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Published
on Wednesday, November 21, 2001
Renowned
U.S. Economists Denounce Corporate-Led Globalization
Nobel
Prize winner Joseph Stiglitz and internationally acclaimed economist Paul
Krugman decry undemocratic, unsound, and unethical corporate agenda
by James L. Phelan
It seems critics
of corporate-led globalization have some new allies. Recent Nobel Prize
winner Joseph Stiglitz, along with well-known economist Paul Krugman,
have of late made a flurry of public statements critical of the policies
and processes of the World Trade Organization (WTO), the World Bank /
IMF, and the proposed Free Trade Area of the Americas (FTAA) - while leaving
plenty of harsh words for the blatantly pro-corporate actions of the Bush
Administration. Both economists point to the disruptive and distorting
influence of large corporate entities through their dominance over both
domestic and international institutions.
Stiglitz and
Krugman have begun to voice their indignation more frequently in the press,
raising many of the same concerns that social justice and environmental
advocates have long made about the disproportionate influence of big business
and the hypocrisy of “free market” dogma.
Taking
Care of Business
In a recent
column appearing in the New York Times, Krugman stated: “Cynics tell us
that money has completely corrupted our politics, that in the last election
big corporations basically bought themselves a government that will serve
their interests. Several related events last week suggest that the cynics
have a point.” As evidence of heavy-handed corporate opportunism, Krugman
takes issue with the recent claims by security interests that federalizing
airport security would represent a “taking” - a bald move by private interests
to maintain a questionable security status quo free from public calls
for more systematic scrutiny.
Krugman then assails the House “Stimulus Bill”, stating that the “remarkable
thing we learned from that bill was that conservative politicians - who
used to claim that they were improving incentives by reducing marginal
tax rates, and that it was just an incidental side effect that big corporations
and wealthy individuals were so richly rewarded - no longer feel the need
to disguise their payoffs.” As he states, the principal goal of the bill
is to repeal retroactively the corporate alternative minimum tax, “which
means that selected companies would immediately receive huge lump sum
payments from the government, totaling around $25 billion, with no incentive
effect at all.” What’s worse is that “there are no strings attached to
those gifts: if the companies want to, say, pay huge bonuses to top executives,
they can.
Republicans
have always depended on the kindness of corporations, but this bill takes
that faith to extremes.” Very little here, says Krugman, is representative
of sound economic policies aimed at economic recovery, not to mention
the need for shared
sacrifice in times of belt-tightening. Corporate interests, as Krugman
rightly points out, have friends in convenient political circles. In a
blunt conclusion, Krugman sums it up saying that “the truth must be spoken.
Lately our government has not exactly inspired confidence; its response
to terrorism is starting to look a bit scatterbrained. But on some subjects
our leaders are quite clearheaded: whatever else may be going on, they
make sure that they are taking care of business.”
Corporate-Led
Globalization
When it comes
to decrying the disruptive influence of the corporate agenda internationally
- whether in the WTO or the FTAA - most critics have focused their energies
on denouncing the anti-democratic nature of international trade and investment
regimes and their narrow focus on liberalizing markets at all costs.
A recent interview
with Joseph Stiglitz, however - the ultimate World Bank/IMF insider -
sheds new light on what many have long suspected: documents and testimony
on secret industry-governmental meetings, the behind the scenes agenda-setting
of transnational corporate interests, and the apparent hidden agenda of
the WB/IMF.
This conspiratorial
assessment of hidden agendas could easily be shrugged off as baseless
- except that this account comes to us from a fired-up and increasingly
political Stiglitz. Fired from the World Bank in 1999 for his criticism
of the WB/IMF’s policies, Stiglitz has refused to keep quiet as these
institutions - largely serving under the dictates of the U.S. Treasury
Department - impose policies internationally that he claims have “condemned
people to death.”
Only recently
in the news for winning the Nobel Peace Prize for economics, Stiglitz
seems to be using this surge in international attention to criticize corporate-friendly
policies and to lend his support to the momentum of social justice groups
organizing for greater transparency and participation in international
policy-making processes.
In a recent debriefing with the London Observer’s Gregory Palast, the
former World Bank Chief Economist roundly attacked the hidden agenda of
these international institutions. In addition to testifying to the ideological
foundations of much of the WB/IMF’s condition-laden policies lending policies,
Stiglitz denounces the unethical agenda that these institutions impose
on all countries that explicitly create conditions favorable to international
oligarchs and transnational enterprise.
Having acquired
a handful of World Bank documents from undisclosed sources marked “confidential,”
“restricted,” and “not otherwise (to be) disclosed without World Bank
authorization,” Stiglitz began to document the real effects and aims of
the World Bank’s four step, one-size-fits-all, economic restructuring
package imposed on less industrialized countries.
The first step,
according to Stiglitz, is the promotion of state-level corruption as the
facilitator of the “privatization” requirement which often also serves
U.S. political goals - a process that Stiglitz says would more be accurately
called “briberization.” This is followed by step two, “Capital Market
Liberalization” which sets up predictable cycles of “hot money” speculation
in non-productive assets that ultimately leaves the national economy hemorrhaging
from loss of controls on capital.
Step three is
“’Market-Based Pricing’, a fancy term for raising prices on food, water
and cooking gas. This leads, predictably, to Step-Three-and-a-Half: what
Stiglitz calls, ‘The IMF riot.’” An outraged populace predictably reacts
to the fact that they can no longer afford to feed themselves. According
to the documents obtained from the WB, these “IMF riots” are predicted
and documented, stating that the resulting “social unrest” and civil strife
has to met with “political resolve.” Yet, as Gregory Palast points out,
this process has one positive outcome “for foreign corporations, who can
then pick off remaining assets, such as the odd mining concession or port,
at fire sale prices.” Step four is not far behind: the “poverty reduction
strategy” called “Free Trade.”
Stiglitz, however,
is careful to point out that the World Bank and the IMF are not the heartless
“free market” ideologues they might seem. Although the WB/IMF work devoutly
to remove the uneconomic subsidies placed on food and other items essential
to the poor, they are not necessarily against state interventions in markets
- as Stiglitz makes clear, “when the banks need a bail-out, intervention
(in the market) is welcome.” For example, as Palast points out, “the IMF
scrounged up tens of billions of dollars to save Indonesia’s financiers
and, by extension, the US and European banks from which they had borrowed”
in its enlightened redistribution of subsidies.
A Political
Conclusion
Palast notes
that from this assessment a recognizable pattern emerges: “There are lots
of losers in this system but one clear winner: the Western banks and US
Treasury, making the big bucks off this crazy new international capital
churn.”
So what would
Stiglitz recommend in place of the usual WB/IMF fare? “Stiglitz proposed
radical land reform, an attack at the heart of ‘landlordism’, on the usurious
rents charged by the propertied oligarchies worldwide, typically 50% of
a tenant’s crops.” This is, alas, a more delicate subject. It’s easier
to simply have faith that constant economic growth will deliver us from
the difficult issues of land tenure and access to income-bearing assets.
This very political program is understandably not on the WB/IMF’s list
of chores, since as Stiglitz reminds us, “If you challenge [land ownership],
that would be a change in the power of the elites. That’s not high on
their agenda.”
According to
Palast, ultimately “what drove [Stiglitz] to put his job on the line was
the failure of the banks and US Treasury to change course when confronted
with the crises - failures and suffering perpetrated by their four-step
monetarist mambo. Every time their free market solutions failed, the IMF
simply demanded more free market policies.”
With increasing
numbers of prominent insiders and mainstream economists now sounding the
alarm bells over corporate-led globalization, the task for social justice
and environmental advocates has become ever-clearer.
We must organize
to demand that these illegitimate trade policies and institutions are
either nixed or fixed through deep democratic reform.
Sources:
* Paul Krugman, “Taking Care of Business”
<http://www.commondreams.org/views01/1028-01.htm>,
Common Dreams, October 28, 2001.
* Gregory Palast, “The Globalizer Who Came in from the Cold”
<http://www.gregpalast.com/detail.cfm?artid=78&row=1>,
The London Observer, October 10, 2001.
* Kintto Lucas, “FTAA (Free Trade in the Americas) Is a Threat, Warns
Nobel Laureate”
<http://www.commondreams.org/headlines01/1029-03.htm>,
Common Dreams, October 29, 2001.
Director of
Policy Initiatives James Phelan <mailto:jphelan@earthisland.org> is
also a co-founder of Grassroots Globalization Network <http://www.earthisland.org/ggn/index.html>.
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