Susan George | ukwatch.net

Predictable Poverty

eddie — Thu, 23 Oct 2008 16:57:44 +0000

The requirements for reducing or eliminating poverty, in Europe and world-wide, are known and the money is there, but the weight of the financial lobby is such that political will at present seems non-existent.

‘All for ourselves and nothing for other people’ seems, in every age of the world, to have been the vile maxim of the masters of mankind. As soon, therefore, as [the great proprietors] could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons. For a pair of diamond buckles, perhaps, or for something as frivolous and useless, they exchanged the maintenance, or what is the same thing, the price of the maintenance of a thousand men for a year.

Adam Smith, The Wealth of Nations, 1776.(1)

Introduction

In the early twenty-first century, poverty on a world -wide, massive-scale is not merely unnecessary but inexcusable. This is indeed its most striking feature. One could argue, following Adam Smith [who considered himself a “moral philosopher” not an economist] that it was equally avoidable in the Great Britain of 1776, but that is a matter for historians. Here we shall stay in our own century while keeping Adam Smith’s words of indictment in mind. The “vile maxim of the masters of mankind” is, alas, alive and well; the masters are still trying to keep all for themselves and allow nothing for other people. Whenever they can, which is most of the time, they organise public policy in such a way that their goals can be met.

In contemporary Europe we are living in such a time. Europe could eliminate poverty on its own soil, reliably estimated in 2006 to strike 72 million people, around 15 percent of its total population.(2) It could also contribute hugely to eradicating poverty in the world, taking the lead in the OECD countries in that regard. It has the wealth and the [unused] policy space to do both. Like other OECD countries, however, Europe refuses to confront the obvious solutions which would involve very small changes in the lifestyles of the rich, and a few, somewhat larger ones, for banks and transnational corporations. So it seems to me that the first duty of a participant in a conference concerning “the fight against poverty” is to examine wealth.

Whatever might have been possible, politically speaking, in the eighteenth century had people been obliged to share more equally, it was still a time when genuine crop failures could take place; trade was expensive and sometimes the necessities of life were in short supply. Here I shall argue that today, for the first time in human history, poverty retains not a shred of mystery nor of inevitability; one need no longer ask if, technologically and materially speaking, it could be eradicated. The answer is simple and straightforward: yes, it could. Politically, however, as I shall also argue, the European Union, with the complicity of its Member States, is doing whatever lies in its considerable power to prevent this happening both in Europe itself and in the world. This will be the second focus of my contribution.(3)

I. Wealth and inequality

Now, nearly two and a half centuries after the opening quote from Adam Smith, the father of modern capitalist theory, let us hear the stylistically less well-crafted but nonetheless heartfelt cry of the “Lowtax Network Editorial Team”:

There is such a lot of money!

Despite a presumably temporary dip in asset values as a result of shell-shocked markets post sub-prime, HedgeFund.net said recently that total hedge fund assets stood at $2.848tn at the end of March 2008. (4)

Not quite three trillion dollars in hedge funds, or $2.848.000.000.000? So claims Investors Offshore. Although such a sum may sound enormous and indeed amounts to more than twenty percent of the entire GDP of the European Union, it is modest compared to the real private money that is out there. Merrill-Lynch and Cap Gemini have recently published their twelfth annual World Wealth Report , a trustworthy source given that Merrill-Lynch wants to manage as much wealth as possible and therefore has an interest in getting the figures right. Their Report for 2008 counts a shade over ten million “High Net Worth Individuals” in the world-about one in every 670 people. These HNWIs, including the far richer and more exclusive group of “Ultra-HNWIs”, in 2007 together controlled $40.7 trillion, that is, $40.700.000.000.000.

By the year 2012, Merrill-Lynch believes this group will have collectively accumulated $59 trillion. This projection is reasonable given that the increase of the HNWI’s total wealth in 2007 compared to that of the HNWIs of 2006 was more than nine percent. Furthermore, since 2002 the total wealth of this growing class of HNWIs has increased by more than 50 percent. In other words, every year there are more HNWIs [although only a slight increase in their numbers compared to the total world population] and every year their nest-egg grows so that it has now reached dinosaurian proportions.

Let us also be clear about the meaning of “wealth” in this context: The Merrill-Lynch Cap Gemini definition limits it to investable wealth of which the HNWIs all have at least a million dollars “excluding collectibles, consumables, consumer durables, and primary residence”. In other words, art and wine collections, mansions, luxury cars, top-of-the-line kitchen equipment and other relatively illiquid assets don’t count. As a point of comparison, needed when scaling these dizzying financial heights, the $40.7 trillion in the hands of these ten million HNWIs come to more than three times the GDP of either the United States or the European Union, nearly six times that of China and thirteen times the GDP of India.

Europe’s share of this valuable pie is roughly a quarter and has remained constant as the total pie has grown. Increasingly large sums and shares now go to Asians, Latin Americans and Middle-Easterners. At 3.7 percent, Europe has the lowest growth rate in the numbers of the HNWIs-who now count 3.100.000 Europeans, compared to over 15 percent growth in the numbers of Mid-Easterners and 12 percent of Latin Americans. The wealth accruing to these geographical regions remains, however, modest compared to the total and two-thirds of that wealth is still in North America and Europe.

So the investable cash the hedge funds have garnered, those $2.8 trillion that the Lowtax Network brags about, is plainly peanuts-not even seven percent of the pile the HNWIs are sitting on worldwide.

Various other measures of private wealth exist, such as the Forbes Magazine list of billionaires world-wide, again measured in $US. The 2006 list [published in 2007] gave 943 names; the one for 2007 published in early March 2008 had grown to 1125 people whose wealth is usually based on corporate shares. I did not have the courage to do the adding-up myself and Forbes does not give totals. Some have said that the total wealth of the 2006 list of fewer than a thousand individuals came to $3.5 trillion. I have lazily added up only the fortunes of the people at the top in 2007: the first three have $180, the first ten $426 billion.

Now try the following simple calculation. If you have “only” one billion dollars, like pages and pages of people at the end of the Forbes list, and if you are such an incompetent investor that you make a return of “only” $50 million or five percent a year; then every day of the year, Sundays and holidays included, you must spend $137.000 in pure consumption or you will automatically become richer. In other words, once you reach this level, it is virtually impossible ever to be poor or even just affluent.

We can indeed join in the Lowtax Network Team’s shout of triumph: “There is such a lot of money!” There is indeed. The world is awash in it and there is quite enough for everyone. But as the simple calculation above indicates, beyond a certain level, it’s very hard not to become richer. The natural, mathematical tendency of wealth is to become concentrated where it already is-at the top. The 20/80 “power law” takes over. Twenty percent of the population will have 80 percent of the wealth; 80 percent of the population will have 20 percent of the wealth. Today these figures are even more exaggerated and this will be the case so long as no political intervention or regulation is tolerated. This is precisely the position defended by the European Union and its Member States: allow nature to take its course.(5)

However, before inquiring into the purely European responsibilities concerning the persistence of poverty and what might be done about it, let us quickly look at the collective inequality data for the world, of which the best assessment is undoubtedly the WIDER study published in December 2006.(6)

The main WIDER findings were not surprising for those who have studied the subject: In the year 2000, 2 percent of adults in the world owned more than half of global household wealth. The richest 1 percent alone accounted for the ownership of 40 percent of global assets while the top 5 percent captured 71 percent and the top 10 percent held 85 percent of the wealth. The bottom half of humanity got along on barely 1 percent of total assets. These figures show the operation of the power law in high gear, especially since the WIDER definition of “wealth” was broader than that of Merrill-Lynch. The WIDER scholars used the classic “net worth” definition, meaning all physical and financial assets, including homes, the principle asset for most people who own anything, less debts.

Who’s who, and where, in these WIDER percentages and how much wealth do they have? The good news is that to belong to the category of the “top half” of the human race, you needed only the modest sum of $2200 worth of assets. The bad news is that most people would still feel exceedingly poor at that level, even in terms of Purchasing Power Parity [PPP], the measure now used in most official comparisons. Top 10 percent membership meant owning $61.000; the top 1 percent required $500.000 plus. This latter amount, let us recall, is not nearly enough to get you into the really exclusive ranks of the Merrill-Lynch HNWI club-37 million people are in the top 1 percent according to WIDER whereas only 10 million are of interest to Merrill-Lynch.

The WIDER authors estimate that the world’s households together possess $125 trillion in wealth, about triple global GDP. If the wealth were shared equally, everyone on earth would have $26.000 worth of assets [WIDER calculates this figure in terms of PPP]. No one expects ever to arrive at complete equality-it probably would not be a good idea even if it were attainable-but these calculations do tend to show that the world as a whole is certainly not “poor” by any standard measure.

In the 21st century we thus have a broad and increasingly detailed knowledge about who is rich and who is not, where they live, how many they are, what their wealth is based on and so on. Still, many might say that globalisation is the famous tide that lifts all boats so the poor are benefitting from it too. They are said to have risen from an even lower level on the human scale and their absolute and relative numbers are said to be decreasing [although everyone recognises that if China and India are left out of this equation, the argument collapses]. Leave globalisation and the market, we are told, to increase economic growth and the boats of the poor will rise on the tide with the rest.

This is unfortunately not the case. Inequalities are growing mightily both within and between countries and as over thirty recent food riots have shown, market events can plunge tens of millions back into absolute destitution. Tony Addison and Giovanni Andrea Cornia explain why we cannot usefully speak about combating poverty without examining inequality. Inequality matters a great deal where poverty reduction is concerned. It impedes rather than encourages growth and it swamps or punches holes in the boats of the poor. We must recognise that inequality has risen in many countries over the last two decades… . This is disturbing since little progress can be made in poverty reduction when inequality is high and rising. Moreover, contrary to earlier theories of development, high inequality tends to reduce economic growth, and therefore poverty reduction through growth.(7)

Their paper provides evidence of strong negative relationship between inequality and growth and they show that ‘traditional’ sources of inequality must be addressed through land reform, and more public spending on the human capital of the poor. These measures, however, even if applied, will not be sufficient since new causes of rising inequality must also be tackled by redesigning stabilization programmes to avoid sharp anti-poor demand compression and to protect pro-poor spending; regulation of privatized enterprises to protect disadvantaged poor consumers; and more pro-poor education investment to offset the tendency of trade liberalization to increase income inequality.

More explicitly, avoiding “anti-poor demand compression” and compensating for same with “stabilisation programmes” means that sharp price increases [food, energy, water…] will hit the poor hardest and leave them without the necessities of survival if governments do not act. “Regulation of privatised enterprises” means that these authors assume that privatisation is a fait accompli. So it is, after decades of structural adjustment at the hands of neo-liberal institutions like the World Bank or the IMF applying “Washington Consensus” anti-poor medicine. These policies also have primacy in neo-liberal Europe, one of whose goals is to facilitate the inclusion of all human activities in the marketplace.

Thus for Cornia and Addison, at the very least, these now privatised utilities, transport networks, health-care systems, education; but also formerly government-managed food stocks, veterinary services, municipal water systems, rubbish collection and so on must be regulated, that is, overseen by public authorities [if these services haven’t disappeared altogether]. They don’t ask for re-nationalisation or other forms of public ownership, merely for “regulation”.

“Pro-poor education investment” to ward of f exclusion of the poor from labour markets when trade is liberalised and subsequently “increases income inequality” is another means of adjusting to contemporary reality and trying to alleviate the plight of the poor. But as we shall see in a moment, fully a third of the European labour force is estimated by the Commission itself to be of “low educational attainment” and there are few signs that Europe has any intention to do anything about it, despite the “Lisbon Strategy”. Annual assessments of progress towards the Lisbon goals show Member States falling behind in crucial areas.

In other words, neo-liberal globalisation will necessarily create inequalities and the greater the inequalities, the more the poor will be made poorer and more vulnerable.

A good part of the “social” or non-monetary wage is wiped out through privatisation and higher prices for basics like water, transport or electricity. Lack of public investment in health and education has, in many places, made recourse to private systems an attractive option for anyone who can afford them-which not everyone can. If one hopes to reduce, much less eradicate poverty, then specific, targeted public policies are required in Europe or elsewhere. It is wishful, if often convenient, thinking to believe that such a result can be achieved through “growth” and some imaginary “magic of the marketplace”. Markets reward the haves, not the have-nots for the excellent reason that it cannot even “see” those who contribute little to capitalist production and buy so little that they are nearly invisible to capitalist consumption. We have known for decades that growth does not “trickle down”.

If one is serious about reducing or eliminating poverty, the obvious road to take in Europe is the Keynesian one of cross-border taxation and redistribution, re-establishment of the social wage through high-quality, integrated [cross border] public services including health-care and life-long education, a responsible fiscal policy including the elimination of tax havens, regulation of financial transactions and imposition of accounting practices that do not allow transnational corporations to use transfer pricing and other dodges; a European Central Bank with a mandate to practice policies leading to full-employment and so on. The European Union is actively avoiding all such practices and in some cases rendering them legally impossible.

II. European responsibilities

The arguments concerning poverty laid out above could be illustrated and supported for pages more, but this paper has no pretentions to being exhaustive. Nor do I believe it possible to convince anyone not already convinced of the harmful effects of neo-liberal policies. These policies, as now applied throughout Europe and the world, were consciously designed to do exactly what they have done: amass maximum wealth at the top while ignoring the consequences of greater poverty and inequality below.(8)

No one now denies the rise in inequality and wealth concentration but the standard answer to corrective policy changes is always the same. We heard it most recently at the failed mini-ministerial meeting of the WTO in Geneva this summer. Have faith in “market-based solutions” and the market will solve your problems. Let us now look briefly at how Europe, specifically the European Union, with the acquiescence and active cooperation of its Member States, fits into this picture.(9)

Since the Single European Act of 1986, the purely economic orientation of the EU has grown ever-clearer. The amendments to previous treaties contained in this Act were designed to increase the capacity of Europe to establish a truly common market. It was also the first time that social policies and democratic aspirations were explicitly pushed aside. The then-President of the Commission, the social-liberal Jacques Delors, explained that these would come “later”. We are still waiting.

Nearly twenty years later, under the Barroso Commission which many consider the most neo-liberal in EU history, the Treaty for a European Constitution [TEC] drafted by an unelected convention made the market orientation even more explicit. The word “market” occurred 78 times in the text, “competition” [usually accompanied by the phrase “free and undistorted”] was given 25 mentions, “social policy” got three and “unemployment” none. The “four freedoms” were the paramount objective of the TEC: the free movement of “goods, persons, services and capital”, interpreted as we shall see shortly in the broadest possible way so as to reduce other rights to the barest minimum.

The French debate in 2005 on the TEC and the future of Europe was the most ardent I had witnessed since May 1968: contrary to the assertions of the Commission, the French knew exactly what they were voting for/against. It was a class vote, with everyone but the managerial class voting No and when the French people voted decisively [54.7%] against the TEC [as did the Dutch even more decisively-61.6%— shortly thereafter], the Commission and European elites discarded all democratic pretence. The people had voted wrongly, therefore the people were wrong and should be ignored. Or, as Commission Vice-President Gunter Verheugen put it even more brutally after the French/Dutch votes, “We must not give in to blackmail”. So much for universal sovereignty.

The Lisbon Treaty, drafted in an even more secretive fashion and even more difficult to decipher, followed in due course and incorporated virtually all the provisions of the defunct Constitution, passing over the popular rejections as if they had never occurred. According to the principle author of the TEC, Valéry Giscard d’Estaing, Lisbon provided only “cosmetic changes” to make it “easier to swallow”. Nicolas Sarkozy admitted that if the French were allowed to vote again, they would again vote No, as would the people of many other nations. Therefore they should not be allowed to vote. The same authoritarian treatment given the French and the Dutch is now being meted out to the Irish. Disregard for one’s own rule of unanimity is clearly preferable to another failure and one can be sure that the Commission will not rest until it has obtained the Treaty it wants in order to steamroll ahead with its own profoundly undemocratic, economically divided Europe.(10)

Among the poverty-enhancing attributes of the texts Europeans are being forced to swallow are the provisions on public services or rather “services of general economic interest” which are specifically made subject to competition. Unanimity is required for any common social or fiscal policy, meaning that competition will push these downwards. Lisbon obliges EU members to “improve their military capabilities” [while making them subservient to the US and NATO] which means that other budgets will necessarily suffer. Although “enhanced cooperation” is quite easy to realise among like-minded European governments in the military sphere, it is extremely difficult if not impossible to organise cooperation regarding social and fiscal policies. And of course the four freedoms trump all other considerations.

The twelve central/eastern European newcomers will not receive anything like the structural funds generously apportioned to Spain, Portugal, Greece and Ireland in earlier days; everything points to the deliberate use of these newcomer countries as reservoirs of cheap labour. In 2005, the “Bolkestein” or services directive was roundly denounced as organising unfair competition between the workers of higher- and lower-wage countries. The characteristically neo-liberal directive stipulated that firms from Eastern Europe need not even register with the authorities of a western European country in order to supply services there, at the going wage and working conditions in the “country of origin”. Faced with an outcry, even from the usually docile European Trade Union Confederation, the Commission and Parliament were obliged to soften the directive to some degree and exclude some vital social services from its remit.

The Commission, however, true to form, decided that it would get what it wanted through another channel and has now passed on the matter to the European Court of Justice.

The result has been consistent jurisprudence in 2007-2008 weakening labour protection and the right to strike, while forbidding a national Member State to consider its own labour code as “public policy”. The relevant cases, known as the Vaxholm-Laval, Viking, Ruffert and Luxembourg decisions, have all diminished hard-won worker rights.

The Vaxholm-Laval decision forbade Swedish unions to organise industrial action to force a Latvian company [Laval] to pay Swedish wages to its Latvian workers engaged in construction work in the Swedish town of Vaxholm.

The Finnish Viking Line wanted to reflag one of its vessels staffed with a largely Finnish crew in Estonia so it could hire an Estonian crew not benefiting from a collective agreement negotiated by the Finnish Seaman’s Union. The decision found that “Social policy objectives do not automatically take precedence over the objective of having a properly functioning common market”, in this case “freedom of establishment” in Estonia.

The Ruffert case concerned the right of German public authorities, when awarding work contracts, to demand that tendering companies commit to paying wages to foreign workers in line with rates specified in collective agreements applicable to German workers. The European Trade Union Confederation General Secretary called the ECJ decision refusing this demand “another destructive and damaging judgement [after Vaxholm-Laval]. They both assert the primacy of the free movement of services over existing labour regulations which apply to the place where the service is provided”.

The ETUC also called the Ruffert decision “an open invitation for social dumping, which will not only threaten workers’ rights and working conditions, but also the capacity of local (small and medium) enterprises to compete on a level playing field with foreign (sub)contractors.”(11)

Most ominous of all, however, is doubtless the “Luxembourg” case brought by the European Commission against its own EU Member State. The Commission claimed that Luxembourg had violated the EU “Posting of Workers Directive” [PWD] when it transposed this directive into national law. Luxembourg argued that its national “public policy” [which could therefore legally replace the terms and conditions expressly listed in the PWD] included among other provisions written employment contracts, automatic indexation of wages to the cost of living, regulation of part-time and fixed-time work and respect of collective labour agreements. Luxembourg therefore claimed it was justified in requiring foreign employers to conform to its “public policy” which is “to protect workers”.

The ECJ upheld the Commission on all points: Luxembourg’s interpretation was “excessive”; its legislation went beyond what is allowed by the PWD because the latter embodied an “autonomous principle of Community law and can be monitored by the European judge accordingly…National labour law as a whole cannot constitute public policy”.(12)

These four decisions create a huge incentive for companies to subcontract work to subsidiaries that are, on paper at least, located in low-cost EU countries. Downward pressure on standards, wages and social rights will necessarily increase.

Thus the EU is organising the race to the bottom among workers. Its own statistics show that it has already been successful in reducing the gains of labour while enhancing those of capital. The statistics relating to the labour/capital share of added value can be calculated in different ways, using different bases and different time-lines—economists enjoy arguing about the best ones to use. But the EU itself, in its own most recent Employment in Europe Report 2007 shows that after hitting a peak in 1975 when the labour share of added value was 70 percent [69.9% to be precise], by 2006 it had declined gradually by over 12 percentage points, to 57.8 percent, with, of course, equivalent increases in capital’s share from 30 to 42.2 percent.

In some countries the decline has been even steeper, as in France which now stands at 56.7 percent labour share of added value. The erosion of the labour share in the new Member States is even more drastic. In 2005 and 2006, Poland stood at 48.6, Bulgaria at 44.6 and Slovakia at only 42.3 percent. Malta, of particular interest to us here, averaged a 51 percent share of added value for labour over the period 1990-2006, peaking in 2003 at 53.3. It has since slipped back to 50 percent.(13)

In the EU, the drop for labour was more than double that of the United States. Although in the US, over the whole period 1960-2006 the share of labour never exceeded 66 percent, with that high point reached in 1970, it was more stable. The low point came in 2005, at 61 percent, for a total loss of “only” five percentage points compared to 12 for the EU. As for Japan, long known as the most egalitarian developed country, it reached a remarkable 76 percent share for labour in 1975-1977 but had plummeted to 60 percent by 2006. In terms of labour share, Europe still remains the worst performer among these major OECD countries-or the best for capital, depending on how one measures.

As noted above, economists don’t necessarily agree on the details of calculating added value shares between labour and capital, but as the EU points out in its own Report, all the other credible sources-the Bank for International Settlements, the IMF or the OECD— show exactly the same patterns though the actual numbers may vary.

Not being an economist, I am unqualified to assign proportional responsibility for the decline in the labour share [never forgetting the improved share for capital] but it is easy to point to at least some of the factors that have contributed to it. Globalisation has given capital greater bargaining power over labour and changes in this rapport de forces between the two have surely played a part. Offshoring, de-industrialisation with the consequent loss of well-paid manufacturing jobs and the simultaneous rise of less well-paid service jobs also must have had something to do with this trend. Privatisation , like the relentless search for “shareholder value” have gone hand in hand with massive layoffs.

The unexamined question in the changes in value-added shares seems to me the role of the financial sector which exploded especially during the past decade. At least during the period from 2000-2006, profits of the banking and financial secotrs were nearly double those of any other industry. Investors had little incentive to invest in the real, job-creating economy. Financial institutions were furiously innovating, leveraging, and passing the hot potato of shaky loans, packaged as “Structured Investment Vehicles” or “Collateralised Debt Obligations”, on to other unwary institutions-with the private ratings agencies egging them on.

As we know, this bubble has burst, with dire consequences. Working people have already paid several times: first when jobs in the real economy became scarcer and less well paid because of the rush to invest in financial products, not “real” ones; second when many lost their homes or the “equity” [capital] placed in their homes; finally when the bubble burst and taxpayers had to step into the breach to save the financial system. Now they will pay once more as we sink into generalised recession.

Europe’s growth problem-and it is a problem-is seen to lie not in the dominance of runaway finance but in the “rigidity of the labour market”. The remedy, seen from Brussels, is “Flexicurity”. This hideous neologism is supposed to combine to best effect flexibility and security but it is also dangerous: the GUE-NGL [progressive left] group in the European Parliament has already labelled it “Flexploitation”. Theoretically, the idea is to export the Danish model to the rest of Europe. The Danes have little protection with regard to hiring and firing, but a lot of support if they are between jobs or unemployed. Unfortunately, it’s not possible to generalise this system without a great many other changes which the EU and most of its Member States are unwilling or unable to undertake.

For example, the Danes [and other Scandinavians] don’t want to hear about a “European Minimum Wage” which would be a progressive measure for some other countries, because they know that their own wages [no minimum is set] are higher than an EMW would be. The Scandinavians also live in societies where the social consensus accepts high taxes and expects very high rates of participation in trade unions and collective bargaining among social partners. So while the goals of full employment, high levels of security, willingness to change jobs and access to life-long learning are certainly worthy ones, more emphasis for the moment seems to be placed on flexibility than on security, as the mounting proportions of casual and unwilling part-time employment seem to attest.

Furthermore, the 2008 Commission Report on Education brings the unwelcome news that illiteracy [called officially “low performance in reading literacy”] in Europe “actually increased by 10 percent between 2000-2006 and has reached 24.1 percent”. These illiterates, unless they can somehow be rescued, will soon join the ranks of the “almost 108 million people [who] still have low educational attainment, about one third of the labour force”, which is to say that they are virtually unemployable except in purely manual, unskilled jobs which are in shorter and shorter supply. These people constitute an exceptionally large reservoir of present and future poverty.

It would be wrong to leave the subject of European policy’s own contributions to poverty without examining, however briefly, the impact of the EU on poverty in the South. Here we have a rich field to choose from. I have argued elsewhere that Europe should commission systematic research on the contribution of its own policies to the “push factors” causing massive immigration which is now treated entirely as a security-police-military problem. My argument is that we have helped to close off every avenue of socio-economic success, particularly in the countries of North and Sub-Saharan Africa and having done this, we are then surprised when the inhabitants of these countries risk their lives trying to move to Europe.(14)

I will not elaborate on this theme here other than to say that in my research proposal to the EU Research Directorate, I included in my list of topics which should be examined in relation to migration pressures : the continuing existence of large amounts of external debt and structural adjustment which impede personal development, the acquisition of skills, promote exports over local needs, and so on. Other areas are commodity prices; agriculture, notably the CAP; fisheries, climate change [beyond Europe’s sole control] and unfair trade. Here I would like merely to touch on EU trade strategies, particularly the Economic Partnership Agreements [EPAs] under negotiation with ACP countries and the likely results-namely to increase poverty in some of the poorest countries in the world.

“Free trade” is the most sacred of the neo-liberal doctrines and the EU Trade Commissioner Peter Mandelson is a true believer. In October 2006, he launched the strategy “Global Europe” which concerns Europe’s place in the world through commerce. Particularly since the “Doha Round” of the World Trade Organisation has become stalled if not comatose, Mandelson has concentrated on bilateral and plurilateral negotiations and has given the Economic Partnership Agreement with the 78 African-Pacific-Caribbean countries his particular attention.

The definition of “free trade” has shifted enormously in the past decade. Although lowering of tariffs on incoming goods is still an important component of trade agreements, what Mandelson and others refer to as “Beyond Borders Barriers” are as important if not more so. BBBs or “non-tariff barriers” in the European vocabulary mean any obstruction not only to sales of EU goods and services but also “barriers to investment” by European transnational corporations in any area. They want equality of access to government contracts and the elimination of government regulations Europe interprets as “disguised barriers to trade”. The WTO is also concerned with all these, but bilateral and plurilateral trade agreements are all “WTO Plus”, meaning that by definition they must allow freer movement and fewer “barriers” than WTO agreements do.

All the successful, now-industrialised countries, including the most recent ones like Korea or Taiwan, reached their present economic status by protecting their infant industries, using targeted government spending and subsidies and maintaining tariffs often as high as 40 or 50 percent on incoming goods, but these protections are no longer allowed for newcomers. Some of the ACP countries, especially the poorer ones, receive a hefty slice of their revenues from tariffs but are now being asked to forego these without compensation.

Mandelson’s chief aim, however, seems to be totally unrestricted entry for European transnationals, so he is calling for the dismantling of national investment codes so as to eliminate restrictions on the sectors a TNC can invest in, the number of investors allowed in each sector, quantitative or proportional limitations on investment [for example 49 percent] or repatriation of profits, requirements for local hiring and local content and so on. EPAs can only be described as “leonine”. So why do poor countries accept them, as many have done with a few notable exceptions like Senegal? They have signed because the EU has told them that if they don’t, their development aid will be cut and the EU will buy fewer of their products. It is also demanding access to government public procurement contracts, often reserved for local firms, as well as access to raw materials.

No country seems too small or insignificant to pry open-in the early days of the services negotiations in the Doha Round, NGOs [legally] obtained copies of the correspondence between the Commission and the major European water companies in which the former asked the latter which countries they wanted to expand in, supplying which services, in which modes. The result was 73 GATS [General Agreement on Trade in Services] requests for market opening in the “request-offer” process, often to extremely poor countries.

Conclusion

The solutions to poverty, both European and world-wide are quite obvious and, naturally, the financial industry and many other interests lobby consistently against them. As there are between 10.0000 and 15.0000 lobbyists in Brussels, they have a lot of help.

—With regard to the financial crisis-cum-recession, transparency is vital. Banks at present won’t lend to each other because nobody knows how much debt the other one has and how bad its balance sheet really is. So they are pulling back from most lending and making loans much more expensive. This is known as the “credit crunch” based on lack of trust, not of money.

—The private ratings agencies which gave the toxic SIVs and CDOs triple AAA ratings need to be placed under government control; they should be paid by the buyers, not the sellers of securities to eliminate their present perverse incentives.

—The finance wonder-boy innovators have to be prevented from passing on the hot potato of toxic debt and obliged to keep a good proportion of their own products on their own books. Leverage [through which $1 can easily become $40, $50 or even $100] must be controlled by enforcing capital requirements with real assets.

—Stop allowing the socialising of losses and make shareholders pay the real costs of the debacle.
In a general way, we are neglecting to use existing tools. Here are a few:

—Cancel the debt of poor Southern countries, but [this is my personal view, not that of any particular NGO] in exchange for involvement of the people in the concerned countries in determining how the savings should be spent. The government should not be allowed to do this by itself. The argument that “one cannot apply conditions” is laughable, given that we have been doing so for decades, but the wrong conditions, those of the Bank-IMF.

—Close down tax havens, particularly those in Europe used by Europeans and European companies. The Tax Justice Network estimates that rich individuals have placed well over $11 trillion in such havens; the OECD has branded three major European ones-Andorra, Monaco and Lichtenstein-as completely uncooperative. Tax avoidance and evasion are now major industries.

—Tax cross-border financial flows, whether of currencies [recently traded at the rate of $3.2 trillion a day], stock market purchases, or transnational corporation profits. A very small property tax above a certain level would be helpful. Let us hire Price-Waterhouse or the equivalent to tell us how to levy another small tax on the billionaires and the HNWIs. The technical means to do all these exist, the obstacles involved are purely political.

—Seek fair trade, not free trade, taking into account the real, long-term interests of Europe, especially with the Mediterranean countries and Sub-Saharan Africa. Recognise food sovereignty as a basic, inviolable right.

—Invest in education and ecology. Require the banks that have been bailed out time and again reserve a certain portion of their loans at very low interest rates for these areas.

It is now generally known that there is no such thing as “aid flows” from North to South. Rather, the “aid” is coming from the South, or from Southern nationals, to the North and net flows are massively in the North’s favour. Worker remittances from migrant workers to their home countries dwarf anything that Europe is sending to them under the heading of “Development Aid” and market opening will proceed by one means or another. Debt service from Sub-Saharan Africa alone continues at the rate of $25.000 every minute. Transnationals set up more or less where they like and disregard the needs of the local people when they do not simply steal their land. We can expect further impoverishment as a result.

It is not an accident that many NGOs and social movements have given up on the European Union as it presently exists although they continue to fight against its policies. Yet Europe could be a model for a new kind of society if it abandoned the meretricious, damaging values of neo-liberalism and returned to its Enlightenment roots which would now include enlightened Keynesian policies of taxation and redistribution, at the European and global levels. Europe still has the best social model in the world, based on rights and economic security and this can be mathematically proven.(15)
The requirements for reducing or eliminating poverty are known and the money is there. The political will at present seems non-existent, but social movements will continue as best they can to defend a different future, as I have tried to do here.

This was Susan George’s contribution to “The fight against poverty” civil society project conference 2008 at the Jean Monnet Centre Of Excellence, University Of Malta, 8 October 2008. Susan George is Chair of the Board of the Transnational Institute. Her latest books are Hijacking America: How the religious and secular right changed what Americans think, and We the peoples of Europe.

Notes
(1) Book III, Chapter IV, p.512 in the Andrew Skinner edition, London, Penguin 1974

(2) Sarah Bouquerel and Pierre-Alain de Malleray, “L’Europe et la Pauvreté: Quelles réalités ? » Note no. 31 for the Robert Schumann Foundation, April 2006

(3) The elites of the United States, Asia, Brazil, etc. are also trying to prevent redistribution and eradication of poverty but this conference centres on Europe.

(4) See Investorsoffshore.com, “Private Wealth Management” by the Lowtax Network Editorial Team, August 2008. This network appears to be based in London although this is not clear from the data on the site.

(5) The “power law” holds true in an amazing number of areas: 20% of the banks have 80% of the accounts; 20% of publishers publish 80% of the books; 20% of US colleges receive 80% of the applications and so on.

(6) United Nations University World Institute for Development Economics Research [UNU-WIDER] The World Distribution of Household Wealth [James Davies, Susanna Sandstrom, Anthony Shorrocks, Edward Wolff] , Helsinki, December 2006

(7) Tony Addison and Giovanni Andrea Cornia, “Income Distribution Policies for Faster Poverty Reduction”, WIDER Discussion Paper no. 2001/93

(8) For the means by which neo-liberal policies became the new “common sense” in the US, see Susan George, Hijacking America: How the Religious and Secular Right Changed What Americans Think, Polity Press, Cambridge, 2008. For more on the enthusiastic participation of the EU in these same policies, see Susan George, We the Peoples of Europe, Pluto Press, London, 2008.

(9) Because critics of the Constitution and now the Lisbon Treaty have so often been shoved into the category of “allies of the right” or “anti-Europeans”, allow me to make clear that this is not the case for me, for the Attac movement [I am honorary president of Attac France], for the coalition most active in organising the No campaign in France, nor for the many other progressive Europeans I meet. While willingly recognizing my non-elected status and lack of representativity, I find all around me, in many European countries and contexts, something like furor, even hatred for the Commission and the present structures of Europe emerging. Those who feel this way are almost invariably enlightened, fervent Europeans but they want a social, ecological, democratic European Union, not the autocratic, corporate-friendly one being imposed on us now. The more official Europe displays its contempt for the people, the more dangerous this situation could become. Unfortunately, everything indicates that the Commission itself, like the top European bureaucrats, are utterly oblivious to this danger.

(10) Bruno Waterfield, “EU polls would be lost says Nicolas Sarkozy” The Daily Telegraph, 15 November 2007; . Giscard d’Estaing in hearings before the Constitutional Affairs Committee of the European Parliament 17 July 2007, see also his ‘Tribune libre” in Le Monde of 14 June 2007 in which he explains that through Lisbon,, which was the Constitution rendered “colourless and painless” , “public opinion would be unwittingly led to adopt the provisions that [governments} didn’t dare present to them straightforwardly”. Many other major European figures [Barroso, Merkel, d’Amato, Zapatero, Bertie Ahern, the Belgian foreign minister, etc].all explained that Lisbon was the same thing as the Constitution ; many added that it had been deliberately made much more difficult to understand.

(11) See press releases on the ETUC site

(12) Posting of Workers Directive 96/71/EC; European Court of Justice, Commission vs. Luxembourg C319/06 and ETUC Briefing Note on the case. The decision was handed down on 19 June 2008, a week after the Irish referendum favouring the No. The formal name of this court is the Court of Justice of the European Communities.

(13) .Employment in Europe Report 2007, Chapter 5, “The labour income share in the European Union”., European Commission, 2007; using country or area specific tables and charts.

(14) Susan George, Paper for the EU Research Directorate, programme “Responding to Global Challenges”; “Examining Relationships between European Union Policies and Migratory Pressures” [April 2008, to be included in an as yet unpublished collection of proposals issuing from the Global Challenges workshop.

(15) See the final chapter of Susan George, We the Peoples of Europe, op.cit. which is based on the International Labour Organisation report Economic Security for a Better World; 2006, an exhaustive survey classing countries according to seven types of security. European countries, including many in eastern Europe, come out on top; the United States is no. 25.

Solutions for a Sustainable World

Ellie Keen — Sun, 12 Oct 2008 13:49:38 +0000

The Schumacher lecture

The Schumacher lectures are traditionally held in Bristol but have now branched out so that Schumacher North, based in Leeds, also organises the series. They occupy a day, with three people delivering lectures and a final panel. My companions for this day were Anne Pettifor, well known for her leadership of the Jubilee 2000 Debt campaign and Andrew Simms of the New Economics Foundation. My contribution was written in mid-September 2008; the continuation of the financial crisis makes it, I think, all the more pertinent.

Please first let me congratulate the organisers of Schumacher North for their initiative in bringing this lecture series and other activities of the Schumacher Society to Leeds. It’s an honour to be here and especially to share the platform with two brilliant people whom I greatly admire. I also want to thank the organisers for the privilege of honouring the memory of Dr Schumacher, a man far ahead of his time who bequeathed to us a lasting legacy. It’s a challenge to be worthy of that heritage in a lecture bearing his name.

But I intend to try. My talk today will concern the stage I’ve arrived at in a kind of reflexion in progress—I don’t mean a book, although it may well become that as well—but an effort to make sense of the fast moving events in our battered world and an attempt to think about them in a more unified way.

Philosophically speaking, the thing-in-itself, the isolated object whether it’s an electron, a human cell, an organism, a single word —even a human being—makes sense only in the context of its relationships, its place in its physical, linguistic or social environment . Margaret Thatcher once famously said, “There is no such thing as society”. She thus perfectly embodied the foundations of the neo-liberal ideological programme which should, ideally, prevent us from even thinking about ourselves and others in our natural and social context. We must be taught to believe that we are not citizens or members of a social body but discrete, individual consumers. We are entirely responsible for our own destinies and if we fall by the wayside for whatever reason—illness, job loss, accident, failure, whatever—it’s our own fault. We should have foreseen the case and planned for it. We have no responsibility for other people either. Solidarity is a banished word. Nor are we accountable for the state of the planet—homo sapiens is the only important species and humans are isolated if not immune from natural, physical laws. That’s the essence of the neo-liberal spirit: “You’re on your own” as Barack Obama has been saying to Americans to encapsulate the philosophy of his opponents.

If you are well-schooled in neo-liberalism, you will never join a social movement, never engage in a struggle against an unjust action of the government, never contribute to an effort to protect the natural world because not only will you make a fool of yourself, not only will your effort fail, but even if successful it will lead eventually to oppression, even totalitarianism, as Thatcher’s mentor Professor Friedrich von Hayek argued. And, as he also taught, economic freedom is superior to every other kind of freedom, whether political, religious or intellectual.

I believe to the contrary that our only hope lies in understanding everything we confront today as a link in an ever-more-complex chain, as an element in a system. The danger with this approach of course is to become lost and frustrated in the syndrome of “Everything is connected to everything”. That’s true, everything is connected to everything, but we still have an enormous task ahead in trying to identify the priority connections, to understand how they work together and what we can do to change them, because they definitely do need changing. I will argue that the present connections are dysfunctional, they have become perverse: they form a system that worsens the human condition and irrevocably damages the planet. But there is hope, because what has been constructed by humans can also be dismantled by them.

All this may sound rather vague so let’s get down to specifics. To make matters more concrete, I’d like to talk now about the most obvious crises we face collectively today, why they are all linked and why the solutions to them must be linked as well.

The first of these crises is social—the crisis of mass poverty and growing inequality within individual countries and between the rich and poor countries. The second is the financial crisis that Wall Street, the City and the public authorities refused to see coming because they were living in bubble-land. It began with the subprime affair in the United States but has spread inexorably like a lava flow in the US and elsewhere, threatening to plunge the global economy into a prolonged period of stagnation as severe as the Great Depression. Every day while I was writing this lecture at home, a new financial institution went down the drain or on the block and the end is not yet in sight. The third crisis, most ominous of all, is that of climate change and species destruction. It is accelerating faster than most scientists, much less governments, thought possible, causing many to ask if we have not already entered the era of the runaway greenhouse effect.

Each of these crises—social, financial, environmental—is negatively linked to the others, they intensify each other with negative feedback; they lead to worst-case scenarios. Let us take just a few examples of these perverse interactions.

The poverty-inequality crisis is a good place to start. This crisis is well documented; no one seriously denies the numbers. The World Bank recently recognised that it had grossly underestimated—by about 400 million—the numbers of the very poor, and even then its figures stop at the year 2005 and don’t include recent upheavals in food and energy costs that have swelled the ranks of the impoverished. Even more important, however, is the fact that for the first time in human history, there is no excuse for mass poverty and deprivation. Taking this assertion seriously already helps to point us towards a solution.

Most scholars and institutions concerned with such issues focus on poverty per se but I think it’s more useful and enlightening to focus on wealth. It may not be obvious to everyone that the world is actually awash in money. Most of it is still in North America and Europe but the numbers of the seriously rich on other continents are catching up fast. Those who have the money know very well how to keep it and, with their hired help, the battalions of lawyers, accountants and lobbyists, they are busy salting away their profits in tax havens, finding loopholes and protected investments, lobbying fiercely in parliaments and ministries against regulations on banks and financial markets. As you can see, I began by talking about poverty but I am already touching on the links with the financial crisis.

How many of you knew that ten million people, according to the latest Merrill-Lynch World Wealth Report, together boast investable, liquid funds of more than $40 trillion? That’s 40.000 billion or 40 followed by 12 zeroes. This wealth is above and beyond the value of their houses, cars, yachts, wine or art collections and so on and it is equivalent to about three times the GDP of either the United States or Europe. You might like another simple calculation. Assume that you have one billion dollars, which is the cut-off point for the latest Forbes magazine list of 1125 truly rich individuals in the world. If despite your billion you are such a dim-witted investor that you get only a five percent return on your fortune, you will still have to spend $137.000 every day of the year in sheer consumption or you will automatically become richer. My point is that cash is abundant and there’s no shortage of available wealth.

We also know a great deal about inequality. The UN World Institute for Development Economic Research, WIDER, estimates total world household assets at about $125 trillion. This is about three times world GDP and unsurprisingly, the top two percent of the world captures more than half of that wealth. The top 10 percent, which certainly includes many of us here, hold 85 percent, while the bottom half of humanity is obliged to stumble along with barely 1 percent. All you need to be classed in the top half of humanity is a meagre $2200 in total assets—that includes your house, your land or items like your car or your refrigerator—hardly a princely sum. If all household assets were divided equally—impossible and probably not even desirable to achieve—everyone on earth could have a share of $26.000. So again, money as such isn’t the problem.

In all the countries where 90 percent of the world’s population lives, inequalities have increased especially since the 1980s. At this point in the argument, the neo-liberals usually jump in to remind us that rising tides lifting all boats. They admit that inequalities have grown, but still argue that the poor are better off than they were. It seems almost rude to remind them in turn that falling tides have the opposite effect, they swamp and strand the more fragile boats and that is where the tide of the financial crisis is now taking us.

The real point, however, is not the absolute numbers but the fact that inequality makes the economy and also the natural environment worse for everyone, rich or poor. Two experienced academics, Tony Addison and Giovanni Andrea Cornia, put it this way: “Inequality has risen in many countries over the last two decades [and] little progress can be made in poverty reduction when inequality is high and rising….Contrary to earlier theories of development, high inequality tends to reduce economic growth and therefore poverty reduction through growth.”

Although it’s true that economic growth has reduced poverty, particularly in China, one must also ask “At what cost?” China has now overtaken the United States in greenhouse gas emissions and frighteningly has hardly even begun its transition to the automobile society. China also requires at least 10 times as much energy as the more mature industrial societies to produce a unit of GDP.

Growth certainly isn’t the answer ecologically, but even economically it fails the test because the benefits accrue almost entirely to the top of society. That is Cornia and Addison’s main point.

We have also learned in the past few months that it is entirely possible to push tens of millions of poor people off the ledge where they had just gained a foothold and send them back into the depths of poverty. Food riots, most of them urban, in at least thirty different countries have revealed another scary new phenomenon: the worldwide food crisis. Until now, food shortages and famines tended to be local, but so many societies have accepted neo-liberal trade mantras and become dependent on world markets for their basic daily staples that today a sudden spurt in prices is felt from Haiti to Egypt to Bangladesh.

The neo-liberal institutions like the World Bank, the WTO and the European Commission continue to pretend that poverty reduction will result from more growth and more trade. They fail to mention that both growth and trade will reinforce the environmental crisis. The food and energy crises have in turn strong links to the financial crisis, since speculation has been an important factor in both. Food and energy are also intimately linked to the climate crisis as one can see instantly when one thinks of carbon-loaded fossil fuels or of agro-fuels taking vast amounts of land away from food production.

At this point in the discussion, especially when one is speaking to concerned, engaged, decent people like those likely to be found at a Schumacher lecture, someone will raise two highly pertinent questions. The first is this: “ Isn’t there a point where people with huge fortunes say ‘enough is enough’ and start sharing?” Some do—Bill Gates and Warren Buffet are oft- cited examples. But as a class, I’m sorry to say that the answer is no. We know a lot about poverty lines but there is no such thing as a wealth line and the word “ enough “ is not part of the vocabulary of this class. You needn’t believe me. Listen to the expert who said “All for ourselves and nothing for other people seems in every age of the world to have been the vile maxim of the masters of mankind.” That was not Karl Marx but Adam Smith, in his classic 1776 treatise on capitalism, the Wealth of Nations. Little has changed since then.

The second question is “But why don’t the neo-liberal institutions, like the World Bank, the International Monetary Fund, the World Trade Organisation, the European Commission and the US government recognise that their policies have failed? Why do they keep on pushing them wherever and whenever they can?” The answer is not just that institutions are always loath to admit their mistakes, especially when these have killed and ruined so many millions. It is also that these policies have not failed.

To the contrary, they have produced exactly the results they were intended to produce. They have made a tiny fraction of international society rich beyond imagining, they have kept many dependent countries dependent in a new, less visible sort of colonial relationship and they have made so-called free trade, privatisation and unfettered capitalism the rule in countries that previously wanted little or nothing to do with them. Furthermore, they have imposed their policies with relatively little organised protest because their ideology has been expertly produced, packaged and delivered. Ideology can alas have a far stronger influence than facts. This is why we must fight on the practical front, of course, but also — I happen to believe primarily — fight the battle of ideas.

In any event, the massive funds belonging to rich people who already have most of the material goods they need or want are generally devoted to more or less speculative investments. Hedge funds, for example, are estimated to be sitting on about three trillion dollars, even today when so many investments have suffered melt-down. The financial institutions have been frantically innovating, particularly over the last decade. The entire incentive structure of the banking and finance industry has become perverse: the large institutions know perfectly well that they are “too big to fail”, consequently they also know that no matter how risky their actions, they will be bailed out by the public purse and has become all too plain. Beforehand, top management takes the money and runs.

Between the years 2000 and 2006, average annual profits of the financial sector in Great Britain averaged 20 percent—that is, two or three times the profit rate of other sectors of the economy. Huge bonuses, especially in the US and the UK, went to a handful of people, intensifying inequalities, whereas millions further down the ladder have lost their jobs and often their homes. Such profits were themselves clearly not sustainable because at some point, financial gain must be based not just on speculation but on the real economy.

Now that the bailouts are coming thick and fast, we have before us a singular example of socialism for the rich, the well-connected and Wall Street, in which the profits are grabbed by the usual suspects and the losses, tremendous losses, are billed to taxpayers. The United States has in effect nationalised these institutions and their debts—without getting anything from the financial industry in exchange.

As the sub-prime crisis has continued to ooze like a giant oil spill over the whole economy, speculators have searched for alternative profitable areas and created the food-price bubble trouble in which we now find ourselves. What happens then? The resource-poor, the world’s hungry, grab whatever they can, they chop down trees, kill animals and overexploit what little land they may have. Poverty is bad news for nature. But so is wealth. Even though there are far fewer of them, the rich cause much greater environmental damage with their dinosaurian ecological footprints. People who use the population argument to explain the multiple crises and who see in population control the solution are missing a crucial point—it’s not so much the number of people, although numbers are important, as their relative weight.

Furthermore, as we have repeatedly witnessed, the frequency and the fury of storms provoked by global warming hit the poor and the poorer regions of the globe hardest. There is worse to come. We have not even begun to comprehend the perils of climate change, including vastly increased numbers of environmental refugees who will crowd the planet due to droughts, flooding and crop failures. The Pentagon is already working on how to stem this tide by countering by whatever means necessary the refugees frantic efforts to reach more favourable lands. Government planning for this perfectly predictable phenomenon is limited to increased surveillance and security responses, not attempts to make outmigration less necessary. And yet the UN Intergovernmental Panel on Climate Change [IPCC] which is probably the most respected scientific body in the world, has already warned us that in Africa, the yields of rain-fed agriculture are likely to be reduced by 50 percent, deserts will gain ground, species destruction has already reached such proportions that we are in the midst of the sixth geological extinction of the planet’s four and a half billion-year history. The fifth extinction was the one that put paid to the dinosaurs.

I could go on drawing out relationships between the poverty, financial and ecological crises but I’m sure you need no more. The question is what we can do about all this and by “we” , I mean people everywhere who understand that the triple crisis is real and urgent.

Knowing that I will doubtless offend a great many people here, let me say straight away that there is an exit strategy, a genuine solution exists, but it is not in my view the one that many well-meaning environmentalists have long advocated. I’m sorry, but the time has passed for telling people to change their behaviour and their lightbulbs; that if enough people do this, then together “we” can save the planet. I’m sorry, but “we” can’t. Obviously I’m not suggesting that people shouldn’t change their behaviour and their lightbulbs—but even if the entire population of Europe does so—a most unlikely scenario—it’s not going to be enough. I agree as well with proposals for localisation and scaling down, but we have also got to scale up.

We need large-scale solutions, sophisticated, industrial solutions and huge involvement of governments in order to cut greenhouse gas emissions drastically enough to save our future. In other words, we must have the courage to challenge not just our political leadership but the entire neo-liberal, unregulated, privatised, capitalist economic system in place in order to provoke and promote a quantitative and qualitative leap in the scale of environmental action. Dare I say it here? Sometimes big can be beautiful and right now is one of those times.

Since I believe that individual and local solutions are necessary but tragically insufficient to address the seriousness and the urgency of the ecological crisis, I will use the rest of my time to discuss the twin problems of how to deal with governments and with the capitalist corporate production and financial system. The dilemma I wrestle with is this: Can we save the planet while international capitalism remains the dominant system, with its focus on profit, share-holder value, predatory resource capture and with no-holds-barred finance capital making more and more decisions? Can we rescue our natural home when confronted with a powerful caste that does not know the meaning of “enough” and is allergic to the kind of fundamental change a New Ecological Economic Order requires? Can we move forward when governments basically work for the interests of that class?

On bad days I reply No: We can’t save the planet. It’s impossible to reverse the climate crisis under capitalism. But that is a despairing answer and if true, it means there is virtually no hope. No hope, because I do not see how even the most convinced, most determined people could replace, much less overthrow capitalism fast enough to carry out the necessary systemic change before a runaway climate effect takes hold—always assuming it hasn’t done so already. First of all, there are not that many convinced and determined people prepared to act against the dominant economic system and there is nothing that resembles in the smallest degree an avant-garde revolutionary party that might lead them even if they existed. There is no one-size-fits-all replacement solution for capitalism. Considering the historical record and role of such parties and such solutions, I consider this an unmistakably good thing.

But there are other obstacles to once-for-all revolutionary change. Nobody knows, figuratively speaking, who the Tsar is that we would have to overthrow today and nobody has a clue where to find the Winter Palace we would have to storm. We know the Winter Palace isn’t on Wall Street which was up and running again a few days after 11 September and is now taking full advantage of the bailouts. The US is only one of many world capitalist centres. Even if we were to win in one place, the nomadic money-moguls would simply mount their camels and head for another. The worlds of 1917 and of 2007 are utterly different, so we must try to move beyond this revolutionary impasse, this dead-end and find a new synthesis.

The question we face is not so much what to do — I think that is reasonably clear and I’m about to spell it out—but whether we will have the intelligence and the strength to seize the great opportunity with which we are now presented. Perhaps the words “great opportunity” strike you as wildly optimistic considering the long and dire preamble you’ve just listened to. However, I am now going to argue that not only are individual solutions insufficient but that the remedies offered by Kyoto, Bali, Bonn or whatever timid future agreements may be negotiated are tragically inadequate, Once more—I cannot stress this enough—the scale is crucial. And the great opportunity is to be found in the financial crisis itself. Properly targeted and used, it could open the door to the quantitative and qualitative leap we must make.

Some progressive people will reject the solution I propose, but I would then ask them what alternative they offer. The ecological crisis is of a different nature from the financial and poverty crises in the sense that once climate change is underway, as it is now, it is irreversible and we haven’t time for theoretically perfect solutions. With politics you can sometimes turn back and start over, but not where nature is concerned. So you can accuse me if you like of suggesting a way to give capitalism a new lease on life and I will plead guilty.

Let’s take first the slightly easier question “How can we deal with governments?” at least in the more or less democratic countries. China is another matter. People are generally way ahead of their governments in recognising the emergency. The political issue is not simply to “throw the rascals out” because they would be replaced by other rascals just as bad, just as beholden to the corporations, their lobbies and the financial markets. The trick is to convince politicians that ecological transformation and environmental practices can pay off politically.

This means that citizens, activists and experts, whether they like it or not, have got to work with local, regional and national politicians and governments; help them to find like-minded partners and formulate ambitious projects they can undertake on the broadest possible scale. Citizens, activists and experts must furthermore help these politicians and governments to become shining ecological examples with the electorate by publicising their efforts and their successes. Could the Schumacher Society become a kind of nexus for an ongoing forum of best-standards/best practice, bringing together political decision makers at every level with citizens groups and experts to discuss and carry out the best public-sector initiatives? Politicians must be convinced that these policies will not just work but also be highly popular with their constituencies.

Now let’s take the more difficult question of confronting the economic system as a whole. In his book Collapse, Jared Diamond examines several historical cases of social extinction due to over-exploitation of the environment. He identifies several common characteristics. One of these is the isolation of the elites, giving them the capacity to keep on consuming way above ecologically sustainable limits long after the crisis has already struck the poorer, more vulnerable members of society. That is where we are now globally, not just in isolated places like Easter Island or Greenland.

So how can we realistically combat the ecological footprints of our dinosaur elites, recognising that we don’t have the option of shouting “Off with their heads” in some imagined, world-wide revolution. Nor can we force them to change both themselves and the system that serves them so well, whereas we know that we must change that system because it is raping the planet and its inherent logic is to keep on doing so.

I can see only one way out: the coming together of people, business and government in a new incarnation of the Keynesian war economy strategy. I was born in the United States in 1934 and I remember well when the US switched massively to a war economy, converting all the rubber plants in my native city [Akron, Ohio] to production not for private cars and trucks but for the military. There was huge citizen involvement and support. Thousands of factories, research labs, housing projects, military bases, day care centres, and schools were built or expanded during the war. Public transport was improved and worked overtime to move millions of men and women to Army bases or new defence jobs.

Yes, there were still worker-management conflicts and yes, big corporations rather than small business got most of the government contracts but on the whole the workers were well paid, African-Americans and women began making a few modest gains and the whole war effort finally pulled the United States out of the Depression—it was Keynesianism on a huge scale. There was also an elite group of businessmen called “Dollar-a-Year Men” on loan from their companies to the government, who were charged with making sure that military production and quality targets were met. They had enormous prestige—my godfather was one and I was doubtless insufferable bragging to my little school friends about him.

Why am I going back over this ancient history? Because I think we have a similar opportunity today. The US and the world economy are heading downhill fast and the fallout for ordinary people in terms of jobs, housing, consumption and future welfare is going to be grave. If this diagnosis is right, then some new economic tools will have to be used to combat recession and stagnation, simply because the old ones have already been pushed to their limits and have little or nothing left to give.

The way Central Banks and Treasuries usually try to solve financial recession or depression is through standard remedies like interest rate cuts, currency devaluations or incurring new debt—but the United States has reached the end of its leash on that score. Interest rates are already extremely low—although not in Europe, where the European Central Bank and its hidebound president are ideologically committed to the same sorts of monetary policies that prolonged the Great Depression in the 1930s. The dollar is already weak, which makes US exports cheaper, but it can’t be devalued much further without risk. Deficit spending is already beyond belief. With the bailout of Fannie Mae and Freddie Mac, the Federal Reserve in effect took on their bad debt and added hugely to the liabilities of the United States Treasury. It risks doing so again. Households too are over-indebted and are losing more equity every day as the value of their dwellings deteriorates.

Since the traditional tools are worn out, the only new tool I can think of to pull the world out economic ruin and social chaos is a new Keynesianism, not military this time, but environmental; a push for massive investment in energy conversion, eco-friendly industry, new materials, efficient public transport; the green construction industry and so on.

Stringent standards for new buildings must become the norm; older ones can be “retro-fitted” on easy financial terms; families and commercial property-owners can receive financial incentives for installing green roofs and solar panels and sell excess energy to the grid. Research and development can be oriented towards alternative energies and strong, ultra-light materials for airplanes and vehicles. Technically speaking, we already know how to do such things, although some clean solutions are still more costly than dirty ones. Mass-produced, they would become less so.

All these new, eco-friendly industries, products and processes would have huge export value and could quickly become the world standard. I am trying to describe a scenario that can be sold to the elites because I don’t think they will embrace genuine environmental values and conversion if there’s nothing in it for them. But this approach is not merely a cynical attempt to get the elites to move in their own interests. There are also plenty of advantages in such an economy for working people. A huge ecological conversion is a job for a high-tech, high-skills, high-productivity, high-employment society. It would be supported, I believe, by the entire population because it would mean not just a better, cleaner, healthier, more climate-friendly environment, but also full employment, better wages, and new skills, as well as a humanitarian purpose and an ethical justification—just like World War II.

How could one finance such a huge effort? It would have to involve targeted government spending in the traditional Keynesian sense and governments are bound to complain that they haven’t the means to carry out such a policy.

The financial crisis provides the ideal opportunity both to finance the conversion and to get the runaway global financial system under control.

At present, taxes almost always stop at national borders. The secret is to take taxes up to the European level and to the international one through currency and other financial transaction taxes. People who oppose such schemes pretend they are not feasible because one would need to obtain the consent of every national jurisdiction in the world, but that is not correct. In fact, currency and other transaction taxes would require nothing more than political determination, the cooperation of the Central Bank and a few lines of software. For the currency transaction tax first proposed by James Tobin in the 1970s and now considerably refined, the tax base is the currency itself, not the place it’s traded. Thus the European Central Bank could easily collect the taxes on any transactions involving euros, the Bank of England the same for the pound, the Fed for the dollar and so on. Since currency trades now amount to $3.2 trillion dollars every day, a tax of one basis point, that is, a levy of one per thousand could raise a tidy sum for ecological conversion and poverty reduction. Britain already imposes a tax on stock market transactions but other European countries do not and should imitate Britain.

Carbon taxes are another much mooted and equally feasible idea. So is a unitary profits tax on transnational corporations, which would require knowing the total sales of the company, the total taxes paid, the sales realised in each jurisdiction and the tax paid in each jurisdiction. If, for example, a TNC reported that in country X, a particularly low-tax jurisdiction, it made 5 percent of its sales yet paid 50 percent of its taxes, the authorities would find it a bit fishy. I’m presenting an extremely crude summary here but believe me, there are experts—bankers, corporate lawyers, fiscal experts and accountants—who know exactly how to do such things. Perhaps to encourage more local consumption, one could also think about taxing the miles travelled by the food we eat and the clothes we wear.

We would not forget the poor countries of the South which are the major terrain of the poverty crisis. Debt cancellation for poor countries that the G-8 has been promising for a decade must finally happen but against the requirement that these countries also contribute to the planetary environmental effort through re-forestation, soil conservation, species protection and the like. They would also be required to involve their own people in democratic decision-making and the funds would be carefully monitored by independent auditors.

Tax havens that allow affluent individuals and corporations to avoid paying their fair share of the conversion should be shut down: it would be cheaper to pay the inhabitants of the Cayman Islands, Liechtenstein and the rest a living wage for twenty years. Plenty of cash would remain for eco-investments, job-creation and poverty relief.

In exchange for their bailouts, the banks and investment houses have to accept regulation—not just regulations to insure transparency and eliminate the incentives for stupid behaviour but also more stringent ones forcing them to participate in the ecological offensive. They should be obliged to devote X percent of their loan portfolios to eco-projects at below market interest rates—which they could make up by charging much higher rates on loans to dirty or otherwise anti-ecological projects. Low or no-cost financing for home conversion projects should be another compulsory priority for banks. This could give a huge spurt to the construction industry.

Nobody is asking for the moon here. Banks would still make loans, finance investments and earn a fair return for their services. Taxes on currency transactions at one basis point are not going to ruin anyone. Unitary profits taxes on large corporations would simply return us to the era when the companies paid their taxes because they couldn’t avoid them. The point is that a Keynesian taxation and redistribution system would be invested, nationally and internationally, both ecologically and socially, in education, health care, clean, green energy, efficient water distribution, communications technology, public transport, and various other things the world needs and that we already know how to do. These measures would, in turn go a very long way to creating opportunities for far more people to participate in the new green economy through jobs, life-long education, more social protection and reduced inequality. Getting the present financial crisis-producing, free-flowing, unregulated financial system under public and citizen control is the prerequisite for solving both the environmental and the poverty crises.

In other words, it’s a Public Relations dream. Whichever political parties understand this can win on such a programme without anyone having to bring down the entire capitalist system as a prior condition for saving the planet.

A Keynesian ecological programme would furthermore bring many constituencies together in a common cause. As matters now stand, politically speaking, no single interest group can solve the problem that concerns it most. By this I mean that, by themselves, ecologists can’t save the environment; farmers alone can’t save family farms; trade unions alone can’t save well-paid jobs in industry and so on. Broad alliances are the only way to go, the only strategy that pays. The Global Justice Movement, as international social activists call it, has begun to have some success in working democratically and making alliances with partners who come from different constituencies but are basically on the same wavelength.

Now we must go beyond this stage and attempt something more difficult: to forge alliances also with people we don’t necessarily agree with on quite major questions—for example, with business. This can only be accomplished by recognising that disagreements, even conflicts, can be fruitful and positive so long as the areas where it is possible to agree are sought out, identified and built upon. We must find where the circles of our concerns overlap. At least one of those overlaps ought to be saving our common home. I don’t see any other way of generating citizen enthusiasm, involvement and the qualitative and quantitative leap in scale that is now required.

I haven’t time to elaborate on all the technical details concerning the content and the financing of necessary environmental investments. What I can do is guarantee you that the conversion to a green economy is technically feasible. The schemes for new taxes have been thought through; the industrial prototypes already exist; the machinery is ready to hum into action the moment people can make their politicians accept the challenge. Getting the financial system under control and taxing international capital at quite ridiculously low rates in order to redistribute it institutionally and internationally would be enormously popular. We could seriously attack climate change and eliminate the worst of world poverty within a decade. We are talking politics, not technical aspects here and trying to figure out a way to tame the raging beast, the crisis-producing, free-flowing, unregulated financial system and putting it under public and citizen control.

Capitalism is not sane in the sense that most people understand sanity. We humans normally think about our future, that of our children and the future of our countries and the world. The market, on the contrary, operates in the eternal present which, by definition, cannot even entertain the notion of the future and therefore excludes safeguards against future, looming destruction unless these safeguards are imposed upon it by law.

We need law, for sure, and political forces with the backbone to propose and to vote the law into existence, but we also need to think about human motivation. Remember the prestigious Dollar-a-Year Men of the 1940s and imagine what might happen if we could transpose them into the world of 21st century capitalism. A significant number of contemporary captains of capitalism, all of them with bloated, unimaginable salaries, might be brought to believe that money is all very well, but is there nothing more? Why not found an extremely exclusive Order of the Earth Defenders, or the Environmental Knights or the Carbon Conquerors who alone, in recognition of their special contributions to the national and international environmental conversion effort. They would have the right to display a highly visible emblem on a banner in front of their homes; a fanion on their cars, a green and gold rosette in their buttonholes like the French Legion d’Honneur or a Congressional Medal of Ecological Honour. They would belong to the small assembly of the anointed; those who provide the means and have the honour of saving the earth. Becoming a member ought to appeal to their competitive spirit.

In conclusion, let me say that myth has always been the driving force of every great human achievement, from Greek democracy to the Renaissance to the Enlightenment and the American and French Revolutions. So must it be in the coming age of Ecological Stewardship. To save the planet, we must change, quickly and profoundly, the way the majority thinks and feels and acts, and we must start with the social forces we have right here and right now, and no others. It’s no use wishing they were different ones or stronger, or wiser. We must play the hand history deals us.

For such a change, we will need six “Ms”, starting with Money, Management and Media. But even more important than these three “Ms”, we must try to create a new sense of Mission and Motivation and Myth at the noblest level. “Myth” in this sense has nothing to do with story-telling or lies. It is the grand narrative that empowers us to believe that we can accomplish what we must accomplish. It speaks to the deepest motivations of human consciousness and inspires the desire for honour and for a life’s work which transcends death. The elites already have Money, Management, Media. On our side, we have Mission, Motivation and Myth. If we can bring together all these, the future will take care of itself.

And wouldn’t that be nicer than having another war?

Need for a new social alliance

Ellie Keen — Wed, 18 Jun 2008 21:59:14 +0000

Interview with Susan George

FLORENCE, Jun 3 (IPS) – A global alliance of human rights activists, environmentalists and ethically run small enterprises is needed to save the planet from self-destruction, says Susan George, chair of the Board of the Transnational Institute in Amsterdam. The institute works “to contribute to social justice.”

Susan George, author of several books on development, now focuses on neo-liberal globalisation mirrored in the World Trade Organisation talks, international financial institutions and in North-South relations.

“Even if committed to the social and environmental challenges, none of these groups individually will be able to save our future, which is dominated by powerful economic forces that have a short-term view and, if allowed, will continue exploiting and destroying the planet,” George says.

We must recognise, she says, that change does not happen at an individual level. “Yes, I can change my light bulbs or reduce my carbon footprint, but we need a radical revolution that cannot be achieved individually.”

IPS Italy correspondent Sabina Zaccaro spoke with Susan George at Terra Futura, an exhibition of ‘good practices’ in social, economic and environmental sustainability held yearly in Florence. In its fifth year, Terra Futura was dedicated to strengthening social alliances — and trying some audacious ones such as alliances among private citizens and financial institutions.

IPS: Will the political-economic system really allow these alliances to happen?

Susan George: The market ideology works to separate people, it is a model that separates people on a competition basis. Social contact is the only response to economy that works all the time to prevent this.

People do not have to abandon their own field and commitment, but become used to working together. We are free agents, and if we understand that there’s an interest, that the vast majority of people can often no longer see where their interests lie — and that is part of the political fight that we have — then it is possible.

If you show to people that they have an interest in alliances, and this is true for farmers, trade unionists, small medium enterprises…then yes, I think it possible to make those alliances.

IPS: And who sets the rules?

SG: It is hard to get binding rules, it could be easier at the level of the regions. In many places this is not possible because of corruption, or because the will of the government is to prevent this kind of thing and allow transnational corporations to do whatever they like. I would say that that’s what the European Commission is there for — to allow finance capitals and transnational capitals to operate as freely as possible.

IPS: Can the ethical argument alone convince business?

SG: No, not at all. They say how green they are, how caring they are, but it’s rubbish to believe it…Corporations and transnational organisations preach self-green regulation; ‘we will bring the proper solution’, they say, but it is totally illusive.

IPS: So, what can be a convincing argument?

SG: The right arguments are the arguments of force you cannot argue with, you don’t discuss; you don’t say ‘please’. When you are in a position where you are able to dictate.

IPS: How?

SG: Well, through alliances! At a much larger scale, at a big scale…the problem is scale. Alliances must be as broad as possible. Economic power is way ahead of us, so to me the problem is, can we go fast enough, become important enough in order to put a stop to that, to escape the current impasse.

IPS: Does politics have a role in that?

SG: If it would be just politics, I would not be that worried, since things due over centuries sort themselves out; but with the environment we don’t have that kind of time. I don’t say it often in public, because I don’t want people be in despair, but I am often in despair.

IPS: Are you totally pessimistic?

SG: I am hopeful; the only thing you can work on is hope. Generally, politicians are the last to move, but we need to make alliance with them.

When politicians have an interest in something, they show that they are able to listen. Look at what happens with prices…and scarcity. Politicians and business do listen to that, they listen to the price of oil — they bring the wrong solutions, but they listen to price signals.

IPS: Can oil be replaced with agro-fuels?

SG: It’s criminal. There’s a lot of talk about using plants that are bio — but any plant is bio. I’ve just read that some of the species they’re intending to use are invasive species, they take over, and then will spread all over and take all the water out of the ground, and so on.

So, it’s always the same thing — you cannot have just a techno solution because there’s the entire environment that you have to consider. I am not an agronomist, but I would refuse any introduction, any crop until the impact of that crop on the rest of the environment has been studied. You cannot just say ‘Ok, this is good, we will harvest it, and we will do ethanol out of it’, because you don’t know.

That’s also what’s wrong with GMO (genetically modified organisms) seeds. They only look at the plant and what that plant is supposed to do, to repulse insects or whatever, but they don’t look at the whole of the environment, it’s not their task.

Scientists are perfectly able to make a plant that can repulse insects, but they have no knowledge at all of how the birds, the butterflies, the worms, the bacteria, will react. (END/2008)

Susan George is a Fellow and Chair of the Board of the Transnational Institute. Her latest books are La Pensée enchaînée: Comment les droites laïque et religieuse se sont emparées de l’Amérique [Fayard, 2007], to be published in English as: Hijacking America: How the Religious and Secular Right Changed What Americans Think [Forthcoming, Polity Press 2008], and We the peoples of Europe [Pluto Press, 2008].

Yes, we can

Ellie Keen — Tue, 03 Jun 2008 00:00:00 +0000

At a time when supposed “progress’ is controlled by transnational corporations, the struggle for human emancipation requires perseverance and transnational political organization to be able to control the corporations that seek to control us.

Progress is an idea invented in the 18th century, the age of the Enlightenment and of revolutions but it sometimes hard to keep the idea alive in our own time. In France, the revolutionaries overthrew the monarchy and the “natural order”—the ultimate heresy at the time. The Founding Fathers of the United States, imbued with the notion of progress, bequeathed it to generations of Americans. When it first flowered, the idea of progress was confined to the West, to what we might call the “Enlightenment Zones”; and to the relatively educated classes. Through following decades, thinkers and activists believed in human emancipation and fought for it—for the eradication of slavery, a new life for immigrants, the rights of workers, of women and minorities.

In those early days, science and technology seemed to be developing with such speed and assurance, solving so many problems and making life so much easier for millions that it was easy to believe—in 19th century Britain for example—that mankind was on the high road towards an ever-brighter horizon.

The notion of “development” embodied the 20th century version of progress. At least until the appearance of the UN’s Human Development Reports in the mid-1990s, the official “developers” like the World Bank confused economic growth with human well-being and, pushing vast programmes like the “Green Revolution”, counted on science and technology to eradicate poverty and inequality. China is still following a similar 19th century path, displaying unrivalled faith in technological progress while showing little interest in human liberation or ecological limits.

Two world wars, the Shoah, the gradually revealed horrors of colonialism, the nuclear arms race and civilian nuclear disasters all contributed in the 20th century to eroding faith in progress. Climate change, proliferating financial crises, the “oil shock”, the threat of massive famine and terrorism are playing the same role in the 21st.We seem finally to be getting it through our heads that civilisation can very well go backwards and that at this very moment we are almost certainly pushing it in that direction.

Historically speaking, only the left, only the progressive forces have ever brought about progress in the sense of human emancipation. So the question that TEMAS is asking its authors — “What would be a new idea of progress for the left in the 21st century?” is an urgent one.

Let me try to answer it first by pointing out the distinction one must make between scientific and technological advances and human progress. The two used to go hand in hand; today, however, the debate, indeed the fight concerns whether scientific developments actually constitute progress or not. Now the left must often try stop what the right labels “progress”, an inconceivable role for progressives a hundred years ago. In our day, when supposed “progress” is controlled by transnational corporations focused solely on profit and opening new markets, this is a progressive duty.

The example of Genetically Manipulated Organisms illustrates this point. Although no one has yet conclusively proved that GMOs are dangerous to human health, their harmful impact on the environment and their capacity to spread and destroy the freedom of farmers to grow organic or traditional crops is manifest. Knowing that transnational corporations control GMOs, particularly Monsanto with its heavy legacy of harmful products progressives are right to prevent the cultivation of GMOs except under strictly contained conditions.

We do not need more nuclear power but rather, as in Spain, much more investment in wind power and other alternative energies. Nor do we need new warplanes, however much these may earn for the military-industrial complex, but rather research and development of light-weight materials for building commercial aircraft in order to reduce drastically the amount of fuel they consume. As the philosopher Paul Virilio has pointed out, every technology comes with its own specific accident: the plane crash, the computer black-out with catastrophic information loss; the nuclear meltdown, various plagues due to unplanned release of manufactured organisms in nature, the oil spill or the chemical explosion—the list is long. The duty of progressives is to apply rigorously the precautionary principle and attempt to control the corporations that seek to control us. It requires perseverance and transnational political organisation to match the strategies of the corporations themselves.

The question of progress towards human emancipation is different. Here the left is obviously not called upon to prevent, but to seek and find new paths—just as all progressives who have ever lived have tried to do. All of them had to struggle against the myriad forms of oppression in the difficult circumstances of their own times, and most of them, let’s face it, lost. Spartacus did not bring about an end to slavery in ancient Rome, nor did slavery end until the 19th century. Hundreds of philosophers, proto-scientists, thinkers and innocent people were burnt at the stake before the power of the Church could be blocked. For centuries, Europe fought bloody wars resulting in untold numbers of needless deaths until a united Europe brought them to an end. Women were not recognised as fully human until less than a hundred years ago and are still trying to gain genuine equality, even in “advanced” societies. Human rights are still ignored in most places, including the west, so we do not lack for targets and 21st century “construction-sites”.

The unprecedented challenge facing progressives now is to be active on all geographical fronts. Until recently, it was quite enough to try to deal with the problems of one’s own country—decent wages, improved working conditions, proper health care, universal education, separation of Church and State and so on. Needless to say, national issues are still important. So are local ones. More and more, however, we can see that the boundaries of our lives reach well beyond our national frontiers. Europeans today must face the fact that 85 percent of the legislation governing them will come not from their national parliament but from Brussels and the EU is in the grip of the neo-liberal, business-driven economic model to the exclusion of any consideration of social progress.

The European Court of Justice has recently handed down no less than three decisions obliging Sweden, Finland and Germany to accept workforces from Eastern Europe paid up to 50 percent below the agreed wage for their own workers. These decisions are based on the “freedom to provide services”. They deliberately place European workers in direct competition with each other and organise the “race to the bottom” for wages and working conditions. In the Lisbon Treaty, the word “market” appears 63 times, “competition” 25 times, “social progress” gets three mentions and unemployment none. The Commission insists that there be no restrictions on the free movement of goods, services people and capital. How can we hope to tax international capital movements—as Attac has been proposing for years—if no “restrictions” are allowed and it is the unelected Commission or the Court that decides? Centuries of European progress can be rescinded and blotted out unless progressives can get this neo-liberal Europe under control; a task we must accomplish through trans-border organisation to match that of the European elites who are extremely well-served by present arrangements.

Internationally speaking, it is a painfully slow process to place vital subjects on the agenda, much less to get them acted upon. It took over twenty years to convince national and international decision-makers of the reality and the danger of climate change, so eager were they to listen to the corporations, especially the oil companies. Now that everyone is conscious of the threats, the leadership is once more paralysed. We know that climate refugees will be hammering on our doors in a matter of years—yet no preparations are made. We know that famine is once more stalking the world, that tens of millions of people who had emerged from lives of chronic hunger are being plunged once more into that particular hell, yet we continue to produce bio-fuels instead of food-crops and make no efforts to contain market forces that lead to mass starvation.

Progressives need to get rid of the World Bank, the International Monetary Fund and the World Trade Organisation once-for-all and replace them with international organisations genuinely responsive to the needs of the neglected three-quarters of humanity. By the time he died in 1946, John Maynard Keynes had already drawn up blueprints for such organisations—we could do far worse than to exhume and improve them to suit today’s needs.

Everywhere we see elites anxious to end the democratic progress of past centuries and to put an unelected leadership [the EU Commission…] or technocrats [the IMF, the WTO...] faithful to their interests in charge. The constant struggle of progressives to preserve democracy pits them against their adversaries trying to undermine it: the democratic deficit must be the nexus of all our future action.

Perhaps because he recognises this, Barack Obama has emerged from near-political anonymity to occupy a pre-eminent place in the collective imagination and, one hopes, soon the office of the US President. In magnificent language, he gives people the sense of their traditions and achievements. Each time they were told they were not ready, that it wasn’t worth trying, that they could never win, they replied, “Yes we can”. The authors of the Declaration of Independence , the slaves and the abolitionists, the pioneers and the immigrants, the workers and the women, the New Dealers and the astronauts—all of them replied Yes we can.

Human history, and therefore the struggle for human emancipation, is not over and we must never insult the future. Let us hope that progressives worldwide, above all Europeans, will also unite around those words: Yes we can.

This article is a contribution to the debate on “The idea of progress in the 21st Century”, to be published in Spanish in TEMAS para el Debate, June 2008.

Susan George is Board Chair of the Transnational Institute and honorary president of Attac-France. Her latest books are La Pensée enchaînée: Comment les droites laïque et religieuse se sont emparées de l’Amérique [Fayard, 2007], to be published in English as: Hijacking America: How the Religious and Secular Right Changed What Americans Think [Forthcoming, Polity Press 2008], and We the peoples of Europe [Pluto Press, 2008].

Europe Deserves Much Better than the Lisbon Treaty

Ellie Keen — Fri, 16 May 2008 20:18:25 +0000

European history provides a showcase of human beings at their worst. Constant conflict, the two bloodiest wars ever waged, famine, brutal industrialisation, oppression of workers and women, religious strife, colonialism, fascism, communism – all these stain our past. But Europe also represents the best humankind has accomplished, giving the world the Renaissance, the Enlightenment, a constant struggle for emancipation, democracy and the separation of powers, the welfare state – not to mention universally recognised cultural contributions from Greek drama to Finnegans Wake , from the symphony orchestra to Irish folksong.

Born in the United States and a citizen of France, I am a fervent European. At this point in history, I believe only Europe can provide all its citizens with democratic government, dignified living standards, greater social equality, public services, universal healthcare and education. This small continent, with just 15 per cent of the world’s people, can lead the way towards ecological sanity and a liveable planet and prove nations can overcome even the most tenacious hatreds and live together in peace. Europe can be a counter-model to the myriad brutalities, affinity for war and stupendous inequalities on display elsewhere.

For these and other reasons, I voted no to the deeply flawed, undemocratic European constitution in May 2005. Had the French government not confiscated the people’s right to another referendum, I would have voted no again to the Lisbon (“Reform”) Treaty – a clone of the rejected constitution, except for “cosmetic changes” making it “easier to swallow”, as Valéry Giscard d’Estaing, principal author of the constitution, said. No flag, no Beethoven hymn, but the rest is there as Angela Merkel, José Manuel Barroso, Bertie Ahern and other relieved European notables all agreed.

The treaty contains no substantive changes. It’s just much harder to understand, worse even than the immensely complex constitution. Now we must deal with two European treaties (Rome, 1957, and Maastricht, 1992, with their subsequent revisions) to which Lisbon adds 145 pages of amendments plus 132 more pages of 12 protocols and 51 declarations, all legally binding, all superseding every law of the 27 member states.

There is no single text – you must cut, paste and collate the hundreds of pages for yourself. The very least one should require of a treaty that will dictate at least 80 per cent of all future legislation throughout Europe is that it be comprehensible. But complexity can be an effective weapon against democracy. Let us recall what commission vice-president Gunter Verheugen said after the French and Dutch No votes: “We must not give in to blackmail.” So much for universal suffrage and popular sovereignty.

There are a few beneficial changes to the defunct constitution. The new treaty gives the European Parliament, the only elected body, marginally more power to co-decide on legislation, although it still cannot initiate legislation.

However, the unelected European Commission remains all-powerful, particularly in crucial areas such as trade. A new article specifies the European goal of “integration of all countries into the world economy through the suppression of barriers to international trade”. Already trade commissioner Peter Mandelson is pushing for European corporate penetration in even the poorest countries, defining “barriers” as any government measure regulating foreign investment, public procurement, environmental or consumer protection.

The European Central Bank gets an even more iron-clad statute of independence from political supervision; its mandate remains control of inflation with no mention of full employment. The “market” (63 mentions in the text) remains the supreme good and “competition” (25 mentions) the overarching rule. Public services are specifically subjected to competition: government subsidies or other forms of support will become more precarious. European-wide social policies will require unanimous approval – this is a euphemism for a race to the bottom. The Charter of Fundamental Rights is inferior to most existing European constitutions.

Common security and defence policy places Europe firmly under the tutelage of Nato “which remains the foundation of the collective defence of its members”. We are signing on blindfolded for whatever Nato’s future policies may be – we only know for sure the US will remain in command. The treaty also obliges members to “progressively increase their military capacities”.

This Lisbon Treaty is a model of failed neo-liberal economic nostrums and misplaced confidence in the market and competition as universal panaceas. Europeans deserve better, beginning with an elected convention for drafting a constitution, time for full debate and a popular ratification process.

Europe has now surpassed the US as the wealthiest political entity. We can afford to retain and perfect the European social model, provide a decent livelihood for all and undertake a swift conversion to an ecological economy; we can afford to embody the ideal of the common good. Not to demand all this and more is a betrayal of whatever is best in our history. This may be Europe’s last chance.

Susan George is a Fellow and Chair of the Board of the Transnational Institute. Her latest books are La Pensée enchaînée: Comment les droites laïque et religieuse se sont emparées de l’Amérique [Fayard, 2007], to be published in English as: Hijacking America: How the Religious and Secular Right Changed What Americans Think [Forthcoming, Polity Press 2008], and We the peoples of Europe [Pluto Press, 2008].