Amidst the misery and turmoil of these times the BBC gave us light relief when one of its reporters claimed to have individually liberated Kabul. Perhaps the only other relief available is to watch the mandarins of globalisation disagree about why the circumstances arose in the first place.
Peter Sutherland, founder of the WTO, oddly, tells us that we should not exaggerate the connection between current events and globalisation per se. In a planned international diplomatic offensive, James Wolfensohn, President of the World Bank, plainly disagrees. He has been touring global capitals explaining how in a world where twenty per cent of the population has eighty per cent of the wealth, instability will convey itself through migration, through wars within countries and through crime and terrorism. These are problems, he says, that do not recognise borders. But enough of the broad-brush observation, what about the specific details of what has happened?
Two passenger jets dependent on late twentieth century information systems, communication and flight technology fly into twin skyscrapers that were built using state of the art innovations in design and material science the World Trade Centre. It would be easy to continue ploughing the same furrow in describing the military response. The common economic policy response has been to intensify calls for more rapid global economic integration. I ask, is it possible to exaggerate the connection between current events and globalisation per se?
Setting precedents, making rules
About some things Sutherland seems to be in plain denial. He says that many problems are to do with factors other than economic globalisation. He then refers obliquely to US foreign policy in Latin America and support for leaders who do not command universal respect. Could he be talking about Chile where US multinational ITT was embroiled in the rise of Pinochet, or perhaps United Fruit in Central America? Look for trouble anywhere around the world and economics is either leading it by the nose or treading close behind in its footsteps. It is a useless distinction to separate out economics.
Sutherland also asks why inequality has grown in some countries and not others. He should know the answer. Wherever economic reform has bolted unrestrained from the stables of the Anglo Saxon monetarist model into the developing world, hardship and inequality have followed. Broadly comparing south-east Asia with Latin America, frontloading development with policies for redistribution and comprehensive social provision enabled development with far greater equity in Asia. According to the UN Development Programme, there is no automatic link between growth and human development. Russia underwent shock liberalisation and integration and enjoyed neither growth nor human development.
One of the most important factors for development is stability and the ability plan for the medium to long term. Yet capital liberalisation, which is so important to Sutherland, is now almost universally acknowledged to be one of the greatest contributors to global economic instability. The IMF now accepts this but seems reluctant to act. It is just nonsense to blame developing country economic failure on domestic governments. For the last two decades the policy paradigm for development has overwhelmingly been set in Washington DC and by the major industrialised nations. At the same time the prices of the commodities most depended on by the poorest countries have hit record lows fueled by the idiotic economic model that encourages poor countries to all produce more of the same goods to trade, further depressing prices, in order to grow their way to recovery.
Disingenuousness in the free traders arguments reaches its height when Sutherland says everyone has been guilty of protectionism from time to time. Lets be clear, the dominant industrialised nations were guilty at precisely the point when they were establishing their dominance. Once strong, they could preach the values of imbalanced economic freedom. As JK Galbraith once pointed out, Free trade was for the first arrival [Britain] an attractive design for confining the later contenders to their earlier stages of development.
The problem for less developed countries today, as it was for China and India in the nineteenth century, is that free trade is compulsory.
Since the 1960s, every attempt by developing countries to engage with the global economy on terms that would help them develop, such as managing investment, regulating foreign multinationals and stabilising commodity prices, has been resisted and opposed. Its another echo of the nineteenth century when, according to Mike Davis, author of Late Victorian Holocausts El Nino Famines and the making of the Third World, From about 1780 or 1800 onward, every serious attempt by a non-Western society to move over into a fast lane of development or to regulate its terms of trade was met by a military as well as an economic response from London or a competing Imperial capital.
Now, incurable problems with depressed commodity prices, beggar-thy-neighbour South-South competition, environmental stress and the reluctance of rich countries to assist or open their markets to any significant degree, are still dismissed. But the fragility of such a model, is also nothing new.
According to Davis, under the British in India, Between 1875 and 1900, years that included the worst famines in Indian history, annual grain exports increased from three million to ten million tons an amount equivalent to the annual nutrition of twenty-five million people.
It rapidly becomes tedious when you have to answer all the points made by ideologues in the mechanical regurgitation of an old script, so to briefly answer points that emerge from Peter Sutherlands interview. Relying on foreign direct investment is riddled with difficulties if it is to play a serious role in development: see any of UNCTADs World Investment Reports of the work of researcher David Woodward in his new book The Next Crisis? There has been a groundswell of official support, especially from France and Germany, for fundamental capital controls like a currency transaction tax the so-called Tobin tax. The WTO and its current agreements are not roundly supported by most developincountries; that claim is misleading and simply untrue. The WTOs dispute resolution mechanism, in spite of Sutherlands confidence, places political and capacity burdens on complainants that push it beyond the reach of many developing countries. To say that there are adequate international mechanisms in place to tackle the abuse of market power by multinational corporations is almost laughable.
Shirley Williams points to one of the greatest crimes of globalisation throughout history: the way it destroys political and social structures without replacing them with anything that can guarantee either social or economic security.
The path to sustainable development
Maria Cattaui in her interview is more politically astute than Sutherland. She seems sensitive to most of the criticisms of globalisation, but like a politician leaves little trace of what she herself believes in, except to say that in general she believes in a much expanded state sector and government which is strange considering that the organisation she represents normally takes a virulently pro-market line.
For at least the last two hundred years there has been a relentless widening of the gap between rich and poor. Now the need to prevent conflict within and between nations means that the trend must be reversed. A new awareness is dawning even among others than James Wolfensohn.
In February 2000 the retiring head of the International Monetary Fund made the kind of speech he would not have dared to make at the height of his career. Michel Camdessus said, The widening gaps between rich and poor within nations, and the gulf between the affluent and the most impoverished nations (and) poverty will undermine the fabric of our societies through confrontation, violence and civil disorder.
Wolfensohn more recently said, All the academic analysis indicates that within countries the cause of crime and distress is frequently associated with poverty, and the extension of that to the international condition is that if you have instability and inequity, then you lack peace.
After the 11 September atrocities in New York, EU Commissioner Chris Patten told the Financial Times that we need to be more vigorous and creative about other evils, citing the relationship between poverty, degradation and violence, and arguing that the issues we have to tackle include those of a global imbalance in resources.
Yet the ground for increasing worldwide instability has been prepared by decades of complacency and neglect from affluent countries and their financial institutions. The OECDs special committee that reports on the aid performance of its members concluded in a recent review that, It might well be argued that if more donors had met the ODA target (0.7 per cent of GNP), the mass poverty and humanitarian emergencies which persist in many parts of the developing world today might have been largely avoided. Gordon Brown has asked for a doubling of rich country aid, but even if successful it would have to address how only tiny percentages of aid actually go to the basic needs of the poorest people.
Early in the 1990s the Earth Summit set a course for sustainable development in low-income countries and put a price on it. The Summits secretariat said that implementing Agenda 21 would need an extra $125 billion per year from rich countries in the form of aid or other concessions. Yet compared to trends at the time of the Summit, funding declined over the following decade.
The UN Development Programme separately estimated the extra annual resources needed to pay for human development goals. Their annual Human Development Report called for additional annual spending: $6 billion on basic education; $13 billion on basic health and nutrition; $9 billion on water and sanitation; and $12 billion on reproductive health care for women. The estimated total bill has stood at around $40 billion for some years.
One more recent estimate from UNICEF argued that, effective care for children between birth and the age of eight is the crucible of sustainable human development. It priced achieving that goal at a modest additional global expenditure of US $70 billion to $80 billion each year.
Meanwhile the outstanding unpayable debts of the poorest countries still stand at around $300 billion and continue to drain their resources. One estimate by Jubilee Plus suggests that all twenty three countries qualifying for the HIPC initiative are in danger of their debts becoming unsustainable even after relief.
Not accidental, but planned
Even after the official defeat of the Taliban two things are still likely. Untold numbers of innocents could die of cold and starvation over the winter months. Secondly, the conflict could recruit many more angry and alienated people to the ranks of the branded terrorists. Instead of the contradictory and accidental internationalism that the United States and Britain have fallen into, we need a coherent and planned internationalism that stifles the forces of alienation and creates a global economy in which everyone can meet their needs and nurture their hopes.
That sounds pretty abstract, but it comes down to a few practical suggestions about sharing economic opportunities that, lacking political urgency, keep getting ignored. It comes down to things like fair and transparent debt relief; supporting democracy at the local and national level, rather than undermining it, as the World Banks former chief economist and Nobel Prize winner Jo Stiglitz accused the IMF of doing.
As climate change starts tearing apart livelihoods around the world and forcing migration, it means having enough funds to help those who need it, and a plan for the logical and equal sharing of the planets life-supporting eco-systems set within the limits of their tolerance. It means having a global economy founded on the principles of justice, democracy and sustainability to build trust and the fabric of community, rather than the one we have, that devours them for the profit of a few.
The most undermining thing that grows in the gap between rich and poor is humiliation. The denial of rights coupled with the denial of economic opportunity is what breeds disaffection and violent reaction. Global business as usual is widening that gap, increasing instability and increasing the potential for backlash.
Competitive winner-take-all market economies cannibalise the fabric that holds communities and societies together. More of the same is no solution. What would an alternative look like? First, history tells us that to reconcile deeply held grudges and senses of injustice processes of arbitration are an essential part of a healing process. South Africas Truth and Reconciliation Commission was a good example. The condition of Afghanistan bombed on and off for much of the last century is a glaring example of the continuing legacy of colonialism, ancient and modern. Perhaps it is time for a wider reckoning and a Global Truth and Reconciliation Commission for the morass of accumulated colonial abuses.
Secondly, it is clear that new mechanisms are needed both to reduce the instability of the global economy, redistribute its benefits and work within environmental limits. New definitions of security will usher in capital controls such as the currency transactions tax, and demand that developing countries are guaranteed a fair and stable price for their resources.
The new question to ask of every policy is, will it increase or decrease the vulnerability of people, will it add to or take away from our collective security? Trade liberalisation has repeatedly been shown to be a disaster for the food security of the poorest people in developing countries. Capital liberalisation almost brought the world economy to its knees.
The lack of general public faith in the ability of multinational corporations to police their own behaviour and behave in the public interest gave birth to the anti-globalisation movement and a miasma of mistrust that shows no signs of going away. I predict that the long-term fallout from the last few months will be the death of the assumption that all economic activity logically floats up to the global level. The future will be found by asking a different question: what is the right level at which to organise all the different aspects of our livelihoods in the neighbourhood, or at the regional, national, bio-regional or global level?
The answers to these questions in terms of food production, manufacturing, retailing, travel and culture will describe a sustainable new world order. It will be about localisation, not globalisation. Or if you prefer the jargon, it will be about subsidiarity or the proximity principle, or nearness. It will be a planned internationalism where we do globally what we must, and locally what we are able.
