Clusters of Crisis and a Planetary Contract

18 October 2001
Article

The tragic and world-altering events of 11 September 2001 have, I believe, only reinforced the conclusions I reached in the Budapest paper, notably in section VI. In the light of these events, I hope, however, that it may be useful to present my recommendations in a more systematic manner below. I have left the rest of the Budapest paper as it was at the end of August, before the terrorist attacks.


What were the major world crises before the abomination of 11 September 2001?

We can identify four poles or "crisis clusters" which are themselves, unsurprisingly, interconnected.

  1. First is the environmental destruction cluster characterised by climate change which is in turn based essentially on excessive, crippling and foolhardy Western dependency on fossil fuels. Here, too, are to be found air and water pollution, massive species destruction, disappearance of soil fertility, deforestation and the like.
  2. Second is the poverty and inequality cluster, with growing disparities and mal-distribution of wealth, employment and resources both between and within nations reinforcing the destabilising North-South gap and creating a pervasive sense of injustice.
  3. Third is the crisis of democracy and empowerment throughout the world, itself related to elite control bred of huge inequalities, see above. Formal democratic progress [elections, etc.] has occurred in some places, particularly since the fall of the Berlin wall, but genuine popular participation remains the exception and most people-whether from North or South-exert little if any control over the basic circumstances of their own lives.
  4. Fourth is the looming economic crisis of recession/depression. Serious and structurally in-built overcapacity now exists in virtually all industries and services; the clear and present danger of mass unemployment and exclusion can only add to the other burdens.

As if all this were not enough, 11 September 2001 has ushered in an age of radical insecurity and post-State conflict. We now face a shadowy, undeclared, non-territorial enemy who is not fighting for traditional goals, who respects none of the "rules of war" evolved over past centuries and who brings the full horror of unpredictability into the homes and work places of the wealthy, the democratic, the law-abiding.

We must at all costs avoid the "clash of civilisations" à la Samuel Huntington. This is this scenario Bin Laden and his fellow fascist fundamentalists most devoutly desire, believing as they do that indiscriminate American action against Arab civilians will radicalise millions of Moslems and lead to full-scale holy war against the hated West. Egyptian President Hosni Mubarak has described Bin Laden as "a megalomaniac who wants to take power over the world". We must hand him no opportunities.

Now is the time to recall, rather, the advice of the great Chinese general, Sun Tzu [circa 500 B.C.]:

Do not do what you would most like to do. Do what your adversary would least like you to do.

What does a fanatical, post-State enemy least want us to do? What paths might we choose to defeat his purposes while at the same time bringing remedy to the clusters of crisis outlined above? These paths exist, but so far our political leaders appear stunned and without vision. Once more it will be up to citizens to convince them that they must act boldly. Terrorism has brought about a moment similar-although less hopeful-to that of the 1940s when the Bretton Woods institutions and the Marshall Plan were conceived.

A new, updated and globalised Keynesian strategy is now called for, not just in the United States or in Europe but throughout the world. We need vast injections of crisis-directed resources into the global economy. They must be linked to environmental renewal, poverty eradication and democratic governance.

Such a "Planetary Contract" would include the following components:

  • Environmental renewal and repair: The West should overcome its short-sighted dependence on fossil fuels, particularly as they are produced mainly in countries which could, in spite of all precautions, fall into the fundamentalist camp whose first act would be to create havoc in Western economies. We need a programme to kick-start mass production of solar and other renewable energies and clean technologies, through subsidies and export credits if necessary, as well as clean-ups in the North, reforestation in the South and conservation measures everywhere.
  • Anti-poverty measures insuring a dignified life for all: Various United Nations agencies have affirmed that one could supply drinking water, adequate food, basic housing, health care and education to everyone on earth for under $100 billion a year for ten years.
  • Democratic conditionality: No one wants to see the history of past decades repeated with elites capturing virtually all the benefits of both trade and aid. Western citizens are in favour of aid to poor countries, but only if they are guaranteed that the resources will reach those in need.

Therefore, in order to receive the benefits of the Planetary Contract, governments in the South would be required to include the representatives of their own civil society in the management and distribution of these resources. All societies, no matter how poor, have organisations representing farmers, workers, women, the business community and so on, which are allowed to operate more or less freely depending on the government. Arab and/or Moslem countries wishing to join in the Planetary Contract would need to show good faith in weeding out their own dangerous fundamentalist elements.

It would often be helpful to include representatives of Northern NGOs and civil society who have already worked with the more independent groups in the South so as to make sure that government and the elite are not merely manipulating or substituting for "civil society" No government would be obliged to enter into the Planetary Contract, but once accepted, then democratic [and anti-fundamentalist, of whatever stripe] conditionality would have to be accepted as well, without governmental recriminations of "interference" or "neo-colonialism".

The model of the Porto Alegre [Brazil] municipal budgeting process should inspire the redistribution of resources. In this city of 1.3 million people, elected neighbourhoods' associations receive budgetary allocations to be spent on their democratically established priorities. Waste and corruption have virtually disappeared. The Planetary Contract should also provide for a corps of independent, professional auditors with the capacity to recommend an instant end to disbursement in cases of proven corruption and capture on the part of the government or elite groups.

Financing the Planetary Contract

Although far more could doubtless be found, two hundred billion dollars a year ought to be adequate to confront the clusters of crisis and, in the bargain, pull the world back from the brink of recession where it now hovers. Let us recall that after World War II, the United States spent well over 3% of its GNP on the Marshall Plan, knowing that the reconstruction of Europe as its privileged trading partner was in the best interests of both. A new win/win situation can now be created at the global level, using the following elements:

  • Official Development Aid [ODA] now represents about $50 billion: it should be pooled and Northern countries should stop trying to use it as an export-generating device. NGO bureaucracies, in many countries now dependent on their government's aid budgets would resist such a move and should be in their turn resisted.
  • Debt cancellation would make a huge contribution. Democratic conditionality, as above, would apply to the waiving of debt repayments to the North.
  • Close tax havens and clamp down on money-laundering and financial crime of all kinds. Governments should find themselves with new revenues previously claimed by transnational mafias. A controversial proposal: legalise all drugs, sell them in [drab, unglamourous] "fair price shops" under government auspices, and tax them. Would this not bring in billions in revenues while probably reducing the numbers of drug users and certainly reducing the destruction of Colombia by spraying?
  • Impose "Tobin-type" taxes on currency and other international financial transactions. "Tobin-type", because Professor Tobin's classical proposal is probably no longer perfectly adapted to today's situation as it was designed to limit speculation rather than raise revenues.
  • Apply international taxation to corporate cross-border corporate mergers and acquisitions which now make up some 80 percent of Foreign Direct Investment.
  • Levy a "Unitary Profits Tax" on transnational corporations. (1) Such a tax would be popular with citizens on grounds of tax justice because TNCs now make ample use of transfer pricing and "creative accounting" and pay less than their fair share of governments' budgets in the North, whereas tax burdens fall increasingly on incomes and consumption. It would also reduce the pressures on third world countries to offer tax havens to these corporations. Part of the Unitary Profits Tax could be earmarked for the Planetary Contract.
  • George Soros' proposal concerning Special Drawing Rights would naturally find its place in a new arsenal of financial measures.

There is no shortage of measures available to finance a Planetary Contract so long as the principle behind such a contract is recognised: For a globalised world, we need global taxation and redistribution.

Administering the Planetary Contract

As will be made clear below, the citizens movement has little faith in existing international institutions. The institutional void is the chief obstacle we face when we affirm that "Another World is Possible". International institutions with power aren't trusted; those that are trusted are powerless.

Our preference for administrating the Planetary Contract would go to a new institution rather than to a revamped World Bank or IMF which we find thoroughly discredited. This is not to say that the individuals in these institutions should be scrapped. Many of them have invaluable experience and could make a vital contribution so long as they proved willing and able to play by new rules.

The point is that we can no longer accept structures where governments and governments alone are represented. The United Nations Charter begins "We the Peoples of the United Nations" before immediately sweeping them aside: now the peoples must be brought home and civil society put back in the picture.

So long as checks and balances are established, peoples' governance [as above] in individual countries insured and flying squads of anti-corruption auditors are plentiful, various administrative structures could apply. Experts from present UN agencies should be recruited, the bureaucracy kept to a minimum and country quotas for personnel abolished. An independent Board with real power to sanction the Administrator and top level staff should be provided for.

Conclusion

A Planetary Contract would not be a cure for human evil nor for fundamentalist fanaticism and fascism-nor would anything else. We know that the terrorists' sponsors have no interest in the poor or in justice. The fact remains that they feed on poverty and injustice which make a rich soil for resentment. The United States has a far from perfect record and have embargoed, bombed, harmed and liquidated unnumbered civilians. The "Wretched of the Earth" know these things, they know that their lives are not valued as are those of the West and they also know exactly what is being refused to them, because globalisation also means immediate and widespread dissemination of information and images.

To the despair that breeds hatred and terrorism, it is our responsibility to oppose a contract of hope and renewal. It is affordable and necessary. Citizens will stand behind it. Another world is possible.



References

1. As proposed by Prof. Howard Wachtel of American University in several papers: If TNC worldwide profits, worldwide sales revenues and sales revenues in each tax jurisdiction are known, then they could be taxed in each jurisdiction at a flat rate worldwide. Example: Company X makes worldwide profits of $1 billion and receives 40% of its worldwide sales revenues in the United States. The profits earned in the US are thus considered to be $400 million and the corporate profit tax is applied to that base.