Global Civil Society3

8/14/2019 Global Civil Society3

http://slidepdf.com/reader/full/global-civil-society3 1/28

C H A P T E R 3

THE NEW ANTI-CAPITALIST MOVEMENT:MONEY AND GLOBAL CIVIL SOCIETY

Meghnad Desai and Yahia Said

Washington DC, Prague, Seattle, Davos, andwherever ‘the money men’ meet have beenthe foci of protest which have mobilised a

broad coalition of groups, activists, and lay individuals.While they may differ on many things, they agree onone. They consider many of the recent developmentsin globalisation as harmful, disruptive of theircommunities, and destructive in the long run. Suchprotests have taken many by surprise both in theirscope and in their intensity, and have contributed to

the increased interest in civil society in recent years.The protesters rarely attack globalisation as such,targeting instead corporate globalisation, globalcapitalism, the neo-liberal order, multinationalcompanies, international financial institutions (IFIs),and trade agreements. Whatever the target, however,these protests are often branded as anti-globalisation.The counter-argument is usually a defence of globalisation as helpful to the world at large inenhancing output growth by expanding trade, helpingthe developing countries industrialise, and affording

an opportunity for the first time in human history toeradicate world poverty.

In a framework where globalisation is understoodas a symbiotic relationship between global capitalismand global civil society, this chapter analyses theinteractions between the two. These interactionsmake up what we define as global civil societyirrespective of whether or not it includes the market(see Chapter 2 for different definitions of global civilsociety).

Given the breadth of its subject, this chapter

focuses on money and finance as a proxy for globalcapitalism. This simplification is permissible for threereasons:

1. Finance is the dominant force in globalcapitalism. Financial flows far exceed trade flowsand play an ever-growing role in every markettransaction. Any sizeable trade today will almostcertainly include bank credits on both sides, hedgesagainst exchange rates and commodity pricefluctuations in the form of futures and derivatives,and other forms of insurance. The growth and spread

of the financial services industry and the un-precedented liberalisation of financial markets can beexplained by the investment needs of the newindustrial paradigm. The shift to information andcommunication technologies requires the mobilisa-tion of vast financial resources, and global finance isthe fastest way to achieve that. Similar financialbooms occurred during previous technological revo-lutions (Perez 2000).

2. The financial services industry is among the

main promoters of global capitalism, pushing for theopening of new markets and ever deeper liber-alisation. The financial services industry is moredependent than any other on the low inflationadvocated by the neo-liberal orthodoxy. Currently, theindustry is pushing hard for the expansion of theWTO into the area of finance and investment throughthe General Agreement in Trade on Services (GATS).This will significantly expand the organisation, givingit jurisdiction over two-thirds of world GDP andbringing it into areas that affect every aspect of

human life.3. As we explain below, the financial services

industry has traditionally been singled out for moralcondemnation. So it is today, when it represents anextreme version of global capitalism. Financial

juggernauts several times larger than many countries,fat-cat investment bankers and IMF executivesplaying God, astronomical profits on both the upsideand the downside of the economic cycle, and bizarrefinancial products seemingly useless for anythingother than the enrichment of those who invent them

make finance an inevitable and often convenienttarget for those seeking to confront global capitalism.

Money and Morality

Our analysis deals with the ways in which globalcivil society has responded to the manyactivities of the financial sector—domestic

and international, private and public—as they haveaffected the lives of the people. Finance is organised,complicated, and pervasive. It comprises bank loans

5





rates were high. But the arrival of bullion from theIberian colonies of West Africa and South Americachanged that. It affected social relations, favouringPeruvian merchants at the expense of the old landedwealth. Things began to be bought and sold formoney which were previously not subject toexchange. Commerce began to create more wealth

than agriculture had done for millennia. Moneybecame the gateway to modernity and capitalism.

That does not, however, mean that traditionalsocieties did not use money or that money coincidedwith modernity or the frail identification of moneyand capitalism with the West. The use of money hasbeen found to be very important in many traditionalpre-capitalist economies. The reciprocal inter-dependence of non-monetary, caste-based exchangeof the Hindu jajmani system—a classic example of village self-sufficiency—is a myth propagated by

modern (Western) investigators who wanted to seenon-monetary exchange as a feature of ‘traditional’society. As Parry and Bloch say:

What implicitly seems to underlie the misrepresentation is a deeply entrenched notion about the transformative potential of money such that its presence becomes an index of a ‘modern’ society, with the corollary that ina ‘traditional’ one it can only be of peripheral significance. (1989: 7; see especially also

Fuller 1989)

Thus we can dismiss the notions that traditionalsocieties were based on real relationships unmediatedby money, and that money, like the serpent in theGarden of Eden, arrived and corrupted the innocent.Money, and our views of its good or bad effects, aretherefore never context-free. Our culture—that is, themodern, post-colonial, post-imperial world as it hascome to be shaped by two centuries of industrialcapitalism—is shot through and through with money

and its higher form, credit. Indeed, it is impossible toimagine our economy without money, though pocketsof ‘local money’ networks survive which use labourtime as units of account and even means of payment.(see Box 3.6)

The major concerns we have, however, are notwith such local pockets of resistance but with globalfinance and especially the ways in which global civilsociety has encountered the massive money flowswhich have become the distinguishing feature of globalisation. It is here that we encounter the

contrasting views of money as barren or liberating,and it is these that we must consider in more detail.These two competing views of money and itsusefulness represent the two extremes and the manypossible positions between them.

At one extreme there is the libertarian view inwhich the market and all its works are benevolent and

beyond criticism. An allied view is that, benevolentor not, the market is a self-organising process and itsregulation self-defeating and counterproductive.There is the moderate view that the market is moreor less self-regulating but needs an occasionalcorrection. Then there is the view that the market isprone to failure and the state should be ever-readyto regulate it. This view easily slides into one whichsees the market as chronically malfunctioning andhence in need of overarching control. The extremeview would be a rejection of the market and all its

works and its replacement by a self-consciousdemocratic rule of ‘Society’ (Desai 2001). There isextremism at either end of the spectrum in whichone celebrates the market while the other excoriatesit. In between are nuanced objections, not toabstractions such as the ‘market’ or ‘money’ but toconcentrations of economic power (transnational/global corporations) or to excessive income andwealth inequalities; not against ‘market failures’ ingeneral but environmental degradation or racial orgender discrimination; not to flows of capital as such

but to the uses to which they are put and the returnsobtained and to inequalities of power in internationaltrade. The theme common to all of these is theeconomic or the monetary link which unites them.

Given the Manichean division at the extremes andthe multiplicity of nuanced attitudes in the middle,it is necessary to distinguish the types of moneyflows or trading arrangements which attract differentdegrees of protest. Capital flows are singled outbecause it is the unregulated, or at least freer, flowof capital in the last 10 to 15 years which, in our view,

marks out the new phase of globalisation.

Capital Flows: Types, Impacts,Responses

The shock of globalisation and the flows of capitalit sets up are not new phenomena in worldhistory. Trade has taken place between the

different continents by sea or land for millennia.Europe and Asia especially have a continuous historyof trade and gold flow, which goes back to the T

H E N E W

A N T I C A P I T A L I S T M O V E M E N

T

M O N E Y A N D G L O B A L C I V I L S O C I E T Y M

h

d D

i

d Y h i S i d

5



T H E N E W A

N T I - C A P I T A L I S T M O V E M E N

T : M O N E Y A N D G L O B A L C I V I L S O C I E T Y M

e g h n a d D e s a i a n d Y a h i a S a i d

54

The message is abundantly clear. There is noconfusion, dithering, or doubt:

The IMF and the World Bank, far frombringing economic stability and reducing poverty, are destroying the environment and impoverishing people. Their calls for dialogue are just a public relations ploy and the announced reforms are cosmetic. The BrettonWoods institutions should be abolished and all Third World debt cancelled. Moreover, the entire political and economic system of global capitalism needs to be overhauled. This is to be achieved by a global movement of

solidarity opposed to the neo-liberal model imposed by multinational companies, the richcountries, and their minions at the World Bank and the IMF.

This was, in short, the message delivered by KaterinaLiskova one of the leaders of the Movement AgainstEconomic Globalisation (INPEG), the coalition of NGOs and activists which organised the antiIMF/World Bank protests in Prague in the autumnof 2000. Katerina was speaking at a panel debate

organised by Czech President Vaclav Havel at PragueCastle. The 20-year-old activist delivered this defiantmessage flanked by World Bank President JamesWolfenson and IMF Managing Director Horst Kohler.UN Human Rights Commissioner Mary Robinsonwas moderating this unique forum, which alsoincluded international financier and philanthropistGeorge Soros, Jubilee 2000 founder Ann Pettifor,Filipino academic/activist Walden Bello, and SouthAfrican Minister of Finance Trevor Manuel. Despitethe predictability of the protesters’ message, the

global financial leaders seemed dumbfounded.Wolfenson just reiterated his readiness for dialoguewhile Kohler insisted that he also had a heart.Indeed, World Bank and IMF representatives alwaysappear hurt andsurprised when attacked by civicactivists.1

The International Bank for Reconstruction andDevelopment (IBRD), also known as the World Bank,

and the International Monetary Fund (IMF) emergedout of the Bretton Woods conference held in the USin 1944. They were designed as components of an

international regime of fixed exchange rates whichwas meant to deliver growth and stability to thepost-war world economy. British economist JohnMaynard Keynes, who believed that public inter-vention could improve on market outcomes, at leastin the short run, was one of the founding fathersof the two institutions.

The organisations were shaped by their origins.First, they are proactive; they are supposed tocombat ‘market failures’ on a global scale: povertyin the case of the World Bank and financial

instability in the case of the IMF. Second, they tendto be elitist and undemocratic primarily becausethey are dominated by their founder and maindonor, the United States, and because they are runby ‘experts’ who don’t expect ordinary people tounderstand complex economic problems. Over timeneo-liberal economists came to represent theoverwhelming majority of these ‘experts’, reflectingboth trends in the economic profession and politicalchange in the major donor countries. US andWestern domination in general meant that political

considerations often prevailed over economic onesin determining World Bank and IMF policies,especially when it came to regimes which weredeemed pro-Western or at least anti-Communist.This continued even after the end of the cold war,as was the case with billions of IMF and World Bankdollars loaned to Russia with the aim of proppingup President Yeltsin and his ‘reformers’.

The combination of activism and elitismdescribed above meant that the Bretton Woodsinstitutions were, and continue to be, attacked from

both right and left. Extreme neo-liberals who see nopoint in public intervention, especially at theinternational level, view the IMF and the WorldBank as examples of ‘big government’. The MeltzerReport commissioned by the Republican majority inthe US Congress exemplifies this approach, albeitwith some moderation (IFIAC 2000). The report iscritical of the proactive ‘mission creep’ at theBretton Woods institutions and stresses the

Box 3.1: Civil society and the international financial institutions



T H E N E W


T


h

d D

i

d Y h i S i d

5

potential for market distortions caused by theirinterventions, such as the displacement of privateinvestment and moral hazard. Attacks from the

right have increased since the two institutions,especially the World Bank, embarked on a numberof reforms aimed at increasing transparency anddialogue and taking policies beyond the neo-liberalscriptures. It is because of the constant attacksfrom the right that IMF and World Bank officialsfeel hurt when they are attacked form the left.

The leaders of the IMF and the World Bankbelieve that they have gone out of their way toaccommodate activists’ concerns and point out thatthe institutions are constrained by the will of the

member states. They blame both developedcountries for holding the purse strings too tightand developing country governments for blamingthe IMF and the World Bank for their own failures.

Ann Pettifor partially agrees with this opinionbut she would not go as far as to blame thedeveloping countries for the debt crisis. At thePrague Castle meeting she invited activists to directtheir attention to the ‘puppet masters’ in the G7countries instead of the Bretton Woods institutions.This opinion was seconded by George Soros, who

believes that things would be a lot better if developed countries adhered to their commitmentto allocate 0.7 percent of their GDP to foreign aid.

The World Bank, the IMF, and other inter-national institutions are facing similar problems of content—guiding principles, mission, goals—andform—accountability and participation, checks andbalances. Solving these issues in each institutionseparately seems inefficient if not impossible. Thereis a need to explore ‘global’ solutions such as a setof common principles, parameters, guidelines, or

common structures such as an Ombudsman orappeals court. International institutions may evenshare an ‘upper/second chamber’, like the onesproposed by the Angela Wood of the BrettonwoodsProject (Wood 2001), which would better representpoor countries or non-state actors. Speaking at thePrague Castle meeting, Mary Robinson congratu-lated Katerina on her courage and proceeded tooutline such a global solution. She calls it the

‘rights-based approach’ and it entails cross-referencing trade and global finance rules withhuman rights principles and environmental norms.

Such ‘global’ solutions, however, require apolitical momentum which does not seem availableat the moment. Quite the contrary: the newunilateralist US administration is likely to attemptto curtail the Bretton Woods institutions, reducingthem to extensions of US foreign policy. WhileWalden Bello sees no problem in a tactical alliancewith the extreme right against the Bretton Woodsinstitutions, other activists would think twice beforehopping into bed with the likes of Pat Buchanan.They may also heed the sombre observation raised

by the South African Finance Minister TrevorManuel, at the Prague Castle meeting. He pointedout that, without the IMF and the World Bank, onlythree countries in sub-Saharan Africa would haveaccess to external financing. Time will show whetheractivists will be able to keep the heat on the IFIswithout playing into the hands of the extreme right.



Phoenicians. The dawn of capitalism in the 1500sintroduced a new element of violence in therelationships of trade and gold flow between Europeand Africa and the Americas. Massive gold flows toEurope were forcibly extracted from the oldercivilisations of those continents. This sorry saga hasbeen well mapped out by Immanuel Wallerstein in his

many writings (see, for example, Wallerstein 2000).With the industrial revolution, capital and

commodity flows took very different forms and hada very different impact. Now labour could beharnessed at home and abroad without coercion;surplus could be extracted from labour made moreproductive by new machines. Capital began to flowoutwards to the periphery as much as it flowed backin the form of repatriated profits. The periphery wastransformed in the process of colonisation by theflow of industrial capital. Soon the colonies began to

crave their emancipation, which to them impliedtheir own industrialisation, and decided uponindependence to pursue capital accumulation andindustrial self-sufficiency. In this new context after1945, private flows of capital from the core to theperiphery dried up. Much of the capital flowed withinthe core. The flows from the core to the peripherytook the form, for the first time in history, of massivegovernment-to-government transfers and somesmaller flows from the multilateral lendinginstitutions set up at the Bretton Woods conference

in 1944—the World Bank and the InternationalMonetary Fund (IMF)—to the countries of what in the1950s came to be called the Third World.

The founders of the Bretton-Woods systembelieved that they had discovered the magic formulawhich would harness the creative forces of capitalismwhile mitigating its negative side effects. A fixedexchange-rate regime backed by the promise of IMFintervention was supposed to help everyone reap thefruits of free trade without worrying about instability.Aid facilitated by the World Bank was meant to help

address issues of poverty and inequality.

The 1970s and the petro-dollar debt

This new dispensation persisted until the early 1970s.At that juncture the first of many events occurredwhich began the transformation of the post-warworld by what we now call ‘globalisation’. The UnitedStates came off the dollar-exchange standard and theBretton Woods system of fixed exchange ratescollapsed. The quadrupling of oil prices generated a

massive transfer, of up to about 5 per cent of theirGDP, from the OECD countries to the oil-exportingcountries. This was the largest flow in the 200 yearssince the industrial revolution of money from thedeveloped countries to the (oil-exporting) developingcountries. This in turn led to the recycling of petrodollars, which brought private bank loans from

developed-country banks to the developing countries.This integration of the periphery into the globalbanking world heralded a new phase of the worldeconomy.

The first crisis of the 1980s

It was when international debt became a problem inthe early 1980s that we may say global civil societyencountered the financial world. As Marx saw 150years ago, capitalist power relations are non-coercive

in a crude physical sense. The distancing betweenthe owner of capital and its effects on the groundfurther complicates the agency problem. When debtpiles up and interest payments mount, the poor maystarve but whose fault is it really? The borrowers—those in power in the developing countries—eagerlyshift the blame to the lenders—the IMF or Westernbanks. The IMF and the banks accuse the borrowersof economic mismanagement. But the real reasonfor the debt crisis was that the developed world haddecided to put its house in order, adopted monetarist

policies, and began to borrow rather than printmoney. This led to the turnaround in the bondmarkets when interest rates rose from 5 per cent to15 per cent in nominal terms and from around minus10 per cent to plus 10 per cent in real terms.

Through the 1980s, as country after country withdebt problems had to seek IMF loans and submit tostructural adjustment, civil society everywhere beganto realise the severe impact such flows could have ondaily life. It was as if, until then, people had beeninsulated from the outside world of global finance

whose rules were non-negotiable even to theirsovereign governments. Governments tried to beardown on their people in order to repay their debts,however wisely or foolishly the money had beenused, and in response to the protests of their peoplecould only plead helplessness in the face of IMF orforeign banks. In the years since independence peoplehad thought that their governments were on theirside or could at least be brought round to their side,and had some power to better their lives, as theyhad been promised. Now there was a cleavage T

H E N E W A




56



between them and their governments, which pointeda finger at a bigger external power.

It was in devising defensive responses to this newsituation that civil societies began to form in manycountries. Until then, there had been a unity betweenthe state and the people, which had arisen fromtwentieth century independence movements in Asia

and Africa. Now the people had to articulate theirvoices against the state, even their own state. Peoplebegan to build defensive, cross-class alliances to fightagainst the cutbacks in food subsidies, rises in taxesand prices, unemployment, shutdown of publicfacilities, pricing of previously freely available goods,and so forth (Cornia et al., 1987).

The resolution of the debt crisis of the 1980s wasin one sense surprising and in another quite business-like. It took the intervention of the US governmentin the form of Brady Bonds (see Box 3.7, Glossary) to

allow the banks to do what they normally do with baddebts: write them off. After much misery, much of thedebt was written off, converted into equity, swappedfor factories in debtor countries, or forgiven inrecognition of some environmental good deed. Itwas painful and messy but once the write-off hadbeen agreed by the developed country governments(which had to bear the tax burden of debt write-offs) the private commercial debt issue was resolved.

The 1990s: the peso and the Asian crises

The events of the 1990s were yet another phase of the movement that had started in the 1970s.Communist economies had by then collapsed andbegun their transition to market economies. Chinahad adopted market-oriented policies, albeit withoutrenouncing socialism. Stock markets were springingup all over the emerging market economies.Developed countries had all by then deregulatedcapital movements. The financial markets and theforeign exchange markets were dealing in $1 trillion

per day, helped by the revolution in telecom-munications and information technology. The pre-ferred form of capital flow was equity rather thandebt. Foreign direct investment (FDI) flows to theThird World were soon outstripping foreign-aid flowsby a factor of 4 to 1.

Two further shocks jolted the brave new world of global finance during the 1990s. First was theMexican peso crisis in December 1994. Havingfollowed an orthodox fiscal and monetary policy,much to the approval of the IMF, Mexico loosened the

purse-strings in a pre-election year and made a riskydollar conversion of its debt. The uprising in Chiapascoincided with a transition to a new presidency, andthe credibility of the peso collapsed. A massive rescueoperation of $18 billion had to be organised by theIMF. A bad deflationary year followed in 1995 withmuch loss of output, but 1996 saw a recovery and a

flow of funds back into Mexico.The other shock was the Asian crisis of 1997 and

1998. This spread across nations previously hailed asmiracle economies. Starting with the Thai bhat, thecurrency depreciation and stock market collapsemoved to Malaysia, then to Indonesia, and finally toSouth Korea. The Asian crisis was truly the first crisisof globalisation of the late twentieth century. Itstarted on the periphery but spread to the metropolisvia Russia. It originated in the financial sector, whichis at the forefront of globalisation. Its resolution,

partially at least, came when the US Federal Reservecut interest rates three times in quick succession inrecognition of the likely impact of the crisis on USstock markets.

The Asian crisis was special in that it was triggeredby bank lending rather than by portfolio investmentsor FDI. It took place in countries with high growthrates, high savings rates, and generally good macro-economic policies. The IMF misdiagnosed the crisis asone of 1980s-style macroeconomic mismanagement.But it was a private lending crisis, not a public finance

one. The policy of pegged exchange rates proved tobe inconsistent with unrestricted bank lending fromabroad. What seemed like risk-free lending becamerisky when the bhat could no longer hold on to its pegto the US dollar. Since the bulk of the debt liabilitywas in foreign currency, the domestic central bankcould not help by performing its function as lenderof last resort.

The Asian crisis was serious in terms of loss of output and currency depreciation. It also meant asubstantial adverse impact on living standards of

many people who had just recently emerged frompoverty (see Box 3.2). In some countries, especiallyIndonesia but also Thailand and South Korea, thecrisis became one of political authority. South Koreasucceeded in making a transition to democracy anda peaceful change of regime, and Thailand reformedits constitution. Indonesia also went through atraumatic transition to democracy which remainsfragile. The democratic deficit enhanced the needfor civil society to organise resistance movements. Byits clumsy intervention, the IMF seemed to be as T

H E N E W


T


h

d D

i

d Y h i S i d

5



T H E N E W A




58

In East Asia, it was reckless lending by international banks and other financial institutions combined with reckless

borrowing by domestic financial institutions—combined with fickle investor expectations—which may have precipitated the crisis; but the costs—in terms of soaring unemployment and plummeting wages—were borne by workers. Workers were asked to listen to sermons about bearing pain just a short while after hearing, from the same preachers, sermons about how globalisationand opening up capital markets would bring them unprecedented growth.

(Stiglitz 2000: 1)

East Asia enjoyed an unprecedented 7 per centGDP growth per year for the last two decades of the twentieth century. This enabled some countriesin the region, namely, Hong Kong, South Korea,Singapore, and Taiwan, to become the only ones toactually make the transition from Third World toFirst World. Following the 1997 crisis, the region’seconomies shrank by 4 per cent (United Nations1999). Inflation and unemployment, hitherto

virtually unknown in most of these countries, sky-rocketed. Although most of the region’s economiesmanaged to recover by 1999, they remain belowtheir potential level had pre-crisis trends persisted:

The crisis left these countries with a heavy publicdebt burden, forcing the governments to spend agreater proportion of GDP on interest payments.

While most of the region’s economies are growingagain, the social consequences of the crisis persist.

In the aftermath of the crisis, the number of peoplein the region earning less than $1 day increased.by 10 million (18 per cent).

South Korea, which had an unemployment rateof 2 per cent before the crisis, was still reportinga rate of 4 per cent at the end of 2000, despite thefact that the economy grew by 9.5 per cent in thesame year. Real unemployment is even higher, asunemployment numbers do not reflect either thepercentage of people who are nominally employedbut receive no salary or the 117,000 migrant

workers who had to leave South Korea after thecrisis. South Korea also had no unemploymentinsurance until the crisis. The scheme sinceestablished does not cover most of the unem-ployed. Real wages declined by 14 per cent in theaftermath of the crises after growing by 7.3 percent in 1996. This, combined with inflation, ledconsumer spending to decline by 12 per cent, thesteepest drop in South Korean history. The result of all this is a persisting increase in poverty. Before thecrisis 7.5 per cent of the urban population were

poor. This number jumped to 23 per cent at theheight of the crises and was standing at 14 per centat the end of 1999, despite the recovery.

In Indonesia, unemployment rose from 4.9 percent to 13.8 per cent after the crisis. Real wagesdropped by between 40 per cent and 60 per cent.The percentage of people living in poverty jumpedfrom 11 per cent in 1996 to 20 per cent at theend of 1999, an addition of 20 million people.

Box 3.2: The cost of the Asian crisis

Increase in debt servicing costs as % of GDP after the crisis

Indonesia 3.9

Malaysia 2.2

Korea 0.5

Philippines 2.1

Thailand 10.3

Source: World Bank (2000)

GDP deviation from pre-crises growthtrend in 1999 (%)

Indonesia –16.6

Malaysia –7.2

Korea –12.9

Thailand –14.5

Source: World Bank (2000)



T H E N E W


T


h

d D

i

d Y h i S i d

5

much part of the problem as of any solution. Theinsistence of the Malaysian Prime Minister, DrMahathir, that controls on capital movements berevived in face of IMF opposition strengthened thisimpression, as in the event Malaysia did insulate itself against the worst effects of the crisis.

Calls for reform of the international financial

institutions, for a new ‘global financial architecture’,were made in the wake of the Asian crisis during thesummer of 1998. But the resolution of the immediateimpact on US markets by the Federal Reserve cooledthe ardour for any fundamental change among theG7 countries. No lender of last resort has been set upat the global level. The IMF escaped either bolsteringof its powers or downsizing, as advocated by theMeltzer Report for the US Congress (IFIAC 2000).There were some changes in terms of greatertransparency, greater accountability, and wider

consultation with developing countries.2 But therewas no radical reform.

Growth and persistence of foreign directinvestment

Through the 1990s, despite the peso and the Asiancrises, the movement of FDI to developing countriesproved much less volatile than that of portfoliocapital or bank lending. This has not excused FDIfrom criticism and its volume now exceeds that of

foreign aid by between three and four times. Whilethe large volume of turnover in the foreign exchangeand bond markets—$1 trillion plus daily—attractsmuch attention, it is FDI which has effects at a locallevel and has longer-term effects on growth,employment, and the environment than portfoliocapital. Its spread is confined to a small number of countries with high savings rates, large pools of semi-skilled labour, good governance, and high levels of literacy. There is, however, no IFI which monitors FDIor polices its accountability. Within the domestic

jurisdiction of all OECD countries, there are toughregulations on corporations (for example, the USJustice Department’s moves against Microsoft) andregulatory bodies such as the Securities and ExchangeCommission in the US and the Financial ServicesAuthority in the UK. There is, however, no move afoottoday for a global regulator of FDI. The MultilateralAgreement on Investments (MAI) was an attempt to

In Thailand, unemployment remains at threetimes the pre-crisis level, despite strong recovery.Combined with a 6 per cent decline in real wages,

this translates into an increased incidence of poverty of 15 per cent.

Hong Kong and South Korea are the only EastAsian countries who have an unemploymentinsurance system. In Hong Kong unemploymentrose from 2.2 per cent in 1997 to 5 per cent in1998. At the end of 2000 it stood at 5 per centdespite two consecutive years of growth.

2 For an overview of the Financial Stability Forum and other IMF reforms, see IMF ( URL ).

The cost of the Asian crisis, 1996–1999

1996 1997 1998 1999

GDP growth rates (%) (IMF)

Total 6.6 5.2 –4.0

Hong Kong 4.5 5.0 -5.0 2.9

Indonesia 8.0 4.5 –13.0 0.3

Korea 6.8 5.0 –6.7 10.7

Malaysia 10.0 7.3 –7.4 5.7

Philippines 5.8 5.2 -0.6 3.3Singapore 8.0 8.4 0.4 5.4

Taiwan 5.7 6.8 4.7 5.7

Thailand 5.9 -1.7 –10.0 4.2

Unemployment as a percentage of workforce (ILO)

Hong Kong 2.8 2.2 4.7 6.3

Indonesia 4.0 4.68 5.46 N/A

Korea 2.0 2.6 6.8 6.3

Malaysia 2.5 2.5 3.2 3.4

Philippines 7.4 7.9 9.6 9.37

Singapore 3.0 2.4 3.2 4.6

Taiwan N/A N/A N/A N/A

Thailand 1.08 0.87 3.41 3.0

Sources: Stiglitz (2000); United Nations (1999); WorldBank (2000).



introduce a uniform structure of rules for bothdomestic and foreign capital, but it did not extend toa uniform and universal regulation regime such asexists in individual OECD countries. The demise of the MAI was due as much to protests by the NGOs asto the reluctance of the US Congress to contemplatesymmetric treatment of foreign and domestic capital.

(see Box 3.3)If there has been no global move towards regulation

of FDI or any serious move for the reform of the IFIs,there has been a successful single-issue movement—Jubilee 2000—for the reduction of Third World debt.(seeBox 3.4) While the petrodollar debt owed to commercial

banks caused serious debt default problems in the 1980sand much misery, it was resolved, as noted above, bysome cancellation of debt, some payment in lieu in theform of environmental policy changes, and even somecapital sales. Public debt has proved to be a muchtougher nut to crack. For one thing, the World Bank, aswell as the governments of developing countries who

are the lenders, do not believe in writing off bad debt.What is a sound commercial practice is forbidden topublic agencies. This is a peculiar example of theinflexibility of government finance.

This Third World debt arises from a small amountof intergovernmental or IFI lending to some very

T H E N E W A




60

Box 3.3: The demise of the MAI

At the end of 1998, negotiations within theframework of the Organisation for EconomicCooperation and Development (OECD) for aMultilateral Agreement on Investment (MAI) wereabandoned. The collapse of the negotiations wasprecipitated by a number of factors including abroad international campaign coordinated byFriends of the Earth, 50 Years Is Enough, and otherinternational and local groups.

The MAI was intended to promote cross-borderinvestments by providing a unified set of rules

governing interactions between governments andinvestors worldwide. The rules proposed werefavourable to investors, prohibiting governmentsfrom discriminating among or against them andgiving investors the right to prosecute offendinggovernments in international courts. For example, theagreement would have eliminated a government’sright to place certain industries or areas of activityout of reach for foreign investors. It would haveprohibited the imposition of local content or otherperformance requirements committing foreigninvestors to purchase a certain proportion of theiroutlays from local suppliers or to create local jobs. Itwould have allowed investors the freedom to movemoney in and out of countries without restrictionsand prohibited any form of expropriation.

The negotiations, which were taking place largelyunnoticed since 1995, began to attract unwantedattention after the Asian crisis of 1997. The crisisleft both governments and activists with littleappetite for further financial-market liberalisation.

Disagreements among G7 countries were also on therise. The US wanted to maintain the right topersecute companies investing in Cuba or Iran. Francewanted to protect its film industry from Hollywood.Hungary wanted to preserve employee andmanagement-centred privatisation schemes. In theend it was France’s withdrawal from the processwhich sealed the MAI’s fate.

Activists succeeded in amplifying and leveraginggovernment disagreements up to the point of defeating the MAI.

The critical method employed by anti-MAIcampaigners was education and information. Theyprovided in-depth analysis of the proposedagreements and their possible environmental, social,and political implications. They published glossariesexplaining obscure legal and trade terms andprovided real-time coverage and analysis of thenegotiating positions.

This was probably the first time such negotiationswere conducted in the spotlight of public attention.It presented a radical break from the tradition of conducting negotiations among technocrats awayfrom public scrutiny, providing only a doctoredsummary of concluded agreements to the publicand parliaments at the ratification stage.

One may agree with the technocrats’ contentionthat the popularised version of the MAI draftagreements and the analysis of their impact byNGOs are not scientifically accurate or that manyof those involved in the debates were not qualifiedto pass judgement on such matters. This is changing



poor countries in the late 1980s and early 1990s,including Uganda, Mozambique, and Niger. Theoriginal principal has now mushroomed into a muchlarger sum due to the inability of many of the debtorcountries to service it, as unpaid instalments havebeen added and compounded. The size of the debtnow bears little relation to the original amount.

Debtor countries have been weakened by the collapseof primary commodity prices since the late 1970sand many local and civil wars. Individual G7 countrieshave taken some initiatives; the UK has been in thelead since 1990, when John Major was briefly theChancellor of Exchequer, and has accelerated this

lead under Chancellor Gordon Brown; but the WorldBank’s Highly Indebted Poor Countries (HIPC)initiative has been on the table since the mid-1990s.It has been mired in inaction. The total amounts aresmaller than those in the 1980s but the debtorcountries are now much poorer. It is also moredifficult to persuade countries, especially the G7

which dominate the voting in the IFIs, to agree to anydebt forgiveness.

Paradoxically, Third World debt, which Jubilee 2000focused on, has little to do with globalisation. Indeed,it is the countries which cannot access the privatelenders in the form of either debt or equity because

T H E N E W


T


h

d D

i

d Y h i S i d

6

rapidly, however, and many activists today haveaccess to high-quality research on economic issues.The campaign against the MAI was, however, abreakthrough in terms of democratising inter-national trade negotiations by providing the publicwith an alternative opinion; forcing politicians toscrutinise the proposed agreement; and requiringthe technocrats to be more transparent and todefend their positions to a sceptical public.

The MAI negotiations also witnessed increasedcooperation/coordination between NGOs and

governments trying to alter or stop the agreementaltogether. France used NGO arguments againstthe agreement in both domestic and internationaldeliberations. The government-commissionedLalumière Report, conducted in the summer of 1998, relied heavily on NGO testimony to justifyFrance’s reservations (Friends of the Earth 1998a ).

The MAI defeat was a temporary and, some wouldsay, a pyrrhic victory for civil society. Most groupsinvolved in the campaign would have preferred to seean alternative agreement which would regulateforeign investments in ways that protect the environ-ment, labour, human rights, and indigenous cultures.Many wanted to see multinational corporations andfinanciers brought under national or international

jurisdiction. An international agreement on invest-ment is necessary to avoid a race to the bottomamong governments in their quest for foreign invest-ments. Faced with the choice between a dangeroustreaty and an even more dangerous lack thereof,campaigners, unable to come up with a comprehens-

ive alternative, opted for the latter. They leveragedthe nationalism of individual governments to derailthe whole process.

Offering suggested changes to the MA is a trickier issue. Whereas it is important to eliminate the MAI’s worst features in case the agreement goes forward, but [sic!] eliminating those sections alone would not result in an acceptable agreement. Good rules on investment would include binding

language on investors’ responsibilities for the environment, workers and human rights.Therefore, signalling any support for the MAI in exchange for textual changes canbe dangerous because the agreement as a whole is fundamentally unbalanced infavour of investors. (Friends of the Earth1998 b)

The issues covered under the MAI are back on thetable again through the General Agreement onTrade in Services (GATS) in the framework of theWTO. GATS covers a much wider area of activitiesthan investment alone and is already the target of intense opposition from activists worldwide (seefor instance the World Development MovementURL). Will they be able to advance an internationalistalternative or will they ally themselves withprotectionists to derail the whole process as they didwith the MAI?



T H E N E W A




62

Box 3.4: Why Jubilee 2000 made an impact

by Ann Pettifor, Programme Coordinator, Jubilee Plus at the New Economics Foundation, UK, and previously director of Jubilee 2000 UK.

Jubilee 2000 succeeded in many ways, but fell farshort of achieving its goal of ‘cancelling the unpayabledebts of the poorest countries by the year 2000’. Butthe campaign could be said to have had some successin several respects:

1. It placed the issue of third world debt firmly onthe political agenda. The campaign was launched in1996. In 1998 a MORI poll commissioned by the aidagency CAFOD revealed that 69 per cent of the publicwanted the British government to celebrate themillennium by cancelling Third World debt rather than

building the Millennium Dome. At the end of thecampaign, another MORI opinion poll commissionedby CAFOD found that two-thirds of those with anopinion supported Jubilee 2000. Only one in ten peopleactually opposed the Jubilee 2000 campaign,indicating that concern about corruption in the ThirdWorld did not reduce support for debt cancellation(CAFOD, press release, 7 July 1999). In a poll commis-sioned by The Scotsman during the 2001 Britishgeneral elections, the issue of Third World debt wasconsidered more important by Scottish voters thanthe issue of Europe (The Scotsman, 15 May 2001).

2. A global social movement was built, unitedaround this one issue. By 2000, after just four yearsof campaigning, there were Jubilee 2000 campaigns, of varying strengths and character, in 68 countries. Thenational campaigns were autonomous but shared over-all goals, symbols, and information—and a tremendoussense of solidarity. The campaigns were based incountries as diverse as Angola and Japan, Colombiaand Sweden, Honduras and Israel, Togo and the UnitedStates (Jubilee 2000 URL). The ability to cooperate andcoordinate our campaigning was greatly enhanced byuse of the Internet.

3. Confidence was built in developing countrygovernments. In their negotiations with the BrettonWoods Institutions and with Paris Club bilateralcreditors, the representatives of poor debtor nationswere often cowed by the financial power and clout of bureaucracies serving the G7 powers. The growth of asocial movement in the North that supported theirhuman rights and called for international financial

justice encouraged developing country representativesto strengthen their negotiating stances and to appeal

over the heads of bureaucracies like the IMF to theelectorates in Western countries. President Obasanjoof Nigeria used this tactic in the US and in a meetingwith the G7 in Japan before the 2000 OkinawaSummit. And at the UN Financing for DevelopmentConference in New York in May 2001, the G77, led byIran, made strong challenges to the OECD countries onthe debt issue.

How did we achieve this? The main reason for oursuccess in fthe UK was that millions of ordinary peoplesupported the campaign. Without them, there wouldhave been no successes. However, Jubilee 2000 didfacilitate their involvement. Below we list some of the techniques used by the coordinating group inLondon and suggest action points for othercampaigners:

• First, study the problem very carefully and producean analysis and long-term strategy which reflectsmany approaches. We describe this as similar tothe challenge facing diamond-cutters: theysometimes study a stone for two years beforecutting it; they then cut it in a way which will givemaximum reflection of all the facets. Many issues,like trade for developing countries and the role of the IMF and the World Bank are not analysedprecisely and accurately, and therefore do not givemaximum reflection to all facets of the problem.Part of getting this right is a matter of instinct,

based of course on experience and extensiveknowledge—rather like sailor Ellen McArthur’ssuccess in ‘reading the winds’ during her historicround the world race.

• Look for a strong and straightforward argument—for example, a moral or social one—which willencourage people to attempt to get to grips withtechnical or political issues.

• Use the campaign’s core issue as a rallying point fordiverse groups, individuals, and organisations that

wouldn’t usually work together. In other words,build a coalition. But don’t be choosy about who is

in it; welcome anyone on the sole condition thatthey back the principles underlying your campaign.

• Coalitions are difficult to handle; some are loose,with no leadership and little coherence. Ours wasstrong, with clear leadership. One of the keyresponsibilities of the leadership must be tomaintain respect and communication with allpartners, regardless of their level of knowledge,



T H E N E W


T


h

d D

i

d Y h i S i d

6

experience, political or financial influence, andpolitical or religious allegiance or background. Allowa thousand flowers to bloom; be very open andinclusive. Support members of the coalition byproviding easily digestible information, which canbe adapted to their needs. This is particularlyimportant for those that do not usually work on theissue. Allow others to use the branding to promotetheir own organisation, to raise funds, and topromote their own particular contribution to thecampaign.

• Make the campaign brief (this is less threatening toestablished coalition members) and set a deadlineto achieve the key objective(s); and stick by this‘closing date’ This helps to keep a broad front of

organisations together.

• Make use of world events which illustrate yourcase—for example, the floods in Honduras, afterwhich that country paid more in debt service thanit received in aid. This means being ‘opportunistic’and responding quickly to events.

• Devise easy, specific and non-threatening actionsthat ordinary people will feel confident and justifiedin undertaking in order to express the case for thecampaign.

• Write a petition and ensure that its wording iscarefully devised to unite the widest possible rangeof people behind the campaign. Don’t use it just forcounting signatures but apply it as part of a widerprocess and opportunity for engaging andeducating people.

• If you are campaigning for changes in the South,be sure to provide a platform in the North forspokespersons from the South. Make it possible forthem to speak for themselves and to speak directlyabout their experience.

• Keep looking for opportunities to raise expectationsbeyond those that may be considered normal butwhich retain a sense of ‘ just about possible’. Thisbuilds excitement, energy, and leadership. We usedgoals that were beyond reasonable expectationsyet were on the edge of practicality, pushing theboundaries.

• Involve different faiths in the campaign: oncepeople of faith are properly involved then the

campaign becomes difficult to resist. They and theirorganisations need to be closely involved bothinternationally and locally.

• The coordinating group must genuinely have thewill and commitment to be very open incommunicating information. You must believe thatordinary people will be able to grasp and deal withcomplex issues. Our supporters astonished officialsand politicians with their grasp of complex facts.

• Be prepared to take measured risks. We often didnot have more than three months funding in thebank.

• Keep the campaign fashionable and ahead of thegame by (a) involving celebrities; and (b) loudlyacknowledging and celebrating successes andachievements. But be aware of the risks andlimitations of celebrity involvement; and don’twaste their time unless you have something thatreally meshes with their profile and commitment.Ensure that the relationship is a two-way one: thatthey get something out of it too.

• The core coordination team should be made up of

people with a diversity of backgrounds and culturesin order to reflect the full range of interest in thecampaign.

• All individuals and organisations taking part in thecampaign must keep focused on its overall missionand goals; their own agendas must be subservientto it. Working for campaigns like these should notbe considered a safe career move.

These are some of the techniques we used. None of

them, however would have worked without thewillingness of ordinary people to give precious time,resources, and commitment to the campaign. Thecredit for the success of Jubilee 2000 belongsoverwhelmingly to these millions of people, mostof whom will never be recognised for their rolebut who used their individual strengths to promotethe cause of the most indebted nations. Theyachieved this at a time when ‘aid fatigue’ wassupposedly pervasive and deep cynicism about themotives and altruism of voters was widespread.



they are abysmally poor that are forced into the armsof governmental or multilateral institutional lenders.Their plight is an aspect of the unequal nature of theglobal power structure as enshrined by the UNconstitution, which gives veto power to the permanentmembers of the security council, and in the decision-making structures of the Bretton Woods institutions.

The Asian crisis was a crisis of countries that hadbecome just rich enough to be attractive to privatelenders. The public-debt crisis is that of countries thatare too poor to be of interest to commercial lendersand too weak to be a threat to the powerful govern-ments which have lent them money.

Anti-capitalism: An Overview

T

hroughout the 40 or so years following 1945,there was a vibrant anti-capitalist movement, in

the form either of orthodox Leninist Communistparties or of democratic socialist parties. Feministand civil rights movements were added to thisworldwide. The focus everywhere was the statebecause the state was seen as an instrument of control over capital or over the unequal powerstructure. Political parties of the left were part of this broad protest movement even when they werein office, as were the trade unions which supportedthese parties. The 1960s saw a big explosion of thesemovements across Western Europe and in the USA at

a time when ‘capitalism in one country’ was perhapsperforming at its best in terms of full employmentand growth. The 1970s saw a worsening of economicperformance, with stagflation and a deepening of the crisis of the state, but also of resistance againstit. But even in the 1970s the various national move-ments were separate; only the environmentalmovement forged global interconnections. It was thechanges in the 1970s and in the 1980s discussedabove which shattered the logic of capitalism orsocialism in one country and began to shape the

new global economy not as an ecological ideal butas an economic reality.The anti-capitalist movement of the 1960s and

1970s was wounded if not defeated by the structuralchanges which capitalism underwent in the 1980s inthe developing countries. The collapse of the SovietUnion demoralised the Leninist left and shut downmany Communist parties. There was instead a growthof NGOs, many of them concerned with developmentor ecological issues. Other movements, like thewomen’s movement and human rights campaigns,

survived the neo-liberal onslaught of the 1980s. Theyhave now emerged as the opposition to globalisationin the 1990s and beyond. Their numbers are larger,both individually and in their memberships. They aremore globally networked. They are also less connectedwith political parties. In the following sections thesemovements are analysed in terms of their stances

on the financial effects of globalisation.The last ten years have witnessed historic changes

in the world system. The state socialist countries of Europe have transformed themselves into fledglingdemocracies and fragile market economies. AcrossOECD countries, social democratic parties in officeor out of it have rethought their old philosophies andabandoned any desire for state ownership or controlof capital. A system of countries each pursuing‘capitalism in one country’ with weak articulationthrough trade has changed into one with strong

articulation through international capital flows,inter-country, inter-corporate competition, flexibleexchange rates, and converging long-term interestrates through global bond markets. Governmentshave suffered a narrowing of their scope for fiscaldiscretion. Stock markets have grown in size andnumbers across the world. The logic of globalisationis one of unregulated global flows and a single bondmarket, although that logic is as yet far from realised.

Civil Society and Global Finance:

Four Responses

Interactions between civil society and globalcapitalism take place at two friction points. At onepoint, society is reacting to market encroachment

on both personal and public spaces: consumerism,atomisation, the erosion of public services, and nationstate models of democracy. At the other, society isreacting to socio-economic consequences of capitalismsuch as poverty, inequality, and instability.

At these friction points the anti-capitalist

movement raises two corresponding sets of questions:

1. What are the boundaries of the market? Howare they determined and enforced?

2. Can the market be trusted to produce just andstable outcomes or does it require externalintervention? How would such intervention becarried out?

These questions, although as old as capitalism itself,have gained in relevance over the past 20 years, T

H E N E W A




64



T H E N E W


T


h

d D

i

d Y h i S i d

6

providing an impetus to the anti-capitalist movement.The reasons for this renewed attention are set outbelow.

First, there is a perception that liberal democracyis lagging behind neo-liberal economics or even beingthreatened by it (Mittelman 2000). The neo-liberalreforms rammed through during the 1980s by right-

of-centre governments in the West and by the IMFin the East and the South, the inexorable encroach-ment of the market into the public sphere, theunchecked reign of multinational corporations, andthe apparent inability of national leaders to challengeany of the above has given the anti-capitalistmovement a new angle of attack.

Second, the abandonment of nation state-basedanswers to the contradictions of capitalism, be theythe welfare state in the North or state-sponsoreddevelopment or superpower patronage in the South,

is generating pockets of extreme poverty in bothrich and poor countries. While overall levels of prosperity are increasing, the situation at the bottomof the socio-economic ladder has actually beendeteriorating. The widening gap between rich andpoor, both within and between countries, isincreasingly difficult to conceal, justify, or sustain.

The anti-capitalist movement has changed intandem with its target. In the era of state capitalismthe focus was on the state. Some wanted to captureit, others to reform it, and yet others just wanted it

out of the way. Today, attention is shifting to thecorporation as the main target of the anti-capitalistmovement. Some strands of the movement againstcorporate globalisation would even call for protectingand strengthening the territorial state while othersdemand solutions that require the creation of a globalwelfare state. To be sure, the state, especially in theG7 countries, remains an important target for manymovements. There is a growing awareness, however,of the limitations of state power under globalisation.

The movement against global capitalism falls into

four groups: isolationists, supporters, reformists, andalternatives. As with all such classifications, nomovement, campaign, or event can be allocated solelyto any one of the categories. Many shift from one tothe other depending on the issue, event, or timeframe in question.

Isolationists

In addition to remnants of Communist and Stalinistgroups, isolationists include some environmental

groups such as Friends of the Earth, who tend to bemore radical in their economic than in their ecologicalagenda; think tanks and groups promoting nationalsolutions to Third World development issues, such asFocus on the Global South; anti-globalisation groupssuch as the International Forum on Globalisation,Global Exchange, and 50 Years Is Enough; local social

movements such as the Landless Peasants Movementin Brazil (MST); individuals such as Walden Bello andNoam Chomsky; and media outlets such as Le MondeDiplomatique.

The isolationists represent the only global civilsociety response to global capitalism which openlyclaims to be anti-globalisation. The isolationists calldirectly or indirectly for the abolition of the existingglobal economic order. Walden Bello says:

Indeed, I would contend that the focus of our

efforts these days is not to try to reform the multilateral agencies but to deepen the crisis of legitimacy of the whole. I am talking about disabling not just the WTO, the IMF,and the World Bank but the transnational corporation itself. And I am not talking about a process of ‘re-regulating’ the TNCs but of eventually disabling or dismantling them as fundamental hazards to people,society, the environment, to everything we hold dear. (Bello 2000)

Other isolationists are less categorical. Many call for‘economic diversity’ (Friends of the Earth 2000),presumably allowing for certain elements of globalcapitalism to continue in some areas. The demandsthey advance, however, can hardly be compatiblewith a functioning market economy, particularlygiven their objection to such concepts as economicgrowth or comparative advantage.

Isolationists treat globalisation and globalcapitalism as synonyms. They oppose globalisation in

most of its manifestations, promoting insteaddeglobalization (Bello 2000) or localization (Hines2000) which entails:

• economic subsidiarity: trade should beminimised, goods should be produced as closelyas possible to the site of consumption;

• political subsidiarity: states and localcommunities should be re-empowered at theexpense of transnational corporations andinternational organisations, decisions should be



taken as closely as possible to where they takeeffect; and

• self-sufficiency: resources for investmentshould be mobilised locally, reliance on foreigninvestment should be minimised.

In their blanket opposition to the IMF and the World

Bank, left-wing isolationists find strange bed-fellowsamong their right-wing rivals and supporters of global capitalism. To quote Bello on this subject:

The motivation of the incoming Republicans incriticising the IMF and World Bank lies in their belief in free-market solutions to development and growth. This may not coincide with that of progressives, who see the IMF and World Bank as a tool of US hegemony. But the two sides can unite behind one agenda at this point: the

radical downsizing, if not dismantling, of the Bretton Woods twins. (Bello 2001)

On the specific issues of global finance, the isol-ationists hold the following positions.

Public debt. Third World debt is a direct con-sequence and responsibility of Western powers, banks,and international lending institutions. Loans wereknowingly made to corrupt and/or incompetent ThirdWorld leaders for political reasons, for example toensure loyalty during the cold war or to perpetuate

a relationship of dependence. Lending was also usedas a beachhead to secure access for transnationalcorporations. Hence, all Third World debts should bewritten off. Moreover, given the real transfers3 fromthe Third World to the rich countries caused byunfavourable terms of trade and interest paymentsand outright looting in colonial days, the debtrelationship should be reversed. In the future, ThirdWorld countries should avoid borrowing altogetherand rely on their own resources for investments.

Short-term capital flows. Equity investments,

derivatives, and foreign exchange transactions areall part of a global casino. On the upside, they onlyenrich Western speculators; on the downside, theycause widespread suffering to working people bothin the North and in the South. Speculators often getbailed out by the IMF and other rescue programmes.They may even benefit from crises, as did George

Soros, attacking the European Union’s exchange ratemechanism and the Thai bhat.

Short-term capital flows are inherently volatileand destabilising. The responsibility for financial crisessuch as those in 1997–8 lies squarely on the shouldersof Western speculators and their private-sectorcounterparts in the afflicted countries. It also lies

with the IMF, which forced the emerging economiesto liberalise their capital markets in the first place.Post-crisis IMF interventions bail out speculatorswhile aggravating the effects on working people.Countries should have the option to introducecurrency and exchange controls and opt out of theglobal capital market altogether.

Long-term foreign direct investments. Foreigninvestments benefit only the multinational corpor-ations that make them. They serve to perpetuate theexploitation of the poor and destroy the environment.

Consequently, structural adjustment programmes andother liberal reforms aimed at encouraging foreigninvestments are part of the same conspiracy:

DEBT © DEBT CRISIS © STRUCTURAL ADJUSTMENT © OPENING TO

TRANSNATIONAL CORPORATIONS

Self-reliance and self-sufficiency are the only wayforward. This is the unifying slogan which bringstogether the isolationists in the Third World withprotectionists in the North by shielding national

favourites, such as state-sponsored manufacturingindustries, in the developing countries and sunsetindustries, such as the car industry, in developedones.

Supporters

Civil society responses to global finance in the‘supporters’ category include no movements and veryfew NGOs. They consist mainly of organisations,groups, media outlets, think tanks and individuals

lobbying on behalf of business, be it an individualcompany, an industry, or private enterprise in general.Examples of supporters include the Centre for CivilSociety in India, the Chamber of British Industry inthe UK, the American Enterprise Institute in the US,The Economist, The Wall Street Journal, the MeltzerCommission, and Thomas Friedman.

Although attention is usually devoted to instanceswhen the interests of civil society collide with thoseof global capitalism, the interactions between thetwo are not always negative. Civil society may benefit T

H E N E W A




66

3 Adverse terms of trade meant that Third World countries over many years sold relatively cheap raw materials to industrialised countries in exchange for relatively expensive manufactured goods.



when market expansion takes place at the expense of authoritarian regimes, fundamentalism, or autarky.Capitalism can also be more just and efficient thansuch alternatives as feudalism or central planning.This is the main rationale behind civil societyresponses which are unequivocally supportive of global capitalism in its current form. Supporters are

indeed, the most influential of the civil societyresponses to global capitalism.

Since they occupy the two extreme ends of thespectrum, it should come as no surprise thatsupportive responses to global capitalism oftencoincide with isolationist positions. For diametricallydifferent reasons both are dismissive of reforms andglobal governance proposals aimed at mitigating thenegative consequences of global capitalism. The mostimportant point of agreement among them is theequation of globalisation and global capitalism. As

Thomas Friedman says:

The driving idea behind globalization is free-market capitalism—the more you let market forces rule and the more you open your economy to free trade and competition, the more efficient and flourishing your economy will be. Globalization means the spread of free-market capitalism to virtually every country inthe world. Globalization also has its own set of economic rules—rules that revolve around

opening, deregulating and privatising your economy. (Friedman 2000)

Global capitalism, according to its supporters, is notonly the best way to prosperity: it is the only way.‘There Is No Alternative’ (TINA) is an often-repeatedargument to this end. TINA does not only mean thatanyone who refuses to open up to global capitalismwill be left behind; it also points to the perils of rolling back global capitalism. Supporters claim thatif governments and international organisations

succumb to anti-capitalist sentiments and try to reinin global capitalism, then globalisation as a whole willbe rolled back, leading inevitably to results similar tothose encountered when the previous era of globalisation came to an end early in the twentiethcentury, namely, war, fascism, and communism.

Supporters not only bristle at all forms of anti-capitalism but also reject most reform proposals.According to the supporters, all the injustices andinefficiencies attributed to global capitalism are nota result of too much market but of too little.

Government interference of all kinds, includingprotectionism, welfare provisions, corruption, andincompetence is, according to them, responsible forthe plight of the poor. The Economist (2000) states:

Governments are apologising for globalisationand promising to civilise it. Instead if they

had any regard for the plight of the poor,they would be accelerating it, celebrating it,exalting it . . .

Supporters attack the World Bank and the IMF foreven listening to NGOs, let alone engaging them inany serious deliberations. Many of them are actuallyopposed to these and other international institutionsas examples of interventionist big government. Onthe specific issues of global finance, the supportershold the following positions.

Public debt. Most of the burden of Third Worlddebt is the responsibility of corrupt and incompetentgovernments. Cancelling it will not help thesecountries but may actually hurt them if it is seen asrewarding bad government. Government lending inthe future should be kept to a minimum and usedmostly as an instrument of foreign policy. Eveninternational lending institutions should try to stayout of the debt market. The Meltzer Report (IFIAC2000), for example, recommends that the World Bankuse grants rather than loans, but these should be

disbursed through private service providers instead of being handed to governments.

Short-term flows. Short-term flows, be they loans,portfolio investments, foreign-exchange transactions,derivatives, or other exotic instruments are all part of the proper functioning of market mechanisms.Derivatives, for example, help distribute risk in a waythat best reflects market realities and the preferencesof individual market participants. Crises attributed toshort-term flows, such as the Asian crisis, alwayshave their roots in government interference, in this

case Asian crony capitalism and subsequent IMFintervention. The answer is, therefore, always moreliberalisation.

Long-term foreign direct investment. FDI is thebest way to match savings and investmentsworldwide. It allocates financial resources to theirmost productive use, promotes the best technologies,and produces the most-needed products and services.Moreover, FDI is the best way to transfer know-howand technology, business prowess, and even demo-

T H E N E W


T


h

d D

i

d Y h i S i d

6



cratic culture. FDI is the only way for the Third Worldto catch up.

Not only is it self-defeating for countries to placeany restrictions on foreign investment; they shoulddo their utmost to attract it. This is done throughneo-liberal reforms including deregulation, privat-isation, small government, balanced budgets, and

tight money. The pain and dislocation caused bythese policies are all justified by the expected benefits.

Reformists

The majority of movements, organisations, andcampaigns active in the area of global finance arereformist. They include the bulk of the labourmovement and associated think tanks such as theInstitute for Policy Studies; development organ-isations such as Oxfam and WorldVision; watchdogs

such as the World Development Movement and theBretton Woods Project; issue-specific campaigns suchas Jubilee 2000 and Action pour une Taxe Tobind’Aide aux Citoyens (ATTAC); and individuals such asGeorge Soros and Ann Pettifor. Even JamesWolfenson, the head of the World Bank, could beincluded in this category.

Reformists comprise a broad category rangingform NGOs dedicated to monitoring the IMF to thoseIMF employees who are serious about reform. Thereformists aim ‘at partial change to try to offset

current injustices and inequalities’ (Cohen and Rai2000: 2). Unlike the isolationists, movementsdemanding cancellation of Third World debt or IMFreforms are not pursuing a radical new social order.

The reformists pursue variations on the ‘socialdemocratic’ agenda for the global era. Their aim is tomaintain the advantages of the capitalist model whilemitigating its excesses through re-regulation andredistribution. As the largest US trades union states:

We need a global New Deal that establishes

new rules to temper the excesses of the market; promote sustainable egalitariangrowth; and assure the rights of working people everywhere are respected.(AFL-CIO 1998)

The reformists view themselves as the only truedefenders of globalisation. They believe that bothisolationist calls to reverse the process and supporters’insistence on ‘ultra-liberal’ forms of global capitalismare bound to derail globalisation, with tragic

consequences. According to reformists, globalisationcan succeed only if it is civilised and made moredemocratic, equitable, and stable.

Reformists propose a variety of global governancesolutions to address this task. These proposals areusually built around reforming or augmentingexisting international institutions or establishing new

ones.The reformists advance a set of global governance

initiatives such as the Tobin tax (explained below) orregulations for multinational corporations, whichmay actually require a global state to implement.John Cavanagh says:

Some scholars such as Walden Bello, argue that developing countries would be better-off withno international financial institution rather than the IMF because this would allow local

and national governments and citizens groups more autonomy in pursuing alternative development strategies. However, in an era of global capital, we would ideally have international financial institutions that could help reduce volatility and contagion in ways that can not be accomplished through nationstates. An International Bankruptcy Authority has already been discussed. In addition, a number of scholars have proposed the creationof a new Global Financial Authority or a Global

Central Bank. (Anderson and Cavanagh 2000)

On the specific global finance issues the reformistshold the following positions, although given the widerange of groups in this category the positions listedhere are not all encompassing:

Public debt. Both developed and developingcountries share the responsibility for the debtoverhang and should share the burden of itsresolution. For example, countries should becompensated for failed structural adjustment

programmes or World Bank projects, which wouldoffset some of their outstanding obligations. Debtshould be cancelled for the poorest countries. Theburden for the rest should be reduced to a levelwhere it does not jeopardise their ability to providebasic human services. An International BankruptcyMechanism should be established to deal with debtcancellation and restructuring in situations whencountries are no longer capable of meeting theirdebt obligations (Anderson and Cavanagh 2000).

T H E N E W A




68



Both lenders and borrowers should ensure thatlending proceeds through an open and transparentprocess to avoid misuse through corruption orincompetence. Civil society should be involved in allstages of the process.

Short-term flows. The position of the reformistson short-term flows is close to that of the

isolationists. Instead of dismissing these flows outof hand, however, the reformists seek solutions whichwould reorient them from speculation to long-terminvestment. Countries should have the option toimpose ‘speed bumps’ and other defensive measuresbased on internationally agreed criteria. The IMFshould not pursue the opening up of the capitalaccount in member countries but should leave thatto the discretion of governments. In case of crises,rescue packages should be aimed at minimising thenegative impact on the real economy as opposed to

bailing out reckless investors.At the global level, proposals to tame short-term

flows range from strengthening existing regula-tions to the establishment of a global lender of last resort/central bank and a Tobin tax. Namedafter the Nobel Prize-winning economist JamesTobin of Yale University, such a tax of anythingbetween 0.05 and 0.25 per cent levied on allforeign-exchange transactions would act as adeterrent to speculative transactions. The ATTACplatform claims that:

Even fixed at a particularly low rate of 0.05%,the Tobin tax would gather close to 100 billiondollars a year. Collected, primarily, by industrialised countries, where the largest financial centres are located, the sum could be redirected to international organisations for activities aimed at fighting inequality,promoting education and public health in poor countries and food security and sustainable development. This kind of mechanism would

put sand in the gears of speculation. It would feed the logic of resistance, give citizens and nations back some room to manoeuvre and inparticular it would show that politics can be restored to its proper place.(Platform ATTAC 1998)

Long-term foreign direct investment. Fewreformists would deny the benefits of foreigninvestment. Like the supporters, the reformistsbelieve that foreign investment is the best way to

allocate capital to its most productive uses. It is alsothe only way for poor countries to catch up with therich given the difference in savings rates.

As discussed above, the reformists promotesolutions which would redirect short-term flows tolonger-term investments. The reformists, however,reject the link between neo-liberal structural

adjustment policies and the flow of investments.Indeed, they reject neo-liberal structural adjustmentpolicies because of the pain they cause to the poorestin society, their ‘one-size-fits-all’ approach, and thefact that they have not even been proved to promotegrowth or investment.

The reformists also emphasise the need toaugment private investments by public funds toachieve development goals. According to the ICFTU(2000), for example, public investments by bothnational governments and IFIs should be targeted at

social protection, primary education, health care,and employment.

Alternatives

The anti-capitalist protests in Seattle 1999,Washington 2000, and Prague 2000 were driven bythe alternatives. Alternatives exist both as organ-isations—for example, the Zapatistas, Adbusters, andReclaim the Streets—and as ‘submerged net-works’ which come to the fore only around certain

campaigns or exercise resistance through a particularlifestyle, such as INPEG (see Box 3.1), which existedonly for the purpose of organising the Pragueprotests, or alternative money (LETS) groups (seeBox 3.1). Alternatives are wary of leaders but thereare alternative spokespeople like Naomi Klein andSubcomandante Marcos. (see Box 3.5)

Instead of aiming to transform or reform globalcapitalism, the alternatives are concerned withreclaiming ‘things’ from the encroaching market andcreating space for alternatives. They are concerned

with the political and cultural consequences of capitalism as much as they are with its economicand environmental costs. They perceive the en-croachment of the market into the public space as athreat to democracy, which takes the form of ‘corporate censorship’ in the North and human rightsabuses in the South (Klein 1999).

The fact that the alternatives comprise broadcoalitions means that it is difficult to pin down theiragenda or even what they stand for. But instead of being a weakness, the lack of a ‘little red book’ is T

H E N E W


T


h

d D

i

d Y h i S i d

6



T H E N E W A




70

The story of the Zapatistas’ uprising is a textbookexample of the relation between the local and theglobal in civil society today. The Zapatista Army

for National Liberation burst on to the internationalstage when it seized several towns and villages inMexico’s poorest state of Chiapas on 1 January1994. The insurgency coincided with the launch of the North American Free Trade Agreement andmade a mockery of Mexico’s planned celebration of

joining the First World. The armed stage of theuprising lasted for only twelve days but it succeededin drawing international attention to the plight of Mexico’s indigenous population and forced thegovernment to give serious consideration to their

demands.The desperate insurgency had every chance of

being drowned in blood or joining the long list of forgotten ethnic conflicts. Instead the Zapatistassucceeded in tapping a vast transnational network of civic activists who provided it with visibility, protection,legitimacy, and support. Naomi Klein says:

The Zapatista uprising was a new way to protect land and culture: rather than locking out the world, the Zapatistas flung open the

doors and invited the world inside.(Klein 2001)

The Zapatistas brought networking to a new level.Their ideas, which spread initially through word of mouth, dominate the Internet. According to NaomiKlein, there are at least 4,500 Zapatista websitesbased in 26 countries. There is a Zapatista cottageindustry selling 40 kinds of T-shirts, baseball caps,posters, and Mayan dolls. Zapatista gatherings—Encontros—both in Mexico and elsewhere are

attended by thousands of activists from all overthe world. Their latest event, the Zapatour, in whichthe movement’s masked leaders toured the countrypromoting their cause, culminated with a 150,000-strong rally in Mexico City.

One of the secrets behind the Zapatistas’ successis their ideas as formulated by the movement’seloquent non-leader Subcomandante Marcos. These

ideas go far beyond the immediate demands of theMayan communities to articulate an alternativeglobal vision. Marcos is inviting the millions ‘stood-

up’ by globalisation to unite behind the ChiapasIndians by defining the ‘savage capitalism of theend of the 20th century’ as the common enemy.Anyone who feels disenfranchised by globalcapitalism can join the Zapatistas by doingwhatever they can wherever they are.

The Zapatistas are sceptical both of cosmeticreforms and of ‘fascist’ nationalist solutions. Indeedthey are sceptical of any ready-made alternatives,promoting instead a ‘revolution which makes therevolution possible’. Their main goal is to create the

democratic space in which alternative socialproposals can compete and coexist with each otheras long as they are just. Marcos says, describingthe revolution:

It will be, primarily, a revolution which is the result of the struggle on different social fronts, with many methods, within different social forms, with different degrees of commitment and participation. And its results will be, not a party, organisation or alliance

of victorious organisations with its specific social proposal, but a chance for a democratic space in order to resolve the confrontation among diverse political proposals. This democratic space for resolution will have three fundamental premises which are inseparable historically: democracy, in order to decide upon the dominant social proposal, liberty in order to subscribe to one or the other proposal and

justice in which all proposals should be

enclosed. (Don Durito 1995)

This ambiguity combined with the movement’saversion to hierarchy and classical concepts of leadership make it ideal for the alternatives. Indeed,these ideas are the closest thing to a ‘manifesto’ forthe alternative stream of the anti-capitalist move-ment. Klein says:

Box 3.5: The Zapatistas





T H E N E W A N T I - C A P I T A L I S T M O V E M E N



72

Civil society responses to global capitalism extendbeyond protests and lobbying to ‘practical’ alter-natives. In the area of money and finance such

alternatives include LETS schemes and other moneyalternatives, micro-lending and Grameen banking,and socially responsible investment. These alter-natives can be isolationist, reformist, supporter, oralternative in nature depending on theircompatibility with global capitalism. They also varyin spread and success.

According to Project LETS (URL) there arearound 500 LETS schemes and networks in 36countries. The average size of these schemes is50–60 participants although larger ones can have

thousands of participants.

A typical example of LETS schemes is IthacaHours, based in the small university town of Ithaca,New York. One Hour is equivalent to $10 or onehour of work. The core of the system is a bi-monthlytabloid in which people and businesses that acceptIthaca Hours advertise their products and services.Each advertiser receives Four Hours so that s/he

can purchase other peoples’products. The currencyis limited to a 20-mile radius and payments can

be made in both dollars and hours. The schemeinvolves about 2,000 participants (Lietaer 2001).Since LETS currencies are usually based on theexchange of labour hours, most LETS schemes arecommunity-based, although this is changing withthe advent of the Internet. Formalised LETS schemesare usually political rather than practical in nature.Environmental sustainability, anti-consumerism,

and efforts to promote community cohesion andculture are among their main motivations.Formalised LETS schemes are trying to carve out

space away from the market and as such could bedesignated as alternative.

The most prevalent forms of alternative money,however, are neither political nor formalised. Moneyshortages due to state failure or neo-liberal reformsmay force millions in developing and transitioncountries to seek alternatives to money. In theformer Soviet Union people augmented barterarrangements originally developed to deal with theshortage economy to handle the tight money of shock therapy. Such arrangements involve the

exchange of both goods and services, includinglabour hours. Rather than being an alternative tomarket relations such arrangements are part of thenew market economy in these countries.

The Grameen Bank extends loans as small as$50 to the poorest people in rural Bangladesh.The loans are given without collateral. The mainclients are women whom the bank deems morelikely to spend the money wisely and to repay iton schedule. The bank relies on community andpeer pressure to ensure repayment. As such it

uses social capital in the form of communityrelations and gender as a substitute for collateraland as a way to reduce lending costs. Grameenbanking and similar forms of micro-lending havebeen extremely successful, reaching 14 millionpeople in December 1999, a growth of 82 per centin two years (Empowering Women with Microcredit2000). The success of Grameen banking hasprompted aid agencies, international lendinginstitutions, and commercial banks to emulate it inother countries. Originally, Grameen banks were all

NGOs. Micro-lenders today are divided betweenNGOs, who have predominantly a social/environ-mental agenda, and banks. Grameen banking andother forms of micro-lending are firmly anchoredwithin market structures. They could be designatedas reformist since they correct a market failure byextending lending to the poorest people who areusually shunned by commercial banks.

Socially responsible investing (SRI) is the mostsuccessful of the practical alternatives. Indeed, it is

Box 3.6: The other Alternatives



T H E N E W


T


h

d D

i

d Y h i S i d

7

becoming so commonplace for pension funds—thelargest portfolio investors—to demand SRI fromtheir fund managers that it is gradually becoming

the norm rather than the alternative. In 1999 over$2US trillion were invested in socially responsibleways, accounting for 13 per cent of assets undermanagement in the United States. This representeda growth of 45 per cent over the 9 per cent figurefor 1997 (Social Investment Forum 1999). Thenumbers are expected to grow especially since SRIfunds are proving to be as profitable as, if not moreso than, traditional ones. SRI is also spreading intoEurope, albeit at a slower pace. The introduction of regulation in the UK requiring pension funds to

disclose SRI policies has provided a needed boost.

British SRIs are estimated to have £45 billion undermanagement. There are several varieties of SRI,from passive screening ofcompanies according to

certain criteria to the active use of corporategovernance mechanisms to inject environmentalsustainability and labour and human rightsstandards into corporate policies. SRI could bedescribed as supportive because it takes placewithin the framework of global capitalism, using itsexisting tools and mechanisms. One could say thatSRI proves that market mechanisms such ascorporate governance are the most efficient way toproduce desired public goods without governmentintervention.

Source: Social Investment Forum (1999).

Socially responsible investing in the US in 1999 ($Billions)

Screening

$1,232

Screening and

Advocacy

$265

Community Investing

$5.4

Shareholder Advocacy

$657





T H E N E W


T


h

d D

i

d Y h i S i d

7

translated into an advantage, ensuring mass appeal,especially among the young.

It’s not the last gasp of the old left, or the resurgence of the new right. It’s not protectionism, or even anarchism. It’s something entirely different; something fresh

being pieced together from the shards of old ideas, and glued with new solutions for a new age. (Kingsnorth 2000)

The alternatives do not necessarily seek to overthrowcapitalism and are definitely not interested in gainingpower. They seek instead to defend a ‘way of life’and thus, place a strong emphasis on cultural issues.It is not surprising that their protests look more likecultural happenings than political action. Indeed, thealternatives’ grasp of popular culture is one of their

main strengths.The alternatives have a schizophrenic relationship

to globalisation. On the one hand, by espousing manyisolationist ideas they appear anti-globalisation; onthe other hand they are fiercely global in placing astrong emphasis on solidarity or, as Reclaim theStreets puts it: ‘The resistance will be as transnationalas capital’. The alternatives are also the most techno-logically savvy of all the resistance movements, whichfurther ties them to globalisation. Similar groups aredescribed as ‘anarcho-techies’ by John Naughton in

Chapter 6.There are parallels between the alternatives of

today and the radicals of the 1960s. For example,the radicals brought together emancipatory andrights politics of the ‘old’ and the life politics of the‘new’ social movements. The alternatives reproducedthis link in the form of the Longshoremen providingprotection to the anti-sweatshop student demon-strators in Seattle. The radicals and the alternativesare also similar in their emphasis on popular cultureand forms in general. But there are also differences

between the two: chief among them is that the‘authority’ being challenged today is the corporation,not the state.

Alternatives do not have a particular position onglobal finance issues. Instead they espouse a mixtureof isolationist and, to a lesser degree, reformist ideas.

Conclusion: The Total Is MoreThan the Sum of the Parts

Civic responses to capitalism are as old as thesystem itself. Reactions to money are evenolder. Isolationists, supporters, reformists, and

alternatives existed previously in various forms. Most

of the time, governments and markets confronted orignored them when they could not co-opt them.Lately, the individual responses have been comingtogether, creating something larger than the sum of its components. In Seattle and Prague, a myriad of individuals, organisations, movements, ideas, andmethods came together to deliver a message sopowerful that it took everyone by surprise.

Seattle and Prague, however, are only the mostvisible expression of global civic responses tocapitalism. The various responses are actually working

together all the time.The alternatives lend mass appeal and visibility

to what would otherwise be marginal isolationistand reformist movements. They also create the spacewhere the various responses come together. Theisolationists with their militancy and radical demandskeep the issues alive and sharpen the debate. Theultimate winner from these synergies are thereformists, who eventually fill the gap between thesupporters and the isolationists with constructivesolutions.

Civic responses to global capitalism are alsocoming together across regions despite supporters’claims to the contrary. The Zapatistas not only weresaved by global solidarity; they are also the inspirationfor alternatives worldwide. IMF and World Bankreforms are influenced by demonstrations in Turkey,Nigeria, and Argentina as much as they are by riotsin Prague and Washington. The Jubilee 2000campaign would not have achieved what it did hadit not been a truly global movement.

What is it that brings Ann Pettifor, Katerina

Liskova, George Soros, and Walden Bello together todress down the heads of the World Bank and theIMF?4 Why would the leaders of the Bretton Woodsinstitutions subject themselves to such public

4 Katerina Liskova is one of the organisers of the Prague World Bank/IMFD protest. Ann Pettifor is the founder of Jubilee 2000 campaign to cancel Third World debt. Walden Bello is a radical Filipino academic and anti-capitalist activist. Gorge Soros is a financier and philanthropist. The four participated in a meeting held at Prague castle together with the heads of the IMF and World Bank hosted by Czech President Vaclav Havel (see Box 3.1).



T H E N E W A




76

upbraiding? After all, activists were championingThird World issues before Katerina was born. Sorosmade his millions even earlier, totally unaware of Bello and his fellows in the national liberationmovement. Twenty years ago most anti-capitalistactivists did not even know who the leaders of theBretton Woods institutions were, and if they did they

wouldn’t have dreamt of sitting with them at thesame table.

It could be that for the first time in decades thebottom rung seems to have dropped from the globalsocial ladder, that along with overall prosperity thereare more and more pockets around the world wherepeople seem to have nothing to lose. Regardless of where they are, people are terrified by wideningdisparities. Many are all too aware that the Zapatistainsurrection and Landless Peasant Movement landoccupations are comparatively benign outbursts by

those left behind, that unless something is done wecan expect more violent eruptions with unpredictableconsequences.It could be that even those enjoying the fruits of prosperity are feeling less and less in control of theirlives. It is, after all, frustrating to get virtually identicaleconomic policies no matter whom you vote for andto watch your elected representatives facilitate orat best stand by helplessly as markets devour preciouspublic space.

Maybe the whole thing is just a successful public

relations stunt by the alternatives who are deftlymixing pop culture and information technology tolend a sheen of novelty and broad appeal to tiredslogans. The new anti-capitalist movement may justbe giving a new form to an old idea. Like itspredecessors, it is unlikely to succeed in terms of defeating global capitalism (after all, supporters arethe most influential of the civic responses to globalcapitalism) but it may just transform it.

Given the cacophony of voices behind it, themessage from Seattle and Prague may be neither

coherent nor constructive. It is more like an alarm, ashout of protest and despair. But it is loud enoughthat corporations, international organisations, andgovernments can ignore it only at their peril.

ReferencesAFL-CIO (1998). ‘US Workers Addressing the Global

Crisis’ (Executive Council Statement). Monterey,California (14 October).

Anderson, Sarah and Cavanagh, John (2000).Bearing the Burden: The Impact of Global Financial Crisis on Workers and Alternative Agendas for the IMF and Other Institutions .Washington DC: Institute for Policy Studies.http://www.ips.dc.org.

Bello, Walden (2000). Excerpted from a talk

delivered at a series of engagements during thedemonstrations against the World EconomicForum in Melbourne, Australia, 6–10 September.http://www.focusweb.org.

— (2001). ‘Is Bush Bad for the World Bank?’January. http://www.corpwatch.org.

Cohen, Robin and Rai, Shirin (2000). Global Social Movements . London: Athlone.

Cornia, Giovanni Andrea, Jolly, Richard, andStewart, Frances (1987). Adjustment with a Human Face. Oxford: Clarendon Press.

Desai, M (2001). Marx’s Revenge: The Resurgence of Capitalism and the Death of Statist Socialism. London: Verso.

Don Durito of the Lacandon Errant Knight forwhom Sup Marcos is shield-bearer (1995).Durito IV: Neoliberalism and the Party-State System. Mexico: Zapatista Army of NationalLiberation, 11 June. http://www.eco.utexas.edu/faculty/Cleaver/chiapas95.html

Economist (2000). ‘The Case for Globalization’. 21September.

Emerging Markets Companion (1996–9). Brady Bond Primer. http://www.emgmkts.com/research/bradydef.htm

Empowering Women with Microcredit (2000).Microcredit Summit Campaign Report.http://www.microcreditsummit.org/campaigns/report00.html

Friedman, Thomas (2000). The Lexus and the Olive Tree; Understanding Globalization. New York:Anchor. http://www.lexusandtheolivetree.com/globalization.htm

Friends of the Earth (1998a). MAI Update, October.http://www.foe.org.— (2000). Towards Sustainable Economies:

Challenging Neoliberal Economic Globalisation.1 December. http://www.foei.org.

— (1998b). Licence to Loot: The MAI and How to Stop it, http://www.foe.org/international/loot.html

Fuller, C. J. (1989) ‘Misconceiving the Grain Heap: aCritique of the Concept of the Indian JajmaniSystem’, in Jonathan Parry and Bloch, Maurice



T H E N E W


T


h

d D

i

d Y h i S i d

7

Box 3.7: Glossary of financial terms

Derivatives Futures, puts, options and other financial instrumentswhich are derived from others, such as commodityprices, shares, and bonds. Derivatives are often used asinsurance against unfavourable movements in theunderlying instruments. In portfolio investmentsderivatives are used to achieve a specific risk/returnprofile.

Futures Financial instrument constituting a bet on thedirection of the price of a certain commodity orexchange rate.

Foreign Direct Investment (FDI) ‘Refer to Investment Flows aimed at acquiring alasting management interest (10% or more of voting

stock) in an enterprise operating in an economy otherthan that of the investor’ (World Bank 1998–1999).

Portfolio investment The purchase of debt, equity and other financialinstruments. Equity portfolio investments usually stopshort of obtaining management control in a particularenterprise. The goals of portfolio investments varyfrom growth to income to value preservation againstadverse shocks.

Brady Bonds ‘Named after US Treasury Secretary Nicholas Brady,

who in association with the IMF and World Banksponsored the effort to permanently restructureoutstanding sovereign loans and interest arrears intoliquid debt instruments . . . Principal and certaininterest is collateralized by U.S. Treasury zero couponbonds and other high grade instruments. Creditorbanks exchanged sovereign loans for Brady bondsincorporating principal and interest guarantees andcash payments. Debtor governments had theirprincipal, interest and interest arrears reduced.Countries involved in the Brady Plan restructuring:

Argentina, Brazil, Bulgaria, Costa Rica, DominicanRepublic, Ecuador, Mexico, Morocco, Nigeria,Philippines, Poland, Uruguay. Potential futurecandidates for Brady Plan restructuring: Ex-SovietUnion (Vnesheconobank), Nicaragua, Panama, Peru’(Emerging Markets Companion 1996–9).



(ed.), Money and the Morality of Exchange .Cambridge: Cambridge University Press.

Hines, Colin (2000). Localisation: A Global Manifesto . London: Earthscan.

ICFTU (International Confederation of Free TradesUnions) (2000). ‘Securing the Conditions forReducing Poverty and Achieving Sustainable

Growth’. Statement by the ICFTU, TUAC, and ITSto the Spring 2000 meeting of the IMF and theWorld Bank in Washington DC.

IFIAC (International Financial Institution AdvisoryCommission, ‘Meltzer Commission’) (2000).Report (March). http://www.house.gov/jec/imf/ifiac.htm.

IMF (International Monetary Fund).http://www.imf.org

Jubilee 2000. http://www.jubileeplus.orgKingsnorth, Paul (2000). ‘Seeds of the New in the

Prague Autumn’. The Ecologist , 30/8: 44-5.Klein, Naomi (1999). No Logo: Taking Aim at the

Brand Bullies . New York: Picador.— (2001). ‘The Unknown Icon’. Guardian (3 March).Lietaer, Bernard (2001). The Future of Money .

London. Century.Mauss, Marcel (1996). The Gift: Forms and

Functions of Exchange in Archaic Society.London: Cohen and West.

Mittelman, James (2000). The GlobalizationSyndrome, Transformation and Resistance .

Princeton: Princeton University Press.Parry, Jonathan and Bloch, Maurice (1989).

‘Introduction: Money and the Morality of Exchange’, in Jonathan Parry and Bloch Maurice(ed.), Money and the Morality of Exchange .Cambridge: Cambridge University Press.

Perez, Carlota (2000). ‘Technological Revolutionsand Financial Capital’, paper presented at ‘TheOther Canon Conference’, Oslo.

Platform of ATTAC (Action pour une Taxe Tobind’Aide aux Citoyens), 3 June. http://www.attac.org.

Project LETS. http://lentils.imagineis.com/letslistReclaim the Streets. http://www.reclaimthe

streets.netSocial Investment Forum (1999). 1999 Report on

Socially Responsible Investing Trends in the United States, November. http://www.socialinvest.org/areas/research/trends/1999-Trends.htm

Stiglitz, Joseph (2000). ‘Democratic Developmentas the Fruits of Labor’, Keynote Address,Industrial Relations Research Association,Boston, January. Taken from Anderson andCavanagh. http://www.ips.org

Tönnies, Ferdinand (1955). Gemeinschaft und Gesellschaft (Community and Association)

(trans. Charles P. Loomis). London: Routledgeand Kegan Paul.

United Nations (1999). World Economic and Social Survey . New York: United Nations.

Wallerstein, Immanuel (2000). The Essential Wallerstein. New York: New Press.

Wood, Angela (2001). Structural Adjustment for the IMF Options for Reforming the IMF’s Governance Structure. Brettonwoods Project(January). http://www.brettonwoodsproject.org/briefings/reform/sapimf.html

World Bank (1998–1999). World Development Report: Knowledge for Development . New York:Oxford University Press

— (2000). East Asia: Recovery and Beyond .Washington, DC: World Bank.

World Development Movement. http://www.wdm.org.uk/campaign/GATS.htm

N E W A




Global Civil Society3

Documents