The ongoing series of global economic problems including stagnation, financial volatility and unemployment are in fact the effects of what has become the highest ever level of inequality in human history
Shifts in the global political economy over the past few years have led to the overt convergence of neo-conservatism and liberalisation. This political alignment, premised on an unsustainable notion of limitless growth, has remained firmly opposed to principles of redistributive socio-economic reform. Resultantly, the world has been witnessing uneven development and a widening gap between the haves and have-nots.
The ongoing series of global economic problems including stagnation, financial volatility and unemployment are in fact the effects of what has become the highest ever level of inequality in human history. This inequality is not only glaringly evident in present circumstances; it is unfortunately likely to be even more acute in the coming future. Numerous threats from environmental damage, economic recession and socio-political unrest are potentially serious enough to derail the modest ongoing process of global integration.
The fact that the world has been facing a growing economic slowdown is not even a recent phenomenon. The World Bank points out that the world’s per capita annual GDP increase fell from 3.6 percent during the 1960s, to 2.1 percent during the 1970s, to 1.3 percent during the 1980s and to 1.1 percent during the 1990s. This was then followed by a rise to 2.5 per cent for the first half of the 2000s, but is now slipping again.
Over-accumulation of capital not only exacerbates inequality, it has begun causing huge gluts in world markets and declining increases in per capita GDP growth. While the bundle of goods which constitute GDP has changed over time — technological products have assumed much more prominence in GDP measurements — GDP growth itself remains a notorious overestimate of prosperity.
Environmental degradation, for instance, is often a direct consequence of domestic production but it remains ignored while calculating GDP rates. The extremely uneven character of accumulation around the world also makes GDP estimations an inaccurate measure for overall well-being within a nation.
Neo-liberalism has largely been blamed for having generated such vast inequalities between the poor and the rich. The neo-liberal bloc, stretching from Washington DC, through to most of Europe’s major capitals, and all the way to Japan, has remained unable to overcome the global economic crisis. Conversely, it can be argued that the present economic stress caused by stagnation and volatility has been worsened by the above mentioned joining of neo-liberal and neo-conservative forces in countries like the US, under the George Bush era.
The US neoconservatives have now finally been defeated after two consecutive terms in office due to a combination of their economic problems, military debacles, and the accompanying political unpopularity. While the new government is yet not in place, the extent to which they will be able to modify established US interests around the world remains to be seen.
Even reform-oriented liberals such as Joseph Stiglitz, Jeffrey Sachs, or George Soros have failed to achieve meaningful gains in addressing the latest global challenges.
Perhaps there would have been more room for optimism if the United Nations democratisation process had made some headway. Yet the UN reforms agenda has achieved minimal success given its inability to expand the Security Council, notwithstanding pressure from aspirant member states including Japan, Germany, India, Brazil, Nigeria and South Africa.
The US and EU resistance to reform of the international financial institutions has led to an increasing legitimacy crisis for the World Bank, and growing IMF financial deficits. Moreover, repeated delays in concluding World Trade Organisation negotiations have led to hurdles in removal of barriers to trade and making the terms of trade more equitable.
Environmentally, the EU and other supportive developing countries have failed to defend or expand the Kyoto Protocol in view of resistance from countries like the US and Australia. Subsequent G8 meetings have also not been able to make sufficient breakthroughs to reverse potentially catastrophic climate change. Therefore there is no real progress on the urgent need for global ecological management problems arising in regards to freshwater, maritime resources, and specie extinction.
The World Health Organisation’s commission concerning social determinants affecting health, points out how cuts in state resources for health care or imposition of cost recovery principals have lowered low-income people’s utilisation rates of health services over the world. Yet structural adjustments’ persistent orientation to privatise state services continue to worsen global health conditions.
Third World nationalists from places like Cuba, Venezuela and Bolivia, as well as civil society initiatives such as the Zapatistas movement in Mexico, or the anti-dam encampments in India’s Narmada Valley, may have the will to advance the required far-reaching reforms. Whether they have the capacity and get the required international support to achieve their goals, remains to be seen.
Hopefully the past three and a half decades of elite mismanagement have alerted the incoming US administration to the dire consequences of espousing top-down strategies for development. It is about time that the neo-conservative and neo-liberal processes of globalisation which are primarily dictated from above are replaced by genuine participatory globalisation from below.
It is possible that the architecture for globalisation is improved so that it becomes more beneficial to the poor countries. One of the areas deserving reconsideration relates to intellectual property rights: pharmaceutical innovators choose to have intellectual property rights in rich country markets, which rewards their innovation but allows poorer countries to reproduce life-saving medicines cheaply without having to pay enormous fees to multinational corporations.
Also, whether institutions like the IMF allow countries like Pakistan, compelled to reach out to them again, to avoid loan conditionalities which have adverse effects on the poor will be another indication of whether the neo-liberal vanguards are finally ready to demonstrate the flexibility required to put the world on the track of more sustainable development.
The writer is a researcher. He can be contacted at email@example.com
Reproduced by permission of The Daily Times