-----Original Message----- From: Jim Davis <jdav@gocatgo.com> To: global@noc.org <global@noc.org> Date: Tuesday, April 11, 2000 10:32 AM Subject: Fissures in the Globalist Ruling Bloc? >FISSURES IN THE GLOBALIST RULING BLOC? >SEATTLE AND THE POLITICS OF GLOBALIZATION FROM ABOVE > >By Jerry Harris and Bill Robinson > >Globalization has become the main dynamic in the world today. We are >witness to a new stage in the evolution of the capitalist system >characterized by the hegemony of transnational capital and the rise of a >new global capitalist ruling bloc. At the helm of this bloc is a >transnational capitalist class based among the huge corporate and >financial institutions that are integrating the world into a single >productive apparatus. The globalist bloc has its corresponding >representatives in the political parties, civil societies, and state >apparatuses in both the developed and third world nations. The politics >and policies of this bloc are conditioned by the new global structure of >accumulation made possible by the revolution in information technology >and new capitalist strategies of production and labor control fostered >by these changes. >The groups that make up the globalist bloc are united only in their >defense of global capitalism. Beyond that, they have shifting alliances >and competitive contradictions. Throughout much of the 1980s and 1990s >they marched virtually unchallenged in building their new world order. >But underneath their triumpet banners a host of contradictions have been >building in intensity. Fissures within the bloc have now become more >apparent in the face of mounting economic crises and a groundswell of >resistance from popular classes around the world. These came together >at the ministerial meeting of the World Trade Organization (WTO) in >Seattle last November in a way hitherto unseen. The WTO creates a >concentrated crossroads for world politics and economics as the >organization strives to build a new regulatory superstructure to house >these global forces of production. Thus it also provides a forum where >these tensions can explode in their most exposed form. >Seattle witnessed this explosion as the birth of a new movement. >Changes in the political landscape have been accelerating in scope since >the Asian market crisis. Europe has been the scene of large-scale >anti-global demonstrations for several years. But Northamericans seemed >unaware of this growing movement, even as the United States fostered >some of the most powerful transnationals, and housed the International >Monetary Fund (IMF) and World Bank in Washington. The struggle in >Seattle went on inside the corridors and outside on the streets. While >many observers have commented on the demonstrations, our purpose here is >to concentrate retrospectively on the battles inside in order to, more >broadly, highlight some of the major issues of debate within the >globalist bloc. An analysis of the rising fissures within the globalist >bloc may offer lessons for empancipatory action from below in the new >century. >There are, among others, three tactical and strategic issues we will >discuss that are generating fissures in the summits of global power >which became exposed in Seattle: 1) political tensions between dominant >groups in the North and the South over the social crises that global >capitalism has wrought; 2) a strategic split within the bloc between >traditional neo-liberals and a "Third Way" or "softer" version of >neo-liberalism; 3) recent shakeups at the IMF and the World Bank, >reflective of these first two fissures, over how to reform the world >financial system and bring greater order to the global economy. > > > > The WTO, Transnational Classes, and the Third World > > >Prominent among the fanfare at Seattle was the apparently militant >position a number of Third World ministers took up against their >Northern counterparts, such as those from Brazil and India. This was >interpreted by some observers as a contradiction between the Third World >and the core in the new capitalist order, or even as a renewed >anti-imperialism. Closer inspection, however, suggests the protests >mainly represented a struggle within the globalist bloc, not an >anti-imperialist contest between the Third World and the capitalist >core. >The complaints of Third World ministers at the WTO were a complex mix of >calls for necessary reforms, anger over G-7 arrogance, and expressions >of competitive pressures. While their grievances over the arrogant >disregard of their concerns were justified, fundamentally they were >demanding greater access to global markets for the Third World >bourgeoisie and a greater role in managing the global economy, not its >dismantlement. These Third World elites are as much part of the new >global system as their counterparts in the developed nations. This is >not the national bourgeoisie of the 1960s who promoted state directed >modernization projects, local industry, and import substitution. >Production worldwide as been reorganized by the giant transnational >corporations (TNCs) that operate through new methods of finance and >production brought about by the revolution in information technology and >new accumulation strategies fostered by these changes. National >productive apparatuses have been broken down and integrated into >emergent global production processes. On the one hand the material >bases for the old Third World national capitalist projects have eroded, >and on the other, globalization has opened up new opportunities for >third world capitalists and state elites, whose interests lie >increasingly in integration into global capitalist rather than in the >construction of autonomous national capitalisms. >Transnational class formation is a key aspect of the globalization >process and has involved the increasing integration of Third World >contingents into the ranks of the globalist bloc. Elites in both North >and South have become divided along a new national-transnational axis. >National fractions are those groups grounded in national circuits of >accumulation, whereas transnational fractions are those grounded in new >globalized circuits. The former tend to pursue their interests through >national regulatory, industrial, and protectionist policies, whereas the >latter, in an expanding global economy based on worldwide market >liberalization. The clashes between national and transnational groups >underlie many surface political events and ideological battles in recent >years. These two fractions have been vying for control of local states >since the 1970s. Transnational fractions of local elites swept to power >around the world in the 1980s and 1990s and have used national state >apparatuses to dismantle the old nation-state projects and integrate >their countries into the global economy and society. > The leading capitalist groups in the Third World have transnationalized >by integrating into global circuits of accumulation through a variety of >mechanisms, ranging from subcontracting for global corporations, the >purchase of foreign equity shares, mergers with corporations from other >countries, joint ventures, and increasing foreign direct investment >(FDI) abroad of their own capital. In the 1980s, $170 billion in FDI >entered the Third World. In the 1990s, this figure shot up to $1.3 >trillion. Third World based transnationals themselves had invested $51 >billion abroad by 1995, or about 8 percent of total world FDI stock, up >from only one percent in 1960 and three percent in 1985. Between >1993-1995, the top 50 Third World TNCs augmented their foreign assets by >280 percent, compared to a rate of 30 percent for top corporations based >in the developed world. Petroleos de Venezuela and Daewoo joined the >ranks of the top 100 transnational in 1996 (although Daewoo may shortly >be taken over by G.M. or Ford). The Third World bourgeoisies of >countries such as Singapore, South Korea, Taiwan, Brazil, Chile, and >Mexico, are becoming important "national" contingents of the >transnational capitalist class. >These contingents have increasingly used the infrastructure of global >capitalism to attempt to strengthen their standing with the globalist >ruling bloc. Venezuela pursued a successful WTO case against America's >clean air standards, which resulted in allowing dirtier Venezuelan >gasoline to be imported into the U.S. The famous "turtle protesters" at >Seattle were reacting to a case won by Pakistan, Malaysia and Thailand. >These are examples of ongoing competitive struggles amongst the >globalists, which naturally were continued in Seattle. The Third World >ministers who came to Seattle represent for the most part the new >transnationalized elites in the developing world. This explains why >most of the third world countries at the WTO are wedded to the IMF and >global market. Whether the former Asian tigers, Brazil or India, these >governments are carrying out vast neo-liberal restructuring, often under >the co-direction of the IMF and World Bank. A few weeks after the >uproar in Seattle, WTO Director General Mike Moore was in New Delhi >addressing the Confederation of Indian Industry to work out new deals at >the conference "Partnership Meet 2000." >Many of the Third World states represented at Seattle see the future of >their countries as fully integrated parts of the global economy in >partnership with transnational capital. Their competitive advantage is >the superprofits made off the exploitation of their working class, and >the rape of their country's natural resources. In Seattle they fought >hard to maintain these advantages for themselves and their transnational >partners. Arguing for low wages is not a plan for national development, >but a defense of Nike paying 25 cents an hour, and Third World >sub-contractors running industrial zones for the TNCs that drive the >global economy. >In looking at some of the major spokespersons that emerged among the >Third World ministers at the WTO meeting their motives become clear. >The government of Brazil, for example, is carrying out a vast >neo-liberal project after its defeat of the Workers Party and receiving >a $42 billion bailout package from the IMF last year. Another voice was >from the ruling BJP of India, a reactionary Hindu nationalist party that >is implementing a neo-liberal program of privatization and dismantling >the Indian economy's state sector. Of course there are competitive >conflicts over how programs are carried out. But much of the >nationalist rhetoric displayed by government officials in Seattle was >simply a cover to legitimatize their policies at home, where the >deepening economic crisis is turning up the political heat. >However, beyond the rhetoric, there was another set of underlying >political tensions within the globalist bloc reflected in the ministers' >protests in Seattle. Third World globalists have born a >disproportionate brunt of the political fallout from the social crises >brought on by global capitalism. They face rising mass unrest, >instability, a legitimacy crisis, and the threat of losing their grip on >power, whereas their core country counterparts seem only concerned with >assuring that global accumulation continue unhindered. Having born the >brunt of recent upheavals, Third world globalists are now insisting on a >greater say in policy matters. None of these ministers want to face the >type of turmoil experienced by Indonesia, nor suffer the fate of >Suharto. > This issue came to a head in Seattle when small groups of rich nations >held informal meetings on key issues without informing Third World >ministers. These so-called "Green Room" meetings were a crude >manipulation of the WTO, which has been much criticized for its >non-transparent and undemocratic nature. The breakdown of general >deliberations, and the resultant failure to reach any new trade >agreements, was in part due to the rift between the Third World >ministers and G-7 countries. But the issue here is one of democracy and >justice within the globalist bloc, not of a struggle between this bloc >and the Third World, much less over substantive democracy and social >justice in global society. Given continued North-South inequalities and >the long history of core country interventions in the Third World >progressives must be particularly sensitive to demands emanating from >the peripheries of world capitalism. But the voices to listen to are >from the grassroots. > > > >Clinton's "Third Way": Globalization with a Human Face? > > >If one major fissure among the globalists revealed in Seattle was this >rift between the G-7 "senior" partners and Third World "junior" partners >in the ruling bloc, a second was that between the more dogmatic >neo-liberals and a "softer" neo-liberalism as expressed in the emergent >"Third Way" political project. >Bill Clinton is a key political leader for the globalists. Part of his >apparently progressive rhetoric in Seattle was for local consumption to >keep important voting blocs inside the Democratic Party. But the >President's political moves go far beyond the upcoming election. >Clinton has been a major figure in promoting the "Third Way" strategy >for globalism, which is an important adjustment to the pure >neo-liberalism of the Reagan/Thatcher period. His support for labor and >environmental rights is part of this approach, and seeks to stabilize >globalization into an acceptable institutionalized form with a broader >social base. Its origins in the U.S. goes back to Clinton's initiation >of the Democratic Leadership Council. These "New Democrats," as the >Clinton wing is known, moved the Democratic Party away from traditional >liberalism towards an alignment with neo-liberal conservatism. The >Third Way was first picked-up in the United Kingdom by Tony Blair (who >actually coined the phrase), then in Germany by Gerhard Schroder, and >now a number of other parties throughout the world. > The Third Way argues the state should enable the market to function >more smoothly and avoid radical swings that produce periodic crisis. >Government's role is to create an institutional framework for a flexible >global economy that recognizes a place for social concerns. >Unemployment, poverty, educational and health are seen as issues >effecting the labor force and the proper use of "human capital." But >the Third Way political program is not a return to a Keynesian project. >The program does not question the premises of an every more open and >integrated global economy or the prerogatives of capital. The state is >neither to not to replace the private sector nor to intervene directly >in the circuits of accumulation, but to structure market rules that >enable capital to enjoy a more dominant role in a stable financial >environment. The program reaffirms the set of macroeconomic fiscal and >monetary policies associated with neoliberalism, with withdrawal of the >state from "economic issues" (state regulation of capital) and the >continued rollback of the welfare state. But these aspects are combined >with a new emphasis on "social issues." Social programs such as >education and health care that generate the "human capital" which >high-tech information capital requires are emphasized, as is the >creation of "flexible labor markets." Welfare is replaced with "job >readiness" and market opportunities" (read: cheapening labor and >tailoring it to the changing needs of capital while abandoning the >state's and capital's reciprocal obligations to labor). Limiting the >destruction of nature is also promoted as a necessary step in managing a >profitable and productive environment. >The Third Way conception of the state and economic policy draws on the >new "institutional economics," which emphasizes the problems of economic >coordination in the free market and their resolution through the >management activities of "experts" in the state. Theoretically, this >approach argues that the state, which has the authority to create money, >influence interest rates, encourage technical development and research >through educational and regional policy, and so on, can influence >economic activity without interfering directly in the market by creating >a more predictable economic environment. The doctrine emphasizes >complex coordination of just the type of decentralized and vertically >disintegrated production processes that characterize the global economy, >as well as a new and more sophisticated infrastructural environment, >such as communications grids and information highways - "goods" which >the more "pure" neo-liberal laissez-faire state is ill-equipped to >provide. >Reagan and Thatcher represented the most dogmatic and pure form of >neo-liberalism - a wholesale and unfettered opening to the global >economy. This dominated political and economic transformations in the >initial period of globalization. This was known as the "Washington >consensus," was first launched as a globalist strategy at the Cancun >Conference in 1982 and implemented around the world with a vengeance in >the 1980s and 1990s. But the world recession of the 1990s exposed the >fragility of the world monetary system and caused rising alarm and >growing fissures in the inner circles of the global ruling class. How >to stabilize the system and achieve some regulatory order and stabilize >the system has bedeviled transnational elites and led to strategic >differences. With mounting social fallout from pure neo-liberalism, >especially in the wake of the Asian crash and looming economic disasters >elsewhere, unity around the Washington consensus fell apart and the >Third Way began to develop as an alternative policy approach for the >transnational ruling class. >The breakdown of the Washington consensus reflects a broad and ongoing >debate engaged by different think tanks, political leaders and >economists as the globalists search for a way out of growing world >crisis. Indeed, shortly before the Seattle meeting Clinton told the >annual gathering of New Democrats that the party is united on most >"Third Way policies" - fiscal conservatism, being "tough" on crime, >educational reform, and so on - but there is one big exception: "how >we're going to respond to globalization." The battle in Seattle, both >on the streets and in the corridors, was mostly in response to the >social fall-out and failures of the neo-liberal Washington consensus. >Clinton came to Seattle, in part, to push the Third Way alternative. >His much publicized poor performance at the meeting reflected a failure >of the Third Way to consolidate its leadership and to successfully forge >a new consensus. > > > >Changes at the IMF and World Bank > > > This debate has been reflected in the differences and sometimes heated >exchanges between policy leaders at the IMF and World Bank. This >struggle came to a head in November and December around two important >resignations; Michel Camdessus leaving as Managing Director of the IMF, >and Joseph Stiglitz resigning as chief economist at the World Bank. The >major protagonists in this drama that unfolded within the apex of these >powerful supranational institutions of global capitalism brought >together several of the most influential figures in globalist financial >policies. It is not possible here to elaborate on the issues behind the >IMF and World Bank shakeups, which go to the heart of an increasingly >fractious transnational elite's efforts to reform the world financial >system. But a cursory look at the events, which dovetailed with >Seattle, throws some light on the current politics of globalization from >above. >Camdessus has led the IMF for 13 years and is a leading exponent of the >Washington consensus and has had a huge influence on global economic >policies. Stiglitz was chief of Clinton's Council of Economic Advisors >before he went to the World Bank, where he became a major spokesman for >the Third Way, and one of the most outspoken critics of the IMF. In >some ways Stiglitz was a stalking horse for Clinton, who has been >cautious and accommodating with the established policies of the >Washington Consensus. Clinton's men at the Treasury Department, Robert >Ruben and Lawrence Summers worked closely with Camdessus to implement >neo-liberal solutions to the Asian and other crises. These included >bailouts for international finance, high interest rates to benefit >global lenders, rapid privatization of state supported enterprises and >cutting social services. The resulting political disruptions and free >fall into poverty was viewed as necessary steps to regain the confidence >of international financiers. >It was precisely these policies which began the revolt of Third World >globalists, as they paid the price of the crisis for their more powerful >partners in the developed world. Stiglitz, not surprisingly a leading >exponent of the new "institutional economics," was the first inside >voice from the inner sanctum of the ruling bloc to criticize the IMF's >strategy in Asia and Russia, directly challenging the Washington >consensus as a short-sighted and incomplete strategy. In fact, >Camdessus' resignation reflected the breakdown of the Washington >consensus. Taking place on the heels of Seattle, it upped the ante by >raising the possibility of new directions for the Fund and for globalist >financial policies. Stiglitz stepped up the tenor of his attacks after >Camdessus announced his resignation in November. At that point, Summers >stepped into the fray to try to impose order and stake out a middle >ground for a new consensus. > The functions of the IMF have grown greatly with globalization. Its >role as a neo-liberal policy enforcer took shape not as part of an >ideological principal of governance, but as an organic response to >growing world problems. During Camdessus' tenure criticism of the IMF >steadily rose from all quarters, indicating a concern to formalize a >global supervisory and regulatory structure that could bring some order >to world finance. As one commentator pointed out in the Financial Times >regarding the resignation: "As an exemplar of bureaucratic >entrepreneurship, the IMF is a triumph. Yet what is good for the >institution is not necessarily ideal for the world. A change in >management is the ideal time to refocus the institution on its core >tasks." In response to his critics, Camdessus retorted that "I know >that there is, here and there, some nostalgia for a mythical 'good old >fund,' limited to a narrow scope of concerns...This would obviously be a >recipe for irrelevance in today's world," and lamented that he had >failed to reverse "the world's propensity to use [the Fund] as a >scapegoat." But changes have been strongly supported by "conservatives" >or old-guard neo-liberals who see the IMF as an oversized bureaucracy >interfering in the natural functioning of the free market, as well by >old-guard "liberal" Keynesians largely marginalized under globalization >and who decried the extension of neo-liberal social policies through IMF >financial arrangements. The cutting edge of the Third Way is that it >charts a path between the conventional conservative/liberal split in an >attempt to reformulate a majority globalist consensus. In what Summers >called a "great debate," he argued the true role of the IMF is "to >enable creditors to recognize their collective interests despite their >individual interest." >Taking advantage of Camdessus' resignation, Summers gave a major policy >speech in mid-December on the IMF at the London School of Business which >gives some insight into Third Way thinking regarding global financial >regulation. His proposals called for important adjustments to programs >based on the Washington consensus, pushing the IMF towards Third Way >policies. Changes would include an end to long-term IMF lending, while >allowing the private sector greater freedom in arranging terms and >solutions for international debt. This would limit IMF loans to >short-term crisis management, and focus the Fund's attention on >developing a system that obligates governments and banks of "emerging >markets" to provide greater access for global bankers and lenders to >large bodies of closely guarded economic information. Summers also >proposed more attention be given to debt relief, limiting volatile >short-term loans, and recognizing the need for greater inclusion of >"civil society" and "emerging countries" in IMF decisions making. >But while the IMF should scale back short-term lending and shift this >role more fully to private capital, it must assume greater >responsibility in global financial oversight and regulation. In this >manner the IMF would provide a more secure environment for ongoing >accumulation. Its role would be that of an oversight committee which >guards the collective rules while individual competition is allowed full >range; stepping in only when economic competition gets out of hand >causing a financial crisis. Such measures in Summers's view would give >states more ability to keep the market running smoothly and help avoid >the financial disruptions to the system that the Third Way argues for. >Overall, Summers was reformulating a call made with increasing frequency >within the globalist bloc for the creation of a transnational "lender of >last resort" and suggesting that this role fall to the IMF. The Fund >"must be a last, not a first, resort," impose "generally accepted >accounting principles" for the global economy and encourage countries to >"implement standards and codes of conduct." >Previously Camdessus and Summers have worked closely to implement >neo-liberal solutions in Asia, Russia and Brazil. In fact, Summers was >Clinton's point man in getting Congress to come up with $18 billion to >help the IMF take control of the Asian crisis. But as speculation >circulated about Camdessus resignation, Summers began to distance his >own position from that of Camdessus and called for a "new framework for >providing international assistance...one that moves beyond a closed, >IMF-centered process that has too often focused on narrow macroeconomic >objectives at the expense of human development." In London, Summers >expanded his changing tactics to suggest that the World Bank, not the >IMF, take the lead in global debt relief programs for the world's >poorest countries. >Summers' rejection of the policies he helped develop and implement >indicates the depth of the globalist debate. The economic, social and >political upheavals of the past three years have the transnational >elites searching for new answers, answers that Third Way advocates hope >to provide. With Summers' and others' proposals for reorganizing the >IMF, key organic intellectuals of the globalist bloc have acknowledged >that transnational functionaries need to acquire greater autonomy from >transnational capitalists and act more independently of the latters' >short-term interests. The neo-liberal state has shown itself incapable >of such autonomy; it is not clear if a "Third Way" state would be up to >the task. > Back to Stiglitz. With the debate swinging to his side why would >Stiglitz choose to resign? One of his most repeated criticisms of the >Fund was that its policies led to a deepening human crisis of poverty. >Now poverty reduction programs are more firmly in the hands of the World >Bank. Just as Summers had distanced himself from Camdessus, World Bank >president James Wolfensohn, who had credited Stiglitz for helping to >move the institution beyond the Washington consensus, now distanced >himself from Stiglitz, expressing discomfort with the full range of the >latter's criticisms. These include restricting short-term flows of >capital, the IMF's Russian policy, moving more slowly on market >liberalization, giving poor countries an inside seat on financial >negotiations, and advocating a stronger role for the state. "In short, >he cast himself as a scourge of the Washington establishment," noted The >Economist. ""By the end, his boss, the hitherto supportive James >Wolfensohn, had turned less warm." >Many of Stiglitz' ideas seem firmly planted in Third Way policy. But >for Stiglitz the World Bank has not moved far nor fast enough in >changing their basic approach. As Stiglitz stated; "It has become >obvious to me that it would be difficult to continue to speak out as >forcefully and publicly as I have on a variety of issues and still >remain as chief economist. Rather than muzzle myself, or be muzzled, I >decided to leave. It became very clear to me that working from the >inside was not leading to the responses at the speed at which responses >were needed." Recently Stiglitz launched further broadsides against the >Washington consensus at the American Economics Association, where he won >a standing ovation. Sharply criticizing policies that Camdessus, >Summers and Ruben had enforced, he stated; "I believe there is some >chance that some of the disastrous economic decisions would not have >occurred had workers had a voice in the decision making. Capital market >liberalization has not only not brought people the prosperity they were >promised, but it has also brought these crises, with wages falling 20 or >30 percent, and unemployment going up by a factor of two, three, four, >or ten." >Such open criticism of the crisis goes beyond the comfort level for most >Third Way advocates, including Summers, who was rumored to have >pressured the World Bank for his resignation. With both Camdessus and >Stiglitz out of the way, Summers can now cobble together a policy >combination to push forward in the effort to build a new consensus >within the IMF and World Bank, and more broadly, within the globalist >ruling bloc. > > > >Wither the Politics of Globalization From Below? > > >It is not clear how the globalist ruling bloc will sustain its fragile >economic and political hegemony. There is no reason to believe it will >be able to manage the contradictions of global capitalism, particularly >those of overaccumulation and worldwide social polarization. However, >as Seattle made clear, the principal source of tension in the coming >period will be over the threat from below. The fissures in the >globalist ruling bloc have percolated up from outside the bloc. What >took place in the streets in Seattle, the politics of globalization from >below, forms the real basis on which to understand the politics of >globalization from above. > Yet the assessment from the streets is mixed. The protests were for >the most part not simplistic demands to cease global interference in >national economies or to end trade. Economic globalization begets >globalized politics and globalized resistance. There were as many >demands to impose supranational regulations and to extend global rights >and protections as there were to limit the power of the WTO and of the >TNCs. True, there were very disturbing national chauvinist >undercurrents in some of the banners raised by U.S. trade union and >other contingents. But the battle seemed to be over the nature of >globalization and who controls the process, as reflected in the slogans >of, "Whose world is it! and "Our world, our streets!" >Seattle was unequivocally an anti-capitalist movement. The importance >of this development should not be understated. But breaking the "TINA" >(There is not Alternative) syndrome requires an alternative vision for >global society. The left and progressives, who may well be competing >for influence with a Third Way political configuration for this vision, >must move from anti-capitalism, however important that stance may be, to >relaunching a democratic socialist project for the 21st century. > > > > > >NOTES > > > ************************************************************* Building the capacity of a new a movement for social and economic justice ... 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