Monday, November 17, 2008

On Global Neoliberalism Crisis

. . . and here comes a scary sky
hangin' over a no-mercy city

where the winners take every best , the losers beg for the rest,

and the sacred panopticons are all at rest

gone are those starry starry nights . . . gone are the songs of yesterday. . .



Friday, November 07, 2008

Breaking News:

Obama supporter died in Jakarta

A staunch supporter of Democratic Party died of heart attack in Jakarta lastnight, minutes after Obama delivered his victory acceptance speech. Witness reports that his last words were: " O my ghoooost, what we've done, what went right? . . . we started a joke. . . but now look, he become a US President for real. . . what went right . . . who's gonna be responsible for this?

Political jokes is society protecting itself against the rationality of politics and politicians irrationality . . .

Friday, October 17, 2008

The Price of Free Trade (Part Two)

Lori Wallach,
Free Trade—The Price Paid
April 13, 2005, © Big Picture TV

Summary
Lori Wallach discusses the impact of unfair trade rules such as those of NAFTA and the WTO, established in 1994 and 1995 respectively. She gives examples of how biased trade regulations can affect the interests of different member states, including such instances as baby food sold in Guatemala, foreign-owned patents in India and hormone-treated meat in Europe. Any multi-national corporation can effectively challenge any country in which it operates at a WTO court. Countries are forced to comply by the threat of trade sanctions. As a result, government authority is weakened and corporations are empowered.

Transcript
Now the implications of these agreements, which again aren’t about trade, are so broad that the implications are very different in different countries. So for instance, in India where the Constitution explicitly forbid the patenting of life forms or medicines or seeds, they’ve been required to implement the WTO agreements to basically change in the world’s largest democracy and put into place patent laws that basically violate what the Constitution says, or the country of Guatemala, which was one of the countries that had done one of the best jobs implementing the so called UNICEF Nestlé’s Code, this was the code that was developed after lots of citizen campaigning that had to do with the plain marketing of breast milk substitutes, so baby formula, there used to be very tricky labeling of fat babies so that illiterate mothers would be tricked into thinking it was better to use the formula instead of breast milk, and then after a couple of weeks, their milk would dry up, they’d be hooked on having to buy this stuff, and then they killed their baby, because when you mix dirty water with formula, the baby dies from infant diarrhoea. So this was like a catastrophe, a global, just catastrophe of unneeded child deaths, and there was this huge campaign, and Guatemala implemented this health treaty, World Health Organization UNICEF treaty, into the domestic law, and they were a poster child for decreasing infant mortality.
In comes the US saying, excuse me, we’re here representing Gerber Baby Foods, and under the WTO’s intellectual property agreement, they have a trademark on the fat baby face, and we’re so sorry, but you’ll have to allow them to violate your domestic law implementing your health treaty because your WTO obligations require you to allow the fat trademark baby face even though it violates your health treaty and your domestic law, so you can either do this now in advance and we will save you the million dollars you’re trying to defend your law to WTO, or else we’ll take a formal challenge and make you do it.

Well, unfortunately, as is the case now, ten years into the WTO, almost any time a company gets a country to file one of these attacks, because in fact, that’s how it works, a country can challenge another country’s laws as not conforming, and then the country that loses has to change their law or faces permanent trade sanctions. Now when there is a threat basically, particularly in poor countries, the country just says, I give up, I’ll change my law.
And not just poor countries, I mean there’s a classic European Union one like that where the US basically threatened to challenge of the ban on a particularly inhumane kind of fur trap that was banned all across Europe, it’s allowed in some US States, they’re just like a dreadful torture device, and in this instance, the European Union, after the thing had gone through the union, through the commission, the parliament approved it, it was ready for implementation, and like inches before it was actually going to be published, the US and the EU negotiated for a one year delay, then a three year delay, and now it just basically died in the cradle, and this humane trapping law directive EUI had gone through everything, has never gone into a fact because of a WTO threat.
Similarly, Korea basically threw out two important food safety laws after the US threatened to challenge them. They said, don’t even bother, we’re not even going to defend. Meanwhile, there have been 90 formal cases of trade challenges where one country goes after another at the WTO, and in that record, there is only one case when environmental health, a public interest protection was ever saved.

In every other instance, they were struck down. So the US implementation of the CITES Treaty on endangered species through our Endangered Species Act was struck down. Our Clean Air Act regulations and the cleanliness of gasoline were struck down with the WTO.

The European ban on artificial growth hormones in meat was struck down as a WTO violation. These are all non-discriminatory things where a country just said, in Europe they said, we’re not eating meat containing artificial growth hormones. Our farmers can’t use it, you can’t import meat that has it, we’re just not eating it. It’s not discriminatory, just doesn’t, we’re not treating foreign goods differently. It’s just we’re not eating that stuff. We’re not sure what it does to you and we don’t want to find out the hard way, so keep it out.
Well, you can’t do that under the WTO. The US won that case on behalf of the Beef Cattlemen’s Association. Same thing, the Caribbean banana trade system that had been negotiated with the European Union was struck down in the WTO, basically saying, no, you can’t have a development agenda, you have to follow exactly the trade rules word for word.

So law after law, country after country. India’s basically law saying no patenting of life forms, drugs and seeds, struck down. So all of these different important laws and policies, and in fact any time there’s a leading edge policy, right now Europe is rewriting chemical, a chemical regulation through a program called REACH, which will basically require the registration of every chemical that’s used in a certain volume.
WAbout Lori Wallach Director, Global Trade Watch Lori Wallach is one of the best known and most vocal critics of many of the trade agreements associated with corporate globalization. She is the Director of Public Citizen’s Global Trade Watch, a non-profit organization founded in 1995 to promote government and corporate accountability in the globalization and trade arena. By profession a trade lawyer, she has written a number of books and articles on trade and her comments have been widely broadcast on CNN, ABC, CNBC and CSPAN.hat most people don’t realize is that all of our countries’ chemical regulations went to effect basically only going

forward. So if there was already a chemical on the market in the 70s or 80s when a European or a British or a French or a US law went to place, then the testing and registration requirements only went forward, so everything that was already on the market was in grand fathered.

We have no idea what some of those things do, and we’ve accidentally found out some of them are actually quite deadly, so the idea is to actually test everything that you use over a certain volume. So for things you just use a little of, those are outside the law, but anything that’s a major volume chemical, it doesn’t matter if they started using it in 1918 or in 2001, has to be tested, and for those that are most hazardous, there’s a special system, but for the other ones, you just have to list what’s in them and make sure they’re safe.
Well, the European industry, chemical industry has gotten in cahoots with the US chemical industry and the US trade representative to basically blow up this law by claiming to WTO violation before it ever gets implemented. Well, this is the law that should set the forward pattern for all the rest of the world. The US needs to update our laws. Our laws are totally backwards. You guys actually in Europe are going to do it right first, and then we should follow. Instead, the US industry is using the WTO to kill it. So this gives you some idea of the so called free trade regime, and it has very little to do with trade, and it’s certainly not free.
— Lori Wallach

About Lori Wallach Director, Global Trade Watch Lori Wallach is one of the best known and most vocal critics of many of the trade agreements associated with corporate globalization. She is the Director of Public Citizen’s Global Trade Watch, a non-profit organization founded in 1995 to promote government and corporate accountability in the globalization and trade arena. By profession a trade lawyer, she has written a number of books and articles on trade and her comments have been widely broadcast on CNN, ABC, CNBC and CSPAN.

Thursday, October 16, 2008

The Price of Free Trade (Part One)

Lori Wallach,
Free Trade—The Price Paid
April 13, 2005, © Big Picture TV

Summary
In the first part of this two-part series, Lori Wallach explains how the name of free trade was usurped by multinational corporations and right-wing think-tanks in the early 1990s. In 1995 the post-war trade agreement known as GATT was incorporated into the WTO at the Uruguay Round. This endorsed a much wider neo-liberal corporate agenda that stretched far beyond trade issues. It imposed radical new obligations on trading partners and in particular the developing world.

Free Trade was a beautiful Trojan horse because in parliaments around the world, nobody had any idea what they were getting themselves into. . .

Basically, the good name of trade was used as a Trojan horse. If you can imagine that the original trade rules which came under a thing called the General Agreement on Tariffs and Trade in 1947 dealt only about trading goods between countries, and those rules focused on tariffs and quotas, traditional trade measures. A tariff is a tax charged when a good crosses a border, and a quota is a quantitative limit about how much of an import you’ll take. And so in the past, trade agreement said for instance, we all the countries signing this agreement agree we’ll only charge a 3% tariff tax and blah, blah coming over the border, and we’ll all allow 1,000 pairs of shoes or whatever the quota is, it’s actually in tonnes or in millions of pieces, and those limits were then negotiated and traded and swapped and set over time.

Only starting in the early 1990s did the WTO and NAFTA explode the boundaries of what was in a legitimate trade agreement. And there is a back story to this, which is, that the Reagan and Thatcher so called revolutions, the neoliberal world view which involves trying to have worldwide an entire package of policies, the goal of which is to basically get people and their governments out of the markets, that the markets know the best, if you can just totally deregulate and liberalize everything, we’ll all be happier for that kind and gentle hand at the market. And so this world view involves a whole package of policies to implement it. Trade liberalization, finance liberalization, which means liberalization of currency trading and of a variety of instruments of trading, of investment liberalization, who can own what, who can sell and buy things, from land to different properties, new protections for property, both for investors but also for intellectual property, deregulation of social standards or harmonization of regulatory standards to one global environmental or worker safety or food safety standards that you can work on a global single unified market level with a multinational corporation, the commodification of new tradable units by patenting things and allowing you to trade things that were seen as, my own genes for instance, or to have commodification of things with human rights, basic services like the right to drinkable water and creating all these new units, and also getting the government out of the business of actually having a role in the marketplace, so getting privatization of any kind of factories and companies but also of services, so the things in many of our countries, the phone systems, the energy utilities, the water utilities that are government run or heavily regulated private not for profits are regulated monopolies, all of that needs to be gotten rid off through privatization and deregulation of services.

That mix of policies was being pushed back by parliaments throughout the world including by the US Congressmen. Reagan was trying to shove it down their throats. And so, very cleverly, the right wing think tanks and the big multinational companies who jointly sought for different purposes, one ideological, one for profit motives, to implement this world view into real policies, came up with the idea of using the obscure trade negotiations, the GATT, because ever since 1947, the GATT would have periodic negotiations every seven to ten years where it would sort of add some new issues or cut some more tariffs. And so one of those negotiations had started in Uruguay, and everyone in the world thought it was another of those snoozerama situations where they basically are in there cutting tariffs on socks, woohoo, no one’s paying attention to that. But really what was done is the entire agenda was rewritten, and the Reagan and Thatcher guys basically said, hey, let’s have a different kind of trade agreement. Let’s make the GATT just part of what’s implemented, and they created the World Trade Organization, a freestanding international body which would implement 17 different agreements, only one of which is really about trade, the GATT. It’s now submerged under the WTO. The other 16 agreements have to do with, there’s a whole agreement limiting what kind of domestic environmental standards you can have, a whole agreement limiting what kind of domestic food safety standards you can have, a whole agreement limiting how you can spend your tax dollars in procurement policy. Can you have green procurement? Can you try and not do business with companies that are human rights violators? So a whole agreement on privatization and deregulation of services, there’s a whole agreement on intellectual property protections, new patent protectionism, new copyright rights. There’s a whole agreement on how you can treat foreign investors inside your country, the trade related investment measures. All of these are non-trade related issues, but they’re now enforced through these different trade agreements like NAFTA and WTO. It was a beautiful Trojan horse because in parliaments around the world, nobody had any idea what they were getting themselves into.
— Lori Wallach

Thursday, October 09, 2008

Adam Smith was even better than you: market fundamentalists!!

Adam Smith's works is often regarded as key source of neoliberalism. But he has been oversimplified by his critics. One fact should not be left alone: he is a professor not of economics but of moral philosophy; and he offers a vision of how to advance the social good, not through self-interest, as he would later argue in his magnum opus The Wealth of Nations, but through systematic social benevolence; and in this sense, he was morally better than today's greedy neoliberals or market fundamentalists:

Merchants and master manufacturers are … the two classes of people who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share of the public consideration. As during their whole lives they are engaged in plans and projects, they have frequently more acuteness of understanding than the greater part of country gentlemen. As their thoughts, however, are commonly exercised rather about the interest of their own particular branch of business, than about that of the society, their judgment, even when given with the greatest candour (which it has not been upon every occasion) is much more to be depended upon with regard to the former of those two objects than with regard to the latter. Their superiority over the country gentleman is not so much in their knowledge of the public interest, as in their having a better knowledge of their own interest than he has of his. It is by this superior knowledge of their own interest that they have frequently imposed upon his generosity, and persuaded him to give up both his own interest and that of the public, from a very simple but honest conviction that their interest, and not his, was the interest of the public. The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it (Adam Smith, The Wealth of Nations, Book I, Everyman’s Library, Sixth Printing, 1991; pp. 87-88, 231-232)

Tuesday, October 07, 2008

Global Neoliberalism Crisis 2008

The global financial crisis, brewing for a while, really started to show its effects in the middle of 2008. Around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems. On the one hand many people are concerned that those responsible for the financial problems are the ones being bailed out, while on the other hand, a global financial meltdown will affect the livelihoods of almost everyone in an increasingly inter-connected world. The problem could have been avoided, if ideologues supporting the current economics models weren’t so vocal, influential and inconsiderate of others’ viewpoints and concerns.
This article provides an overview of the crisis with links for further, more detailed, coverage at the end.

Global Financial Crisis 2008
by Anup Shah
Sunday, October 05, 2008
http://www.globalissues.org/article/768/global-financial-crisis.

Crisis so severe, the world financial system is affected
Following a period of economic boom, a financial bubble—global in scope—has now burst.
A collapse of the US sub-prime mortgage market and the reversal of the housing boom in other industrialized economies have had a ripple effect around the world. Furthermore, other weaknesses in the global financial system have surfaced. Some financial products and instruments have become so complex and twisted, that as things start to unravel, trust in the whole system started is failing.
The extent of this problem has been so severe that some of the world’s largest financial institutions have collapsed. Others have been bought out by their competition at low prices and in other cases, the governments of the wealthiest nations in the world have resorted to extensive bail-out and rescue packages for the remaining large banks and financial institutions.
The effect of this, the United Nation’s Conference on Trade and Development says in its Trade and Development Report 2008 is, as summarized by the Third World Network, that
". . . the global economy is teetering on the brink of recession. The downturn after four years of relatively fast growth is due to a number of factors: the global fallout from the financial crisis in the United States, the bursting of the housing bubbles in the US and in other large economies, soaring commodity prices, increasingly restrictive monetary policies in a number of countries, and stock market volatility … the fallout from the collapse of the US mortgage market and the reversal of the housing boom in various important countries has turned out to be more profound and persistent than expected in 2007 and beginning of 2008. As more and more evidence is gathered and as the lag effects are showing up, we are seeing more and more countries around the world being affected by this rather profound and persistent negative effects from the reversal of housing booms in various countries."
— Kanaga Raja, Economic Outlook Gloomy, Risks to South, say UNCTAD, Third World Network, September 4, 2008
A crisis so severe, those responsible are bailed out
Some of the bail-outs have also been accompanied with charges of hypocrisy due to the appearance of “socializing the costs while privatizing the profits.” The bail-outs appear to help the financial institutions that got into trouble (many of whom pushed for the kind of lax policies that allowed this to happen in the first place).
Some governments have moved to make it harder to manipulate the markets by shorting during the financial crisis blaming them for worsening an already bad situation.
(It should be noted that during the debilitating Asian financial crisis in the late 1990s, Asian nations affected by short-selling complained, without success that currency speculators—operating through hedge funds or through the currency operations of commercial banks and other financial institutions—were attacking their currencies through short selling and in doing so, bringing the rates of the local currencies far below their real economic levels. However, when they complained to the Western governments and IMF, they dismissed the claims of the Asian governments, blaming it on their own economic mismanagement instead.)
Other governments have moved to try and reassure investors and savers that their money is safe. In a number of European countries, for example, governments have tried to increase or fully guarantee depositors’ savings. In other cases, banks have been nationalized (socializing profits as well as costs, potentially.)
In the meanwhile, smaller businesses and poorer people rarely have such options for bail out and rescue when they find themselves in crisis.
There seems to be a growing resentment and little sympathy for those working in the financial sector that appeared to have gambled with people’s money, and hence their lives, while even getting fat bonuses and pay rises for it in the past. Although in raw dollar terms the huge pay rises and bonuses are small compared to the magnitude of the problem, the encouragement such practices have given in the past, as well as the type of culture it creates is what has angered so many people.
Side note on those taking on risky loans in the subprime market»
In the case of subprime mortgages, it is also argued that those who took on the risky loans are to blame; they should not have borrowed so much money when they knew they would not have the means to repay. While there is truth to this, and our culture of expecting easy money, consuming beyond our means, etc is something that needs urgent attention, in the case of subprime mortgages, it seems easy to forget the predicament of people living in poverty. Financial advisors that irresponsibly pushed these loans (with no interest or care of the borrower in mind) were generally aggressive as they had a lot to gain from these loans.
For people living in poverty even in wealthy countries life can be desperate and miserable. Concerns will range from crime in the neighborhood, to good schooling, to getting by week by week on very little, and ensuring a job lasts. The hope of being able to escape it for a while was, in effect, exploited. When in poverty, long term thinking is not always going to enter the realm of immediate concern.
Furthermore, it is likely that those lower down the social strata are not going to be as financially savvy as those further up. Hence there is usually more trust placed in a bank or financial advisor. It is often forgotten these days that banks and financial institutions have changed in nature; there is less concern about the people they serve, but more about how they can sell products from which they can make profit. While to some extent risky borrowers may bear some responsibility, overall they lost out while the lenders are being bailed out.
A crisis so severe, the rest suffer too
There is the argument that when the larger banks show signs of crisis, it is not just the wealthy that will suffer, but potentially everyone. With an increasingly inter-connected world, things like a credit crunch can ripple through the entire economy.
For example, people may find their mortgages harder to pay, or remortgaging could become expensive, for any recent homebuyers the value of their homes are likely fall in value leaving them in negative equity, and many sectors may find the credit crunch and higher costs of borrowing will lead to job cuts. As people will cut back on consumption to try and weather this economic storm, yet other businesses will struggle to survive leading to further fears of job losses.

The financial crisis and wealthy countries
Many have blamed the greed of Wall Street for causing the problem in the first place because it is in the US that the most influential banks, institutions and ideologues that pushed for the policies that caused the problems are found. The crisis became so severe that after the failure and buyouts of major institutions, the Bush Administration offered a $700 billion bailout plan for the US financial system. Joseph Stiglitz, Nobel Laureate Joseph Stiglitz: Bail Out Wall Street Now, Change Terms Later, Democracy Now!, October 2, 2008
This bailout package was controversial because it was unpopular with the public, seen as a bailout for the culprits while the ordinary person would be left to pay for their folly. The initial rejection at the US House of Representatives, because of this, sent shock waves around the world.
It took a second attempt to pass the plan, but with add-ons to the bill to get the additional congressmen and women to accept the plan.
However, as former Nobel prize winner for Economics, former Chief Economist of the World Bank and university professor at Columbia University, Joseph Stiglitz, argued, the plan “remains a very bad bill:”
"I think it remains a very bad bill. It is a disappointment, but not a surprise, that the administration came up with a bill that is again based on trickle-down economics. You throw enough money at Wall Street, and some of it will trickle down to the rest of the economy. It’s like a patient suffering from giving a massive blood transfusion while there’s internal bleeding; it doesn’t do anything about the basic source of the hemorrhaging, the foreclosure problem. But that having been said, it is better than doing nothing, and hopefully after the election, we can repair the very many mistakes in it." Joseph Stiglitz, Nobel Laureate Joseph Stiglitz: Bail Out Wall Street Now, Change Terms Later, Democracy Now!, October 2, 2008
Writing in The Guardian, Stiglitz also added that, "Americans have lost faith not only in the [Bush] administration, but in its economic philosophy: a new corporate welfarism masquerading behind free-market ideology; another version of trickle-down economics, where the hundreds of billions to Wall Street that caused the problem were supposed to somehow trickle down to help ordinary Americans. Trickle-down hasn’t been working well in America over the past eight years. The very assumption that the rescue plan has to help is suspect. After all, the IMF and US treasury bail-outs for Wall Street 10 years ago in Korea, Thailand, Indonesia, Brazil, Russia and Argentina didn't work for those countries, although it did enable Wall Street to get back most of its money. The taxpayers in these other poor countries picked up the tab for the financial markets’ mistakes. This time, it is American taxpayers who are being asked to pick up the tab. And that’s the difference. For all the rhetoric about democracy and good governance, the citizens in those countries didn’t really get a chance to vote on the bail-outs . . . In environmental economics, there is a basic concept called the polluter pays principle. It is a matter of fairness, but also of efficiency. Wall Street has polluted our economy with toxic mortgages. It should now pay for the cleanup.
— Joseph Stiglitz, Good day for democracy; Now Congress must draw up a proposal in which costs are borne by those who created the problem, The Guardian, October 1, 2008

A crisis signaling the decline of US’s superpower status?
Some commentators have been writing even before the global financial crisis took hold that the US was in decline, as evidenced by its challenges in Iraq and Afghanistan, and its declining image in Europe, Asia and elsewhere.
The BBC also asked if the US’s superpower status was shaken by this financial crisis:
The financial crisis is likely to diminish the status of the United States as the world’s only superpower. On the practical level, the US is already stretched militarily, in Afghanistan and Iraq, and is now stretched financially. On the philosophical level, it will be harder for it to argue in favor of its free market ideas, if its own markets have collapsed.
… Some see this as a pivotal moment.
The political philosopher John Gray, who recently retired as a professor at the London School of Economics, wrote in the London paper The Observer: “Here is a historic geopolitical shift, in which the balance of power in the world is being altered irrevocably. “The era of American global leadership, reaching back to the Second World War, is over… The American free-market creed has self-destructed while countries that retained overall control of markets have been vindicated . . . How symbolic that Chinese astronauts take a spacewalk while the US Treasury Secretary is on his knees.” — Paul Reynolds, US superpower status is shaken, BBC, October 1, 2008
Yet, others argue that it may be too early to write of the US:
The director of a leading British think-tank Chatham House, Dr Robin Niblett … argues that we should wait a bit before coming to a judgment and that structurally the United States is still strong. America is still immensely attractive to skilled immigrants and is still capable of producing a Microsoft or a Google,” he went on. “Even its debt can be overcome. It has enormous resilience economically at a local and entrepreneurial level. “And one must ask, decline relative to who? China is in a desperate race for growth to feed its population and avert unrest in 15 to 20 years. Russia is not exactly a paper tiger but it is stretching its own limits with a new strategy built on a flimsy base. India has huge internal contradictions. Europe has usually proved unable to jump out of the doldrums as dynamically as the US.
“But the US must regain its financial footing and the extent to which it does so will also determine its military capacity. If it has less money, it will have fewer forces.”
— Paul Reynolds, US superpower status is shaken, BBC, October 1, 2008

Europe and the financial crisis
In Europe, a number of major financial institutions have failed, or needed rescuing.
A number of European countries are attempting different measures (as they seemed to have failed to come up with a united response).
For example, some nations have stepped in to nationalize or in some way attempt to provide assurance for people. This may include guaranteeing 100% of people’s savings or helping broker deals between large banks to ensure there isn’t a failure.

The financial crisis and the developing world
For the developing world, the rise in food prices as well as the knock-on effects from the financial instability and uncertainty in industrialized nations are having a compounding effect. High fuel prices, soaring commodity prices together with fears of global recession are worrying many developing country analysts.
Summarizing a United Nations Conference on Trade and Development report, the Third World Network notes the impacts the crisis could have around the world, especially on developing countries that are dependent on commodities for import or export:
Uncertainty and instability in international financial, currency and commodity markets, coupled with doubts about the direction of monetary policy in some major developed countries, are contributing to a gloomy outlook for the world economy and could present considerable risks for the developing world, the UN Conference on Trade and Development (UNCTAD) said Thursday.
… Commodity-dependent economies are exposed to considerable external shocks stemming from price booms and busts in international commodity markets.
Market liberalization and privatization in the commodity sector have not resulted in greater stability of international commodity prices. There is widespread dissatisfaction with the outcomes of unregulated financial and commodity markets, which fail to transmit reliable price signals for commodity producers. In recent years, the global economic policy environment seems to have become more favorable to fresh thinking about the need for multilateral actions against the negative impacts of large commodity price fluctuations on development and macroeconomic stability in the world economy.
— Kanaga Raja, Economic Outlook Gloomy, Risks to South, say UNCTAD, Third World Network, September 4, 2008
Asia and the financial crisis
Countries in Asia are increasingly worried about what is happening in the West. A number of nations urged the US to provide meaningful assurances and bailout packages for the US economy, as that would have a knock-on effect of reassuring foreign investors and helping ease concerns in other parts of the world.
Many believe Asia was sufficiently de-coupled from the Western financial systems, but this crisis has shown that this is not the case, at least not yet.
Many Asian countries have seen their stock markets suffer and currency values going on a downward trend. As many nations in the region are seeing rapid growth and wealth creation, there is enormous investment in Western countries, and therefore, a lot of exposure to problems, too.
In addition, there is increased foreign investment, mostly from the West in Asia. Asian products and services are also global, and a slowdown in wealthy countries means increased chances of a slowdown in Asia and the risk of job losses.
Asia has not had a subprime mortgage crisis like many nations in the West, but the increasingly inter-connected world means there are always knock-on effects.
A crisis in context
While much mainstream media attention is on the details of the financial crisis, and some of its causes, it also needs to be put into context (though not diminishing its severity).
Almost daily, some half of humanity or more, suffer a daily financial crisis of poverty. In poorer countries, poverty is not always the fault of the individual alone, but a combination of personal, regional, national, and importantly international influences. There is little in the way of bail out for these people, many of whom are not to blame for their own predicament, unlike with the financial crisis.
The poorer countries do get foreign aid from richer nations, but it cannot be expected that current levels of aid (low as they actually are) can be maintained as donor nations themselves go through financial crisis. As such the Millennium Development Goals to address many concerns such as halving poverty and hunger around the world, will be affected.
While the media’s attention is on the global financial crisis (which predominantly affects the wealthy and middle classes), the effects of the global food crisis, which predominantly affects the poorer and working classes) seems to have fallen off the radar. The two are in fact inter-related issues, both have their causes rooted in the fundamental problems associated with a neoliberal, one-size-fits-all, economic agenda imposed on virtually the entire world.

A crisis that need not have happened
This problem could have been averted (in theory) as people had been pointing to these issues for decades. Yet, of course, during periods of boom no-one (let alone the financial institutions and their supporting ideologues and politicians largely believed to be responsible for the bulk of the problems) would want to hear of caution and even thoughts of the kind of regulation that many are now advocating. To suggest anything would be anti-capitalism or socialism or some other label that could effectively shut up even the most prominent of economists raising concerns.
Of course, the irony that those same institutions would now themselves agree that those “anti-capitalist” regulations are required is of course barely noted. Such options now being considered are not anti-capitalist or whatever. It reveals how we are used to a black and white picture of our economy, not the grey-areas; that there are various forms of capitalism, the most extreme of which leads to the biggest bubbles and the biggest busts. Quoting Stiglitz again, he captures the sentiments of a number of people:
We had become accustomed to the hypocrisy. The banks reject any suggestion they should face regulation, rebuff any move towards anti-trust measures — yet when trouble strikes, all of a sudden they demand state intervention: they must be bailed out; they are too big, too important to be allowed to fail . . . America’s financial system failed in its two crucial responsibilities: managing risk and allocating capital. The industry as a whole has not been doing what it should be doing … and it must now face change in its regulatory structures. Regrettably, many of the worst elements of the US financial system … were exported to the rest of the world.
It was al
l done in the name of innovation, and any regulatory initiative was fought away with claims that it would suppress that innovation. They were innovating, all right, but not in ways that made the economy stronger. Some of America's best and brightest were devoting their talents to getting around standards and regulations designed to ensure the efficiency of the economy and the safety of the banking system. Unfortunately, they were far too successful, and we are all — homeowners, workers, investors, taxpayers — paying the price.
— Joseph Stiglitz,
The fruit of hypocrisy; Dishonesty in the finance sector dragged us here, and Washington looks ill-equipped to guide us out, The Guardian, September 16, 2008

Rethinking economics?
During periods of boom, people do not want to hear of criticisms of the forms of economics they benefit from, especially when it brings immense wealth and power, regardless of whether it is good for everyone or not. It may be that during periods of crisis such as now, the time comes to rethink economics in some way. Even mainstream media, usually quite supportive of the dominant neoliberal economic ideology entertains thoughts that economic policies and ideas need rethinking. Stephen Marglin, Rethinking Economics, May 21, 2007, © Big Picture TV
Harvard professor of economics, Stephen Marglin, for example, notes how throughout recent decades, the political spectrum and thinking on economics has narrowed, limiting the ideas and policy options available. Some have been writing for many years that while the current economic ideology is flawed, it only needs minor tweaking to correct it and make it work for everyone; a more compassionate capitalism, but capitalism nonetheless.
Others argue that capitalism is so flawed it needs complete doing away with.
Others may yet argue that the bailouts by large government will distort the markets even more (encouraging bad practices by the big institutions) and rather than more regulation, an even freer form of capitalism is needed.
What seems clear is that at least for a while, debate will increase in the mainstream.
This will also attract ideologues of different shades, leading to both wider discussion but also more entrenched views. Those with power and money are less likely to agree to a radical change in economics where their power and influence are going to diminish, and will be able to lobby governments, produce compelling ads and do whatever it takes to maintain options that ensure they benefit. It is perhaps ironic to quote, at length, a warning from Adam Smith, given he is held up as the leading figure of the economic ideology they promote:
Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their good both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.

Merchants and master manufacturers are … the two classes of people who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share of the public consideration. As during their whole lives they are engaged in plans and projects, they have frequently more acuteness of understanding than the greater part of country gentlemen. As their thoughts, however, are commonly exercised rather about the interest of their own particular branch of business, than about that of the society, their judgment, even when given with the greatest candour (which it has not been upon every occasion) is much more to be depended upon with regard to the former of those two objects than with regard to the latter. Their superiority over the country gentleman is not so much in their knowledge of the public interest, as in their having a better knowledge of their own interest than he has of his. It is by this superior knowledge of their own interest that they have frequently imposed upon his generosity, and persuaded him to give up both his own interest and that of the public, from a very simple but honest conviction that their interest, and not his, was the interest of the public. The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it. (Emphasis Added)
— Adam Smith, The Wealth of Nations, Book I, (Everyman’s Library, Sixth Printing, 1991), pp. 87-88, 231-232
With the mainstream media often representing such entrenched interests, true democratic participation will be very critical.

Sunday, October 05, 2008

The Problem with too much freedom for money

The problem with too much money and too much freedom for money amidst poverty. This year marks the 160th anniversary of The Communist Manifesto and capitalism--a k a "free enterprise"--seems willing to observe the occasion by dropping dead. On Monday night, some pundits were warning that the ATMs might run dry and hinting that the only safe investment left is canned beans. Apocalypse or extortion? No one seems to know, though the populist part of the populace has been leaning toward the latter. An e-mail whipping around the web this morning has the subject line "Sign on Wall Street yesterday," and shows a hand-lettered cardboard sign saying, "JUMP! You Fuckers!" . Share this article

The Communist Manifesto Turns 160

October 1, 2008
the_nation242:http://www.thenation.com/doc/20081013/ehrenreich

As Karl Marx's opus marks a big birthday, capitalism seems willing to mark the occasion by dropping dead. The Manifesto makes for quaint reading today. All that talk about "production," for example: Did they actually make things in those days? Did the proletariat really slave away in factories instead of call centers? But on one point Marx and Engels proved right: within capitalist societies, or at least the kind of wildly unregulated capitalism America has had, the rich got richer, the workers got poorer, and the erstwhile middle class has been sliding toward ruin. The last two outcomes are what Marx called "immiseration," which, in translation, is the process you're undergoing when you have cancer and no health insurance or a mortgage payment due and no paycheck coming in.
Marx predicted that capitalism would fall in a spirited, proactive, fashion: the workers, fed up with immiseration, would revolt, seize the "means of production" and insist on running the show themselves, that being the original, pre-Soviet, notion of socialism.
The revolution didn't happen, of course, at least not here. For the past several years, American workers have sweetly acquiesced to declining wages, rising prices, speed-ups at work, disappearing pensions and increasingly threadbare health insurance. While CEO pay escalated to the eight-figure range and above, so-called ordinary Americans took on second jobs and crowded into multi-generational households with uncomfortably long waits for the bathroom.
But all this immiseration--combined with fabulous enrichment at the top--did end up destabilizing the capitalist system, if only because , in the last few years, America's substitute for decent wages has been easy credit. Until about a year ago, we got almost daily messages, by telemarketer and by mail, urging us to consolidate our debts, refinance our homes, transfer our debts from credit card to another and try tasty new mortgages that didn't even require a down payment. All too often, we bit. It sounded so reasonable, for example, not to let our assets just "sit" in our houses but to start spending that money now.
At the other, Learjet, end of the economic spectrum, there was the problem of what to do with too much money. Yes, this can be a problem. Some of the super-rich have to hire consultants to help them spend their money: Where do you get a $20,000 bottle of wine or find a Picasso for the bathroom wall? More seriously, there was the problem of what to invest in. As Chuck Collins of the Working Group on Extreme Inequality has pointed out, huge concentrations of wealth can function like rogue waves, smashing around recklessly in their search for ever higher returns. A lot of these money waves flowed, directly or indirectly, into the dodgy credit schemes that were engulfing the un-rich majority, leaving even the fat cats imperiled by the toxic debts of the subprime class.

Marx's argument was that the coexistence of great wealth for the few and growing poverty for the many is not only morally objectionable, it's also inherently unstable. He may have been wrong about the reasons for the instability, but no one can any longer deny it's there. When the greed of the rich collided with the needs of the poor--for a home, for example--the result was a global credit meltdown.
Obviously, the way to address the crisis is to deal with the poverty and inequality that led to it: bail out people facing foreclosures, increase food stamp allotments, extend unemployment insurance and make a massive job-generating, public investment in infrastructure--and, since medical debts are the number-one cause of personal bankruptcy, enact universal health insurance immediately. But not even Obama, whose lawn sign I still proudly display, seems to have the stomach for such a "trickle upwards" approach. He has announced that he won't bother taking the bailout as an opportunity to change the bankruptcy law so that people facing foreclosure can renegotiate their mortgages.
So happy birthday, Communist Manifesto--although I'm hoping that capitalism survives this one, if only because there's no alternative ready at hand.
At the very least, we should get some regulation and serious oversight out of any bailout deal, meaning that, yes, the economy will look a little less like "free enterprise." But one thing we should have learned in the last week, if not the last year, is that, when applied to enterprise, "freedom" can be just another word for someone else's pain.
Copyright © 2008 The Nation

Wednesday, September 24, 2008

The US Crisis of Neoliberalism

Yes, this seems familiar for us here in Indonesia

Socialism for Bankers, Savage Capitalism for Everyone Else?
James S. Henry : The bailout jeopardizes the entire progressive agenda, undermines democracy, doesn't compensate us for our money and doesn't solve the problem. Otherwise, it's great!

Goldman Sachs Socialism
William Greider: Bernanke demands $700 billion with no accountability, no transparency and no guarantees. Take it or leave it, suckers.

Bail Out People Before Bankers
The Nation. posted by Peter Rothberg on 09/23/2008 @ 7:03pm

Economists are widely panning
:
Treasury Secretary Hank Paulson's bailout package for lacking appropriate regulatory mechanisms to prevent another future crisis; for not providing homeowner relief; for richly rewarding corporate executives for their failure and for neglecting to provide
meaningful oversight over how the aid is distributed.
This whole mess has given lie to the free market and called into question virtually the entire basis of late capitalist economic organization. The Feds are propping up stock prices, directing buyouts, nationalizing private industries and
subsidizing crooks and swindlers who already made a killing off the mortgage bubble.
The Fed and Treasury are right to take steps to avert this disaster but the use of taxpayer money to exclusively prop up and reward the rich while the needs of everyone else are written off as too costly is both morally unacceptable and, to quote conservative economist
Luigi Zingales of the University of Chicago School of Business, "will undermine the fundamental workings of the capitalist system."
While there is an urgency to put a bailout program in place, there are several important issues that Congress should address as part of the process. As economist
Dean Baker has outlined on TPM , there are some very clear principles that could guide a bailout and a restructuring of the financial system.
A coalition of grassroots groups, including Credo Mobile, Code Pink, United for Peace and Justice and MoveOn.org are planning to express their opposition to Paulson's bailout plan and call for those clear principles this Thursday, September 25 in a
rally and march at 4:00pm near Wall Street in lower Manhattan.
With the world famous financial district as the backdrop and the eyes of the national media watching, the organizers' aim is to make visible the anger and concern of so many people at the prospects of this bailout and to do so as Congress appears set to
pass legislation by the end of the week before adjourning for the fall campaign season.
If you're not in New York, you can still
contact your elected reps and implore them to reject Paulson's plunder and enact a plan that bails out Main Street as well as Wall Street and provides for investment in a new productive economy.

Tuesday, September 23, 2008

Bordieu: The Essence of Neoliberalism

The Essence Of Neoliberalism
Pierre BourdieuProfessor at the Collège de France
Pierre BourdieuDeceased in 2001Le Monde, December 1998En español: La esencia del neoliberalismoLa globalización en La BitBliotecaLa nouvelle vulgate planétaire (au Monde diplomatique) Pierre Bourdieu en La BitBlioteca.


As the dominant discourse would have it, the economic world is a pure and perfect order, implacably unrolling the logic of its predictable consequences, and prompt to repress all violations by the sanctions that it inflicts, either automatically or — more unusually — through the intermediary of its armed extensions, the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD) and the policies they impose: reducing labour costs, reducing public expenditures and making work more flexible. Is the dominant discourse right? What if, in reality, this economic order were no more than the implementation of a utopia — the utopia of neoliberalism — thus converted into a political problem? One that, with the aid of the economic theory that it proclaims, succeeds in conceiving of itself as the scientific description of reality?
This tutelary theory is a pure mathematical fiction. From the start it has been founded on a formidable abstraction. For, in the name of a narrow and strict conception of rationality as individual rationality, it brackets the economic and social conditions of rational orientations and the economic and social structures that are the condition of their application.
To give the measure of this omission, it is enough to think just of the educational system. Education is never taken into account of as such at a time when it plays a determining role in the production of goods and services as in the production of the producers themselves. From this sort of original sin, inscribed in the Walrasian myth (1) of “pure theory”, flow all of the deficiencies and faults of the discipline of economics and the fatal obstinacy with which it attaches itself to the arbitrary opposition which it induces, through its mere existence, between a properly economic logic, based on competition and efficiency, and social logic, which is subject to the rule of fairness.
That said, this “theory” that is desocialised and dehistoricised at its roots has, today more than ever, the means of making itself true and empirically verifiable. In effect, neoliberal discourse is not just one discourse among many. Rather, it is a “strong discourse” — the way psychiatric discourse is in an asylum, in Erving Goffman's analysis (2). It is so strong and so hard to combat only because it has on its side all of the forces of a world of relations of forces, a world that it contributes to making what it is. It does this most notably by orienting the economic choices of those who dominate economic relationships. It thus adds its own symbolic force to these relations of forces. In the name of this scientific programme, converted into a plan of political action, an immense political project is underway, although its status as such is denied because it appears to be purely negative. This project aims to create the conditions under which the “theory” can be realised and can function: a programme of the methodical destruction of collectives.
The movement toward the neoliberal utopia of a pure and perfect market is made possible by the politics of financial deregulation. And it is achieved through the transformative and, it must be said, destructive action of all of the political measures (of which the most recent is the Multilateral Agreement on Investment (MAI), designed to protect foreign corporations and their investments from national states) that aim to call into question any and all collective structures that could serve as an obstacle to the logic of the pure market: the nation, whose space to manoeuvre continually decreases; work groups, for example through the individualisation of salaries and of careers as a function of individual competences, with the consequent atomisation of workers; collectives for the defence of the rights of workers, unions, associations, cooperatives; even the family, which loses part of its control over consumption through the constitution of markets by age groups.
The neoliberal programme draws its social power from the political and economic power of those whose interests it expresses: stockholders, financial operators, industrialists, conservative or social-democratic politicians who have been converted to the reassuring layoffs of laisser-faire, high-level financial officials eager to impose policies advocating their own extinction because, unlike the managers of firms, they run no risk of having eventually to pay the consequences. Neoliberalism tends on the whole to favour severing the economy from social realities and thereby constructing, in reality, an economic system conforming to its description in pure theory, that is a sort of logical machine that presents itself as a chain of constraints regulating economic agents.
The globalisation of financial markets, when joined with the progress of information technology, ensures an unprecedented mobility of capital. It gives investors concerned with the short-term profitability of their investments the possibility of permanently comparing the profitability of the largest corporations and, in consequence, penalising these firms’ relative setbacks. Subjected to this permanent threat, the corporations themselves have to adjust more and more rapidly to the exigencies of the markets, under penalty of “losing the market’s confidence”, as they say, as well as the support of their stockholders. The latter, anxious to obtain short-term profits, are more and more able to impose their will on managers, using financial directorates to establish the rules under which managers operate and to shape their policies regarding hiring, employment, and wages.
Thus the absolute reign of flexibility is established, with employees being hiring on fixed-term contracts or on a temporary basis and repeated corporate restructurings and, within the firm itself, competition among autonomous divisions as well as among teams forced to perform multiple functions. Finally, this competition is extended to individuals themselves, through the individualisation of the wage relationship: establishment of individual performance objectives, individual performance evaluations, permanent evaluation, individual salary increases or granting of bonuses as a function of competence and of individual merit; individualised career paths; strategies of “delegating responsibility” tending to ensure the self-exploitation of staff who, simple wage labourers in relations of strong hierarchical dependence, are at the same time held responsible for their sales, their products, their branch, their store, etc., as though they were independent contractors. This pressure toward “self-control” extends workers’ “involvement” according to the techniques of “participative management” considerably beyond management level. All of these are techniques of rational domination that impose over-involvement in work (and not only among management) and work under emergency or high-stress conditions. And they converge to weaken or abolish collective standards or solidarities (3).
In this way, a Darwinian world emerges — it is the struggle of all against all at all levels of the hierarchy, which finds support through everyone clinging to their job and organisation under conditions of insecurity, suffering, and stress. Without a doubt, the practical establishment of this world of struggle would not succeed so completely without the complicity of all of the precarious arrangements that produce insecurity and of the existence of a reserve army of employees rendered docile by these social processes that make their situations precarious, as well as by the permanent threat of unemployment. This reserve army exists at all levels of the hierarchy, even at the higher levels, especially among managers. The ultimate foundation of this entire economic order placed under the sign of freedom is in effect the structural violence of unemployment, of the insecurity of job tenure and the menace of layoff that it implies. The condition of the “harmonious” functioning of the individualist micro-economic model is a mass phenomenon, the existence of a reserve army of the unemployed.
This structural violence also weighs on what is called the labour contract (wisely rationalised and rendered unreal by the “theory of contracts”). Organisational discourse has never talked as much of trust, co-operation, loyalty, and organisational culture as in an era when adherence to the organisation is obtained at each moment by eliminating all temporal guarantees of employment (three-quarters of hires are for fixed duration, the proportion of temporary employees keeps rising, employment “at will” and the right to fire an individual tend to be freed from any restriction).
Thus we see how the neoliberal utopia tends to embody itself in the reality of a kind of infernal machine, whose necessity imposes itself even upon the rulers. Like the Marxism of an earlier time, with which, in this regard, it has much in common, this utopia evokes powerful belief — the free trade faith — not only among those who live off it, such as financiers, the owners and managers of large corporations, etc., but also among those, such as high-level government officials and politicians, who derive their justification for existing from it. For they sanctify the power of markets in the name of economic efficiency, which requires the elimination of administrative or political barriers capable of inconveniencing the owners of capital in their individual quest for the maximisation of individual profit, which has been turned into a model of rationality. They want independent central banks. And they preach the subordination of nation-states to the requirements of economic freedom for the masters of the economy, with the suppression of any regulation of any market, beginning with the labour market, the prohibition of deficits and inflation, the general privatisation of public services, and the reduction of public and social expenses.
Economists may not necessarily share the economic and social interests of the true believers and may have a variety of individual psychic states regarding the economic and social effects of the utopia which they cloak with mathematical reason. Nevertheless, they have enough specific interests in the field of economic science to contribute decisively to the production and reproduction of belief in the neoliberal utopia. Separated from the realities of the economic and social world by their existence and above all by their intellectual formation, which is most frequently purely abstract, bookish, and theoretical, they are particularly inclined to confuse the things of logic with the logic of things.
These economists trust models that they almost never have occasion to submit to the test of experimental verification and are led to look down upon the results of the other historical sciences, in which they do not recognise the purity and crystalline transparency of their mathematical games, whose true necessity and profound complexity they are often incapable of understanding. They participate and collaborate in a formidable economic and social change. Even if some of its consequences horrify them (they can join the socialist party and give learned counsel to its representatives in the power structure), it cannot displease them because, at the risk of a few failures, imputable to what they sometimes call “speculative bubbles”, it tends to give reality to the ultra-logical utopia (ultra-logical like certain forms of insanity) to which they consecrate their lives.
And yet the world is there, with the immediately visible effects of the implementation of the great neoliberal utopia: not only the poverty of an increasingly large segment of the most economically advanced societies, the extraordinary growth in income differences, the progressive disappearance of autonomous universes of cultural production, such as film, publishing, etc., through the intrusive imposition of commercial values, but also and above all two major trends. First is the destruction of all the collective institutions capable of counteracting the effects of the infernal machine, primarily those of the state, repository of all of the universal values associated with the idea of the public realm. Second is the imposition everywhere, in the upper spheres of the economy and the state as at the heart of corporations, of that sort of moral Darwinism that, with the cult of the winner, schooled in higher mathematics and bungee jumping, institutes the struggle of all against all and cynicism as the norm of all action and behaviour.
Can it be expected that the extraordinary mass of suffering produced by this sort of political-economic regime will one day serve as the starting point of a movement capable of stopping the race to the abyss? Indeed, we are faced here with an extraordinary paradox. The obstacles encountered on the way to realising the new order of the lone, but free individual are held today to be imputable to rigidities and vestiges. All direct and conscious intervention of whatever kind, at least when it comes from the state, is discredited in advance and thus condemned to efface itself for the benefit of a pure and anonymous mechanism, the market, whose nature as a site where interests are exercised is forgotten. But in reality, what keeps the social order from dissolving into chaos, despite the growing volume of the endangered population, is the continuity or survival of those very institutions and representatives of the old order that is in the process of being dismantled, and all the work of all of the categories of social workers, as well as all the forms of social solidarity, familial or otherwise.
The transition to “liberalism” takes place in an imperceptible manner, like continental drift, thus hiding its effects from view. Its most terrible consequences are those of the long term. These effects themselves are concealed, paradoxically, by the resistance to which this transition is currently giving rise among those who defend the old order by drawing on the resources it contained, on old solidarities, on reserves of social capital that protect an entire portion of the present social order from falling into anomie. This social capital is fated to wither away — although not in the short run — if it is not renewed and reproduced.
But these same forces of “conservation”, which it is too easy to treat as conservative, are also, from another point of view, forces of resistance to the establishment of the new order and can become subversive forces. If there is still cause for some hope, it is that forces still exist, both in state institutions and in the orientations of social actors (notably individuals and groups most attached to these institutions, those with a tradition of civil and public service) that, under the appearance of simply defending an order that has disappeared and its corresponding “privileges” (which is what they will immediately be accused of), will be able to resist the challenge only by working to invent and construct a new social order. One that will not have as its only law the pursuit of egoistic interests and the individual passion for profit and that will make room for collectives oriented toward the rational pursuit of ends collectively arrived at and collectively ratified.
How could we not make a special place among these collectives, associations, unions, and parties for the state: the nation-state, or better yet the supranational state — a European state on the way toward a world state — capable of effectively controlling and taxing the profits earned in the financial markets and, above of all, of counteracting the destructive impact that the latter have on the labour market. This could be done with the aid of labour unions by organising the elaboration and defence of the public interest. Like it or not, the public interest will never emerge, even at the cost of a few mathematical errors, from the vision of accountants (in an earlier period one would have said of “shopkeepers”) that the new belief system presents as the supreme form of human accomplishment.


(1) Auguste Walras (1800-66), French economist, author of De la nature de la richesse et de l'origine de la valeur (“On the Nature of Wealth and on the Origin of Value”) (1848). He was one of the first to attempt to apply mathematics to economic inquiry.
(2) Erving Goffman. 1961. Asylums: Essays on the Social Situation of Mental Patients and Other Inmates. New York: Aldine de Gruyter.
(3) See the two journal issues devoted to “Nouvelles formes de domination dans le travail” (“New forms of domination in work”), Actes de la recherche en sciences sociales, nos. 114, September 1996, and 115, December 1996, especially the introduction by Gabrielle Balazs and Michel Pialoux, “Crise du travail et crise du politique” [Work crisis and political crisis], no. 114: p.3-4.
Translated by Jeremy J. ShapiroLa globalización en La BitBliotecaLa nouvelle vulgate planétaire (dans le Monde diplomatique)

Friday, September 19, 2008

Neoliberalism and Apartheid Economy

Reposting from Thursday, January 24, 2008

They are the negros of our "world class economy" . . . the pariahs in our market fundamentalism dreams.

While we are chasing our own version of American Dream, joining the bandwagon of globalization, and pursuing our place in a world-class community, here are pictures of the other side of us all, to whom we -- the market winners and worshipers -- always makes claims that we are hearing them (but never listening), looking at them (without ever seeing), talking to them (yet, without speaking) .
Because we are too far high, in our five-star neoliberalism dreamland . . . we are moving toward (what Richard Freeman puts it) an "apartheid economy" . More and more portion of Indonesian population has been progressively excluded from the economy, by the instrumental rationality of neoliberalism and market forces, marginalized from the never-ending circuit of money-commodity-more money, doomed to become the pariah or decaying sub-population of our fast modernizing Indonesian economy. They've been treated as subhuman, the "negros" in our "world-class economy". Their kids have been separated from the kids of our "world-class schools and universities", they've been denied from the rights for descent and civilized public health services.
The invicible hand of the sacred market made the "unmarketable poor" invicible . . .
They've been evicted from their houses and sidewalks miniscale mall, for the rich need more space for luxurious housing, convenience traffic, and picturesque American-style urban sceneries -- they are forbiden from wandering into our "world-class" malls or shopping arcades that once were public spaces. Their demands, for better wages and treatments, tend to be supressed, and silenced by labeling them as the ghost of long-gone communists movement -- all for the sake of creating a better investment climate.

Indeed, the invisible hand of our market treats them without human face. On the contrary, the invisible hand made the "unmarketable have-nots" invisible. They are the negros of the Indonesian neoliberal seconomy, and are the pariahs in our market fundamentalism grandnarrative.

Despite the rhetoric of the market fundamentalists, facts suggest the persistence of high levels of poverty even though there is more than enough resources to prevent it.
Poverty is a social construction, not an objective reality. This can be taken to means that poverty is socially created and reproduced, it involves interplays among social and political groups on an unlevel power-playing fields. The ways in which control, use and access to the economic resources are instrinsically part of the reasons why so many people down and out on our big cities streets -- and could not (re)gain further access to economic resources.