[Documents menu]History of the world economy

The Global Pillage: Whose "world economy" is it, anyway?

By Tim Wheeler
In the People's Weekly World,
9 November 1996

NAFTA and the World Trade Organization (WTO) are tools with which powerful corporations manipulate the "free market" to control the flow of goods and money around the globe. The terms of these treaties are subject neither to local nor to national law but to the decisions of their boards of directors which answer to corporate masters. The same may be said of the World Bank (WB) and the International Monetary Fund (IMF).

These institutions determine who receives how much credit and when - conditional on the implementation of neoliberal policies specified by the suppliers of capital - again the powerful transnational corporations. When loans are contingent on the sale of natural resources and the privatization of state enterprises with the corresponding dismissal of public workers, countries become unable to develop their own economies and their burden of debt increases until it is, for all intents and purposes, unpayable. Burdened with debt and unable to make long-term investments in their own futures they are obliged to import the basics of life. Corporate concentration of capital thus proceeds apace, dividing us into a shrinking world of privilege astride a huge and growing world of abject poverty. Unless public boundaries are placed on this flow of private capital, concentration will continue and at its end is disaster, as surely for the fortunate few, as for the oppressed billions.

That the world's governments and leaders are not unaware of this disastrous course of events was evidenced at the World Summit for Social Development held in Copenhagen, Denmark in March 1995. Present for the largest gathering of world leaders held until that time, 117 heads of state "pledged to make the conquest of poverty, the goal of full employment, and the fostering of stable, safe and just societies their overriding objectives." The over 14,000 people who participated in the summit included representatives of 186 countries and 811 non-governmental organizations and some 2,800 journalists.

Because over one billion - 20 percent - of the people on earth live on the equivalent of less than $1 a day, the summit governments declared 1996 the International Year for the Eradication of Poverty and committed themselves to that goal in the summit's Declaration and Programme of Action.

Each government pledged to develop a national poverty eradication plan that would promote sustained economic growth in a framework of "sustainable development and equal opportunity." The plan would expand productive employment, using policies for full, decently paid and freely chosen work.

The governments pledged to protect human rights and promote social integration, committing themselves to halting today's extreme social polarization and burgeoning urban shantytowns and to ending the illicit trading in arms, drugs and in human beings, especially women and children. They committed themselves to work toward attaining gender equality and equality before the law, toward ensuring access to control over economic and social resources and activities to disadvantaged and vulnerable groups and to protecting the rights of the indigenous. Finally, they agreed to strengthen cooperation for their social development plans through the United Nations.

Each year the U.N. issues a Human Development Report in which it quantifies national development according to an Index with three key components: longevity, measured by life expectancy at birth; knowledge, based on literacy rates and schooling; and standard of living, measured by purchasing power based on Gross Domestic Product (GDP) per capita adjusted for cost of living.

Seen in this framework the aims of the Copenhagen Summit include: primary health care, particularly of women and children; family planning services including prenatal care; safe drinking water and an end to malnutrition; universal and equitable access to education for all children with particular attention to schools in rural areas, and to the children of migrant or nomadic peoples and the indigenous; and increased adult literacy, particularly of women.

At the end of the summit meeting the governments also committed themselves to ratifying and implementing the 1990 Convention on the Rights of Children. These pledges must now be ratified and implemented in each country. Only action on the part of local grassroots organizations will exert the pressure necessary to obtain ratification in each country.

The riches to resolve these problems are clearly not lacking. To raise the requisite funds some of the following might be considered:

A transaction tax on speculative foreign exchange. This "betting" on the futures of currencies and international notes moves $1 trillion in the world's financial markets every day - more than the value of all the purchases and sales combined. Such a tax would slow purely speculative capital investment; the trading firms dealing in precisely such transactions generate more income than any other "industry." First proposed by James Tobin, 1991 Nobel Prize Winner in Economics, an 0.5 percent tax would generate over $1.5 trillion a year.

A globally agreed-upon limit to the interest specified for international loans made to developing countries. This would make credit more readily available to those who most need it. Loans should not be contingent of the sale of state-owned enterprises or land, rermoving subsidies on food or the dismissal of public workers.

The complete cancellation of the foreign debt of developing countries has been suggested and some debt has, in fact, been forgiven. Complete cancellation is not likely, given the intransigence of transnational corporations and the international financial agencies such as the World Bank and International Monetary Fund. However cancellation of the interest payments due on those debts should be considered. The money thus released could be earmarked for social development.

A globally agreed-upon rate for the taxation of profits taken out of developing countries. Three quarters of this tax could revert to the developing country; the remaining quarter could be directed to a world body such as the UN's Food and Agriculture Organization, or its Children's Fund or to a U.N. operating fund.

Each nation should commit itself to cutting its military and arms budget until that budget reaches no more than ten percent of its total national budget. In 1992, world military spending - $815 billion - equaled the combined income of 49 percent of the world's people. A mere 3 percent annual reduction in this spending would yield a "peace dividend" of nearly $460 billion by the year 2000. In his Agenda for Peace, U.N. Secretary General Boutros Boutros Ghali proposed a tax on the defense budgets of industrial nations to finance the U.N.'s emergency peacekeeping fund.

Parallel to those cuts, the nations which possess nuclear stockpiles should commit themselves to cutting those stockpiles by half each year for 10 years after which the remaining stockpiles should be completely destroyed. Part or all of the money recovered by these two measures could be channeled to an international development fund so that the world's people could truly "beat their swords into plowshares."

Since capital flows freely across national boundaries in search of opportunity, labor must be able to do likewise. Developed nations must reach agreements with developing nations for the provision for workers who migrate from the latter to the former in search of employment. At the same time, the world's nations must agree to a minimum standard for wages.

The implementation of these last two measures ought to be seen as goals: they will only be possible when the previous points have been addressed and implemented. That they will be depends on just how firmly we believe that where there is a will there is a way. As has so often been said, it is not money which is lacking but political will.

-Julia Lutsky contributed to this article.

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