[Walden Bello, 2002] The crisis that is wrenching the current system of global economic governance is a systemic one. It is not one that can be addressed by mere adjustments within the system, for those would be merely marginal in their impact or they might merely postpone a bigger crisis. To borrow the insights of Thomas Kuhn’s classic Structure of Scientific Revolutions, when a paradigm is in crisis, there are two responses. One is that followed but he adherents of the old Ptolematic paradigm, which was to make more and more complicate adjustments to their system of explanation until it became too complex and virtually useless in promoting scientific advance. This is the approach taken by most of the proposals for reform discussed above.
The other path was that taken by the partisans of the new Copernican system, which was to break away completely from the old paradigm and work within the parameters of the competing paradigm, which could not only accommodate dissonant data in a far more simple fashion but also point to new exciting problems.1 This is the direction proposed in this book.
In contrast to science, however, breaking with the past is a far more complicated affair when it comes to global economic governance. Ins social change, new systems cannot really be effectively constructed without weakening the hold of old systems, which do not take fundamental challenges to their hegemony lightly. A crisis of legitimacy is critical in weakening current structures, but it is not enough. A vision of a new world may be entrancing, but it will remain a vision without a hard strategy is the deliberate dismantling of the old.
Thus a strategy of deconstruction must necessarily proceed along-side one of reconstruction.
The big anti-corporate globalization demonstrations of the last few years have been rich tin bringing up the strategic demand of dismantling the WTO and the Bretton Woods institutions. Advancing this demand and getting more and more people behind it has been central in creating the crisis of legitimacy of these new institutions.
Tactically, however, it would be important to try to bring coalitions together on more broadly acceptable goals, the achievement of which can nevertheless have a big impact in terms of drastically reducing the power of thee institutions or effectively neutering them. In the case of the IMF, for instance, a demand that has potential to unite a broad front of people is that of converting it into a research agency with no policy powers but one tasked with the job of monitoring global capital and exchange rate movements – in other words turning it into an advisory and research institution along the lines of the Organisation for Economic Co-operation and Development (OECD).
In the case of the World Bank, uniting with the demand to end its loan-making capacity and devolving its grant activities to appropriate regional institutions marked by participatory processes (which would eliminate the Asian Development and other existing regional banks as alternatives) could serve as a point of unity for diverse political forces and be a major step to effectively disempowering it. These initiatives could be coordinated with campaigns to boycott World Bank bonds, deny new appropriations for the International Development Association (IDA), and oppose calls for quota increases for the IMF. Unlike the Soros approach, the thrust of this multi-dimensional effort would be not one of reforming but drastically shrinking the power and jurisdiction of the Bretton Woods institutions.
Given its centrality and unique characteristics as a global institution, however, it is the WTO that must be the main target of the deconstruction enterprise. It is especially critical in the period leading up the Fifth Ministerial Meeting of this most powerful of the multilateral agencies of global governance.
The strategy of the deconstruction enterprise must respond to the needs of the moment in the struggle against corporate-driven globalization. This can be derived only by identifying the strategic objective, accurately assessing the global context or conjuncture, and elaborating an effective strategy and tactical repertoire that responds to the particularities of the conjecture.
For the movement against corporate-driven globalization, it seems fairly clear that the strategic goal must be halting or reversing WTO-mandated liberalization in trade and trade-related areas. The context or ‘conjecture’ is characterized by a fragile victory on the part of the free trade globalizers at the Fourth Ministerial at Doha, where they bludgeoned developing countries into agreeing to a limited round of trade talks for more liberalization on agriculture, services and industrial tariffs. The conjuncture is marked by the globalizers’ effort to build momentum so as to have the Fifth Ministerial in Mexico launch negotiations for liberalization of the so-called trade-related areas of investment, competition policy, government procurement and trade facilitation. Their aim is to have the Fifth Ministerial expand the limited set of negotiations they extracted at Doha into a comprehensive round of negotiations that would rival the Uruguay Round.
This expansion of the free trade mandate and the expansion of the power and jurisdiction of the WTO, which is now the most powerful multilateral instrument of the global corporations, is a mortal threat to development, social justice and equity, and the environment. And it is the goal that we must thwart at all costs, for we might as well kiss goodbye to sustainable development, social justice, equity and the environment if the big trading powers and their corporate elites have their way and launch another global round for liberalization during the WTO’s Fifth Ministerial Assembly in Mexico in 2003.
Given the strategic goal of stopping and reversing trade liberalization, the campaign objective on which the movement against corporate-driven globalization must focus its efforts and energies is simple and stark: derailing the drive for free trade at the Fifth Ministerial, which will serve as the key global mechanism for advancing free trade.
As noted earlier, the free trade partisan C. Fred Bergsten, head of the Institute of International Economics (IIE), has compared free trade and the WTO to a bicycle: they collapse if they do not move forward. Which is why Seattle was such a mortal threat to the WTO and why the globalizers were so determined to extract a mandate for liberalization at Doha. Had they failed at Doha, the likely prospect was not simply a stalemate but a retreat from free trade. For the movement against corporate-driven globalization, derailing the Fifth Ministerial or preventing agreement on the launching of a new comprehensive round would mean not only fighting the WTO and free trade to a standstill. It would mean creating momentum for a rollback of free trade and a reduction of the power of the WTO. This is well understood by, among others, The Economist, which warned its corporate readers that ‘globalization is reversible’.
If derailing the drive for free trade at the 5th Ministerial is indeed the goal, then the main tactual focus of the strategy becomes clear: consensus decision-making is the Achilles’ heel of the WTO, and it is the emergence of consensus that we must prevent at all costs from emerging.
Before the Fifth Ministerial, the anti-corporate globalization movement must focus its energy on ensuring that countries do not come into agreement in any of the areas now being negotiated or about to be negotiated, that is, agriculture, services and industrial tariffs; and at the Ministerial itself, preventing any consensus from emerging on negotiating the new issues of government procurement, competition policy, investment and trade facilitation. The aim must be, as in Seattle, to have the delegates go to the Ministerial with a ‘heavily bracketed’ declaration – that is, one where there is no consensus on the key issues – and at the Ministerial itself, to prevent consensus via last-minute horse-trading. As in Seattle, the end goal must be to have the Ministerial end in disagreement and lack of consensus.
If the goal is unhinging the game plan for greater free trade at the Fifth Ministerial, then the anti-corporate globalization movement has its work cut out for it. We must unfold a multi-pronged strategy whose components must include:
– unravelling the alliance between US Trade Representative Rober Zoellick and EU Trade Commissioner Pascal Lamy by exacerbating the US-EU conflict on Europe’s agricultural subsidies, the Bush administration’s failure to obtain unrestricted fast-track authority to negotiate from the USA’s Senate, Washington’s imposition of protective tariffs on steel and its resurgent trade unilateralism, and the US export of hormone=treated beef and genetically modified organisms (GMOs);
– intensifying our efforts to assist developing country delegations in Geneva to master the WTO process and formulate effective strategies to block the emergence of consensus on the areas prioritized by the trading powers and reassert the priority of implementation issues;
– working with national movements, such as peasant movements for food sovereignty in the South and citizens’ movements in the North, to build massive pressure on their governments not to agree to further liberalization in agriculture, services, and other areas being negotiated;
– skillfully co-ordinating global protests, mass street action at the site of the ministerial, and lobby work in Geneva to create a global critical mass with momentum in the lead-up to the ministerial.
The task is immense and we have so little time. But we have no choice. The trading peers and the WTO learned from Seattle, and they brought the bicycle of the WTO back on its wheels in Doha. Likewise, we must learn from Doha so that we can wrestle the bicycle back to the ground in Mexico. And among the key lessons we need to absorb is that our coalition must have a coordinated strategy that brings our work on many different fronts, levels and dimensions to bear on one goal: unhinging the drive for free trade at the Fifth Ministerial.
Deglobalizing in a pluralized world
Hand in hand with the deconstruction campaign must unfold the reconstruction process or the enterprise to set up an alternative system of global governance.
There is a crying need for an alternative system of global governance. The idea is floating around that thinking about an alternative system of governance is a task that for the most part is still in a primeval state. In fact, many or most of the basic or broad principles for an alternative order have already been articulate, and it is really a question of specifying these broad principles to concrete societies in ways that respect the diversity of societies.
Work on alternatives has been a collective past and present effort, one to which many in the North and South have contributed. The key points of this collective effort might be synthesized as a double movement of ‘deglobalization’ of the national economy and the construction of a ‘pluralist system of global economic governance.’
The context for the discussion of deglobalization is the increasing evidence not only of the poverty, inequality and stagnation that have accompanied the spread of globalized systems of production but also of their unsustainability and fragility. The International Forum on Globalization (IFG) points out, for instance, that:
the average plate of food eaten in western industrial food-importing nations is likely to have travelled 2,000 miles from source to plate EAch one of those miles contributes to the environmental and social crises of our times. Shortening the distance between prodder and consumer has to be one of the crucial reform goals of any transition away from industrial agriculture.2
Or as Barry Lynn has asserted, so much industrial production has been outsourced to a few areas suh as Taiwan, that, had the earthquake of September 21, 1999 experienced by that island been ‘ a few tenths of a point stronger, or centered a few miles closer to the vital Hsinchu industrial park, great swaths of the world economy could have been paralyzed for months.’3
What is deglobalization? While the following proposal is derived principally from the experience of societies in the South, it has relevance as well to the economies of the North.
Deglobalization is not about withdrawing from the international economy. It is about reorienting economies from the emphasis on production for export to production for the local market.
⁃ drawing most of a country’s financial resources for development from within rather than becoming dependent on foreign investment and foreign financial markets;
⁃ carrying out the long-postponed measures of income redistribution and land redistribution to create a vibrant internal market that would be the anchor of the economy and create the financial resources for investment;
⁃ de-emphasizing growth and maximizing equity in order radically to reduce environmental disequilbrium.
⁃ not leaving strategic economic decisions to the market but making them subject to democratic choice;
⁃ subjecting the private sector and the state to constant monitoring by civil society;
⁃ creating a new production and exchange complex that includes community co-operatives, private enterprises and state enterprises, and excludes TNCs;
⁃ enshrining the principle of subsidiary in economic life by encouraging production of goods to take place at the community and national level if it can be done at reasonable cost in order to preserve community.
This is, moreover, about an approach that consciously subordinates the logic of the market, the pursuit of cost efficiency, to the values of security, equity and social solidarity. This is, to use the language of the great social democratic scholar Karl Polanyi, about re-embedding the economy in society, rather than having society driven by the economy.4
True, efficiency in the narrow terms of constant reduction of unit costs may well suffer, but what will be gained – or perhaps the most appropriate term is regained – are the conditions for the development of integrity, solidarity, community, greater and more democracy, and sustainability.
It is these principles that today drive many bold enterprises that have achieved some success, mainly at a local, community level. As Kevin Danaher of Global Exchange has pointed out, the list includes fair trade arrangements between Southern farmers and Northern consumers in coffee and other commodities, micro-credit schemes such as the Grameen Bank, community currency systems delinking exchange from global and national monetary systems and linking it to local production and consumption, participatory budgeting as in Porto Alegre, and sustainable eco-communities such as Gaviotas in Colombia.5
The reigning god, however, is a jealous one that will not take lightly challenges to its hegemony. Even the smallest experiment must either be smashed or emasculated, as the imperious Bank of Thailand did when it told several villages in the Kud Chum district in Thailand’s Northeast region to abandon their local currency system. Peaceful co-existence between different systems is, unfortunately, ultimately not an option.
Thus deglobalization or the re-empowerment of the local and national, however, can only succeed if it takes place within an alternative system of global economic governance. The emergence of such a system is, of course, dependent on greatly reducing the power of the Western corporations that are the main divers of globalization and the political and military hegemony of the states – particularly the United States – that protect them. But even as we devise strategies to erode the power of the corporations and the dominant states, we need to envision and already lay the groundwork for an alternative system of global economic governance.
What are the contours of such a world economic order? The answer to this is suggested by our critique of the Bretton Woods-cum-WTO system as a monolithic system of universal rules imposed by highly centralized institutions to further the interests of corporations – and, in particular, US corporations. To try to supplant this with another centralized global system of rules and institutions, although these may be premised on different principles, is likely to reproduce the same Jurassic trap that ensnared organizations as different as IBN, the IMF and the Soviet state, and this is the inability to tolerate and profit from diversity. Incidentally, the idea that the need for one central set of global rules is unquestionable and that the challenge is to replace the neoliberal rules with social democratic ones is a remnant of a techno-optimist variant of Marxism that infuses both the Social Democratic and Leninist visions of the world, producing what Indian author Arundhati Roy calls the predilection for ‘gigantism’.
Today’s need is not another centralized global institution but the deconcentration and decentralization of institutional power and the creation of a pluralistic system of institutions and organizations interacting with one another, guided by broad and flexible agreements and understandings.
This is not something completely new. For it was under such a more pluralistic system of global economic governance, where hegemonic power was still far from institutionalized in a set of all-encompassing and powerful multilateral organizations and institutions, that a number of Latin American and Asian countries were able to achieve a modicum of industrial development in the period from 1950 to 1970. It was under such a pluralistic system, under the General Agreement on Tariffs and Trade (GATT) that was limited in its power, flexible and more sympathetic to the special status of developing countries, that the East and Southeast Asian countries were able to become newly industrializing countries through activist state trade and industrial policies that departed significantly from the free market biases enshrined in the WTO.
Of course, economic relations among countries prior to the attempt to institutionalize one global free market system beginning in the early 1980s were not ideal, nor were the Third World economies that resulted ideal. They failed to address a number of needs illuminated by recent advances in feminist, ecological and post-post-development economics. What is simply being pointed out is that the pre-1994 situation underlines the fact that the alternative to an economic Pax Romana built around the World Bank-IMF-WTO system is not a Hobbesian state of nature. The reality of international relations in a world marked by a multiplicity of international and regional institutions that check one another is a far cry from the propaganda image of a ‘nasty’ and ‘brutish’ world the partisans of the WTO evoked in order to stampede the developing country governments to ratify the WTO in 1994.
Of course, the threat of unilateral action by the powerful is ever present in such a system, but it is one that even the most powerful hesitate to take for freer of its consequences on their legitimacy as well as the reaction it would provoke in the form of opposing coalitions.
In other words, what developing countries and international civil society should aim at is not to reform the TNC-driven WTO and Bretton Woods institutions, but, through a combination of passive and active measures, to either a) decommission them; b) better them (e.g. converting the IMF into a pure research institution monitoring exchange rates of global capital flows); or c) radically reduce their powers and turn them into just another set of actors co-existing with and being checked by other international organizations, agreements and regional groupings. This strategy would include strengthening diverse actors and institutions such as UNCTAD, multilateral environmental agreements, the International Labor Organization and regional economic blocs.
Regional economic blocs in the South would be important actors in this process of economic devolution. But they would have to be developed beyond their current manifestations in the European Union, Mercosur in Latin America and ASEAN (association of Southeast Asian Nations) in Southeast Asia.
A key aspect of ‘strengthening’, of course, is making sure these formations evolve in a people-oriented direction and cease to remain regional elite projects. Trade efficiency in neoclassical economic terms should be supplanted as the key criterion of union by ‘capacity building’. That is, trade would have to be reoriented from its present dynamics of locking communities and countries into a division of labour that diminishes their capabilities in the name of ‘comparative advantage’ and ‘interdependence’. It must be transformed into a process that enhances the capacities of communities, that ensures that initial cleavages that develop owing to initial division-of-labour agreements do not congeal into permanent cleavages, and which has mechanisms, including income, capital and technology-sharing arrangements that prevent exploitative arrangements from developing among trading communities.
Needless to say, the formation of such regional blocs must actively involve not only government and business but also NGOs and people’s organizations. Indeed, the agenda of people-oriented sustainable development can succeed only if it is evolved democratically rather than imposed from above by regional elites, as was the case with the European Union, Mercosur and ASEAN. Regional integration has increasingly become an essential condition for national development, but it can be effective only if it is carried out as a project of economic union from below.
Many of the elements of a pluralist system of global economic governance already exist, but there are undoubtedly others that need to established. Here the emphasis must be on the formation of international and regional institutions that would be dedicated to creating and protecting the space for devolving the greater part of production, trade and economic decision-making to the regional, national and community level. One such institution is the establishment of an effective international organization for the preservation and strengthening of the economies of the hundred of thousands of indigenous economies throughout the world.
Indeed, a central role of international organizations in a world where toleration of diversity is a central principle of economic organization would be, as the British philosopher John Gray puts it, ‘to express and protect local and national cultures by embodying and sheltering their distinctive practices’.6
More space, more flexibility, more compromise – these should be the goals of the Southern agenda and the international civil society effort to build a new system of global economic governance. It is in such a more fluid, less structured, more pluralistic world, with multiple checks and balances, that the national and communities of the South – and the North – will be able to carve out the space to develop based on their values, their rhythms, and the strategies of their choice.
1. See Thomas Kuhn, The Structure of Scientific Revolutions (Chicago: University of Chicago Press, 1971).
2. John Cavanaugh et. al., ‘Alternatives to Economic Globalization’, International Forum on Globalization, San Francisco.
3. Barry Lynn, ‘Unmade in America: The True Cost of a Global Assembly Line’, Harper’s, June 2002, p. 36.
4. See Karl Polanyi, The Great Transformation (Boston: Beacon, 1957).
5. Speech at the University of Montana, Missoula, Montana, June 16, 2002.
6. John Gray, Enlightenment’s Wake (London: Routledge, 1995), p. 181.
*This is chapter seven of Bello’s book, Deglobalization: Ideas for a New Economy (London: Zed Books, 2002).