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Making Generosity Redundant


They thought it was all over. After civilisation’s victory in Afghanistan, where the lion now lies down with the lamb, there was, almost all the newspapers agreed, nothing left to discuss. All that needed to be done was to remind those who had questioned the war just how profoundly wrong they were, and they would slip back under the stones from which they had crept.

And yet, from all over the country, in coaches, convoys and hired trains, they came. Theirs was not the trickle of cowed dissenters which some had foreseen, but what may have been the biggest anti-war march since Vietnam.

Those who had attended both demonstrations insisted that this one was roughly twice the size of the protest held a month ago. Far from assuaging public concern about the future of Afghanistan, the capture of Kabul appears only to have roused it.

But the size of the demonstration was not its only unexpected feature. It soon became obvious that the crowd was thinking about more than just Afghanistan. To thunderous cheers, speaker after speaker linked the war to the other means by which the rich world persuades the poor world to do as it bids: namely its power over bodies such as the World Trade Organisation.

It is not only the peace movement which hasn’t gone away, it seems, but also anti-corporate movement, whose death has been so widely proclaimed since September 11. Just as the peace campaigners have drawn strength from the internationalists, the internationalists are building on the peace campaign. The battle against corporate power has resumed.

This may seem like an unfortunate time to attack the World Trade Organisation. At the trade talks in Qatar last week, the poor nations evinced an unprecedented skill in forcing the rich to listen to their demands. Despite the best efforts of Britain and Germany, the WTO agreed that during public health emergencies, governments can override corporate patents to provide their people with cheap drugs. The European Union may be forced to start retracting subsidies which destroy the livelihoods of farmers overseas.

The new trade declaration, moreover, radiates goodwill. The WTO, it insists, wants to address “the marginalization of least-developed countries”; reaffirm its “commitment to … sustainable development”; and “contribute to a durable solution” to third world debt. These are fine words, but in the world trade talks, as in Afghanistan, peace has been declared before the real battles have begun.

The rich nations have so loaded the agenda with new issues that, in the three years available for negotiation, the WTO may never get round to discussing the topics the poor world has raised. Some of these new issues, such as investment and competition policy, had already been flatly rejected by the less developed nations.

The new resolutions on debt cancellation, economic justice and sustainability, moreover, overlook one small but significant obstacle. None of these reforms is in the WTO’s gift.

Fifty-six years ago, the architects of the modern world’s economy recognised that issues like these would have to be addressed if commercial freedom was to be accompanied by commercial fairness. They proposed an “international trade organisation”, which, as well as working to reduce tariffs, would also transfer technology to poor countries, protect the rights of workers and prevent big companies from controlling the world economy. US corporations went beserk and the proposal was postponed.

A temporary organisation, the general agreement on tariffs and trade (GATT), was cobbled together to bring down tariff barriers while the negotiators tried to build a proper trade body. It never materialised. GATT turned into the WTO, and the poor were left to rot.

One of the striking aspects of the debate about globalisation is how little the defenders of the status quo know about the history of the institutions they champion. It’s not just the International Trade Organisation which has been comprehensively forgotten, but also another body proposed at the Bretton Woods conference in 1944.

In his recent pamphlet attacking the internationalist movement, the journalist John Lloyd describes John Maynard Keynes as “the most important theorist behind the creation” of the IMF and the World Bank. Keynes, he suggests, saw them as “conducive to peace and the relief of poverty”. In truth, Keynes bitterly opposed them.

He predicted that if the world economy was managed by these means, the wealth and power of the creditor nations would be massively enhanced, while the debtors would sink ever further into poverty and dependency.

He called instead for an “international clearing union” which would automatically redeem imbalances in trade and cancel debt, by the ingenious means of forcing creditors to pay interest on their international currency surplus at the same rate as debtors.

Once again, the United States objected. It threatened to withold its war loan if the British delegation, led by Keynes, persisted with his proposal, and he was forced to back down and agree to the formation of the bodies which later became the World Bank and IMF.

In a letter to the Times soon afterwards, Keynes conceded that the commercial policies the new bodies would permit may prove to be “very foolish” and “so destructive of international trade that, if they were adopted, Bretton Woods will have been rather a waste of time.”

The problem, in other words, is not the decisions that bodies such as the WTO, World Bank and IMF make. The problem is that they are constitutionally destined to fail. The WTO can set only maximum standards for global trade, rather than the minimum standards which might restrain big corporations. The Bank and the IMF, entirely controlled by the creditor nations, exist to police the poor world’s debt on their behalf.

Yet, instead of recognising these inherent defects, their backers choose to reproach the blind for having their eyes put out. Last week, for example, the internet magazine Open Democracy published interviews with Peter Sutherland, the former head of the WTO, and Maria Cattaui, who runs the International Chamber of Commerce.

Sutherland asserted that it’s “indisputable that the real problem with the economies that have failed” is “their own domestic governments”. Cattaui insisted that the “fault lies most of all at home with the countries concerned”. But, as several prominent economists warned in 1944, even if the indebted nations of the poor world were governed by angels, the trade and financial institutions launched at Bretton Woods would ruin their economies.

There can be no clearer sign of failure than the call Gordon Brown made last week for a doubling of the rich world’s aid to the poor. We could dispute the wisdom of pouring aid into a country at one end and extracting debt repayments at the other, but under present circumstances the new money is clearly necessary.

But if the men who had planned the Bretton Woods conference knew that in 2001 we would be arguing about how much aid we should give to poor nations, they would have packed up and gone home. The stated purpose of their meeting was to render generosity redundant.

There is no point in tinkering with this system. It will destroy the lives of the poor until it is itself destroyed, and replaced with benign institutions of the kind that Keynes envisaged. On Sunday we may have begun to find the strength to do it.

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