File spoon-archives/bhaskar.archive/bhaskar_2003/bhaskar.0307, message 55


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)




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