Transcripts
`Who are the winners, and who are the losers of globalisation?'
by Bernard Cassen
Le Monde diplomatique
(Speech delivered 17 June 2000, at the Friends of Le Monde Diplomatique conference `Globalisation: In Whose Interest?' at Conway Hall in London.)
I will try to answer the question that was put: that is, who are the winners, and who are the losers of globalisation? And before giving a few examples, I think I have to make clear what I mean by globalisation. I completely agree with the definition that Susan has given. We mean corporate-led globalisation. Globalisation, to me, is the contrary of internationalisation. Those people who are opposed to globalisation, like Susan and I, are not opposed to international trade or international exchanges. We are internationalists, both of us. So we are not nationalists. That is, sometimes we are being accused, because we are against globalisation, of retreating to the national perimeter. This is not true.
What are the dogmas of globalisation, in this meaning? It's that markets are efficient, that the state, or the states, are not necessary, that the poor and the rich have no conflicting interests, and finally that things turn out for the best if left alone. The role that remains for the state is to see to it that there is no inflation, the budget is balanced, and that law and order is guaranteed. That's about all. Well, this is the rhetoric, basically, of the IMF, of the OECD, of the WTO, the World Bank, and the European Commission, which is closer to us and more important to us. Unfortunately, all the available data totally disprove these statements. And I'm speaking of data produced from within these international institutions, and data published by business-friendly newspapers. I'll give you a few examples.
Let's start with Russia. Here is an interesting newspaper headline, which I will read in French and then translate into English. `L'économie russe se rétablit au prix d'un nouvel appauvrissement de la population.' That's Le Monde, 24th of March. That is, `Thanks to further impoverishment of the population, the Russian economy is getting better.' I think there is not much to say after that. And that's very much the meaning of globalisation. Because I think that Russia is an incredible example of the catastrophic failure of the free-market doctrine, as it was pursued by the IMF, as we all know. Privatisation and deregulation did not create efficient and competitive markets, but instead, large, private monopolies, oligarchs, mafiosi, who control industry, and the media, and the Kremlin as well, of course. And when this comes to their own banks, these were not banks, these were not banks at all, but rather speculative tools, serving only some of the functions of the commercial banks. This the IMF knew, or else, what's the point of having such a powerful international institution, if it does not know what is going on in a country which it is helping? Meanwhile, the Russian state, if we can call that a state, followed a rigid policy of limiting expenditure, so that wages and pensions were not paid, and the private sector ran out of money. Taxes were not levied, because there was nothing to tax. Still, even today, the `Washington consensus' holds that the course of economic reform must go on. Economic reform is exactly what I have been describing; that is, the rule of the mafias and the rule of oligarchs, and the ruin of the country.
This very article from Le Monde gives some more details. It says that the economy, I repeat, is doing very well. That 75% of the population lives with income below the minimum subsistence line, which is 240 francs. How many pounds would that be? Twenty pounds a month, in Russia. That's Russia after 10 years of reform led by the IMF, not to mention the reduction of life expectancy by seven years in 10 years, which I think is unheard of in the history of demography; there is no precedent for it.
Now, let's take another example. Here again, a newspaper headline which is very interesting; I'll read it: `A rise in joblessness delights US markets.' And the same day, in Les Echos, which is a French financial newspaper, you have: `Les marchés dopés par le chômage américain': `Markets boosted by American unemployment'. I think it's very clear: the interests of the markets are totally contradictory with the interest of unemployment. When unemployment rises, so do the markets. There would be a lot to say about unemployment in the USA. We had a private discussion over lunch with my colleague. Because when they say that, in the USA, the unemployment rate is 4%, that's totally wrong. First, because the methods through which this figure is obtained are not the same as the ones we use in other countries, but you have to add to those 4% another 2%, who represent the 2 million people who are in prison in the USA, and most of whom are young people, that is, people who normally would be in the active population. The flat rate is at least 6%, not 4% as is currently being said.
In other words, what is good for investors, for the so-called markets, is bad for the workers. We have experienced this in France very recently, in fact, last summer, when Michelin, the French multinational, announced simultaneously an unprecedented rise in profits, and the dismissal of 7,500 workers in all its plants all over the world. Why were these people given the sack? Not because the company was losing money. It was making a lot of money. But because it wasn't making enough money. That's the point today. That is, with unfettered financial markets, pension funds, as Susan said, demand return on equity of fifteen to eighteen percent, in countries where the rate of growth, as is the case in France, is 3%. This is absolutely impossible, unless you sacrifice labour, or investment, or research. That is, the ultimate horizon of markets is the quarterly report. They don't see much further than that. Generally, it's the next ten minutes.
Fourth example: Brazil. Brazil is one of those countries where the IMF has been especially active, too. After the Russian fiasco, well, there was the Brazilian catastrophe. You remember that at the beginning of 1999, last year, the Brazilian currency, the real, was devalued, with the active support of the IMF, whose 41 billion dollar loan was in fact a safety net for the native and foreign speculators on the Brazilian currency. Well, in Brazil we know very well who were the losers. The losers were the small and middle-sized firms that had to close. People who became unemployed by tens of thousands, particularly in the industrial areas, the decrease in the standard of living, the increase in street and urban violence, which is a direct consequence of liberalisation in all countries, including this particular country here. Now, who are the winners? I happened to be in Brazil when an article was published in the Brazilian equivalent of the Financial Times, that is, a very serious newspaper, which is called the Gazeta mercantil. It's published in São Paulo; it's a very good paper in its own terms. And this article says this: `January was a great month for the banks.' January, that is, the month of the devaluation. `The devaluation of the real guaranteed some institutions profits eight times higher than the previous year.' That is, in one month, the month of January 1999, the Morgan Guaranty Trust made eight times as much profit as in the whole previous year. Well, if you want to know who were the winners in Brazil, there they are. They are the banks and the speculators.
Now, another example which has been mentioned a bit earlier is the case of India. Last May, there was a very important strike movement all over India, in which 20 million people took part. And the strike was against government measures which aimed at liberalising further the economy, and suppressing subsidies to basic products, that is, one of the fundamental demands of all structural adjustment programs. Well, there is, at the moment, a very lively debate within the World Bank. I read in the Financial Times yesterday that Mr. Ravi Kanbur, who is apparently one of the top World Bank economists, resigned from the Bank. Why did he resign? Because there was disagreement about the content of the report he was going to publish on behalf of the Bank. He was going to say that inequality does not automatically decrease when there is growth. He says: `Growth is in no way a guarantee of redistribution of wealth.' Whereas the official doctrine is the contrary: it's that there must be growth, and the more growth, the more redistribution, the less inequality. And he had to resign. Yet the available figures are absolutely clear. India began to liberalise in the year 1991. Since then, there has been growth, 6% approximately, but there has been in no way any decrease in poverty or inequality. Whereas in the previous period, when there were state-oriented policies, the state policies led to considerable redistribution of wealth. In 1974, 53% of people were below the poverty line; in 1990, 34%. That is, state policies are much more efficient than liberal policies at reducing inequality. Of course, this we knew. But when we have figures that prove it, it's better.
To conclude: deregulated financial exchanges, speculative investment, unregulated corporations have caused economies to boom, but in many cases to crash, as in the case of Brazil, and in Southeast Asia as well. They have ruined countries; they have brought nations to their knees. They have attacked traditional agriculture. They have decreased food security. They have considerably increased inequality. They have destabilised government, etc., etc. This is the price that has been paid so far by globalisation. So it's obvious that this neoliberal experiment a dismal failure. And in general, when there is a failure of this type, people say, `Well, it has failed because it has not been liberal enough. We must inject a new dose of liberalisation to make the system work.' And in particular, I'm very surprised by the argument that poorer countries, undeveloped countries, must have more market access to developed ones. What does that mean, in reality. That means that you expect undeveloped countries to export. To export what? To export commodities that they need for their own internal market. That is, the problem for the Brazilians, for example, is not to export to Europe; it's to feed its own population. That is, we must return to self-centred economies, and not to export-led economies that have proved a real failure.
And this is the conclusion: that the globalisation process has led to a real subversion of democracy. The point has been made, I think, very clearly by Susan. Because, very clearly, for multinationals and financial markets, the objective is to bypass all political authorities. Unfortunately, in this they are considerably helped by all international institutions: the IMF, the World Bank, the OECD, the WTO, and the European Commission, which is, for us, certainly, the most dangerous of these institutions, because it's closer to us.
Bernard Cassen, Professor at the Institute of European Studies at the University of Paris VIII. Executive Director of the French monthly newspaper Le Monde Diplomatique. President of ATTAC, Paris. From 1981-1985 he led the Inter-Ministerial special Committee for Scientific and Technical Information. His journalistic career began in 1967 with Le Monde, until he joined the first editorial board of Le Monde Diplomatique in 1973. He is the author and co-author of several hundred articles and reports.
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