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(...continued)
The destabilization of Western societies
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
One of the policy shifts was described above -- the re-introduction of the
doctrine of laissez-faire economics. This undermined a century of social
progress in the West, abandoned government's attempt to provide a beneficial
"guiding hand" to the economy, and brought government policy-making into
line with elite corporate interests.
Another shift which occurred during this period was the destabilization of
the Bretton Woods arrangements(20). Already in 1971 US President Nixon had
taken the US off the gold standard, removing the underpinning of Western
monetary stability. Following that, exchange rates were allowed to float,
and currency speculation became a profitable venture. Western nations began
to relinquish their controls over capital flows and "offshore tax havens"
came into existence. The system of international finance became unregulated,
unstable, and speculative. Bretton Wood's "guiding hand" was removed from
the global economy, and control over international finance was effectively
transferred from elected governments to private banks, investors, and
speculators.
A global speculation market developed which is now many times larger than
the global commercial economy. In what amounts to a pyramid scheme, money is
created by leveraged speculative transactions in great quantities, so great
that most national treasuries are dwarfed in comparison. As was demonstrated
in Southeast Asia, this unregulated system can destroy reasonably sound and
productive national economies almost overnight(21).
In another shift, the IMF and World Bank reversed their agendas. Instead of
stabilizing international finance, they started using their power to destroy
national economies and to impose laissez-faire policies on nations that
didn't want them(22). In Southeast Asia, instead of helping the nations to
get back on their feet, the IMF forced operationally healthy businesses into
bankruptcy and presided over the dismantlement of economies. The devastating
effects of IMF policies in Africa, Latin America, and the former Soviet
Union are almost unbelievable. In Rwanda, for example, a healthy economy was
systematically destroyed, contributing directly to the total collapse of
society and a genocidal civil war(23).
The radical shift toward laissez-faire policies was launched in 1980, with
the successful campaigns of Ronald Reagan in the US, and Margaret Thatcher
in Britain. Under the rhetoric of "smaller government" and "economic
reform", the old, failed, laissez-faire doctrine was re-introduced.The
history of the previous century was forgotten, along with the reasons why
social programs and regulation had been introduced in the first place. All
the credit for existing prosperity was given to capitalism, now referred to
fondly in the corporate-controlled media as the "efficient private sector".
The regulation and social reforms which had stabilized capitalism and made
it more bearable were re-defined to be "government interference". "Reform",
in an Orwellian reversal, came to mean the dismantlement of reform(24).
The flagship policies of this new regime were referred to in official
rhetoric as privatization, deregulation, and reform. Privatization, which
applied primarily in Britain -- the US had always been largely privatized --
meant that the government began to sell off infrastructures to private
investors at bargain prices -- infrastructures which had been developed at
considerable public expense. Consumers typically gained some immediate
benefits from these transactions, but the promised "benefits of the market"
had been greatly exaggerated. In the rhetoric, the benefits of
better-managed operations, it seemed, would go directly to the consumer. In
fact, as public services were taken over by private monopolies, "efficiency"
turned out to mean the downsizing of workforces, reductions in quality and
reliability, and cut-backs in infrastructure investment. Apart from some
initial price cuts to consumers, the benefits went mainly to corporate
stockholders and to corporate executives, who received immense bonuses for
their bold "efficiency" measures(25).
Deregulation meant that decades of stabilizing regulations -- the "guiding
hand" -- were rapidly removed, with predictable results. Merger-mania
erupted, as firms sought to leverage their way toward monopolistic
dominance. Industries which had been isolated by regulatory barriers, such
as America's savings and loan industry, became vulnerable to looting by
operators eager to siphon off their assets into more lucrative investments.
Conservatively and responsibly run firms, such as California's Louisiana
Pacific Lumber company, could be raided by junk-bond speculators, with their
assets either sold off, or else developed recklessly in order to generate
the short-term revenue necessary to pay off the junk-bond debt. The
"economic growth" experienced under deregulation has had more to do with the
gathering of markets into fewer hands -- the incredibly profitable TNC's --
than with the generation of productive economic activity(26).
Reform, besides referring to generic compliance with a laissez-faire agenda,
also meant reducing the taxes of corporations and the wealthy, increasing
subsidies to corporations, eliminating social services, backtracking on
labor rights, and generally cutting back the beneficial functions of
government. This agenda represents nothing less than a wholesale transfer of
assets, revenues, and power from elected governments to corporations,
leaving governments and societies impoverished and disenfranchised. It
amounts to a massive assault on the well-being of Western societies, brought
about by corporate domination of the political process, and backed up by a
deluge of anti-government and pro-private-sector propaganda in the
corporate-controlled media(27).
This momentous policy shift was known in the US as the "conservative
revolution", while in Europe it came to be known as the "neoliberal
revolution". It spread to the rest of the West, and beyond, and became a
central part of the globalization process. It was originally seen as a
radical political initiative in 1980, but by the end of the decade it had
become the new political center in the West(28). In 1991, with the signing
of the fiscally conservative Maastricht Treaty, European government leaders
committed Europe as well to a "neoliberal" economic future(29).
But of all these historic shifts in Western policy that have followed the
publication of The Crisis of Democracy, perhaps the most significant has
been the "free-trade" revolution. Free trade had been a nominal part of
Western policy ever since the GATT agreement was signed in 1948. But in
1995, in the Uruguay Round of negotiations, the World Trade Organization
(WTO) was created. GATT had been a treaty; the WTO is a membership
organization, with a permanent bureaucracy centralized in Geneva. The
finance ministers and other Western officials who act as delegates to the
WTO generally come from a background in private banking and industry, and
their perspective reflects elite corporate interests. The senior staff
members and policy makers of the WTO are almost exclusively representatives
from large transnational corporations(30).
Few people have even heard of the WTO, and yet it has enormous influence and
power. Completely dominated by elite corporate interests, it has the legal
power, by binding and enforceable treaties, to overturn national legislation
on a broad range of issues. Any member nation of the WTO can bring an action
against another member, under the WTO, if it feels "unfair trading
practices" are occurring. The US recently undertook such an action against
the European Union, and the WTO forced the EU to stop subsidizing Carribean
banana growers(31). In another action, the EU was forced to allow the
importing of hormone-fed beef from the US(32). In the latter case, the EU
claimed its restrictions were health related, and not motivated by trade
considerations. But the WTO decided otherwise, and there is no appeal from a
WTO decision.
"Free-trade zone" agreements, such as the North American Free-Trade
Agreement (NAFTA), go even further. While under the WTO one nation can take
an action against another, under NAFTA, a corporation can undertake an
action against a nation. In a recent case, the US-based Ethyl Corporation
took an action against Canada, which had banned the chemical MMT when
scientists found it to be a dangerous neurotoxin(33). Ethyl claimed this was
a case of "trade discrimination". Faced with the expense of fighting the
action, and given the corporate domination of the NAFTA bureaucracy, Canada
capitulated. The ban on MMT was overturned, and Canada agreed to pay $13
million in compensation to Ethyl. The scientific evidence had not changed,
but it was irrelevant to the overall policy-making process.
Western leaders have recently been pushing forward a new treaty which would
extend NAFTA-like provisions to most of the world. Under the terms of the
MAI (Multilateral Agreement on Investments), any corporation which does
business in more than one country could bring an action against any nation
on the basis of "investment discrimination"(34). This could be used to
overturn environmental protections, fishing limits, safety regulations,
worker rights, product quality laws, and any number of measures which could
be interpreted -- by a panel of corporate representatives in their secret
MAI hearings -- as being "discriminatory" against an investor's "right" to
maximize profits.
If the MAI isn't adopted -- the negotiations are currently stalled -- there
are contingency plans in the works. There have been discussions of
implementing MAI-like provisions through other channels, such as the
IMF(35). And there has been talk of a huge new "free-trade zone" that would
bind together Europe and North America, allowing corporations to bring
actions against the EU or its member states(36).
The global regime -- world tyranny and global devastation
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
What is called "free trade progress" has actually been the quiet transfer of
sovereignty -- over a broad range of policies -- from elected governments to
corporate-dominated commissions such as NAFTA and the WTO. This transfer of
sovereignty has been a low profile operation. The powerful but faceless
commissions are rarely mentioned in the mass media, only occasionally
written about in major newspapers, and most people are unaware of the degree
to which the traditional powers of nations have already been signed away.
Largely unnoticed, a corporate-dominated global regime is being
consolidated, and legal precedents for its authority -- such as the actions
against Canada and the EU -- are being quietly but firmly established.
Besides the IMF, the World Bank, and the WTO, there is also the OECD
(Organization for Economic Cooperation and Development). Each of these
centralized bureaucracies is dominated by corporate interests and adheres to
a neoliberal, free-trade agenda. While the WTO achieves its authority
through free-trade treaties, the IMF wields similar power by attaching
conditions to the loans which it grants. With the OECD serving as a global
elite think-tank, setting longer-range policy guidelines, this collection of
institutions has become in all but name an official world government(37).
In the poor countries of the third world, in the former Soviet Union, and in
the former tiger-economies of Southeast Asia, this de facto global regime
has shown that it can act with utter ruthlessness. Austerity programs for
the masses, bailout programs for corporations and investors, and
destabilization programs for national economies -- these have characterized
the actions of the IMF(38). But in the West, the regime has been relatively
inactive -- except for a few carefully chosen test cases. Thus most of us in
the West have little idea how much our societies have already been
undermined. Why is the power of the WTO and NAFTA being held back? Why
aren't they being used wholesale to overthrow environmental laws, worker
protections, etc.?
There is a popular anecdote about cooking frogs. If you throw a frog into
boiling water, according to the anecdote, it will jump out, but if you put
it in cold water, and gradually heat it up, it won't realize what's
happening, and will allow itself to be boiled to death. Whether or not this
applies to real frogs, it seems to be an apt metaphor for the situation
Western citizens now find themselves in. Our societies are being dismantled
from around us. But instead of one great conflagration, which might cause us
to protest, the dismantlement is happening in stages, and it is happening
largely behind the scenes. The relative inactivity of the WTO and NAFTA, it
seems, is nothing more than shrewd political timing.
Nonetheless, Western society is being dismantled at an alarming rate. In the
two dozen or so years since Crisis of Democracy was published, the Bretton
Woods "guiding hand" has been removed from international finance, and
neoliberalism has become the dominant global doctrine. In the West,
corporate tax reductions have impoverished national budgets, national
infrastructures have been privatized, social programs have been dismantled,
and governments have signed away their sovereign powers to
corporate-dominated commissions(39). If Western society were to be
dismantled any faster, people might notice and become alarmed.
In the nineteenth century laissez-faire era, capitalist interests reigned
supreme in the West, but they did so within the context of sovereign nation
states. Over time, using the political process of the nation state, people
were able to achieve victories against corporate power, culminating in the
social gains of the postwar years. Now once again, capitalist interests
reign supreme -- only this time in the context of globalization. What the
free-trade treaties do, ultimately, is lock in capitalist hegemony. As long
as Western governments continue to dismantle themselves voluntarily, and
give corporations a free hand, there's little need for the full power of the
globalist regime to be unleashed. But if political sentiment in the West
were to mount against laissez-faire policies, then the de-facto world
government in Geneva is established, and is fully prepared to set economic
and social policies for the whole globe(40). Meanwhile, globalization brings
a return of the abuses of the nineteenth century, but greatly magnified.
In the third world, the IMF (International Monetary Fund) is systematically
destabilizing societies and economies on a wholesale basis -- creating
widespread poverty, disease, and starvation. To much of the world,
globalization is just a new name for imperialism, but with its pace of
exploitation intensified, and with genocidal consequences. Honduran children
labor for pittance to produce overpriced sneakers for our stores. Labor
unions are undermined and shrugged off as irrelevant (in the US) or
suppressed by force (in most of the third world). National economies,
subject to forces wholly beyond their control, collapse with results ranging
from painful (Indonesia) to catastrophic (Rwanda).
In the West, unemployment is not only accepted but embraced as a defense
against inflation. Alan Greenspan, head of the Federal Reserve, praises
"fear" -- the fear of being fired -- as a desirable component of a stable
economy. Real wages decline as workers are forced to give back gains
achieved in years of union power, are made "redundant", or are "downsized"
into less rewarding or temporary jobs. Small farmers are forced out of
business, and into unemployment, as bank lending policies and market forces
favor ever-larger agribusiness operations. Meanwhile, corporate profits
skyrocket and stock markets -- or at least the flagship one on Wall Street
-- boom(41).
Commerce, trade, and finance are being monopolized on a global scale, with
ownership in each business segment being concentrated into the hands of a
few TNC's. These immense conglomerate empires, with their single-minded
dedication to never-ending growth, are like a cancer -- their unrestrained
development projects are destroying societies and the life-support systems
of the Earth itself. Ozone depletion, global warming, destruction of
topsoils and rainforests, pollution of air and water, exhaustion of
fisheries -- these trends threaten the survival of humanity and they are
being accelerated by so-called economic growth(42). Under globalization,
capitalism has grown beyond the point where even a"guiding hand" could
correct its excesses. Unlimited growth is simply not possible forever in a
finite world.
Most of us in the West don't realize how close we are to living under an
official corporate global government, one with no popular representation, no
bill of rights, and whose only god is market forces. The eighteenth-century
Western monarchies became twentieth-century republics -- will the new
millennium return us to tyranny, but on a global scale? And, as citizens, is
our only recourse to wait and see?
Globalization represents a dire crisis for constitutional democracy, the
sovereignty of republics, human well being, and the very survival of life as
we know it on the planet. But in crisis there lies opportunity as well as
danger. The very abuses and excesses which are rising to the surface under
globalization create the seeds of a global counter-movement. As more and
more people come to realize that the future promises only increased
suffering, there is hope that they will rise up in solidarity to build
together a better world.
This book is dedicated to that hope.
Mankind are more disposed to suffer, while evils are sufferable,
than to right themselves by abolishing the forms to which they are
accustomed.
- US Declaration of Independence (1776)
Never doubt that a small group of thoughtful committed citizens
can change the world, indeed it's the only thing that ever has.
- Margaret Mead(43)
----------------------------------------------------------------------------
Footnotes are still under construction -- watch this space.
----------------------------------------------------------------------------
(end Introduction)
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