The Global Crisis, the Political Economy of State Restructuring,
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1 The Global Crisis, The Global Crisis, the Political Economy of State the Political Economy of State Restructuring, Restructuring, and the Campaign for Transformative Social and the Campaign for Transformative Social Protection Protection Bonn Juego PhD Fellow Global Development Studies Aalborg University, Denmark E-mail: [email protected] Presentation for the Asia-Europe People’s Forum (AEPF) Conference on Southeast Asia Regional Roundtable Strategizing Meeting: Building Southeast Asia Peoples' Agenda on Transformative Social Protection as a Democratic and Human Rights Response to the Crisis Asian Institute of Management Makati City, Philippines
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The Global Crisis, the Political Economy of State Restructuring, and the Campaign for Transformative Social Protection Bonn Juego PhD Fellow Global Development Studies Aalborg University, Denmark E-mail: [email protected] - PowerPoint PPT Presentation
Transcript of The Global Crisis, the Political Economy of State Restructuring,
1
The Global Crisis,The Global Crisis,
the Political Economy of State Restructuring,the Political Economy of State Restructuring,
and the Campaign for Transformative Social and the Campaign for Transformative Social
ProtectionProtection
Bonn JuegoPhD Fellow
Global Development Studies
Aalborg University, Denmark
E-mail: [email protected]
Presentation for the Asia-Europe People’s Forum (AEPF) Conference onSoutheast Asia Regional Roundtable Strategizing Meeting:
Building Southeast Asia Peoples' Agenda on Transformative Social Protectionas a Democratic and Human Rights Response to the Crisis
Asian Institute of ManagementMakati City, Philippines
12 October 2009
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The Global Crisis:The Global Crisis:Nature, Responses, and AlternativesNature, Responses, and Alternatives
CONTENTSCONTENTS
How can we make sense of crisis in capitalist development How can we make sense of crisis in capitalist development (in particular, neo-liberalism)?(in particular, neo-liberalism)?
Are there fundamental changes to the visions and strategies Are there fundamental changes to the visions and strategies of global governance institutions, the states, and the social of global governance institutions, the states, and the social movements in their respective responses to the global movements in their respective responses to the global crisis? crisis?
What does transformative social protection mean in this What does transformative social protection mean in this
moment of crisis? moment of crisis?
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Constitutive Role of CrisesConstitutive Role of Crisesin the Evolution of Neo-liberalismin the Evolution of Neo-liberalism
Constitutive Role of CrisesConstitutive Role of Crisesin the Evolution of Neo-liberalismin the Evolution of Neo-liberalism
Relationship: Crisis and Neo-liberalism Dysfunctional or Functional (or both)
Nature of Crisis and Neo-liberalism Born out of crises Evolved through crises Died of crises???
Relationship: Crisis and Neo-liberalism Dysfunctional or Functional (or both)
Nature of Crisis and Neo-liberalism Born out of crises Evolved through crises Died of crises???
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NEO-LIBERALISM WAS BORN OUT OF CRISESNEO-LIBERALISM WAS BORN OUT OF CRISESComplex interaction of forces/events/phenomena...Complex interaction of forces/events/phenomena...
...Mutually reinforcing tendencies...Mutually reinforcing tendencies
NEO-LIBERALISM WAS BORN OUT OF CRISESNEO-LIBERALISM WAS BORN OUT OF CRISESComplex interaction of forces/events/phenomena...Complex interaction of forces/events/phenomena...
...Mutually reinforcing tendencies...Mutually reinforcing tendencies
recession in the developed capitalist economies after 1973, the OPEC oil crisis, and the collapse of the Bretton Woods system
de-linking from the ‘gold standard’ internationalisation of financial markets as a result of the widespread
abandonment of exchange controls the massive increase in foreign bank lending to the Third World as
consequence of the recession in the major economies the growing stagnation of command economies the shift from import substitution in favour of export promotion in the Third
World and the rise of the NICs in East Asia the imposition of structural adjustment programmes (SAPs) on the heavily-
indebted Third World as conditionality attached to rolling over foreign debt the restructuring of global production towards ‘post-Fordism’ and the growth
of MNCs the revolution in macroeconomic policy that resulted in the weakening of
.trade unions, the cutting of state budgets, deregulation, privatisation, etc the advances in ICT (as the new ‘techno-economic paradigm’) ....Etc
recession in the developed capitalist economies after 1973, the OPEC oil crisis, and the collapse of the Bretton Woods system
de-linking from the ‘gold standard’ internationalisation of financial markets as a result of the widespread
abandonment of exchange controls the massive increase in foreign bank lending to the Third World as
consequence of the recession in the major economies the growing stagnation of command economies the shift from import substitution in favour of export promotion in the Third
World and the rise of the NICs in East Asia the imposition of structural adjustment programmes (SAPs) on the heavily-
indebted Third World as conditionality attached to rolling over foreign debt the restructuring of global production towards ‘post-Fordism’ and the growth
of MNCs the revolution in macroeconomic policy that resulted in the weakening of
trade unions, the cutting of state budgets, deregulation, privatisation, etc. the advances in ICT (as the new ‘techno-economic paradigm’) Etc....
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NEO-LIBERALISM HAS EVOLVED THROUGH CRISESNEO-LIBERALISM HAS EVOLVED THROUGH CRISESFrom crisis to crisis in the last 30 years....From crisis to crisis in the last 30 years....
NEO-LIBERALISM HAS EVOLVED THROUGH CRISESNEO-LIBERALISM HAS EVOLVED THROUGH CRISESFrom crisis to crisis in the last 30 years....From crisis to crisis in the last 30 years....
National Developmentalism (postwar-1970s) Crisis of Fordism/Keynesianism (stagflation)
Washington Consensus – 1st Generation Neoliberal reforms (1980s – mid-1990s) Crisis of market fundamentalism of the Washington Consensus —
‘East Asian Miracle’ (8 HPAEs showing high growth and high equity with state intervention)
Post-Washington Consensus – 2nd Generation reforms (mid-1990s - 2008) Cacophony of crises: financial crises, overaccumulation,
overproduction, over-/under-consumption, climate change, ecological degradation, political legitimacy, global governance crisis, oil crisis, food price crisis, subprime crisis
National Developmentalism (postwar-1970s) Crisis of Fordism/Keynesianism (stagflation)
Washington Consensus – 1st Generation Neoliberal reforms (1980s – mid-1990s) Crisis of market fundamentalism of the Washington Consensus —
‘East Asian Miracle’ (8 HPAEs showing high growth and high equity with state intervention)
Post-Washington Consensus – 2nd Generation reforms (mid-1990s - 2008) Cacophony of crises: financial crises, overaccumulation,
overproduction, over-/under-consumption, climate change, ecological degradation, political legitimacy, global governance crisis, oil crisis, food price crisis, subprime crisis
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NEO-LIBERALISM HAS DIED OF CRISES(?)NEO-LIBERALISM HAS DIED OF CRISES(?)Signs of the Times, a Cacophony of Crises:Signs of the Times, a Cacophony of Crises:
RIP Neo-liberalism (1980s-2008)RIP Neo-liberalism (1980s-2008)
NEO-LIBERALISM HAS DIED OF CRISES(?)NEO-LIBERALISM HAS DIED OF CRISES(?)Signs of the Times, a Cacophony of Crises:Signs of the Times, a Cacophony of Crises:
RIP Neo-liberalism (1980s-2008)RIP Neo-liberalism (1980s-2008)
Is neo-liberalism dead? Depends on what we mean by ‘neo-liberalism’....
The neo-liberal form (i.e., market fundamentalism) is dead;
But not the substance of capitalism as a:
processprocess of capital accumulation; relationsrelations in which labour is subordinated to capital
Is neo-liberalism dead? Depends on what we mean by ‘neo-liberalism’....
The neo-liberal form (i.e., market fundamentalism) is dead;
But not the substance of capitalism as a:
processprocess of capital accumulation; relationsrelations in which labour is subordinated to capital
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Neo-liberalism: A strategy for market-led Neo-liberalism: A strategy for market-led development, A blueprint for crisis development, A blueprint for crisis
managementmanagement
Neo-liberalism: A strategy for market-led Neo-liberalism: A strategy for market-led development, A blueprint for crisis development, A blueprint for crisis
managementmanagement
Neo-liberal values: well-being of the financial institutions over well-being of the people
E.g.
Debt crisis in Latin America (1982) Crisis Response: SAPs
Financial Crises: Scandinavia (early 1990s); Mexico (1994); East and Southeast Asia (1997); Russia (1998); Argentina (2001); Turkey (2001-02); US Subprime mortgage (2007-09)
Crisis response: ‘open’ international financial architecture
US subprime crisis (2007-09) Crisis response: Bush-Paulson-Bernanke-Obama Bailout
Programme (restore power of corporations; assure ascendancy of finance capital)
Neo-liberal values: well-being of the financial institutions over well-being of the people
E.g.
Debt crisis in Latin America (1982) Crisis Response: SAPs
Financial Crises: Scandinavia (early 1990s); Mexico (1994); East and Southeast Asia (1997); Russia (1998); Argentina (2001); Turkey (2001-02); US Subprime mortgage (2007-09)
Crisis response: ‘open’ international financial architecture
US subprime crisis (2007-09) Crisis response: Bush-Paulson-Bernanke-Obama Bailout
Programme (restore power of corporations; assure ascendancy of finance capital)
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In times of crisis,In times of crisis,“assets return to their rightful “assets return to their rightful
owners”owners”!!
In times of crisis,In times of crisis,“assets return to their rightful “assets return to their rightful
owners”owners”!!
‘Financial crises have always caused transfers of ownership and power to those who keep their own assets intact and who are in a
position to create credit, and the Asian crisis is no exception....there is no doubt that Western and Japanese
corporations are the big winners.....The combination of massive devaluations, IMF-pushed financial liberalization, and IMF
facilitated recovery may even precipitate the biggest peacetime transfer of assets from domestic to foreign owners in the past fifty years anywhere in the world, dwarfing the transfers from domestic to US owners in Latin America in the 1980s or in Mexico after 1994.
One recalls the statement attributed to Andrew Mellon: "In a depression assets return to their rightful owners”.’
—R. Wade and F. Veneroso (1998),‘The Asian Crisis: The High Debt Model versus the Wall Street-Treasury-IMF
Complex,’ in The New Left Review, 228 (1998), 3-23.
‘Financial crises have always caused transfers of ownership and power to those who keep their own assets intact and who are in a
position to create credit, and the Asian crisis is no exception....there is no doubt that Western and Japanese
corporations are the big winners.....The combination of massive devaluations, IMF-pushed financial liberalization, and IMF
facilitated recovery may even precipitate the biggest peacetime transfer of assets from domestic to foreign owners in the past fifty years anywhere in the world, dwarfing the transfers from domestic to US owners in Latin America in the 1980s or in Mexico after 1994.
One recalls the statement attributed to Andrew Mellon: "In a depression assets return to their rightful owners”.’
—R. Wade and F. Veneroso (1998),‘The Asian Crisis: The High Debt Model versus the Wall Street-Treasury-IMF
Complex,’ in The New Left Review, 228 (1998), 3-23.
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The Cacophony of Crises TodayThe Cacophony of Crises TodayThe Cacophony of Crises TodayThe Cacophony of Crises Today
Overproduction Finance (securitisation, speculative investments,
Ponzi scheme) Environment Climate (global warming) Oil Food (post-Green Revolution, the Great Hunger of
2008) Governance (WB, IMF, WTO, states) Etc.
Overproduction Finance (securitisation, speculative investments,
Ponzi scheme) Environment Climate (global warming) Oil Food (post-Green Revolution, the Great Hunger of
2008) Governance (WB, IMF, WTO, states) Etc.
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Mechanisms of Financial CrisesMechanisms of Financial Crisesand their Effects on the Real and their Effects on the Real
EconomyEconomy
”Black Box”
Production of goods
and services
Money/capital
The real economy“Güterwelt”
Financial economy“Rechenpfennige”
THE CIRCULAR FLOW OF ECONOMICSTHE CIRCULAR FLOW OF ECONOMICS
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COMPLEMENTARY FUNCTIONS, DIVERGENT NATURECOMPLEMENTARY FUNCTIONS, DIVERGENT NATURE
Socio-economic Socio-economic results will differ results will differdepending on the criteria that lead investmentdepending on the criteria that lead investment
Production capitalFinancial capital
Money and paper wealthStatic property“Investible” capital
Wealth-producing wealthFixed capital,technical capital,human capital, good will
AssetsAssets
Essentially mobileKnowledge indifferent
MobilityMobility
Tied to fixed assets, toknowledge of products, processes, capabilities,clients and markets
Wealth-creating assets,LONG-TERM GAINS
BiasBias Quasi-liquid assets, SHORT-TERM GAINS
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“In the years preceding the First World Warthere were in common use among economists a number of metaphors . . . 'Money is a wrapper in which goods come'Money is a wrapper in which goods come ’’; 'Money is the garment drapedround the body of economic life’; 'money is a veil behind whichthe action of real economic forces is concealed’ . . .
During the 1920s and 1930s
. . . money, the passive veil, took on the appearance of an evil genius; the garment became a Nessus shirt; the wrapper a thing liable to explode. Money, in short, after being little or nothing, was now everythingMoney, in short, after being little or nothing, was now everything . . .
SHIFTING ROLES OFSHIFTING ROLES OFMONEY ON THE REAL ECONOMYMONEY ON THE REAL ECONOMY
Then with the Second World War,the tune changed again. Manpower, equipment and organization once more came into their own. The role of money dwindled to insignificanceThe role of money dwindled to insignificance. . .”
Arthur Cecil Pigou (1949) The Veil of Money, Macmillan pp.18-19
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Three basic and complementary mechanisms behind the Three basic and complementary mechanisms behind the conflicts between the real economy and the financial conflicts between the real economy and the financial
economyeconomy(Financial Crises)(Financial Crises)
Three basic and complementary mechanisms behind the Three basic and complementary mechanisms behind the conflicts between the real economy and the financial conflicts between the real economy and the financial
economyeconomy(Financial Crises)(Financial Crises)
1. THE HAMMURABI EFFECT (Babylonia ca. 1795 – 1750
BC)
• The Effect of Compound Interest.
2. THE PEREZ EFFECT (Carlota Perez, Venezuelan
economist)
• Technological Revolutions Create Financial Bubbles.
3. THE MINSKY EFFECT (Hyman Minsky, US, 1919-1996)• Liquidity preference turning point • + ‘bad projects’ killing credit to healthy projects.
1. THE HAMMURABI EFFECT (Babylonia ca. 1795 – 1750
BC)
• The Effect of Compound Interest.
2. THE PEREZ EFFECT (Carlota Perez, Venezuelan
economist)
• Technological Revolutions Create Financial Bubbles.
3. THE MINSKY EFFECT (Hyman Minsky, US, 1919-1996)• Liquidity preference turning point • + ‘bad projects’ killing credit to healthy projects.
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THE HAMMURABI EFFECTTHE HAMMURABI EFFECT(The Effect of Compound Interest)(The Effect of Compound Interest)
THE HAMMURABI EFFECTTHE HAMMURABI EFFECT(The Effect of Compound Interest)(The Effect of Compound Interest)
“A shilling put out at 6% compound interest at our Saviour’s birth would . . . have increased to a greater sum than the whole solar system could hold, supposing it a sphere equal in diameter to the diameter of Saturn’s orbit.”
—Richard Price, English Economist, 1769.
“A shilling put out at 6% compound interest at our Saviour’s birth would . . . have increased to a greater sum than the whole solar system could hold, supposing it a sphere equal in diameter to the diameter of Saturn’s orbit.”
—Richard Price, English Economist, 1769.
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THE PEREZ EFFECTTHE PEREZ EFFECTTechnological Revolutions and Finance Technological Revolutions and Finance
CapitalCapital
THE PEREZ EFFECTTHE PEREZ EFFECTTechnological Revolutions and Finance Technological Revolutions and Finance
CapitalCapital
Crash Institutionalrecomposition
The IndustrialRevolutionBritain
Age of Steamand RailwaysBritain (spreadingto continent and US)
Age of Steel, Electricityand Heavy EngineeringUSA and Germanyovertaking Britain
Age of Oil, Automobilesand Mass ProductionUSA (spreading to Europe)
Age of Informationand TelecomunicationsUSA (spreading to Europe and Asia)
1829
1875 1895–1907
20??
late 1780s early 1790s1770s and early 1780s
1840s
1875–1884 1884–1893
Turning Point
1771
1830s
1908 1920–19291908–1920*
1971 1987–20011971–1987*
1908–1918*
1943–1959 1960–1974*
1893–95
big-bang
1929–33Europe
1929–43USA
1798–18121793–97 1813–1829
1850–1857 1857–18731848–50
2001–??
INSTALLATION DEPLOYMENTIRRUPTION FRENZY SYNERGY MATURITY
TechnologicalRevolutionCore country
1st
2nd
3rd
4th
5th
GREATSURGE
Note: * Observe phase overlaps between successive surges.
Approximate dates of the installation and deployment periodsApproximate dates of the installation and deployment periodsof the great surges of development -- 1771 to the presentof the great surges of development -- 1771 to the present
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THE MINSKY EFFECTTHE MINSKY EFFECT(Ponzi Schemes)(Ponzi Schemes)
THE MINSKY EFFECTTHE MINSKY EFFECT(Ponzi Schemes)(Ponzi Schemes)
Types of financing
1. HEDGE financing• Low risk - can fulfill contractual payment obligation
2. SPECULATIVE financing• involves future renegotiating of the debt (rollover)
• A typical speculative position consists on financing long term assets with short term liabilities.
3.3. PONZIPONZI financing financing• ‘‘cash flows from operations are not sufficient to fill either the cash flows from operations are not sufficient to fill either the
repayment of principal or the interest on outstanding debts by repayment of principal or the interest on outstanding debts by their cash flows from operations’their cash flows from operations’
• expected revenues can not afford even interest payments, and agents are submitted to increasing debt
Types of financing
1. HEDGE financing• Low risk - can fulfill contractual payment obligation
2. SPECULATIVE financing• involves future renegotiating of the debt (rollover)
• A typical speculative position consists on financing long term assets with short term liabilities.
3.3. PONZIPONZI financing financing• ‘‘cash flows from operations are not sufficient to fill either the cash flows from operations are not sufficient to fill either the
repayment of principal or the interest on outstanding debts by repayment of principal or the interest on outstanding debts by their cash flows from operations’their cash flows from operations’
• expected revenues can not afford even interest payments, and agents are submitted to increasing debt
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Ponzi SchemesPonzi SchemesPonzi SchemesPonzi Schemes
Ponzi schemes (such as subprime loans)
cause financial institutions to redefine the game
they no longer compete for market share but instead pull out in order to be more liquid.
In this way also, SOUND PROJECTS ARE REFUSED CREDIT, AND A DOWNWARD SPIRAL STARTS.
Third World debt/lending was also a Third World debt/lending was also a Ponzi scheme.Ponzi scheme.
Myrdalian ‘perverse backwashes’ Funds tend to flow from poor to richfrom poor to rich
countries!
Ponzi schemes (such as subprime loans)
cause financial institutions to redefine the game
they no longer compete for market share but instead pull out in order to be more liquid.
In this way also, SOUND PROJECTS ARE REFUSED CREDIT, AND A DOWNWARD SPIRAL STARTS.
Third World debt/lending was also a Third World debt/lending was also a Ponzi scheme.Ponzi scheme.
Myrdalian ‘perverse backwashes’ Funds tend to flow from poor to richfrom poor to rich
countries!
(Charles Ponzi - police mugshot, 1910)
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Responses to CrisisResponses to CrisisResponses to CrisisResponses to Crisis
SCHUMPETERIAN: ‘IT HAS TO BURN OUT ALONE’
KEYNESIAN: ‘REPAIR IT’, but without encouraging the very
behaviour that caused the problem in the first place.
MARXIST: ‘REPLACE IT’ — overthrow crisis-ridden capitalist
system; establish socialism, a democratic economic planning
SCHUMPETERIAN: ‘IT HAS TO BURN OUT ALONE’
KEYNESIAN: ‘REPAIR IT’, but without encouraging the very
behaviour that caused the problem in the first place.
MARXIST: ‘REPLACE IT’ — overthrow crisis-ridden capitalist
system; establish socialism, a democratic economic planning
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“Times of innovation ... are times of effort and sacrifice, of work for the future, while the harvest comes after.... The harvest is gathered under recessive symptoms and with more anxiety than rejoicing.... [During] [During] recession ...recession ... much dead much dead wood disappearswood disappears.”
—Joseph Schumpeter (1939)Business Cycles
“Times of innovation ... are times of effort and sacrifice, of work for the future, while the harvest comes after.... The harvest is gathered under recessive symptoms and with more anxiety than rejoicing.... [During] [During] recession ...recession ... much dead much dead wood disappearswood disappears.”
—Joseph Schumpeter (1939)Business Cycles
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““I sympathize, therefore, with those who I sympathize, therefore, with those who would minimize, rather than with would minimize, rather than with
those who would maximize, economic those who would maximize, economic entanglement among nations. Ideas, entanglement among nations. Ideas,
knowledge, science, hospitality, travel knowledge, science, hospitality, travel – these are the things which should of – these are the things which should of their nature be international. But let their nature be international. But let goods be homespun whenever it is goods be homespun whenever it is
reasonably and conveniently possible, reasonably and conveniently possible, and, above all, let finance be and, above all, let finance be
primarily national. Yet, at the same primarily national. Yet, at the same time, those who seek to disembarrass time, those who seek to disembarrass a country of its entanglements should a country of its entanglements should be very slow and wary. It should not be very slow and wary. It should not be a matter of tearing up roots but of be a matter of tearing up roots but of slowly training a plant to grow in a slowly training a plant to grow in a
different direction.different direction.
““I sympathize, therefore, with those who I sympathize, therefore, with those who would minimize, rather than with would minimize, rather than with
those who would maximize, economic those who would maximize, economic entanglement among nations. Ideas, entanglement among nations. Ideas,
knowledge, science, hospitality, travel knowledge, science, hospitality, travel – these are the things which should of – these are the things which should of their nature be international. But let their nature be international. But let goods be homespun whenever it is goods be homespun whenever it is
reasonably and conveniently possible, reasonably and conveniently possible, and, above all, let finance be and, above all, let finance be
primarily national. Yet, at the same primarily national. Yet, at the same time, those who seek to disembarrass time, those who seek to disembarrass a country of its entanglements should a country of its entanglements should be very slow and wary. It should not be very slow and wary. It should not be a matter of tearing up roots but of be a matter of tearing up roots but of slowly training a plant to grow in a slowly training a plant to grow in a
different direction.different direction.
For these strong reasons, therefore, I am For these strong reasons, therefore, I am inclined to the belief that, after the inclined to the belief that, after the transition is accomplished, a greater transition is accomplished, a greater measure of national self-sufficiency and measure of national self-sufficiency and economic isolation among countries than economic isolation among countries than existed in 1914 may tend to serve the cause existed in 1914 may tend to serve the cause of peace, rather than otherwise. At any of peace, rather than otherwise. At any rate, the age of economic internationalism rate, the age of economic internationalism was not particularly successful in avoiding was not particularly successful in avoiding war; and if its friends retort, that the war; and if its friends retort, that the imperfection of its success never gave it a imperfection of its success never gave it a fair chance, it is reasonable to point out fair chance, it is reasonable to point out that a greater success is scarcely probable that a greater success is scarcely probable in the coming years.”in the coming years.”
— — John Maynard Keynes (1933 [1972])John Maynard Keynes (1933 [1972]) National National Self-sufficiencySelf-sufficiency
For these strong reasons, therefore, I am For these strong reasons, therefore, I am inclined to the belief that, after the inclined to the belief that, after the transition is accomplished, a greater transition is accomplished, a greater measure of national self-sufficiency and measure of national self-sufficiency and economic isolation among countries than economic isolation among countries than existed in 1914 may tend to serve the cause existed in 1914 may tend to serve the cause of peace, rather than otherwise. At any of peace, rather than otherwise. At any rate, the age of economic internationalism rate, the age of economic internationalism was not particularly successful in avoiding was not particularly successful in avoiding war; and if its friends retort, that the war; and if its friends retort, that the imperfection of its success never gave it a imperfection of its success never gave it a fair chance, it is reasonable to point out fair chance, it is reasonable to point out that a greater success is scarcely probable that a greater success is scarcely probable in the coming years.”in the coming years.”
— — John Maynard Keynes (1933 [1972])John Maynard Keynes (1933 [1972]) National National Self-sufficiencySelf-sufficiency
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““Modern bourgeois society Modern bourgeois society with its relations of with its relations of production, of exchange production, of exchange and of property, a society and of property, a society that has conjured up such that has conjured up such gigantic means of gigantic means of production and of production and of exchange, is like a exchange, is like a sorcerer who is no longer sorcerer who is no longer able to control the able to control the powers of the nether powers of the nether world whom he has called world whom he has called up by his spells.”up by his spells.”
——Karl Marx and Frederick Engels (1848) Karl Marx and Frederick Engels (1848) Communist ManifestoCommunist Manifesto
““Modern bourgeois society Modern bourgeois society with its relations of with its relations of production, of exchange production, of exchange and of property, a society and of property, a society that has conjured up such that has conjured up such gigantic means of gigantic means of production and of production and of exchange, is like a exchange, is like a sorcerer who is no longer sorcerer who is no longer able to control the able to control the powers of the nether powers of the nether world whom he has called world whom he has called up by his spells.”up by his spells.”
——Karl Marx and Frederick Engels (1848) Karl Marx and Frederick Engels (1848) Communist ManifestoCommunist Manifesto
““These are signs of the These are signs of the times, not to be hidden by times, not to be hidden by purple mantles or black purple mantles or black cassocks. They do not cassocks. They do not signify that tomorrow a signify that tomorrow a miracle will occur. They do miracle will occur. They do show that, within the show that, within the ruling classes themselves, ruling classes themselves, the foreboding is the foreboding is emerging that the present emerging that the present society is no solid crystal, society is no solid crystal, but an organism capable but an organism capable of change, and constantly of change, and constantly engaged in the process of engaged in the process of change.”change.”
——Karl Marx (1867)Karl Marx (1867)Capital, Vol. 1Capital, Vol. 1
““These are signs of the These are signs of the times, not to be hidden by times, not to be hidden by purple mantles or black purple mantles or black cassocks. They do not cassocks. They do not signify that tomorrow a signify that tomorrow a miracle will occur. They do miracle will occur. They do show that, within the show that, within the ruling classes themselves, ruling classes themselves, the foreboding is the foreboding is emerging that the present emerging that the present society is no solid crystal, society is no solid crystal, but an organism capable but an organism capable of change, and constantly of change, and constantly engaged in the process of engaged in the process of change.”change.”
——Karl Marx (1867)Karl Marx (1867)Capital, Vol. 1Capital, Vol. 1
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The World Bank, IMF and their G-20 The World Bank, IMF and their G-20 allies:allies:
Using the global crisis to their Using the global crisis to their advantage....advantage....
The World Bank, IMF and their G-20 The World Bank, IMF and their G-20 allies:allies:
Using the global crisis to their Using the global crisis to their advantage....advantage....
G-20: IMF is back!G-20: IMF is back!Dominique Strauss-Kahn, Managing Director of the IMF, G-20 Press Conference, 2 April 2009G-20: IMF is back!G-20: IMF is back!Dominique Strauss-Kahn, Managing Director of the IMF, G-20 Press Conference, 2 April 2009
Maybe some of you were in the IMF press conference at the end of the Annual
Meeting last October. And if some of you were there, then you may remember
that what I said at that time is that IMF is back. Today you get the proof when
you read the communiqué, each paragraph, or almost each paragraph – let's
say the important ones – are in one way or another related to IMF work.
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WORLD BANK: WORLD BANK: Exactly Exactly the same global neo-liberal project!the same global neo-liberal project!World Bank, Global Monitoring Report 2009: A Development Emergency, p. xii.WORLD BANK: WORLD BANK: Exactly Exactly the same global neo-liberal project!the same global neo-liberal project!World Bank, Global Monitoring Report 2009: A Development Emergency, p. xii.
The report sets out six priority areas for action to confront the development emergency that now faces many of these countries. First, we must ensure an adequate fiscal response in developing countries to protect the poor and vulnerable groups and to support economic growth. Priority areas must be strengthening social safety nets and protecting infrastructure programs that can create jobs while building a foundation for future productivity and growth. The precise fiscal response needs to be tailored to individual country circumstances, consistent with maintenance of macroeconomic stability. Second, we must provide support for the private sector and improve the climate for recovery and growth in private investment, including paying special attention to strengthening financial systems. Helping small and medium enterprises get access to finance for trade and investment is vital for job creation. But the crisis has also underscored the importance of broader reforms to improve the stability and soundness of the financial system. Third, we must redouble efforts in human development and recover lost ground in progress toward the MDGs. We can do this not only by strengthening key public programs for health and education, but also by better leveraging the private sector’s role in the financing and delivery of services.
In support of these efforts to help developing countries, the report emphasizes three key global priorities. Donors must deliver on their commitments to increase aid. Indeed, the increased needs of poor countries hit hard by the crisis call for going beyond existing commitments. National governments must hold firm against rising protectionist pressures and maintain an open international trade and finance system. Completing the Doha negotiations expeditiously would provide a much-needed boost in confidence to the global economy at a time of high stress and uncertainty. Finally, multilateral institutions must have the mandate, resources, and instruments to support an effective global response to the global crisis. The international financial institutions will need to play a key role in bridging the large financing gap for developing countries resulting from the slump in private capital flows, including using their leverage ability to help revive private flows.
Source: World Bank, Global Monitoring Report 2009: A Development Emergency, p. xii.
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World Bank President Robert Zoellick (31 March 2009, prior to the G-20 World Bank President Robert Zoellick (31 March 2009, prior to the G-20 Meeting): Meeting): New Powers for the Multilaterals!New Powers for the Multilaterals!World Bank President Robert Zoellick (31 March 2009, prior to the G-20 World Bank President Robert Zoellick (31 March 2009, prior to the G-20 Meeting): Meeting): New Powers for the Multilaterals!New Powers for the Multilaterals!
• “a WTO monitoring system to advance trade and resist economic isolationism, while working to complete the Doha negotiations to open markets, cut subsidies, and resist backsliding”;
• “a monitoring role for the IMF, to review the execution of .. stimulus packages and assess results, calling for further action if necessary”;
• IMF and World Bank Group monitoring of actions and results in the banking sector, with financial sector assessments to be extended to developed countries, “with the results published, taken seriously, and followed up”;
• an overhaul of the financial regulatory and supervisory system” in which “most of the actual authority over regulation will rest with national governments”, but within which an expanded FSF [Financial Stability Forum] “could become another important institution of a stronger multilateral system, working with the IMF and the World Bank group on implementation”
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IMF: ‘An opportunity to make progress on seemingly intractable issues’IMF: ‘An opportunity to make progress on seemingly intractable issues’IMF (February 2009), Initial Lessons of the Crisis for the Global Architecture and the IMFIMF: ‘An opportunity to make progress on seemingly intractable issues’IMF: ‘An opportunity to make progress on seemingly intractable issues’IMF (February 2009), Initial Lessons of the Crisis for the Global Architecture and the IMF
Bottom line. The crisis has revealed flaws in key dimensions of the current global architecture, but also provides a unique opportunity to fix them. On
the flaws, surveillance needs to be reoriented to ensure warnings are clear, successfully connect the dots, and provide practical advice to policy
makers. An effective forum for policy makers with the ability and mandate to take leadership in responding to systemic concerns about the
international economy is key. Ground rules for cross-border finance need to be strengthened. And, given the growing size of international
transactions, resources available for liquidity support and easing external adjustment should augmented and processes for using them better defined so they are more readily available when needed. These are all ambitious
undertakings. But the damage wrought by the crisis provides an opportunity to make progress on seemingly intractable issues. The moment
should not be missed.
Bottom line. The crisis has revealed flaws in key dimensions of the current global architecture, but also provides a unique opportunity to fix them. On
the flaws, surveillance needs to be reoriented to ensure warnings are clear, successfully connect the dots, and provide practical advice to policy
makers. An effective forum for policy makers with the ability and mandate to take leadership in responding to systemic concerns about the
international economy is key. Ground rules for cross-border finance need to be strengthened. And, given the growing size of international
transactions, resources available for liquidity support and easing external adjustment should augmented and processes for using them better defined so they are more readily available when needed. These are all ambitious
undertakings. But the damage wrought by the crisis provides an opportunity to make progress on seemingly intractable issues. The moment
should not be missed.
26
ASEAN: ‘Ensure free flow of goods, services and ASEAN: ‘Ensure free flow of goods, services and investment’investment’ASEAN Member States, Press Communique, Thailand, 1 March 2009ASEAN Member States, Press Communique, Thailand, 1 March 2009
ASEAN: ‘Ensure free flow of goods, services and ASEAN: ‘Ensure free flow of goods, services and investment’investment’ASEAN Member States, Press Communique, Thailand, 1 March 2009ASEAN Member States, Press Communique, Thailand, 1 March 2009
• “the necessity of proactive and decisive policy actions to restore market confidence and [to] ensure continued financial stability to promote sustainable regional economic growth”
• “expansionary macroeconomic policies, including fiscal
stimulus, monetary easing, access to credit including trade financing, and measures to support private sector, particularly small and medium enterprises (SMEs) undertaken by each ASEAN Member State to stimulate domestic demand”
• “coordinating policies and taking joint actions that would be
mutually reinforcing at the regional level”
• “determination to ensure the free flow of goods, services and investment, and facilitate movement of business persons, professionals, talents and labour, and freer flow of capital”
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States’ Bailouts and Resiliency PlansStates’ Bailouts and Resiliency Plans(Bailouts for the poor???)(Bailouts for the poor???)
States’ Bailouts and Resiliency PlansStates’ Bailouts and Resiliency Plans(Bailouts for the poor???)(Bailouts for the poor???)
Malaysia
First stimulus measure: increase capitalisation of a
government investment company by USD 5 billion
(also to stabilise stock exchange)
Malaysia
First stimulus measure: increase capitalisation of a
government investment company by USD 5 billion
(also to stabilise stock exchange)
Philippines
Economic Resiliency Plan (ERP): PhP 330 billion
Philippines
Economic Resiliency Plan (ERP): PhP 330 billion
QuickTime™ and aTIFF (Uncompressed) decompressor
are needed to see this picture.
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Global Civil Society ChallengeGlobal Civil Society Challengeand the Challenge to Global Justice and the Challenge to Global Justice
MovementsMovements— ‘Another World Is Necessary’ —— ‘Another World Is Necessary’ —
Global Civil Society ChallengeGlobal Civil Society Challengeand the Challenge to Global Justice and the Challenge to Global Justice
MovementsMovements— ‘Another World Is Necessary’ —— ‘Another World Is Necessary’ —
““TThhe crisis consists e crisis consists precisely in the fact precisely in the fact
thatthat the old is the old is dying and the new dying and the new cannot be borncannot be born; in ; in this interregnum a this interregnum a
great variety of great variety of morbid symptoms morbid symptoms
appear.appear.””
—Antonio Gramsci (1971)Prison Notebooks
““TThhe crisis consists e crisis consists precisely in the fact precisely in the fact
thatthat the old is the old is dying and the new dying and the new cannot be borncannot be born; in ; in this interregnum a this interregnum a
great variety of great variety of morbid symptoms morbid symptoms
appear.appear.””
—Antonio Gramsci (1971)Prison Notebooks
QuickTime™ and aTIFF (Uncompressed) decompressor
are needed to see this picture.
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Crisis as a ‘Turning Point’Crisis as a ‘Turning Point’Crisis as a ‘Turning Point’Crisis as a ‘Turning Point’
CRISIS from Greek ‘krisis’ “the turning point of a
disease when an important change takes place, indicating either recovery or death”
People from left, right, centre look at the crisis the ‘Chinese way’ — i.e., an opportunity to advance their respective
interests!
CRISIS from Greek ‘krisis’ “the turning point of a
disease when an important change takes place, indicating either recovery or death”
People from left, right, centre look at the crisis the ‘Chinese way’ — i.e., an opportunity to advance their respective
interests!
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Transformative Social ProtectionTransformative Social ProtectionTransformative Social ProtectionTransformative Social Protection
Neo-liberals
Well-being of the market/financial institutions
Neo-liberals
Well-being of the market/financial institutions
TSP
Well-being of the peoplepeople
MaterialMaterial — not just ideational — basis for alternatives
TSP
Well-being of the peoplepeople
MaterialMaterial — not just ideational — basis for alternatives
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Lessons of the 1997 Asian Crisis for TSP Campaign
(Towards a Democratic and Human Rights Response to Crisis)
Lessons of the 1997 Asian Crisis for TSP Campaign
(Towards a Democratic and Human Rights Response to Crisis)
Democratisation may be stalled.Democratisation may be stalled. Justification for authoritarian rule (e.g. ‘Asian
Values’)
Human Rights compromised.Human Rights compromised. Human rights obligations sidelined in the name of
surveillance and internal security (Malaysia, Singapore)
The poor severely neglected.The poor severely neglected. e.g., ASEM Trust Fund failed to target the poor,
workers, and the vulnerable, adversely affected groups.
Democratisation may be stalled.Democratisation may be stalled. Justification for authoritarian rule (e.g. ‘Asian
Values’)
Human Rights compromised.Human Rights compromised. Human rights obligations sidelined in the name of
surveillance and internal security (Malaysia, Singapore)
The poor severely neglected.The poor severely neglected. e.g., ASEM Trust Fund failed to target the poor,
workers, and the vulnerable, adversely affected groups.
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Emergent AUTHORITARIAN LIBERALISM in AsiaEmergent AUTHORITARIAN LIBERALISM in Asia(Authoritarian Polity, Market Economy)(Authoritarian Polity, Market Economy)
Emergent AUTHORITARIAN LIBERALISM in AsiaEmergent AUTHORITARIAN LIBERALISM in Asia(Authoritarian Polity, Market Economy)(Authoritarian Polity, Market Economy)
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CONCLUDING REMARKSCONCLUDING REMARKSCONCLUDING REMARKSCONCLUDING REMARKS
1. The Constitutive Role of Crises in the Evolution of Neo-liberalism
i. was born out of the crises of the 1970s
ii. has evolved through a series of crises over the last 30 years
iii. died of the cacophony of crises culminating in the current global economic crisis.
1. The Constitutive Role of Crises in the Evolution of Neo-liberalism
i. was born out of the crises of the 1970s
ii. has evolved through a series of crises over the last 30 years
iii. died of the cacophony of crises culminating in the current global economic crisis.
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As it shows, crises have so far been functional, rather than dysfunctional, to neo-liberalism:
Crises reshape class and social relations but in ways that perpetuate the hegemony of capital over labour and the preservation of elite rule.
Crises restrategise development plans of institutions from international organisations to states to further advance, not retreat from, market-led development.
Crises restructure states and societies in which social institutions are oriented towards the logic, requirements, and imperatives of neo-liberalism.
As it shows, crises have so far been functional, rather than dysfunctional, to neo-liberalism:
Crises reshape class and social relations but in ways that perpetuate the hegemony of capital over labour and the preservation of elite rule.
Crises restrategise development plans of institutions from international organisations to states to further advance, not retreat from, market-led development.
Crises restructure states and societies in which social institutions are oriented towards the logic, requirements, and imperatives of neo-liberalism.
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2. The responses to the global crisis from the multilaterals, to regional organisations, to states are fundamentally the same through the years, with or without crisis.
But there are differential catastrophic impacts across social classes, amongst the poor, marginalised, vulnerable sectors.
2. The responses to the global crisis from the multilaterals, to regional organisations, to states are fundamentally the same through the years, with or without crisis.
But there are differential catastrophic impacts across social classes, amongst the poor, marginalised, vulnerable sectors.
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3.3. Another world is necessary!Another world is necessary!
Tranformative Social Protection Tranformative Social Protection nownow!!! !!!
‘‘Social Security’Social Security’ (at a minimum, right to livelihood, food, healthcare, water, housing, education, and other essential services): both timeless and universal
The TSP Campaign: find, advance, and create a a democratic and human rights responsedemocratic and human rights response — protect, care for, and work with the most vulnerable sectors such as the urban and rural poor, the workers, women, migrants, farmers and fisherfolks, persons with disability, and indigenous peoples
3.3. Another world is necessary!Another world is necessary!
Tranformative Social Protection Tranformative Social Protection nownow!!! !!!
‘‘Social Security’Social Security’ (at a minimum, right to livelihood, food, healthcare, water, housing, education, and other essential services): both timeless and universal
The TSP Campaign: find, advance, and create a a democratic and human rights responsedemocratic and human rights response — protect, care for, and work with the most vulnerable sectors such as the urban and rural poor, the workers, women, migrants, farmers and fisherfolks, persons with disability, and indigenous peoples
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Thank you very much.Thank you very much.
—Bonn Juego
Thank you very much.Thank you very much.
—Bonn Juego
