[OPE] Walden Bello, "The Coming Capitalist Consensus"

From: Jerry Levy <jerry_levy@verizon.net>
Date: Wed Dec 31 2008 - 10:23:11 EST

/Published on Wednesday, December 24, 2008 by //Foreign Policy in Focus/
<http://www.fpif.org/fpiftxt/5765>/ /
/Washington, DC/

The Coming Capitalist Consensus

by Walden Bello*

Not surprisingly, the swift unraveling of the global economy combined
with the ascent to the U.S. presidency of an African-American liberal
has left millions anticipating that the world is on the threshold of a
new era. Some of President-elect Barack Obama’s new appointees – in
particular ex-Treasury Secretary Larry Summers to lead the National
Economic Council, New York Federal Reserve Board chief Tim Geithner to
head Treasury, and former Dallas Mayor Ron Kirk to serve as trade
representative – have certainly elicited some skepticism. But the sense
that the old neoliberal formulas are thoroughly discredited have
convinced many that the new Democratic leadership in the world’s biggest
economy will break with the market fundamentalist policies that have
reigned since the early 1980s.

One important question, of course, is how decisive and definitive the
break with neoliberalism will be. Other questions, however, go to the
heart of capitalism itself. Will government ownership, intervention, and
control be exercised simply to stabilize capitalism, after which control
will be given back to the corporate elites? Are we going to see a second
round of Keynesian capitalism, where the state and corporate elites
along with labor work out a partnership based on industrial policy,
growth, and high wages – though with a green dimension this time around?
Or will we witness the beginnings of fundamental shifts in the ownership
and control of the economy in a more popular direction? There are limits
to reform in the system of global capitalism, but at no other time in
the last half century have those limits seemed more fluid.

President Nicolas Sarkozy of France has already staked out one position.
that “laissez-faire capitalism is dead,” he has created a strategic
investment fund of 20 billion euros to promote technological innovation,
keep advanced industries in French hands, and save jobs. “The day we
don’t build trains, airplanes, automobiles, and ships, what will be left
of the French economy?” he recently asked rhetorically
<http://euobserver.com/9/27157>. “Memories. I will not make France a
simple tourist reserve.” This kind of aggressive industrial policy aimed
partly at winning over the country’s traditional white working class can
go hand-in-hand with the exclusionary anti-immigrant policies with which
the French president has been associated.

Global Social Democracy

A new national Keynesianism along Sarkozyan lines, however, is not the
only alternative available to global elites. Given the need for global
legitimacy to promote their interests in a world where the balance of
power is shifting towards the South, western elites might find more
attractive an offshoot of European Social Democracy and New Deal
liberalism that one might call “Global Social Democracy” or GSD.

Even before the full unfolding of the financial crisis, partisans of GSD
had already been positioning it as alternative to neoliberal
globalization in response to the stresses and strains being provoked by
the latter. One personality associated with it is British Prime Minister
Gordon Brown, who led the European response to the financial meltdown
via the partial nationalization of the banks. Widely regarded as the
godfather of the “Make Poverty History” campaign in the United Kingdom,
Brown, while he was still the British chancellor, proposed
<http://www.hm-treasury.gov.uk/2633.htm> what he called an “alliance
capitalism” between market and state institutions that would reproduce
at the global stage what he said Franklin Roosevelt did for the national
economy: “securing the benefits of the market while taming its
excesses.” This must be a system, continued Brown, that “captures the
full benefits of global markets and capital flows, minimizes the risk of
disruption, maximizes opportunity for all, and lifts up the most
vulnerable – in short, the restoration in the international economy of
public purpose and high ideals.”

Joining Brown in articulating the Global Social Democratic discourse has
been a diverse group consisting of, among others, the economist Jeffrey
Sachs, George Soros, former UN Secretary General Kofi Annan, the
sociologist David Held, Nobel laureate Joseph Stiglitz, and even Bill
Gates. There are, of course, differences of nuance in the positions of
these people, but the thrust of their perspectives is the same: to bring
about a reformed social order and a reinvigorated ideological consensus
for global capitalism.

Among the key propositions advanced by partisans of GSD are the following:

* Globalization is essentially beneficial for the world; the
neoliberals have simply botched the job of managing it and selling
it to the public;

* It is urgent to save globalization from the neoliberals because
globalization is reversible and may, in fact, already be in the
process of being reversed;

* Growth and equity may come into conflict, in which case one must
prioritize equity;

* Free trade may not, in fact, be beneficial in the long run and may
leave the majority poor, so it is important for trade arrangements
to be subject to social and environmental conditions;

* Unilateralism must be avoided while fundamental reform of the
multilateral institutions and agreements must be undertaken – a
process that might involve dumping or neutralizing some of them,
like the WTO’s Trade-Related Intellectual Property Rights
Agreement (TRIPs);

* Global social integration, or reducing inequalities both within
and across countries, must accompany global market integration;

* The global debt of developing countries must be cancelled or
radically reduced, so the resulting savings can be used to
stimulate the local economy, thus contributing to global reflation;

* Poverty and environmental degradation are so severe that a massive
aid program or “Marshall Plan” from the North to the South must be
mounted within the framework of the “Millennium Development Goals”;

* A “Second Green Revolution” must be put into motion, especially in
Africa, through the widespread adoption of genetically engineered

* Huge investments must be devoted to push the global economy along
more environmentally sustainable paths, with government taking a
leading role (“Green Keynesianism” or “Green Capitalism”);

* Military action to solve problems must be deemphasized in favor of
diplomacy and “soft power,” although humanitarian military
intervention in situations involving genocide must be undertaken.

The Limits of Global Social Democracy

Global Social Democracy has not received much critical attention,
perhaps because many progressives are still fighting the last war, that
is, against neoliberalism. A critique is urgent, and not only because
GSD is neoliberalism’s most likely successor. More important, although
GSD has some positive elements, it has, like the old Social Democratic
Keynesian paradigm, a number of problematic features.

A critique might begin by highlighting problems with four central
elements in the GSD perspective.

First, GSD shares neoliberalism’s bias for globalization,
differentiating itself mainly by promising to promote globalization
better than the neoliberals. This amounts to saying, however, that
simply by adding the dimension of “global social integration,” an
inherently socially and ecologically destructive and disruptive process
can be made palatable and acceptable. GSD assumes that people really
want to be part of a functionally integrated global economy where the
barriers between the national and the international have disappeared.
But would they not in fact prefer to be part of economies that are
subject to local control and are buffered from the vagaries of the
international economy? Indeed, today’s swift downward trajectory of
interconnected economies underscores the validity of one of
anti-globalization movement’s key criticisms of the globalization process..

Second, GSD shares neoliberalism’s preference for the market as the
principal mechanism for production, distribution, and consumption,
differentiating itself mainly by advocating state action to address
market failures. The kind of globalization the world needs, according to
Jeffrey Sachs in /The End of Poverty/, would entail “harnessing…the
remarkable power of trade and investment while acknowledging and
addressing limitations through compensatory collective action.” This is
very different from saying that the citizenry and civil society must
make the key economic decisions and the market, like the state
bureaucracy, is only one mechanism of implementation of democratic

Third, GSD is a technocratic project, with experts hatching and pushing
reforms on society from above, instead of being a participatory project
where initiatives percolate from the ground up.

Fourth, GSD, while critical of neoliberalism, accepts the framework of
monopoly capitalism, which rests fundamentally on deriving profit from
the exploitative extraction of surplus value from labor, is driven from
crisis to crisis by inherent tendencies toward overproduction, and tends
to push the environment to its limits in its search for profitability.
Like traditional Keynesianism in the national arena, GSD seeks in the
global arena a new class compromise that is accompanied by new methods
to contain or minimize capitalism’s tendency toward crisis. Just as the
old Social Democracy and the New Deal stabilized national capitalism,
the historical function of Global Social Democracy is to iron out the
contradictions of contemporary global capitalism and to relegitimize it
after the crisis and chaos left by neoliberalism. GSD is, at root, about
social management.

Obama has a talent for rhetorically bridging different political
discourses. He is also a “blank slate” when it comes to economics. Like
FDR, he is not bound to the formulas of the /ancien regime/. He is a
pragmatist whose key criterion is success at social management. As such,
he is uniquely positioned to lead this ambitious reformist enterprise.

Reveille for Progressives

While progressives were engaged in full-scale war against neoliberalism,
reformist thinking was percolating in critical establishment circles.
This thinking is now about to become policy, and progressives must work
double time to engage it. It is not just a matter of moving from
criticism to prescription. The challenge is to overcome the limits to
the progressive political imagination imposed by the aggressiveness of
the neoliberal challenge in the 1980s combined with the collapse of the
bureaucratic socialist regimes in the early 1990s. Progressives should
boldly aspire once again to paradigms of social organization that
unabashedly aim for equality and participatory democratic control of
both the national economy and the global economy as prerequisites for
collective and individual liberation.

Like the old post-war Keynesian regime, Global Social Democracy is about
social management. In contrast, the progressive perspective is about
social liberation.

Copyright © 2008, Institute for Policy Studies

/Walden Bello is a columnist for Foreign Policy In Focus, a senior
analyst at the Bangkok-based Focus on the Global South, president of the
Freedom from Debt Coalition, and a professor of sociology at the
University of the Philippines.

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Received on Wed Dec 31 10:31:20 2008

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