Origins - OPEC, rise of offshore capital market and TNB's:
Interest rate hikes, 80's Debt Crisis,--Globalization Project:
1990's-present, -- Rise of global Debt Regime
"The world market standardizes consumption
but fragments production."(182)
 Current
Outlook: 3rd World nations and anti-globalization advocates
ask that 150 billion dollars, of third world debt be written
off. Quasi-Liberal mainstream Globalization advocates agree
that there is a debt
crisis and that the systemic policies of debt servicing
and debt restructuring need a fresh look. The Current IMF
WB ministerial meetings in Washington are attempting
to address these issues and draft reform policies. Are they
doomed to failure?
The Development project began in Europe
at the outset of the Marshall Plan and accelerated
rapidly during the 1960's at the height of US-Soviet cold
war tensions, as proxy interventionism replaced the colonial
legacy of imperialism in the nation states of the third world.
After WWII the US and the former Allied powers drew up a series
of international and multilateral trade agreements intended
to prevent monetary collapse, the characteristic common cause
of warfare on the European continent for millennia. Hence
Bretton Woods's architects, Keynes
and White,
restructured the post war global economy, favoring exchange
rate stability of which arose the economic policies that created
the modern European welfare states as a safety net from the
ideological extremes of fascism and communism, in a bipolar
balance of power system.
The development project was an attempt to universalize
the European model of economic development, industrialization.
Its chief representatives were the IMF and the WB,
IGO's controlled by the G8 nations. The ideology of 'development'
implied that the third world was underdeveloped, or otherwise
made backward by the legacy of colonialism, and that replication
of the European model of specialized economic development could transform these
countries from their current state of poverty, into industrially
profitable capitalist hubs, profiting both MNC investors and
the local economies. Inherently, the Problem was also historically
misapplied, since Europe's experience, or evolution from feudalism
to capitalism had spanned centuries.
The implied notion of third world feudalism, was incalculable
and more of an empty projection, the carrot and the stake
to third world economic development resulting in the quagmire
of the Corporatist echelon's assurances of sustainability
being sacrificed for self directed corporate regional security.
The major consequence of the development project was
an overall increase in poverty in the third world despite
the initial early success of the project. By 1986, 3rd world debt had grown to 1 trillion dollars. (127)
Essentially the development project could be summed up as
corporatist-and nationally directed economic growth, utilizing
industrial farming technology (foreign inputs) known as ISI,
or Import
Substitution Industrialization. This also included
foreign aid subsidies to promote manufacturing, and construction
of machine plants. Essentially the plan was to make the third
world economies commercially viable to the demands of the
hegemons of international trade.(pg.75)
Those countries that succeeded during the development project
became known as NIC's or newly Industrialized Nations.
These countries also functioned as economic and strategic
regional allies and functioned as military and economic logistical
hubs in the US's efforts during the cold war to contain Soviet
expansionism. Examples of these countries are S. Korea, Singapore,
Brazil, Malaysia, and Taiwan. All relied on centrally managed capitalisim featuring export led growth or, export oriented industrialization with strong import protectionisim, to wit the remainder of the 3rd world viewed as a double standard in regards to the West's empty rhetorical assurances of economic growth arising out of 'liberalization' of trade. For Further Reading
 Since
the NIC's owed their success to generous US foreign aid subsidies
packages, it was hard to not imagine that if resources had
been more equitably distributed in the third world then current
levels of global poverty and its only means of coordinated
response which is the instinctive instinct to self destruct,
terrorism, violence intended to influence political outcomes,
bears little distinction from the eternal maxim, might
makes right. So it is not surprising that the NIC's experienced
uneven access to economic development more so than the supposed,
perennially defined, underdeveloped, third world nations,
in Latin America, and Africa who were basically locked
in a dependency cycle with the West.
Major Reasons for the failure of Development
1.) GATT Tarrifs (encouraged cash crop production
GATT, the general agreement on trade and tarriffs was envisioned
to include reciprocal trade concessions when it entered force
in 1947. The agreement was intended to monitor and reduce
obstacles to 'free trade' among 'member nations'..providing
for a 75 % reduction in tarriffs from (1947-1980) Of course
US agriculture was completely exempt from GATT provisions.
ex.
US public law - 480. & US
super 301 clause of the 1988
trade Act.
a.)GATT-Uruguay
Round (1984 - 1994) This trade agreement was an attempt
at trade reform. The US sponsored these trade talks so that
it could liberlize international trade laws concerning banking,
telecommunications and insurance. The charicteristic premise
of the Uruguay round was that free trade could enhance commodity
exports, or at least those owned by Tansnational Firms.
Outcome: Absence of real trade rules, especially concerning,
biotech and GMF (genetically modified food) seed patents and
an overall system of 3rd world forced reliance on US export
subsidies. Ex. US corn exports undercut local phillipino corn
prices by 20%.(168)
Outcome 2: Deregulation resulted in an increase in prices
2.) 3rd world ISI strategies created whole industries
dependant on the dominant form of regional export goods, and
the ensuing outgrowth of cottage industries, and some parastatals
could not innovate out of the dependant mode afforded by the
development project. The more 3rd world nations attempted
various ISI strategies, the more the 1st world was able to
receive increased profits due to their charging technological
rents on farm machinery, and other infrastructural investment
projects. (pg.96 & pg.111)
3.) NIC's were sustained by protective tariffs along
with US political, economic, and military aid. NIC's like
South Korea practiced trade protectionism, and maintained
a state system of centrally managed capitalism. (pg.153)
4.) The OPEC Crisis had short term benefits for the
third world, via an increase of petro dollars, that
provided the impetus for transnational banks to offer third
world regimes generous terms of credit for infrastructural
modernization projects. In the 1980's banks raised interest
rates. In 1981 42% of third world loans came from commercial
banks, 37% of multilateral agencies, yet by 1988, banks only
accounted for 6% of third world loans and multilateral agencies,
held claims to 88% of Third World debt. Thus, the initial
gains were eclipsed by empty promise of liberal privatization
of national economic growth from the IMF and WB. Hence the
corporatist depositors, themselves, articulated the cycle
of third world debt servicing becoming the reality of today's
debt default.
Globalization Project
1.)shift in the development agenda to debt management
3.) Ideological view: only deregulated economic growth reduces
poverty
Reality: Between 1975-1990 the low wage workforce increased
by 142%
4.)Privately financed development projects
5.) Causalization (contractualization) & bifurcation
of the Labor force
a.)deskilling
b.)automation
 The
IMF
and the WB
are financed through corporate MNC's private lenders as well
as through the current SDR
monetary system. MNC's and TNB's combined account for 66%
of all global trade. The growing trend in the 1980's, was
the deregulation of banks and utilities, spawning mega
mergers and leveraged buyouts. This essentially created a
new international division of labor, one focused on the
concept of 'lean production.' This corporate agenda
became part of the development agenda in that with these new
interest rate hikes, debtor nations were faced to implement
cuts in their state funds for social infrastructural spending.
(Pgs.-131-199 ex. mexico.) This also resulted in demographic
depeasantization
of indigenous independent rural collectivist farming communities
toward increased reliance on foreign corporate ownership of
vital state capital resources and the proliferation of EPZ's
or export processing zones, (in mexico they are referred to
as the maquiladoras, and are found in the poor border states)
where they are often exempt from the most menial of labor
standards.
The new global debt regime although formally still administered
to by the IMF and the WB, began to implement a series of policies
in which loans came to take the form of SAL's, conditional
Structural
Adjustment Loans decreased the size of 3rd world states,
resulting in cuts in social programs which were then diverted
to commercial subsidies to attract foreign investment. These
loans restructured whole third world states and generally
strengthened the power of the Finance ministries over those
of public welfare.(ex. Mexico & NAFTA pg.179) Furthermore
the 'global plebiscite' as George Soros refers to the currency
traders have greater monetary destabilization power in the
third world, while SAL's exact an equally compelling sacrifice
in terms of developmental power sacrificed or leveraged by
the debt regime.
Mexico & NAFTA
Originally, the mexican government controlled the process
of agro-industrialization, yet centralized control and the
system of patronage under the PRI regime encouraged widescale
corruption. Attempts at reform were first undertaken in the
1970's with major revamping modifications made to the Campesino
agrarian code. The PRI virtually controlled the campesino
sector and financed that sector through multilateral international
loans rather than utilizing a national progressive tax. The
scene was set for disaster when in 1981 mexican oil prices
fell, and it was also forced to terminate its debt financing
program.
Between 1980-1991 Mexico recieved 13 loans from the World
Bank and 6 loans from the IMF. In 1986, world bank loans to
mexico were contigent on Mexico's elimination of imported
food subsidies and privitization of rural parastatal agencies.
The outcome was that mexico under the WB and IMF terms of
development recieved commercialized sovereignty in place of
sustainable development in that it was forced to shift financial
support from the peasant farmers engaged in indigenous agricultural
production, the campesinos and replaced them with large commercial
agro-export production zones generally financed with foreign
capital. Major economists such as Herman Daly, former WB economist,
predict that NAFTA will ruin mexican peasants.
OUTCOME
1.) further
increase in the poverty gap globally, despite modest progress
afforded by development policies in the 60's and 70's.
a.) 1995 emergence of the WTO: a non democratic sovereign
entity that regulates world trade.
WTO was the initial outcome of the GATT-URUGUAY round and
upon its formation claimed 135 member nations. The WTO has
inserted a new layer of independent international jurisdictional
source of power that generally reflects the interests of its
transnational corporate lobby, though its rules are binding
on all member nations. WTO trade policies can override individual
state and regional trade bloc agreements, ex. NAFTA,
and EU, especially on issues concerning concerning environmental
regulation, and food, product and labor quality.
b.) WTO is the Ultimate expression of the globalization Project
with marked emphasis on its role as the global manager of
economic world trade.
2.) Proliferation of IGO's & NGO's
3.) Informalization: increased support for BAIRS: Dictatorships
ex. Pinochet,
Chile: ex. of US
Support for anachronistic autocratic regimes to support
the myth of free trade and maintain the economic status quo.
(222)
Also see this: The
Trial of Henry Kissinger
4.) Recolonization of the third world by the debt regime
(pg.232)
5.) Revived classical
economics
a.)Globalization: View that Holds that nationally directed
economic growth is anachronistic to globally directed economic
growth.
6.) Environmental degredation
7.) Globalization is an organizing myth.
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