“New Global Architecture” Poses Questions for the Left


Jeremy Brecher and Tim Costello

 

Global capitalism
has entered a crisis that few of its architects anticipated. As a result, the air is abuzz
with proposals for a “new architecture” for the global economy. An era of debate
and struggle over the design of the global economy lies ahead. But popular movements,
progressives, and the left are also unprepared for new opportunities, challenges, and
choices presented by the crisis of global capital.

While the common
people have been suffering for years, the effects of free market globalization are now
beginning to threaten the IMF, the U.S. Treasury, global corporations, financiers, and the
other mangers of the global economy. U.S. Treasury Secretary Robert Rubin states that
“The global economy cannot live with the kind of vast and systemic disruptions that
have occurred over the last year.” He–as well as many other economists and world
leaders who helped to design this global casino–are now calling for a “new
architecture” for the global financial system.

Highly promoted
proposals for such a new architecture have come not only from Rubin but from the likes of
Tony Blair, George Soros, and Jeffrey Garten. Most mix together a few of the following
elements:

           
Imposition of still more liberalization/deregulation on “emerging
markets”

           
Better financial data collection to provide investors “early warning” of
financial trouble

Extension
of banking regulation via extended powers for the central banker-controlled Bank for
International Settlements

           
Global bankruptcy procedures

           
Global investment insurance

           
A global central bank

           
More and earlier lending to countries that can’t pay debts

           
Internationally coordinated interest rate cuts

New
“Keynesian” international institutions to provide short-term liquidity and/or
longer-term demand

Many of the current
proposals are blatantly anti-democratic, designed to protect capital from elected
governments. Economist Jeffrey Garten, whose proposal for a new financial architecture has
recently received wide attention, complains that today finance ministries and treasuries
are “responsible to elected legislatures.” He advocates instead a global
“independent central bank”-one which would not be “at the mercy of
short-term oriented legislatures.” He argues that such a bank “could help the
profitability of American multinational companies by creating a healthier global
environment for their businesses.” Other proposals, too, aim to save capital by
destroying democracy.

The New Potential
for Popular Intervention

While popular
movements, progressives, and the left are used to thinking of themselves as powerless in
the face of the global economy, the economic and political landscape is changing in a way
that may make them less so. For example, mobilization by hundreds of citizen groups in 70
countries recently succeeded in forcing a suspension of negotiations for the Multilateral
Agreement on Investment. As the Financial Post put it, “There is little doubt
that the Internet and its widespread use by non-governmental organizations opposed to the
pact played a pivotal role in sinking the wildly unpopular deal.”

Everywhere
neo-liberalism seems to be under challenge. Countries as diverse as China, India, Hong
Kong, Malaysia, Russia, and Chile have all taken action to counter, in various ways, the
destabilizing force of unregulated private investment. Strong anti-IMF movement exists in
many of the countries of Asia, and efforts are now under way to link and globalize those
movements. Even in the developed countries, the ideology of the Reagan/Thatcher era seems
to be waning. Social democratic parties now govern 15 of the 16 countries in the European
Union; while some, like the British Labor Party, have supported neo-liberal approaches,
several, like the newly installed German leadership, are now calling for a reversal of
direction. In several cases these governments depend on more radical left parties, such as
the Greens in Germany and former Communists in Italy, which are strong advocates of a new
economic direction.

As the global
crisis deepens, debtor countries acquire new leverage vis-à-vis their creditors and the
global economy as a whole–a power Russia has already used as a bargaining chip with the
IMF. A cooperative use of that power–a so-called “debtor’s cartel”–would
provide strong leverage indeed.

There is a growing
potential to address issues of the global economy through mass direct action. According to
labor journalist Kim Moody, "In the last couple of years there have been at least two
dozen political general strikes in Europe, Latin America, Asia, and North America. This
phenomenon began in 1994. There have been more political mass strikes in the last two or
three years than at any time in the 20th century." Since 1996, there have been
general strikes in Argentina, Belgium, Brazil, Canada, Columbia, Denmark, Ecuador, France,
Greece, Haiti, Italy, Puerto Rico, South Korea, and Spain, among others. This year, the
“people power” uprising in Indonesia and mass strikes in Korea specifically
targeted the policies of the IMF. This summer 75,000 people surrounded leaders of the G-7
meeting in Birmingham, England demanding that they write off the debts of the world’s
poorest countries.

International
networking around the issues of globalization is also burgeoning. One indicator: Just in
October and November there were three international conferences held in Washington, DC to
help coordinate transnational challenges to corporate globalism.

To Engage or Not to
Engage?

The managers of the
global economy, if only to save their own hides, are pursuing changes in the world’s
“financial architecture.” To do so, however, they will need political support
from other groups. This opens a set of opportunities – albeit problematic ones–for
popular movements, progressives, and the left.

Some on the left
seem to feel that we should “just say yes” to any international response
intended to ward off or mitigate the threat of global economic meltdown. On this logic,
many progressives in Congress supported an $18 billion expansion in funding for the IMF.
Some will no doubt support almost any proposals, no matter how regressive, on the grounds
that doing anything to ward off a worldwide depression is better than doing nothing.

Others maintain
that the left should “just say no” to all proposals for new international
economic institutions or new rules for existing ones. They argue that any such
institutions will inevitably be dominated by the same oppressive forces that control the
global economy today. Let global economic institutions collapse and local and national
institutions will again be able to serve the needs of their people.

The problem with
“just say yes” is that current institutions like the IMF and the World Bank
often do more to destroy the people and environment of those they “help” than to
promote economic stability, and many of the proposals for a “new architecture”
would only make that destruction worse. The problem with “just say no” is that,
with no international governance whatsoever, the global economy is less likely to turn
into a garden of benign localism than a war of all against all. The problem with both is
that they provide no way to use our potential leverage to affect the process by which the
global economy will be redesigned.

We propose a
two-pronged strategy. First, the left should develop a comprehensive alternative to
restructure the global economy–its own “new architecture.” Such an alternative
would provide solutions for the real problems of the global economy, and it should be
something that could realistically win the support of a majority of people in most
countries and be effectively implemented if power were not so unequally distributed. Many
drafts of such alternatives have been drawn up by various international conferences and
commissions. The left should demand that it be included in the “new
architecture” debate in the media, Congress, and international institutions on the
basis of those proposals.

Second, the left,
progressives, and popular organizations should be prepared to enter into a tacit
bargaining relationship with at least some of those in the establishment who are trying to
forge an alternative to neo-liberalism. This doesn’t mean individuals going off on
their own to meet with bigwigs; rather, it means building a consensus among a wide range
of groups and constituencies regarding what kind of “new architecture” they
would support and what kind they would oppose. The left should not expect to force
acceptance of its entire program. But it should demand a set of minimum conditions for any
proposal to win its support – and without which any proposal will meet its determined
opposition.

To win its support,
any proposal must not simply save the hides of the oligarchs, but rather must increase the
power and well-being of ordinary people around the world. We don’t have an
off-the-shelf list of such conditions–indeed, defining them will itself require
substantial dialogue and bargaining among movements–but they would certainly include
elements like the following:

Guarantees
for the right of people at the bottom to organize as workers, peasants, women, slum
dwellers, and citizens to promote the redistribution of power, and, thereby, of wealth.

Debt
relief. The debt of the poorest countries should be written off. Debts of other developing
countries should be reduced and restructured so that they do not have to starve their
people to pay the interest on their debts.

           
– Accountability of any new institutions to those their programs affect.

This strategy will
work only if its proponents are able to pool many different kinds of power– from the
transnational citizen power manifested in the defeat of the MAI to the direct action power
seen in the global wave of general strikes to the political power reflected in the rise of
left-center governments.

It can be difficult
to bring together a disparate set of interests into a unifying set of bargaining demands.
But is their any other strategy with an equal or better chance of affecting the global
economy for the benefit of ordinary people and the environment?

Brecher and
Costello are the authors of Global Village or Global Pillage: Economic Reconstruction
from the Bottom Up
(South End Press, second edition, 1998).