Wednesday, 16 July 2008

Anti-Empire



Given the insights of market imperfection outlined above Stiglitz has suggested that politicians need to behave ‘more like scholars’ (Stiglitz 2002: x) but observes that ‘the opposite happens too often’. Stiglitz and Soros have increasingly focussed on the fact that economics has been either used to legitimate American interests or simply junked when it gets in the way of self-interested politicians:

They talk a free-market ideology but, if you look at their politics in terms of bailouts and protectionism, it is not a free-market policy; if you look at their procurement agenda and what they did with Bechtel in Iraq, it doesn’t even look like a fair competition agenda. So you have to sort of suspect an element of ideology but more an element of particular groups seizing control. (The Observer, 18 May 2003)

Bush, they suggest, has dropped the market approach, and is looking now to heavy handed state intervention to benefit the hyper-wealthy of a hyper-power. Indeed Stiglitz and Soros in their recent writings have moved on to attack Bush’s military adventures (Soros 2004; Stiglitz 2003). A number of other voices have echoed the suspicion that globalisation has a specifically American orientation and reflects US corporate and military interests. Will Hutton former head of the Industrial Society and editor of the Observer newspaper, specifically argues that capitalism comes in different varieties and favours Asian or European flavours to those of US capitalism. He suggests that the US system discourages long-term investment and promotes dot com style paper gains over strategically focussed real growth in assets. Slashed public spending on education and health within the US system weakens the fundamentals of the economy such as a healthy work force. Equally the US system breeds systematic and destructive inequality. Despite the rhetoric of pure markets, the Government intervenes with measures ranging from subsidies to corporate interests to huge military spending, and not to help the poor or promote growth but to feed revenue to firms. Hutton argues that the IMF demand for capital liberalisation has made it easier for US financial institutions to grow and made it easier for the US to fund its trade deficit, noting that in 1995 alone ‘foreign central banks bought $70 billion of new US treasury securities’ (Hutton 2001: 191). The writer Noreena Hertz has looked to socially and environmentally friendly entrepreneurs to provide a more Keynesian and humane form of global capitalism (2001).

Hertz along with Hutton, Soros and Stiglitz have increasingly come to see globalisation as an ideological force driven not by market economics but by US demands for hegemony with the economics of the market providing a gloss of legitimacy to the pursuit of naked power. Typically, Stiglitz, notes that for many globalisation appears to be ‘triumphant capitalism, American style’ (Stiglitz 2002: 5).
This said Soros notes that European countries are far from immune when it comes to economic imperialism:

the French government, for instance, has an even stronger tradition of pushing business interests through political means. The president of an Eastern European country I know was shocked when in a meeting with President Jacques Chirac the French president spent most of their time together pushing him to favour a French buyer in a privatization sale. I shall not even mention arms sales.
(Soros 1998: 204)

A genuine consensus for growth and development which advances a true rather than US corporate globalisation has been advocated by Soros and Stiglitz. They believe that the Bretton Woods institutions must be reformed and also support the introduction of the Tobin Tax, named after the economist James Tobin, on capital flows. A percentage tax on capital transactions could raise $1,000,000,000s for development projects and reduce the instability of markets. It is unlikely that universal backing for such a tax would be forthcoming but studies have shown that even if only a minority of currency transactions were covered it would bring benefits. Tobin believes that his tax could also be levied on share transactions and administered by the IMF to make it stick (Henwood 1998: 319). Henwood, a keen Tobinist who like Keynes knows that financial markets are more about gambling or playing ‘snap’ than productivity, argues gleefully:

Few things, aside from the threat of direct appropriation of their property, make Wall Streeters scream more loudly than the assertion that their pursuits are pointless or malignant, and that their activities should be taxed like noxious effluent. Listening to those screams would be another positive benefit of a transactions tax. (Henwood 1998: 319)

Tobin suggested a modest 0.5% tax and the networks campaigning for its introduction call for a levy as low as 0.2% (see chapter five). Soros also advocates the creation of new global credits to finance debt. Stiglitz suggests that the IMF’s structural adjustment to be linked to social inclusive policies. Above all the Washington institutions should act in a transparent way and engage in dialogue.

2 comments:

Neil said...

He definately has chimp lips.
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