Vol.3 No.28, 11 December 2003

SANE Views in a Global Perspective

The focus of SANE Views is on the application of the principles of New Economics to the South African economy. It is also important, however, to see how global trends and events have affected South Africa, how South Africa has responded, and what has gone wrong in this process. What can New Economics offer that will provide a better response to South Africa's ailing economy, unemployment, destitution? This is what we shall be considering in this and some subsequent issues of SANE Views.

Economic globalisation can be described as the accelerated integration of capital, production and markets globally, a process driven by the logic of corporate profitability. This is a definition provided by Walden Bello, professor at the University of he Philippines and executive director of the Bangkok-based organisation Focus on the Global South. We shall here use some of the ideas that he has put forward in a presentation made by him for the McPlanet Conference in Berlin in 2002, and published in the Fall issue of the New Labor Forum.

The World Trade Organisation (WTO) was set up in 1995 with the aim of guiding the process of globalisation. At the time it was hailed in the establishment press as the gem of global economic governance in the era of globalisation. It proposed a set of rules that would subject both the powerful and the weak to a common set of rules and regulations, backed by an effective enforcement apparatus. During the First Ministerial of the WTO in Singapore in 1996, a note of triumphalism was sounded. The WTO, the IMF and the World Bank, making up the so-called 'Washington Consensus' collectively issued a famous declaration to the effect that the challenge of the future now lay in making their policies of global trade, finance, and development '"coherent" so as to lay the basis for global prosperity.

This so-called Globalist Project has been marked by the coming to hegemony of the ideology of neo-liberalism which has focussed on "liberating the market" via accelerated privatisation, deregulation and trade liberalisation. However, in practical reality, the process has come seriously short of its ideals. Now, in the early years of the new century, the triumphalism has gone. Developing countries, once hopeful that the WTO would bring more equity to global trade, now unanimously agree that most of what they have reaped from the WTO membership are costs, not benefits.

There have been three "moments" in the deepening crisis of the globalist project. The first was the Asian financial crisis of 1997. This event revealed that one of the key tenets of globalisation - the liberalisation of the capital account to promote the freer flow of capital - could be profoundly destabilising. The Structural Adjustment Programs designed by the IMF to accelerate deregulation, trade liberalisation and privatisation had almost everywhere institutionalised stagnation, worsened poverty, and increased inequality.

The second moment of the crisis of the globalist project was the collapse of the third ministerial of the WTO in Seattle in December 1999. There were three streams of discontent and conflict that had been building up for some time:

• Developing countries resented the inequities of the agreements they had been compelled to sign in 1995
• Massive popular opposition to the WTO emerged from myriad sectors of global civil society which saw that the well-being of many sectors of society were being threatened
• Unresolved trade conflicts between the EU and the US which had earlier simply been papered over.

The third moment of the crisis was the collapse of the stock market and the end of the 'Clinton' boom. This was not just the bursting of the bubble but a rude reassertion of the capitalist crisis of over-capacity and overproduction. leading to a collapse of stock values, stagnation and deflation.

A number of economists have suggested that we may at the end of a Kondratieff Cycle. Russian economist Nicolai Kondratieff has put forward the hypothesis that capitalist economies are marked not only by short-term cycles but also by long term 'super-cycles' of roughly fifty to sixty years. The Kondratieff cycle is marked by the intensive exploitation of new technologies leading to a crest followed by a downward turn and a prolonged trough as these technologies yield diminishing returns.

South Africa has faithfully followed the prescriptions of the so-called Washington Consensus. It would appear that this has been at great cost to the wealth and welfare of its citizens. It would seem that the time has come to look at an approach to economic policies other than that of the structural re-adjustment put forward by the 'Washington Consensus'. SANE proposes those of New Economics. They can be summarised in terms of six pillars of economic sustainability
The essentials of these pillars are:

1. Tax bads and reward endeavour
2. Promote local
3. Restrict international currency movement
4. Take control of money creation
5. Support local complementary currencies
6. Issue a universal basic income grant (BIG)

These 'Six Pillars of New Economics' are set out in SANE brochures and on SANE's website
sane.org.za

We have here considered the economic and social factors which have led to current national and global economic troubles. Even more serious in the long-term are those of environmental destruction and resource depletion. These will be considered in the next issue of SANE Views.

© South African New Economics Network 2006. Page generated at 17:09; 24 September 2006