[asia-apec 1076] Focus on Trade #34, Part 1 of 2
Li Yuk Shing Kevin
kevin.li at graduate.hku.hk
Wed Apr 14 22:41:20 JST 1999
-------- Original Message --------
Subject: Focus on Trade #34, Part 1 of 2
Date: Wed, 14 Apr 1999 15:12:49 +0700
From: "Administration" <admin at focusweb.org>
Organization: Focus on the Global South
FOCUS ON TRADE
Number 34, April 1999
Part 1 of 2
Focus-on-Trade is a regular electronic bulletin providing updates and
analysis on regional and global trade and finance. Although initially
concerned with APEC, the scope of the bulletin now extends to
include the World Trade Organisation (WTO), the ASEAN Free
Trade Area (AFTA), the Multilateral Agreement on Investment
(MAI), the International Monetary Fund (IMF) and any other
acronyms that require critical attention. Focus-on-Trade contains
updates on trends in world trade, with an emphasis on analysis of
these trends from an integrative, interdisciplinary viewpoint that is
sensitive not only to economic issues, but also to ecological,
political,
gender and social issues related to developments in world trade.
Your contributions and comments are welcome. Please contact us c/o
CUSRI, Wisit Prachuabmoh Building, Chulalongkorn University,
Bangkok 10330 Thailand. Tel: (66 2) 218 7363/7364/7365, Fax:
(66 2) 255 9976, E-Mail: admin at focusweb.org, Website:
http://focusweb.org
Focus on the Global South is an autonomous programme of policy
research and action of the Chulalongkorn University Social Research
Institute (CUSRI) based in Bangkok.
*****************************************************
CONFERENCE CALLES FOR RADICAL REFORM OF
INTERNATIONAL FINANCE
ON March 23, more than 320 people from 40 countries converged in
Bangkok for the international conference 'Economic Sovereignty in a
Globalising World: Creating People Centred Economics for the 21st
Century.'
The conference, organised by Focus on the Global South, and co-
sponsored by DAWN and SAPRIN, was a benchmark meeting,
bringing together activists and academics working on everything from
debt, financial regulation, trade policy, investment agreements and
institutional reform to local currencies and community banks, regional
alternatives for trade and investment, food security, speculation taxes
and foreign direct investment.
The depth and breadth of participation brought new dimensions to the
debate about global financial architecture -- especially from the
'South' and development perspective - inspiring new possibilities for
alliance building and international action.
Strong consensus was clear on several key issues: immediate and
radical reform of the IMF, debt cancellation and abolition of HIPC,
no new round of the WTO, and total opposition to any variation of
the Multilateral Agreement on investment. In addition, the rights and
responsibilities of national governments to set economic policies
determined through domestic democratic processes was upheld. The
urgent need to quell the power and volatility of finance was repeated
throughout the conference as was the importance of supporting a job-
creating, equitable and environmentally sustainable real economy.
Many participants commented that the IMF stands as one of the main
obstacles to reform of the international economic system. In the lead
up to the IMF and World Bank Annual Meetings, Focus on the
Global South will work with other organisations and networks to
launch a campaign for immediate and radical reform of the Fund.
In the next months, there will be a number of follow-up activities and
projects. As a start Focus has created a list-serve for all conference
participants to share ideas and information and posted all conference
papers to the Focus website (http://focusweb.org). Reports of the
four working groups - market reform, institutional reform, national
policies and people-centred alternatives - will be posted by the end of
the month. In addition, Focus is preparing an edited selection of
conference papers for publication.
THIS ISSUE of Focus on Trade includes the conference's final press
communique which reflects the overwhelming mood of the meeting,
one of the keynote speeches and an interview with Hazel Henderson
and Walden Bello which appeared in Thailand's leading English daily
paper The Bangkok Post following the conference.
As preparations for the end of year WTO ministerial are building
hundreds of organisations are mounting a all-out offensive opposing a
new round of the WTO. In this issues, we have included Tomoko
Sakuma's report on the unprecedented meeting between Japanese
government officials and civil society groups to discuss trade and the
final last article is Aileen Kwa's clear and incisive analysis of why
the
WTO is not good for developing countries.
*****************************************************
NEW RELEASE: THE SIAMESE TRAGEDY
Walden Bello's major book on development in Thailand 'The Siamese
Tragedy: Development and Disintegration in Modern Thailand' is now
available. In The Siamese Tragedy, Walden Bello and co-authors
Shea Cunningham and Li Kheng Poh, argue that, even before the
collapse, the Thai economy had feet of clay and that vested interests,
both local and international, propelled the Thailand down a path
which is economically, socially and environmentally unsustainable. If
you would like a copy contact: Food First in the US, 398 60th
Street, Oakland, CA, 94618; Zed Books for the UK and Europe, 7
Cynthia Street, London, N1 9JF; White Lotus for Thailand and Asia
at GPO Box 1141, Bangkok, Thailand 10501. A Thai language
edition is also available.
*****************************************************
IN THIS ISSUE
IMF chief must resign, conference demands
Architectural blueprints, development models, and political strategies
by Walden Bello
A meeting of minds: interview with Hazel Henderson
and Walden Bello
by Sanitsuda Ekachai and Atiya Achakulwisut
Japanese officials try to woo civil society reps
by Tomoko Sakuma
The WTO and Developing Countries: Will Vietnam
Benefit from Being a WTO Member?
by Aileen Kwa
*****************************************************
IMF chief must resign
BANGKOK, 26 March: The resignation of the Managing Director of
the International Monetary Fund, Michel Camdessus, is just one of
the demands issued today by the growing "people's movement" for
international financial reform.
Over 300 activists, parliamentarians, economists and academics from
throughout the world have spent the past three days in Bangkok,
drawing up concrete steps to change the current system, which
favours the rich, at the expense of the poor.
The overwhelming majority of the participants at the "Economic
Sovereignty in a Globalising World" Conference say Michel
Camdessus must take responsibility for the failures of the institution.
In a final communique, participants demanded that Camdessus and all
senior IMF staff immediately resign, and that Camdessus' successor
be elected through a democratic process.
The participants also demanded debt cancellation for all countries and
an end to linkages between structural adjustment and "debt relief"
(HIPC).. The Fund must also cease all efforts to push capital account
liberalisation. The conference also called for the establishment of
regional stabilisation funds that would act in the interests of peoples
throughout the world.
The conference supports the right of countries to impose capital
controls in the interests of economic sovereignty and the betterment of
their citizens.
The conference has also called for a two year review of the World
Trade Organisation's (WTO) impact on jobs, the environment, human
rights and the poor, and there should be no new negotiations until this
review is completed.
The conference participants strongly opposed and denounced efforts
to bring the Multilateral Agreement on Investment into the WTO.
The increasing power of civil society to effect change was noted by
Carlos Fortin, the Deputy Secretary-General of the United Nations
Conference on Trade and Development (UNCTAD), when he
warned that 'people power' should not be underestimated.
"Sustained campaigning by NGOs led to the abandonment of the
controversial Multilateral Agreement on Investment. These groups
were also instrumental in the creation of the international convention
banning landmines. They can also play an important role in reforming
global financial systems," said Mr Fortin.
Participants lent their support to various expressions of ressistance
and denounced corporate economic globalisation led by the United
States and the G7.
"We strongly believe our fate cannot be left in the hands of the G7 and
that creating a just international financial system cannot succeed
unless
this is undertaken within the framework of democratic participation by
citizens and social movements," stated participants.
Dr Walden Bello, Co-director of Focus on the Global South - the
organisation hosting the event - says the conference has succeeded in
generating a global movement aimed at reforming the current global
economic system.
"This conference has been a tremendous success in bringing together
so many sectors of society from all over the world. We are seeing the
emergence of a coordinated and organised global movement against
speculative capital and the IMF," he says.
"We shall work towards a world not of globalisation but of true
internationalism based on mutual respect and democratic interaction
between free and diverse peoples."
*****************************************************
Architectural blueprints, development models, and political strategies
by Walden Bello*
Today, the world media are awash with talk about reform of the
global financial architecture. However, the published reports focus
mainly on discussions taking place within the Group of Seven or the
larger Group of 22, particularly on the debate between the finance
authorities of the United States and those of Europe and Japan.
Sometimes, there are some reports that come out on proposals from
the United Nations Conference on Trade and Development
(UNCTAD) or from some government in the South. But little weight
is attached to the latter by media commentators, even when
substantively these views merit consideration.
Of course, if one is a Jeffrey Sachs or a Paul Krugman, of course,
one's views are given some currency. If you are not a neoclassical
economist, forget it. And if you come from the world of NGO's, your
views don't count at all.
This is, of course, interesting because when it comes to global trade,
US Trade Representative Charlene Barshefsky, and WTO Director
General Renato Ruggiero are talking about consulting civil society and
about actively and democratically involving all of us in the
globalization
process. But when it comes to the world of high finance, these are
matters of allegedly great complexity that are best left to the experts
and the managers of the world economy like Alan Greenspan, Robert
Rubin, and Larry Summers, whom Time has anointed as 'The
Committee to Save the World." Or to the much-broader Group of
22 countries handpicked by the US, whose three reports released in
October 1998 have been anointed as "the international community's
definitive statement on reforming the international architecture
"(1)
Why Are We Here?
The overriding purpose of this conference is to get the rest of us to
crash this exclusive party talking about the financial order of the
world. We need to do this for several reasons.
First, because those who are actively debating this issue are, for the
most part, still arguing within a paradigm of neoliberal economics that
has been central to generating this crisis.
Second, because devising a global financial order is not simply a
matter of technical economics but one that must be informed by
values, and the main values and priorities of those who are managing
this process are different from those of you and me.
Third, because this process is, first and foremost, a question of
power, and unless we do out best to gatecrash this gathering, what
will emerge will simply be a global architecture that will benefit a
very
small global elite and continue to marginalise the vast majority of the
world's peoples.
Considerations on Finance Capital
Before discussing strategies being proposed for global financial
reform, let me advance some propositions.
First of all, I think we need to put to rest once and for all the idea
that
the Asian crisis is not a product of "crony capitalism." What brought
about the crash of 1997 was not crony capitalism but "casino
capitalism." Even at the height of the Asian financial collapse in
September of that year, Stanley Fischer, the American deputy
managing director of the IMF, was blaming the crisis on the fact that
"markets are not always right. Sometimes inflows are excessive, and
sometimes they may be sustained too long. Markets tend to act fast,
sometimes excessively."(2) And even the Economist, one of the
premier organs of market fundamentalism, had to admit that "the
economic pain being imposed [by global capital markets] on the ex-
tigers is out of all proportion to the policy errors of their
governments."(3)
The Fund and the US Treasury, of course, continue to uphold the
rightness of their obsession with "reforming" domestic economic and
financial arrangements, but the credibility of this approach is eroded
daily by the spectacular fashion that IMF straitjackets are suffocating
economies in Thailand, Malaysia, and Indonesia.
Second, finance has been the cutting edge of the globalization
process. The integration of commodity markets via free trade and
that of production systems via TNC subsidiarization have proceeded
apace, but both processes have been outstripped by the integration of
global capital markets under the aegis of London and Wall Street.
Third, finance, which was liberated from the confines of the Keynesian
state by the Thatcherite and Reaganite ideological revolution, has
steadily gained "ascendancy over industry" and other sectors of the
economy, to borrow the prescient characterisation of the 1991
UNCTAD Trade and Development Report.(4) This pre-eminence
of the
financial sector is related to the crisis of dwindling growth or
deflation that deflation which
has increasingly overtaken the real sectors of the global economy. This
crisis has its
roots in overcapacity or under-consumption, which today marks global
industries from
automobile to energy to capital goods.(5) Diminishing, if not
vanishing, returns in
industry has led to capital being shifted from the real economy to
squeezing "value" out of
already created value in the financial sector.
The result is essentially a game of "global arbitrage," where capital
moves
from one capital market to another, seeking to turn profits from the
exploitation of the imperfections of globalised markets by taking
advantage
of interest-rate differentials, targeting gaps between nominal currency
values
and "real" currency values, and short-selling in stocks, that is,
borrowing
shares to artificially inflate share values then selling. Not
surprisingly,
volatility, being central to global finance, has become as well the
driving
force of the global capitalist system as a whole.
Third, since differences in exchange rates, interest rates, and stock
prices
are much less among the more integrated Northern markets, movements of
capital have been much more volatile between the capital markets of the
North than the so-called "Big Emerging Markets" of the South and Asia.
Thus
while crises are endemic to the finance-driven global capitalist system,
the
crises of the last few years have been concentrated in the emerging
markets.(6) Since late 1994, we have had Mexican financial crisis, the
"Tequila Effect" of this crisis in Latin America, the Asian crash, the
Russian
collapse, the unravelling of the Brazilian real, and the spinoff of the
Brazilian
crisis on the rest of Latin America.
Fourth, despite the global financial system's proneness to crises,
finance
capital operates, as Robert Kroszner describes it, "in a realm close to
anarchy."(7) That deregulation at the national level has not been
replaced by
reregulation at the international level is because finance capital has
accumulated tremendous political power over the last two decades. While
finance capital was liberated from the straitjacket of the Keynesian
economy
by the Republican administrations of Ronald Reagan and George Bush, it
has been under the Democratic administration of Bill Clinton that
financial
interests became paramount in the foreign economic policy of the US
government. Represented in the inner sanctum of Washington by Treasury
Secretary Robert Rubin, a former arbitrage artist, and Federal Reserve
Chairman Alan Greenspan, a former Street consultant, the so-called Wall
Street-Treasury Complex stands foursquare against any serious financial
regulation. The power of this lobby stems partly from the strength of
the
interests it represents, but even more from its ideology of market
freedom,
which it markets as applying not only to trade in goods but also to the
mobility of capital.
Fifth, the crisis of the developing countries of the South is not simply
one of
exposure to unregulated financial flows-one can easily be fixed with
capital
controls at both the global and national level. The financial
deregulation of
their economies that has proven so devastating is simply the latest
phase of
a development model that they have internalised over the last two
decades
under the aegis of IMF-World Bank structural adjustment programs-one
that
makes foreign markets and foreign capital the twin engines of
development.
In other words, the Mexican Crisis on 1995, the Asian Collapse of 1997,
and
the Latin American unravelling of 1999 were events waiting to happen to
economies where liberalization of trade and investment had become
equated development, and where import substitution, trade policy, and
industrial policy had been vilified as anti-development.
The Three Schools of Global Financial Reform
There are now a thousand and one proposals for world financial reform,
ranging from proposals for preemptive crisis mechanisms to reform of the
International Monetary Fund to establishment of a "World Financial
Authority."(8) Rather than take them up one by one in technical
fashion, let
me instead go into the heart of the matter, power and interests, and
group
the most important proposals into three different strategies. I will
call the first
the "It's the wiring, not the architecture" approach. The second might
be
termed the "Back to Bretton Woods" school. And we might christen the
third
strategy as the "Change the development model" strategy."
"It's the Wiring, not the Architecture"(9)
One might say that this is basically the US position-though it is shared
to
some degree by many of the G-7 members, with probably the notable
exception of Japan.
This school assigns primacy to "reforming" the financial sectors of the
crisis
economies along the lines of more transparency, tougher bankruptcy laws
to
eliminate moral hazard, prudential regulation using the "Core
Principles"
drafted by the Basle Committee on Banking Supervision, and greater
inflow
of foreign capital not only to recapitalize shattered banks but also to
"stabilise" the local financial system by making foreign interests
integral to it.
When it comes to the supply-side actors in the North, this perspective
is to
leave them to voluntarily comply with the Basle Principles, though
government intervention might be needed periodically to catch
freefalling
casino players whose collapse might bring down the whole global
financial
structure, as was the case last year when the US Federal Reserve had to
organise a rescue of the hedge fund Long Term Capital Management after
the latter was unravelled by Russia's financial crisis. the Russian
crisis
unravelled the hedge fund Long Term Capital Management.(10) The
farthest the Group of Seven has gone in terms of dealing with the
controversial hedge fund question was to issue a declaration in October
1998 commenting on the need to examine "the implications arising from
the
operations of leveraged international financial organizations including
hedge funds and offshore institutions" and "to encourage off-shore
centers to
comply with internationally agreed standards."(11)
Finally, when it comes to the existing multilateral structure, this view
supports
the expansion of the powers of the IMF, proposing not only greater
funding
but also new credit lines, such as the "precautionary credit line" that
would
be made available to countries that are about to be subjected to
speculative
attack. Access to these funds would, however, be dependent on a
country's
track record in terms of observing good macroeconomic fundamentals, as
defined traditionally by the Fund.
While much has been made of the conflict between the US and the other
members of the G-7 countries in the world press, in fact, the
articulated
differences appear to be marginal. France and Germany (at least before
the
resignation of Oskar Lafontaine), with some support from Japan, have
proposed the establishment of "target zones" that would reduce the
fluctuations among the yen, dollar, and euro. There are no virtually no
suggestions from the European Union on controlling capital flows on the
supply side.
Japan has made additional proposals on the IMF, but these are variants
of
the position of either the US government or some US think-tanks: more
IMF
monitoring of hedge funds, getting the IMF to push private creditors and
investors to participate in a rescue program instead of bailing them
out, and
providing a "certified" line of credit to countries that follow good
economic
policies which are under speculative attack, something similar to
Clinton's
precautionary credit line.(12)
"Back to the Bretton Woods System"
The second school of thought would put tougher controls at the global
level,
in the form the Tobin Tax or variants of it.(13) The Tobin tax is
transactions
tax on capital inflows and outflows at all key points of the world
economy that
would "throw sand in the wheels" of global capital movements. Controls
at
the international level may be supplemented by national-level controls
on
capital inflows or outflows. A model of such a measure is the Chilean
inflow
measure that requires portfolio investors to deposit up to 30 per cent
in an
interest-free account at the Central Bank for a year, which has been
said to
be successful in discouraging massive capital portfolio inflows. For
some
people, there is an ill-concealed admiration for Prime Minister Mohamad
Mahathir's tough set of outflow measures, which included the fixing of
the
exchange rate, the withdrawal of the local currency from international
circulation, and a one-year lock-in period for capital already in the
country.(14)
In addition to controls at the national and international level,
regional controls
are also seen by proponents of this view as desirable and feasible. The
Asian Monetary Fund is regarded as an attractive, workable proposal that
must be revived. The AMF was proposed by Japan at the height of the
Asian
financial crisis to serve as a pool of the foreign exchange reserves of
the
reserve-rich Asian countries that would repel speculative attacks on
Asian
currencies. It was, not surprisingly, vetoed by Washington.
The thrust of these international, national, and regional controls is
partly to
prevent destabilising waves of capital entry and exit and to move
investment
inflow from short-term portfolio investment and short-term loans to
long-term
direct investment and long-term loans. For some, capital controls are
not
simply stabilising measures but are, like tariffs and quotas, strategic
tools
that may justifiably be employed to influence a country's degree and
mode
of integration into the global economy. In other words, capital and
trade
controls are legitimate instruments for the pursuit of trade and
industrial
policies aimed at national industrial development.
When it comes to the World Bank, the IMF, and the WTO, the thrust of
this
school is to reform these institutions along the lines of greater
accountability,
less doctrinal push for free trade and capital account liberalization,
and
greater voting power for developing countries. Like the G-7, advocates
of
this approach view the IMF as a mechanism to infuse greater liquidity
into
economies in crisis, but unlike the G-7, they would have the Fund do
this
without the tight conditionalities that now accompany its emergency
lending.
Some people in this school accompany their proposals to reform the Bank
and the Fund with a recommendation to establish a "World Financial
Authority," whose main task, in one formulation, would be to develop and
impose regulations on global capital flows and serve as "a forum within
which the rules of international financial cooperation are developed and
implemented
by effective coordination of the activities of national
monetary
authorities."(15)
In other words, the Fund, World Bank, and WTO continue to be seen as
central institutions of a world regulatory regime, but they must be made
to
move away from imposing one common model of trade and investment on
all countries. Instead, they must provide a framework for more
discriminate
global integration, that would allow greater trade and investment flows
but
also allow some space for national differences in the organisation of
capitalism.
In the vision of Dani Rodrik, the current chief economic adviser to the
G-22, a
grouping of developing countries. the ideal multilateral system appears
to
be substantially a throwback to the original Bretton Woods system
devised
by Keynes that reigned from 1945 to the mid-seventies, where "rules left
enough space for national development efforts to proceed along
successful
but divergent paths."(16) In other words, a "regime of peaceful
coexistence
among national capitalisms."(17)
Not surprisingly, this perspective has resonated well with economists
and
technocrats from developing countries, the devastated Asian economies,
and the UN system-which is said to the refuge of Keynesians who fled the
neoliberal revolution at the World Bank and academic institutions.
"Change the Development Model"
Those that we classify as belonging to this school regard the IMF and
WTO,
in particular, as Jurassic institutions that would be impossible to
reform both
owing to both their deep neoliberal indoctrination and the hegemonic
influence within them of the United States. The world would be better
off
without them since they serve merely to order the global system in
favour of
the North.
The same scepticism marks their view on the possibility of imposing
global
capital controls or prudential regulations on hedge funds and other big
casino players, again because of the strength of neoliberal ideology and
financial interests.
National capital controls are seen as much more promising, and the
experiences of China and India in avoiding the financial crisis, of
Chile in
regulating capital flows, and Malaysia in stabilising its economy have
convinced proponents of this view that this is the way to go. Like the
"global
Keynesians," this school would also see regional arrangements such as
the
Asian Monetary Fund as feasible and workable.
Where the proponents of this view differ from the global Keynesians is
that
their advocacy of capital controls is accompanied by more fundamental
and
thorough critique of the process of globalization that goes beyond its
blasting away legitimate differences among national capitalisms.
Buffering
an economy from the volatility of speculative capital is an important
rationale
for capital controls, but even more critical is the consideration that
such
measures would be a sine qua non for a fundamental reorientation of an
economy toward a more inner-directed pattern of growth that would
entail, in
many ways, a reversal, though limited of the globalisation process.
The main problem, from this viewpoint, is not the volatility of
speculative
capital, but the problem lies in the way that the export sector and
foreign
capital have been institutionalised as the engines of these economies.
The
problem is the indiscriminate integration into the global economy and
the
over-reliance on foreign investment, whether direct investment or
portfolio
investment, for development. Thus while the current crisis is wreaking
havoc
on peoples' lives throughout the South, it also gives us the best
opportunity in
years to fundamentally revise our model and strategy of development.
Changing the Development Model
What are some of the priorities of this alternative model of
development?
What makes it different not only from the neoliberal model but also from
the
national capitalisms stoutly defended by Dani Rodrik?
Comprehensive, integrated formulations are few and far between in our
region today, but the following ideas, proposals, or visions are being
actively
discussed throughout East Asia today:
While foreign investment of the right kind is important, growth must be
financed principally from domestic savings and investment. This means
good, progressive taxation systems. One of the key reasons for the
reliance
on foreign credit and foreign investment was the elites of East Asia
did not
want to tax themselves to produce the needed investment capital to
pursue
their fast-track development strategies. Even in the depths of today's
crisis,
conspicuous consumption continues to mark the behaviour of Asia's
elites,
who also send so much of their wealth abroad to safe havens in Geneva,
Tokyo, or New York. Regressive taxation systems are the norm in the
region,
where income taxpayers are but a handful and indirect taxes that cut
into the
resources of lower-income groups are the principal source of government
expenditures.
While export markets are important, they are too volatile to serve as
reliable
engines of growth. Development must be reoriented around the domestic
market as the principal locomotive of growth. Together with the
pitfalls of
excessive reliance on foreign capital, the lessons of the crisis include
the
tremendous dependence of the region's economies on export markets.
This has led to extreme vulnerability to the vagaries of the global
market and
sparked the current self-defeating race to "export one's way out of the
crisis"
through competitive devaluation of the currency. This move is but the
latest
and most desperate manifestation of the panacea of export-oriented
development.
Making the domestic market the engine of development, to use a
distinctly
unfashionable but unavoidable term, brings up the linkage between
sustained growth and equity, for a "Keynesian" strategy of enlarging the
local
market to stimulate growth means increasing effective demand or bringing
more consumers (hopefully discriminating ones, that is) into the market
via a
comprehensive program of asset and income distribution, including land
reform. There is in this, of course, the unfinished social justice
agenda of
the progressive movement in Asia-an agenda that has been marginalised by
the regnant ideology of growth during the "miracle years." Vast numbers
of
people remain marginalised because of grinding poverty, particularly in
the
countryside. Land and asset reform would simultaneously bring them into
the market, empower them economically and politically, and create the
conditions for social and political stability. Achieving economic
sustainability based on a dynamic domestic market can no longer be
divorced from issues of equity.
Regionalism can become an invaluable adjunct to such a process of
domestic market-driven growth, but only if both processes are guided not
by
a perspective of neo-liberal integration that will only serve to swamp
the
region's industries and agriculture by so-called "more efficient" third
party
producers, but by a vision of regional import-substitution and protected
market-integration that gives the region's producers the first
opportunity to
serving the region's consumers.
While there are other elements in the alternative development thinking
taking
place in the region, one universal theme is "sustainable development."
The
centrality of ecological sustainability is said to be one of the hard
lessons of
the crisis. For the model of foreign-capital fuelled high-speed growth
for
foreign markets is leaving behind little that is of positive value. In
the case of
Thailand, at least, it is hard to dispute this contention. As many of
you visiting
this once lovely city can testify, 12 years of fast-track capitalism is
leaving
behind few traces except industrial plant that will be antiquated in a
few
years, hundreds of unoccupied high-rises, a horrendous traffic problem
that
is only slightly mitigated by the repossession of thousands of
late-model cars
from bankrupt owners, a rapid rundown of the country's natural capital
and
an environment that has been irreversibly, if not mortally, impaired, to
the
detriment of future generations.
In place of 8-10 per cent growth rates, many environmentalists are now
talking of rates of three to four per cent or even lower. This links
the social
agenda with the environmental agenda, for one reason for the push for
high
growth rates was so that the elites could corner a significant part of
the
growth while still allowing some growth to trickle down to the lower
classes
for the sake of social peace. The alternative-redistribution of social
wealth-is
clearly less acceptable to the ruling groups, but it is the key to a
pattern of
development that will eventually combine economic growth, political
stability, and ecological sustainability.
These and similar ideas are already being discussed actively throughout
the
region. What is still unclear, though, is how these elements will hang
together. The new political economy may be embedded in religious or
secular discourse and language. And its coherence is likely to rest
less on
considerations of narrow efficiency than on a stated ethical priority
given to
community solidarity and security.
Moreover, the new economic order is unlikely to be imposed from above in
Keynesian technocratic style, but is likely to be forged in social and
political
struggles. This fire down below is likely to upset the best laid plans
of the
tiny elite that are trying to salvage an increasingly unstable
free-market order
by tinkering at the margins of the global financial order and calling it
reform.
* This paper was prepared for the Conference on "Economic Sovereignty in
a Globalised World," Bangkok, March 23-26, 1999. Walden Bello, PhD, is
professor of sociology and public administration at the University of
the
Philippines and co-director of Focus on the Global South, a research,
analysis, and advocacy program of the Chulalongkorn University Social
Research Institute in Bangkok. He is the author or co-author of ten
books,
including the recently published A Siamese Tragedy: Development and
Disintegration in Modern Thailand (London: Zed Press, 1998).
(1) Barry Eichengreen, Toward a New Financial Architecture (Washington,
DC: Institute for International Economics, 1999), p. 131.
(2) Stanley Fischer, "Capital Account Liberalization and the Role of the
IMF,"
Paper presented at the "Asia and the IMF Seminar," Hong Kong, Sept. 19,
1997.
(3) Economist
(4) Quoted in UNCTAD, Trade and Development Report 1998
(Geneva: UNCTAD, 1998), p. i.
(5) See, for instance, "Barbarians at Bavarians' Gates," Economist,
Feb. 13, 1999, p. 22.
(6) Stanley Fischer, "On the Need for an International Lender of Last
Resort," Speech delivered at the joint luncheon of the American
Economic Association and the American Finance Association, New
York, January 3, 1999.
(7) Randall Kroszner, "The Market as International Regulator," in
Mastering Finance, p. 399.
(8) A list of the more significant proposals are found in Barry
Eichengreen,Toward a New Financial Architecture (Washington, DC:
Institute for International Economics, 1999).
(9) Among the documents that broadly share this view are the
following: Group of 22, "Reports on the International Financial
Architecture, Working Groups on Transparency and Accountability,
Strengthening the Financial System, and International Financial Crises,
Oct. 1998; Morris Goldstein, The Asian Financial Crises: Causes,
Cures, and Systemic Implications (Washington: Institute for
International Economics, 1998); Robert Rubin, "Strengthening the
Architecture of the International Financial System," Speech at the
Brookings Institution, Washington, DC, April 14, 1998 (downloaded
from Internet); Stanley Fischer, "On the Need for an International
Lender of Last Resort," Paper prepared for the joint luncheon of the
American Economic Association and the American Finance
Association, New York, January 3, 1999; and Barry Eichengreen,
Toward a New International Financial Archictecture (Washington,
DC: Institute for International Economics, Feb. 1999).
(10) Federal Reserve Chairman explicitly opposed regulation of
hedge funds during hearings at the US Congress in October 1998,
when the LTCM fiasco occurred. See David Ignatius, "Policing
Hedge Funds: Who's in Charge Here?," International Herald Tribune,
Feb. 22, 1999., p. 6.
(11) Quoted in "Towards a New Financial Architecture: A Report of
the Task Force of the Executive Committee on Economic and Social
Affairs of the United Nations," United Nations, New York, January
21, 1999.
(12) As summarized by David de Rosa, 'Miyazawa's Big Ideas on
How to Run the IMF," Bloomberg News column, reproduced in
Manila Times, March 3, 1999, B13.
(13) Among the documents that might be said to broadly belong to
this viewpoint are the following: Task Force of the Executive
Committee on Economic and Social Affairs, United Nations,
"Towards a New International Financial Architecture; UNCTAD,
"The Management and Prevention of Financial Crises," Trade and
Development Report 1998 (Geneva: United Nations Conference on
Trade and Development, 1998), pp. 83-110; Dani Rodrik, "The
Global Fix," New Republic, Nov. 2, 1998 (downloaded from
Internet); John Eatwell and Lance Taylor, , "International Capital
Markets and the Future of Economic Policy," CEPA Working Paper,
No. 9, Center for Economic Policy Analysis (CEPA), New School
for Social Research, Sept. 1998; Roy Culpeper, , "New Economic
Architecture: Getting the Right Specs," Remarks at the Conference on
"The Asian Crisis and Beyond: Prospects for the 21st Century,
Carleton University, Ottawa, January 29, 1999.
(14) See, for instance, Roy Culpeper.
(15) John Eatwell and Lance Taylor, p. 14.
(16) Dani Rodrik.
(17)Ibid.
End Focus on Trade #34, part 1 of 2
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