-Caveat Lector-
DARK VICTORY OF THE NEW WORLD ORDER
by Walden Bello
May 20, 1994
1994 is the year the World Bank and the International Monetary Fund (IMF)
mark their golden 50th anniversary. But it is an event most of the
world's people have little cause to celebrate especially the countries and
the peoples whose economies are in a state of collapse, largely as a result
of the structural adjustment programs imposed on them by these
institutions. Knowledge of this failure is now widespread, as is awareness
of the insecurity and deterioration of working conditions being experienced
by most people in the North. What is not widely recognized is that these
two phenomena are linked to the same cause a sweeping strategy of global
economic rollback unleashed by Northern political and corporate elites to
consolidate corporate hegemony in the home economy and shore up the North's
domination of the international economy.
Central to this process was the leadership of a highly ideological
Republican regime in Washington. Aside from defeating communism, Reag anism
in practice was guided by three other strategic concerns. The first was to
re subordinate the South within a US-dominated global economy. The second
was to roll back the challenge to US economic interests from the newly
industrializing countries (NICs) and Japan. The third was to dismantle the
New Deal social contract between big capital, big labor, and big
government which both Washington and Wall Street saw as the key constraint
on corporate America's ability to compete internationally.
This is not to suggest an image of corporate and political elites plotting
at the White House or in Manhattan high rises to impose global adjustment.
This is never the way major shifts in national policy come about. What
usually occurs is a much more complex social process in which ideology
mediates between interests and policy. An ideology is a belief-system a set
of theories, beliefs, and myths with some internal coherence that seeks to
universalize the interests of one social sector to the whole community. In
market ideology, for instance, freeing market forces from state restraints
is said to work to the good not only of business, but also to that of the
whole community. Transmitted through social institutions such as
universities, corporations, churches or parties, an ideology is
internalized by large numbers of people whose actions it then informs.
Radical free market ideas had been around for a long time as an alternative
to the post-War Keynesian social contract. However, market ideology
became a dominant force only when a political elite which espoused it
ascended to state power on the back of an increasingly conservative
middle-class social base at the same time that the changed circumstances of
international economic competition caused the corporate establishment to
desert the liberal Keynesian consensus in its favor.
There was a wide sharing of the assumptions of free-market ideology by
cultural, state, and economic elites during the Reagan-Bush era. There were
obvious differences among these elites, but for the most part there was
agreement on the broad thrust of championing private enterprise, rolling
back communism and the insurgent South, eliminating state intervention in
the economy, reducing government-supported safety nets, and freeing labor
markets by dismantling unionism.
When a class-based ideological alliance faces a conflict between
ideology and its class interests, the class interest generally prevails.
This alliance is no exception. The very intellectual foundation of free
market ideology is a belief in the superiority of purely competitive
markets over oligopoly. Unrestrained by concern for intellectual
consistency and coherence, the central commitment of the Reagan-Bush policy
agenda to unfettering the market place found expression not in efforts to
break up oligopolies, but rather to doing away with the obstacles to
corporate mergers and acquisition. The result has been a further
concentration of corporate power.
Ultimately, the strategic coherence of the Republican policies was provided
not by their pro-competition principles but by their anti-statist and
pro-corporate thrust. From the viewpoint of the free-market vanguard which
dominated Washington, state intervention via protectionism and foreign
investment restrictions prevented U.S. capital from fully penetrating Third
World Economies; aggressive state support for domestic firms in the NICs
militated against the creation of a level playing field for U.S.
corporations; and exorbitant taxation of the private sector and enforcement
of environmental and labor standards prevented U.S. capital from becoming
com petitive with the formidable Japanese. Thus they sought to eliminate
state supports for production in the South and the NICs, and to reduce
state restraints on corporate activity in the United States.
In the South, the debt crisis of 1982 served as the opening for the
imposition of the structural adjustment programs via the World Bank and the
IMF that forced south to roll back state intervention in economic life. The
aim was to weaken domestic entrepreneurial groups by eliminating
protectionist barriers to imports from the North and by lifting
restrictions on foreign investment; to overwhelm the weak legal barriers
protecting labor from capital; and to integrate the local econ omies more
tightly into the North-dominated world economy.
The consequences have been devastating. In the developing countries, an
estimated 13-18 million people, mostly children, die from hunger and
poverty each year. Women have been especially hard hit, since the higher
physical demands on them, relative to men, necessitate calorie requirements
that are often not met. Most ad justed countries have not even been able
to reduce their external debts, ostensibly a primary goal of structural
adjustment.
Against the NICs, trade policy was the weap on of choice. While
Washington's immediate goal was to rectify trade imbalances by reducing NIC
exports to the United States and prying open NIC markets, its strategic
objective so clear in its treatment of South Korea, the NIC par excellence
was to dismantle the system of state intervention and support that had
enabled NIC producers, following the Japanese mode, to compete
successfully against American corporations not only in world markets, but
in the U.S. market itself.
In the United States, getting government off the back of business took
the form of a radical reduction of tax rates on the rich, removal of state
restraints on corporate mergers and acquisitions, and weak er enforcement
of environmental standards. Above all, it meant giving government support
to aggressive corporate efforts to bust unions and weaken labor's
resistance to the drive to achieve competitiveness by reducing wages and
benefits, downsizing the domestic work force, and transferring
manufacturing operations to cheap labor areas in the Third world.
Ironically, a Republican regime pledged to arrest U.S. decline ended up
accelerating it, though the elites who prospered handsomely at the expense
of everyone else scarce ly noticed.
By the end of the Reagan-Bush era, federal aid to the cities had plummeted
by 60 per cent from its levels in 1981. The upsurge of crime, spread of
drugs, and consolidation of inner-city poverty were among the predictable
results. The successful assault on organized labor was apparent in wage
trends: between 1979 and 1989, the hourly wage of 80 per cent of the work
force declined, with the wage of the typical (or median) worker falling by
nearly five per cent in real terms. Male workers with 12 or fewer years of
schooling lost the most ground, with their hourly wages falling by 20 per
cent.
While in Germany and Japan technology was employed to assist workers in
gaining higher productivity, in the United States, it was used to displace
them. Throughout the 1980's, corporations broke down the power of labor by
substituting high-tech machines for well-paid skilled work ers. For the
most part, US corporations are meeting the competitive challenge of the
1990's by continuing the strategy of the 1980's. While Japanese firms
cling with tenacity to their system of life-time employment, even US firms
experiencing good times, such as Walmart and Procter and Gamble, have
embraced downsizing as a basic strategy to maintain profit margins.
Although a new Democratic administration has ascended to power in
Washington, hopes that it would break with the policies in place have
proven to be largely misplaced. Continuing support for structural
adjustment, an even more aggressive trade policy, the June 1993 bombing of
Iraq ordered by president Bill Clinton, and support for the North American
Free Trade Agreement (NAFTA) designed to consolidate cheap-labor preserves
south of the border indicate continuity rather than the change that Clinton
promised.
There is an alternative to the dark victory of the grim global future known
as the New World Order. However, bringing it about will mean eliminating
its central cause, the restructuring of the world economy to consolidate
the hegemony of Northern corporate capital. It will mean appealing to and
promoting the common interests of workers of the North and workers of the
South in repealing corporate-driven structural adjustment. It will entail
forging across borders an alternative economic vision that brings the
economy back under the control of the community.
An alternative economic system need not mean an end to competition,
only its subordination to the strategic organizing principles of
cooperation, equity, and sustain ability. Indeed, in this post-Keynesian,
post-Stalinist, post-Reaganomics world, the challenge to economic
innovators is how to marry capitalism's unsurpassed ability to promote
productive efficiency and technological innovation to the traditional
socialist movement's concern for equity and the Green Movement's demand for
a New Deal between nature and society. The universalizing logic of labor
solidarity, community, equity, and ecological sustainability provides the
foundation for this alliance.
If the Bank and Fund's 50th birthday is not an occasion to celebrate,
it certainly provides an opportune time to assess the role and record of
these powerful global institutions and the alternatives to the agenda they
serve.
Walden Bello is senior analyst and former executive director of the
Institute for Food and Development Policy and a contributing editor of the
People-Centered Development Forum. He may be reached c/o Institute for Food
and Development Policy, 398 60th St., Oakland CA 94618, U.S.A. (510)
654 4400; Fax (510) 654 4551; e-mail: [EMAIL PROTECTED]
This article was prepared and distributed by the People-Centered
Development Forum based on his recent book Dark Victory: The United States,
Structural Adjustment and Global Poverty co-authored by Shea Cunningham and
Bill Rau available from the Institute for Food and Development Policy (see
above) at $12.95 plus $3.50 shipping and handling. CA residents add sales
tax. Outside the United States contact Pluto Press, 345 Archway Road,
London N65AA, UK.
Development Thinking/People Centred Development Publications)
PCDForum Article #8
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