"New Global Architecture" Poses Questions for the Left

Global capitalism has entered a crisis that few of its architects anticipated. As a result, the air is abuzz with proposals for a “new architecture” for the global economy. An era of debate and struggle over the design of the global economy lies ahead. But popular movements, progressives, and the left are also unprepared for new opportunities, challenges, and choices presented by the crisis of global capital.

While the common people have been suffering for years, the effects of free market globalization are now beginning to threaten the IMF, the U.S. Treasury, global corporations, financiers, and the other mangers of the global economy. U.S. Treasury Secretary Robert Rubin states that “The global economy cannot live with the kind of vast and systemic disruptions that have occurred over the last year.” He--as well as many other economists and world leaders who helped to design this global casino--are now calling for a “new architecture” for the global financial system.

Highly promoted proposals for such a new architecture have come not only from Rubin but from the likes of Tony Blair, George Soros, and Jeffrey Garten. Most mix together a few of the following elements:

            Imposition of still more liberalization/deregulation on “emerging markets”

            Better financial data collection to provide investors “early warning” of financial trouble

Extension of banking regulation via extended powers for the central banker-controlled Bank for International Settlements

            Global bankruptcy procedures

            Global investment insurance

            A global central bank

            More and earlier lending to countries that can’t pay debts

            Internationally coordinated interest rate cuts

New “Keynesian” international institutions to provide short-term liquidity and/or longer-term demand

Many of the current proposals are blatantly anti-democratic, designed to protect capital from elected governments. Economist Jeffrey Garten, whose proposal for a new financial architecture has recently received wide attention, complains that today finance ministries and treasuries are “responsible to elected legislatures.” He advocates instead a global “independent central bank”-one which would not be “at the mercy of short-term oriented legislatures.” He argues that such a bank “could help the profitability of American multinational companies by creating a healthier global environment for their businesses.” Other proposals, too, aim to save capital by destroying democracy.

The New Potential for Popular Intervention

While popular movements, progressives, and the left are used to thinking of themselves as powerless in the face of the global economy, the economic and political landscape is changing in a way that may make them less so. For example, mobilization by hundreds of citizen groups in 70 countries recently succeeded in forcing a suspension of negotiations for the Multilateral Agreement on Investment. As the Financial Post put it, “There is little doubt that the Internet and its widespread use by non-governmental organizations opposed to the pact played a pivotal role in sinking the wildly unpopular deal.”

Everywhere neo-liberalism seems to be under challenge. Countries as diverse as China, India, Hong Kong, Malaysia, Russia, and Chile have all taken action to counter, in various ways, the destabilizing force of unregulated private investment. Strong anti-IMF movement exists in many of the countries of Asia, and efforts are now under way to link and globalize those movements. Even in the developed countries, the ideology of the Reagan/Thatcher era seems to be waning. Social democratic parties now govern 15 of the 16 countries in the European Union; while some, like the British Labor Party, have supported neo-liberal approaches, several, like the newly installed German leadership, are now calling for a reversal of direction. In several cases these governments depend on more radical left parties, such as the Greens in Germany and former Communists in Italy, which are strong advocates of a new economic direction.

As the global crisis deepens, debtor countries acquire new leverage vis-à-vis their creditors and the global economy as a whole--a power Russia has already used as a bargaining chip with the IMF. A cooperative use of that power--a so-called “debtor’s cartel”--would provide strong leverage indeed.

There is a growing potential to address issues of the global economy through mass direct action. According to labor journalist Kim Moody, "In the last couple of years there have been at least two dozen political general strikes in Europe, Latin America, Asia, and North America. This phenomenon began in 1994. There have been more political mass strikes in the last two or three years than at any time in the 20th century." Since 1996, there have been general strikes in Argentina, Belgium, Brazil, Canada, Columbia, Denmark, Ecuador, France, Greece, Haiti, Italy, Puerto Rico, South Korea, and Spain, among others. This year, the “people power” uprising in Indonesia and mass strikes in Korea specifically targeted the policies of the IMF. This summer 75,000 people surrounded leaders of the G-7 meeting in Birmingham, England demanding that they write off the debts of the world’s poorest countries.

International networking around the issues of globalization is also burgeoning. One indicator: Just in October and November there were three international conferences held in Washington, DC to help coordinate transnational challenges to corporate globalism.

To Engage or Not to Engage?

The managers of the global economy, if only to save their own hides, are pursuing changes in the world’s “financial architecture.” To do so, however, they will need political support from other groups. This opens a set of opportunities – albeit problematic ones--for popular movements, progressives, and the left.

Some on the left seem to feel that we should “just say yes” to any international response intended to ward off or mitigate the threat of global economic meltdown. On this logic, many progressives in Congress supported an $18 billion expansion in funding for the IMF. Some will no doubt support almost any proposals, no matter how regressive, on the grounds that doing anything to ward off a worldwide depression is better than doing nothing.

Others maintain that the left should “just say no” to all proposals for new international economic institutions or new rules for existing ones. They argue that any such institutions will inevitably be dominated by the same oppressive forces that control the global economy today. Let global economic institutions collapse and local and national institutions will again be able to serve the needs of their people.

The problem with “just say yes” is that current institutions like the IMF and the World Bank often do more to destroy the people and environment of those they “help” than to promote economic stability, and many of the proposals for a “new architecture” would only make that destruction worse. The problem with “just say no” is that, with no international governance whatsoever, the global economy is less likely to turn into a garden of benign localism than a war of all against all. The problem with both is that they provide no way to use our potential leverage to affect the process by which the global economy will be redesigned.

We propose a two-pronged strategy. First, the left should develop a comprehensive alternative to restructure the global economy--its own “new architecture.” Such an alternative would provide solutions for the real problems of the global economy, and it should be something that could realistically win the support of a majority of people in most countries and be effectively implemented if power were not so unequally distributed. Many drafts of such alternatives have been drawn up by various international conferences and commissions. The left should demand that it be included in the “new architecture” debate in the media, Congress, and international institutions on the basis of those proposals.

Second, the left, progressives, and popular organizations should be prepared to enter into a tacit bargaining relationship with at least some of those in the establishment who are trying to forge an alternative to neo-liberalism. This doesn’t mean individuals going off on their own to meet with bigwigs; rather, it means building a consensus among a wide range of groups and constituencies regarding what kind of “new architecture” they would support and what kind they would oppose. The left should not expect to force acceptance of its entire program. But it should demand a set of minimum conditions for any proposal to win its support – and without which any proposal will meet its determined opposition.

To win its support, any proposal must not simply save the hides of the oligarchs, but rather must increase the power and well-being of ordinary people around the world. We don’t have an off-the-shelf list of such conditions--indeed, defining them will itself require substantial dialogue and bargaining among movements--but they would certainly include elements like the following:

Guarantees for the right of people at the bottom to organize as workers, peasants, women, slum dwellers, and citizens to promote the redistribution of power, and, thereby, of wealth.

Debt relief. The debt of the poorest countries should be written off. Debts of other developing countries should be reduced and restructured so that they do not have to starve their people to pay the interest on their debts.

            -- Accountability of any new institutions to those their programs affect.

This strategy will work only if its proponents are able to pool many different kinds of power-- from the transnational citizen power manifested in the defeat of the MAI to the direct action power seen in the global wave of general strikes to the political power reflected in the rise of left-center governments.

It can be difficult to bring together a disparate set of interests into a unifying set of bargaining demands. But is their any other strategy with an equal or better chance of affecting the global economy for the benefit of ordinary people and the environment?

Brecher and Costello are the authors of Global Village or Global Pillage: Economic Reconstruction from the Bottom Up (South End Press, second edition, 1998).