“As long as wealthy corporations and the governments they control are in power, the poor are always going to get a raw deal,” Solnit said.
“http://news.moneycentral.msn.com/inc/news/providerLPredir.asp?Feed=AP”
The above statement from one of the anti WTO demonstrators in Hong Kong last week will present the content of my following article. I will not take a portion to write around the outcome of Hong Kong WTO negotiation. I would rather take a fundamental portion related with the state of international economic cooperation through international institutions under capitalism neo-liberal.
I will briefly show a fact of economic degradation in the poor country such as Indonesia-I will not categorize it into developing countries, because, similar to Africa, Indonesian productive forces have been destroyed under neo-liberalism (It has been forty years since Indonesia promote globalization neo-liberal economic as an answer of a welfare myth following the western rich countries recipe).
I will close this article with a confident and chances as well as the condition of the people struggle to establish an alternative to recent international economic cooperation. Some data without footnotes token from the outcome of several discussion being held by several civil societies’ organizations against WTO in Hong Kong 13th-18th December 2005. Inspired from such discussion, I take the following conclusion and ideas.
A Fairytale of Welfare under the Free Trade
Like it has been estimated, through a green room marathon in the last three days, the result of Hong Kong negotiation more like a concession rather than solution. Agricultural subsidy in the developed countries became the sexiest topic, and answered in the year 2013, eight years after Hong Kong, seven years after the proposal of service liberalization will discussed on April 2006.
The Poor’s countries will wasting their time because tariff and quota’s free ‘agreement’ for the Least Development Countries (LDC) will realize in 2008 or after the Doha Round completed.
It should be realized that Indonesian delegation strategy cycling within asking for promise of developmental commitment in Doha Round is ineffective. As well as hoping that Special Product (SP) and Special Safeguard Mechanism (SSM) can secure Indonesian agriculture products, or aids for trade to help the poor’s countries trading system.
Concession after concession as the outcome from each WTO negotiation has been more like a bribery of welfare and development through market liberalization from the richest countries government toward the poor’s countries. Such concession also become solution for capital and commodities market extensive of the MNC and TNC into the third world countries market, as well as a way out of the frail economic order of neo-liberal capitalism and international trade system sustainability today.
The collapse of productive forces, extreme poverty, the low national productivity and technology, unemployment have been the fundamental and historical problems of the poor’s countries could never been answered by a free market and trade, even under the name of the Alliance for Progress under President Kennedy or a new strategy called the Millennium Development Goals (MDGs). All of these “displays of good will” or compassion (mercy, a gift from developed countries) failed in the face of the realities of the 21st century: famine and malnutrition accompanied advances in agricultural technology and food production, death through treatable illnesses and ignorance and illiteracy amid the rapid development of technology and scientific knowledge.
After more than a decade of the “free market”, the discourse on globalisation (the Washington Consensus) had been recycled. It has been eight years since the Asian countries - including Indonesia - have been fully integrated into the global market (market liberalisation) and the new free-and-easy pressures of financial sector. During this time, there has been no period, not even a brief one, of an economic cycle which has supported or confirmed the views of developing countries’ leader that is the “integration of the Third World market into the global market in order to eliminate poverty and uneven development.
Even United Nation itself said that the countries which open up their market as WTO instruction proved increase in poverty, while those who protected their market had been increase in welfare. So then, how is exactly free-market policies resolve the degradation faced by poor’s countries? Or how the degradation can be solve by charity or humanitarian aids? Can agricultural degradation in the poor’s countries solved by demanding full market liberalization into US or UE through elimination of their agricultural subsidies or export barrier? Or a solution such to rebalance the unbalance WTO rules through SP-SSM?
Samir Amin once noted that poverty resolution becomes a merely the dole or a discourse on charity rather than a political one; without understanding the social and economic mechanisms that cause poverty. Poverty is seen as garbage or a residue from the process of capital accumulation.
Poverty does no occur as a result of a natural process. Even if it were natural, we have already had the productive capacity to overcome it. Our lives are designed, determined and enforced by a system that profits a small minority of wealthy people. This is why the real causes of poverty are omitted from public discussion and the mainstream media. History, that shows that the poor have the ability and can struggle to control their lives and to work wholeheartedly for a better social system (what all of us want), had been distorted or erased.
The State of International Economic Cooperation under Neo-liberalism
Economic and political life that is dominated by the global financial institutions of the advanced countries compared with the years 1871-1914 (World War I) and World War II; is more coercive, full of sudden change, ridden with conflict, and for ordinary people, will end in horror.
The economic domination of the advanced countries over the developing countries is now promoted as the way out of this problem - and the international trade and financial institutions are its tool. The colonisation of developing countries is now finding a new guise: globalisation - the concentration of the value of social production by multinational companies in the form of the unification of banking, financial and productive capital. The economic power of multinational companies is now greater than states.
The result of these globalisations and the associated strengthening of the financial institutions - which not only control industrial companies but also banks and insurance industries - has not just taken, place in the US but is global. The total of assets owned by the three richest people in the world exceeds the GDP of poor countries with population of 600 million. The population of imperialist OECD countries is only 19% of the total world population yet they enjoy 71% of the trade share, 58% of direct foreign investment and 91% of them are internet consumers. Far from what is referred to as “distribution of assets” -as proclaimed in the conceptual theories of “globalisation” - their sales already criss-cross the globe; indeed trans-national corporations are increasingly concentrating production and commodity sales in their “parent” countries. This reflects an extremely uneven and unjust distribution - particularly in the case of direct and indirect global
investment.
Conversely, by tracing the history of how the liberal economic and political system tries to overcome crisis and excesses we understand why neo-liberalism is a means by which it attempts overcome this.
The investors’ dreams were based on the technological innovation: they would be able to use all kinds of means to force the broadening of markets, force down the cost of labour and intensify the exploitation of global resources - all of which is sanitised under the euphemism of “globalisation”. But even big speculators like George Soros are concerned that globalisation and the neo-liberal “free market” ignores public interests - particularly the working class - so that are also worried that they will no longer submit to the parliamentary system which supports it and seek alternatives such as taking over the government and putting it in their own hands. They are also concerned about a possible global depression as occurred in 1929 - the financial crisis and the collapse of the economy which haunted countries like Japan in 1989, Mexico in 1994, Russia in 1998 and South Korea, Thailand and Indonesia in 1997. The advanced capitalist countries, particularly the US and Britain, can no longer be overcome these crisis by Keynesian type policies but are attempting to do so though neoliberalism and responsibility for this has been handed over to the international financial and trade institutions (as the tools) like the IMF, the World Bank, GATT-WTO, the Paris Club, NAFTA, APEC and so on (1).
Early in his speech during 2004 commemoration of Cuban Revolution in 2004, President Fidel Castro clearly articulated the fact that to the outcome of economic liberalisation is always worse for the poor. Environment degradation, because of global warming for example, is always suffered most by the poor in society. They did not have cars, air conditioning and perhaps even possibly no furniture (that is if they have a house, which many do not). Carbon dioxide pollution that is causing global warming and fluorocarbons that are devastating the ozone layer represent a far greater threat for the poor. Added to this is the fact that if they do become ill, they cannot afford adequate healthcare.
Even a well-known welfare-state economic model such in Germany once forced Gerhard Schoeder to pass a policy such Hartz IV-cutting social security, pension, education and health-as an answer of the capital accumulation crisis.
Indeed we should not be shocked by the increasing levels of poverty - particularly in the Third World - but which is also becoming prevalent in countries such as the US where the social security and welfare system has been dismantled living many to live in Third World like conditions. In fact issues such as unfair trade, privatisation and protectionism that the WTO actually promotes, is merely a new form of colonial plunder.
As it once was said, “In these circumstances, it is clear who has gained and who has lost in the current system of international trade. As noted in the 2003 United Nations development Program (UNDP) Human Development Report, the countries with low Human Development Index (HDI) scores in 1990 accounted for 0.86 percent of world exports, compared with 82.82 percent for countries with high human development. By 2001, the low HDI countries’ share of world trade had fallen to 0.66 percent-clear and incontrovertible proof of who has lost out from the Uruguay Round”.
The Degradation of Indonesian People
If we trace the expansion of neoliberal policies in Indonesia, we must start with the coming to power of the New Order in 1965-66. The establishment of the New Order (and the millions that were killed and interned by the military) was nothing less than a victory of capital, a tool and a means created in order to allow the domination of the economy by a small selection of business people led by former President (then General) Suharto and his cronies.
The trend towards liberalisation of the economy can be found with the promulgation of Law Number I/1967 on Foreign Investment, which was supplemented by Law Number 6/1968 and Law Number 11/1971. These laws allowed foreign capital to dominate the economy and far outstrip the capacity of domestic businesses that are left high and dry. Even the strategic industrial sectors (which in Indonesia had never developed broadly) such as metal, logging and chemical industries are still foreign dominated.
Since then the dominant force of production in Indonesia has been capitalism that is bound together though debt, domination of capital (investment) in extraction, plantation, and the manufacture sector. Open, market friendly market policies, turned Indonesia into a target for agricultural, livestock, and manufacture production marketing.
The 1997 financial crisis and sustainability
After the 1997 financial crisis there was a more blatant and deep penetration of neo-liberalism into developing countries. Investment/capital broaded into extractive sectors, plantations, public services, finance, insurance, land and state-owned enterprises (as dictated by round-after-round WTO agreements). Indonesia become increasingly dependently on western agricultural products and products from South Asia, China, Thailand and Vietnam. This also including small- and medium-manufactured commodities from China, Taiwan, Singapore, Hong Kong, Malaysia and Vietnam and the big capital and manufactured commodities from the US, Japan and Germany. These was able to take place through forcing countries to accept high levels of foreign debt, trade and production agreements, submission to international law through world financial and trade institutions (particularly the World Bank, IMF and WTO) and cuts to state subsidies and social spending (read privatisation/liberalisation).
The fundamental problems of Indonesian society today is the high level of dependence on foreign productive force including capital, the low level national productive force (including technology, manufacture of tools and human resources), the low level technological transformation, low national productivity, high (and increasing) unemployment, sharpening divide between the rich and poor/urban and rural and environmental degradation.
Indonesian productive force; the expertise of suffering
Seventy percent of Indonesia’s population are peasants living and working in rural areas. According to agricultural census by BPS (Centre of Statistical Board) in 2003, around 56.52% of households are small-peasant families that cultivate less than 0.4 hectares of land to supply their families’ needs. This indicates that since 1993 the number of small-peasant households in Indonesia had increased by around 2.6% annually. With less than 0.4 hectares of land and poor technology, the removal of government subsidies and protection in the form of the State Logistic Agency (BULOG), low levels education and innovation, the Indonesian peasantry cannot expect to raise their standard of living or quality of life; and the so called Special Product categories or Special Safeguard Mechanism of the WTO offer little more than a band aid solution even if then can be applied fairly.
Other issues related to the peasantry’s welfare have also suffered under the WTO. While the WTO excludes labour, human rights and the environment from discussion because they are considered as “non-trade” issues, majority of neo-liberal economists and free market stakeholder assert that Indonesia’s wage level are too high, un-competitive and deter foreign investment (it also has to be considering that Indonesia’s labour productivity is the lowest in South East-Asia). Therefore there has been pressure to the government to freeze wages. However, the root cause of low productivity in Indonesia is actually the outdated technology being used and the low quality of human capital due to the excessive cost of education and healthcare. Some 56.7% of Indonesian workers only have an elementary level education while only 4.6% are university or college graduates. The illiteracy level among women is 19% and 9% for men. A woman’s average wage is 2/3 of a man doing the same job. Meanwhile, only 18.3% of the population have access to clean water.
As many as of is 43.4% of the Indonesian people have an income of less than US$2 per day while those whose incomes less are than US$1 is 7.4% out of a population of 220 million. Compare this to the agriculture subsidies paid to farmers in the European Union countries where a single cow receives a subsidy of US$ 2.2 a day.
Under these circumstances it is totally impossible to cal for high levels of labour productivity. Ironically it is the crisis of capitalism itself that has diminished the Indonesian people’s quality of life and historically, they are the ones who suffer from the policies of neo-liberalism.
It is for this reason therefore, that I strongly support the political stance taken by the Bolivarian Republic of Venezuela’s delegation at the 2003 Ministerial Level Meeting of WTO in Cancun, in which they insisted on the need to refrain from adopting new commitments until the fundamental and long-term pending issues that affect poor countries are resolved.
Taking Power at National Level - A Basis for Alternative Economic Cooperation at the International Level
So, what should we do now? What are the big questions that need to be answered by the social movements around the world after Seattle and Cancun? What then should be our political goals?
I believe that more than ever we need political movements at the national level. Movements those are able to provide a critique of the role of international and multinational corporations and their pro-neoliberal local agents in government and parliament. Of course this has to take place within the context of an international movement but supporting alternative political leadership at national level is absolutely crucial.
Seventy-seven countries opposed the “new Singapore’s issues” on investment, competition, transparency, government budgets and trade facilitating by WTO. This is a potential, but historically must be seen that majority of those governments economical and politically dependent to their parent capitalist countries (G7) not mention that their ‘independent’ are still under colony (dominion, commonwealth etc). Without any political movement in national level to replace the national government leadership, this dependency will still persist. Our enemy is not a ghost; it has nose, head, brain, hands and legs. It is the pro-neoliberal government.
Making an Alternative Model of International Cooperation Possible
Venezuela has raised the idea of new model of international cooperation. As a concept the Alternative Bolivarian for Latin America or ALBA, is based in the principles of complementarities (rather than competition), solidarity (instead of domination), cooperation (rather than exploitation) and respect for sovereignty (instead of corporate rule). It is a starting point for Latin American integration based on the notion that Latin American countries will be in a stronger position if they are united rather than competing for the honour of being the US’s top lapdog. And in practice, ALBA is based on grassroots participation where the people are both the implementers and the beneficiaries of agreements reached under the banner of ALBA. I agree with Deborah James from Global Exchange who asserted, “Venezuela is number one ally of the social movements”. Social movement throughout the world should welcome the success of ALBA, “kicking” ALCA out of Latin America at Mar del Plata, Argentina, or perhaps inspired by the actions President Hugo Chavez that were followed by those of Kirscner and Lula in giving their signatures to the expulsion of FTAA as a Latin America’s economic project. So I think that today, we can say the basis for a fair, democratic, humanitarian model placing people before profits has already found its momentum.
We must not however forget that the governments of Venezuela and Cuba promotion of Latin America integration against US imperialism have not taken place in a vacuum. Since the overthrow of the Perez Jimenez dictatorship in 1958, Venezuela has had to be on guard against anti-Chavez movements - either clandestine in the mountains and shantytowns. A progressive like Hugo Chavez is not just a hero from above that has come down to carry out a mission for the poor. He is a historical product coming out of the struggle to power by the people of Venezuela that has been waged for many years. He was elected in 1998 because of the campaign investment and the failed uprising to overthrow Andres Peres government in 1992. This uprising gave people the confidence to believe in and be involved in the struggle to replace the pro-neoliberal government.
Without leadership of people like Chavez and Fidel in promoting Latin America’s new model of cooperation, there will be movement against FTAA. What I mean to say is that the struggle against neoliberal policies and even the big transnational corporations would be limited without a struggle to replace their tools - their agents at the national and local level - the pro-neoliberal national governments. The positive lesson we can learn from the leftist government of Venezuela is that they’re laying the grounds for the development of the socialism in the 21st century as an alternative to neoliberalism and state capitalism. They are doing this by simultaneously advancing the productive force of the people, strengthening the democratic movement so that it is united, broad and multi-sector and as a real tool of power for the poor people. This is not charity or a gift from Santa Claus but a real and concrete effort on the part of the government Venezuela to empower people to improve the quality of life.
A social movement is a political movement. I think it is time for us to rename the social movement as political movements against neoliberalism. We should use a term of “politic” to define our politics - not the pro-capitalist politics of the TNC and MNC’s whose aim is the accumulation profit - but the politic of the poor. Social movement related to NGOs all over the world should begin to redefine their objectives, start with the politically correct approach of supporting and being involved in struggle to replace neoliberal national government. This must not be limited to channelling the people’s resistance the reformation of neoliberal institutions or governments. A struggle for reform is just a transitional tactic to build the democratic forces and widen the democratic space towards the strategic goal of replacing their neoliberal governments.
This is why it has never been enough to just criticising national governments. We must get involve with and support the politic of the poor - our politic - in concrete ways such as building united fronts, uniting the movements, political parties or any endeavour that is seeking to create a real alternative. This is poor people’s road to throwing off the yoke of oppression. By taking power into our own hands. It is for this reason therefore that “the struggle should develop, and will develop; there’s no other choice ” (2).
Footnotes
(1) Those are developed country’s governments who control IMF, World Bank and WTO, as they controlled UN Security Council. For example, within IMF, vote is based on the role/share of financial contribution. On 1990, 23 developed countries had 62,7% vote, while 35,2% vote belong to others 123 countries member. Five Executive permanent Board of IMF nominate by the biggest five of shareholder-US, UK, France, German, Japan. The fundamental role of IMF, World Bank and WTO is to drive developing countries economic policies, which, of course, should be approved by developed countries majority. Such policies authorized in The Great Seven governments’ of developed countries-G7-annual meeting. In their 1976 meeting, the head of the G7 governments, for example, approved economic reorganization plan of developing countries, through; opening world market-in case to increase import from developed countries or to prioritize import than buying from domestic market-privatizing state-own companies, functioning and widely opening the gate for foreign investment, and also cutting off “un-productive” budget, like education and health care. These “policies” today have been forced to the debtor of Third World countries. The subjection of developing countries market is also the fundamental goal behind the pressure of first world countries through “free market” association like NAFTA and APEC. The tariff of import removal by all members of the association, also remove the one and only remained protection mechanism by the developing countries toward their domestic market penetration by the power of developed countries. But the developed countries can limit their domestic market penetration toward export from developing countries through establishing a series of a strong non-tariff barrier.
(2) Fidel Castro speech in commemoration of Cuban Revolution 2004.