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Issue 45, September 1999

What the market really means

Dark Victory: The US & Global Poverty
Globalization with a Human Face
The UN Human Development Report 1999

Reviewed by Per Olsson

BOTH THESE publications expose the disastrous economic, social, political and environmental consequences of globalisation. They also share a common ambition to lay down an alternative to market ideology.

The UN Report calls for "stronger governance", while Dark Victory pleads for "the re-integration of economy into the community". But the UN Report is far more thought-provoking and also has the advantage of being up to date. Dark Victory, first published in 1994, is mainly about the global impact of Reaganism and neo-liberalism in the 1980s, although this new edition includes an epilogue that outlines the reasons behind the implosion of the Asian Tigers' in 1997.

The authors of Dark Victory tend to put too much emphasis on globalisation as an ideology that happened to become a dominant force when a political elite "came to power on the back of an increasingly conservative middle-class social base, at the same time that the corporate establishment was deserting the liberal-Keynesian consensus". But this is an idealist explanation which does not account for the fact that 'market ideology' was an effect of globalisation not its cause. Moreover, in defining globalisation as mainly an ideological weapon, the authors inevitably fall into the trap of idealising Keynesianism (or the 'social market').


Globalisation, in fact, is rooted in the ending of the unique post-war boom of 1950-75. There was little room for the 'liberal Keynesian consensus' in the new period of depression which followed the first post-war world-wide slump of 1974-75. A falling rate of profit, stagnation combined with inflation - 'stagflation' - discredited Keynesianism. At the same time, the position of US capitalism was undermined, on the one hand, by the rapid development of the productive forces in Japan and Western Europe and, on the other, by the defeat of US imperialism in Vietnam, Laos and Cambodia. Consequently, de-regulation and privatisation throughout the world became the means of conquering new markets for goods and capital, particularly for the US monopolies. US imperialism, assisted by the World Bank, the IMF and GATT, forced other countries to open up their markets and adjust to the new conditions imposed.

Dark Victory does give a well-documented account of what the process of globalisation has meant for the masses living in Africa and Latin America, as well as in the US itself. But it deals only in passing with the profound ideological and political impact of the collapse of Stalinism in 1989-91. An ideological counter-revolution was launched by the capitalists internationally after 1989, with the fall of the Berlin Wall hailed as the final triumph for capitalism and the 'market ideology'. This 'Dark Victory' is a hollow one, however, and the growing gap between the rich and the poor is bound to trigger a movement from the oppressed masses, as in other periods of history. Globalisation will pave the way for social explosions and a wide-spread repudiation of the 'market ideology'.


The authors of Dark Victory, however, like many others on the left, fail to draw the distinction between 'bureaucratic socialism', ie Stalinism, and a genuine socialism based on workers' democracy. According to them, "flexibility and principled compromise are the order of the day, not the dogmatism that unravelled both Stalinist socialism and Reaganism as credible alternatives to the Keynesian modus vivende". This thinking is as muddled as Blair's 'third way' to nowhere.

The new UN Human Development Report provides fresher reading. The obvious intention is to issue a dire warning to the ruling class: "Uneven globalization is bringing not only integration but also fragmentation - dividing communities, nations and regions in those that are integrated and those that are excluded. Social tensions and conflicts are ignited when there are extremes of inequality between the marginal and the powerful. Indonesia shows what can happen when an economic crisis sets off latent social tensions between ethnic groups - or between rich and poor".

But there can be no such thing, however, as 'globalisation with a human face'. Super-exploitation, marginalisation and human deprivation is the ultimate outcome of the multinationals' dash for profit. How could it be different when "globalization is dominated by the expansion of markets and rewards profitability", as the UN report correctly states?

The facts given in the report speak for themselves. By the turn of the century more than 80 countries will have a per capita income lower than they had a decade ago. The countries of Eastern Europe and the CIS have experienced the fastest rise in income inequality, with the restoration of capitalism plunging more than 100 million people into dire poverty. The gap between rich and poor has soared in the advanced capitalist countries, "especially in Sweden, Britain and the USA".


The report also lists the "new threats to human security - in rich countries and poor" that globalisation has created. Firstly there is a new financial volatility and economic insecurity. Financial crises have become increasingly common and the crisis in East Asia has become the worst setback to the world economy since the 1930s. The estimate of global output losses from the East Asian crisis, over the three years from 1998 to 2000, is put at nearly $2 trillion or about 2% of world economic production in these years - and more than the combined annual income of sub-Saharan Africa, the Arab states and South Asia.

Second is increasing job and income insecurity: "in both poor and rich countries dislocations from economic and corporate restructuring, and from dismantling the institutions of social protection, have meant a greater insecurity in jobs and incomes". Mergers and acquisition, down-sizings and layoffs, are all adding to the insecurity at the same time as "the multinational corporations now dwarf some governments in economic power".

Thirdly there is now a greater health insecurity. In 1998 more than 33 million people were living with HIV/AIDS, which has now become the poor person's disease. For nine countries in Africa, a loss of 17 years in life expectancy is projected by 2010, back to the levels of the 1960s. But the pharmaceutical industry is still reluctant to develop a vaccine against AIDS. The UN Report explains why: "Vaccines are the most cost-effective technologies known in health care, preventing illness in a one-time dose. But they generate smaller profits and have higher potential liabilities than treatments used repeatedly. As a result a consortium of pharmaceutical companies has united to develop antiviral agents against HIV, but not to produce a vaccine against AIDS".


The present era of globalisation has resulted in a "fiscal squeeze on public goods, a time squeeze on care activity, and an incentive squeeze on the environment", leading the report to call for a redistribution of wealth, higher public investment, cuts in military spending, a new tax system, less pressure on the poor countries to liberalise their economies, and a new global governance: "In short, reform driven by concern for people, not capital". It is true that many governments, confronted with an upsurge in the struggle and a deepening of the capitalist crisis, will have no alternative than to implement some of these measures in the future. But such measures will be very limited and fall far short of taking the power out of the hands of the big capitalists and the speculators who have turned the world economy into a global casino.

Overall, the modest reforms proposed by the UN in no way correspond to the acute situation, the horror without end, described in the report. It is like a doctor prescribing aspirin to a dying patient in desperate need of surgery. Only on the basis of world socialism will it be possible to satisfy the needs of all the people in the world and end for all time human deprivation, class and sexual oppression, violence and wars.

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