were seen as imposing standards that were seen as unfair to foreign trading interests. In a series of landmark cases the tuna-dolphin case between the US and Mexico, the turtle-shrimp controversy pitting the US and Asian countries it seemed that national environmental laws were being subordinated to free trade. The thrust seemed to be to bring environmental protections in different countries to the lowest common denominator rather than to bring them up to the highest standards. Second, the aggressive push by corporations to exploit advanced food technology and biotechnology alarmed environmentalists and citizenries all over. The EUs ban on hormone-treated beef from the US--enacted in response to popular demand in Europe-- continued despite the WTOs viewing it as illegal. Likewise, genetic modifications in agricultural production coupled with resistance to ecolabelling on the part of US firms such as Monsanto triggered a consumer backlash in Europe and other parts of the world , with the precautionary principle being invoked as a powerful weapon against the US corporations criterion of solid science. Also, the aggressive effort by US biotech firms to extend patenting to life forms and to seeds led to strong resistance by farmers groups, consumer groups, and environmentalists to what was denounced as the privatization of the aeons-long interaction between nature and communities. Third, the strong resistance of the US industrial sector to acknowledge the fact of global warming, at a time when the speed of the melting of the polar ice caps was accelerating, was perceived as a brazen attempt to put profits ahead of the common interest. This perception could only be reinforced by the successful corporate effort to stalemate a collective global effort to effectively deal with global warming during the Clinton administration and finally to kill it when the Bush administration refused to sign and ratify the already weak Kyoto Protocol on climate change. The aggressive anti-environmental posture of US corporations was one of the factors that led to a great distrust of business even within the United States, with 72 per cent of Americans surveyed by Business Week in 2000 saying that business has too much power over their lives, leading the countrys prime business weekly to warn: Corporate America, ignore these trends at your peril. At the same time, developing countries felt that the US was using environmental arguments to slow down their development with its position that the greenhouse gas emissions of developing countries needed to be also subject to substantially the same restrictions imposed on the developed countries before Washington would sign the Kyoto accord. Indeed, such suspicions were not unfounded, since Bush administration people were targeting China, whose rapid development was seen as a strategic threat to the US. Environmentalism was being deployed in the USs effort to maintain its geo-economic , geopolitical edge. By the early 2000s, then, the global consensus represented by the Rio Summit had unraveled, and it all but collapsed under the massive corporate green washing campaign that was unleashed at the World Summit on Sustainable Development (also known as Rio+10) in Johannesburg in September 2002. Sustainable development, a vision that attempted to reconcile economic growth with ecological stability fell by the wayside, and Herman Dalys apocalyptic image of an economic system marked by hyper-growth outstripping in record time an ecological system created over aeons seemed closer to realization as US, European, and Japanese capital worked closely w ith a pollution-friendly government to make high-growth China both the workshop and wastebasket of the world. A few years ago, many agreed with economist Herman Daly that ecological deterioration is due to the inexorable drive of the man-made system of production to fill with geometric speed the limited space created over eons by nature. From this perspective, slower growth and lower rates of consumption were the key to environmental stabilization, and this could be achieved through policy choices supported by the public. Increasingly, this analysis is giving way to the more radical view that the main culprit is an unchecked capitalist mode of production that unceasingly transforms nature's bounty into commodities and incessantly creates new demands. Capitalism constantly erodes man and woman's being-in-nature (creature) and being-in-society (citizen) and, even as it drains them of life energy as workers, it moulds their consciousness around one role: that of consumer. Capitalism has many "laws of motion," but one of the most destructive as far as the environment goes is Say's law, which is that supply creates its own demand. Capitalism is a demand-creating machine that transforms living nature into dead commodities, natural wealth into dead capital. Environmentalism, in short, has regained its radical edge over the past decade, moving the critique of globalization to a critique of the dynamics of capitalism itself. (Part II to follow) --- from list bhaskar-AT-lists.village.virginia.edu ---
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