Downloading PDF. Please wait... Issue 1806

Trading in catastrophe

This article is over 19 years, 6 months old
ALEX CALLINICOS challenges Clare Short's lies about free trade
Issue 1806

THE TRADE Justice Movement brought thousands of people to Westminster to lobby their MPs on Wednesday of last week. They demanded a fair deal for the Third World. International development secretary Clare Short was quick to claim that the demonstrators were supporting the rich countries’ campaign for free trade:

‘The World Bank has estimated that substantial trade liberalisation could reduce the number of people living in poverty by over 300 million by 2015. I’m very glad to see the Trade Justice Movement advocating fairer trade rules. NGOs have come a long way since Seattle.’

These patronising remarks are typical of the strategy that Short and her patron Gordon Brown have pursued towards the movement against corporate globalisation. They have expressed sympathy with the movement’s goals.

But they have then claimed that these can only be achieved by the neo-liberal economic programme that provoked the Seattle protests in the first place. Some non-governmental organisations have fallen for this ploy. Oxfam recently launched a campaign arguing that the key to ending global poverty was to scrap the trade restrictions that keep the rich Northern markets closed to the products of the South.

The Washington Post gloated that Oxfam had joined the free market camp. Oxfam’s campaign has come under strong attack from Walden Bello, one of the key intellectuals of the anti-capitalist movement. He argues that ‘it is monopolistic agricultural interests that will be the main beneficiaries of greater agricultural market access to Northern markets.

‘Even in the case of staple foods like rice and corn, it is not small farmers that benefit but big middlemen. A focus on market access for agricultural products from the South in the North will also increase pressures on developing countries to open up their markets as the quid pro quo for the accelerated opening of markets in the North.’

Bello argues that the free trade campaign is really about removing any restrictions on the ability of the multinational corporations to exploit the planet and all the people and resources it contains. There is a powerful push to launch another big round of trade negotiations at the World Trade Organisation summit in Mexico next year.

‘We might as well kiss goodbye to sustainable development, social justice, equity and the environment if the big trading powers and their corporate elites have their way,’ Bello warns. What this means is indicated by a report published last week by the United Nations Conference on Trade and Development (UNCTAD).

The number of people living in extreme poverty, on an income of less than $1 a day, has doubled over the past 30 years to 307 million, and will rise to 420 million by the year 2015 on present economic trends. ‘Nor was free trade the panacea,’ said the Financial Times’s summary. ‘The report found poverty increased in the most open and most closed trade regimes.’ ‘Present economic trends’ are those that reflect the dominance of the so called Washington consensus-the free market policies enforced by the International Monetary Fund and the World Bank.

William Easterly, an economist at the World Bank, recently acknowledged the failure of these policies. He noted what he called a ‘significant puzzle’.

In the 1960s and 1970s Third World governments were pursuing all the wrong policies from a neo-liberal point of view. They intervened in the economy, owned various industries and subsidised consumer prices. But around 1980 there was what Easterly calls an ‘improvement in policy variables’.

Under pressure from the International Monetary Fund and the World Bank, heavily indebted Southern governments began to adopt ‘market friendly economic policies’. These ought, according to the reigning economic orthodoxy, to have markedly improved the economic performance of the Third World. But the opposite happened. The median growth rate per person in the less developed countries (LDCs) fell from 2.5 percent in 1960-79 to zero percent in 1980-98.

In other words, instead of speeding up, economic growth disappeared. Easterly uses all his statistical skills to come up with an explanation. In the end he admits defeat, concluding, ‘What is clear is that the 1980-98 stagnation of LDCs was a major disappointment after all the policy reforms of the 80s and 90s.’

Zero growth may have been a ‘disappointment’ for the policy makers and experts in Washington. It has been a catastrophe for Third World producers whose livelihoods have been destroyed by neo-liberal policies. Yet our rulers are quite unabashed by these failures. The Washington consensus is immune to the kind of inconvenient evidence provided by UNCTAD or its own servants.

Summits like those at Seville in Spain last week or in the Rockies in Canada this week serve simply to drive the free market juggernaut on. Only mass mobilisation can stop it.

Sign up for our daily email update ‘Breakfast in Red’

Latest News

Make a donation to Socialist Worker

Help fund the resistance