eBook
Available on Compatible NOOK devices, the free NOOK App and in My Digital Library.
Related collections and offers
Overview
The answer is a triad of 'governance institutions' - The IMF, the World Bank and the WTO. Globalization massively increased the power of these institutions and they drastically affected the livelihoods of peoples across the world. Yet they operate undemocratically and aggressively promote a particular kind of neoliberal capitalism. Under the 'Washington Consensus' they proposed, poverty was to be ended by increasing inequality.
This new edition of Unholy Trinity, completely updated and revised, argues that neoliberal global capitalism has now entered a period of crisis so severe that governance will become impossible. Huge incomes for a small number of super-rich people produced an unstable global economy, rife with speculation and structurally prone to crises. The IMF is in disgrace, the WTO can hardly meet anymore and the World Bank survives as a global philanthropist. Is this the end for the Unholy Trinity?
Product Details
| ISBN-13: | 9781848137967 |
|---|---|
| Publisher: | Bloomsbury Publishing |
| Publication date: | 11/16/2009 |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 298 |
| File size: | 593 KB |
About the Author
Richard Peet is Professor of Geography at Clark University in Worcester, Massachusetts, USA. He obtained his BSc (Econ) at the London School of Economics, his MA from the University of British Columbia, and his PhD at the University of California. He was the Editor of the radical geography journal, Antipode, from 1970 to 1985 and Co-Editor of Economic Geography between 1992 and 1998. His published books include: Radical Geography (Maaroufa Press, Chicago, 1977), Global Capitalism: Theories of Societal Development (Routledge, London 1991), Modern Geographical Thought (Blackwell, Oxford, 1998), (with Elaine Hartwick) Theories of Development (New York: Guilford 1999), (with Michael Watts) Liberation Ecologies (London: Routledge 1996 and 2004) and Unholy Trinity: The IMF, World Bank and WTO (Zed Books, 2003). Unholy Trinity has been translated into Spanish as La Maldita Trinidad and is being translated into Arabic and Korean.
Read an Excerpt
Unholy Trinity
The IMF, World Bank and WTO
By Richard Peet
Zed Books Ltd
Copyright © 2009 Richard PeetAll rights reserved.
ISBN: 978-1-84813-253-5
CHAPTER 1
Globalism and neoliberalism
Capitalism has been international in scope since the Europeans went out to 'discover the world' some five hundred years ago. Ideas, capital, labor and resources drawn – with not a little violence – from societies ranged across the globe made possible the rise of European capitalism. And measured by mass movements across global space, such as the migration of people, or direct investment, capitalism in the early twenty-first century is only as international in scope as it already was by the late nineteenth. Yet, for some time now, a new sense of globalism has grown among people who think for a living and, what is more, whose ideas command respect. The recent intensification of long-distance interchange, many people think, has resulted in a new global era and, perhaps, a new, more worldly type of human existence.
What is this thing called 'globalization'? Definition of the term is still being contested. But there are several, similar uses, with fairly wide acceptance. The sociologist Roland Robertson (1992: 8) understands globalization to be 'the compression of the world and the intensification of consciousness of the world as a whole.' Anthony Giddens (1990: 64), another sociologist, speaks of 'the intensification of world-wide social relations which link distinct localities in such a way that local happenings are shaped by events occurring many miles away' And the geographer David Harvey says that late-twentieth-century people 'have to learn to cope with an overwhelming sense of compression of our spatial and temporal worlds' (1989: 240; original emphasis).
These brief descriptions reveal two consistently related themes: global space is effectively getting smaller ('compressed') in terms, for instance, of the time taken for people, objects and images to traverse physical distance; as a result, social interactions are increasing across spaces that once confined economies and cultures. So change seems to have occurred in the scale at which even daily life is led, especially in terms of the reception of images and information, the more spatially fluid of the many elements that influence opinions, beliefs and tastes. The human experience has globalized as the times separating spaces have collapsed. Putting this a little more realistically, an increasing proportion of people now live a geographically schizophrenic life in which the intensely local intercuts with the extensively global. Understood this way, globalization offers beautiful opportunities for disparate peoples to know and, perhaps, appreciate each other by living 'closer' together. A globalized humanity, still composed of somewhat different peoples, at last becomes possible. In this sense, globalization should be welcomed as the last act of the Enlightenment.
Behind these optimistic statements, however, lurks the possibility of something quite different. For the particular way in which globalization is brought about might destroy its inherently liberating potential. Giddens, for instance, goes on to refer to globalization as 'influence at a distance.' And this raises the question: whose influence? Globalization might be accompanied, even caused, by a concentration of power. So the 'communications media' that technically annihilate space saturate everyone with the same images, creating a new and more unpleasant future by homogenizing what necessarily becomes merely a virtual experience. The multinational corporations that integrate production systems into one global economy might use the opportunity simultaneously to dominate competing labor forces and to manipulate more effectively a world of consumers. Finance capital concentrated in New York, London and a few other global cities could more efficiently invest, disinvest, speculate and operate in every corner of the world. And global governance institutions, such as the World Bank or the International Monetary Fund (IMF), might bring huge swathes of entire continents under the same pernicious, undemocratic control. So rather than disparate peoples simply interacting more as space collapses, we might instead have a process in which one culture dominates the others, or one set of institutions controls all others. That is, as the space of a single global experience expands, the institutions that control economies and project cultural themes accumulate into larger entities and condense into fewer and more similar places ('world-class cities'). Or putting this again more realistically, we find a tendency toward the concentration of power accompanying globalization – and ruining its humanitarian potential.
Yet as the dialectic suggests, for every tendency toward homogenization there is a counter-tendency that reacts against it, in the direction of the reassertion, sometimes even the resurrection, of difference. And for every move in the concentration of control, there is a counter-move that decentralizes power. So we find globalization as Westernization contested by diverse counter-tendencies, social movements ranging from sea turtle activists to al-Qaida terrorists. This contestation cannot be described simply as a clash of civilizations along regional 'fault lines' as with Samuel Huntington (1996) – the interpenetrations and interactions are far too complex to be comprehended by such a simple geographical imagination. For example, many environmental activists adhere to Eastern religious principles, while al-Qaida militants communicate via the Internet. Globalization is much more of a geographical mix. Understanding globalism, its cultures and institutions, requires careful attention to detail. Yet this need not mean waffling around in that academic style where almost saying something is regarded as declarative adventurism. There are some dependable generalizations that can be made, certainly about global governance institutions, and the hegemonic ideas these propagate, which yield insights into the present set of complex processes that make up globalization.
In this book I take the side of those critical of the way the existing global economy has emerged, and I take exception to the way in which it is currently organized, controlled and run. I am particularly critical of the objectives pursued by governance institutions, in terms of the economies that have resulted and the consequences for peoples, cultures and environments. I argue that globalization has been accompanied by the growth in power of a few prodigious institutions operating under principles that are decided upon undemocratically, and which drastically affect the lives and livelihoods of a world of peoples. I argue that the world has become more unequal and unstable as a result of financialization, private and quasi-public. But I concentrate on one particular type of institution, what is sometimes called the 'global governance institution,' as the focus of this book. In this phrase, 'governance' refers to quasi-state but unelected control and regulation of economic plans and programs, 'institution' refers to a centralized body of experts who share a common ideology, and 'global' refers to the area being governed. I concentrate on the increasing influence, within these institutions, of a single ideology that I, and many other critics, term 'neoliberalism.' So I am dealing with neoliberal globalization, not just globalization as a neutral spatial process. And neoliberal globalization is the focus of my critique, not globalization in general, and certainly not as potential.
Consequently, I argue that many of the social movements that appear to resist globalization in general actually resist the kind of globalization produced by neoliberal ideas, policies and institutions in particular. I argue further that this distinction, between globalization as humanitarian potential and neoliberal globalization as dominating reality, is under-appreciated, to the point of being disastrously misunderstood. This is because the neoliberalism that now informs even conventional thinking about globalization has achieved the status of being taken for granted or, more than that, has achieved the supreme power of being widely taken as scientific and resulting in an optimal world. So resistance to neoliberal globalization is seen as resistance to globalization in general, a new kind of Luddite opposition to the technically and economically inevitable. For instance, resistance to free trade is seen as protest against trade in general, when what the protesters want instead is fair trade. When thousands of people demonstrate at each world economic summit the lament is that the protesters, 'prone to violence,' simply don't understand, are divided, misled, propose ridiculous things such as the end of capitalism, and have no idea what they want instead. Protest against the actually existing, neoliberal globalization is taken as an offense against Reason, Progress, Order and the Best World Ever Known to Man. Yet a global system that cannot know its own faults, no matter how disastrous their consequences, is the reverse of that humanitarian potential, open to a world of difference, that I envisioned earlier as globalization's promise. How did this happen?
From liberalism to Keynesianism
The central economic beliefs of Western capitalism were first set down systematically by philosophers and political economists such as Thomas Hobbes, John Locke, David Hume and Adam Smith, writing mainly in seventeenth- and eighteenth-century Britain. These founding philosophers thought hard on behalf of a new class of manufacturing entrepreneurs then coming to the fore. Essentially their philosophies rephrased more exactly modern beliefs emerging from new kinds of economic and social practice. Adam Smith's The Wealth of Nations, published in 1776, laid out a liberal theory of individual economic effort in a society characterized by competition, specialization and trade (Smith 1937). For Smith, capitalism left to itself had its own silent rationality ('invisible hand'), which magically transformed private interest into public virtue – with 'virtue' interpreted as an efficiently organized, growing economy capable of providing benefits for everyone. This classical liberalism was progressive in that it questioned the authority of the landowning nobility, the grand merchants and the monarchical state, with their conservative ideas of divine rights, family values, feudal loyalties and patriotic duties. By comparison, classical liberalism was on the side of science, evidence, rationality and at least partly reasoned values (God still being needed as moral guarantor). This early liberal doctrine reacted critically against an even earlier mercantilism, in which governments intervened directly to guide the development of national economies in the interests of the accumulation of state power. By comparison, liberalism championed the rational, acquisitive but philanthropic entrepreneurial individual and the organizational efficiency of self-regulating (as opposed to state-regulated) markets. 'Natural liberty implied free competition, free movement of workers, free shifts of capital, and freedom from government intervention' (Lekachman 1959: 89).
The economic principles first elaborated by Smith were refined into a political-economic theory of liberal reform by the 'philosophical radicals,' a group active in London in the 1820s and 1830s. The most important of these was David Ricardo, a self-made millionaire from speculating in the London financial markets, and a writer of pamphlets, tracts, books and letters to the Morning Chronicle. Ricardo's formulation of trade theory, containing what Nobel laureate Paul Samuelson later called 'four magic numbers' representing the labor needed to produce wine and cloth in Portugal and England, became established as the classical source of the theory of comparative advantage that has guided liberal and neoliberal trade theory ever since. Ricardo (1911 [1817]: 80–81) argued that 'each country producing those commodities for which by its situation, its climate, and its other natural or artificial advantages it is adapted, and by their exchanging them for the commodities of other countries' would result in an increase in global production and the 'universal good of the whole.' He then argued that Portugal should specialize in wine production (mainly agricultural), for which it had the largest comparative advantage, and England should specialize in cloth production (mainly industrial), for which it had the least comparative disadvantage. Yet exactly this specialization had already resulted in centuries of unequal exchange to the concentrated benefit of Britain (Sideri 1970). 'Free trade' actually creates a spatial arena open to domination by economically and politically powerful countries, like Britain in the eighteenth and nineteenth centuries, and dominant classes, like the British industrial bourgeoisie. In other words liberal theory was completely committed to class and national interests, while posing as a fine set of principles good for everyone.
Then, in the second half of the nineteenth century, these same economic ideas were further reformulated into mathematical, 'scientific' laws of market economies by neoclassical economists. Basically, neoclassical economic theory asserted that, under conditions of perfect competition, markets yield a long-run set of prices that balance, or equilibriate, the supplies and demands for each commodity. Given certain conditions – such as the preferences of consumers, productive techniques, and the mobility of productive factors – market forces of supply and demand allocate resources efficiently in the long run, in the sense of minimizing costs and maximizing consumer satisfaction. And finally, all participants in production receive incomes commensurate with their efforts. Capitalism is therefore the best of all possible economic worlds.
The market economies, however, organized by individualistic liberal principles, proved to be susceptible to system-threatening depressions. Also the vast material benefits generated by competitive productivity stuck stubbornly to the hands of the new class of entrepreneurs. As these gross deficiencies were revealed, political struggles, marked by violent and widespread protests, were enlarging the voting franchise from one restricted to property-owning men to one that included property-less working men, and women, who had previously been deemed 'sub-rational.' Then, too, soldiers returning from two great wars demanded that the freedom for which they had risked all include a greater share of the material benefits they themselves were producing. This entailed a new kind of political state that intervened to regulate the economy not merely in its own (state) interest, as with the earlier mercantilism, but for the benefit of the great majority of the peoples of the Western democracies. In other words, the bourgeois liberal state of the nineteenth century was forced by crisis, protest, wars and enfranchisement to become, by the mid-twentieth century, the liberal ('New Deal') state in the United States and the socially democratic, more interventionist, state in western Europe.
Politics in these new kinds of social economies included the right of the state to intervene directly to regulate the market economy and the new powers of democracy to redistribute wealth and equalize incomes. Post-war political economy used state intervention, exercised through various levels of planning and public ownership, in its social democratic versions, and fiscal and monetary policy in its liberal-democratic versions, to stabilize economies and redistribute income through welfare programs, unemployment compensation, the subsidization of education and the free provision of social services. At the same time, in the colonial countries, nationalist movements for independence frequently included the socialist ideal of state direction of economies in the interests of popular social and economic development. In the Third World, dependency theory argued that accepting a production position allocated by the existing global division of labor meant accepting agricultural- and resource-based specializations that transferred income to the already rich countries at the centers of power. Most dependency theorists called, instead, for greater national economic autonomy, import substitution industrialization, and various levels of state ownership of key economic activities. All these political-economic doctrines favored state intervention in guiding what otherwise were usually staunchly capitalist economies. For this exact reason they faced strong opposition – from business interests and orthodox cultural institutions, from elements of the Republican Party in the United States, and from reactionary fractions of conservative parties elsewhere.
The economic theory informing this new kind of twentieth-century liberal capitalism came from John Maynard Keynes (1883–1946). Keynes was skeptical about many of the postulates of the neoclassical approach – for example, the notion that wage-earners were maximizers or that unemployment was voluntary He argued that the level of employment was determined by demand for goods and services and that real investment by businesses was the crucial component of this demand. In turn, business investment resulted from decisions made by entrepreneurs under conditions of risk, with the key variable being 'expectation,' or the degree of investor confidence. The government could influence this confidence through interest rates and other monetary policies, although Keynes himself doubted that merely changing interest rates would be sufficient to alter business confidence and thus investment significantly. Subsequently, conservative Keynesian economists have seen the manipulation of interest rates as a relatively non-bureaucratic, non-intrusive method by which the central bank of a country tries to influence national income and employment. Liberal Keynesian economists, by comparison, see government deficit spending as a more effective measure: the 'liberal' part being that deficit spending can be used by the state to improve social and welfare services. While favoring the latter course, Keynes thought that mere government spending was the crucial bit. When capital was scarce, saving was beneficial to an economy. But when unemployment rose, thrift impeded economic growth, and the government should spend and spend again. In general, Keynes proved theoretically what depressions had long shown in practice: that free markets do not spontaneously maximize human well-being (I discuss Keynes at greater length in Chapter 2).
(Continues...)
Excerpted from Unholy Trinity by Richard Peet. Copyright © 2009 Richard Peet. Excerpted by permission of Zed Books Ltd.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
PrefaceAbbreviations and Acknowledgments
1. Globalism and Neoliberalism
2. Bretton Woods: Emergence of a Global Economic Regime
3. The International Monetary Fund
4. The World Bank
5. The World Trade Organization
6. Global Financial Capitalism and the Crisis of Governance
Bibliography
Index