The Virtues of Deglobalization

September 5, 2009

By Walden BelloForeign Policy in Focus, 3 September 2009

The current global downturn, the worst since the Great Depression 70 years ago, pounded the last nail into the coffin of globalization. Already beleaguered by evidence that showed global poverty and inequality increasing, even as most poor countries experienced little or no economic growth, globalization has been terminally discredited in the last two years. As the much-heralded process of financial and trade interdependence went into reverse, it became the transmission belt not of prosperity but of economic crisis and collapse.

End of an Era

In their responses to the current economic crisis, governments paid lip service to global coordination but propelled separate stimulus programs meant to rev up national markets. In so doing, governments quietly shelved export-oriented growth, long the driver of many economies, though paid the usual nostrums to advancing trade liberalization as a means of countering the global downturn by completing the Doha Round of trade negotiations under the World Trade Organization. There is increasing acknowledgment that there will be no returning to a world centrally dependent on free-spending American consumers, since many are bankrupt and nobody has taken their place.

Moreover, whether agreed on internationally or unilaterally set up by national governments, a whole raft of restrictions will almost certainly be imposed on finance capital, the untrammeled mobility of which has been the cutting edge of the current crisis.

Intellectual discourse, however, hasn’t yet shown many signs of this break with orthodoxy. Neoliberalism, with its emphasis on free trade, the primacy of private enterprise, and a minimalist role for the state, continues to be the default language among policymakers. Establishment critics of market fundamentalism, including Joseph Stiglitz and Paul Krugman, have become entangled in endless debates over how large stimulus programs should be, and whether or not the state should retain an interventionist presence or, once stabilized, return the companies and banks to the private sector. Moreover some, such as Stiglitz, continue to believe in what they perceive to be the economic benefits of globalization while bemoaning its social costs.

But trends are fast outpacing both ideologues and critics of neoliberal globalization, and developments thought impossible a few years ago are gaining steam. “The integration of the world economy is in retreat on almost every front,” writes the Economist. While the magazine 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.”

“Deglobalization,” a term that the Economist attributes to me, is a development that the magazine, the world’s prime avatar of free market ideology, views as negative. I believe, however, that deglobalization is an opportunity. Indeed, my colleagues and I at Focus on the Global South first forwarded deglobalization as a comprehensive paradigm to replace neoliberal globalization almost a decade ago, when the stresses, strains, and contradictions brought about by the latter had become painfully evident. Elaborated as an alternative mainly for developing countries, the deglobalization paradigm is not without relevance to the central capitalist economies.

11 Pillars of the Alternative

There are 11 key prongs of the deglobalization paradigm:

  1. Production for the domestic market must again become the center 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 level of the community and at the national level if this can be done at reasonable cost in order to preserve community.
  3. Trade policy — that is, 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-postponed measures of equitable income redistribution 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. Deemphasizing growth, emphasizing upgrading 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.
  8. Strategic economic decisions cannot be left to the market or to 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, what proportion of the government budget to devote to agriculture, etc. — 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 cooperatives, private enterprises, and state enterprises, and excludes transnational corporations.
  11. Centralized global institutions like the IMF and the World Bank should be replaced with regional institutions built not on free trade and capital mobility but on principles of cooperation that, to use the words of Hugo Chavez in describing the Bolivarian Alternative for the Americas (ALBA), “transcend the logic of capitalism.”

From the Cult of Efficiency to Effective Economics

The aim of the deglobalization paradigm is to move beyond the economics of narrow efficiency, in which the key criterion is the reduction of unit cost, never mind the social and ecological destabilization this process brings about. It is to move beyond a system of economic calculation that, in the words of John Maynard Keynes, made “the whole conduct of life…into a paradox of an accountant’s nightmare.” An effective economics, rather, strengthens social solidarity by subordinating the operations of the market to the values of equity, justice, and community by enlarging the sphere of democratic decision making. To use the language of the great Hungarian thinker Karl Polanyi in his book The Great Transformation, deglobalization is about “re-embedding” the economy in society, instead of having society driven by the economy.

The deglobalization paradigm also asserts that a “one size fits all” model like neoliberalism or centralized bureaucratic socialism is dysfunctional and destabilizing. Instead, diversity should be expected and encouraged, as it is in nature. Shared principles of alternative economics do exist, and they have already substantially emerged in the struggle against and critical reflection over the failure of centralized socialism and capitalism. However, how these principles — the most important of which have been sketched out above — are concretely articulated will depend on the values, rhythms, and strategic choices of each society.

Deglobalization’s Pedigree

Though it may sound radical, deglobalization isn’t really new. Its pedigree includes the writings of the towering British economist Keynes who, at the height of the Depression, bluntly stated: “We do not wish…to be at the mercy of world forces working out, or trying to work out, some uniform equilibrium, according to the principles of laissez faire capitalism.”

Indeed, he continued, over “an increasingly wide range of industrial products, and perhaps agricultural products also, I become doubtful whether the economic cost of self-sufficiency is great enough to outweigh the other advantages of gradually bringing the producer and the consumer within the ambit of the same national, economic and financial organization. Experience accumulates to prove that most modern mass-production processes can be performed in most countries and climates with almost equal efficiency.”

And with words that have a very contemporary ring, Keynes concluded, “I sympathize…with those who would minimize rather than with those who would maximize economic entanglement between nations. Ideas, knowledge, art, hospitality, travel — these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible; and, above all, let finance be primarily national.”

Foreign Policy in Focus columnist Walden Bello is a member of the House of Representatives of the Philippines and senior analyst at the Bangkok-based research and advocacy institute Focus on the Global South.


People’s Water Forum Declaration 2009

March 20, 2009

Istanbul, People’s Water Forum 2009

After Mexico City 2006, which was an important milestone of the continuous work of the global movement for water justice, we have now gathered in Istanbul to mobilize against the 5th World Water Forum. We are here to delegitimize this false, corporate driven World Water Forum and to give voice to the positive agenda of the global water justice movements!

Given that we are in Turkey, we cannot ignore that this country provides a powerful example of the devastating impacts of destructive water management policies. The Turkish government has pushed for the privatization of both water services, watersheds and has plans to dam every river in the country. Four specific cases of destructive and risky dams in Turkey, include the Ilisu, Yusufeli, Munzur and Yortanli dams. For ten years, affected people have intensively opposed these projects, in particular, the Ilisu dam which is part of a larger irrigation and energy production project known as the South East Anatolia Projects, or GAP. The Ilisu dam ? one of the most criticized dam projects worldwide? is particularly compex and troubling because of its implications on international policy in the Middle East. The dam is situated in the Kurdish-settled region where there are ongoing human rights violations related to the unsolved Kurdish question. The Turkish government is using GAP to negatively impact the livelihood of the Kurdish people and to suppress their cultural and political rights.

We, as a movement, are here to offer solutions to the water crisis, and to demand that the UN General Assembly  organize the next global forum on water. The participation of important United Nations officials and representatives in our meeting is evidence that something has changed. There is a tangible and  symbolic shift of legitimacy: from the official Forum organized by private interests and by the World Water Council to the Peoples Water Forum, organized by global civil society including, farmers, indigenous peoples, activists, social movements, trade unions, non-governmental organizations and networks that struggle throughout the world in the defense of water and territory and for the commons.

We call on the United Nations and its member states to accept its obligation, as the legitimate global convener of multilateral forums, and to formally commit to hosting a forum on water that is linked to state obligations and is accountable to the global community. We call upon all organizations and governments at this 5th World Water Forum, to commit to making it the last corporate-controlled water forum. The world needs the launch of a legitimate, accountable, transparent, democratic forum on water emerging from within the UN processes supported by its member states.

Confirming once again the illegitimacy of the World Water Forum, we denounce the Ministerial Statement because it does not recognize water as a universal human right nor exclude it from global trade agreements. In addition the draft resolution ignores the failure of privatization to guarantee the access to water for all, and does not take into account those positive recommendations proposed by the insufficient European Parliamentary Resolution. Finally, the statement promotes the use of water to produce energy from hydroelectric dams and the increased production of fuel from crops, both of which lead to further inequity and injustice.

We reaffirm and strengthen all the principles and commitments expressed in the 2006 Mexico City declaration: we uphold water as the basic element of all life on the planet, as a fundamental and inalienable human right; we insist that solidarity between present and future generations should be guaranteed; we reject all forms of
privatization and declare that the management and control of water must be public, social, cooperative, participatory, equitable, and not for profit; we call for the democratic and sustainable management of ecosystems and to preserve the integrity of the water cycle through the protection and proper management of watersheds and environment.

We oppose the dominant economic and financial model that prescribes the privatization, commercialization and corporatization of public water and sanitation services. We will counter this type of destructive and non-participatory public sector reform, having seen the outcomes for poor people as a result of rigid cost-recovery
practices and the use of pre-paid meters.

Since 2006, in Mexico, the global water justice movement has continued to challenge corporate control of water for profit. Some of our achievements include: reclaiming public utilities that had been privatized; fostering and implementing public-public partnerships; forcing the bottled water industry into a loss of revenue; and coming together in collective simultaneous activities during Blue October and the Global Action Week. We celebrate our achievements highlighted by the recognition of the human right to water in several constitutions and laws.

At the same time we need to address the economic and ecological crises. We will not pay for your crisis! We will not rescue this flawed and unsustainable model, which has transformed: unaccountable private spending into enormous public debt, which has transformed water and the commons into merchandise, which has transformed the whole of Nature into a preserve of raw materials and into an open-air dump.

The basic interdependence between water and climate change is recognized by the scientific community and is underlined also by the Intergovernmental Panel on Climate Change. Therefore, we must not accept responses to climate chaos in the energy sector that follow the same logic that caused the crisis in the first place. This is a logic that jeopardizes the quantity and quality of water and of life that is based on dams, nuclear power plants, and agro-fuel plantations. In December 2009, we will bring our concerns and proposals to the United Nations Climate Change Conference in Copenhagen.

Further, the dominant model of intensive industrial agriculture, contaminates and destroys water resources, impoverishes agricultural soils, and devastates food sovereignty. This has enormous impact on lives and public health. From the fruitful experience of the Belem World Social Forum, we are committed to strengthening the strategic alliance between water movements and those for land, food and climate.

We also commit to continue building networks and new social alliances, and to involve both local authorities and Parliamentarians who are determined to defend water as a common good and to reaffirm the right to fresh water for all human beings and nature. We are also encouraging all public water utilities to get together, establishing national associations and regional networks.

We celebrate our achievements and we look forward for our continued collaboration across countries and continents!


Writing on Water: Democratisation in Water Management

March 14, 2009

Video on the Pan Asian Water Colloquium held in Chennai, September 25 to 30th 2008. A group of Water Activists, Operators, Unionists, Academics, Researchers and Policy makers from 18 countries across the globe assembled in Chennai to participate in the Pan Asian Colloquium on “Rights to Water: Challenges and Solutions”. This film is a documentation of the journey of the delegates as they explore alternatives and experience the “The Democratization Experiment” of the Tamilnadu Water supply and Drainage baord. (TWAD). 

Part One: The adverse effects of the privatization of water in various parts of the world becomes apparent as the delegates share their experiences. Given that ‘Water’ is part of the Global commons and that privatization needs to be resisted; how does one proceed forward. What are the alternatives? What is this TWAD experiment. How and where does the journey begin?

Part Two: If the journey begins with the self; the transformation of the individual first; then can individual transformation become institutional transformation? The delegates visit a village near Chennai and see the result of the personal transformation and the spirit of voluntarism in one TWAD Engineer.

Part Three: The myths propounded the international financial institutions on the trillion dollar requirement for meeting the Milleinnum Development Goals on Water are demolished.

Part Four: The enabling tools of the process of transformation are discussed. “Koodam” as a concept of democratization is elaborated and how the voluntarism generated enthuses true community participation.

Part Five: The main issues of the Water Debate are discussed threadbare by the delegates from various countries; reaching the conclusion that one cannot ignore working with the governments.

Part Six: Inspired by the vision of a village community who have painted in the wall of a building, what they  want the village to be in ten years time; the delegates each take a vow to fight for reclaiming public water and to work to spread the idea of the democratization of water management.

Further resource: The report from the Pan-Asian Water Colloquium


Call for a Global Week of Action against Capitalism and War from March 28 to April 4

March 9, 2009

DECLARATION OF THE ASSEMBLY of SOCIAL MOVEMENTS AT THE WORLD SOCIAL FORUM 2009

We won’t pay for the crisis. The rich have to pay for it !

Anti-imperialist, anti-capitalist, feminist, environmentalist and socialist alternatives are necessary

We the social movements from all over the world came together on the occasion of the 8th World Social Forum in Belém, Amazonia, where the peoples have been resisting attempts to usurp Nature, their lands and their cultures. We are here in Latin America, where over the last decade the social movements and the indigenous movements have joined forces and radically question the capitalist system from their cosmovision. Over the last few years, in Latin America highly radical social struggles have resulted in the overthrow of neoliberal governments and the empowerment of governments that have carried out many positive reforms such as the nationalisation of core sectors of the economy and democratic constitutional reforms.

In this context the social movements in Latin America have responded appropriately, deciding to support the positive measures adopted by these governments while keeping a critical distance. These experiences will be of help in order to strengthen the peoples’ staunch resistance against the policies of governments, corporations and banks who shift the burden of the crisis onto the oppressed. We the social movements of the globe are currently facing a historic challenge. The international capitalist crisis manifests itself as detrimental to humankind in various ways: it affects food, finance, the economy, climate, energy, population migration… and civilisation itself, as there is also a crisis in international order and political structures.

We are facing a global crisis which is a direct consequence of the capitalist system and therefore cannot find a solution within the system. All the measures that have been taken so far to overcome the crisis merely aim at socialising losses so as to ensure the survival of a system based on privatising strategic economic sectors, public services, natural and energy resources and on the commoditisation of life and the exploitation of labour and of nature as well as on the transfer of resources from the Periphery to the Centre and from workers to the capitalist class.

The present system is based on exploitation, competition, promotion of individual private interests to the detriment of the collective interest, and the frenzied accumulation of wealth by a handful of rich people. It results in bloody wars, fuels xenophobia, racism and religious fundamentalisms; it intensifies the exploitation of women and the criminalisation of social movements. In the context of the present crisis the rights of peoples are systematically denied. The Israeli government’s savage aggression against the Palestinian people is a violation of International Law and amounts to a war crime, a crime against humanity, and a symbol of the denial of a people’s rights that can be observed in other parts of the world. The shameful impunity must be stopped. The social movements reassert their active support of the struggle of the Palestinian people as well as of all actions against oppression by peoples worldwide.

In order to overcome the crisis we have to grapple with the root of the problem and progress as fast as possible towards the construction of a radical alternative that would do away with the capitalist system and patriarchal domination. We must work towards a society that meets social needs and respects nature’s rights as well as supporting democratic participation in a context of full political freedom. We must see to it that all international treaties on our indivisible civic, political, economic, social and cultural rights, both individual and collective, are implemented.

In this perspective we must contribute to the largest possible popular mobilisation to enforce a number of urgent measures such as:

- Nationalising the banking sector without compensations and with full social monitoring, 
- Reducing working time without any wage cut, 
- Taking measures to ensure food and energy sovereignty 
- Stopping wars, withdraw occupation troops and dismantle military foreign bases 
- Acknowledging the peoples’ sovereignty and autonomy ensuring their right to self-determination 
- Guaranteeing rights to land, territory, work, education and health for all. 
- Democratise access to means of communication and knowledge.

The social emancipation process carried by the feminist, environmentalist and socialist movements in the 21st century aims at liberating society from capitalist domination of the means of production, communication and services, achieved by supporting forms of ownership that favour the social interest: small family freehold, public, cooperative, communal and collective property.

Such an alternative will necessarily be feminist since it is impossible to build a society based on social justice and equality of rights when half of humankind is oppressed and exploited.

Lastly, we commit ourselves to enriching the construction of a society based on a life lived in harmony with oneself, others and the world around (“el buen vivir”) by acknowledging the active participation and contribution of the native peoples.

We, the social movements, are faced with a historic opportunity to develop emancipatory initiatives on a global scale. Only through the social struggle of the masses can populations overcome the crisis. In order to promote this struggle, it is essential to work on consciousness-raising and mobilisation from the grassroots. The challenge for the social movements is to achieve a convergence of global mobilisation. It is also to strengthen our ability to act by supporting the convergence of all movements striving to withstand oppression and exploitation.

We thus commit ourselves to:

Launch a Global Week of Action against Capitalism and War from March 28 to April 4, 2009 with:

- anti-G20 mobilisation on March 28, 
- mobilisation against war and crisis on March 30, 
- a Day of Solidarity with the Palestinian People to promote boycott, disinvestment and sanctions against Israel on March 30, 
- mobilisation for the 60th Anniversary of NATO on April 4, etc.

Increase occasions for mobilisation through the year:

- March 8, International Women Day; 
- April 17, International Day for Food Sovereignty; 
- May 1, International Workers’ Day; 
- October 12, Global Mobilisation of Struggle for Mother Earth, against colonisation and commodification of life. 
- Schedule an agenda of acts of resistance against the G8 Summit in Sardinia, the Climate Summit in Copenhagen, the Summit of the Americas in Trinidad and Tobago, etc.

Through such demands and initiatives we thus respond to the crisis with radical and emancipatory solutions.


Development Redefined

March 9, 2009

John Cavanagh and Robin Broad, Foreign Policy in Focus25 September 2008

Beginning in the 1980s, a “Washington Consensus” that free markets were the solution to poverty dominated development theory, policy, and practice around the world. Today, just as faith in deregulated markets has evaporated in the nightmare on Wall Street, so too is the long reign of market fundamentalism (or neoliberalism) ending in the development arena. And, a debate over the best route to development — a debate that was vibrant in the 1970s and earlier — has returned. Various phenomena account for this. We highlight these below, along with some of the alternative approaches that are springing up around the world.

Crises at the World Bank, IMF, and WTO

In mid-2007, a New York Times article started with words that would have been unimaginable in the mainstream press even a half-decade earlier: “[T]he entire international economic architecture established after World War II — the World Bank, the International Monetary Fund and what is now called the World Trade Organization — is buckling under the weight of globalization, trade disputes and the ambitions of rising economic power in Asia and elsewhere.”

Why are the multilateral financial and trade institutions that have served as the key public levers of the Wash­ington Consensus so significantly weakened? As chronicled in our new book Development redefined: How the market met its match, adverse impacts of their policies — and the arrogance and recalcitrance of these institutions — over these past decades have sparked public opposi tion around the world. This became even more widespread after their spectacular failure in the Asian financial crisis. In addition to their crises of credibility and legitimacy, the World Bank and the IMF are now experiencing financial difficulties as countries bypass their resources and turn instead to China, Venezuela, and other new donors for loans, often less encumbered by onerous conditions.

The World Bank, desperate to keep middle-income clients from which it earns income, has announced plans to reduce interest rates on its loans to them. The Bank liberally deploys the rhetoric of its critics, from poverty reduction to more consultation with the public to an acknowledgment of the necessity of governments. Its structural adjustment loans have been relabeled “anti-poverty loans” and “development policy support” loans. But those changes are largely cosmetic. A report by the European Network on Debt and Development, for example, discovered that — contrary to the Bank’s claim that Washington Consensus polices no longer dominated its conditionality — the Bank “is still making heavy use of [such] economic policy conditionality, especially in sensitive areas such as privatization and liberalization.” In addition, the Bank has suffered stinging external critiques about the objectivity and reliability of its research — especially that related to economic globalization and its purported undisputed proof that liberalization causes economic growth.

In 2007, the World Bank’s self-advertisement that it stands with the poor and against corruption came under particularly heavy public ridicule during a protracted internal dispute (turned media frenzy) over then president Paul Wolfowitz’s overly generous pay packages for his partner (a World Bank employee) and his top deputies (most, like himself, neoconservatives who came out of the Bush administration). This scandal heightened the criticism of U.S. power in the Bank, the inequitable voting structure, and the 60-year-old “tradition” whereby the U.S. government selects the Bank president and Europeans pick the head of the IMF.

The International Monetary Fund is in even more dire shape than the Bank. After the disasters of the Asian financial crisis demonstrated the Fund’s ineptitude, the Fund’s next moment of truth began in 2001-2002, when its long-time model client Argentina faced economic collapse, defaulted on many of its debts, changed course as it rejected IMF prescriptions, and went on to grow rapidly in the ensuing years. As USA Today phrased it, “by defying the conventional economic wisdom…and shunning the…International Monetary Fund,” Argentina became “Exhibit A for those who doubt globalization’s one-size-fits-all policy prescription.” Other IMF clients became so keen to get out of the Fund’s grasp that they are paying back in full and in advance. Indeed, in 2007, the bulk of the Fund’s outstanding loans were to Turkey, leading The Economist to call it the “Turkish Monetary Fund.” The irony of the long-time lender-of-last-resort and manager of financial crises being in its own financial crisis has not been lost on observers.

Thus both the Bank and Fund stand today as significantly weakened institutions, but both are desperately trying to regain credibility, legitimacy, and power.

In 2007, in a shrewd move, the Bush administration chose Washington Consensus backer and former U.S. trade representative Robert Zoellick to head the Bank. Zoellick already has at least one victory for the Bank under his belt, having successfully convinced governments to put new resources into its lending facility for the very poorest nations (the International Development Association). More controversially, he has broached the idea of accepting contributions from corporations and foundations — a move that would call into question the public character of the Bank. And the Bank is attempting to place itself center stage as the public institution to address the climate crisis, notwithstanding the hypocrisy that it still pours billions of dollars annually into fossil-fuel loans.

So too is the IMF trying to remake itself. Soon after Dominique Strauss-Kahn took over as IMF managing director in 2007, he admitted that the institution is struggling with relevance and mandate (“[I]t is a factory to produce paper”) and announced plans to deal with the Fund’s financial shortfall, in part by a large-scale cut of staff. Fund officials are deeply worried that when the next financial crisis erupts, poorer nations might bypass the Fund altogether and turn to emerging regional institutions for short-term finance. As Strauss-Kahn acknowledged to The Wall Street Journal: “The legitimacy of the IMF relies upon the capacity to have everybody on board, including those countries with which there have been problems in the past.”

This recent weakening of the Bank and Fund is correlated with a weakened ability to use the Third World debt crisis to impose Washington Consensus conditions on poorer nations — a decided change from a quarter-century ago. Indeed, many larger and faster growing poorer nations have escaped Bank and Fund surveillance by building up foreign exchange reserves and finding alternative sources of finance. But, one has to be careful not to generalize. Many smaller, indebted, poorer nations, especially in Africa, are still burdened with external debt and remain dependent on Bank and Fund loans and subject to their strictures. That is especially true of countries dependent on importing increasingly expensive fossil fuels and food. Even here, however, there are notable exceptions: some of the poorest countries have qualified for debt relief (but with conditionality attached); others have found alternative sources of funding (witness Bolivia).

And some have dared to challenge Bank dictums. In a case that is subjecting the Bank to criticism and embarrassment akin to what the Fund faced on Argentina, Malawi has reacted to a crisis in its domestic corn crop and impending famine by reinstating fertilizer subsidies that the Bank had pressed it to slash. The result? In 2007, Malawi is not only feeding its own population but also exporting corn to Zimbabwe.

Additionally, the global trade body, the WTO, stands on the verge of failure to complete a new round of trade rules. Negotiations have broken down many times since the 2001 launch of the so-called Development Round (or Doha Round), including in late 2007. What is clear is the inability of the United States, Europe, and Japan to control trade negotiations as they once did. Part of the challenge comes from the strengthened voice of some Southern governments. Part is from the growing sophistication of civil society groups in critiquing the proposals. The WTO’s credibility as an institution representing interests of rich and poor alike is also under broad attack, with growing acknowledgement by insiders and outsiders that the likely gains from a new trade round are less than previously hyped, and that most of the gains will likely stay in the North. A Tufts University study brought attention to World Bank data showing a “likely scenario” from the negotiations of Southern “gains” of only $6.7 billion versus Northern gains of $31.7 billion — or, in more stark terms, an average of “less than a penny a day for those in the developing world.”

The waning power of the Bank and Fund and the paralysis of the WTO negotiations have re-created some of the policy space that the Consensus had taken away. The debate is out in the open; more are acknowledging that the emperor has no clothes.

The Development Debate Returns

Let’s be very clear: market fundamentalism has not disappeared. There are still some stalwart defenders of the Washington Consensus, and Jeffery Sachs’s and Thomas Friedman’s new offshoots of the religion still attract converts. There are some who still feel that markets are the sole route to prosperity; these individuals argue for minor tinkering of the Consensus, but want to leave it largely intact. Nor is it easy for Southern governments to break with the Consensus or its institutions: Brazil, led by a former metalworker and union leader, has shown how hard it is to shake neoliberal policies as his government has continued to pursue export-oriented industrialization and agribusiness. Moreover, there are still many poorer nations (particularly in Africa) that remain mired in debt and dependent on international financial institutions, with seemingly little space to maneuver away from Consensus prescriptions. The World Bank, IMF, and WTO desperately search for redemption and new roles. Global corporations remain powerful actors on global stages; many look to expand sales by draping themselves in eco-friendly rhetoric.

These caveats notwithstanding, the public institutions that were the main enforcers of the Washington Consensus are in crisis, and the legitimacy of market fundamentalism is severely diminished. The renewed energy that the Consensus received from the terrorist attacks of September 11 proved to be relatively short-lived, weakened in part by the ineptness of the George W. Bush administration’s overall response to terrorism. Almost none of the participants in the development debate of today would argue that the market alone is enough. The curtain has been pulled away to expose the inflated pretensions of neoliberalism; the little man who was the Wizard of Oz is revealed for all who are willing to look.

Significantly, debate has even found its way back to academic economists. As The New York Times phrased it in a title to a 2007 article: “In Economics Departments, a Growing Will to Debate Fundamental Assumptions.” In that article Robert Reich, a former cabinet minister in the Clinton administration, explained: “Economists can’t pretend that the consensus for free markets and free trade that existed 30 years ago is still here.”

Daily, new forces rise to challenge the Consensus and create alternatives to it. No longer can Consensus backers claim that “there is no alternative.”

Alternatives in Action

Although there are many different proposals, most alternative projects have as a common starting point a redefinition of development. Most groups in the movement prioritize the fulfillment of people’s basic social, economic, cultural, and political rights. They measure progress in terms of the improved health and well-being of children, families, communities, democracy, and the natural environment. Rather than a linear “takeoff,” development in this view involves the redistribution of political power and wealth down ward. A team of researchers from richer and poorer countries (including the authors) affiliated with the International Forum on Globalization worked collectively — discussing and debating — to distill the alter-globalization movement’s principles in Alternatives to Economic Globalization: democracy, ecological sustainability, subsidiary (favoring local production), protection of common resources (such as air, water, and parks), human rights, food security, equity, and cultural and biological diversity.

These goals are important, but part of what is exciting is that alternatives in action — which build on the above principles — abound. In the introduction to this book, we outlined how in the 1960s and 1970s, alternatives took shape at local (Tanzania’s self-reliant villages), national (import-substitution industrialization by Brazil and other countries), regional (the common markets), and global (New International Economic Order) levels. The same is true today, although there is a crucial difference between that era of debate and different paths of development, and the period we are entering now: the actors involved. In the 1960s and 1970s, the key actors pressing for change were largely Third World governments, energized by key intellectuals with a clear framework for change. Today, the dynamism for change is coming much more from social movements and citizen organizations, which are both creating alternatives and pressing governments and global institutions for change. In the words of Oscar Olivera, the Bolivian activist who has led several campaigns to keep municipal water systems out of the hands of global corporations, “[T]he true transformational power of life resides in people’s capacity for organization and mobilization.”

Many citizen groups and governments are also rethinking aid and open markets, which neoliberalism so single-mindedly promoted. In the Philippines and several other countries, citizen groups have set up innovative structures to channel aid money to endow foundations, which in turn fund small-scale, grassroots projects that often help local groups control and manage forest and fishing resources in a sustainable manner. On the debt front, Ecuador appears to have launched a significant initiative in 2007 by setting up a National Debt Audit Commission tasked with “establish[ing] the illegitimacy and illegality of the debts claimed of the Ecuadorean government and to recommend measures for securing justice and reparation.”

The “fair trade movement” seeks to bypass global corporations and set up alternative trading arrangements that discourage sweatshop working conditions and environmental destruction while ensuring that benefits remain local. This includes product labeling initiatives that let consumers know that rugs have been produced without child labor (RugMark), T-shirts have been sewn by workers paid a living wage (No Sweat), and wood products have been made from timber that was harvested in a sustainable manner (Forest Stewardship Council). Numerous outlets — from Equal Exchange in Massachusetts to Dean’s Beans — now sell “fair trade” coffee from Latin America, Africa, and Asia that has been certified by a third-party monitor. There is even fair trade music.

Note: This is an excerpt from Development redefined: How the market met its match, a book by Robin Broad and John Cavanagh recently published by Paradigm Publishers.


Thai village’s novel solution to downturn

February 18, 2009

AlJazeera, February 17, 2009 Like many countries around the world, Thailand is battling the effects of the global economic crisis. But residents of one Thai village have found a novel way to shield themselves against the downturn – making their own cash.

Al Jazeera’s Selina Downes travelled to the village of Santi Suk to find out more.


‘Globalization From Below’ Tackles the ‘Great Recession’

January 27, 2009

*By Jeremy Brecher, Brendan Smith, and Tim Costello

[As tens of thousands of activists from around the world gather in Belem, Brazil for the World Social Forum, social movements everywhere are debating how to respond to the ever-deepening economic crisis.  This article is excerpted from the longer Discussion Paper “GLOBALIZATION FROM BELOW” TACKLES THE “GREAT RECESSION” prepared by Global Labor Strategies.] 

At the pit of the Great Depression in 1930, an American country music group named the Carter Family recorded a song called The Worried Man Blues. It began:

“I went down to the river and I lay down to sleep 
When I woke up there were shackles on my feet.”

Though many subsequent verses describe the horrific outcome, there is no explanation of what had happened or why – just an awakening to a seemingly endless catastrophe.  The song immediately became an unprecedented national hit.  It’s hard to imagine that its success didn’t have something to do with capturing the sense of being the helpless victim of incomprehensible disaster that so many felt in the face of the Great Depression. 

The seemingly sudden collapse of the global economy in 2008 has similarly left millions, indeed billions of people all over the world a victims of a catastrophe that appears both inexplicable and unending. 

But what’s now being dubbed the “Great Recession” is neither incomprehensible nor irremediable.  On the contrary, it can be understood as an expectable result of a capitalism that has been globalized and at the same time “freed” by neoliberalism of control in the public interest.     

The economic globalization that transformed the world at the turn of the century promised, according to its advocates, a glorious vista of prosperity that would provide unprecedented economic growth and raise billions of people out of poverty.  In practice it generated personal and national insecurity, growing inequality, and a race to the bottom in which every community, nation, and workgroup had to reduce its social, environmental, and labor conditions to that of its most impoverished competitor. 

But economic globalization also gave birth to a new convergence of global social forces that opposed this kind of globalization.  People all over the world fought back against this “globalization from above” with their own “globalization from below.”  They used asymmetrical strategies of linking across the borders of nations and constituencies to become a counter power to the advocates of globalization.  They created a movement – variously known as the global justice movement, the anti-globalization movement, global civil society, or as we call it, “globalization from below” — that some in the media even characterized as “the world’s other superpower.”

The anti-globalization/global justice/globalization-from-below movement developed in response to the expansive phase of globalization and neoliberalism.  Now the global economy has entered the most severe financial crisis since the Great Depression.  The financial crisis has turned out to be the start of a cascade of other economic crises that are reshaping the global economy as definitively as an earthquake reshapes a city.  Current leaders of the world’s nations have utterly failed to develop a solution.   The likely impact of their failure on ordinary people around the world is incalculable. 

The advocates of globalization from above propounded as an article of faith that markets are self-regulating and that all would be for the best in the best of all possible worlds if only governments, labor unions, citizens organizations, and the unruly mob let them alone to do their thing.

The times they are a-changing.  US government officials long known as market fundamentalists seize banks, buy mortgage and insurance companies, and commit $7.7 trillion – half of the US annual product — to government intervention in financial markets. 

The Clintonite “moderates” who once gutted the social safety net and sacrificed commitments to jobs programs in order to build up budget surpluses now propose vast public works programs financed by budget deficits.  The IMF, scourge of “irresponsible” countries that didn’t balance their budgets, advocates a trillion-plus dollars in global government deficits and claims to have replaced “structural adjustment conditionalities” with condition-free loans.      

These programs may well fail in halting the downward spiral of the global economy.  But they open the door to new forms of more social and public economy.  That’s one reason conservatives normally oppose them – and one indicator of how serious the present crisis really is.  The economic crisis makes it possible to put proposals on the table that have long been ruled inadmissible.   

While economists have asserted with great confidence that one after another trillion dollar “solution” would save the global economy, one after another has failed, raising the specter that it cannot be saved in its present form.  Peter Boon and Simon Johnson of the website baselinescenario.com recently raised that possibility in the Wall Street Journal.   They note that economists generally believe even the Great Depression of the 1930s could have been stopped by proper monetary policy.  But, Boon and Johnson argue, governments may simply not be able to prevent such huge deflationary spirals.  “Perhaps the events of 1929 produced an unstoppable whirlwind of deleveraging which no set of policy measures would truly be able to prevent.”  Their implication seems evident: The same could be true today.

The multi-trillion dollar rescues and bail-outs so far just attempt – possibly futilely — to save the status quo.  But what can we do if the status quo can’t be saved?  Can globalization from below really provide an alternative solution to the great recession? 

It has already started to do so.  A landmark was the meeting of a group of social movements and NGOs in October, 2008 on the occasion of the Asia-Europe People’s Forum in Beijing that developed a sketch for a “transitional program for radical economic transformation.”  The “Beijing Declaration”  laid out alternatives that are “practical and immediately feasible” that put the “well-being of people and the planet at their center.”  This requires “democratic control over financial and economic institutions.”  It includes proposals for finance, taxation, public spending and investment, international trade and finance, environment, and agriculture and industry.  It provides a brilliant first expression of a globalization-from-below alternative to the failures of globalization from above. 

The basic vision of the Declaration is summed up in its title:  “The global economic crisis:  An historic opportunity for transformation.”  Its goal, in other words, is not to shore up the status quo and return to the destructive form of globalization that preceded the crisis.  Its objective is almost the opposite of the eight-trillion-dollars-and-counting of bail-outs, rescues, and subsidies provided to business in recent months by the world’s governments.  It aims instead to provide “a transitional program for radical economic transformation” to a “different kind of political and economic order.”

“Transitional program” may sound like antiquated socialist rhetoric – a call to take state power and nationalize industry.  But both the goals and the methods are very different.  Indeed, the Declaration points a path between merely reestablishing the status quo and assuming that actions must be “revolutionary or nothing.”

No “maximalism” here.   “To capture people’s attention and support” the Declaration argues, proposals must be “practical and immediately feasible.”  That is possible because, even under the domination of globalization from above, people have been developing alternatives within the world’s nooks and crannies.  The unfolding economic crisis provides the opportunity “to put into the public domain some of the inspiring and feasible alternatives many of us have been working on for decades.”   

The goal linking these alternatives is “the well-being of people and the planet.”  And that requires a focus not primarily on restoring the financial system, but first and foremost on the great human and environmental crisis the world is facing in relation to food, climate, and energy.

Such common human interests are not the principal concerns of the people and institutions that now call the shots in national governments or the global economy.  The “well-being of people and the planet” will not be achieved by economic jiggering.  Instead, “democratic control over financial and economic institutions are required.” 

The vision of such democratic control, however, is not of either a centralized national or a centralized global economy.  It is closer to what Walden Bello elsewhere described  as the “co-existence” of a variety of “international organizations, agreements and regional groupings” that would allow “a more fluid, less structured, more pluralistic world with multiple checks and balances” in which nations and communities can “carve out the space to develop based on their values, their rhythms, and the strategies of their choice.”

The current economic crisis creates opportunity for transformation, the Declaration argues, because it severely weakens the power of the US, the EU, and the IMF, World Bank, and WTO.  It undermines the legitimacy of the neo-liberal paradigm.  And, where global pseudo-consensus once asserted that “there is no alternative” to liberal capitalism, the future of capitalism is now becoming an open question.

Of course, this moment can also be seized by “fascist, right wing populist, xenophobic groups” who will try to “take advantage of people’s fear and anger for reactionary ends.” 

What is the agency for pursuing constructive alternatives and resisting destructive ones?  It starts with the “powerful movements against neo-liberalism” that have been built over past decades.  These will grow along with public anger at the abuse of public funds for private subsidy, the crises of food, energy, and the environment, and the deepening recession.

As social movements from around the world converge in Belem, Brazil at the end of January for the World Social Forum, they will be in a position to take the next step toward realizing their potential as the world’s “other superpower.” Indeed, it is the convergence of the already existing networks and understandings of globalization from below with the new outrage at what neo-liberalism has done to the world that provides the opportunity to show that another world is indeed possible.

*Tim Costello, Jeremy Brecher and Brendan Smith are the co-founders of Global Labor Strategies, a resource center providing research and analysis on globalization, trade and labor issues. GLS staff have published many previous reports on a variety of labor-related issues, including Outsource This! American Workers, the Jobs Deficit, and the Fair Globalization Solution, Contingent Workers Fight For Fairness, and Fight Where You Stand!: Why Globalization Matters in Your Community and Workplace. They have also written and produced the Emmy-nominated PBS documentary Global Village or Global Pillage? GLS has offices in New York, Boston, and Montevideo, Uruguay. For more on GLS visit: www.laborstrategies.blogs.com or email smithb28@gmail.com.