The Political Demand for Change
The fiftieth birthday of the United Nations spawned over a hundred study groups, colloquia and collective proposals for reform. Predictably, nothing much has happened. This paper was written for one of the more intelligent - in my view anyway - efforts in this direction, a colloquium organised by Maurice Bertrand, a now-retired UN veteran from the Corps Commun d'Inspection [Joint Inspection Body]. To my surprise and regret, I was the only woman present - something that rarely happens any more, thank God. This piece was published as a chapter in Maurice Bertrand and Daniel Warner, eds. A New Charter for a Worldwide Organisation? Kluwer Law International [The Hague, London, Boston] in 1997.
The United Nations is becoming increasingly irrelevant. Particularly since the fall of the Berlin Wall, the date that marks the real beginning of the 21st century, its peacekeeping role has become almost a caricature, with the Security Council frequently acting as a figleaf or a front for the remaining superpower.
In 1992, one Third World diplomat spoke - off the record - of United States pressure exerted on Security Council members as "a reign of terror". (1)
It's the classic type of power...In a way, the pressure has always been there, but it has become more unbearable... I don't think it is really very healthy for a country like the United States to bring pressure to that point. We should not be asked to vote for resolutions in contravention of our principles on fundamental issues.
One of his Asian colleagues was even more blunt:
Twenty years from now, the world will be different. America will have declined and I will get my own back... Many of us will (by then) be ambassadors and foreign ministers - and we will remember how we were treated by the United States.
Under circumstances in which the interests of a single member can prevail, it is not surprising that certain resolutions voted by the Security Council are not followed up (East Timor or the Western Sahara) or that others do not reflect the real preferences of the states that voted for them - the Gulf War is an especially revealing case in point. India and Zimbabwe, in need of credits from the IMF and the World Bank, actually made speeches against it, but still voted for the corresponding resolutions. When Yemen voted no, US diplomat John Kelly told the Yemeni ambassador, "That's the most expensive no vote you ever made". He was as good as his word: Yemen immediately lost $70 million in aid. On the other hand, Egypt's attitude to Desert Storm was rewarded by the cancellation of roughly a quarter of its foreign debt.
At the UN, carrots and sticks are freely wielded and although the United States may constitute the most flagrant example, it is not the only one. Yet despite such autocratic behaviour, the "international community" is not clamouring for change.
Political Supply and Demand
It is not demanding change because the present system serves certain powerful national interests quite well. Advocates of a new and more effective worldwide organisation must therefore ask themselves how, politically speaking, a new international organisation can possibly be established. Why should governments profiting from present arrangements want different ones? Aside from the US, Britain and France are justifiably afraid of losing their pre-eminent places on the Security Council. Japan and Germany would like to join, or to replace them in the same spot, with the same powers.
As for the developing countries, Southern inter-governmental political ventures that have tried to by-pass, confront or ignore major Northern players have been successfully outmanoeuvred or fatally weakened (the Group of 77, the Non-Aligned movement). Third world or former socialist governments dependent on international financing - virtually all of them - are acutely aware of the need to toe the prescribed line. The present Secretary General of the UN seems most unlikely to call upon member governments to institute major reforms, much less seek a replacement for the organisation he heads.
In short, the political impetus for change and a critical mass of prime organisational movers are exceedingly hard to locate. After 50 years, to use an economic metaphor, the situation is one of glut and depressed prices with a superabundant supply of proposals and blueprints for change and extremely thin political demand for them. A new organisation would not, perhaps, have to wait for universal approval, but it could not be built on the basis of a few marginal, dissident states within the prevailing system either. So it would seem that the only remaining strategic option is to convince the major, recalcitrant players that a new worldwide organisation would be in their interests. The question thus becomes "How might they be convinced?"
Arguments and Events
To date, events as traumatic as World Wars have been required to spark the creation of new international organisations. No such event - thank God - now lies on the horizon. The nuclear horror scenario has all but vanished. In 1995, one can, however, argue that the psychological equivalent of a World War or a nuclear catastrophe is the threat of universal financial chaos and collapse, which the recent Mexican crisis could well herald. (2)
Like a World War, such a threat is hardly cause for rejoicing. The Mexican financial meltdown will create untold suffering for ordinary Mexicans and for other Latin Americans as well. Still, one cannot fail to remark the unprecedented - some would say unseemly - speed with which the US swung into action, barely taking time to inform its European partners, and scraped together $50 billion to stanch the hemorrhage of the peso. In sharp contrast, at the 50th anniversary meeting of the Bretton Woods Institutions in September 1994, IMF Managing Director Michel Camdessus failed to obtain half that sum in SDRs for all the Eastern European countries combined, plus a group of seriously indebted third world countries.
If, as 20th century history indicates, the drastic failure of one system is required for instituting another, and if we (whoever "we" may be) really want a new one, must we then rally round the banner marked "Let Chaos Reign"? This is not a frivolous question. What about the next crisis, and the one after that? Indonesia and Russia. both carrying enormous debt burdens, come to mind. As the Director of the Institute for International Economics, Dr. C. Fred Bergsten says, the number of currency markets that are "too big to fail" is growing rapidly. (3)
But they can and do fail, and so far, no one has a clue how to deal with these failures when they occur, much less prevent them. Other crises, in other areas, are similarly and rapidly spinning out of control and none of them has the remotest chance of being managed without a framework for organised international cooperation. The need for an Economic Security Council is already obvious, but this does not mean it will be recognised in the absence of a financial Chernobyl, and perhaps not even then.
Being neither a jurist nor a specialist on the UN, I do not pretend to comment on Maurice Bertrand's proposed Charter which strikes me as a thorough and valiant attempt to propose a more rational ordering of the world. I would, however, like to explore in greater depth how this or some other Charter might become politically acceptable. I will first elaborate at some length on the "chaos" hypothesis; then plead for the inclusion of the crucial dimension of the environment as an integral part of any proposal. Mass poverty and the environment are also closely related to increased levels of conflict and cannot be treated separately.
[A cautionary note: the following remarks on the deregulated market system should not be construed as a call for reviving the thoroughly and deservedly discredited bureaucratic socialist model. The problem is not so much the market per se as its innate tendency, when no countervailing power is applied, to absolute rule.]
Over roughly the past two decades, the free-market system in all its particulars has been extended to every corner of the globe. The G7 (particularly the United States), the Bretton Woods Institutions (BWI) and the GATT-WTO have pursued a single-minded goal: to achieve worldwide acceptance, freely or under duress, of neo-conservative (sometimes called, confusingly, neo-liberal) economic principles. They stress (1) free (deregulated) trade, maximum integration into the global market and international competition, often through devaluation (2) so-called "flexibility" of the workforce (lower real wages and standards, rollback of social protection and trade union gains) and (3) privatisation, deregulation and a drastically reduced role for the state in the economy.
Heavy borrowing, the ensuing debt crisis of the early 1980s and the subsequent "conditionality" applied to dependent economies by the Bretton Woods Institutions through structural adjustment packages has significantly quickened the pace of this process whose motto could be summed up as "the more market, the more development" (and vice-versa). Structural adjustment loans of a few tens of millions of dollars may require conditions covering several dozen pages and descending to an almost unbelievable level of detail. (4) So much has been published concerning the harmful impact of adjustment on workers, children, women, the environment, etc. that it is useless to try to provide even a summary here. (5)
More than one scholarly wit has noted that the UN Charter provided for the fastest and most complete delegation of political power in history: "We the peoples of the United Nations" - and went on immediately to give all powers to governments. (6) Fifty years later, even governments have lost many of those powers. The BWI and the GATT/WTO now make many decisions over which peoples have no control whatsoever and their governments very little.
The BWI do not only increasingly determine monetary policies, macro-economic orientations and budgetary choices. The Bank is also developing another set of conditions, loosely grouped under the heading of "good governance" which requires that governments be transparent and accountable to their citizens, respect human rights and the rule of law, seek re-legitimation through elections or some other process at regular intervals and be in a general way responsive to the needs of their citizens. (7)
These are "motherhood and apple pie" issues which no one can oppose - everyone wants to live in a country where good governance reigns. They do, however, introduce two sharp contradictions. The first is that structural adjustment has drastically reduced the capacity of the State to do most of the things the Bank now requires from it and is in no position to respond to the needs of citizens. The second is that the Bank itself does not practice the fine principles it preaches: it is neither transparent nor accountable. Some of its projects have resulted in massive human rights violations in the involuntary resettlement of several million people, a practice anthropologist Thayer Scudder calls "The worst thing you can do to people, next to killing them". The Bank remains a law unto itself and has not been re-legitimised in 50 years. For complex reasons, its Board cannot provide adequate control mechanisms. (8)
The BWI (plus GATT) have also devoted their energies to making the world a hospitable place for transnational corporations whose control over the world economy is rapidly growing. The intra-firm trade of TNCs now accounts for one third of all world trade. Their stocks of foreign direct investment amount to about two trillion dollars, most of it in other developed countries, but increasingly in a few privileged third world countries. With about $410 billion worth of investments in the latter group, they have created 12 million jobs (fully half of them in China). In other words, each job created represents roughly $34.000 in investments. At that rate, several centuries and several trillions of dollars would be necessary to provide jobs for even a fraction of the workforce in the South. Meanwhile, TNCs destroy national firms which are unable to compete with the capacity to underprice the locals for as long as is necessary through "deep-pocket financing".
No international agency has the capacity to monitor, much less control these corporations. The Bretton Woods Institutions do not believe that the TNCs need to be either monitored or controlled. On the contrary, for the BWI, foreign direct (corporate) investment constitutes a country's reward for undergoing the austerity of structural adjustment. Work undertaken long ago in the UN system to develop a binding Code of Conduct governing TNC behaviour has been suspended. In one of his first acts upon taking office, the present Secretary General disbanded the New York UN Centre on Transnational Corporations (UNCTNC) which provided reliable documentation about these companies and which now functions at a greatly reduced scale inside UNCTAD.
An increasingly deregulated global economic system leads to far higher levels of unpredictability and instability. It also results in increasing concentrations of wealth and social polarisation. It renders the realisation of development goals impossible if "development" is defined as a steady increase in material, social and cultural welfare for the great majority of the planet's inhabitants, particularly those now most deprived.
Neo-conservative economic doctrines have demonstrably accentuated existing inequalities within both rich and poor countries, they have deepened the gap between rich and poor parts of the world and they have given rise to massive unemployment and insecurity for all but a minority. The familiar "champagne glass" graph of the GNP distribution, income, share of trade or investment between the richest fifth of the world's population and the poorer four-fifths shows more champagne in the glass at the top than ever before; and an ever-thinner, diminishing stem: the top fifth has now cornered 85% of world GNP (compared to 70% in 1965); the bottom fifth shares a meagre 1.4%. (9)
In the United States, according to Department of Labor figures, between 1979 and 1993, the poorest 20% of Americans lost 17% of their already inadequate incomes whereas the richest 20% added 18% to theirs. (10) The world now boasts 358 billionaires whose combined wealth ($760 billion) equals the average annual per capita GDP ($390) of nearly two billion poor people. (11)
The unregulated market now threatens not just individuals and communities but nations themselves - even strong ones. A former high official of the French Treasury notes that if, in the 1970s, the Banque de France had "lost even 5% of its reserves", this would have been seen as a "major catastrophe". In July 1993, in only two days, the French Central Bank lost all its reserves, for a total of 300 billion francs (about $60 billion) and was obliged to borrow as well in order to protect the franc against a speculative onslaught. (12)
Italy and Spain are other fragile targets of similar assaults; no one knows who will be next. The public debt of the United States has grown to unmanageable dimensions. As interest payments demand more and more of the national income, the US will be sorely tempted to print money and unleash a wave of worldwide inflation. International currency transactions are now estimated to exceed actual investment in productive activities or trade financing by a factor of 60/100 to one (no one knows for sure by how much) and roughly a trillion dollars changes hands every day. The speculative financial superstructure no longer has much to do with the actual economic basis of society and the creation of wealth.
The explosion of the Mexican "miracle" should not have taken so many by surprise but now that it has exploded, Mexico's market for US goods is half what it was, whereas Mexican labour is twice as cheap and the promised benefits of NAFTA are unlikely to materialise. Illegal immigration to the US immediately and predictably soared. Austerity measures imposed on a working population that has already lost half its real income under previous structural adjustment will provoke social unrest on the US border and even $50 billion may not be enough to prevent chaos. North Africa represents a similar threat to Europe. Dozens of other trouble spots exist, some of them, like the urban ghettos, within the borders of the rich countries.
Only through the machinery of continual international consultation and regulation can one hope to predict and to prevent future explosions. A worldwide organisation with genuine regulatory powers is the only riposte to increasing social destruction because national entities are no longer able to cope.
An international organisation is also indispensable because, contrary to the received wisdom of the Bretton Woods Institutions, 19th century rules no longer apply.
Adam Smith and David Ricardo would have been astonished at the idea that British capital might one day be invested in Taiwan or Venezuela. The famous doctrine of Comparative Advantage works only so long as capital remains national. Once it is de-nationalised, comparative advantage gives way to absolute advantage, since capital will seek out the most productive workers at the lowest wages, the cheapest materials and the fewest regulations; wherever they may be found.
Thus, as economist and Chancellor of Chile's Universidad Austral Manfred Max-Neef points out, the global marketplace will reward the most socially irresponsible choices, even though they may be the most economically profitable ones in the short term. (13) Society at large will be expected to pay the bill for the "side-effects" of the market's functioning but will be increasingly less able to do so.
The Ideological Foundations
The deregulated global market is not now subject to political control or to the rule of law. Its apparent legitimacy rests, rather, on widely held ideological assumptions which are rarely examined or even made explicit. The ideas which have come to dominate the planet, particularly since the end of the Cold War, appear so natural to most decision makers and serious people that anyone questioning them can expect to be the object of bemused condescension if not outright scorn. Recognising and accepting this, I shall nonetheless question and argue against them here.
If the political conditions for new international institutions are ever to come into being, it is crucial to challenge the ideas on which the present system is based. The work of Karl Polanyi and his seminal book The Great Transformation (14) (1944) are extremely valuable in this connection, because they throw light on the origins of these ideas and on the historical response of 19th century England which had to act in order to save society from its own deregulated market economy.
Polanyi described how the Industrial Revolution for the first time transformed land (nature), labour (man) and money into commodities. Polanyi's anthropological and historical erudition enabled him to show convincingly that nowhere else and at no other time had the self-regulating market been enshrined as the dominant principle of economic and social organisation; nowhere else and at no other time had money, human labour and nature itself all been treated as commodities and subjected to the laws of supply and demand.
His observations apply both to "primitive" and to "civilised" societies across both time and space. European mercantilism, for example, never entrusted wages or rents to market forces: where they existed, they were set by public authorities. Prior to the Industrial Revolution, markets were restricted to commodities in the narrow sense of the term; money, land, and labour were not treated as if they had been produced for sale; it was implicitly recognised that in fact they had not been "produced" at all. (15)
Other societies did not motivate people to work from fear of starvation; elsewhere men were not goaded to seek wealth from the profit motive but from a desire for honour and status in the community, to which much of their wealth was redistributed. According to Polanyi, and contrary to Adam Smith's assertion, humans have no particular inclination to "barter, truck and exchange" and while markets and merchants existed in many (though by no means all) societies, there was never, prior to about 1830-1850, a system of interlinked markets governing virtually all aspects of human existence. (16)
Polanyi also showed how, left to itself, the self-regulating market system would destroy society. Recognising this fact explicitly or implicitly, 19th century England undertook to protect itself. From all political quarters - left, right and centre - proposals were made and reforms enacted so that society could shield itself against the market's destructive power. The rise of the market and of regulation are simultaneous phenomena, or nearly so, and every other modern capitalist society has followed the lead of 19th century England: this is why we have protective tariffs, anti-child labour laws, safety requirements, zoning laws, building codes, central banking, state insured bank deposits and a host of other rules and regulations.
Unlike Marx, Polanyi did not wish to see capitalism overthrown but he understood that the market is a good servant and a bad master.
An Austrian refugee writing in Roosevelt's America, he saw the New Deal and the Welfare State as the definitive stage of capitalism and he believed that the unfettered, self-regulating market system operating as the central, dominant institution of society had been merely a "spectacular episode". The motives of Homo economicus had been forced upon him as the only way to earn a livelihood, then elevated by the prevailing ideology to the status of "human nature". Rationality and the instinct of self-preservation would win the day, because basing social and economic interaction on the fear of hunger and the profit motive was about as rational in Polanyi's view as basing the institution of the family on the sexual instinct alone.
Fifty years after the founding of the United Nations and the Bretton Woods Institutions - which coincided with the publication of Polanyi's path-breaking work - the interlocking system of unfettered self-regulating markets in commodities, money, land and labour is now operating at the international level. This is the true significance of the overused term "globalisation". And just as Polanyi foresaw in the case of 19th century England, it is in the process of destroying our own society on a grandiose scale, in the "Great Transformation" of our time.
Paradoxically, if we want to keep the market - which renders a great many services and can help to make society richer, better educated, and healthier - then it must be controlled through international structures and agreed processes which prevent it from self-destructing and taking us all with it. Otherwise it will continue to foster mass unemployment, social dislocation and ever-increasing inequalities within and between countries.
A Worldwide Regulatory Organisation versus the Self-destructing Society
No one can say how bad things must get before a worldwide, regulated system is seen as desirable in the interests of preserving the market itself. No one can say either who might take the initiative to institute such a rule of law. Certainly the organisations presently overseeing the international system (the Bank-Fund-GATT triumvirate) are completely unfit for the task. They are, rather, bent on further deregulation, privatisation and the forced integration of every community, of nature and of human labour into the global marketplace. Their adherence to these principles is a matter of doctrine and it is, I believe, futile to expect them to change on the basis of rational argument. (17)
Judged by their own standards, these institutions have also been extremely successful. In just a few years, a system destined to be no more than a "spectacular episode" in Polanyi's phrase, an outmoded and outgrown phase in human development, has been elevated to the status of a universal natural law. As the former Chief Economist of the World Bank and present Under-Secretary of the US Treasury Lawrence Summers put it, "The laws of economics, it's often forgotten, are like the laws of engineering. There's only one set of laws and they work everywhere". (18)
All societies have economies - i.e. arrangements and enforced rules for acquiring or producing material goods and services which sustain individual and community life. It does not follow that societies are or should be economies. So long as the unregulated market remains the overarching organisational principle of society at the global level, it is a logical impossibility for the UN system, or anyone else, to promote widespread social welfare. Left to its own devices, the unregulated market will necessarily generate exclusion, anarchy, chaos and a Hobbesian world.
In Hegelian terms, forces strong enough to pose an antithesis to the present thesis of self-regulating markets will have to make themselves felt before today's policy makers react internationally as 19th century England's did nationally. In the absence of such forces, we cannot expect to replace the United Nations with an effective international organisation capable of dealing with today's clear and present dangers. There are, however, some likely candidates for the job.
It is already clear, for example, that popular resentment and frustration at growing mass unemployment and governmental inability to reverse it will be a major "push" factor, as will further speculative assaults on weak currencies and the herd reactions of panicky investors. If governments of major powers decide that even a few questions must be addressed internationally, they should be encouraged to do so.
There are, however, two other major forces which could push even the most reluctant governments to create a full new set of workable international rules, hopefully before it is too late. These forces are increasing environmental destruction and spreading conflicts.
Events like the Mexican financial crash are spectacular whereas ecological destruction is gradual and can be - at least for a time - swept under the carpet and ignored. Yet the warning signs are all there - depleted fish stocks, massive deforestation and loss of biodiversity, a disappearing ozone layer, topsoil erosion and water shortages threatening food supplies, high-levels of toxic pollution - the catalogue is well known.
Half the area of the continental United States now consists of "endangered ecosystems" - some to the point of no return - according to a recent report from the National Biological Survey. (19) The world's major insurance and re-insurance companies have become deeply worried about creeping climate change and global warming which they justifiably believe to be the cause of the greatly increasing number of tropical storms, floods and other natural disasters that are costing them dearly. (20)
Rapid habitat destruction and overuse of pesticides also encourages the proliferation and spread of "new" (i.e. old, but hitherto unknown) viruses and the rapid transmission of deadly diseases which are reappearing even in the rich countries. AIDS, according to many epidemiologists, is only the beginning. (21)
A destructive market system does not take responsibility for these impacts, nor is it even equipped to send the proper economic signals where the environment is concerned. For one thing, market prices do not reflect the loss of natural capital (for example, exports of hardwoods or fish are counted exclusively as revenues; the costs of depletion are not reckoned). Yet as former World Bank economist Herman Daly points out, it doesn't matter how many sawmills you possess if there are no more trees, nor how many fishing trawlers and driftnets when the fish have disappeared. Since raw material exports are a basic feature of structural adjustment programmes, and since dozens of countries are attempting to export a similar, narrow range of products, world primary product prices reflect glut, not depletion.
Nor does the market reflect such so-called externalities as the spread of disease or the loss of fertility. The pricing system cannot tell us anything at all about the real social and environmental costs of the disposal of the wastes of the production process - from toxics to CO2 - until it is too late. The burden of these costs burden falls upon society as a whole. The producers of CFCs do not pay for treating skin cancers caused by ozone loss; the victims of Bhopal have never been indemnified. Some real costs can be infinite. If, for example, the Mediterranean dies, who could pretend to put a figure on the loss, which could never be measured in financial terms alone? (22)
Any new worldwide organisation must concern itself with the environment, not as an afterthought or a word in the preamble, but as a Global Commons which needs to be protected by enforceable global measures from the predatory impact of the market. The World Bank approach (growth first, then countries will be rich enough to worry about the environment) is not good enough. UNEP as presently constituted is completely inadequate.
Caring for the environment internationally would, in turn, require a completely revamped system of international transfers of funds and of technology because poor people cannot be expected to protect the environment if it comes at the cost of their survival. They will cut down trees or "over"cultivate the soil because they must satisfy their immediate needs first, even when they know this comes at the expense of their future ones. A new international organisation would need to have its own power to tax and not rely on national contributions in order to ensure such international transfers.
Maurice Bertrand's study concentrates on armed conflict: this is as it should be, but it is also important to show where such conflict comes from. At least in the third world, poverty, deepening inequalities and environmental destruction almost invariably lie at its roots and many states now lack the capacity to resolve conflicts arising under these pressures. (23) The result is that some seventy developing countries are now experiencing political and social violence, up to and including civil war. The human result includes a growing death toll, 47 million refugees and displaced people (compared to 35 million in 1990) and intolerable insecurity for ordinary citizens. (24)
The debt crisis has also exacerbated internal conflict and violence. Algeria, for example, has for many years remitted over two-thirds of its export income to creditors in the form of debt service. Little is left over for investment in jobs and human welfare. At least half of young Algerian men are unemployed or seriously underemployed and see no hope for the future outside of the FIS or the GIA. Dan Smith has shown that third world countries with the heaviest gross debt burdens, or with the highest debt service ratios (debt to exports or to GNP) are the most likely to be at war: two-thirds of the former group, over half of the latter. He adds that "Long wars are even more closely associated with debt: of 27 states involved in war for more than a decade, data on debt are available for 24, of which 18 - exactly three-quarters - have heavy debt burdens". (25)
Financial strains, ecological stress and conflict cannot be neatly separated. This is why a new worldwide organisation would need to concentrate on all three, in an integrated way. Global power will, for example, be more and more based on the capacity to command maximum ecological space and diversity because they will be increasingly scarce. Although most wars can ultimately qualify as "resource wars", specific conflicts over specific resources (often water) are increasing (Israel-Palestine and other Mid-Eastern countries, India-Bangladesh, Peru-Ecuador).
Assuming the political impetus for the creation of a new world system materialises, my own list of recommendations (without repeating those set forth by Maurice Bertrand, with which I am in full agreement) would include the following:
- The Bretton Woods institutions would become fully transparent and accountable (1) to the citizens of the countries where they work and (2) to the international community which would have the power to monitor and to sanction them.
- The Code of Conduct for TNCs would be completed and would prevent transfer pricing and other abuses. TNCs would be taxed internationally so as to provide the budget for the new worldwide organisation and the transfers (with conditions attached) to deprived people in both the developed and the developing worlds. Commercial bank and currency transactions would also be taxed (a "Tobin Tax" at 0.05% could raise $150 billion a year according to the UNDP).
- The Economic and Ecological Security Council would aid countries in instituting uniform environmental accounting so as to monitor the use and the destruction of natural capital and to promote environmental protection. An agency for the promotion of renewable energy (particularly solar) would be established.
At the deepest level, I believe that no new worldwide organisation can come into being unless and until we abandon the dogmatic doctrine that "There is no Alternative" to the domination of the unregulated market; a belief defended with religious fervour and crusading zeal by the current guardians of the international system. Thinkers and writers who seek a more diverse, pluralistic and rational world can help to combat the suicidal neo-conservative consensus. No partial and impaired truth can prevail forever. We do not need change simply because 50 years have passed since the UN and the Bretton Woods Institutions were founded but because the evidence of failure is mounting daily: the present system simply does not work. No frontier or force can long withstand the inequality, marginalisation and poverty - and the consequent despair, frustration and resentment - it generates. Change will necessarily come. The challenge is to make sure it comes in peace and reason, not in sound and fury.
1. This paper was completed on 15 February 1995. Since then, other financial warning signals have sounded.
2. African countries are particularly vulnerable: an African friend involved in the negotiations says that when his country's health budget provided for fourteen new public health nurses, the Bank shot back, "We told you you could only hire nine".
3. Much can be put in this basket: in his forward to the Bank' s publication Governance and Development, President Preston asserts that "Poverty and the environment are two critical areas of country strategy that present particular challenges of governance". So do "public sector management" "reforming the civil service", "promoting deregulation", "improving the working of markets" and "parastatal reforms". A top Bank official says the Bank has also "expressed concern at the level of military expenditures in at least twenty cases".
4. Slavery is a special case: Polanyi holds that transfers of slaves were usually "status transactions"; the price of a slave was set by custom or authority, not supply and demand, and this price often served as a unit of measure (e.g. so many slaves = so many cattle). Judas received 30 pieces of silver for betraying Jesus - this was the same amount as "the price of a man" set forth in the Code of Hammurabi 1700 years earlier.
5. This quote and the ones that follow are from Ian Williams, "US Takeover at the UN", The Nation, (New York), 12 October 1992, p.392.
6. Quoted in Peter Passell, "How to Plan for the Next Great Bailout", International Herald Tribune(New York Times), 11-12 February 1995.
7. See among others Susan George, A Fate Worse than Debt, Penguin, London 1988 and Susan George and Fabrizio Sabelli, Faith and Credit: the World Bank's Secular Empire, Penguin 1994.
8. For example, Erskine Childers with Brian Urquhart, Renewing the United Nations System, Dag Hammarskjold Foundation,Development Dialogue 1994:1, Uppsala, Sweden, p. 171.
9. See George and Sabelli, op.cit. for an exploration of the reasons for the World Bank's power.
10. For much statistical evidence see the successive UNDP Human Development Reports, particularly 1994, p.63.
11. Figures reprinted from the Wall Street Journal in Courrier International, 2-8 February 1995. In The Politics of Rich and Poor (Random House, N.Y. 1990) Kevin Phillips cites evidence showing that during the Reagan years, the top 1% of American families increased their average annual family incomes by nearly 50% - from $270,000 to $404.000!
12. Forbes magazine lists billionnaires every July - in 1994, the combined wealth of the 358 was $760 billion; GDP per capita of "low-income economies" as defined by the World Bank is $390; $760 billion divided by $390 = 1.949.000.000 people.
13. André de Lattre's contribution to the volume Bretton Woods: Mélanges pour un Cinquantenaire, numéro spéciale de la Revue Economique et Financière, Association d'économie financière, sous la direction de Thierry Walrafen, Paris, décembre 1994, p.36.
14. Manfred Max-Neef, communication to the Oslo Forum on New Development Options, Norwegian Forum on Environment and Development and Ministry of Foreign Affairs, 1-3 February 1995.
15. First published by Rinehart, N.Y. 1944, reprinted by Beacon Press, Boston 1957.
16. See also Polanyi's essay "Our obsolete market mentality", Commentary, Vol.3, February 1947, pp. 109-17.
17. See Susan George and Fabrizio Sabelli, Faith and Credit: The World Bank's Secular Empire, Penguin, London, 1994 (in French Crédits sans Frontières: La Réligion Séculière de la Banque Mondiale, Eds. La Découverte, Paris 1994) whose central metaphor for the Bank is the medieval Catholic Church.
18. Summers' speech was recorded by Kirsten Garrett of Australian National Radio: and broadcast in November 1991. See George and Sabelli, Faith and Credit, op. cit. p. 106.
19. William K. Stevens, New York Times Service, "Study finds scores of ailing US ecosystems", International Herald Tribune 16 February 1995. Thirty ecosystems were more than 98% destroyed, 58 had declined by 85-98%, and a further 30 by 70-84%.
20. The two largest re-insurance companies in the world, Munich Re and Swiss Re, have both declared global warming to be a major threat. These companies, and others will be present at the Berlin Climate Summit in March 1994, joining with Greenpeace and other environmental NGOs, to make this case.
21. Laurie Garrett, The Coming Plague: New emerging diseases in a world out of balance, Farrar, Strauss and Giroux, New York, 1994.
22. The cover of the New Scientist (4 February 1995) asks, "The Mediterranean: Dirty, Dangerous and Doomed?" and Fred Pearce's article "Dead in the Water" inside justifies the alarm, p.26-31.
23. For details, see Nina Graeger and Dan Smith, eds. Environment, Poverty, Conflict, PRIO REPORT 2/94, the Peace Research Institute of Oslo, 1994 and Thomas Homer-Dixon, et al., "Environmental Change and Violent Conflict", Scientific American, February 1993, Vol 286, no.6, pp.38-45.
24. Dan Smith, Director of the Peace Research Institute of Oslo (PRIO), communication to the Oslo Seminar on New Development Options towards the 21st Century: Democracy, Equity and Sustainability, organised by the Norwegian Forum for Environment and Development and the Royal Ministry of Foreign Affairs, Oslo, 1-3 February 1995.
25. Dan Smith, author of Chapter 6 in Susan George, The Debt Boomerang, Pluto Press, London (Westview Press, Boulder Colorado, USA), p.146-48 and tables, quote p.148.