Re: [OPE] Jane D'Arista on international Keynesian reformism

From: Patrick Bond (
Date: Mon May 05 2008 - 14:58:57 EDT

Jurriaan Bendien wrote:
> "To build a new global social contract, the underlying logic of the 
> international financial system must be radically altered.

I was able to pay tribute to Jane on Friday, in spite of the fact that 
the prevailing adverse power balances make her proposal for a new social 
contract and Keynesian ICU appear far-fetched.

Still, we have to join the top-down with the bottom-up, I'd want to 
argue. Here's the abstract and intro; the full paper's available from if anyone wants.

Beyond Third World Debt Crisis:
Financial Volatility and Social Power from the Bottom Up

by Patrick Bond
Director, Centre for Civil Society and Research Professor, School of 
Development Studies
University of KwaZulu-Natal, Durban, South Africa

Presented to the Conference on the Political Economy of Monetary Policy 
and Financial Regulation,
in honor of Jane D'Arista

Political Economy Research Institute (PERI)
Gordon Hall, 418 N. Pleasant Street
University of Massachusetts, Amherst
2 May 2008

The global economy’s vast financial sector expansion – in the context of 
productive sector stagnation tendencies - has increased the leading 
powerbrokers' capacity to devalue large parts of the Third World 
(including major emerging market sites), as well as to write down 
selected financially volatile and vulnerable markets in the North (e.g. and real estate bubbles). In contrast to the 1930s, this set of 
partial write-downs of overaccumulated financial capital has not yet 
created such generalized panic and crisis contagion as to threaten the 
entire system's integrity. Shifting and stalling the necessary 
devalorization of overaccumulated capital, particularly as it bubbles up 
via financial sectors into speculative markets, has entailed spatial and 
temporal fixes. In addition, extra-economic coercion has intensified, 
including gendered and environmental stresses. The result is a world 
economy that concentrates wealth and poverty in more extreme ways, 
geographically, and brings markets and the non-market spheres of society 
and nature together, but in a manner adverse to the latter. Reform of 
the system is long overdue, and Jane D'Arista's ideas for revitalized 
multilateral financial institutions, particularly following Keynes' 
International Clearing Union proposal, are worth revisiting. However, 
what good ideas 'from above' require for consideration are extremely 
powerful movements 'from below', whose own notions of global justice are 
already generating organic campaigns that disempower global capital, and 
build transnational links to movements. In a context of severe bias in 
multilateral financial and development agencies, amounting to a 
neoliberal-neoconservative fusion, the inability of reform at the global 
scale and the constrained space and political will at national level in 
most states compel us to consider the exercise of social power from 
below, against the worst depredations of oppression, which are often 
experienced through the financial circuit of capital. From below, 
grassroots reactions – especially, strategies for decommodification and 
'deglobalisation of capital' – should become the basis for more serious 
strategizing, if we are to better ground a global movement for financial 


So the burden of reform devolves to others - those diverse voices around 
the world who are uniting now in a movement to challenge the 
corporate-capitalist version of globalization. These active citizens, of 
course, have very little power to change things themselves, except their 
intelligence and spirit, plus an ability to arouse the broader public. 
This new international movement understands that the maladies of global 
finance go deeper than recurring crises and the danger of a total 
breakdown. For decades, the poorer countries have lived with harsh 
dictation from global capital about what economic plans their 
governments may or may not pursue in behalf of citizens, with brutal 
discipline if they stray. The cheerleaders describe this as 
globalization's 'golden straitjacket' - follow our orders, and we will 
make you rich (someday, but people in most societies are learning that 
the consequences for humanity are often quite leaden. Some people do get 
rich, of course, or gain wage incomes. But as millions learned in 
Southeast Asia, their escape from poverty was a temporary thing, hostage 
to the anxieties of distant investors who are oblivious to their 
individual efforts and aspirations.
William Greider, 'Time to Rein in Global Finance'
The Nation magazine, April 24, 2000


I am second to none in offering admiration for Jane D'Arista's 
contributions to analysis of so many economic and especially financial 
phenomena. Her far-sightedness was especially stunning in an area I 
briefly worked with her on in 1986, the Third World debt. Much has 
happened in this area since that time, including dubious debt relief 
programs and amplified uneven development between regions of the South. 
But because, as D'Arista would agree, the Third World debt which emerged 
as an acute crisis in 1982 and has never ceased its harm, is a symptom 
of deeper economic imbalances, we have to spend some time at the outset 
establishing context, in both 'economic' and 'political' spheres. Only 
then can we properly proceed to consideration of D'Arista's global 
financial reform proposals to assess their feasibility, and then onwards 
to an alternative strategy – 'bottom up' - with the same aims as 
D'Arista but based upon different readings of the balance of forces and 
hence of the impetus for genuine reform.

There is no doubt that financial volatility remains central to the way 
global markets are developing, and that such volatility constrains 
economic, social, political and environmental progress in the Third 
World. The grounding of volatility as a symptom of deeper economic 
tensions also requires setting the stage politically. These are the main 
objectives of the second section.

Having done so, the third section allows us to consider two half-hearted 
and one visionary approach to global financial reform, from above. 
First, the status quo processes of the Monterrey Financing for 
Development agenda in 2002 led in 2005 to G7 finance ministers offering 
sufficient debt relief as to keep borrowers – especially in Africa - 
paying both large downpayments and high rates of export earnings. 
However, the experience of such extreme Northern domination through the 
International Monetary Fund was the main reason for Latin American 
countries (and a few others) repaying the IMF early, threatening its own 
revenue streams. With these divergent forces at work, there was very 
little on offer in multilateral reform. Second, at least one country, 
Norway, made some tentative steps forward (e.g. to defunding the World 
Bank due to its water privatization fetish, and to canceling earlier 
corrupt shipping loans), but these were half-hearted and contradictory. 
Third, we can turn to a much clearer agenda for reform, by D'Arista in 
1999, as amplified by William Greider in his stirring call, at the 
outset. But no constituency for this project was built during the 
crucial early 2000s, as the Jubilee movement's weak Northern base and 
militant but strong Southern group found themselves marginalized, and as 
the rest of the global justice movement addressed issues not immediately 
concerned with finance.

What might break the deadlock? The fourth section suggests that an 
approach more respectful of deep-seated popular challenges to 
commodification and globalization has enormous potential. Cases include 
the challenge to multinational corporate power in the sphere of AIDS 
medicines patents and reparations for past 'Odious Debts' to regimes 
like apartheid. In the sphere of consumer finance, we turn to 
experiences as diverse yet interrelated as the SA township 'bond 
boycott' and Mexico's 'El Barzon' movements. Finally, aiming again at 
global financial governance, activists' World Bank Bonds Boycott 
strategy, especially powerful during the early 2000s, is another way to 
disempower some of the most dysfunctional aspects of global finance (the 
Bretton Woods Institutions), and instead empower investors to do 
something more useful with their resources. Fusing D'Arista's ideas from 
above, with these from below, would be one way forward for a strategic 
discussion, aimed at democratizing finance.

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