SlideShare una empresa de Scribd logo
1 de 37
Descargar para leer sin conexión
The Global Crisis,
     the Political Economy of State Restructuring,
and the Campaign for Transformative Social Protection

                                  Bonn Juego
                                     PhD Fellow
                             Global Development Studies
                             Aalborg University, Denmark
                            E-mail: bonnjuego@yahoo.com


                    Presentation for the Asia-Europe People’s Forum (AEPF) Conference on
                        Southeast Asia Regional Roundtable Strategizing Meeting:
      Building Southeast Asia Peoples' Agenda on Transformative Social Protection
                         as a Democratic and Human Rights Response to the Crisis
                                                            Asian Institute of Management
                                                                    Makati City, Philippines


                                                                             12 October 2009
                                                                                     1
The Global Crisis:
    Nature, Responses, and Alternatives

                            CONTENTS

   How can we make sense of crisis in capitalist development (in
    particular, neo-liberalism)?

   Are there fundamental changes to the visions and strategies of global
    governance institutions, the states, and the social movements in their
    respective responses to the global crisis?

   What does transformative social protection mean in this moment of
    crisis?


                                                                      2
Constitutive Role of Crises
     in the Evolution of Neo-liberalism
 Relationship: Crisis and Neo-liberalism
    Dysfunctional or Functional (or both)

 Nature of Crisis and Neo-liberalism
    Born out of crises
    Evolved through crises
    Died of crises???




                                             3
NEO-LIBERALISM WAS BORN OUT OF CRISES
                      Complex interaction of forces/events/phenomena...
                                     ...Mutually reinforcing tendencies
   recession in the developed capitalist economies after 1973, the OPEC oil crisis, and the
    collapse of the Bretton Woods system
   de-linking from the ‘gold standard’
   internationalisation of financial markets as a result of the widespread abandonment of
    exchange controls
   the massive increase in foreign bank lending to the Third World as consequence of the
    recession in the major economies
   the growing stagnation of command economies
   the shift from import substitution in favour of export promotion in the Third World and
    the rise of the NICs in East Asia
   the imposition of structural adjustment programmes (SAPs) on the heavily-indebted
    Third World as conditionality attached to rolling over foreign debt
   the restructuring of global production towards ‘post-Fordism’ and the growth of MNCs‫‏‬
   the revolution in macroeconomic policy that resulted in the weakening of trade unions,
    the cutting of state budgets, deregulation, privatisation, etc.
   the advances in ICT (as the new ‘techno-economic paradigm’)‫‏‬
   Etc....



                                                                                           4
NEO-LIBERALISM HAS EVOLVED THROUGH CRISES
                                     From crisis to crisis in the last 30 years....

   National Developmentalism (postwar-1970s)
      Crisis of Fordism/Keynesianism (stagflation)

   Washington Consensus – 1st Generation Neoliberal reforms (1980s –
    mid-1990s)
      Crisis of market fundamentalism of the Washington Consensus — ‘East
       Asian Miracle’ (8 HPAEs showing high growth and high equity with state
       intervention)

   Post-Washington Consensus – 2nd Generation reforms (mid-1990s -
    2008)
      Cacophony of crises: financial crises, overaccumulation, overproduction,
       over-/under-consumption, climate change, ecological degradation, political
       legitimacy, global governance crisis, oil crisis, food price crisis, subprime
       crisis

                                                                                   5
NEO-LIBERALISM HAS DIED OF CRISES(?)
                           Signs of the Times, a Cacophony of Crises:
                                     RIP Neo-liberalism (1980s-2008)

 Is neo-liberalism dead?
    Depends on what we mean by ‘neo-liberalism’....


 The neo-liberal form (i.e., market fundamentalism)
  is dead;

    But not the substance of capitalism as a:

       process of capital accumulation;
       relations in which labour is subordinated to capital

                                                                6
Neo-liberalism: A strategy for market-led
     development, A blueprint for crisis management

Neo-liberal values: well-being of the financial institutions over well-
  being of the people

   E.g.

      Debt crisis in Latin America (1982)
         Crisis Response: SAPs

      Financial Crises: Scandinavia (early 1990s); Mexico (1994); East and
       Southeast Asia (1997); Russia (1998); Argentina (2001); Turkey (2001-
       02); US Subprime mortgage (2007-09)
          Crisis response: ‘open’ international financial architecture

      US subprime crisis (2007-09)
         Crisis response: Bush-Paulson-Bernanke-Obama Bailout Programme
           (restore power of corporations; assure ascendancy of finance capital)
                                                                                   7
In times of crisis,
 “assets return to their rightful owners”!

‘Financial crises have always caused transfers of ownership and power to
     those who keep their own assets intact and who are in a position to
    create credit, and the Asian crisis is no exception....there is no doubt
     that Western and Japanese corporations are the big winners.....The
           combination of massive devaluations, IMF-pushed financial
      liberalization, and IMF facilitated recovery may even precipitate the
    biggest peacetime transfer of assets from domestic to foreign owners
     in the past fifty years anywhere in the world, dwarfing the transfers
   from domestic to US owners in Latin America in the 1980s or in Mexico
   after 1994. One recalls the statement attributed to Andrew Mellon: "In
          a depression assets return to their rightful owners”.’

                                             —R. Wade and F. Veneroso (1998),
     ‘The Asian Crisis: The High Debt Model versus the Wall Street-Treasury-IMF
                            Complex,’ in The New Left Review, 228 (1998), 3-23.
                                                                             8
The Cacophony of Crises Today

 Overproduction
 Finance (securitisation, speculative investments, Ponzi
  scheme)
 Environment
 Climate (global warming)
 Oil
 Food (post-Green Revolution, the Great Hunger of 2008)
 Governance (WB, IMF, WTO, states)
 Etc.


                                                            9
Mechanisms of Financial Crises
and their Effects on the Real Economy

    The
real
economy          Financial
economy
      “Güterwelt”             “Rechenpfennige”




     ”Black Box”
      Production
                          Money/capital
     of goods and
        services




  THE CIRCULAR FLOW OF ECONOMICS
                                                  10
COMPLEMENTARY FUNCTIONS, DIVERGENT NATURE
                 Financial capital       Production capital
                                         Wealth-producing wealth
                Money and paper wealth
Assets                                   Fixed capital,
                Static property
                                         technical capital,
                “Investible” capital
                                         human capital, good will

                                         Tied to fixed assets, to
Mobility        Essentially mobile       knowledge of products,
                Knowledge indifferent    processes, capabilities,
                                         clients and markets



Bias            Quasi-liquid assets,     Wealth-creating assets,
                SHORT-TERM GAINS         LONG-TERM GAINS




              Socio-economic results will differ
         depending on the criteria that lead investment
                                                                    11
SHIFTING ROLES OF
                  MONEY ON THE REAL ECONOMY

“In the years preceding the First World War
there were in common use among economists a number of metaphors . . .
'Money is a wrapper in which goods come’; 'Money is the garment draped
round the body of economic life’; 'money is a veil behind which
the action of real economic forces is concealed’ . . .

During the 1920s and 1930s
. . . money, the passive veil, took on the appearance of an evil genius; the
garment became a Nessus shirt; the wrapper a thing liable to explode.
Money, in short, after being little or nothing, was now everything . . .

Then with the Second World War,
the tune changed again. Manpower, equipment and organization once more
came into their own. The role of money dwindled to insignificance. . .”
                                                   insignificance

                     Arthur Cecil Pigou (1949) The Veil of Money, Macmillan pp.18-19
                                                                                       12
Three basic and complementary mechanisms behind the conflicts
     between the real economy and the financial economy
                      (Financial Crises)


1.       THE HAMMURABI EFFECT (Babylonia ca. 1795 – 1750 BC)
     •      The Effect of Compound Interest.


2.       THE PEREZ EFFECT (Carlota Perez, Venezuelan economist)
     •      Technological Revolutions Create Financial Bubbles.



3.     THE MINSKY EFFECT (Hyman Minsky, US, 1919-1996)
     •   Liquidity preference turning point
     •   + ‘bad projects’ killing credit to healthy projects.



                                                                  13
THE HAMMURABI EFFECT
    (The Effect of Compound Interest)

“A shilling put out at 6% compound
  interest at our Saviour’s birth
  would . . . have increased to a
  greater sum than the whole solar
  system could hold, supposing it a
  sphere equal in diameter to the
  diameter of Saturn’s orbit.”

   —Richard Price, English Economist, 1769.

                                              14
THE PEREZ EFFECT
Technological Revolutions and Finance Capital
                 Approximate dates of the installation and deployment periods
                 of the great surges of development -- 1771 to the present

GREAT    Technological                                                               Turning
SURGE    Revolution                                    INSTALLATION                   Point
                                                                                                            DEPLOYMENT
         Core country                        IRRUPTION            FRENZY                          SYNERGY            MATURITY
         The Industrial
1st      Revolution
         Britain
                                  1771 1770s and early 1780s late 1780s early 1790s 1793–97        1798–1812       1813–1829


         Age of Steam
         and Railways
2nd      Britain (spreading       1829          1830s              1840s            1848–50        1850–1857       1857–1873
         to continent and US)

         Age of Steel, Electricity
         and Heavy Engineering
3rd      USA and Germany           1875      1875–1884           1884–1893          1893–95        1895–1907       1908–1918*
         overtaking Britain

                                                                                    1929–33
         Age of Oil, Automobiles                                                     Europe
4th      and Mass Production 1908
         USA (spreading to Europe)
                                             1908–1920*         1920–1929           1929–43
                                                                                                       1943–1959   1960–1974*
                                                                                      USA

         Age of Information
         and Telecomunications
5th      USA (spreading        1971          1971–1987*          1987–2001          2001–??        20??
         to Europe and Asia)


                                  big-bang                                       Crash Institutional
                                                                                         recomposition



  Note: * Observe phase overlaps between successive surges.                                                                     15
THE MINSKY EFFECT
                        (Ponzi Schemes)
                              Types of financing
1.       HEDGE financing
     •      Low risk - can fulfill contractual payment obligation


2.       SPECULATIVE financing
     •      involves future renegotiating of the debt (rollover)
     •      A typical speculative position consists on financing long term assets
            with short term liabilities.


3.       PONZI financing
     •      ‘cash flows from operations are not sufficient to fill either the
            repayment of principal or the interest on outstanding debts by
            their cash flows from operations’
     •      expected revenues can not afford even interest payments, and agents
            are submitted to increasing debt
                                                                                    16
Ponzi Schemes

 Ponzi schemes (such as subprime loans)

    cause financial institutions to redefine the
     game
    they no longer compete for market share
     but instead pull out in order to be more
     liquid.
    In this way also, SOUND PROJECTS
     ARE REFUSED CREDIT, AND A
     DOWNWARD SPIRAL STARTS.
                                                (Charles Ponzi - police mugshot, 1910)

 Third World debt/lending was also a Ponzi
  scheme.

 Myrdalian ‘perverse backwashes’
    Funds tend to flow from poor to rich
     countries!                                                               17
Responses to Crisis

 SCHUMPETERIAN:
   ‘IT HAS TO BURN OUT ALONE’


 KEYNESIAN:
   ‘REPAIR IT’, but without encouraging the very behaviour
    that caused the problem in the first place.


 MARXIST:
   ‘REPLACE IT’ — overthrow crisis-ridden capitalist system;
    establish socialism, a democratic economic planning




                                                                18
“Times of innovation ... are times
   of effort and sacrifice, of work
   for the future, while the
   harvest comes after.... The
   harvest is gathered under
   recessive symptoms and with
   more anxiety than rejoicing....
   [During] recession ... much
   dead wood disappears.”

          —Joseph Schumpeter (1939)
                     Business Cycles



                                19
“I sympathize, therefore, with those who
       would minimize, rather than with
    those who would maximize, economic
     entanglement among nations. Ideas,       For these strong reasons, therefore, I am
    knowledge, science, hospitality, travel       inclined to the belief that, after the
   – these are the things which should of         transition is accomplished, a greater
     their nature be international. But let       measure of national self-sufficiency and
                                                  economic isolation among countries than
       goods be homespun whenever it is           existed in 1914 may tend to serve the cause
    reasonably and conveniently possible,         of peace, rather than otherwise. At any
                                                             rather
          and, above all, let finance be          rate, the age of economic internationalism
      primarily national. Yet, at the same        was not particularly successful in avoiding
     time, those who seek to disembarrass         war; and if its friends retort, that the
    a country of its entanglements should         imperfection of its success never gave it a
      be very slow and wary. It should not        fair chance, it is reasonable to point out
     be a matter of tearing up roots but of       that a greater success is scarcely probable
                                                         greater
                                                  in the coming years.”
                                                                  years.”
      slowly training a plant to grow in a
               different direction.              — John Maynard Keynes (1933 [1972]) National
                                                                              Self-sufficiency




                                                                                     20
“Modern bourgeois society
  with its relations of
  production, of exchange
  and of property, a society
  that has conjured up such
  gigantic means of
  production and of                         “These are signs of the times,
  exchange, is like a sorcerer                 not to be hidden by purple
  who is no longer able to                     mantles or black cassocks.
  control the powers of the                    They do not signify that
  nether world whom he has                     tomorrow a miracle will
  called up by his spells.”                    occur. They do show that,
                                               within the ruling classes
                                               themselves, the foreboding
   —Karl Marx and Frederick Engels (1848)
                                               is emerging that the
                    Communist Manifesto        present society is no solid
                                               crystal, but an organism
                                               capable of change, and
                                               constantly engaged in the
                                               process of change.”

                                                             —Karl Marx (1867)
                                                                Capital, Vol. 1
                                                                         Vol.
                                                                       21
The World Bank, IMF and their G-20 allies:
     Using the global crisis to their advantage....


 G-20: IMF is back!
 Dominique Strauss-Kahn, Managing Director of the IMF, G-20 Press Conference, 2 April 2009


     Maybe some of you were in the IMF press
        conference at the end of the Annual
Meeting last October. And if some of you were there,
              then you may remember
  that what I said at that time is that IMF is back.
           Today you get the proof when
  you read the communiqué, each paragraph, or
           almost each paragraph – let's
say the important ones – are in one way or another
                related to IMF work.

                                                                                        22
WORLD BANK: Exactly the same global neo-liberal project!
World Bank, Global Monitoring Report 2009: A Development Emergency, p. xii.



The report sets out six priority areas for action to confront the development emergency that now faces
many of these countries. First, we must ensure an adequate fiscal response in developing countries to
protect the poor and vulnerable groups and to support economic growth. Priority areas must be
strengthening social safety nets and protecting infrastructure programs that can create jobs while
building a foundation for future productivity and growth. The precise fiscal response needs to be tailored
to individual country circumstances, consistent with maintenance of macroeconomic stability. Second,
we must provide support for the private sector and improve the climate for recovery and growth in
private investment, including paying special attention to strengthening financial systems. Helping small
and medium enterprises get access to finance for trade and investment is vital for job creation. But the
crisis has also underscored the importance of broader reforms to improve the stability and soundness of
the financial system. Third, we must redouble efforts in human development and recover lost ground in
progress toward the MDGs. We can do this not only by strengthening key public programs for health
and education, but also by better leveraging the private sector’s role in the financing and delivery of
services.

In support of these efforts to help developing countries, the report emphasizes three key global
priorities. Donors must deliver on their commitments to increase aid. Indeed, the increased needs of
poor countries hit hard by the crisis call for going beyond existing commitments. National governments
must hold firm against rising protectionist pressures and maintain an open international trade and
finance system. Completing the Doha negotiations expeditiously would provide a much-needed boost in
confidence to the global economy at a time of high stress and uncertainty. Finally, multilateral
institutions must have the mandate, resources, and instruments to support an effective global response
to the global crisis. The international financial institutions will need to play a key role in bridging the
large financing gap for developing countries resulting from the slump in private capital flows, including
using their leverage ability to help revive private flows.

Source: World Bank, Global Monitoring Report 2009: A Development Emergency, p. xii.                           23
World Bank President Robert Zoellick (31 March 2009, prior to the G-20
Meeting): New Powers for the Multilaterals!

                         • “a WTO monitoring system to advance trade and resist
                         economic isolationism, while working to complete the Doha
                         negotiations to open markets, cut subsidies, and resist
                         backsliding”;

                         • “a monitoring role for the IMF, to review the execution of ..
                         stimulus packages and assess results, calling for further
                         action if necessary”;

                         • IMF and World Bank Group monitoring of actions and
                         results in the banking sector, with financial sector
                         assessments to be extended to developed countries, “with
                         the results published, taken seriously, and followed up”;

                         • an overhaul of the financial regulatory and supervisory
                         system” in which “most of the actual authority over
                         regulation will rest with national governments”, but within
                         which an expanded FSF [Financial Stability Forum] “could
                         become another important institution of a stronger
                         multilateral system, working with the IMF and the World
                         Bank group on implementation”
                                                                                       24
IMF: ‘An opportunity to make progress on seemingly intractable issues’
  IMF (February 2009), Initial Lessons of the Crisis for the Global Architecture and the IMF




Bottom line. The crisis has revealed flaws in key dimensions of
    the current global architecture, but also provides a unique
    opportunity to fix them. On the flaws, surveillance needs to
      be reoriented to ensure warnings are clear, successfully
       connect the dots, and provide practical advice to policy
        makers. An effective forum for policy makers with the
       ability and mandate to take leadership in responding to
    systemic concerns about the international economy is key.
          Ground rules for cross-border finance need to be
    strengthened. And, given the growing size of international
     transactions, resources available for liquidity support and
         easing external adjustment should augmented and
     processes for using them better defined so they are more
      readily available when needed. These are all ambitious
         undertakings. But the damage wrought by the crisis
      provides an opportunity to make progress on seemingly
       intractable issues. The moment should not be missed.
                                                                                               25
ASEAN: ‘Ensure free flow of goods, services and investment’
  ASEAN Member States, Press Communique, Thailand, 1 March 2009

• “the necessity of proactive and decisive policy actions to
   restore market confidence and [to] ensure continued
   financial stability to promote sustainable regional economic
   growth”

• “expansionary macroeconomic policies, including fiscal
   stimulus, monetary easing, access to credit including trade
   financing, and measures to support private sector,
   particularly small and medium enterprises (SMEs)
   undertaken by each ASEAN Member State to stimulate
   domestic demand”

• “ c o ordinating policies and taking joint actions that would be
   mutually reinforcing at the regional level”

• “determination to ensure the free flow of goods, services
   and investment, and facilitate movement of business
   persons, professionals, talents and labour, and freer flow of
   capital”
                                                                     26
States’ Bailouts and Resiliency Plans
                        (Bailouts for the poor???)


           Malaysia                           Philippines
First stimulus measure: increase
   capitalisation of a government
   investment company by USD 5           Economic Resiliency Plan
    billion (also to stabilise stock        (ERP): PhP 330 billion
               exchange)




                                                                     27
Global Civil Society Challenge
and the Challenge to Global Justice Movements
      — ‘Another World Is Necessary’ —
                          “The crisis consists
                            precisely in the fact
                          that the old is dying
                          and the new cannot
                             be born; in this
                           interregnum a great
                             variety of morbid
                            symptoms appear.”

                                —Antonio Gramsci (1971)
                                       Prison Notebooks


                                                     28
Crisis as a ‘Turning Point’
 CRISIS from Greek ‘krisis’
    “the turning point of a
     disease when an important
     change takes place, indicating
     either recovery or death”

 People from left, right, centre look
  at the crisis the ‘Chinese way’ —
  i.e., an opportunity to advance
  their respective interests!



                                         29
Transformative Social Protection

    Neo-liberals               TSP

 Well-being of the    Well-being of the
  market/financial      people
  institutions
                       Material — not just
                        ideational — basis
                        for alternatives

                                            30
Lessons of the 1997 Asian Crisis for TSP Campaign
     (Towards a Democratic and Human Rights Response to Crisis)


 Democratisation may be stalled.
    Justification for authoritarian rule (e.g. ‘Asian Values’)

 Human Rights compromised.
    Human rights obligations sidelined in the name of
     surveillance and internal security (Malaysia, Singapore)

 The poor severely neglected.
    e.g., ASEM Trust Fund failed to target the poor,
     workers, and the vulnerable, adversely affected groups.


                                                                  31
Emergent AUTHORITARIAN LIBERALISM in Asia
        (Authoritarian Polity, Market Economy)




                                                 32
CONCLUDING REMARKS

1. The Constitutive Role of Crises in the Evolution of
    Neo-liberalism

      i.   was born out of the crises of the 1970s

      ii. has evolved through a series of crises over the last
          30 years

      iii. died of the cacophony of crises culminating in the
           current global economic crisis.

                                                          33
As it shows, crises have so far been functional,
  rather than dysfunctional, to neo-liberalism:


   Crises reshape class and social relations but in ways that
    perpetuate the hegemony of capital over labour and the
    preservation of elite rule.

   Crises restrategise development plans of institutions from
    international organisations to states to further advance, not
    retreat from, market-led development.

   Crises restructure states and societies in which social institutions
    are oriented towards the logic, requirements, and imperatives of
    neo-liberalism.


                                                                     34
2. The responses to the global crisis from the
   multilaterals, to regional organisations, to states
   are fundamentally the same through the years,
   with or without crisis.

    But there are differential catastrophic impacts
     across social classes, amongst the poor,
     marginalised, vulnerable sectors.


                                                       35
3.       Another world is necessary!

          Tranformative Social Protection now!!!

          ‘Social Security’ (at a minimum, right to livelihood, food,
           healthcare, water, housing, education, and other essential
           services): both timeless and universal

          The TSP Campaign: find, advance, and create a democratic
           and human rights response — protect, care for, and work
           with the most vulnerable sectors such as the urban and rural
           poor, the workers, women, migrants, farmers and fisherfolks,
           persons with disability, and indigenous peoples


                                                                          36
Thank you very much.




          —Bonn Juego




                    37

Más contenido relacionado

La actualidad más candente

Innovation, Economic Diversification and Human Development
Innovation, Economic Diversification and Human DevelopmentInnovation, Economic Diversification and Human Development
Innovation, Economic Diversification and Human DevelopmentiBoP Asia
 
Welcome to my presentation on dependency theory
Welcome to my presentation on dependency theoryWelcome to my presentation on dependency theory
Welcome to my presentation on dependency theoryOjhor Shrabon
 
Ryaboshlyk Crisis-and-Embodied-Innovations FRAGMENT
Ryaboshlyk Crisis-and-Embodied-Innovations FRAGMENTRyaboshlyk Crisis-and-Embodied-Innovations FRAGMENT
Ryaboshlyk Crisis-and-Embodied-Innovations FRAGMENTVolodymyr Ryaboshlyk
 
Working Paper 04/2012 Rebuilding war-torn states: tomorrow's challenges for p...
Working Paper 04/2012 Rebuilding war-torn states: tomorrow's challenges for p...Working Paper 04/2012 Rebuilding war-torn states: tomorrow's challenges for p...
Working Paper 04/2012 Rebuilding war-torn states: tomorrow's challenges for p...Australian Civil-Military Centre
 
Gp 11 dev't depen. perspt
Gp 11 dev't depen. persptGp 11 dev't depen. perspt
Gp 11 dev't depen. persptseykey
 
Bradford 2013 population and development short
Bradford 2013 population and development shortBradford 2013 population and development short
Bradford 2013 population and development shortJohn Bradford
 
Theories of indebtedness
Theories of indebtednessTheories of indebtedness
Theories of indebtednessAjit Kumar Ray
 
Evolution of economic thought Lecture 6
Evolution of economic thought Lecture 6Evolution of economic thought Lecture 6
Evolution of economic thought Lecture 6Almaszabeen Badekhan
 
Enterprise Liquidity Risk: Overcoming the challenges
Enterprise Liquidity Risk: Overcoming the challengesEnterprise Liquidity Risk: Overcoming the challenges
Enterprise Liquidity Risk: Overcoming the challengesCognizant
 
History of Economic Thought
History of Economic ThoughtHistory of Economic Thought
History of Economic ThoughtJohn Cousins
 
1966 frank-development of underdevelopment
1966 frank-development of underdevelopment1966 frank-development of underdevelopment
1966 frank-development of underdevelopmentHira Masood
 
Short note on developmental study for pg
Short note on developmental study for pgShort note on developmental study for pg
Short note on developmental study for pgasegede kebede
 
Core Macroeconomic Concepts in Historical Context
Core Macroeconomic Concepts in Historical ContextCore Macroeconomic Concepts in Historical Context
Core Macroeconomic Concepts in Historical ContextAsad Zaman
 
GlobalCrisisBibliographyWebed
GlobalCrisisBibliographyWebedGlobalCrisisBibliographyWebed
GlobalCrisisBibliographyWebedMarkus Krebsz
 

La actualidad más candente (19)

Innovation, Economic Diversification and Human Development
Innovation, Economic Diversification and Human DevelopmentInnovation, Economic Diversification and Human Development
Innovation, Economic Diversification and Human Development
 
Welcome to my presentation on dependency theory
Welcome to my presentation on dependency theoryWelcome to my presentation on dependency theory
Welcome to my presentation on dependency theory
 
Ryaboshlyk Crisis-and-Embodied-Innovations FRAGMENT
Ryaboshlyk Crisis-and-Embodied-Innovations FRAGMENTRyaboshlyk Crisis-and-Embodied-Innovations FRAGMENT
Ryaboshlyk Crisis-and-Embodied-Innovations FRAGMENT
 
Working Paper 04/2012 Rebuilding war-torn states: tomorrow's challenges for p...
Working Paper 04/2012 Rebuilding war-torn states: tomorrow's challenges for p...Working Paper 04/2012 Rebuilding war-torn states: tomorrow's challenges for p...
Working Paper 04/2012 Rebuilding war-torn states: tomorrow's challenges for p...
 
So205 Dependency Theory
So205 Dependency TheorySo205 Dependency Theory
So205 Dependency Theory
 
Gp 11 dev't depen. perspt
Gp 11 dev't depen. persptGp 11 dev't depen. perspt
Gp 11 dev't depen. perspt
 
Chapter4
Chapter4Chapter4
Chapter4
 
Bradford 2013 population and development short
Bradford 2013 population and development shortBradford 2013 population and development short
Bradford 2013 population and development short
 
Dependency Theory
Dependency TheoryDependency Theory
Dependency Theory
 
Theories of indebtedness
Theories of indebtednessTheories of indebtedness
Theories of indebtedness
 
Evolution of economic thought Lecture 6
Evolution of economic thought Lecture 6Evolution of economic thought Lecture 6
Evolution of economic thought Lecture 6
 
Enterprise Liquidity Risk: Overcoming the challenges
Enterprise Liquidity Risk: Overcoming the challengesEnterprise Liquidity Risk: Overcoming the challenges
Enterprise Liquidity Risk: Overcoming the challenges
 
Modernization
ModernizationModernization
Modernization
 
History of Economic Thought
History of Economic ThoughtHistory of Economic Thought
History of Economic Thought
 
1966 frank-development of underdevelopment
1966 frank-development of underdevelopment1966 frank-development of underdevelopment
1966 frank-development of underdevelopment
 
Short note on developmental study for pg
Short note on developmental study for pgShort note on developmental study for pg
Short note on developmental study for pg
 
Core Macroeconomic Concepts in Historical Context
Core Macroeconomic Concepts in Historical ContextCore Macroeconomic Concepts in Historical Context
Core Macroeconomic Concepts in Historical Context
 
Chapter4 dvpt
Chapter4 dvptChapter4 dvpt
Chapter4 dvpt
 
GlobalCrisisBibliographyWebed
GlobalCrisisBibliographyWebedGlobalCrisisBibliographyWebed
GlobalCrisisBibliographyWebed
 

Destacado (8)

Belize - Trade Profile UWI's Shridath Ramphal Centre
Belize -  Trade Profile UWI's Shridath Ramphal CentreBelize -  Trade Profile UWI's Shridath Ramphal Centre
Belize - Trade Profile UWI's Shridath Ramphal Centre
 
Aid for Trade: Case Study - Caribbean Aid for Trade (AfT) and Regional Integr...
Aid for Trade: Case Study - Caribbean Aid for Trade (AfT) and Regional Integr...Aid for Trade: Case Study - Caribbean Aid for Trade (AfT) and Regional Integr...
Aid for Trade: Case Study - Caribbean Aid for Trade (AfT) and Regional Integr...
 
Dominican Republic -Trade Profile UWI's Shridath Ramphal Centre
Dominican Republic -Trade Profile UWI's Shridath Ramphal CentreDominican Republic -Trade Profile UWI's Shridath Ramphal Centre
Dominican Republic -Trade Profile UWI's Shridath Ramphal Centre
 
Anitgua & Barbuda - Trade Profile [UWI's Shridath Ramphal Centre]
Anitgua & Barbuda  - Trade Profile [UWI's Shridath Ramphal Centre]Anitgua & Barbuda  - Trade Profile [UWI's Shridath Ramphal Centre]
Anitgua & Barbuda - Trade Profile [UWI's Shridath Ramphal Centre]
 
CARICOM-Canada Trade Development Forum - EDC and its relationship with CARICO...
CARICOM-Canada Trade Development Forum - EDC and its relationship with CARICO...CARICOM-Canada Trade Development Forum - EDC and its relationship with CARICO...
CARICOM-Canada Trade Development Forum - EDC and its relationship with CARICO...
 
Barbados -Trade Profile UWI's Shridath Ramphal Centre
Barbados -Trade Profile UWI's Shridath Ramphal CentreBarbados -Trade Profile UWI's Shridath Ramphal Centre
Barbados -Trade Profile UWI's Shridath Ramphal Centre
 
Lucia nairobi presentation
Lucia nairobi presentationLucia nairobi presentation
Lucia nairobi presentation
 
From Poverty to Power: The Global Economic Crisis
From Poverty to Power: The Global Economic CrisisFrom Poverty to Power: The Global Economic Crisis
From Poverty to Power: The Global Economic Crisis
 

Similar a Bonn Juego (12 Oct2009) AEPF-TSP

An afro arab spring - socio-political trajectories in stemming the tide of th...
An afro arab spring - socio-political trajectories in stemming the tide of th...An afro arab spring - socio-political trajectories in stemming the tide of th...
An afro arab spring - socio-political trajectories in stemming the tide of th...Costy Costantinos
 
CASE STUDY CAPITALISM This case views the global, capitalist
CASE STUDY CAPITALISM This case views the global, capitalistCASE STUDY CAPITALISM This case views the global, capitalist
CASE STUDY CAPITALISM This case views the global, capitalistMaximaSheffield592
 
Sustainable Economic Systems.pptx
Sustainable Economic Systems.pptxSustainable Economic Systems.pptx
Sustainable Economic Systems.pptxkenjiekris
 
Presentazione inglese
Presentazione inglese Presentazione inglese
Presentazione inglese cliobul
 
Macro And Micro Causes Of Financial Crisis Essay
Macro And Micro Causes Of Financial Crisis EssayMacro And Micro Causes Of Financial Crisis Essay
Macro And Micro Causes Of Financial Crisis EssayCrystal Alvarez
 
The Cause Of Global Financial Crisis
The Cause Of Global Financial CrisisThe Cause Of Global Financial Crisis
The Cause Of Global Financial CrisisBeth Johnson
 
Practical Economics NICVA June 2014 - Markets and the Financial Crash
Practical Economics NICVA June 2014 - Markets and the Financial CrashPractical Economics NICVA June 2014 - Markets and the Financial Crash
Practical Economics NICVA June 2014 - Markets and the Financial CrashConor McCabe
 
Neoliberalism Research Paper
Neoliberalism Research PaperNeoliberalism Research Paper
Neoliberalism Research PaperKimberly Yang
 
finacial crisis
finacial crisisfinacial crisis
finacial crisisG Garcia
 
Understanding The Economic Recession In America Essay
Understanding The Economic Recession In America EssayUnderstanding The Economic Recession In America Essay
Understanding The Economic Recession In America EssayAnn Montgomery
 
The Financial Crisis and Policy Response: A Post Keynesian Perspective
The Financial Crisis and Policy Response: A Post Keynesian PerspectiveThe Financial Crisis and Policy Response: A Post Keynesian Perspective
The Financial Crisis and Policy Response: A Post Keynesian Perspectivepkconference
 

Similar a Bonn Juego (12 Oct2009) AEPF-TSP (20)

An afro arab spring - socio-political trajectories in stemming the tide of th...
An afro arab spring - socio-political trajectories in stemming the tide of th...An afro arab spring - socio-political trajectories in stemming the tide of th...
An afro arab spring - socio-political trajectories in stemming the tide of th...
 
CASE STUDY CAPITALISM This case views the global, capitalist
CASE STUDY CAPITALISM This case views the global, capitalistCASE STUDY CAPITALISM This case views the global, capitalist
CASE STUDY CAPITALISM This case views the global, capitalist
 
varouf11.pdf
varouf11.pdfvarouf11.pdf
varouf11.pdf
 
Sustainable Economic Systems.pptx
Sustainable Economic Systems.pptxSustainable Economic Systems.pptx
Sustainable Economic Systems.pptx
 
English Major Essay
English Major EssayEnglish Major Essay
English Major Essay
 
Ghost Protocol
Ghost ProtocolGhost Protocol
Ghost Protocol
 
Presentazione inglese
Presentazione inglese Presentazione inglese
Presentazione inglese
 
Macro And Micro Causes Of Financial Crisis Essay
Macro And Micro Causes Of Financial Crisis EssayMacro And Micro Causes Of Financial Crisis Essay
Macro And Micro Causes Of Financial Crisis Essay
 
Financial Crisis Jh
Financial Crisis JhFinancial Crisis Jh
Financial Crisis Jh
 
Financial Crisis Jh
Financial Crisis JhFinancial Crisis Jh
Financial Crisis Jh
 
The Cause Of Global Financial Crisis
The Cause Of Global Financial CrisisThe Cause Of Global Financial Crisis
The Cause Of Global Financial Crisis
 
Practical Economics NICVA June 2014 - Markets and the Financial Crash
Practical Economics NICVA June 2014 - Markets and the Financial CrashPractical Economics NICVA June 2014 - Markets and the Financial Crash
Practical Economics NICVA June 2014 - Markets and the Financial Crash
 
Neoliberalism Research Paper
Neoliberalism Research PaperNeoliberalism Research Paper
Neoliberalism Research Paper
 
finacial crisis
finacial crisisfinacial crisis
finacial crisis
 
Seven acupuncturepoints2010
Seven acupuncturepoints2010Seven acupuncturepoints2010
Seven acupuncturepoints2010
 
Seven acupuncturepoints2010
Seven acupuncturepoints2010Seven acupuncturepoints2010
Seven acupuncturepoints2010
 
Understanding The Economic Recession In America Essay
Understanding The Economic Recession In America EssayUnderstanding The Economic Recession In America Essay
Understanding The Economic Recession In America Essay
 
The Financial Crisis and Policy Response: A Post Keynesian Perspective
The Financial Crisis and Policy Response: A Post Keynesian PerspectiveThe Financial Crisis and Policy Response: A Post Keynesian Perspective
The Financial Crisis and Policy Response: A Post Keynesian Perspective
 
The Upside of the Downside
The Upside of the DownsideThe Upside of the Downside
The Upside of the Downside
 
Essay On Economic Crisis
Essay On Economic CrisisEssay On Economic Crisis
Essay On Economic Crisis
 

Más de Bonn Juego

Bonn Juego - The Philippines: A Year After the Duterte Phenomenon (8 May 2017)
Bonn Juego - The Philippines: A Year After the Duterte Phenomenon (8 May 2017)Bonn Juego - The Philippines: A Year After the Duterte Phenomenon (8 May 2017)
Bonn Juego - The Philippines: A Year After the Duterte Phenomenon (8 May 2017)Bonn Juego
 
Bonn Juego (2016), Duterte-style Populism: The Philippines in the Geopolitica...
Bonn Juego (2016), Duterte-style Populism: The Philippines in the Geopolitica...Bonn Juego (2016), Duterte-style Populism: The Philippines in the Geopolitica...
Bonn Juego (2016), Duterte-style Populism: The Philippines in the Geopolitica...Bonn Juego
 
Invitation - Bonn Juego, PhD Defence
Invitation - Bonn Juego, PhD DefenceInvitation - Bonn Juego, PhD Defence
Invitation - Bonn Juego, PhD DefenceBonn Juego
 
Bonn Juego (2013) Reflections on Methodology for PhD Research in the Social S...
Bonn Juego (2013) Reflections on Methodology for PhD Research in the Social S...Bonn Juego (2013) Reflections on Methodology for PhD Research in the Social S...
Bonn Juego (2013) Reflections on Methodology for PhD Research in the Social S...Bonn Juego
 
Bonn Juego's Lecture Abstract, 7th sem, 2011 (Bonn Juego)
Bonn Juego's Lecture Abstract, 7th sem, 2011 (Bonn Juego)Bonn Juego's Lecture Abstract, 7th sem, 2011 (Bonn Juego)
Bonn Juego's Lecture Abstract, 7th sem, 2011 (Bonn Juego)Bonn Juego
 

Más de Bonn Juego (6)

Bonn Juego - The Philippines: A Year After the Duterte Phenomenon (8 May 2017)
Bonn Juego - The Philippines: A Year After the Duterte Phenomenon (8 May 2017)Bonn Juego - The Philippines: A Year After the Duterte Phenomenon (8 May 2017)
Bonn Juego - The Philippines: A Year After the Duterte Phenomenon (8 May 2017)
 
Bonn Juego (2016), Duterte-style Populism: The Philippines in the Geopolitica...
Bonn Juego (2016), Duterte-style Populism: The Philippines in the Geopolitica...Bonn Juego (2016), Duterte-style Populism: The Philippines in the Geopolitica...
Bonn Juego (2016), Duterte-style Populism: The Philippines in the Geopolitica...
 
Invitation - Bonn Juego, PhD Defence
Invitation - Bonn Juego, PhD DefenceInvitation - Bonn Juego, PhD Defence
Invitation - Bonn Juego, PhD Defence
 
Bonn Juego (2013) Reflections on Methodology for PhD Research in the Social S...
Bonn Juego (2013) Reflections on Methodology for PhD Research in the Social S...Bonn Juego (2013) Reflections on Methodology for PhD Research in the Social S...
Bonn Juego (2013) Reflections on Methodology for PhD Research in the Social S...
 
Bonn Juego's Lecture Abstract, 7th sem, 2011 (Bonn Juego)
Bonn Juego's Lecture Abstract, 7th sem, 2011 (Bonn Juego)Bonn Juego's Lecture Abstract, 7th sem, 2011 (Bonn Juego)
Bonn Juego's Lecture Abstract, 7th sem, 2011 (Bonn Juego)
 
Paul Lafargue
Paul LafarguePaul Lafargue
Paul Lafargue
 

Último

Another Day, Another Default Judgment Against Gabe Whitley
Another Day, Another Default Judgment Against Gabe WhitleyAnother Day, Another Default Judgment Against Gabe Whitley
Another Day, Another Default Judgment Against Gabe WhitleyAbdul-Hakim Shabazz
 
Anantkumar Hegde
Anantkumar Hegde  Anantkumar Hegde
Anantkumar Hegde NewsFeed1
 
Européennes 2024 : projection du Parlement européen à trois mois du scrutin
Européennes 2024 : projection du Parlement européen à trois mois du scrutinEuropéennes 2024 : projection du Parlement européen à trois mois du scrutin
Européennes 2024 : projection du Parlement européen à trois mois du scrutinIpsos France
 
One India vs United India by Dream Tamilnadu
One India vs United India by Dream TamilnaduOne India vs United India by Dream Tamilnadu
One India vs United India by Dream TamilnaduDreamTamilnadu
 
Green Aesthetic Ripped Paper Thesis Defense Presentation_20240311_111012_0000...
Green Aesthetic Ripped Paper Thesis Defense Presentation_20240311_111012_0000...Green Aesthetic Ripped Paper Thesis Defense Presentation_20240311_111012_0000...
Green Aesthetic Ripped Paper Thesis Defense Presentation_20240311_111012_0000...virgfern3011
 
Ministry of Justice Extradition Eswatini 3.pdf
Ministry of Justice Extradition Eswatini 3.pdfMinistry of Justice Extradition Eswatini 3.pdf
Ministry of Justice Extradition Eswatini 3.pdfSABC News
 
Light Rail in Canberra: Too much, too little, too late: Is the price worth th...
Light Rail in Canberra: Too much, too little, too late: Is the price worth th...Light Rail in Canberra: Too much, too little, too late: Is the price worth th...
Light Rail in Canberra: Too much, too little, too late: Is the price worth th...University of Canberra
 
Por estos dos motivos, defensa de JOH solicita repetir juicio
Por estos dos motivos, defensa de JOH solicita repetir juicioPor estos dos motivos, defensa de JOH solicita repetir juicio
Por estos dos motivos, defensa de JOH solicita repetir juicioAlexisTorres963861
 
19032024_First India Newspaper Jaipur.pdf
19032024_First India Newspaper Jaipur.pdf19032024_First India Newspaper Jaipur.pdf
19032024_First India Newspaper Jaipur.pdfFIRST INDIA
 

Último (9)

Another Day, Another Default Judgment Against Gabe Whitley
Another Day, Another Default Judgment Against Gabe WhitleyAnother Day, Another Default Judgment Against Gabe Whitley
Another Day, Another Default Judgment Against Gabe Whitley
 
Anantkumar Hegde
Anantkumar Hegde  Anantkumar Hegde
Anantkumar Hegde
 
Européennes 2024 : projection du Parlement européen à trois mois du scrutin
Européennes 2024 : projection du Parlement européen à trois mois du scrutinEuropéennes 2024 : projection du Parlement européen à trois mois du scrutin
Européennes 2024 : projection du Parlement européen à trois mois du scrutin
 
One India vs United India by Dream Tamilnadu
One India vs United India by Dream TamilnaduOne India vs United India by Dream Tamilnadu
One India vs United India by Dream Tamilnadu
 
Green Aesthetic Ripped Paper Thesis Defense Presentation_20240311_111012_0000...
Green Aesthetic Ripped Paper Thesis Defense Presentation_20240311_111012_0000...Green Aesthetic Ripped Paper Thesis Defense Presentation_20240311_111012_0000...
Green Aesthetic Ripped Paper Thesis Defense Presentation_20240311_111012_0000...
 
Ministry of Justice Extradition Eswatini 3.pdf
Ministry of Justice Extradition Eswatini 3.pdfMinistry of Justice Extradition Eswatini 3.pdf
Ministry of Justice Extradition Eswatini 3.pdf
 
Light Rail in Canberra: Too much, too little, too late: Is the price worth th...
Light Rail in Canberra: Too much, too little, too late: Is the price worth th...Light Rail in Canberra: Too much, too little, too late: Is the price worth th...
Light Rail in Canberra: Too much, too little, too late: Is the price worth th...
 
Por estos dos motivos, defensa de JOH solicita repetir juicio
Por estos dos motivos, defensa de JOH solicita repetir juicioPor estos dos motivos, defensa de JOH solicita repetir juicio
Por estos dos motivos, defensa de JOH solicita repetir juicio
 
19032024_First India Newspaper Jaipur.pdf
19032024_First India Newspaper Jaipur.pdf19032024_First India Newspaper Jaipur.pdf
19032024_First India Newspaper Jaipur.pdf
 

Bonn Juego (12 Oct2009) AEPF-TSP

  • 1. The Global Crisis, the Political Economy of State Restructuring, and the Campaign for Transformative Social Protection Bonn Juego PhD Fellow Global Development Studies Aalborg University, Denmark E-mail: bonnjuego@yahoo.com Presentation for the Asia-Europe People’s Forum (AEPF) Conference on Southeast Asia Regional Roundtable Strategizing Meeting: Building Southeast Asia Peoples' Agenda on Transformative Social Protection as a Democratic and Human Rights Response to the Crisis Asian Institute of Management Makati City, Philippines 12 October 2009 1
  • 2. The Global Crisis: Nature, Responses, and Alternatives CONTENTS  How can we make sense of crisis in capitalist development (in particular, neo-liberalism)?  Are there fundamental changes to the visions and strategies of global governance institutions, the states, and the social movements in their respective responses to the global crisis?  What does transformative social protection mean in this moment of crisis? 2
  • 3. Constitutive Role of Crises in the Evolution of Neo-liberalism  Relationship: Crisis and Neo-liberalism  Dysfunctional or Functional (or both)  Nature of Crisis and Neo-liberalism  Born out of crises  Evolved through crises  Died of crises??? 3
  • 4. NEO-LIBERALISM WAS BORN OUT OF CRISES Complex interaction of forces/events/phenomena... ...Mutually reinforcing tendencies  recession in the developed capitalist economies after 1973, the OPEC oil crisis, and the collapse of the Bretton Woods system  de-linking from the ‘gold standard’  internationalisation of financial markets as a result of the widespread abandonment of exchange controls  the massive increase in foreign bank lending to the Third World as consequence of the recession in the major economies  the growing stagnation of command economies  the shift from import substitution in favour of export promotion in the Third World and the rise of the NICs in East Asia  the imposition of structural adjustment programmes (SAPs) on the heavily-indebted Third World as conditionality attached to rolling over foreign debt  the restructuring of global production towards ‘post-Fordism’ and the growth of MNCs‫‏‬  the revolution in macroeconomic policy that resulted in the weakening of trade unions, the cutting of state budgets, deregulation, privatisation, etc.  the advances in ICT (as the new ‘techno-economic paradigm’)‫‏‬  Etc.... 4
  • 5. NEO-LIBERALISM HAS EVOLVED THROUGH CRISES From crisis to crisis in the last 30 years....  National Developmentalism (postwar-1970s)  Crisis of Fordism/Keynesianism (stagflation)  Washington Consensus – 1st Generation Neoliberal reforms (1980s – mid-1990s)  Crisis of market fundamentalism of the Washington Consensus — ‘East Asian Miracle’ (8 HPAEs showing high growth and high equity with state intervention)  Post-Washington Consensus – 2nd Generation reforms (mid-1990s - 2008)  Cacophony of crises: financial crises, overaccumulation, overproduction, over-/under-consumption, climate change, ecological degradation, political legitimacy, global governance crisis, oil crisis, food price crisis, subprime crisis 5
  • 6. NEO-LIBERALISM HAS DIED OF CRISES(?) Signs of the Times, a Cacophony of Crises: RIP Neo-liberalism (1980s-2008)  Is neo-liberalism dead?  Depends on what we mean by ‘neo-liberalism’....  The neo-liberal form (i.e., market fundamentalism) is dead;  But not the substance of capitalism as a:  process of capital accumulation;  relations in which labour is subordinated to capital 6
  • 7. Neo-liberalism: A strategy for market-led development, A blueprint for crisis management Neo-liberal values: well-being of the financial institutions over well- being of the people  E.g.  Debt crisis in Latin America (1982)  Crisis Response: SAPs  Financial Crises: Scandinavia (early 1990s); Mexico (1994); East and Southeast Asia (1997); Russia (1998); Argentina (2001); Turkey (2001- 02); US Subprime mortgage (2007-09)  Crisis response: ‘open’ international financial architecture  US subprime crisis (2007-09)  Crisis response: Bush-Paulson-Bernanke-Obama Bailout Programme (restore power of corporations; assure ascendancy of finance capital) 7
  • 8. In times of crisis, “assets return to their rightful owners”! ‘Financial crises have always caused transfers of ownership and power to those who keep their own assets intact and who are in a position to create credit, and the Asian crisis is no exception....there is no doubt that Western and Japanese corporations are the big winners.....The combination of massive devaluations, IMF-pushed financial liberalization, and IMF facilitated recovery may even precipitate the biggest peacetime transfer of assets from domestic to foreign owners in the past fifty years anywhere in the world, dwarfing the transfers from domestic to US owners in Latin America in the 1980s or in Mexico after 1994. One recalls the statement attributed to Andrew Mellon: "In a depression assets return to their rightful owners”.’ —R. Wade and F. Veneroso (1998), ‘The Asian Crisis: The High Debt Model versus the Wall Street-Treasury-IMF Complex,’ in The New Left Review, 228 (1998), 3-23. 8
  • 9. The Cacophony of Crises Today  Overproduction  Finance (securitisation, speculative investments, Ponzi scheme)  Environment  Climate (global warming)  Oil  Food (post-Green Revolution, the Great Hunger of 2008)  Governance (WB, IMF, WTO, states)  Etc. 9
  • 10. Mechanisms of Financial Crises and their Effects on the Real Economy The
real
economy Financial
economy “Güterwelt” “Rechenpfennige” ”Black Box” Production Money/capital of goods and services THE CIRCULAR FLOW OF ECONOMICS 10
  • 11. COMPLEMENTARY FUNCTIONS, DIVERGENT NATURE Financial capital Production capital Wealth-producing wealth Money and paper wealth Assets Fixed capital, Static property technical capital, “Investible” capital human capital, good will Tied to fixed assets, to Mobility Essentially mobile knowledge of products, Knowledge indifferent processes, capabilities, clients and markets Bias Quasi-liquid assets, Wealth-creating assets, SHORT-TERM GAINS LONG-TERM GAINS Socio-economic results will differ depending on the criteria that lead investment 11
  • 12. SHIFTING ROLES OF MONEY ON THE REAL ECONOMY “In the years preceding the First World War there were in common use among economists a number of metaphors . . . 'Money is a wrapper in which goods come’; 'Money is the garment draped round the body of economic life’; 'money is a veil behind which the action of real economic forces is concealed’ . . . During the 1920s and 1930s . . . money, the passive veil, took on the appearance of an evil genius; the garment became a Nessus shirt; the wrapper a thing liable to explode. Money, in short, after being little or nothing, was now everything . . . Then with the Second World War, the tune changed again. Manpower, equipment and organization once more came into their own. The role of money dwindled to insignificance. . .” insignificance Arthur Cecil Pigou (1949) The Veil of Money, Macmillan pp.18-19 12
  • 13. Three basic and complementary mechanisms behind the conflicts between the real economy and the financial economy (Financial Crises) 1. THE HAMMURABI EFFECT (Babylonia ca. 1795 – 1750 BC) • The Effect of Compound Interest. 2. THE PEREZ EFFECT (Carlota Perez, Venezuelan economist) • Technological Revolutions Create Financial Bubbles. 3. THE MINSKY EFFECT (Hyman Minsky, US, 1919-1996) • Liquidity preference turning point • + ‘bad projects’ killing credit to healthy projects. 13
  • 14. THE HAMMURABI EFFECT (The Effect of Compound Interest) “A shilling put out at 6% compound interest at our Saviour’s birth would . . . have increased to a greater sum than the whole solar system could hold, supposing it a sphere equal in diameter to the diameter of Saturn’s orbit.” —Richard Price, English Economist, 1769. 14
  • 15. THE PEREZ EFFECT Technological Revolutions and Finance Capital Approximate dates of the installation and deployment periods of the great surges of development -- 1771 to the present GREAT Technological Turning SURGE Revolution INSTALLATION Point DEPLOYMENT Core country IRRUPTION FRENZY SYNERGY MATURITY The Industrial 1st Revolution Britain 1771 1770s and early 1780s late 1780s early 1790s 1793–97 1798–1812 1813–1829 Age of Steam and Railways 2nd Britain (spreading 1829 1830s 1840s 1848–50 1850–1857 1857–1873 to continent and US) Age of Steel, Electricity and Heavy Engineering 3rd USA and Germany 1875 1875–1884 1884–1893 1893–95 1895–1907 1908–1918* overtaking Britain 1929–33 Age of Oil, Automobiles Europe 4th and Mass Production 1908 USA (spreading to Europe) 1908–1920* 1920–1929 1929–43 1943–1959 1960–1974* USA Age of Information and Telecomunications 5th USA (spreading 1971 1971–1987* 1987–2001 2001–?? 20?? to Europe and Asia) big-bang Crash Institutional recomposition Note: * Observe phase overlaps between successive surges. 15
  • 16. THE MINSKY EFFECT (Ponzi Schemes) Types of financing 1. HEDGE financing • Low risk - can fulfill contractual payment obligation 2. SPECULATIVE financing • involves future renegotiating of the debt (rollover) • A typical speculative position consists on financing long term assets with short term liabilities. 3. PONZI financing • ‘cash flows from operations are not sufficient to fill either the repayment of principal or the interest on outstanding debts by their cash flows from operations’ • expected revenues can not afford even interest payments, and agents are submitted to increasing debt 16
  • 17. Ponzi Schemes  Ponzi schemes (such as subprime loans)  cause financial institutions to redefine the game  they no longer compete for market share but instead pull out in order to be more liquid.  In this way also, SOUND PROJECTS ARE REFUSED CREDIT, AND A DOWNWARD SPIRAL STARTS. (Charles Ponzi - police mugshot, 1910)  Third World debt/lending was also a Ponzi scheme.  Myrdalian ‘perverse backwashes’  Funds tend to flow from poor to rich countries! 17
  • 18. Responses to Crisis  SCHUMPETERIAN:  ‘IT HAS TO BURN OUT ALONE’  KEYNESIAN:  ‘REPAIR IT’, but without encouraging the very behaviour that caused the problem in the first place.  MARXIST:  ‘REPLACE IT’ — overthrow crisis-ridden capitalist system; establish socialism, a democratic economic planning 18
  • 19. “Times of innovation ... are times of effort and sacrifice, of work for the future, while the harvest comes after.... The harvest is gathered under recessive symptoms and with more anxiety than rejoicing.... [During] recession ... much dead wood disappears.” —Joseph Schumpeter (1939) Business Cycles 19
  • 20. “I sympathize, therefore, with those who would minimize, rather than with those who would maximize, economic entanglement among nations. Ideas, For these strong reasons, therefore, I am knowledge, science, hospitality, travel inclined to the belief that, after the – these are the things which should of transition is accomplished, a greater their nature be international. But let measure of national self-sufficiency and economic isolation among countries than goods be homespun whenever it is existed in 1914 may tend to serve the cause reasonably and conveniently possible, of peace, rather than otherwise. At any rather and, above all, let finance be rate, the age of economic internationalism primarily national. Yet, at the same was not particularly successful in avoiding time, those who seek to disembarrass war; and if its friends retort, that the a country of its entanglements should imperfection of its success never gave it a be very slow and wary. It should not fair chance, it is reasonable to point out be a matter of tearing up roots but of that a greater success is scarcely probable greater in the coming years.” years.” slowly training a plant to grow in a different direction. — John Maynard Keynes (1933 [1972]) National Self-sufficiency 20
  • 21. “Modern bourgeois society with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of “These are signs of the times, exchange, is like a sorcerer not to be hidden by purple who is no longer able to mantles or black cassocks. control the powers of the They do not signify that nether world whom he has tomorrow a miracle will called up by his spells.” occur. They do show that, within the ruling classes themselves, the foreboding —Karl Marx and Frederick Engels (1848) is emerging that the Communist Manifesto present society is no solid crystal, but an organism capable of change, and constantly engaged in the process of change.” —Karl Marx (1867) Capital, Vol. 1 Vol. 21
  • 22. The World Bank, IMF and their G-20 allies: Using the global crisis to their advantage.... G-20: IMF is back! Dominique Strauss-Kahn, Managing Director of the IMF, G-20 Press Conference, 2 April 2009 Maybe some of you were in the IMF press conference at the end of the Annual Meeting last October. And if some of you were there, then you may remember that what I said at that time is that IMF is back. Today you get the proof when you read the communiqué, each paragraph, or almost each paragraph – let's say the important ones – are in one way or another related to IMF work. 22
  • 23. WORLD BANK: Exactly the same global neo-liberal project! World Bank, Global Monitoring Report 2009: A Development Emergency, p. xii. The report sets out six priority areas for action to confront the development emergency that now faces many of these countries. First, we must ensure an adequate fiscal response in developing countries to protect the poor and vulnerable groups and to support economic growth. Priority areas must be strengthening social safety nets and protecting infrastructure programs that can create jobs while building a foundation for future productivity and growth. The precise fiscal response needs to be tailored to individual country circumstances, consistent with maintenance of macroeconomic stability. Second, we must provide support for the private sector and improve the climate for recovery and growth in private investment, including paying special attention to strengthening financial systems. Helping small and medium enterprises get access to finance for trade and investment is vital for job creation. But the crisis has also underscored the importance of broader reforms to improve the stability and soundness of the financial system. Third, we must redouble efforts in human development and recover lost ground in progress toward the MDGs. We can do this not only by strengthening key public programs for health and education, but also by better leveraging the private sector’s role in the financing and delivery of services. In support of these efforts to help developing countries, the report emphasizes three key global priorities. Donors must deliver on their commitments to increase aid. Indeed, the increased needs of poor countries hit hard by the crisis call for going beyond existing commitments. National governments must hold firm against rising protectionist pressures and maintain an open international trade and finance system. Completing the Doha negotiations expeditiously would provide a much-needed boost in confidence to the global economy at a time of high stress and uncertainty. Finally, multilateral institutions must have the mandate, resources, and instruments to support an effective global response to the global crisis. The international financial institutions will need to play a key role in bridging the large financing gap for developing countries resulting from the slump in private capital flows, including using their leverage ability to help revive private flows. Source: World Bank, Global Monitoring Report 2009: A Development Emergency, p. xii. 23
  • 24. World Bank President Robert Zoellick (31 March 2009, prior to the G-20 Meeting): New Powers for the Multilaterals! • “a WTO monitoring system to advance trade and resist economic isolationism, while working to complete the Doha negotiations to open markets, cut subsidies, and resist backsliding”; • “a monitoring role for the IMF, to review the execution of .. stimulus packages and assess results, calling for further action if necessary”; • IMF and World Bank Group monitoring of actions and results in the banking sector, with financial sector assessments to be extended to developed countries, “with the results published, taken seriously, and followed up”; • an overhaul of the financial regulatory and supervisory system” in which “most of the actual authority over regulation will rest with national governments”, but within which an expanded FSF [Financial Stability Forum] “could become another important institution of a stronger multilateral system, working with the IMF and the World Bank group on implementation” 24
  • 25. IMF: ‘An opportunity to make progress on seemingly intractable issues’ IMF (February 2009), Initial Lessons of the Crisis for the Global Architecture and the IMF Bottom line. The crisis has revealed flaws in key dimensions of the current global architecture, but also provides a unique opportunity to fix them. On the flaws, surveillance needs to be reoriented to ensure warnings are clear, successfully connect the dots, and provide practical advice to policy makers. An effective forum for policy makers with the ability and mandate to take leadership in responding to systemic concerns about the international economy is key. Ground rules for cross-border finance need to be strengthened. And, given the growing size of international transactions, resources available for liquidity support and easing external adjustment should augmented and processes for using them better defined so they are more readily available when needed. These are all ambitious undertakings. But the damage wrought by the crisis provides an opportunity to make progress on seemingly intractable issues. The moment should not be missed. 25
  • 26. ASEAN: ‘Ensure free flow of goods, services and investment’ ASEAN Member States, Press Communique, Thailand, 1 March 2009 • “the necessity of proactive and decisive policy actions to restore market confidence and [to] ensure continued financial stability to promote sustainable regional economic growth” • “expansionary macroeconomic policies, including fiscal stimulus, monetary easing, access to credit including trade financing, and measures to support private sector, particularly small and medium enterprises (SMEs) undertaken by each ASEAN Member State to stimulate domestic demand” • “ c o ordinating policies and taking joint actions that would be mutually reinforcing at the regional level” • “determination to ensure the free flow of goods, services and investment, and facilitate movement of business persons, professionals, talents and labour, and freer flow of capital” 26
  • 27. States’ Bailouts and Resiliency Plans (Bailouts for the poor???) Malaysia Philippines First stimulus measure: increase capitalisation of a government investment company by USD 5 Economic Resiliency Plan billion (also to stabilise stock (ERP): PhP 330 billion exchange) 27
  • 28. Global Civil Society Challenge and the Challenge to Global Justice Movements — ‘Another World Is Necessary’ — “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.” —Antonio Gramsci (1971) Prison Notebooks 28
  • 29. Crisis as a ‘Turning Point’  CRISIS from Greek ‘krisis’  “the turning point of a disease when an important change takes place, indicating either recovery or death”  People from left, right, centre look at the crisis the ‘Chinese way’ — i.e., an opportunity to advance their respective interests! 29
  • 30. Transformative Social Protection Neo-liberals TSP  Well-being of the  Well-being of the market/financial people institutions  Material — not just ideational — basis for alternatives 30
  • 31. Lessons of the 1997 Asian Crisis for TSP Campaign (Towards a Democratic and Human Rights Response to Crisis)  Democratisation may be stalled.  Justification for authoritarian rule (e.g. ‘Asian Values’)  Human Rights compromised.  Human rights obligations sidelined in the name of surveillance and internal security (Malaysia, Singapore)  The poor severely neglected.  e.g., ASEM Trust Fund failed to target the poor, workers, and the vulnerable, adversely affected groups. 31
  • 32. Emergent AUTHORITARIAN LIBERALISM in Asia (Authoritarian Polity, Market Economy) 32
  • 33. CONCLUDING REMARKS 1. The Constitutive Role of Crises in the Evolution of Neo-liberalism i. was born out of the crises of the 1970s ii. has evolved through a series of crises over the last 30 years iii. died of the cacophony of crises culminating in the current global economic crisis. 33
  • 34. As it shows, crises have so far been functional, rather than dysfunctional, to neo-liberalism:  Crises reshape class and social relations but in ways that perpetuate the hegemony of capital over labour and the preservation of elite rule.  Crises restrategise development plans of institutions from international organisations to states to further advance, not retreat from, market-led development.  Crises restructure states and societies in which social institutions are oriented towards the logic, requirements, and imperatives of neo-liberalism. 34
  • 35. 2. The responses to the global crisis from the multilaterals, to regional organisations, to states are fundamentally the same through the years, with or without crisis.  But there are differential catastrophic impacts across social classes, amongst the poor, marginalised, vulnerable sectors. 35
  • 36. 3. Another world is necessary!  Tranformative Social Protection now!!!  ‘Social Security’ (at a minimum, right to livelihood, food, healthcare, water, housing, education, and other essential services): both timeless and universal  The TSP Campaign: find, advance, and create a democratic and human rights response — protect, care for, and work with the most vulnerable sectors such as the urban and rural poor, the workers, women, migrants, farmers and fisherfolks, persons with disability, and indigenous peoples 36
  • 37. Thank you very much. —Bonn Juego 37