Disarming the markets (original) (raw)

Leader

The storm that has hit the money markets in Asia and affected the rest of the world is part of a wider danger. That is financial globalisation, which has become a law unto itself with its own powers, embodied by institutions such as the IMF, the World Bank, the OECD and the World Trade Organisation. Together, they threaten the power base of real states in the real world.

The hurricane that has hit the money markets in Asia poses a threat to the rest of the world. The globalisation of investment capital is causing universal insecurity. It makes a mockery of national boundaries and diminishes the power of states to uphold democracy and guarantee the wealth and prosperity of their peoples.

Financial globalisation is a law unto itself and it has established a separate supranational state with its own administrative apparatus, its own spheres of influence, its own means of action. That is to say the International Monetary Fund (IMF), the World Bank, the Organization for Economic Cooperation and Development (OECD) and the World Trade Organization (WTO). These four powerful institutions are unanimous in singing the praises of “market values”, a view faithfully echoed by most of the major organs of the media.

This artificial world state is a power with no base in society. It is answerable instead to the financial markets and the mammoth business undertakings that are its masters. The result is that the real states in the real world are becoming societies with no power base (1). And it is getting worse all the time.

The WTO, which took over from GATT in 1995, is now an institution with supranational powers, subject to none of the checks and balances of parliamentary democracy. If a case is referred to it, it has the power to declare national legislation on employment, public health or environmental matters “contrary to the interests of free trade” and insist that it be repealed (2). And, in OECD, beyond the reach of public opinion, a very important agreement called the Multilateral Investment Agreement (MIA) has been under negotiation since 1995 and is likely to be signed in 1998, giving investors full powers vis-à-vis governments.

The task of disarming (...)

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(1) See André Gorz, “Misères du présent, richesse de l’avenir”, Galilée, Paris, 1997; also the paper given by Bernard Cassen at the symposium on Social Democracy and Globalisation organised by the Parti québécois and held in Quebec on 27-28 September 1997. See also the study entitled “Le Désarmement financier”, produced by the Lisbon Group under Riccardo Petrella and shortly to be published by Labor, Brussels.

(2) See François Chesnais, “La Mondialisation du Capital”, Syros, Paris, 1997 (new and enlarged edition).

(3) Rapport sur le développement humain 1997, Economica, Paris, 1997.

(4) See Mahbub Ul Haq, Inge Kaul, Isabelle Grunberg, “The Tobin Tax: Coping with Financial Volatility”, Oxford University Press, Oxford, 1996. See also Le Monde diplomatique, February 1997.