Chris Burford cburford at gn.apc.org
Mon May 25 07:06:42 PDT 1998

At 11:47 AM 5/24/98 +0000, Patrick wrote:

>I'll unite with Hank on this. I attended the 1996 Unctad meetings in
>the Johannesburg suburb of Midrand, which was presided over by our
>Minister of Trade and Industry, Alec Erwin, a leading member of the
>SA Communist Party and former lead Congress of SA Trade Unions
>strategist. Alec couldn't get anything vaguely progressive together,
>and the delegates there fell over themselves saying they'd promoted
>neo-liberalism in their neighbourhood better than the other guys.
>Nothing much happened, in the meantime, to give any credence to
>periodic SA claims that we are helping organise a new South front
>against the North. Then Alec (still president of Unctad) went to
>Singapore for the WTO meeting late last year and agreed to place MIA
>agreements onto the Unctad "table" which sets it down the slippery
>slope (he could have done some other maneuvres on this, but as
>always, he sought conciliatory ground with the West). (Last month SA
>announced it would lead the world campaign for liberalisation of
>agricultural trade, through the Cairns Group.) On the other hand,
>Alec seemed to endorse a post-Keynesian industrial economists'
>grouping within Unctad promoting the E.Asian flock-of-geese analogy
>(based on product cycle theory) for Southern Africa; but that was the
>one slight hint of heretical thinking, and its practical application
>will be to entrench SA conglomerate control over our region.
>If Unctad is the best Chris can come up with on UN agencies agin'
>neo-liberalism, case is closed. The UNDP parades around South Africa
>in neo-liberalism-plus-human-face drag, which in some ways is even
>more pernicious than fighting the real thing.

Patrick's criticisms here seem to be mainly against Alec Irwin and presumably the lack of clear economic policy of the South African Communist Party since Irwin was one of their two ministers in the Government of National Unity. I guess Patrick has already posted a number of times about this on PEN-L, to which regrettably I do not subscribe. If there is anything he could repost, or anything by the SACP at its *best* (why bother with its worst), I would appreciate that here, perhaps under a different thread title.

Patrick does not say what should have been done differently by a government minister with the neo-liberal pressures on the new South African regime. (Again I accept that may have been said elsewhere.) But I do not think it is fair or convincing if the criticism is left just at the level of personal weakness, although that can be the case. Irwin, I thought, was fairly well respected for his abilities. This surely is a reflection of the power of global short term financial flows. Neo-liberalism is both something to be defeated theoretically, but it actually has a material base, which cannot be wished away. Why after all did Clinton have to trim the more radical policies intended for his first term, if it did not have something to do with the power of the bond traders.

As far as the major issue in this thread title is concerned, the role of UNCTAD, again I do not think Patrick's points are quite fair. Whether I personally can come up with anything better than UNCTAD, is not really the point. I do not claim that I can spend very much time in this specialised area of applied and actual economics though as a layperson and a (would-be) marxist I feel I ought. I have therefore the arrogance of naivety. I do not see why international financial exchanges could not be taxed, I want them taxed, and I will not accept no for an answer. And I have a bank holiday Monday to put it in writing.

Even if I could demonstrate that UNCTAD was a bit more robust, that would not really affect the issue. If UNCTAD is the best that can be offered, the balance of forces still remains very weak in terms of foci of resistance to neo-liberalism. What else do we expect? We know that already. We know it will be an uphill battle. But surely if anything is to be done about it, it is worth looking at the fragmented isolated areas of current resistance to see what can be done to prepare a counter attack.

Why is UNCTAD located at Geneva except to keep it weak? Of course it is weak. Of course at a time when there are futher re-organisation pressures, people will be worried about keeping their jobs. My undestanding is that UNCTAD is a focus of democratic resistance, or a potential focus of democratic resistance to imperialist power hegemony, because its authority derives from a formula related to the number of countres not the size of their capital (like the IMF). It is therefore a forum for the third world.

The other focus where one might look, so it is suggested to me, is the ILO. Now I do not know. The argument does not hang or fall on whether I know or not. I am quite prepared to look stupid on this, I have in the past, and I am prepared to look stupid again. I do not have to appear intelligent because I work in quite a different field. What I am asking is that internet resources are tapped to find out where there are foci of resistance.

UNCTAD Review 1996.

I have turned to this on the Tobin tax. It is dauntingly technical for me. Closer reading reveals a story however whose general pattern is quite intelligible from a marxist perspective, looking at the material interests behind the subtle arguments.

Out of 119 pages it contains 56 on the Tobin tax. This consists of two articles.

"Financial Globalisation versus free trade: The case for the Tobin tax" by Daid Felix. 42pp

Review Article: by Andrew Cornford, one of the associate editors, based at UNCTAD in Geneva, if he has not yet lost his job, "The Tobin tax; Silver bullet for financial volatility, global cash cow, or both?" 13pp

Interestingly opposite the contents page there is a

"Note from the Managing Editor"

"This will be the last issue of the UNCTAD Review. The decision to discontinue the publication has been taken in the context to rationalization of the publications policy of the United Nations overall, and of UNCTAD in particular."

There was only one issue of the review per year anyway, and it has been axed.

Why should the outgoing editorial committee devote its last two articles to the Tobin tax. How far dare they go to without risking unemployability?

I cannot work my scanner, and I cannot get round to learning it. I will however type out a couple of paragraphs that seem to me to be illuminating:

The introductory paragraph of the case for the Tobin tax article by David Felix.

Felix is noted as an Emeritus professor of Economics, (presumably without tenure worries) ar Washington University, St Louis. The opening paragraph states the issue strikingly:

"Is free international capital mobility compatible with free trade and stable exchange rates? The answer of the architects of the Bretton Woods system, who filtered the inter-war experience through the then burgeoning Keynesian thoretical paradigm, was a firm no. The current answer of the chief surviving Bretton Wood institution, the International Monetary Fund, and of the G7 monetary authorities, who filter post-World War II experience through the New Classical Macroeconomics paradigm, is yes. Their efforts to stabilize the volatile international monetary system is premised on the compatibility, indeed the desirability, of combining free international capital mobility with stable exchange rates and free trade."

Felix also has a table of a phased introduction of a Tobin tax at 0.25% which would raise something like 200 billion dollars a year. Useful.

The Review Article by the assistant editor Cornford, is of a book:

"The Tobin Tax: Coping with Financial Volatility, edited by Mahbub ul Haq, Inge Kaul, and Isabelle Grunberg, 1996 (Oxford University Press) First drafts of most of the books chapters were presented at an expert group meeting in New York organized by the UNDP Office of Development Studies in October 1995 in New York, in which Cornford took part.

These articles were of course written before this year's great exchange rate instability in the far east. The review article appears to argue that international financial movements have become more complex since Tobin first proposed in the 70's to throw "some sand in the wheels of our excessively efficient international money markets". Among more recent complications are the development of derivatives which blur the distinction between short and long term transfers. It suggests that *for the purposes of financial global stabilisation" some other mechanisms may technically be more suitable, or a mix of methods may be required. Judging by comments about the far east crisis this debate could open again. (But of course not the debate about the merits of international taxation as such because all discussion of this must be censored by the Helms Inquisition.

Cornford's urbane opening to his review article in 1996 gives some perspective:

"Policy ideas in some areas of economics are subject to cycles of interest which are easily related to actual changes in economic conditions. Volatility of capital movements and currency levels together with the problems they pose for economic managment constitute such an area, and Tobin's proposals for a tax on foreign-exchange transactions, which was first put forward in the 1970's has taken on a new lease of life since the disruption of the Exchange Rate Mechanism of the European Union in the autumn of 1992. This revival of interest in the Tobin tax owing to conditions in capital markets has coincided with a renewal of the search for multilateral instruments for generating revenue for internationally agreed purposes at a time when governments in major OECD countreis are attempting to improve their fiscal balances."

The opening paragraph of his conclusions is remarkable for its convoluted attempts to reconcile what it is politic for him to say, with what his beliefs might be. It appears to have been written after the Jessie Helms proscription if anyone knows the precise date of that.

"A summary evaluation of HKG [the book] is difficult because of the many aspects not only of the Tobin tax itself but also of related issues which the book covers, and because the views of its contributors are far from uniform. Generally HKG makes a strong case for active policies by governments towards the capital account of the balance of payments, but is less successful in arguing that a tax at a low uniform rate on foreign-exchange transactions, imposed on a continuing basis, would make a major contribution to restoring governments' autonomy in macro-economic policy and to damping currency volatility.

"More persuasive is the book's discussion of such a tax as a potential source of revenue for governments whose other options are constrained by such factors as reductions in tariffs due to the liberalization of international trade and electorates' resistance to increased income taxes. Relaxation of this constraint would be likely to be accompanied by more favourable attitudes on the part of many governments to the financing required for the achievement of international objectives, such as those set out by Kaul and Langmore. Some recent reactions to the very raising of the issue of international taxation indicate only that the present time is not propitious for initiatives of this kind. But the political climate in this regard is not immutable and, if it changes, reference is likely to be made again to the numbers and exposition of HKG."

The authors have to put the matter technically, and their jobs may be at stake, and there are technical aspects to it. But whether the working people of the world might rather like a "global cash cow" of say 200 billion dollars a year or better 1 trillion dollars a year to be spent on developments conducive to human and environmental needs is a political question pure and simple. We cannot expect specialists in bodies like UNCTAD to promote such a campaign. They can be allies if we find ways to help them.

Chris Burford


PS if anyone can contact me privately about how to make an Optic-Pro scanner work under Windows 95, I may be able to forward these UNCTAD articles to interested individuals.

PPS IMF headquarters are on reflection, in New York - no?

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