How You Can Help Build a More Just and Sustainable World Economy

Home foreclosures. Global warming. Rampant child labor. An explosion of global billionaires. Daily, you are bombarded with signs of a world economy in big trouble. And it is normal to feel somewhat helpless.

But, contrary to what you might think, there are a lot of things you can do to help the poor and the planet have a better chance. Each of us is a consumer. Most of us are workers and small investors. And, we are all citizens of local communities, of this country, and of the world. In each of these capacities, we can make decisions and choices that will build a better world, and we have a lot of allies in this country and around the world that can help us shift toward a greener, more just global economy.

To get the change right, we must first understand clearly the problems we are trying to solve. The problems out there are big, but they are all related to the same source, and they largely require the same solutions. If you solve one, you can solve them all.

Naming the Problem: Market Fundamentalism

At the root of many of today’s problems is a mindset that became pervasive in the early 1980s as the United States, Great Britain, and Germany all elected leaders who embraced the market as the solution to almost all of our problems. The elections of Ronald Reagan, Maggie Thatcher, and Helmut Kohl were all reactions to a difficult and confused period in the late 1970s when joblessness was rising, oil and other prices were skyrocketing, and governments were having trouble getting things right. Conservatives, going back to the famous University of Chicago economist Milton Friedman and Republican presidential candidate Barry Goldwater in the 1960s, had been saying that the problem was “too much government.” Markets, they argued, should be allowed to operate more freely.

For those who didn’t embrace this new philosophy, particularly in the poorer regions of Latin America, Africa, and Asia, the richer governments imposed it. Starting with the Reagan administration in the 1980s, the U.S. government pressed other governments to shrink their traditional functions of regulation and stimulating the economy in favor of market responses. How did they do this? Well, in many poorer countries, non-democratic governments had been borrowing large sums of money in the 1960s and 1970s that wound up in the pockets of rulers or sunk into boondoggle projects with dubious benefits for the poor. By the early 1980s, impoverished nations were having trouble servicing their external debts, and the richer nations came up with an unequal solution.

The Reagan, Thatcher, and Kohl governments gave new powers to the global financial institutions, particularly the World Bank and International Monetary Fund, to impose “austerity” measures on poor nations in exchange for renegotiating the debts. Countries were told to cut government workers, sell off government enterprises such as municipal water systems, government banks, and electricity systems to private corporations, and plunder their natural resources to boost export earnings. Open your countries to global corporations, they were told, and they will put you on a path to prosperity.

This market-opening mania was accelerated in the 1990s as governments negotiated the World Trade Organization, the North American Free Trade Agreement and other deals that further knocked down barriers to food, other goods, and corporate investments crossing borders, and gave corporations new rights. Billionaire philanthopist George Soros has correctly called these policies “market fundamentalism.”

Governments got downsized, global corporations got lucrative new markets, and yet the debt crisis never went away. And, in the process, five major problems emerged that we need to fix today if we are to have more just and sustainable societies. Here, in rapid order, are the five:

  • Climate Chaos: The rampant overuse of the world water, forests, fisheries, and natural resources has the planet on the verge of ecological collapse and climate chaos. We must stop this madness, and we can.
  • Volatility: Starting with Reagan, the U.S. government and then the global institutions removed a lot of regulations and checks on hot money running around the world seeking the highest return, no matter how risky the investment. In the name of short-term returns, finance markets were turned into casinos, but casinos without rules. We need new regulations on global financial markets.
  • Obscene Inequality: The gaps between rich and poor nations and rich and poor people within nations have been growing as corporations and billionaires reap enormous benefits from global trade and investment and the rest of us get the crumbs. The world’s 1,125 billionaires today have combined wealth that is bigger than the combined wealth of the poorest two-thirds of humanity. This is obscene. Again, there is a lot we can do to reverse these trends.
  • Excess Corporate Power: The trade agreements of the 1990s included a terrible “investor-state” provision that allows corporations to sue governments when regulations threaten corporate profits. This needs to be undone. Likewise, rules that favor big agribusiness over small farmers need to be fixed.
  • Workers Lose Everywhere: Since corporations can now move anywhere in the world, they use this as leverage to bargain down wages and working conditions of workers in the United States and abroad.

All five crises are rooted in the same wrong-headed approach to the world’s problems that most nations have pursued.

And, all demand largely the same solution, namely rejecting the “free market” approach, and launching green economies that have strong global, national and local institutions to build healthy and more equitable societies.

The good news is that a quarter century of failed market fundamentalism around the world has created a vibrant citizen backlash in each of these five areas.

So, first a word on your allies in this fight, and then we’ll get into the agenda we are all fighting for. Crises almost always ignite human reaction. There is no exception here.

Citizen Backlash

Of the five inter-related top crises, the one that has catalyzed the largest backlash in recent years is the climate crisis. In the United States, the public has moved from denial to panic, joining the rest of the world in seeing this as a top priority. Alas, in the panic, too many are turning to false solutions such as biofuels (which are pushing up the price of food and use too much water), nuclear power (still too dangerous and expensive) and “clean coal” (it is still too dirty, especially for mining communities). Still, thousands of groups are coming together around the world to press for swift and effective solutions to the climate crisis (more on this later).

The rapid spread of the housing credit crisis to other financial markets has also engendered a passionate public cry for reform. The Bush administration has largely steered this to bailing out the big Wall Street investment houses. Citizen groups are clamoring for increased regulations on these firms and real relief for the victims of predatory lending. On inequality, worker rights, and excess corporate power, coalitions of labor, religious, and small business groups are coming together to press for change.

All of this reaction has led to an increasing rejection of market fundamentalism. This has been most pronounced in Latin America, where, to differing degrees, at least seven countries have elected candidates who promised a new direction: Brazil, Bolivia, Ecuador, Venezuela, Uruguay, Argentina, and Nicaragua.

Before we get into the new agenda, we should mention two developments that are quite unpredictable, both of which will have a big influence on the future. The first is that after two decades of extremely rapid growth, both China and India are increasingly shaping much of the direction of the global economy. Both have wisely chosen more of a hybrid approach to development, with governments steering economic growth and selectively opening markets. Both, however, have also largely chosen the dirty fossil fuel route to growth, and both are becoming environmental disasters. China also continues to flagrantly violate basic human rights. How these two nations develop, with a third to two-fifths of world’s population between them, will have a huge impact on the future of the planet.

The second new development is that about a dozen governments, most of them in the developing world, have built up massive foreign exchange reserves (approaching $3 trillion), mostly through exports of fossil fuels or manufactured goods to consumers in the United States and other richer countries. From Singapore to China to the United Arab Emirates, these governments now control huge funds, often called “sovereign wealth funds,” that have started propping up ailing U.S. financial and other firms. Countries like China and Venezuela have also now become huge sources of financial aid to other developing nations. How this new economic power of formerly poor nations will affect the global landscape remains to be seen.

The Vision Thing

As the crisis of a quarter century of market fundamentalism grows, there are voices all over the global calling for new restraints on global corporations and on markets. The most visionary voices in institutions like the International Forum on Globalization (www.ifg.org) are calling for fundamental change, for new models of development that put the environment first. After a quarter century of excess, of growth at any cost, of giving all the incentives to corporations, it is time to flip those priorities on their head. Building vibrant local economies should be at the center of what government does.

To save the planet and stimulate good green jobs, we should reorient economies so that we make as much locally as we can. Cities could be surrounded by organic green belts. Public transport could get the money that now goes to bloated militaries. In this world, there would be less trade and cross-border investment because more of what people need would be produced close to home, where democratic control is also the strongest.

At the same time, we need to keep pressing for international protections for human rights and the environment everywhere. This is not only the right thing to do, it is also in the interest of average Americans, since so many of the world’s problems boomerang back to undermine workers and communities here. For the long-term, we should demand that the United Nations form the pillars of the global economy, with international trade and investment channeled to uphold the international rights and standards established by this multilateral body.

Campaigns

In the short term, there are several vibrant campaigns that you can join to help us move toward the vision sketched out above.

One of the most compelling and successful is one that many of you reading this piece have supported for years: the campaign for debt cancellation for the poorest. Under the banner of Jubilee, which draws from the biblical call to cancel debts on a periodic basis, millions of people around the world have pressed governments to cancel debts owed by the poorest countries. The call was joined a decade ago by the Pope, by rock stars like U-2’s Bono, and governments began to respond. In 1996 and again in 2005, some countries were offered limited debt relief. In the United States, Jubilee campaigners have built strong momentum behind a Jubilee Act that would expand debt cancellation to more countries and remove onerous conditions. (see www.jubileeusa.org).

Another critical issue for the coming year was opened up by Barack Obama and Hillary Clinton in the Democratic primary races of this year. Both critiqued the misplaced priorities of the North American Free Trade Agreement (NAFTA) and both pledged to renegotiate the deal if they are elected president. NETWORK members can join a vibrant coalition of labor, environmental, religious, family farm and other activists who have been calling for a new vision of North America where working people in Canada, the United States, and Mexico are offered a fair deal (see www.art-us.org). In addition to renegotiating NAFTA, it will be important to stop a proposed U.S.-Colombia Free Trade Agreement that the Bush administration put before the U.S. Congress in April.

For this year and next, thousands of organizations around the world are focusing on the need for a new global framework to address what is arguably the most pressing crisis of our time: climate chaos. Last December, leaders of many of these groups converged on Bali, Indonesia, as government representatives met to discuss a new phase of the Kyoto Protocol to reduce emissions of climate-warming greenhouse gasses. Many of these citizen groups came together around the slogan: “Climate Justice NOW.” They are asserting that any viable new global climate rules must address the fact that the bulk of the problem rests in rich countries and among the richer populations in all countries, and hence these groupings should bear the brunt of adjustment costs. This campaign may be the one that best allows us to highlight the need for entirely different values to govern our societies, values that start with dignified work, healthy communities, and a clean environment. (For more on Climate Justice NOW, contact our IPS colleague Janet Redman: [email protected]).

All of these campaigns speak to the need for new global trade and finance organizations that are rooted in a greater sense of justice and sustainability. The outlines of such new institutions and rules have been put forward by a team of researcher/activists from rich and poor countries under the auspices of the International Forum on Globalization (see John Cavanagh and Jerry Mander, eds., Alternatives to Economic Globalization: A Better World is Possible (Berret-Koehler, 2004). As the effects of the U.S. mortgage crisis spread around the world, there are rising calls to create a much more rigorous and effective global financial architecture that protects borrowers as much as lenders.

What you Can Do: Local to Global

We urge you to engage in these campaigns as citizens. Today, we are all local, national and global citizens, and you have the choice to engage at any or all of these levels. There is also a lot you can do in your individual capacity. You are all consumers. Today, there is a vast range of “fair trade” organizations that sell everything from tea to carpets to t-shirts that are made under conditions that guarantee decent worker rights and standards to the makers of those products (see www.fairtradefederation.org). Talk to those in charge of purchasing in your church or workplace and make sure they are buying fair trade coffee and tea.

Many of you have pension funds or mutual funds; make sure part of your money is invested in “socially-responsible” funds. And, please donate generously to the many organizations in the United States and around the world that are advancing new approaches to the global economy that put the interests of working people and the environment first. The tide seems to be turning, but challenging the powerful forces behind market fundamentalism will require serious people power. Together, we can do it.

Sarah Anderson directs the Global Economy project of the Institute for Policy Studies in Washington, DC.
John Cavanagh is the director of the Institute for Policy Studies, a member of the New Economy Working Group, and co-author of Development Redefined: How the Market Met its Match (Paradigm, 2008).