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A COUPLE of Nobel prize-winning economists are giving major talks in Joburg this week. Many in civil society hope the visits by two of global capitalism's best-known critics can pull local economic policy debates further leftwards: towards meeting social needs, not market dogmas and corporate profitability.
Without wanting to prejudge, I just don't think such expectations will be fulfilled. The ideas for which Muhammad Yunus and Joseph Stiglitz won the Nobel Peace Prize in 2006 and Economics Prize in 2001, respectively, are simply not sufficient for these tumultuous times.
The Nelson Mandela Foundation is honouring Grameen Bank founder and microcredit guru Yunus on Saturday with the annual Mandela Lecture, while Columbia University professor Stiglitz gives two speeches at Wits University, tonight and on Friday.
The way both have addressed the global economic meltdown leaves a great deal to be desired. Yunus is most complicated, because his micro-finance strategy dovetails with the most rabid model of neo-liberal capitalism.
As Yunus put it: I believe that 'government', as we know it today, should pull out of most things except for law enforcement and justice, national defence and foreign policy, and let the private sector, a 'Grameenised private sector', a social-consciousness-driven private sector, take over their other functions.
Over the past three decades, across the world, many governments pulled back from regulating financial markets, especially in the US under the Reagan, Bush 1, Clinton, and Bush 2 administrations.
One might expect that the resulting financial crisis would change Yunus's tune. After all, the catalysing event a couple of years ago was the rising default rate on a rash of subprime mortgage loans given to low-income US borrowers.
Privilege Earlier, the Yunus philosophy was that credit is a fundamental human right, not just a privilege for those with access to bank savings accounts and formal employment that permits stop-order repayments.
Reflect on this, and you quickly realise how ridiculous, inappropriate and dangerous it is to compare bank credit with crucial political and civil liberties, health care, water, nutrition, education, environment, housing, and the other rights guaranteed in South Africa's constitution.
Yet the biography of Yunus supplied by his local speaking agent (speakersinc.co.za>www. speakersinc.co.za) still makes reference to credit as a fundamental human right in its opening sentence.
Apparently backing away from this posture four months ago, Yunus told India's MicroFinance Focus magazine the opposite: If somebody wants to do microcredit - fine. I wouldn't say this is something everybody should have.
Indeed, the predatory way that credit was introduced to vulnerable US communities in recent years means Yunus now must distinguish his Grameen Bank strategy of real microcredit from microcredit which has a different motivation.
Whenever something gets popular, he told the Indian magazine, there are people who take advantage of that and misuse it.
To be sure, Yunus also unveiled a more radical edge in his interview, interpreting the crisis in the following terms: The root causes are the wrong structure, the capitalism structure we have. We have to redesign the structure we are operating in.
Fair enough. But in the next breath Yunus is back in the neo-liberal box, arguing that state microfinance regulation should be promotional, a cheerleader.
For a man whose strategy of lending to women in group borrowing schemes garnered such praise, but who, when times were tough, allowed interest rates to soar and his loan collectors to rip the tin roofs off the women's houses as a means of taking collateral when they defaulted, a robust consumer watchdog is needed, definitely not a cheerleader.
Similar contradictions characterise Stiglitz's views. His first Wits lecture promises to address the role that orthodox economists played in the creation of the crisis and the implications for the teaching of the discipline of economics in universities.
This sounds very welcome. Stiglitz won the Nobel prize for his new information-theoretic economics, especially the critique of the flawed market assumption of perfect information by buyers and sellers.
He coined the phrase Post-Washington Consensus in 1998, to suggest the need to drop the International Monetary Fund and World Bank orthodoxy of the day, and in 2002 he even called for the IMF to be shut down.
Yet Stiglitz's own ideology is based upon fixing capitalist markets, not transcending them. As he explained six months ago: No one can be sure what will work. But long-standing economic principles can help guide us. Incentives matter.
The same reversion to orthodoxy was witnessed in his leadership of the UN Commission of Experts on Reforms of the International Monetary and Financial System, which met last week in New York.
Reforms Ultimately, Stiglitz's work disappointed those with more ambitious reforms in mind. There were no mentions of capital/exchange controls to allow countries insulation from disastrous global financial flows.
There were no suggestions for converting bank nationalisation from lemon socialism into a genuine public utility. The Jubilee movement's projects of debt cancellation, Odious Debt and reparations were not mentioned.
There were no detailed strategies to address ecological debt and the financing implications of climate crisis. There was no attempt at commodity price regulation, in spite of disastrous swinging.
Instead, Stiglitz's commission endorsed the tired, dubious Doha Agenda of the World Trade Organisation, as well as a greater role for the much-aligned IMF.
The commission proposed a UN Global Economic Council with two dozen members with similar status to the UN Security Council, which might potentially lock in the power of the Group of 20 elites (including South Africa) rather than democratise the world economy.
On the other hand, the commission also proposed a new currency and reserve system that would suffer relatively less veto power from the wealthy countries, plus a 1 percent of gross domestic product levy to redistribute from North to South.
But overall, Stiglitz failed to grasp the opportunity of delegitimising the world elites who are desperately trying to return to business as usual. A much greater challenge to prevailing international economic relations will be needed to recover from the depression.
During a week the G8 leadership is meeting in Italy with the intent of sabotaging prospects for a workable climate change treaty in Copenhagen, the world needs genuine voices of clarity on behalf of social and environmental justice.
Maybe Yunus and Stiglitz can rise to the occasion. My guess, though, is that they remain trapped inside the box of their training as damn economists.
# Patrick Bond is the director of the Centre for Civil Society at UKZN.
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