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The great crash of late 2008 should have heralded the end of the
free-market economic philosophy, neoliberalism for short. So says the
2008 Nobel Economic Prize laureate, Princeton professor Paul Krugman.
Everyone's talking about a new New Deal, for obvious reasons, he told
his New York Times column readers. As in 1932, a long era of Republican
political dominance came to an end in the face of an economic and
financial crisis that, in voters' minds, both discredited the
free-market ideology and undermined its claims of competence. And for
those on the progressive side of the political spectrum, these are
hopeful times.
Is Krugman correct? To be sure, there are promised public works projects
in the United States and Europe, alongside ludicrous bail-outs of
hedonistic financiers.
But those who consider ourselves progressives should first acknowledge
that a dangerous period lies ahead, because of at least three factors:
Public policy will suffer owing to the financial sector crisis through
intense austerity, pressures associated with extreme economic
volatility, and a renewed lobby for micro-neoliberal strategies like
privatisation;
There remains unjustified faith in multilateral system solutions (from
Kyoto climate change mitigation to Bretton Woods revivalism), faith
which distracts us from the national-scale solutions that are feasible
and just; and
A new threat arises, in the form of relegitimised neoliberalism and
even imperialism, through the election of Barack Obama as US president.
The mid-November Washington meeting of the heads of state of the 20
largest economies, including South Africa's Kgalema Motlanthe, was one
example of illusory post-neoliberalism.
At that G20 summit, International Monetary Fund managing director
Dominique Strauss-Kahn suggested fiscal stimulus equal to 2% of gross
domestic product - across the world, everywhere, everywhere where it is
possible.
Recommendations
In reality, though, the IMF was treating South Africa like a typical
Third World debtor, and on October 22 its staff filed several lengthy
reports with these recommendations:
The South African government should run a budget surplus (the opposite
of a fiscal stimulus);
It should privatise infrastructure and social needs - including
electricity and transport;
The Reserve Bank should maintain existing inflation targeting and
raise interest rates;
The treasury and trade ministry should remove remaining protections
against global financial and trade volatility; and
The labour ministry should roll back workers' rights, including
backward-looking wage indexation that protects people against inflation.
Ignoring IMF managing director Strauss-Kahn's expansive rhetoric, IMF
staff suggested Pretoria adopt tighter fiscal policy to avoid
exacerbating current account pressures.
The apparent death of our own home-grown neoliberal project in
September, personified by former president Thabo Mbeki's unceremonious
departure, is misleading. Jacob Zuma appears intent not only on
retaining finance minister Trevor Manuel as long as possible, but also
preparing a collision course with his primary internal support base,
trade unionists and communists.
And Zuma's main opposition, former ANC chairman Mosiuoa Lekota, also
confirmed his allegiance to neoliberalism and fiscal discipline,
attacking welfare grants at a debate at the Centre for Civil Society
hosted with Ashwin Desai on December 18.
These are not merely localised betrayals of the Freedom Charter. The
problem is worldwide, thanks to rising austerity pressure.
Multilateral economic, political and climate arrangements that would
allow Strauss-Kahn's proposed stimulus are simply not in place. The
recent Poznan climate talks again revealed how dysfunctional global
processes can be.
During the height of the false prosperity, at the Gleneagles G8 meeting
in 2005, numerous promises of increased development aid were offered by
wealthy countries.
But, according to Manuel, who also serves as the UN secretary-general's
special envoy on financing for development: World military expenditure
is estimated by the Stockholm Institute to have been $1.3 trillion (R12
trillion) in 2007. Compare this to the $104 billion (R967 billion) spent
on overseas development assistance.
The institute reports that rich countries decreased their aid flows by
4.7% in 2006 and 8.4% in 2007, in contrast to rising military spending
of 3% in 2006 and 6% in 2007.
The food and fuel shocks and global financial turmoil are a bellwether
of the consequences of broken promises. They are a signal of our
failure, Manuel lamented.
Consistent failure is the only way to describe development aid, Bretton
Woods Institution reform, the World Trade Organisation's disastrous Doha
Agenda, international financial regulation as proposed at the G20
summit, UN Security Council democratisation, and other crucial
challenges the world elites have failed to tackle.
Worse, neoliberalism may have another breath of life, with
mouth-to-mouth resuscitation applied by Barak Obama and his econocrat
team: Larry Summers, Paul Volcker and Tim Geithner. They are joined by
the dreaded securocrats who championed the Afghanistan and Iraq wars:
Robert Gates as US defence secretary, vice-president Joe Biden and
Hillary Clinton as secretary of state.
Until grass-roots civil society forces again gather their strength to
mount a countervailing assault, as they did nine years ago against the
World Trade Organisation in Seattle, national-scale challenges to global
power are the only ways forward.
From a national power base, various financial sector reforms can be
pursued: imposition of exchange controls (such as in Malaysia in 1998 or
Venezuela in 2003), financial nationalisation (as some European
countries and even the United States, albeit with crony-capitalist
corruption, are doing), and fiscal stimulation (as wealthier national
states are generally being encouraged to do at present to avoid global
depression).
But grass-roots activists are crucial, to prevent the ubiquitous state
patronage of failed capitalists.
To illustrate, the Treatment Action Campaign and Johannesburg
Anti-Privatisation Forum have won, respectively, antiretroviral
medicines needed to fight Aids and publicly provided water, and in the
process to evict multinational corporations.
The drugs are now made locally and on a generic not branded basis, and
are provided free, a great advance upon the $15 000-a-patient-per-year
cost of branded Aids medicines a decade earlier (in South Africa, nearly
half a million people receive them).
Water
And after massive battles, water in Johannesburg is now produced and
distributed by public agencies (Suez was sent back to Paris after its
controversial 2001-06 protest-ridden management of municipal water). In
April, a major constitutional lawsuit in the Johannesburg High Court
resulted in a doubling of free water to 50 litres per person a day and
the prohibition of pre-payment water meters.
And speaking of recent court victories, two weeks ago, the US judicial
system attacked the Bush state department's refusal of a visa to
University of KwaZulu-Natal Centre for Civil Society founder Adam Habib,
who is one of our country's most respected intellectuals and political
commentators.
Since 2006, Habib - like Nelson Mandela from 1963-2008 - has been
considered a terrorist and cannot enter the US. But the state
department has been ordered to provide reasons in public, no matter how
specious.
Habib says, echoing Bush (while doubting the potential force of Islam's
Iraqi insurgency): Bring 'em on.
In the same spirit - and with the same target - as Habib's stubborn
defence of his right to travel to the US, here's a good local
opportunity for citizens to think globally, throw locally, to rid us
of last year's bad experiences and express hope for a better 2009.
The date: January 19, George W Bush's last day in office.
The place: a block west of the Durban City Hall, near the US consulate.
The event: a shoo-out protest called by the Centre for Civil Society,
in solidarity with jailed Baghdad journalist Muntazer al-Zaidi, the
brave shoe-chucker who, at a December 13 press conference, expressed the
world's fury at a million unnecessary lives lost in Iraq by hurling his
footwear at the American president.
Following Al-Zaidi's example, UKZN honorary professor Dennis Brutus, who
served as a member of the 2005-07 Bush War Crimes Commission, gets the
first shoe-toss at our Bush stand-in.
Expensive high heels and smelly old tackies are equally welcome.
Leftover shoes will go to the Durban homeless.
And we will leave open these questions:
If Robert Mugabe pitches up, will he throw or be thrown at?
And what fate awaits Hillary's stand-in, the day before she takes office
and renews US petro-military adventurism shoed-in or shoed-out by
Durban civil society?
# Patrick Bond is the director of the UKZN Centre for Civil Society.
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