Shopping Till We Drop
Reforming global economics in the absence of a climactic crisis is hard politics, of course, but these suggestions make it clear that fundamental reform is more a matter of what politics will allow, not what economics is sound. The obligation is peculiarly centered in the United States because what's required is confrontation with America's own prideful establishment. It is not Japan, Germany or China tenaciously upholding the status quo's obvious flaws and inequities but Wall Street and Washington. America's fusion of corporate-financial-political interests is the principal obstacle to change, and, one concedes, those interests are unlikely to yield until events have delivered fear and loss to their doorstep too. The only way to change the politics before catastrophe occurs is mobilization of people around the world demanding these reforms.
For roughly fifty years, the United States and allied international institutions have lured or pushed poor nations into pursuing the export approach to industrial development and have implicitly promised to buy much of their production. Now, it appears, we may abruptly throw them over the side. The export-led model is doomed because the United States can no longer afford to sponsor it. Developing nations are entitled to be skeptical, since it will look to them like one more instance of the wealthy protecting themselves from the aspiring poor.
Lori Wallach, director of Global Trade Watch, has discussed the situation with anti-WTO activists from countries like Malaysia, India, the Philippines and Thailand, and has encountered their ambivalence. She tells her coalition partners that "you've got to break yourself of the addiction of export-led development because it is not going to be around for long." Their initial response is anger. "What they say first is, 'You can't do that to us!'" Wallach recalls. "'You've led us down this primrose path, and now you're saying you're going to take it away? You're not going to buy our exports?'" Yet, she explains, they also welcome the change, since these people have spent their lives fighting for self-sustaining, locally evolved economies--for pragmatic reasons but also as a matter of political independence.
The necessary first step, as this activist network has defined it, is an international mobilization to strip the WTO and institutions like the IMF of their imperious dictates for the developing world--the many rules that serve global capital but force poorer nations to forgo self-reliance in favor of an export economy. That agenda should be accompanied by debt relief for the poorest forty-one nations but also far more generous investment aid from advanced economies. Again, this is a matter of political will, not economics. For example, a modest transactions tax on global finance would amass a huge fund of low-cost capital that could be used to build domestic infrastructure in poor nations--projects that, for once, would not be beholden to the plans of multinational corporations.
In a way, these measures are the easy part. The larger challenge is defining the plausible strategies and reasonable safeguards that enable a nation to concentrate first on inward-led development, without losing access to capital markets and becoming hostage to the usual treadmill of insecurity, in which companies threaten to move on if wages rise. The concept of development directed at the internal fundamentals has been advocated for many years, but the truth is that there are still not many living examples of success. Until the global rules change, it will be nearly impossible for an individual nation to do this without losing access to capital.
Contrary to the globalization propaganda, every poor nation is not going to get rich quick, certainly not for generations to come. But all nations could improve themselves and the lives of their citizens quite dramatically if allowed to pursue that goal on their own terms. The cold war is over, finally, and precious ideological distinctions about what is sound economics and what is forbidden should be buried with it.