Occupy World Street: A Global Roadmap for Radical Economic and Political Reform (March 2012)
By Ross Jackson
Economics has evolved into an irrelevant and abstract tool of the ruling elite, based on the dubious assumption that natural recourses are without limit and are there for the sole use of those who control them. While modern economists like to consider their field to be a branch of science, value-free and independent of politics, a more realistic view, critical to understanding the crux of the problem, is that put forward by American economist Hazel Henderson, who characterises economics as “politics in disguise”. Economics has always served its political masters.
Traditional economists use growth in the gross domestic product (GPD) as their measure of economic growth, which the public automatically assumes is the same as a measure of how well we are doing as a nation this year relative to last year. But this is not what it measures, and it was never intended to do so.
The problem is that GDP is a measure of total activity. Some items included are definitely costs to society and logically ought to be deducted rather than added, for example: environmental cleanup (e.g. Chernobyl, Love Canal, Exxon Valdez, Bhopal, BP in the Gulf of Mexico, Fukushima), highway accidents, prison costs, costs of treating social problems, effects of global warming (increasing frequency of violent storms, larger insurance premiums), unemployment costs and many health costs.
GPD is not an appropriate measure for the effectiveness of economic policy.
The evidence strongly suggests that our global civilisation is undergoing a collapse that will continue to play out over several decades. In a geological timescale, the collapse is quite rapid – almost instantaneous - like an implosion. We are the generation experiencing this implosion in slow motion as things fall apart around us. The signs are unmistakable, yet people are still unaware what it happening and try to carry on as best they can in difficult times.
An organism that thinks only in terms of its own survival will invariably destroy its environment and, as we are learning for bitter experience, will thus destroy itself (Fritjof Capra – The Turning Point).
Economics has always been nothing more that politics in disguise (Helen Henderson – The Politics of the Solar Age).
Indeed, if the objective of someone was to drive our civilisation to ruin, nothing could be more effective that the invention of the currently dominant economic system - neoliberalism.
The economic system we choose affects everything in our everyday lives. The economists’ way of looking at the world goes a long way to explaining how we got into a situation that is life threatening for our whole civilisation.
Socioeconomic issues were related primarily to ethics and politics through most of history, while personal gain was not a motive. It was not until somewhat later in the era of the reductionist Newtonian/Cartesian worldview that gain first became a determining motive, a market economy became important, and economics was considered a separate discipline removed from politics, ethics and social order.
Nevertheless, the highly questionable assumption of personal gain as a motive has had enormous impact of the economic systems that have evolved since [Adam] Smith’s time, perhaps because the assumption resonated with that particular segment of society – the merchant class. Smith’s assumption could be considered an illustration of the tendency of many economists to draw abstract theories that are out of touch with reality.
Over 80% of all political debates…ought to be about…the design aspects of the economic system. What do we tax and what does the tax system encourage or discourage? What are acceptable working conditions, minimum wages and maximum wages for employees? Who issues the currency? Who controls interest rates and the central bank? Who benefits? What are the environmental consequences? Who owns the land and on what conditions? Who owns the businesses? How are they regulated? Should centralisation or decentralisation be favoured – urban life or rural life, private or public transportation? The list goes on and on. To say that one is ‘against capitalism’ is thus rather an empty statement unless a particular instance is specified. There is no one interest group that automatically benefits in a society that commoditises labour. It all depends on the design. Marxism, for example, can be seen as a particular version of capitalism with the focus on who owns the means of production.
Since roughly the end of the Second World War the primary goal of almost all nations has been to maximise economic growth, without the least regard for either ecological overload or peak oil. Nor does the reigning political leadership have any regard for whether the net effect of economic growth is positive or negative.
The IMF and the World Bank have arguably done more harm to more people than any other pair of non-military institutions in human history (David Korten, When Corporations Rule the World).
In the early 1980’s, a historical shift in the dominant economic system too place…This shift was not announced publically, but rather crept into the public domain surreptitiously…the new policies acquired the name ‘neoliberalism’…a top down political project with the ideology that fulfilled the wildest dreams of big business and the wealthiest segment of…society for the unregulated freedom to operate as they pleased exclusively in their own interests and with little or no social or environmental considerations to worry about.
Neoliberalism can be seen as an extremist version of neoclassical economics where the only thing that counts is money. It can also be considered as an experiment to test Polanyi’s postulate that giving total power to merchants, if allowed to persist, would “destroy both man and his environment”. After almost thirty years, the conclusions are quite clear to all but the promoters.
The neoliberal is based on the following principals of organising both national and international economic relationships in an ideal world: 1) The unrestricted movement of capital across borders in a currency regime of floating rates without capital controls; 2) the removal of all restrictions on the free flow of goods and labour; 3) minimum government regulation of the markets; 4) the removal of all subsidies, direct or indirect, to domestic industries; and 5) the privatisation of state enterprises. The theory is that such a regime would be to the greatest benefit to all world citizens.
According to Susan George, the neoliberals “bought and paid for” their success in an “absolutely brilliant” piece of ideological and promotional work. The founded a “huge international network of foundations, institution, research centres, publications, scholars, writers and public relation hacks to develop, package and push their ideas and doctrine relentlessly.” Thus, neoliberalism is not an inevitable historic development as they like to describe it, but “a totally artificial construct” created by “people with a purpose”. Part of their strategy is to present the whole phenomenon as inevitable and not subject to debate.
Economic historian, Paul Bairoch states, “it is difficult to find another case where the facts so contradict a dominant theory.” The public has been brainwashed by an ideologically driven flawed theory posing as fact.
‘Markets are self-correcting’ is the greatest lie of all in the neoliberal ‘religion’ and yet is the basis of their demands for deregulation. Every economist from Adam Smith to John Maynard Keynes knew that markets require government regulation to function. This is true for any economic system.
Financial institutions are the first to run for help from taxpayers when markets fail, as we saw most recently in 2008. Regulation is especially essential for neoliberal economics because this particular system is intrinsically unstable and will lead to recurrent financial crises.
The Neoliberal Project is consciously designed to keep the developing countries in their ‘proper place’ as suppliers of cheap raw materials and labour – a form of financial colonialism.
Dr Paul Stevenson of the University of Winnipeg argues that it is the casual link between capitalism and inequality on the one hand and between inequality and social problems of the other, that is critical to our understanding the role of the economic system in social breakdown.
The reality is that without the availability of cheap resources and labour from the 100 or so developing countries that are financial colonies of the dominant Western powers, the standard of living in the rich countries could not possibly be maintained, and the Western elite knows it.
John Grey, professor of European Thought at the London School of Economics puts it this way: “Those who seek to design a free market on a worldwide scale have always insisted that a legal framework which defines and entrenches it must be placed beyond the reach of any democratic legislature.” The WTO and IMF are both excellent examples of such undemocratic institutions.
With the coming to power of Reagan and Thatcher and the ascendance of the neoliberals in 1980, everything changed. The subsequent period from 1980 to the present has been characterised by a deterioration in social cohesiveness, environmental destruction, increasing stress, increasing criminality, a shift for solidarity to individualism, a ‘greed is good’ mentality, a dramatic widening of the gap between the rich and the poor, and last but not least, a series of major financial crises resulting from the ‘financeialisation’ of the world economy. All these phenomena fit together as part of the same pattern and more or less a direct consequence of the ideology of The Neoliberal Project, which deviated significantly from the ideology of previous economic systems.
In a recent study, former chief economist of the IMF, Raghuram G. Rajan, argues that increasing inequality was a deeper cause of the 2007-8 financial crisis. His logic is that lower and middle class incomes were squeezed by neoliberal economics for three decades. In order to maintain their accustomed standard of living, this group went into greater debt than was prudent. Indeed, they were encouraged to do so by the big banks.
The level of inequality in the United Sates just before the 2007-8 crash was the highest since just before the stock market crash of 1929.
A worldview of separation that sees Nature as a collective of resources to be exploited with no intrinsic value in itself and humans as separate from Nature and other humans has created a society that is destroying its natural capital, the source of all life; it has created an explosive economic system that is in direct conflict with the fundamental laws of physics and thus has no concept of limits to growth; it has created increasing inequality, which results in major social and health problems and decreasing well-being; it has created a speculative financial system driven by greed that is destabilising and out of control; and it has crated an explosion of population fuelled by the use in a few generations of irreplaceable resources that took millions of years for Nature to produce. None of the above are external to humanity. All are man-made and can be changed.
The root problem is that not one single country on this planet takes ecological sustainability seriously. We are globally consuming about 40% more of our natural capital every year than the ecosystem can replenish. If we want to survive as a species, then the first step is to acknowledge the facts. Either we say in collective denial of the facts…or we start taking ecological sustainability seriously and change our high consumption lifestyles.
Serious sustainability is a policy that a country adopts when it puts ecological sustainability on top of the list of society’s goals, ahead of economic growth, ahead of more consumption, ahead of competitiveness, ahead of productivity, ahead of everything else on the agenda. Anything else is not serious.
‘What we meant by ‘free trade’ was nothing more nor less than, by means of the great advantage we had enjoyed, to get a monopoly of all their markets for our manufacturers, and t prevent them, one and all, form ever becoming manufacturing nations’ (Henry Clay, former American secretary of state).
When the World Trade Organisation (WTO) was formed in 1995, the corporate friendly rules reversed some of the previously most effective protections of the environment. One change was to remover the right for a state to ban products that were considered unacceptable, e.g. DDT, PCBs, leaded gasoline, etc. In many cases a ban is the only effective way to control pollution…WTO rules can be torturous to interpret for the uninitiated, as the preamble gives lip-service to environment protection and sovereignty. However, sixteen years of rulings make it quite clear that the WTO is anti-environmental, anti-sovereignty and pro-business in the extreme. It should be clear that all these rules have to be reversed if sovereign states are to have any real control over their countries, not least as regards to their economies, the environment and their cultures.
The WTO is based on the principal that everything is allowed into your country unless it is forbidden. The problem is that protection of the environment is impossible without protective tariffs to prevent foreign products produced with lower environment standards from undercutting environmental friendly domestic production. For this reason, free trade cannot deliver a sustainable future.
A report from the think tank Global Financial Integrity (GFI) in January 2011 documents that developing countries are losing, every year, close to $800 billion on account of what they call ‘illicit financial flows’, much of which could be stopped by shifting the developing countries’ currency regime from unrestricted capital flows to capital controls…According to the GFI, the major sources of illicit financial flows are transfer pricing, tax evasion, bribery, theft and kickbacks.
Can civil society muster the necessary will and organisational ability to bring about real change in face of resistance from the ruling elites? Dozens of authors…have in recent years deplored the current start of world affairs, written inspiring visions of a better world and documented the un-sustainability of our current path.
Political leadership at the global level has never been needed more, and yet the ruling elites are looking the other way, tending to their personal fortunes…they cling to their privileges, unwilling to act for the common good.
Among NGOs, the implicit assumption of the majority seems to be that the failure of the international community to take decisive action is simply due to a lack of awareness of the problems; hence their widespread efforts to raise awareness of the issues among citizens and their appeals to governments to wake up to the dangers… this assumption may be quite naïve
(Excerpt from a message to Andrew Harvey, a widely respected spiritual leader in the United States, from the CEO of a major Agribusiness Corporation, over lunch)
“Most of you that I have recently met truly believe that if the CEOs – like me, for instance – really knew what harm their corporations polices were doing, they would rend their Armani suites, fling out their Rolex-wreathed arms, burst into tears, and change. This is madness and shows how little you dare to know about what is really going on.
Let me tell you what you are up against. You are up against people like me. I know exactly what my company is doing and what devastation it is causing to thousands of lives. I should know; I’m running it and I do not care. I have decided I want a grand gold-plated lifestyle and the perks and jets and houses that go with it and I will do anything – bend laws, have people ‘removed’, bribe local government officials, you name it – to get what I want. I know, too, that none of my shareholders care a rat’s ass what I do or how I do it, providing I keep them swimming in cash.
I know too, by the way, that the dark forces I play with are playing with me. I’m under no illusion that will not someday have to pay a price. Don't the French say ‘The devil has no friends’? I’m willing to pay that price in return for being able to afford this restaurant, in return for being able to ring up the president of the United States in front of my houseguests to impress them. Am I getting through to you?”
Ross Jackson – Occupy World Street: A Global Roadmap for Radical Economic and Political Reform, published March 22 2012).