Clearly reformist, but the notion of a system of collective responsibility places on the agenda the need for coordination of the world economy, and fundamentally challenges the neo-liberal doctrine of laissez faire market fundamentalism which has been used to attack living standards of working people in many parts of the world.
>While this is not in itself a case for the general re-introduction of
>capital controls, the Asian crisis illustrates the need to restructure the
>present imbalance between the ascendant power of financial markets and the
>diminished power of governments to hold them to account. Not least, while
>most foreign exchange transactions used to be to finance trade, now most of
>them are speculative.
This, in itself, reformist point about the activitities of finance capital may be an important thin end of a large wedge. Lenin argued that imperialism is the domination of finance capital not of industrial capital. A system of holding finance capital to account, even if it starts as a way of stabilising the turbulence of short term capital flows, can with class struggle open up the possibility of further advances.
>After the Asian crisis, this blind faith in the markets is losing the
>support of public opinion. Gradually, in view of what happened, and how and
>where it happened, Democracy, Transparency, and Social Cohesion are
>recognised as precious assets in this new age of globalisation. They are
>essential for economic and social stability, which are important
>comparative advantages in the long run.
Can anyone unpack the resonances of "Transparency"? It seems to have the merit that no one can easily see why they should be against it, and it might help us to monitor finance more effectively, but does it have any positive thrust? And if so who is using it and for what purpose?
>How is it possible to limit the negative aspects and to improve the
>positive effects of globalisation? In a global economy the answer can only
>be by globalising regulation itself. This means resolving a paradox: that
>trade and financial markets now are global but governance and regulation
>are mainly national.
The co-ordinated interest rate cut yesterday by 11 countries of the Euro zone, many of them with governments linked to parties of the 2nd International, was impressive. It is also impressive for the medium term because it suggests conscious stabilisation of the exchange rate between the Euro and the dollar, in the new year bearing in mind the substantial trade surplus of the Eurozone in relation to the USA.
>c. Without conviction that governments, by joint action, can stem
>recession, a crisis in one group of countries can be immediately
>transmitted by speculation to others, even if their economic base is sound.
>
>d. Contagion from negative expectations can lead to a general shrinking of
>credit, especially for smaller firms, slowing down investment and growth.
>As stock markets fall the income of pensions funds is reduced and
>diminishes the possibilities for firms to raise new finance. Investment and
>consumer demand slows, reinforcing the reduction of global demand and the
>risks of depression. The risk of beggar-my-neighbour deflation is
>aggravated by increased inter-dependence in globalised trade. Japan is
>already in recession. Other key economies, such as those of the United
>States and European Union, are not immune.
All true at one level but the analysis sees the loss of confidence and "contagion" as an external cause of the problem rather than as marxists would argue a symptom, that is of the crisis in the contradiction between the accumulation of capital and the limited purchasing power of the masses.
>h. The paradox of such negative effects of globalisation is that the
>blocking of growth in less developed countries hinders prosperity in
>developed countries themselves. This is compounded by the degree to which
>the allegedly global economy is not truly global. In terms of foreign
>direct investment, other than for minerals and raw materials, sub-Saharan
>Africa is virtually excluded from any gains from globalisation.
This second international statement is really trying to present the arguments for maintaining the purchasing power of the electorates of the advanced capitalist countries. A truly global answer to the world crisis of overproduction would instead pump purchasing power into areas like sub-Saharan Africa.
This is a long statement. I thank Hinrich for posting it, but to be practical if this is going to be of any use to a discussion on this list, I will stop here as I think some of the main points have already been illustrated.
Overall however I would say I think the statement comes over as authoritative and far from silly in capitalist terms. The efforts to portray Lafontaine as dangerously irresponsible have effectively been rebuffed, and Duisenberg's statement in support of the interest rate cut shows that the market fundamentalists are having to be in dialogue with a resurgent social democracy.
Chris Burford
London.