First and foremost, the crisis has debunked the theory that deregulation of markets will bring greater prosperity. The ‘light touch’ approach is now universally recognized as one of the main causes of the current crisis. Yet the World Trade Organization (WTO) continues to push for the further deregulation of financial markets. It must be stopped. The same applies to even more extreme free trade agreements which the EU, US and others are seeking to negotiate with individual developing countries.
Second, we must point to the underlying imbalance in the global economy. Workers have been denied their fair share in the spoils of globalization. The credit bubble was necessary in order to make up for the shortfall in workers’ earnings. Part of the solution must be to rebalance the global economy by raising wages and removing the root cause of the debt pandemic.
Third, new models have been developed based on principles of food sovereignty, which puts the rights of local populations before the profit motives of agribusiness; and on sustainable development, which builds for the future, while safeguarding the jobs of today.
At the government level the Bolivarian Alternative, Alba, has paved the way for a new generation of trade agreements based on co-operation, not competition.
These are all positive alternatives to set alongside the negative model which has dominated for so long.
There are strong forces lined up in opposition. Corporate lobbyists have reinvented themselves as champions of regulation in order to preserve the system. Already there are new calls to revive the stalled Doha round of WTO negotiations. Politicians are still queuing up to defend the principles of free trade.
Only by deepening the analysis and presenting the positive alternatives can we show people that another world is not just possible, but needed now more than ever.
Executive Director of War on Want.
In a nutshell:
Exit free trade; enter trade justice
A MULTIPOLAR WORLD
For those who look forward to a new world order in which the US and the G7 have less power to set the agenda on their own (even while the US remains the ‘indispensable nation’), the crisis has a silver lining.
The fact that it is the first crisis in history where hopes are pinned on growth in developing countries to rescue the world economy, and the first time that troubled banks in the US and Europe have been rescued by capital injections from developing countries, should jolt the US and the G7 out of complacency about their own leadership and about the truth of market fundamentalism.
The crisis may be a stealthy bridge-building event towards incorporating China and several other ‘emerging market’ states as equal partners, towards a new approach to the role of political authorities in governing the market, and even towards loosening the grip of finance and the military on the US Government.
But the immediate sharp question is whether developing countries will try to break away from their commitment to export-led growth as their exports to the US economy slow, and instead develop internal demand to compensate for falling demand in the North.
If they did, it would be a sure sign of the weakening of the globalization consensus. But to do so they would have to curb soaring income inequality, especially top incomes relative to the median, and redistribute income downwards. So deeply has the globalization consensus eclipsed concern about income inequality worldwide that it hardly features on the public policy agenda except as ‘poverty reduction’.
Professor of Economics at the London School of Economics.
In a nutshell:
Out with Western domination and the ‘globalization consensus’; in with a multipolar world and greater social equality
Just a few days before Congress passed the $700 billion Wall Street bailout bill, it passed another massive spending bill with almost no-one paying attention. It was the Defense Bill: $613 billion for the ‘regular’ military budget, above and beyond this year’s $182 billion in direct costs for the actual wars the Pentagon is fighting today.
When we hear about the consequences of the Wall Street bailout, we hear a lot about inevitable cuts in other budget items. But the military budget is somehow never on the list of those items that could be cut. War production doesn’t create real economic health – what do all those fancy missile systems, space weapons, battleships, even tanks and Humvees, produce other than a lot of dead Iraqis and Afghans?
What better way to ‘bail out’ our battered economy than to provide real jobs to soldiers drafted by lack of opportunities and to redirect the hundreds of billions of war spending into green jobs, rebuilding our crumbling infrastructure, training new teachers and building new schools?
And what better place to find the funds to do that than to end the wars – now – and slash the military budget?
Analyst, activist, Middle East specialist.
In a nutshell:
Slash military budgets; increase social and environmental spending
The need to improve housing for low-income households lies behind recent events. In the case of sub-prime mortgages, families took on debts in the hope of securing a better future. But shelter for low-income families is unlikely to be provided through the market alone. Although rich Northern institutions seem to be short of strategies, the South has a wealth of experiences on which to draw.
Only by deepening the analysis and presenting the positive alternatives can we show people that another world is not just possible, but needed now more than ever
Some of the lowest-income urban citizens – pavement dwellers on the streets of Mumbai – have spawned a financial process that has proved to be significantly more robust in addressing the needs of the poor. Shack/Slum Dwellers International is a network of women-led saving schemes which is active in over 20 countries in Africa, Asia and Latin America. Much of their work focuses on shelter because this is a priority for the members.
The network uses both financial and political strategies. Local groups are skilled in managing savings and loan finance. These local groups work within federations of homeless and landless people. Together they have developed a financial strategy that works for, rather than against, the urban poor. Their model has been tested, securing tenure for over 150,000 low-income families.
What’s so good about it? First, people’s own finance establishes strong and regular savings groups in low-income neighbourhoods. Daily savings collections secure money when it is available and build up relations of trust between neighbours.
Second, the federations are able to negotiate with government and financial institutions. Community networks manage the loan process to ensure that vulnerabilities are not increased.
Third, state subsidies ensure that everyone, even those with the lowest incomes, can secure housing improvements. State finance and other contributions, such as free or low-cost land, are blended with people’s own money to improve affordability and inclusion.
Fourth, there are no short cuts. Families have to see for themselves what they can afford to repay. Members have learnt by experience that they cannot rely on others to manage the finance for them.
At least 900 million people in Southern towns and cities are in housing need. Faced with market and state failure, the urban poor are designing their own programmes and negotiating their own finance.
Senior Researcher, Human Settlements, International Institute for Environment and Development (IIED).
In a nutshell:
Learn from the global South about how to create and finance housing
This is an opportunity for the South to proclaim the death knell of neoliberalism.
Nationalize the banks, but don’t limit it to the failing ones. Open the books to public inspection – let citizens decide how profits can be used for the greater good.
Provide interest-free or cheap loans to small farmers. Subsidize agricultural production so that everyone can afford to eat. If the West can subsidize its farmers, so must we!
Stop capital flight – enact strict exchange controls, and bring an end to speculation. Close all tax-free havens and impose progressive taxes. Prevent repatriation of profits by multinationals – insist that they re-invest in local production.
Invest in ensuring that everyone can be productive and self-respecting citizens through making health, education and social welfare universally accessible. Renationalize the service industries – water, energy, transport, communications – all of which were sold for a song under the rule of neoliberalism. Impose tariffs on imported goods. Refuse to pay odious debts.
Such policies will happen only if there is sufficient mobilization by social movements to demand that our governments make them a reality. That is not going to be easy, since it has been our own élites that have benefited from neoliberal policies. Debates and discussions about alternatives need to be stimulated at every level; in the home, on the farms, in the market place, at schools and in every workplace.
Editor of the Africa-focused Pambazuka News and Executive Director of Fahamu – Networks for Social Justice.
In a nutshell:
Bring an end to speculation; nationalize public services; subsidize agriculture; mobilize civil society
A GREEN NEW DEAL
European politicians, thrown by the urgent need to nationalize banks and ditch free market fetishism, must now turn their attention to tackling unemployment and business closures in the real economy. Already it has been proposed at the European Summit that, in the aftermath of the credit crunch, it will be too expensive to reduce carbon emissions substantially at the same time. Yet it would be foolish to use the economic slowdown as an excuse to water down commitments to tackling climate change, since this can be the very route to providing the huge number of jobs and business opportunities now required for a steady-state economy.
Back in the 1930s, President Roosevelt’s New Deal helped the world emerge from economic depression through a massive public works programme. We now urgently need to update that programme and introduce a Green New Deal.
It would re-regulate the national and international finance systems, encourage fair and green taxation, close down tax havens and generate a transformational economic programme to decarbonize our economy.
At the same time, it would provide secure investments for pensions and savings, using that capital to kick-start a massive public and private works programme to cut energy use.
At its core would be an innovative and exciting 21st century project to make buildings truly energy efficient, with the aim of making every building a generator of power. It would slash fossil fuel use and spark a revolution in renewable energies and energy efficiency, creating many thousands of green-collar jobs in the process.
European leaders must recognize that the Green New Deal is a route map for tackling the triple crunch of the credit crunch, an encroaching peak in oil production, and climate change. It should be put at the heart of their efforts to deal with the economic crisis in order to transform today’s reality of energy insecurity, rising joblessness and economic decline into a more secure future for all.
A Green Member of the European Parliament, she is also a member of the Green New Deal Group.
In a nutshell:
Introduce a New Green Deal to kick-start the economy, create employment and tackle climate change
Everyone now agrees on control. Everyone agrees on the need for regulation. Who does it, and how, is something progressive people should get involved in, because that is going to be the debate.
At present, all regulation stops at national borders. So I think this is also an opportunity to push for international taxation and regulation, such as by closing tax havens and taxing financial transactions and currency speculation. Tax havens, if regulated – and by that I mean closed down – would give governments upwards of an extra $250 billion to play with. So they can’t use the excuse that there aren’t enough funds to invest in social security or give allocations to poor people or educate children or keep the health system ticking over during this financial crisis. The money is there.
Many people will have to suffer for the sins of neoliberalism and the élite; millions throughout the world will lose their jobs and livelihoods
Then it could be an opportunity – but this would take much more effort on the part of progressive people – to encourage taxes beyond national borders, on currency transactions, purchases of stocks, bonds and other financial instruments. Transnational corporations ought to have to pay taxes on earnings in each jurisdiction, so that it can be seen what they pay where. That should be the beginning of what we call a Unitary Profits Tax. If transnational corporations sold half their goods in France, then they should have to pay half their tax in France. That’s the idea of the Unitary Profits Tax.
I think we would have to think seriously about the South – that’s the point of the New Internationalist – because remittances are probably going to dry up quite a lot. Immigrants will be the first people hit. We have to make a big investment in the environment, to fund a conversion – a rapid and profound conversion away from fossil fuels. And the banks have to be made to contribute. The thing that is so disgraceful about this bailout is that everyone can see that you can find billions for the banks in half an hour, but that you don’t get anything in return. With the banks now being nationalized or renationalized, you could direct investments towards all kinds of things, much in the way Franklin Roosevelt did during the Depression.
It’s time for an ‘Ecological Keynesianism’ – a massive public spending plan towards ecologically sound projects and technologies that will ultimately reorient our economies towards more progressive aims. And of course it’s deliverable: we have most of the technology we need already. Some green technologies are very expensive, but if you mass-produce them the costs go down considerably and almost right away. What the economist John Maynard Keynes dreamed of was a trade organization with a financing arm which would have prevented us from getting into huge deficits on one side, and huge surpluses on another. I don’t say it would have prevented the financial crisis, but certainly if we had had different organizations emerging from the Havana Charter in 1947, the whole trading and financial systems would have been infinitely different.
Susan George is Chair of the Board of the Transnational Institute. Her latest books are Hijacking America: How the religious and secular right changed what Americans think, and We, the peoples of Europe.
In a nutshell:
Push for international taxation; direct the lending of nationalized banks; a massive public spending plan
The crisis presents an opportunity for reorienting economies away from global markets and global commodity chains and towards local and regional markets and production. Globalization’s final indictment is the synchronized downturn now facing the world, because so many economies have become integrated and dependent on one another. We are, hopefully, going to enter the age of deglobalization.
Many people will have to suffer for the sins of neoliberalism and the élite; millions throughout the world will lose their jobs and livelihoods. We must have something like the International Criminal Court to try people, like Alan Greenspan, whose actions create widespread misery and chaos. A petty swindler goes to jail for years, but an intellectual swindler remains scot-free.
The International Monetary Fund and World Bank have been thoroughly discredited by the central role they played in promoting neoliberalism and globalization. But now in panic, some countries, like Pakistan and Ukraine, are going to the Fund. The US and some European countries are now talking about a ‘Bretton Woods II’ that would place the Fund and the World Bank at the centre of efforts to deal with the financial crisis as dispensers of emergency capital to developing countries. Even otherwise progressive people like the economist Dani Rodrik are talking about placing the IMF at the centre of the firefighting. This is a big mistake. Developing countries should be talking about forming regional funds and strengthening regional relations rather than reinvigorating these Jurassic institutions.
Focus on the Global South, Thailand.
In a nutshell:
Deglobalize; strengthen regional South-South relations; put Greenspan et al on trial
To Kiran, who makes her living as a sweeper in a small town in the northern Indian state of Punjab, the current financial crisis means little. Life will still remain precarious, her regular income paltry, and someone or the other in the family – usually her – will always be partially hungry. But for her daughter, Seema, even though she’s probably never heard of the Lehman brothers or American banks, there’s the very real threat of losing her job in a business processing centre if the parent company decides to cut back on its outsourcing. She doesn’t know if this will happen, but she’s heard it might, and she may then find it difficult to locate another job.
In some ways, the panic about the financial meltdown is very, very far away from the lives of poor women in India. It’s true that the danger signals are there for all to see: increasingly, as our economies are linked to the US, such shocks reverberate much more widely. But there’s also the fact that India has a fairly robust economy; that while the current 7.5 per cent growth may slow down, it will still be growth; that many banks in India were nationalized three decades ago (a move that saw much opposition then, but is seen quite differently now); and that most poor people, more specifically poor women, have their savings in nationalized banks – many through micro-credit groups.
Not so for women at the upper end of the scale, or closer to its middle. For them, the financial crisis has had a deep and profound impact – share prices have dropped, hard earned savings invested in the market have all but disappeared, and although there is a sense that things may start to improve, that doesn’t take away from the shock of losing perhaps the only security you have in a country where economic security for women is both precious and rare.
A less obvious, but much more serious implication is what this will mean for women’s equality. One of the already unreached Millennium Development Goals, equality, according to a recent World Bank and OECD study, needs an investment of roughly $13 billion a year to be achievable. It’s no secret that in times of financial belt-tightening, the first things to suffer are what are seen as ‘social’ issues (under which rubric things such as health, education, and certainly equality usually come). Not only is it very likely that the $13 billion will not now be so easily forthcoming, but governments too will in all probability use the excuse of the financial crisis to make cutbacks.
So while Kiran may not feel the impact in the way that Seema might, what is certain is that, somewhere along the way, any improvements that have taken place in the conditions of their lives are likely to be under threat. And this is why it is so important for governments to focus not only on money, but also on those absolutely basic, but difficult-to-grasp things that underlie its movement across the world: the status and well-being of people, particularly those on the margins of society.
is a Delhi-based writer and feminist publisher.
In a nutshell:
Don’t cut aid; focus on people
Campaigns, contacts and resources
Bretton Woods Project www.brettonwoodsproject.org
Focus on the Global South www.focusweb.org
The Transnational Institute www.tni.org
Halifax Initiative Coalition www.halifaxinitiative.org
Jubilee Debt Campaign www.jubileedebtcampaign.org.uk
Third World Network www.twnside.org.sg
The Corner House www.thecornerhouse.org.uk
IFI Watch www.ifiwatchnet.org
War on Want www.waronwant.org
Tax Justice Network www.taxjustice.net
New Economics Foundation www.neweconomics.org
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