[This is the second in a series of three posts on the Beijing Declaration’s proposals and next steps in implementing its vision.]
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 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?
An excellent starting point for discussion of what to do as present efforts to address the global economic crisis fail is the Beijing Declaration, issued by a group of NGOs and social movements who met in October on the occasion of the Asia-Europe People’s Forum in Beijing. Many of its proposals would be valid in more normal times – indeed many are already functioning in some parts of the world. But the present crisis [link to “Present crisis in historical perspective] puts them on the table everywhere.
Neoliberalism and globalization have been comprehensive in their effect. They have reshaped the economy at every level from local villages to global markets and institutions. And they have reshaped every sphere, from private finance to government taxation, from government spending to international trade, from the environment to agriculture and industry.
The Beijing Declaration provides a vision [link to Globalization from below in hard times post] of a similarly comprehensive transformation. Its proposals would affect local, regional, national, continental, and global economies. And it makes concrete proposals for finance, taxation, public spending and investment, international trade and finance, environmental protection, agriculture, and industry.
The following account provides a bit of background on the problems in each of the spheres, then summarizes the main elements of the Declaration’s proposals.
FINANCE
With their trillions of dollars of financial bailouts, governments are acquiring new leverage over, and even outright ownership of, banks and other financial institutions. The conservative officials who are conducting the bailouts hate this and would like to return control to private hands asap. But once the financial system has proven itself to be so catastrophically dysfunctional, and once such vast sums of public money have gone into rescuing it, the argument for making finance a public utility serving public purposes becomes irrefutable.
The Beijing Declaration lays out several steps to accomplish this purpose. Existing banks should be not just temporarily bailed out, but fully socialized. They should be subject to parliamentary and citizen oversight, with their books open to the public. All loans should be subject to social and environmental criteria, and low-interest loans should be prioritized to address social and environmental needs and expand the social economy (think coops and community-owned businesses). Big banks should be counterbalanced by strengthened grassroots financial institutions (think credit unions and savings clubs). Government-controlled central banks, like other financial institutions, should be made subject to democratic control and social and environmental criteria.
TAXATION
Cutting taxes on corporations and the wealthy has been a worldwide feature of globalization. It has been justified everywhere as a way to increase investment and competitiveness. Its actual effect has been to starve public services; greatly increase the polarization of income and wealth; promote competition among jurisdictions to cut tax rates; and encourage carbon-intensive production and consumption and other anti-social uses of wealth.
To counter the “race to the bottom” in tax rates, the Beijing Declaration proposes to close all tax havens and introduce a global taxation system to prevent transfer pricing and tax evasion. To reverse the upward redistribution of income, taxes should be made more progressive and a levy on bank profits established to finance citizen investment funds. To reduce carbon emissions, subsidies for fossil fuel and nuclear energy companies should be ended and progressive carbon taxes placed on those with the biggest carbon footprints. To support local production, tariffs should be placed on luxury goods and imports of goods that are being produced locally. To reduce the destructive effects of global capital mobility, the Declaration suggests an international “Tobin tax” on the movement of speculative capital.
PUBLIC SPENDING AND INVESTMENT
Starving the public sector has been both a goal and a result of neoliberalism. Structural adjustment plans imposed on developing countries and cuts in the welfare state and the social safety net everywhere have savaged the security and well-being of ordinary people around the world. Many governments, especially the US, have meanwhile poured vast sums into the military. In response to the current economic crisis, governments have diverted trillions of dollars to bailing out banks and other private businesses.
The Beijing Declaration proposes radically reducing military spending and bailouts for bankers. Privatization should be halted and new employment-creating public enterprises established. Government spending should be redirected to guaranteeing basic incomes, social security, universal basic services like housing, water, electricity, health, education, child care, and access to the internet and other public communications facilities. Price controls or subsidies should limit the cost of basic commodities. Massive investment should be made in energy efficiency, public transport, renewable energy, and environmental repair. Government activities should be democratized through participatory budgeting of public finances at all levels; control of public enterprises by parliaments, local communities, and workers; and management of public enterprises by collaboration among managers, staff, unions, and consumer organizations.
INTERNATIONAL TRADE AND FINANCE
The system of globalization from above created by neoliberalism gave governing powers to highly undemocratic institutions like the IMF, the World Bank, and the WTO. It perpetuated the huge subsidy to the US of using the dollar as the global reserve currency. It used debt, loan conditionalities, and conditions on aid to force developing countries to run their economies to service their debts rather than to develop. It used WTO trade rules and, increasingly, bilateral trade agreements between weak and strong countries, to force disadvantageous trade relations on developing countries. Meanwhile, financial deregulation and globalization led to a riot of speculation that eventually led to the present global financial meltdown.
Reconstruction might start, according to the Beijing Declaration, with a people’s inquiry into what happened and what is necessary to fix it. The neoliberal institutions of global governance – in particular the IMF, World Bank, and World Trade Organization -- should be phased out, while the UN, an organization far more representative of the world’ majority, should play a growing role in shaping an new global economic architecture. The dollar should be phased out as a reserve currency.
Debt of developing countries should be cancelled. Sustainable development for local and regional markets should replace export-led development. Regional economic coordination should replace bilateral trade agreements between strong and weak countries. Aid transfers should be continued in the crisis but stripped of neoliberal conditionalities and conditions that primarily serve donor interests. Ruinous global speculation should be met with such measures as bans on trading in derivatives, short-selling of stock, and speculation on staple foods.
ENVIRONMENT
People around the world now recognize that global warming produced by carbon dioxide and other greenhouse gases poses a threat to all. But the response of world governments has been a feeble effort that has barely even slowed, let alone reversed, the growth of greenhouse gasses. The “cap and trade” carbon trading plans introduced by the EU and taken as models for future climate protection so far simply have not worked, and threaten to move environmentally destructive production to poorer countries and localities. Meanwhile, the policies supposedly designed to reduce greenhouse gasses have allowed rich countries to go on expanding their carbon emissions and have not provided poor countries with the support they need to reduce their greenhouse emissions without restricting their own development.
The Beijing Declaration proposes very different strategies to reduce greenhouse gas emissions. Carbon trading regimes should be replaced by progressive carbon emission taxes. Massive job-creating government investment and directed bank lending should prioratize climate protection. Environmentally destructive techno-fixes, like nuclear energy, so-called “clean coal,” and biofuels should be ended. Consumption in rich countries should be radically reduced. Sustainable development should be promoted in poorer countries of the global South, supported by reparations for North-imposed ecological destruction. Countries should be paid to leave fossil fuel reserves in the ground rather than exploit them for quick profits. International climate protection regimes should be subject to democratic management with participation from developing countries and civil society.
AGRICULTURE AND INDUSTRY
Globalization has been accompanied by vast changes in the world’s work. Neoliberal policies have decimated farming and rural communities around the world. So-called free trade has made the world’s peoples dependent on food grown in distant lands and controlled by global trading corporations. Global business and national policies have promoted highly destructive monoculture and other unsustainable farming practices. Legal and trade union protections for labor have been gutted, making more and more work precarious and contingent. Women have been funneled into industrial production in large numbers at the very time that workers’ protections have been undermined. As the victims of neoliberal policies have been forced to leave their homelands in search of work, migrant workers have been exploited and denied the most elementary human and labor rights. With the current economic crisis, large numbers are losing their jobs and being left unprotected in the face of growing abuse of their human rights.
The Beijing Declaration calls for an end to the development model used to justify squeezing the rural sector to provide resources for industrial and urban development. Instead, economic policy should aim to rebuild the agricultural sector by land reform and other policies that support small holder farming, sustainable agriculture, and peasant and indigenous communities. Public policy should support food security and food sovereignty rather than globalized food dependence.
Labor law should limit working hours, strengthen job security, and outlaw precarious low paid work. It should guarantee equal pay for equal work for women. And it should protect the rights -- both in country of work and country of origin -- for migrant workers who lose their jobs.
CONCLUSION
These proposals could no doubt be supplemented by others: For example, they deal little with the need for economic stimulus that so preoccupies those currently trying to save the system. They could be refined: for example, new tariffs might be likely to set off trade wars unless established with international consent. And they could be made more specific: for example, reduced consumption in the developed countries probably can and should come primarily from those with the highest levels of consumption and from wasteful and environmentally destructive activities, rather than from the basic living standards of the population. Indeed, the Declaration emphasizes that its proposals are a starting point for discussion, not a final program.
The unprecedented efforts to save the collapsing status quo now being promulgated in Washington and other capitols around the world are intended to be stop-gap measures that can be reversed once “recovery” is under way. But many of those measures can instead provide starting points for the transformational proposals outlined in the Beijing Declaration. Indeed, they are, as the Declaration says, “practical, common sense proposals.” And each is implicitly a call to action.
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