Domination through ideas Editorial
Stabroek News
February 12, 2003

Related Links: Articles on economic concerns
Letters Menu Archival Menu

Davos is a small town in the Swiss Alps which in the last week of January each year springs into the world headlines. At that time the prestigious World Economic Forum meets in Davos, as it has done for some two decades.

Last year and exceptionally it met in New York city mainly because of the enormous pressure to which it had been subjected the year before by protesting groups. Initially the forum had been organised as an occasion for the chief executives of corporations to exchange ideas on the development of capitalism. But in recent years the forum has been opened up to scholars and political leaders dissenting from the established order. However, it remains essentially an occasion for an exchange of ideas on how to advance the received doctrine on the virtues of the market economy.

There is a certain fascination with the image of a few powerful men on a remote mountain top planning how to reshape the world. Several decades ago in the last century a great novelist the German Thomas Mann wrote a novel The Magic Mountain. It is a tale about the inmates of a sanatorium (a symbol of sick Europe) and their incessant dialogue of ideas in the feverish and heightened sensitivity of the mountain top.

The emphasis is on ideas and Davos this year was the setting for a major confrontation of ideas, symbolic of the deep cleavages in the world. The two protagonists spoke on the same day Sunday, January 26th (as reported in Stabroek News of January 27). The first, highly eminent speaker was an American five star general, once chairman of the Joint Chiefs of Staff, Security Adviser to the elder President Bush and now Secretary of State to the younger President Bush. A member of the elite of the elite, Colin Powell declared his government's deep preoccupation with ridding Iraq of its alleged Weapons of Mass Destruction (WMD) and the commitment of his government to attack Iraq alone "if allies peeled away". This year Davos discussions had in large part been dominated by the assessment of the likely effects of the war and the probability that it would push the world back into deeper recession.

Bred in poverty, working when still a child as a shoe shine boy, thereafter as a metal worker, rising eventually through the trade union movement into a powerful position, lately elected President Lula da Silva of Brazil at Davos urged rich countries to declare "war on hunger" and create a global fund to fight poverty. He was speaking, to use the fine phrase recently coined by the Columbia University Professor Jeffrey Sachs, of "weapons of mass salvation" for the far greater numbers who die not on a particular day but each and every day from hunger, malnutrition and avoidable disease.

At this time when there are sharp cutbacks on economic assistance, it is most unlikely that Lula's proposal will be supported. Yet it is worth pondering the fact that one day's production costs of the armaments which will be used in war against Iraq and the cost of one day's missiles and the bombs which will be rained down on Iraq will account to millions (if not billions) and would be more than sufficient to establish the fund for a War on Poverty.

Davos, which in the same report on Lula's speech is described as "an uncaring arch - capitalist jamboree" may be beginning to lose its attraction. It was reportedly not so well attended this year. Is this because in many parts of the world there is beginning to be deep challenges to the fundamental ideas which dominate the current economic system and which were central to the Davos forum?

One such place where such new ideas have been incarnated is at Porto Alegre, a capital city next door in Southern Brazil. There a World Social Forum has been held for the second time. The Porto Alegre Forum by design meets at about the same dates as Davos. President Lula da Silva addressed it before going to Davos. President Hugo Chavez was also among a list of distinguished speakers from developing countries who made the long journey to Porto Alegre. It sees itself as a global citizens' movement and draws its members from a variety of party political backgrounds. While the movement rejects the total reliance on market driven globalisation, its stated aim is not a return to socialism or any ideology but to develop a consensus around specific proposals and in devising strategies for achieving them.

It is still early days at Porto Alegre but it is part of the growing worldwide challenge to the so-called Washington Consensus. The elements of that consensus are the primacy of market forces, unfettered trade liberalisation, increased private sector development and consequent retrenchment of state responsibilities and functions. Those are the principles which inform the adjustment programmes imposed on developing states which seek assistance by the Washington based institutions, the IMF and World Bank, and which have now been codified in the enforceable rules of the World Trade Organisation (WTO). These ideas are promulgated as unchangeable holy writ. Any deviation from them or slowness in implementing them attracts intimidation and threats of penalties such as loss of markets and economic assistance.

Yet this hegemony of ideas which in a sense is, in terms of the international economic system, the moral equivalent in the military sphere of the doctrine of preemptive strikes is of very recent ascendancy. Economic historians have pointed out that the United Kingdom for centuries pursued policies of regulated and controlled trade as enshrined in the famous or infamous Navigation Acts of the seventeenth century.

The US also resorted to illiberal trade practices. The US Smoot - Hawley Trade Act of 1930 is "generally regarded as one of the most restrictive trade measures ever imposed by a country." (Hall & Benn)

Both the UK and the USA resorted to such restrictive trade practices in order to promote their own rapid economic growth. Yet the developing countries now at a similar stage to those through which the UK and the USA had passed are threatened with the holy writ of the WTO, a situation which while inflicting damage on some developing economies ensures open markets for the enormous productive capacities of the North.

Beginning with the East Asian crisis and the courageous challenge by Malaysia to the measures recommended by the IMF, later in Africa and now increasingly in Latin America especially in view of the turbulence in Argentina, Ecuador and elsewhere, the validity of the assumptions on which the Washington Consensus is based is being questioned.

Here in the Caribbean much significant work is being done. In a remarkable published collection of papers entitled "Globalisation - a calculus of Inequality" which includes contributions by Clive Thomas and Byron Blake, the editors, Professors Kenneth Hall and Denis Benn have argued that what is required for the survival of some developing states is "strategic integrations of the developing countries into the global economy. In this approach, integration with the global economy would occur on a selective and phased basis in terms of the liberalisation of those sectors which are capable of competing in the global economy. Strategic integration is also premised on the development of a suitable institutional capacity to manage the process of liberalization...developing countries would (also) need to defend the principle of special and differential treatment and other suitable economic arrangements in order to ensure their viability..."

Now, the matters outlined above should by no means be dismissed as academic. It is only the consistent acceptance of these principles by the IMF, the World Bank and the WTO and in particular the modification of their current rules and practices which would enable Guyana and other similarly situated states to hold off challenges in the WTO to their preferential markets as for example with sugar. It would enable the small state to maintain its essential special functions including the provision of sufficient protection for small emerging industries and to deal effectively with the legitimate claims of trade unions.

Site Meter