Keynote Presentation in the Oikotree Global Forum 2013 by Rosario Bella Guzman, IBON Foundation
As we have feared and fought, all the inherent weaknesses of the global economic system are currently showing. We are holding this global forum today in the face of unprecedented unemployment, hunger and poverty, when the planet is confronted with an ecological crisis, and when the global economy has sunk in a protracted depression.
The system is bound to fail, we have been warned, as there is indeed something wrong with producing commodities for profits instead of human needs. The level of economic organization that humanity has achieved is matched with the highest form of disorganization where profit is the main driving force in creating values. The amount of wealth we have created is otherwise being appropriated by only a handful of people and at the price of environmental degradation and human alienation.
The crisis of global capitalism is manifesting in the growth of monopolies and the accumulation and concentration of capital in the hands of 0.001% of the global population while the majority are reelingfrom scarcity and marginalization. Profit levels have increased in various industries in the entire economies of the rich countries while super-profits are being extracted from poor countries through cross-border trade and investments.Humanity has brought about tremendous efficiency but it is now suffering the loss of jobs and livelihood.
Defenders of the capitalist system have prescribed neoliberal globalization as the solution.Along with the liberalization of international trade and investments, globalization policies have caused the unbridled financialization of the global economy, creating fictitious capital and extending the lifespan of profits without creating tangible goods and services. The limits of debt and speculation-driven growth have already been exhausted.
We are currently witnessing a synchronized global downturn, according to the United Nations. The Eurozone is expected to grow by only 0.3% in 2013 after contracting last year. The US economy is predicted to grow by only 2.1%, well below the level experienced during every so-called recovery in the post-World War II period. Japan, which experienced a contraction last year, is expected to grow by only 0.6% this year. The British economy is set to move into a “triple dip” recession this year after its services sector, which comprises around 75% of the economy, experienced a sharp decline in December. Germany, which is based on manufacturing, is headed down the same road, with sharp decline in aggregate output.
What is happening to the emerging economies that are being touted to be the next sources of global growth in the coming years? The growth rates of China dropped from 10.4% to 7.7% in 2012, of Brazil from 7.5% in 2010 to 1.3% in 2012, and of India from 8.9% in 2011 to 5.5% in 2012.China alone looks like it is headed towards a hard landing, with its exports and investment decelerating sharply, while the Chinese government has already phased out its fiscal stimulus in 2011.
What is happening to Africa, which is also being hyped to be a rising region? The share of manufacturing in Africa’s gross domestic product (GDP) as well as in its exports is falling. In terms of manufacturing growth, while most African countries have stagnated, 23 had negative growth in their manufacturing value-added (MVA) per capita during 1990-2010. Only five African countries achieved an MVA per capita growth of four percent. Besides, African growth is only in the context of speculative natural resources investment, resource grabs, and mineral ore and petroleum prices.
Advocates of neoliberal globalization, including those who have designed the Millennium Development Goals (MDGs) that apparently could only be achieved through so-called development cooperation, have promoted global free trade as the solution to poverty. Today, global trade is decelerating sharply mainly because of declining import demand in Europe, US and Japan, and consequently sending poor countries that have been dependent on export-oriented growth into deep recession.
The toiling people are the ones bearing the brunt of the global crisis. They are the ones who have lost their jobs and livelihood, cannot afford higher prices of food and basic commodities, and have suffered cutbacks in social services. It is quite ironic that the average labor productivity in the developed economies increased in the past decade more than twice as much as average wages, which means that the global wealth has actually been created by those who are eventually excluded from benefitting from it. The inherent contradictions of global capitalism have also manifested in the fact that during crisis, the rich get richer while the poor get poorer.
Global unemployment is unparalleled in history. The figure may even be moderate, considering that almost 60% of jobs in the underdeveloped countries according to the UN are informal thus not covered by statistics. The unemployment rate continued to climb to a record high in the Eurozone in 2012. Spain and Greece are worse off; more than a quarter of the working population is without a job and more than half of the youth is unemployed. It is estimated that if economic growth stays as anemic in the developed countries as projected, employment rates will not return to pre-crisis levels until far beyond 2016.
Those remaining with jobs or those fortunate to land new jobs are not better off. Corporations and farms have introduced more exploitative wage and employment schemes, such as floor and productivity wages instead of minimum wages, rotation or longer working hours, and contractualization in place of regular employment. Globally, transnational corporations (TNCs) both in agriculture and industry have increasingly subcontracted production stages precisely to take advantage of the cheapest raw materials and labor. The capitalist crisis and globalization have created the favorable condition of a permanent jobs crisis in the underdeveloped countries where a huge supply of surplus labor (a vast army of unemployed, in other words) is readily available for use, creating in turn the opportunity to cheapen labor further and make work more casual.
Food prices jumped to a record high in July 2012, after the steep increases in 2008 that were otherwise associated with speculation. The number of hungry people has reached more than one billion for the first time in history (or since the UN started counting the hungry). In the last three years alone, the hunger and poverty situation has deepened as prices of food commodities have increased steeply and simultaneously, and along with other commodities such as oil and energy, in the longest and broadest inflation after the Second World War.
Austerity measures continue and get more intense as there is no solution that is coming in full view. In the developed countries, cutbacks in unemployment and retirement benefits, pensions and health careare getting more severe. Capitalist governments are introducing new schemes such as later retirement and higher contributions to pensions. In the underdeveloped countries where there had been notmuch social security to begin with, privatization of social services is taking place with much ferocity.
The most bitter irony is that the rich are getting richer as they continue to play with money. According to the Bloomberg Billionaires Index, the world’s 100 richest people added US$241 billion to their combined wealth in 2012.The US accounted for 37 of the top 100, with the combined holdings of American multibillionaires comprising half the total. Europe including Russia followed with 34, while Asia accounted for 14 and Latin America for 11.
The current stage of the capitalist crisis has brought about the most incredible inequality so far in human history. According to the Credit Suisse’s Global Wealth Report 2012, the richest 10% own 85% of the global wealth, with the top 1% alone accounting for 46% of global assets. In sharp contrast, the bottom half of the global population possess barely 1% of total global wealth.
The main driver in the increasing wealth of the super-rich was the rise in global stocks. For instance, when investors judged that the Greek debt crisis would not bring about the immediate collapse of the Eurozone, the Stoxx Europe 600 index had gone up by 19.6% since June. The retail bosses on the other hand are increasing their fortunes not so much because sales are rising but because their smaller competitors are being ruined by the crisis, giving the biggest companies monopoly profits.
The financialization of the global economy has continued despite hard lessons in 2008. Derivatives contracts on the over-the-counter (OTC) market have reached US$650 trillion or approximately 10 times the world’s GDP. Shadow banking or the off-balance sheet activity of banks has risen again and is much greater than GDP in many countries: Hong Kong (520%), Holland (490%), the UK (370%), Singapore (260%), and Switzerland (210%). Shadow banking is biggest in the US (23,000 billion in assets in 2011), followed by the Euro zone (22,000 billion) and the UK (9,000 billion).
We have seen that the policy interventions by capitalist governments have been counter-productive. This is so because the policy interventions have remained in the framework of preserving the capitalist system and continuing with neoliberal globalization. To illustrate, the central banks of the US and the EU have secretly lent to troubled banks at incredibly low interest rates. The European Central Bank (ECB) for instance lent to over 800 banks at 1% interest rate for duration of 3 years. The Fed lent at 0.01% interest rate as against certain States that are obliged to pay rates 600 or 800 times higher. In 2012, the banks used the new flow of cash to make massive purchases of public debt securities in their own countries. For instance borrowed money from the ECB at 1% was used to buy 10-year Spanish securities at 5.5-7.6 percent.
The current stage of the capitalist crisis is unprecedented. It is not the same as neoclassical depression. It is the maturation of the capitalist crisis and complicated by neoliberal globalization, with the speculation in the financial sector as its main feature. Such speculation has led to the sovereign debt crisis occurring in the Euro area as well as in the US. It has also caused the simultaneous occurrence of inflation in commodity assets (such as food, energy and metals) with deflation in debt-based assets (such as real estate and automobiles), which is due to the intervention of central banks.The current stage is a protracted depression and can no longer be solved by the continuation of financial excesses and parasitism.
TNCs, international financial institutions (IFIs) such as the World Bank and even financial oligarchs like Morgan Stanley and Goldman-Sachs are therefore raising the clamor for intensified extraction of natural resources. Such behavior of imperialism is both predictable and shocking at this point. It is predictable because it has always been the back-to-basics solution of imperialism, from colonization to globalization, to re-build the profit through the exploitation of natural resources for cheap raw materials, exploitation of cheap labor, and acquisition of vast tracts of lands. It is shocking because TNCs, IFIs, financial oligarchs and capitalist governments have subjected even the values of land and natural resources to speculation. And in the guise of sustainable development called ‘green economy’, they have blatantly attached a price to natural resources.
Massive foreign land transactions have taken place at a quite controversial scale and pace. Land and forests are being converted and used for a range of purposes including intensive agriculture, mining, plantations, logging operations, urban expansion or hydropower projects, tourism and real estate development. Land markets have suddenly become attractive destinations of private investments especially by financial oligarchs.
Imperialists have designed a green economy that provides mitigation technologies and new areas of investment. They have also resuscitated the much debunked globalization policy of privatization into a more vicious form called public-private partnerships (PPP), which covers not only infrastructure development and public utilities but also social services. And unlike the previous forms of privatization, PPP requires host governments to guarantee all the regulatory risks that may befall the private investments.
There is no recovery in sight, and there is no solution in sight. There is going to be a deeper euro crisis in 2013, with the recession spreading to other economies through trade channels and more importantly through greater financial uncertainty since confidence in the euro and prospects for recovery erode further. In the US, the fiscal cliff deal in the beginning of 2013 clearly shows that the Obama administration, despite its fresh term, is sinking in a deeper dilemma.
There is no recovery for productive sectors, particularly manufacturing, as the global economy continues to be dominated by the services sector that serves super-profit taking and feeds the propensity for financial speculation. This only means that jobs that have been lost shall take long to be recovered, if at all, and unemployment shall remain severe. As for the US, this is by far its weakest recovery since the Great Depression, while it continues to bleed from international de-investment.
The imperialists, led by the US, have shifted our attention to Asia-Pacific, the emerging region they say, as the next center of the global economy and key driver of global politics. US Secretary Hillary Clinton has called this the Asia Pacific Century, “[In] the 21st century, the world’s strategic and economic center of gravity will be the Asia Pacific… And one of the most important tasks of American statecraft over the next decades will be to lock in a substantially increased investment – diplomatic, economic, strategic, and otherwise – in this region.”
This is part economic truth, part investment hype. There is rapid economic growth in Asia-Pacific, especially with China and India; 60% of global population; 40% of global trade; and almost one-third of the global economy, which is going to be half by 2050. According to the UNCTAD, China will overtake the US as the top trading nation by 2016.
But the shift of international investment, production and trade to Asia is at best just hype in the context of and relative to the global crisis. It is indeed going to be the Asian century but only in the sense of foreign investment going to Asia and balancing what has been exhausted and what is yet to be exhausted, but Asia cannot replace the centers of imperialism and is not capable of providing the engine for global recovery and growth.
Yes, there is the increasing consumer capacity and prosperity of a middle class in Asia. But the region registers the highest number of retrenchments, the highest number of vulnerable employment, is home to the majority of the global poor and 63% of the world’s hungry.There is rise of mega-cities in Asia while urban poverty worsens – out of 100 people, 35 in South Asia and 31 in Southeast Asia live in the slums.
There is a deeper truth than the investor interest in Asia. The reality is the US is wary of China becoming a challenge to US hegemony in East Asia. It is doing everything to oversee and influence major developments in China and even to push China to privatize its strategic state-owned enterprises to US TNCs.
The US is joining all regional trade blocs, sitting in all regional summits, even claiming itself to be part of Asia-Pacific. It has also bilaterally knocked on everyone’s door, whether economically or militarily. Its overall role of being the “globocop” and its military infrastructure has been consolidated. Its counter-insurgency (“coin”) policy has been improved, which is simply targeted to anybody who opposes its economic and geopolitical interests. And while NATO remains the key framework for Europe, Middle East and North Africa, US militarist focus has shifted heavily to Asia. In the guise of maritime security, the US has intervened in territorial disputes in Asia but in reality engaged in war mongering and pitting one country against another, or more precisely one country against China. And the US is using the Philippines as its pivot in the region.
At this point, it is important (and I am obliged) to see why the Philippines becomes the center stage of so-called economic resurgence (“the roaring lion”) and so-called democracy (which is actually market democracy). The country is the only country in Asia and among only three others – El Salvador, Tanzania and Ghana – to have received a huge grant called “partnership for growth” from the Millennium Challenge Corporation (MCC) which is funded by the USAID at a time that the US is suffering from budget cuts and deep financial crisis. Sure, Thailand or even Indonesia deserves better attention, but they do not have what the Philippines has. Not only strategically located, the country is the US’s long-term ally and client whose government has historically done everything for its former colonial master.The US has since 2001 regularly sent troops to the Philippines, virtually making the whole archipelago its military base.
The imperialist responses to the global crisis have dire implications on our already eroded natural economies, our chronic crises, our elite democracies, our civil liberties and human rights. They have severe impact on all marginalized and excluded sectors, especially women and children. To illustrate, a total of 711 people were killed from 2002 to 2011in disputes over land, forests and other natural resources. The countries with the highest numbers of reported killings were Brazil, Peru, Colombia and the Philippines, where more than one murder per week took place, according to the Global Witness.
More than a thousand activists, people’s leaders, church people, journalists, environmentalists, scientists, teachers, and concerned citizens have been victims of extrajudicial killing in the Philippines where there are hundreds of cases of enforced disappearances and hundreds more are detained as political prisoners since the US waged its war of terror. A culture of impunity has pervaded. The culture of patriarchy, racism, xenophobia and the like has been strengthened.
This has severe consequences on and challenges to our movements. Obviously, we can no longer afford to sit within our boxes and comfort zones and wait on the world to change. The global crisis has resulted in the escalation of human exploitation. We have seen in the past five years or so the escalation as well of people’s resistance in various forms. Mass protests in the underdeveloped regions are spreading. National liberation movements in some countries are growing and getting more and more possible because of the intensity of the current global crisis and the over-extension of the US wars of aggression.
In the ecumenical movement, one challenge is to make its responses not far different from the organized responses of the social movements, to be one with the people, one with the church. Discussions should be rights-based – basic human rights that we have already asserted and won long time ago are being abrogated by neoliberal globalization. We are being made to forget our rights, the genuine meaning of sustainable development, gender equality, among other long-standing people’s victories.
There should be discussions on economic resistance. There is a whole range of issues in this regard – food, jobs, wages, migration, health, education, public utilities, and access to economic resources, among others. These should be waged in our particular country context, but international campaigns are also quite feasible. The ecumenical movement should be embedded in the campaigns and struggles of sectors, such as the rural sector, indigenous people, trade unions, women and youth, and the urban poor.A movement without solidarity with the poor, they say, is not a movement at all. It should also engage in emerging issues, such as mining, climate, plunder, as well as the debate on the green economy. The current discussions among social movements on these issues are already on collective rights and system change. The churches should not be far behind.
On the other hand, there are specific issues where the ecumenical movement is requested to be at the forefront. Anti-war campaigns being waged are opportunity to criticize and fight human rights violations and bring to fore the intensity of imperialist aggression. There is also the particular request for churches to get involved in the issues of migration and human trafficking as well as violence against women to expose and oppose modern-day slavery. All of these provide us the opportunity to reiterate that the long and arduous struggle for justice and peace is still being waged.
The integrity of the churches in questioning structures comes quite important at this juncture. There is no end to questioning unjust systems and exploring alternative ones in order to promote a life of fullness. This is the church’s mission and we in the social movements are depending on this moral ascendancy to assert the overhaul of moribund systems. In particular, in the breakdown of intergovernmental processes including the increasing corporate control of the UN and the reconfiguration of G8 to G20, the churches can come as an authoritative voice in seeking to end an empire that masquerades as most democratic yet wages its wars of aggression against peoples everyday.
The tradition of the ecumenical movement to strengthen individual accountability with collective action has been most effective in building genuine democracy.Its premium on the integrity of creation, setting the limits on ecology first before economic growth, making human needs the priority of any economy, and building peace based on justice is democracy in action. This brings so much hope in the midst of humanity’s deepest crisis that the aspiration for a tree of life is indeed achievable.
Africa, Sonny. US Economic Offensive in Asia-Pacific and the Philippines, Bayan forum, 15 September 2012 (A PowerPoint presentation)
Quintos, Paul. Notes on the International Economic Situation, UP CMC, 13 January 2013 (A PowerPoint presentation)
Tujan, Antonio Jr. International Situation, UP CMC, 13 January 2013 (A PowerPoint presentation)