New Internationalist

Deglobalization - reflections of a Filipino MP

Issue 430

Walden Bello wonders why, despite the mirage of neoliberal economics, alternatives should still appear so tentative.

Over the last two years the international financial crisis has deepened into a crisis of the real economy. With the collapse of demand in the US and other markets in the North, the export-oriented economy – the ‘globalized’ model that has reigned for the past 30 years – has begun to unravel.

This has brought stagnation and recession to the model’s most successful examples: the economies of East Asia. Singapore’s economy is expected to have contracted by two per cent in 2009; South Korea, the ‘Asian Tiger’ par excellence, to register zero growth. Japan has not snapped out of nearly two decades of stagnation. In China, millions of jobs in export-oriented industries continue to be lost, even as the economy is said to be on the path to economic recovery.

According to the Economist: ‘The integration of the world economy is in retreat on almost every front.’ While the magazine, one of the prime avatars of neoliberal globalization, says that corporations continue to believe in the efficiency of global supply chains, ‘like any chain, these are only as strong as their weakest link. A danger point will come if firms decide that this way of organizing production has had its day.’

In response to the collapse of the export-oriented global economy, many governments have fallen back on their domestic markets, revving them up via stimulus programmes that put spending money into the hands of consumers. But instead of an opportunity to strike out on a different economic path, many governments see only a temporary expedient, to be abandoned once demand in export markets picks up again.

Daunting challenge 

Why do illusions persist? And why the continuing resistance to alternative paradigms, like deglobalization, when this should be a time for thinking outside the box?

The daunting challenge of translating the guiding principles of the alternative into reality is part of the problem. In a place like the Philippines the starting point appears very unfavourable. Thirty years of structural adjustment have de-industrialized the country, with textile and garment firms, for instance, reduced from 200 in the 1970s to 10 today. World Trade Organization-imposed liberalization has converted the country from a net food-exporting country into a net food-importing one. The main pillar of the economy is now the export of labour, with some 10 per cent of the country’s 90 million people working and living outside the country.

There is, in short, no tabula rasa, no virgin soil on which one can impose blueprints.

Moreover, the blocks to transformation are not only material but ideological. True, the recent collapse of the global economy has eroded the credibility of the neoliberal economics that provided its intellectual underpinnings. Nevertheless, neoliberalism continues to exercise a strong influence on economists and technocrats.

The longer humanity takes to confront the crisis, the greater are the odds against peaceful and democratic solutions

For instance, at the recent hearings on the budget at the Philippine House of Representatives that I, as an MP, participated in, trade liberalization was defended as leading to greater ‘competitiveness’. Raising the prospect of renegotiating our foreign debt was discouraged because it would allegedly give us a bad name in global capital markets. Globalization continued to be extolled as the wave of the future.

Why this continuing invocation of neoliberal mantras, when the promise of neoliberalism has been contradicted by reality at almost every turn?

Let me hazard a few guesses. Though I draw mainly from my experience in the Philippines, I suspect that they are valid elsewhere.

Mantra 1

Corruption discourse continues to be pervasive in explaining Philippine underdevelopment. In this discourse, the state is the source of corruption, so having a greater state role in the economy – even as a regulator – is viewed with scepticism. Neoliberal discourse ties in very neatly with corruption discourse, minimizing the role of the state in economic life and assuming that a more dominant market will reduce the opportunities for ‘rent-seeking’ by both economic and state agents. 

For many Filipinos the corrupt state, not the inequality spawned by the market, or the erosion of national economic interests by liberalization, continues to be the main block to the greater good.

Mantra 2

Despite the deep crisis of neoliberalism, there has been no credible alternative discourse that has emerged either locally or internationally. There is nothing like the challenge that Keynesian economics posed to market fundamentalism during the Great Depression. Star economists like Paul Krugman, Joseph Stiglitz and Dani Rodrik continue to pose their challenges within the confines of neoclassical economics. The fact of the matter is that Filipino intellectuals generally look for guidance from abroad, including from critics of the establishment.

Mantra 3

Neoliberal economics continues to project a hard-science image because it has been thoroughly mathematized. In the aftermath of the recent financial crisis, this extreme formalization has come under criticism from within the economics profession itself, with some contending that methodology rather than substance has become the end of economic practice. As a result, the discipline is losing contact with real-world trends and problems. 

John Maynard Keynes, with a mathematical mind himself, opposed the mathematization of the discipline precisely because of the false sense of solidity this gave to economics. As his biographer Robert Skidelsky notes, Keynes was ‘famously sceptical about econometrics’. For him, numbers were ‘simply clues, triggers for the imagination’.

Be that as it may – getting over neoliberalism will involve moving beyond the scientism that masks itself as science.

Though the challenges may seem daunting, the deepening crisis of globalization – especially in the context of the climate crisis – will lead to economies that are much less globalized. It is, of course, far preferable that this historic transition should take place peacefully and via democratic means. But history provides no guarantees. And, as in the pre-World War Two period, the longer humanity takes to confront the crisis, the greater are the odds against peaceful and democratic solutions.

Walden Bello is a member of the House of Representatives of the Republic of the Philippines, representing Akbayan (Citizens’ Action Party). He is also president of the Freedom from Debt Coalition and senior analyst at the Bangkok-based research and advocacy institute Focus on the Global South. He is the author or co-author of numerous articles and 15 books, the latest of which is Food Wars (Verso, London, 2009).

Deglobalization – 11 prongs of an alternative

The times would seem to be especially propitious for alternative strategies for development. One is ‘deglobalization’, which my colleagues and I at Focus on the Global South have been developing for over a decade.

The key aspects, which we elaborated mainly for developing countries, are as follows:

  1. Production for the domestic market must again become the centre of gravity of the economy, rather than production for export markets.
  2. The principle of ‘subsidiarity’+ should be enshrined in economic life by encouraging production of goods at the community and national level, if this can be done at reasonable cost, in order to preserve community.
  3. Trade policy – quotas and tariffs – should be used to protect the local economy from destruction by corporate-subsidized commodities with artificially low prices.
  4. Industrial policy – including subsidies, tariffs and trade – should be used to revitalize and strengthen the manufacturing sector.
  5. Long-measures of income and land redistribution (including urban land reform) can create a vibrant internal market that would serve as the anchor of the economy and produce local financial resources for investment.
  6. De-emphasizing growth, emphasizing the quality of life and maximizing equity will reduce environmental disequilibrium.
  7. The development and diffusion of environmentally congenial technology in both agriculture and industry should be encouraged. This would include the transformation of energy systems from centralized fossil-fuel-based systems into decentralized systems based on renewable energy sources such as solar, wind and geothermal.
  8. Strategic economic decisions cannot be left to the market or technocrats. Instead, the scope of democratic decision-making in the economy should be expanded so that all vital questions – such as which industries to develop or phase out, or what proportion of the government budget to devote to agriculture – become subject to democratic discussion and choice.
  9. Civil society must constantly monitor and supervise the private sector and the state, a process that should be institutionalized.
  10. The property complex should be transformed into a ‘mixed economy’ that includes community co-operatives, private enterprises and state enterprises, and excludes transnational corporations.
  11. Centralized global institutions, like the International Monetary Fund and the World Bank, should be replaced with regional institutions built not on free trade and capital mobility but on principles of co-operation that, to use the words of Hugo Chávez in describing the Bolivarian Alternative for the Americas, ‘transcend the logic of capitalism’.

+ ‘subsidiarity’ simply suggests that nothing is done centrally that can be done as well, or better, at a less central level. For more information visit www.focusweb.org

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