Alternatives
Ecuador’s President Rafael Correa blamed capitalism for the global economic mess. No surprise there. Left leaning leaders of Latin American countries have a tendency to say that sort of thing. Capitalism is a problem. White guys with blue eyes created the recession. We’ve heard it all before.
That said, Correa and some of his colleagues went a step further. According to Reuters,
“Patching up the Bretton Woods system, which we do not control, makes no sense for (developing) countries,” Correa said in a speech on the second day of the conference.
Reforming the IMF and World Bank “would be an insufficient stopgap solution,” he said, adding that “we are faced with a crisis unlike those (previously) provoked by capitalism.”
If the Bretton Woods institutions cannot be abolished, he said, then they should be changed and given less authority over the world’s poor countries. More financial decision-making power, Correa said, should go to the United Nations instead.
That’s more potent than your run of the mill ‘capitalism is bad’ statement. Yet even this rather more radical stance is not new. From about the 50s onwards, the developing world has been trying to fight the ‘establishment’ view on development, and the rules of global financial and economic governance. There have been a plethora of statements, pledges, plans and even alternative organisations set up to combat the influence of the Western dominated Bretton Woods institutions. But the outcome is always the same.
Again, according to Reuters,
The final proposals, watered down from an initial draft that was prepared by [UN General Assembly President and former Nicaragua foreign minister] D’Escoto and rejected by Western powers as too radical, include a call for reforming the IMF.
But the only specific reform they call for is that the decision-making power of emerging market and developing states be increased in the next IMF quota review by early 2011.
Sometimes I wonder why the likes of D’Escoto bother. At best, these measures get some lip service while nothing really changes. More often than not, they are just ignored and treated with contempt. Which begs the question, is it possible to offer a development paradigm that is antithetical to that of the IMF and World Bank? What more have it adopted and allowed to succeed?
Are real alternatives, real departures to the status quo, possible? Or is the best that someone like D’Escoto can hope for a haggling session that ends with a statement of the intent to give up, at some undisclosed occasion in the future, a few crumbs?
12:55 pm
I wonder if Lula and Correa have all that much in common today - they are committed to very different economic orthodoxies.
The interesting development with the IMF is that they have quietly changed their economic assistance. For instance, developing countries in trouble today have been offered credit lines from the IMF to stimulate flagging economies; ten years ago they would have been told to cutback, privatise and remove regulation - the kind of advice that made them suckers for Wall Street. The IMF reacted to their failures in the Far East, Tanzania and Argentina in the ’90s/early ’00s, and the resulting criticism.
The IMF clearly needs reform. So does the World Bank. However the IMF is acting more within it’s original mandate in this crisis; it has developed from the Friedman love-in it was up until a few years ago.
Bryan, I get the feeling you are looking for some kind of revolution in the world economic system. That’s never going to happen, and may not even be desirable. As we’ve argued before, how can you ask developing countries to dramatically adopt Correa/Morales/Chavez policies, when they see China, India, Brazil and Peru’s economy performing so well from free market reforms? There is injustice in today’s world economy; the European and American agricultural subsidies that hold back Africa for instance - but I’m not sure where you want to go with major reform. Look at all the people in Brazil, China and India lifted out of poverty, other people want in on the action that works.
Climate change’s impending effect on economies is another matter. That will be dramatic change that nobody wants.
Comment by Steve K