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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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