Open World Conference of Workers
In Defense of Trade Union Independence & Democratic Rights
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CONTRIBUTION for the Open World Conference of Workers In Defence of Trade Union Independence and Democratic Rights San Francisco - February 2000
Roger Sandri, the former Adjunct Secretary-General of the CGT-Force Ouvriére trade union federation in France, submitted the following document as a contribution to the discussion and preparation of the Open World Conference of Workers in Defence of Trade Union Independence and Democratic Rights, which will take place in San Francisco in the year 2000. At its meeting in June 1999, the Organising Committee of the Open World Conference voted to make this document available to all conference participants.
Sandri's document aims at showing the IMF and World Bank Structural Adjustment Plans' destructive consequences for humankind in general and in all countries, on the basis of facts, quotations, and texts. It shows the need for workers in all countries and on an international level to defend the independence of their organisations in order to defend their rights and gains, for the survival of all humanity.
This contribution is meant as a contribution to the free discussion which should take place in the labour movement the world over. The first part of the document were completed at the end of February 1999. The second part was completed in late May 1999. The chapters of the contribution that follows deal with the "institutions of globalisation".
International Liaison Committee - c/o Parti des Travailleurs,
87, rue du Fg St Denis
75010 Paris
France
Tel.: (331) - 48 01 88 29 - fax : (331) 40 22 01 96
The International Liaison Committee for a Workers' International (ILC) was set up in January 1991 in Barcelona by the first World Open Conference for a Workers' International, which gathered delegates from all continents.
The ILC is a regroupment of various workers' groups, parties, organisations and activists - all dedicated to the defence of the working class, its demands, its organisational independence as a class.
The Second World Open Conference for a Workers' International was held in Paris in June 1993. In March 1995 the Workers conference held in Slovakia called for a Third World Open Conference for a Workers' International, which took place in Paris in October 1996 with representatives of 70 countries coming from all continents.
The ILC fights against the Structural Adjustment Plans imposed by the IMF and the World Bank, which aim at privatisation and the destruction of the public sector. We fight for the political independence of the labour movement, and against its integration into the State. We fight for the defence of the Labour Codes and national collective-bargaining conventions. We oppose the deregulation and flexibility policies launched today in the name of the globalisation of the economy.
The ILC has no intention to be a substitute for the various international labour organisations; nor does it seek to compete with them.
The ILC simply stands as a meeting point for all worker activists in the world who fight to defend the specific interests of workers and democratic rights, in order to discuss their various point of views on the many problems confronting the working class the world over.
On the 7th of June 1998, for the fifth consecutive year, the ILC invited the trade union delegates and working class activists attending the Annual Conference of the International Labour Organisation (ILO) to meet together.
The participants in that international meeting came from 36 countries and four continents, and concentrated their discussions and debates on the defence of ILO norms, the defence of trade union independence and of democracy .
They denounced the attempt by every government and the international institution (UN, IMF, World Trade Organization, World Bank) to impose a corporatist order everywhere, an aim which finds a specific expression in the UN project currently being prepared, the contents and objectives of which were brought to the attention of the militants meeting in Geneva.
A) WHY REFORM THE UN?
In order to adapt to "a world in transformation" as it itself states, the United Nations Organisation is preparing a reform programme aimed at strengthening and at preparing it to "face the challenge of the future."
For the UN, this involves strengthening its leadership and its strategic management.
In accordance with several decisions and recommendations, the UN Secretariat will work along an agenda divided in four main sectors, covering the main strategic areas of the institution:
- peace and security - economic and social affairs - co-operation for development - humanitarian affairs
The UN also considers that it is in a position that allows it to be the best surted to organise co-operation and the partnerships necessary for development between governments, the private sector, the "civil society" and regional and world organisations.
It also considers that because if its regular activities, the UN can help to create conditions allowing every country and every corporation within each country to compete on an equitable basis in the international markets. Flowing from its consultative and operational activities, it considers that it can help to develop the instruments and human resources which will allow numerous countries to lift the constraints on supply which they currently face.
In fact, the UN is taking on a crucial role in capitalism's global strategy. As we indicated in issue number 5 (dated June 7 1998) of our Geneva Preparatory Bulletin, the UN reform project is moving towards "enlarging the role of the institution by creating sectoral groups, of which a UN Group for Development would be a new Department of Economic and Social Affairs."
If those new functions of the UN were implemented, a specialised institution like the ILO would find itself limited to "normative" actions; that part referred to as "operational" being managed by the UN in this context.
Since the ILO's annual general session in June 1998, with the Declaration on Fundamental Workers' Rights adopted by that assembly, it appears that the WTO would be responsible for the "operational" part, the "fundamental rights" being regarded as an element for global commercial negotiations, in the spirit of the "principle of subsidiarity."
This orientation necessarily implies a change of the role of the ILO, and of its legal responsibilities in the implementation of conventions which have been ratified by States. We shall return later to the consequences of the new function of the ILO within the framework of the institutions of globalisation, a function which will amount to a purely technical role.
B) THE UN AND CIVIL SOCIETY
Today the UN has 185 affiliated member states. Until now, decisions taken in the course of its work are the result of a process constituted by the affiliated member States alone.
According to its reform project, the UN would extend its area of competence by enlarging its field of activity towards the economic and social sector designated by the term "civil society". According to the UN leadership:
"The emergence of non-governmental actors is exercising a growing influence on the evolving international environment. Non-governmental organisations (NGOs) are the clearest manifestation of what is called 'civil' society; in other words, the sphere in which social movements organise around objectives, thematic interest groups.
"These movements include special groups like women, youth and native peoples. Other actors are also playing an increasingly influential role in action programmes, on both the national and international levels: local authorities, the media, representatives from business and industry, professional associations, religious and cultural associations, and the intellectual and scientific communities."
To support its argument, the UN notes the following: "The emergence (or, in certain regions of the world, the re-emergence) of civil society is the result of two interdependent processes: on the one hand, the search for forms of government which are more democratic (speech by Bob Dole in Malaysia, given at the APEC Summit of 17-18 November in Kuala Lumpur), transparent, responsible and stimulating; on the other hand, the growing ascendancy of the concepts of national and global economic management, based on market forces, which have led to a revision of the role of the State and have assigned new and broader responsibilities for the pursuit of growth and prosperity to the actors in the markets and civil society. In this global context, a dynamic civil society plays a crucial role in the process of democratisation and assumption of responsibilities."
The UN intends to give NGOs an increasingly important role by giving them credentials and consultative status on the Economic and Social Council.
C) NGOs AND MULTINATIONALS
The UN statistics on the number of NGOs likely to be given an advisory status on the Economic and Social Council illustrate this tendency.
Starting from 41 NGOs in 1948 and 377 in 1968, now there are more than 1200 of them. The development of the NGOs has gone hand in hand with the fact that national States are withdrawing from their public service and social assistance mission, at the national level as well as at the international level. NGOs depend more and more on public funds, subsidies and donations. They become more and more instruments of the States to which those States devolve their tasks.
The intervention of the large multinationals combines with those developments.
Acting as " lobbies," these groups put pressure on governments and States to conquer new markets, to decide on production costs and to open the economy to their interests. In a geopolitical perspective, the multinationals finance humanitarian intervention actions which are highly mediatized because of the position they occupy in the sector of communication. NGOs and sports structures are used as advertising vectors and are delivered "labels" for the conquest of new markets.
This is, for instance, the case of big Chemical and of Pharmaceutical groups or producers of GM food; they are the basis of a genetico-industrial complex and food imperialism leading to the end of small farmers' autonomy, while they finance campaigns against poverty, aids and other pandemics.
In France, according to several observers, the subcontracting operations which the public authorities control, represent about 50% of the French public funding of international charities, i.e. FF 123 million, out of a total of FF 258 million for year 1995 only (figures quoted from Alternatives Úconomiques nÁ35).
The weight of multinationals in the world economy pushes them to claim a permanent political role, to enable them to weigh directly, beyond the States, on global institutions such as the WTO, the IMF, the World Bank, the UN and also now the ILO.
The UN draft reform aims at turninghe NGOs into structures which accompany with the policies of globalisation, policies which express the needs of global capitalism, its strategy of destruction of public services and collective social protection.
In a speech delivered on June 12, 1997, in Geneva at the 85th ILO annual conference, the president of the World Bank declared: "In 1990, the part of the private sector was two times less important than that of the public sector. The private sector now represents $ 240 billion, i.e., 5 times more than the public sector."
In its draft reform, the UN takes this evolution into account. The UN consequently considers that its relations with the organisations linked to the UN system should be extended to the world of business and, first and foremost,to the financial spheres which are under the control of transnational networks.
Under the generic formulation "business world," the UN and the ILO wish to grant a dominating part to the multinationals and in particular to the biggest 200, which are already controlling the WTO.
In this perspective, an agreement was signed on July 24, 1996, between the UN and the Inter parliamentary Union. According to the UN, it represents a "promising starting point to widen UN relations with this important group."
The UN has planned this new re-deployment and decided to take several initiatives:
a) A series of meetings organised between "important personalities" of civil society and the UN secretary-general. The groups formed for this purpose will include academics, leaders from the trade unions, the NGOs, the private companies, the youth and different foundations.
b) All the organic departments of the UN will nominate a liaison officer with the NGOs in order to facilitate the access of the UN to this civil society.
At the national level, circumstances permitting, the UN organisations will have to multiply the opportunities of tripartite co-operation with the governments and civil society. The training programmes for staff of the UN organisations will include co-operation with civil society. It will also be part of the UN officers' educational curriculum.
c) The UN secretary-general will consult the Administrative Co-ordinating Committee with a view to set up an Inter-institution Liaison Department linking with the world of business. It will be named "UN Liaison Department with the NGOs."
d) Arrangements will be reached with the main trade organisations in order to set up adequate bodies for continuing the dialogue between the representatives of the world of business and the UN bodies.
It is on these bases that the UN has decided to hold the World Summit called Year 2000 Forum.
It is important to draw a certain number of conclusions from this analysis of the UN draft reform and to evaluate the consequences for the labour movement taken as a whole.
As regards the ILO and its historical and legal mission, this reform, if it were to be adopted, would have indisputable consequences. A transformation of the ILO has already started since the 85th annual conference of June 1998 with the adoption of "A statement on Workers' Fundamentals Rights."
Adopted unanimously, this "Statement on Workers' Fundamentals Rights" is due to replace the traditional "conventional" procedure which implies the involvement of at least two contracting parties. The statement of principles, with its informal and inciting character, will take pre-eminence over the legal conventions to which the member States contracting with the ILO are submitted.
This new orientation adapts to globalisation, to the dwindling role of the nation States as legal and moral entities, in the name of the new doctrine, founded on flexibility, and deregulation - the whole architecture based on the principle of subsidiarity.
World capitalism in its imperialist dimension is facing its own contradictions. After the Mexico crisis of 1994, these contradictions assumed a new dimension with the crisis affecting south-east Asia and also South Korea and Japan.
The financial crisis is now affecting Russia and Brazil, and with its domino effect upon all the States of the American sub-continent. Subsequently, uncertainty reigns more and more in all the industrialised countries of North America and Europe.
The drastic measures taken by the IMF in order to counter the financial crisis only worsen the already precarious social conditions of working people in the countries struck by the crisis.
The dislocation of the national States, which appears as the product of a long historic evolution, obeys a logic which jeopardises representative democracy, which in its turn was organised on the basis of the acknowledgement of antagonistic interests expressing themselves through the existence of independent trade unions and also through parliamentary democracy, based on the expression of political parties.
But the disappearance as well as the dislocation of the national States to the advantage of other regional spaces weakens the capitalist structure itself; hence the need for global capitalism to look for a new framework, at the world level, which some name "the world government."
The UN naturally takes its place in the objectives being put forward by global capitalism and first and foremost by the U.S. government, which has become the dominating power since the fall of the Berlin Wall. The U.S. government is acting within the prerogatives it set to itself in 1990 at the time of the Gulf War, with the setting up of a "new world order" which aims to go beyond the existing geopolitical regulatory instruments that do not correspond any longer with a new situation marked by the globalisation of the world economy.
The fear expressed here and there by the leaders of global institutions (IMF, World Bank, WTO, OECD, etc.) to see serious social outbursts caused around the world by the structural adjustment policies, which hit in priority the lower layers of the population as in Indonesia, South Korea, Thailand, Malaysia today but also in Russia and Brazil drives the leaders of the advanced capitalist countries to force all the representatives of "civil society" to participate and become integrated into the policies decided by the leading institutions of globalisation.
Working class organisations, particularly those working class organisations that defend class independence, are the first targets -at a local, national and international level.
Faced both with increasingly specific threats weighing upon the working class at a national level and the future of the organisations they built, in a situation where they are confronted with a new form of totalitarianism, the International Liaison Committee welcomed the decision taken by the San Francisco Labor Council (AFL-CIO) and the Continuations Committee of the Western Hemisphere Workers Conference (WHC) to convene an Open World Conference in Defense of Trade Union Independence and Democratic Rights. This Open World Conference will be held in the Year 2000 in San Francisco in opposition to the Year 2000 Forum convened under the UN aegis.
The aim of the conference is to make workers and their organisations aware of the serious dangers threatening them, their class independence and consequently democracy as a whole.
The ILC is also heartened by the decision by the Organising Committee of the Open World Conference in San Francisco to include the ILC as co-convenors of the OWC.
To prepare this Open World Conference, the sisters and brothers of the San Francisco Labor Council and the WHC Continuations Committee have issued an appeal "For an Open World Conference of Workers in Defence of Trade Union Independence and Democratic Rights".
Other appeals of support will certainly follow, issued by labour organisations from all over the world. The San Francisco Open World Conference (OWC) appeal expresses the workers' concern the world over, as they are confronted today to governments and to multinational corporations and their anti-labour strategy whose message is:
There must be a broad consensus. Working people must give up their jobs, social protection and, most important, their independent trade unions to permit global capitalism's "free trade" agenda to move forward. Working people all over the world must give up, in the name of " modernisation" and "globalisation," all of the gains they won through decades of struggle.
The San Francisco Open World Conference appeal underlines that for the capitalist class, the existence of international labour rights particularly the right to collective bargaining and the right to strike are considered today as obstacles to "free trade." They tell us that traditional trade unionism, founded on protest, born from the harsh reality of class struggle, is indeed no longer suitable for the workplaces of the new millennium. Traditional trade unionism hampers corporations' ability to compete in the global economy and in the world market.
The San Francisco Open World Conference appeal mentions the countless efforts of employers and the U.S. governments to restrict, suppress and even bust trade unions. This onslaught has taken various forms: PATCO, Taft-Hartley, Landrum-Griffin, the Hatch Act, state "right-to-work" laws to limit the right to strike, Congressional back-to-work injunctions for striking railroad workers, "Paycheque Protection" acts, and lawsuits against trade unions and officers who respect picket lines - as in the case of the Neptune Jade on the West Coast.
The San Francisco Open World Conference appeal denounces the attempts of employers and governments - which are similar in all industrialised countries to integrate trade unions to their economic plans.
Under the cover of "association" and "partnership," all sorts of schemes have been used to undermine collective bargaining and to downgrade workers' rights and working conditions.
In exchange for toothless side agreements, employers and governments want to get trade unions to drop the fight against NAFTA and the Multilateral Agreement on Investment (MAI), which are so crucial to global capital's free trade agenda. BARBARISM OF MODERN TIMES
The San Francisco OWC appeal summarises the situation confronting the working class and the whole labour force the world over concerning their social statutes, their wages and earnings, their working conditions, employment, etc. All this is sacrificed today in the name of liberalism, financial speculation and stock markets, - -for the capitalist class' interests alone. Billions of people are condemned today to physical and psychological misery and even death, as in Africa. This is the barbarism of modern times.
Experts did not forecast the crisis that hit the Far East stock markets and rapidly extended to Russia then to Latin America.
While these lines are being written, and despite optimistic claims from financial and economic circles, the crisis is affecting the whole of the world economy. Under these conditions no one is in a position to say what the results will be for the world economy and the world population in general. The forecasts made by the leaders of globalisation's institutions are not reliable since they always turned out to be wrong. One would have thought lessons would have been drawn from the 1994 -1998 Mexican crisis. Such was not the case. The casino-like economy in which we live today rules out any possibility of regulation.
The financial crisis that broke out in Thailand in the fall of 1997 has rapidly turned into an economic and social crisis of major proportions, wreaking havoc in the emerging markets of the region. The Indian sub-continent and China are the only ones which managed to withstand the shock, owing to the State role in their economy -- but even they have not escaped the overall process of pauperisation.
Figures have been published. They show that this crisis will have a lasting effect on growth the world over. Forecasts of economic growth have already been lowered from 4% to 2% for 1998. Conclusions drawn here and there, first of all by advocates of globalisation, indicate that a global financial market without rules, without borders and without ad-hoc institutions might plunge the world economic system into a state of deep chaos at any moment. This would affect half of the globe at first, then all of humanity through a succession of shock waves.
The priority given to optimisation of financial capital on a world scale, which is the basis of globalisation, throws peoples in the entire world in a situation of permanent and general destabilisation. The world over, globalisation pushes aside and eliminates national States as a political framework for economic decisions, especially as guarantor of workers' democratic rights, specifically the right to organise in political parties and in trade unions for their class struggle.
The globalisation process draws the outlines of a totalitarian society with no counter-weight, no counter-power.
Complete deregulation for financial products, the unfettered circulation of capital, "imperial" power for multinational corporations which invest their profits' excess in speculative operations or - as in Asia - in virtual investments linked to real-estate speculation, the end of control over credits, an inflated monetary mass guided by interest rates ... all these elements have led to a fictitious economy ever-more disconnected from the real economy.
The amount of capital circulating daily in real time in the world now represents from US$1.8 trillion to US$2 trillion-forty times what is needed by the real economy.
The general tendency, which is to consider that is now impossible for political and economic circles to be determined by anything else but market laws, is leading to a complete impasse. The official political class as a whole, whether social-liberal or liberal-social, has henceforth embraced the liberal dogma of global capitalism.
But this financial crisis affects globalisation and the world economy, and it demolishes all these liberal theses. These theses are gradually being questioned by those who claim that the State should play a key role as a regulatory instrument, while maintaining the system of private ownership of the means of production and exchange. One can see therefore the limits of such a stand.
The present structures of globalisation function in fact as a kind of world-wide State including the IMF, the World Bank, the WTO and the OECD. Since the Copenhagen Social Summit of March 1995, the UN's aim is to extend its field of action and its global competence and to take political responsibilities in a framework integrating and associating "civil society" world-wide to the great supra-national political decisions.
Up till now, the ILO had resisted the mermaid's songs of global integration. It is now abandoning its original role and historical mission of social counterbalance -which has been codified in "conventions" to protect workers. It is progressively turning into an accompanying instrument of the most reactionary aspects of globalisation and the global economy.
All international institutions speak with one voice, and are supported by the major media worldwide given their task to circulate "politically correct" thinking only, that is to say singing the praise of the market economy and so-called free trade.
As for the few aspects of the national States' policies in which they still retain autonomy, they are dictated by the institutions of globalisation under the aegis of the U.S. government, which pretends to have the historic mission of building a "free and fraternal universal city" since the fall of the Berlin Wall in 1989. These policies rely on the new "zones" being set up : European Union, NAFTA, APEC, MERCOSUR, ASEAN, etc...
These new structures detain considerable powers but they have no democratic legitimacy. They are simply the expression of the big interests behind globalisation, organised in associations such as the Trilateral Commission, the Davos Club and lothers that are less well known.
After the Second World War, the General Agriculture Tariff Trade was set up to define free trade arbitration rules, especially concerning tariffs issues, in the framework of trade between nations. This framework no longer corresponds to the global economy's functioning nor to a market exceeding national borders. The GATT was to be replaced by the WTO through the 1995 agreements signed at Marrakech. This World Trade Organisation was set up to organise trade relations on a global level in the context of a universal and totally free market.
In fact, the WTO is a structure set up and controlled by the 200 most important multinational corporations of the world, which are American for the most part -.-without even taking into account their subsidiary firms.
Any complaint for hindrance to free trade, especially concerning social laws considered as too constraining, can be addressed to the WTO. The WTO can therefore ask the country concerned to repeal them.
As to the question of the MAI (Multilateral Agreement on Investment), which was raised in Geneva by the ILC Conference of June 1997, it provoked reactions almost everywhere. The almost secret negotiations initiated by the OECD have been therefore left in abeyance. Most probably they will be taken up again under the authority of the WTO.
The negative influence of globalisation's institutions no longer has to be proved, whether one considers their inability to anticipate a crisis, or their pretension to cure evil -.-by imposing remedies which are worse than the initial evil, especially the so-called "structural adjustment" plans called "shock therapy" by the IMF director, Michel Camdessus. The consequences of these policies are immediate budget cuts, especially in the social budgets, a brutal reduction of the working masses' purchasing power, privatisation of whole sectors of the public services. Listing the criminal policies imposed by the IMF and the World Bank in particular would take too long a time. But the greatest paradox is that while globalisation aims at weakening the State's intervention in economic and social policies, as soon as a crisis begins, the IMF imposes authoritarian State policies. Then they enjoin the State to act against its people, to the sole end of salvaging the imperial interests of global capitalism.
Economies the world over are threatened by recession today. In spite of limited and convenently optimistic assertions on the existence of more or less protected geographic zones such as the USA or Europe, the tendency to recession is being confirmed. This is what John Kenneth Galbraith, a U.S. economist, is fearing. He wrote in an article published by the Spanish daily El Pais on October 15th, 1998:
"What the 1929 crisis taught us is that crashes have additional effects. All those who become suddenly poor, or less wealthy, reduce their purchases, while firms limit their investments. Then recession or depression occur."
This explains why some of the circles expressing the economic thinking of the ruling class call for a return to regulation in capital movements.
Thus the French daily Le Monde published an article on May 19th, 1998, quoting the American economist Paul Krugk:
"Enlightened economists are now adopting a radically changed point of view. They consider that a total liberalisation of short term capital in emerging economies means playing with fire."
On the contrary, other circles consider that the industrialised countries' economies, first of all the U.S. and Europe, have not been reached by the crisis, and therefore tend to think that half-measures of control on capital movements such as those taken in Chile would be enough.
In the Chilean system, 30% of imported capital was forced to be placed in the hands of the Central Bank at a first stage, in order to force direct and indirect investments to remain at least one year in the country.
The measures proposed by those in favour of a limited control of Chilean type are drawn from the "Tobin project, " that is the system of taxation on speculation capital presented by Daniel Tobin, the former counselor of Kennedy in 1972.
According to a study by the United Nations Development Program (UNDP), the Tobin tax of 0.1% on transactions would generate $180 billion a year, which is twice the sum needed each year to eradicate utter poverty in the world in five years.
These short-term measures, however, would not modify the consistent tendencies of world capitalism and the institutions acting in its behalf. These policies are still based upon the "invisible hand of markets" as a means of regulation.
Creating a Tobin -type tax might put a brake on the destruction provoked by the total liberation of capital movement (and even this is far from being proven). The fact is that the general crisis of the capitalist system of production is generated by the system itself, founded upon the exploitation of man by man for an ever more intensive extraction of surplus value. This is today synonymous with the destruction of the labour force.
According to the World Report on Human Development published by the United Nations program in 1997, the world economy represents US$25trillion. And one quarter of the globe's population, 1.5 billion people, are living in absolute destitution.
The UNPD report assesses this worldwide challenge from a planetary point of view. It considers poverty not only from a monetary point of view in terms of purchasing power, but also from of the point of view of human development -that is to say, deprivation of choices and opportunities that would allow individuals to live a decent life.
The report rightly underlines that the growth of poverty has been aggravated one way or another in the last 50 years more than in the last five centuries, practically all over the globe.
The figures which are used were gathered before the financial and economic crisis in which the emergent economies of South East Asia collapsed. The social consequences provoked by this crisis already involve the collapse of purchasing power for the working masses, but also for the middle classes. Over 50% of the population concerned is now living under the poverty line.
Even before the crisis and its consequences, the situation in these emerging countries was threatened by a new increase of poverty. There are 1.5 billion people living under the poverty line; that is to say, with an income per head under $1 a day. Asia is the continent where there are the greatest number of poor. It is also the region with the greatest number of people living in monetary poverty: t515 million people.
There are 1.3 billion people in developing countries who are suffering from monetary poverty. 950 million of them live in South Asia, East Asia and the Pacific region.
Black Africa is the region where human poverty is the highest and increases at the highest rate. 220 million people are suffering from monetary poverty. In fact poverty is extending its empire unheeded in Black Africa and a great number of the other least advanced countries. The UNPD affirms that monetary poverty will concern half of the people of Black Africa in the year 2000.
In Latin America and the Caribbean islands, monetary poverty is higher than human poverty. It concerns today 110 million people and is on the rise.
Eastern Europe countries and Community of the Independent States (ex-USSR) have registered the highest rate of degradation in the last ten years.
Monetary poverty on the basis of a poverty line of $4 per capita per day concerned but a small part of their population. Today 120 million people are concerned, that is to say, one third of their population.
In Russia alone, 42 million people out of 148 million are living under the poverty line, with incomes under 573 rubbles a month ($30).
In the case of industrialised countries, more than 100 million people live under the monetary poverty line, that is to say, half the average individual income. 37 millions are permanently unemployed in these countries.
Inside these broad areas, some people are suffering even more than others, especially children, women and old people.
Global issues provoking or threatening to provoke a new growth of poverty are more and more numerous. The UN gives several examples:
a) Slow economic growth, stagnation or even negative growth in one hundred countries with developing or transitional economies.
b) Thirty armed conflicts are underway in various countries, most of them in Africa. Let us underline that these conflicts are fueled by capitalist powers and multinational societies which are quarrelling through the intermediary of local fractions for the control of regions born from artificial geopolitical structures imposed by colonisation.
c) Slow down of progress in fields as important as nutrition.
d) Rising threat of epidemics such as HIV and AIDS.
The latest statistics show that the human development index (HDI) has fallen since 1996 and that it is continuing to fall in 30 countries. From 1993 to 1997, the number of people with an income lower than $1 a day increased by nearly 100 million. Let us recall here that there are today 1.5 billion people concerned. The crisis which hit South and South-east Asia and its outcome for the whole of the world economy will worsen the living conditions of the population in general and first of all that of those most vulnerable.
In Eastern Europe countries and the CIS, as one could expect, the transition from "socialism" toward democracy and the market economy launched by the capitalist powers after the fall of the Berlin Wall in 1989 reveals itself much more difficult and costly than they imagined.
Costs are not only economic- that is to say linked to the spectacular fall of the GNP- but also and essentially human: lower wages, unpaid wages, rising crime and growing influence of the Mafia of all kinds, most of them linked to the State apparatuses perpetuating Stalinism, of which they are the inheritors, having only changed their names. One must add to this the collapse of the social protection systems. In some of these countries concerned by the transition, life expectancy has regressed by five years and sometimes even more.
In many industrialised countries, unemployment is increasing and traditional protection systems are more and more threatened because of the pressures exerted against the welfare state expenses. Charity and aid in the charge of the NGOs and private associations are being substituted for solidarity systems.
In some of these countries, such as the United Kingdom and the USA, human poverty has considerably increased.
While international financial experts talk today about Asia as a degenerated system, these same experts not so long ago were all adepts of a genuine "Asian cult." The French economic daily La Tribune published a number of articles on the Asian crisis.
This newspaper takes pleasure in recalling the former declarations of the political, financial and economic leaders on the health and strength of the Asian economy. French President Jacques Chirac, in fact, declared on November 17th, 1997, during a tour in Malaysia:
"I told the Malaysian Prime minister that whatever might be the economic and social damages of monetary fluctuations, I for one considered that they could not put in jeopardy South-east Asia's capacities and growth."
The World Bank in its yearly report of September 1997 wrote:
"In spite of a light concern regarding the weaknesses of the banking system in that region, the risks of a loss of confidence should be easily controlled, for most of the East Asian countries have an external budget situation which is stronger than that of other countries that underwent a banking crisis. The perspectives for a strong growth in the years to come remain good."
Mr. Russel J. Cheetham, vice-president of the World Bank for East Asia, declared in February 1996:
"The World Bank is expecting a continuous and rapid average growth of Eastern Asia of 8% to 9% a year, till the end of this decade and for a good part of the decade to come."
But following the Mexican crisis in January 1995, their currency, the Bath of Thailand came under speculative attack but no one seems to care. In the whole area, alarming signs of economic overheating emerged. The monetary mass and bank credit had increased two to three times quicker than the GDP, according to the different countries in that region.
Inflating deficits and the brutal withdrawal of capital led the Bangkok Bank of Commerce to bankruptcy, while the Thailand Central bank, confronted to the scope of its losses, could not avoid a crash.
The chain reaction led to a stream of bankruptcies which went beyond the financial sector and reached industrial firms, especially the big Korean groups which were particularly indebted. To defend the Thai currency the Central Bank had to use all of its reserves. This massive intervention was not enough and on July 2nd, 1997, the Bath of Thailand was floating, abandoning its parity with the US$.
As underlined by La Tribune, the world crisis has begun. As a matter of fact, tens of billions dollars of reserves from the central banks of South East Asia (Thailand, Indonesia, Malaysia, Philippines) have been confiscated by speculators in the year 1997 and transferred to private financial institutions.
This is explained by Mr. Michel Chossudovsky, professor of economics at Ottawa University, in the French review Mani¶re de Voir NÁ 42. He adds that investment banks and brokerase firms have deliberately manipulated the stock market and the exchange market. He adds that, paradoxically, the very western financial institutions which depleted the reserves of the central banks of the developing countries were those that later proposed to help the financial authorities of South East Asia. He gives the example of the Baring Bank, notorious for its involvement in speculation, which generously offered in July 1997 to finance a $1 billion loan to the central bank of the Philippines. In the following months, a great part of the currencies stock thus borrowed was taken back by the speculators, as Manila sold important quantities of dollars to protect its national currency.
A - SOCIAL CONSEQUENCES
This financial disaster hit brutally the working masses, leading to the closure of bankrupted plants.
- In Thailand, the unemployment rate reached 1.5% of the active population in 1996. It reached 4.4 % in August 1998, with more than 3 million unemployed people.
- In South Korea, the unemployment rate rose from 2% in 1996 to 7.4% in August 1998, touching 2 million people and more, the most concerned being the small firm's employees and the tertiary sector. 35,000 bank workers have been laid off since January 1998.
- In Indonesia, the unemployment rate rose from 4.9% in 1996 to nearly 20% of the active population in August 1998. In that country, which was certainly the most hardly hit by the financial collapse, the ILO announced that over 5 million workers would lose their job in 1998. Two Indonesian out of three are living under the poverty line today.
- The Republic of Singapore, which was considered for a long time as the unattainable fortress of capitalism in Asia, has seen its unemployment rate rise from 2% in 1996 to 4.5% in 1998.
- In Hong Kong, the unemployment rate has risen from 2.9% in 1996 to 5% in 1998. In Malaysia, meanwhile, it rose from 2.5 to 5.5%.
It is important to underline that the great majority of workers deprived of their jobs have no social protection, and this contributes to aggravate the economic crisis because there is no internal help.
Following the financial crash, the political situation has been disrupted in several of the countries hit by the crisis. This was the case especially in South Korea, Thailand and Indonesia. As underlined by observers in that region, the Asian crisis has not only bad sides for western firms. Some of them take advantage of the situation to strengthen their positions or buy firms that have been weakened.
But in spite of some targeted operations, caution is generally the rule, because of the political instability and insecurity generated by the crisis. This is due to the opacity of economic instruments and their lack of viability, but mainly to the fact that Western capitalists are awaiting for a new fall in the prices and shares. Still many Western firms have already seized the opportunity to strengthen the economic positions they already partly occupied. As a consequence, the GDP, that is to say national wealth, is collapsing in all the areas concerned.
The GDP fell by 23% in Indonesia, 15%in Malaysia, 13.5% in Thailand, 13% in South Korea, and 10% in Hong Kong. Concerning continental China, the fall of the GDP reached 4% at the end of 1998. In this type of planned economy, which has also been opened to foreign capital, the army has become the foreman of industry, making use of forced and half-forced labour as a means of production. Firms are submitted to the laws of profitability as under capitalist management. Whole sectors which are not profitable are liquidated, leading to thousands of redundancies.
The French daily La Tribune of December 21st, 1998, writes: "The [Chinese] leaders are confronted to daily demonstrations in the towns and all the main economic indicators point downwards. They are trying to avoid at any cost a social explosion."
The IMF, the World Bank and the Central Bank of Japan are under U.S. orders to support the Chinese currency, the yuan. For a devaluation of the yuan would bring about the collapse of the Hong Kong stock market, with immediate repercussions on the whole region and even on all of the Western stock markets, which are deeply involved there.
B - THE IMF'S CRIMINAL DICTATES
In the case of Asia as in all others, especially the Mexican crisis, the IMF plays the role of a pyromaniac fire fighter. Let us quote again the French economic newspaper La Tribune:
"The Asian crisis has shown the limitations of the IMF economic forecasts. Forced to operate heartbreaking changes, the IMF added policies which have heavily contributed to destabilise even further the economic activity in Asian countries. By demanding radical monetary austerity in order to block the flight of capital and devaluation of currencies, it aggravated the situation of already over-indebted private operators."
The economic forecasts of the IMF concerning Asia proved erroneous as to the initial figures projected. The drastic policies of rigorous financial austerity imposed by the IMF merely aggravated a crisis which now reaches the whole world with more or less serious consequences in spite of official denials. This did not prevent the general director of the IMF, Michel Camdessus, from stating with self-assurance on June 26th, 1998: "There will be no quick ending for this Asian crisis."
And he added hypocritically : "Serious events occurred in Indonesia. I did not expect the army to shoot at the crowd. We have lived the spasmodic events of Suharto's last weeks, the crisis, disorders, violence, all of which have led to a generalised economic collapse. We are confronted in Indonesia with a totally new situation."
If one believes Camdessus, it is the legitimate upheaval of the Indonesian people which is responsible for the worsening of the economic situation and the structural adjustment imposed by the IMF. The immediate results of the criminal policy imposed by the IMF were "officially" translated into 2000 people killed. Once more, the IMF and his general secretary have blood on their hands.
C/ JAPAN'S SPECIFIC SITUATION
The Japanese economy, the first exporting power in the Asian zone, is the first concerned by the regional financial crisis. The consequences of the regional crisis are added to the serious crisis affecting the Japanese banking system, which is engaged for over 40% in the total debts of the region's economies; debts that will certainly never be refunded.
One must add to this their worldwide engagement in insolvent lending operations the amount of hot-performing loans of the Japanese banks, which reach today over 87.500 billion yens (760 billion dollars), nearly four times the budget of a country like France.
In spite of the colossal sums injected by the Japanese government in order to cover these accounts, the economic machine is grinding to a halt. Growth should stagnate at a 0.2% level in 1999 and the crisis of confidence of the Japanese population could lead in the long or middle term to a serious political crisis.
As the French daily La Tribune indicates: "Japan has been accused for a long time now of manipulating its currency and under-evaluating it to support its competitiveness. But is the big manipulators not, in fact the United States?"
This economy newspaper recalls that it was Washington that established arbitrarily the parity of 360 yens for 1 dollar immediately after the war. Thirty years later, the obvious success of Japan's exports would lead the U.S. to impose upon Tokyo to depreciate the yen.
At the first meeting of the G5 in New York in September 1995 (which would later become the G7 and the G8 now with Russia) the yen was rising and Japan's trade surplus was growing. ... From 1993 onwards, the United States launched a large offensive to force Japan to reduce the trade imbalance between them by raising the yen's value. U.S. Treasury Secretary Bentsen exerted such a pressure that in June 1994, for the first time, 100 yens were exchanged for one dollar.
This measure, aimed at making Japanese product exports more expensive, would lead in April 1995 to a peak of 79.75 yen for a dollar. The present events jeopardise the vulnerable financial equilibrium on the globe. The inescapable internal drift is accentuated by the existence of 87.500 billion yen of bad debts of the Japanese banks and by the important investments of Japan in the neighbouring countries, whose economies were badly struck by the financial crash. The value of yen fell to 148 yen for a dollar in August 1998.
The fears that too important a fall of the yen would lead to new developments of the Asian crisis and bring about a devaluation of the Chinese yuan drove the United States to limit once again their pressure for a strong dollar so as to not weaken the yen. For the time being, that is to say in December 1998, the yen seems to have stabilised around 115 yens for a dollar. As La Tribune asks: "For how long?"
Economist Fréderic F. Clairmont underlines in the French review Mani¶re de Voir (NÁ 42) that "according to the trade department at Washington, over US$1 billion fly out of Japan each day. Others estimate this figure to be up to US$1.6 billion. Japanese have invested US$269 billion in U.S. Treasury bonds (against US$258 billion for the British), and thus maintain the United States in a state of survival."
Japan's role in the world economy is such that its conditions are decisive for the return to a normal situation. Japan up till now has not finished. With the devastating effects of a speculative bubble that was punctured too late, the Japanese banks are now totally drained and their recovery is now linked to the last rescue plan of 2 billion French francs (33 billion dollars) announced by the government. The Japanese economic machine has ground to a halt, deflation is threatening, nobody can say what will happen.
Mainly orientated toward foreign markets, the Japanese economy is now confronted with the reduction of the world market, which has been weakened by a crisis of the global purchasing power and mass unemployment. According to the ILO, unemployment now concerns nearly 1 billion people the world over, that is to say, nearly one third of the active population.
Japan still remains the second economic world power after the United States. The average income per capita grew by 56% between 1989 and 1996 and is 30% higher than in the United States. The average income of Japanese people is just behind those Luxembourg and Switzerland, which are the highest in the world.
Still unemployment is rapidly rising in all sectors, the building and public building sector have seen their activity fall by 11.2% from August 1997 to August 1998, leading to a fall of real wages. The official rate of unemployment is 4,1% but it should be multiplied by two because of the lack of transparency of statistics.
Although Japan's recovery is conditioned by a new start of the internal market and consumption, dread of future and mistrust towards political institutions has led the Japanese population to save even more. The rate of savings is today reaching 17% of the GDP, placing Japan largely ahead of the world saving drive. But these savings most of the time are invested in foreign countries. Public shares in Japan only yield a 1.68% rate whilst in the United States the rate 5.42%. It is therefore more advantageous for Japanese to deposit their money outside the archipelago, and this aggravates even more the monetary imbalance, depreciating the yen and making practically impossible a boost of the Asia and Pacific zone economy.
Japan has indeed entered an era of over-production and the consequence is deflation contaminating the whole of the world economy and leading to a permanent risk of general crash.
A study has been made by the international commission of the ILC on the situation in Russia and the whole of Eastern countries, hit in their turn by the financial crisis born in East and South-east Asia.
According to the author, Lucien Gauthier, the shock wave provoked by the collapse of Asian stock exchanges has hit the most vulnerable countries and first of all Russia, already financially weak and drained.
Portents of the crisis immediately led capital ito invest in mere speculative operations with no relation at all with the real economy to fly away. The accelerated devaluation of the ruble, a currency now dependent upon the dollar, would contribute to the collapse of an economy whose privatisation was organised for the sole profit of "Mafia" groups, which are the carryovers of the former Stalinist bureaucracy.
Concerning Russia, hundreds of millions of Russian people have lost access to their bank accounts and are therefore in desperate straits. Some had to display much ingenuity to get back their precious dollars, and they did not all succeed.
Even if Russia today remains an economic dwarf, it remains a major reserve of raw materials. But the financial crisis and its economic effects are provoking an important fall of demand worldwide, and as a consequence, the raw material price rates are collapsing, especially for oil .
Banks' breakdown contributed to depress the Russian raw materials market, oriented on secondary products, and already deeply shaken by the Asian crisis. Part of the production is now stocked in warehouses.
A - CONSEQUENCES FOR THE ECONOMIES OF EASTERN EUROPE.
The Russian crisis has had repercussions in all Eastern countries, historically linked to the Russian market.
In Hungary, numerous firms in the food sector in particular have had great difficulties in finding new markets.
This is one more reason for some countries to ask to join the European Union. This is the case of Hungary, which considers that it can fulfill the conditions to enter the EU in 2002. The new alignment of the Eastern European countries with the EU requires that they respect the convergence criteria demanded by the Maastricht Treaty and the Stability Pact added to it to define the rules of admission to the EU and the European Monetary Unit. These rules, called "convergence criteria," impose a budget deficit under 3% of the GDP and a public debt under 60% of the GDP.
Western investments in Russia and the "Community of Independent States" as a whole are ruled by the political authority of the United States administration in a tight collaboration with the multinationals, which are mostly American.
As the international commission of the ILC explains: "In spite of repeated statements, Germany is not the first investor in Russia. Rather, in the framework of the aid to Russia, international financial interventions are decided by Washington but essentially paid by Germany."
Zbigniew Brzezinski, former security counselor of the United State a presidency between 1977 and 1981, writes in a book published in France under the title "Le Grand Echiquier" ("the great chessboard"), in a chapter called "the central aim of America":
"The central issue for America is to build a Europe based upon the French-German relations, viable, linked to the United States, and broadening the international system of democratic co-operation on which America global hegemony is depending."
Then the author determines two zones of influence inside Europe. One begins with Germany and goes toward Eastern and Central Europe. The other begins with France and covers part of Europe, approximately the Mediterranean zone and reaches North Africa.
These two zones combine to set up a huge complex from North Africa to Ural Mountains and to include Spain, Italy, Greece and the whole of Central Europe. "American global hegemony" will be implemented on the basis of this type of "subsidiary principle" with intermediary influence zones.
This explains also the major role the United States wants the North Atlantic Treaty Organisation (NATO) to play in the broadening process of the EU. NATO must be developed as the military instrument achieving U.S. hegemony over a Great Europe turned into a vassal.
According to the Bundesbank, German governments' loans to Russia have reached 75 billion marks. German banks in their turn lent 54 billion mark. This makes a total of 129 billion marks against $16 billion only provided by the U.S. banks, the same amount as that given by France.
Direct and cumulated German investments in Russia only reach $760 million, while the total amount of foreign investments in Russia reaches $9.2 billion. This is less than 10%. The first foreign investor in Russia, with $4.2 billion, nearly half of the total investments, is the United States (oil, gas, mining, raw materials).
Since December 1997, the Asian financial crisis has hit Russia and the Eastern European countries. Social consequences are disastrous. The Russian government is confronted with the pressure of financial markets, the dictates of the IMF and the struggle of the workers mobilising to demand the payment of back wages. The Russian government is looking for liquid assets.
Strikes and demonstrations are multiplying, especially among miners. The Russian Parliament dominated by the "communists" is confronted with this generalised chaos, where one short-lived leader replaces another and is then revoked by an illness-ridden Yeltsin after several days of "negotiations."
On July 16th, 1998, a plan against the crisis which the Parliament had rejected twice before was approved. Collusion with the IMF was there for all to see. When the IMF confirmed the loans to Russia, on July 21st, 1998, it declared:
"For the first time over the past 20 years, the IMF has taken a loan to finance part of this aid. Much has been asked from it since the Asian crisis. Therefore the IMF has used the term of "general borrowing agreements" and has borrowed from the 11 richest member countries about $8.3 billion ."
In Eastern Europe countries, the financial explosion adds to the social depression already provoked by the extreme policies of privatisation, led with lack of judgement since 1989 and dictated by international institutions and first of all, the IMF and the World Bank.
The restructuration policies provoked the implosion of whole sectors of the economy. Official unemployment figures produced by the OECD in 1997 concerning active population are the following: 10.5% in Hungary, 16.5% in Poland, 13% in Romania, 15% in Slovenia, 13% in Bulgaria, 15% in Slovakia. Between 1989 and 1994, employment fell by nearly 12% in the Czech Republic and by 28% in Hungary.
But as underlined in the study to which we are referring, the "official figures are one thing and reality another." Thus a study of the French Foreign affairs high official written in September 1995 notes the following concerning Lithuania:
"The official unemployment rate reached 5% in May 1995. But this hides much higher real rates reaching nearly 20%. In Lettonia, a progressive rise of this phenomenon can be felt (12% on September 1st, 1995) as a consequence of labour deregulation."
Nothing indicates that living conditions for workers in Russia and Eastern Europe will improve. The present revolt of the Romanian miners is confirming the degradation of social conditions.
In 1997, according to the international institutions' diagnosis, relayed by the governments of the industrialised countries, the financial crisis affecting the South East Asian economies was to remain limited to this region due to the intervention of the international regulatory systems.
In fact, the most vulnerable economies were to be hit by the shock wave one after the other. As we have seen, Russia and the regions around it have been touched. Then the Latin American economies have been submitted to the effects of the world crisis. The deficiencies of the anarchical capitalist system of production are becoming evident.
European and North American industrialised countries are forced to admit belatedly that their own economies are not protected from the world crisis. As for Latin America, Brazil, which plays the role of a dominating economy because of its links with the United States and the alignment of its currency on the U.S. dollar, is becoming the weakest link of all the economies in the sub-continent.
The Mexican crisis of 1994 had already shaken this part of the world. Following the crisis in Asia and Russia, the Brazilian banks engaged in speculation and non performing loans. Attacks were launched against the Brazilian currency forcing the Central Bank to deplete its reserves.
As a whole, the GDP of Latin America increased by 5.3% in 1997. But in 1998, the ECLA (UN economic commission for Latin America) predicted that the growth would be under 3%, while the U.S. investment banks Goldmann Sachs felt it would only reach 1.1%. Still the growth in that region would have to reach at least 7% in order to generate jobs. The foreign debt of the American sub-continent already reaches $640 billion, that is to say 35% of the GDP of the whole area. The fall of the prices of raw material following the decrease in foreign demand might increase deficits while reducing the income. This is especially true in Venezuela, where the fall of the oil prices has led to a 7.3% fall in income.
As in Asia, speculation has immediate effects on the stock market rates. According to the Spanish daily El Pais of October 6th, 1998, "In Chile, losses on the stock market turn around 33%. In Brazil they reach 39%, 41% in Mexico, 47% in Argentina, 48% in Colombia, and 69% in Venezuela."
Foreign interventions, including those of the IMF, aim at anticipating and stifling any risk of a general devaluation, for all the sub-continent currencies except that of Mexico are linked to the U.S. dollar. The risk of a speculation against one of the main currencies, the Brazilian real, is quite real, and would have serious consequences for the other currencies.
To oppose this threat, the IMF has ordered a drastic plan of financial austerity This led to an increase of Brazilian interests rates of 49.7%. This has increased the debt amount and also provoked an economic slow-down. The consequence is a deep deterioration of the social situation. As in Indonesia, this does not disturb the IMF general director, Michel Camdessus, whose only worry is to reassure the financial markets.
All these measures were not enough, as the attacks against the Brazilian currency went on. On January 15, 1999, the Brazilian government announced that it was leaving the real currency floating. Since January 21st, the real has been in free fall, loosing over 40% of its value against the dollar in a week time.
After the October elections, Brazil promised to restructure its economy in order to benefit from a massive aid of the IMF. In an article published on November 25th, 1998, the French daily Le Monde assessed the social damage brought about the financial asphyxia of economy.
Brazil has been forced to ask the IMF to reconstitute its exchange reserves, which had fallen at about $41 billion in mid-November after culminating at $74 billion at the end of July 1998 due to Cardoso's governmental measures to support the Brazilian real in order to fight against speculation. Brazil signed on November 13th, 1998, a three years agreement for $41.4 billion lent by the international financial community (independently of private banks).
This credit will be delivered by packets in relation with the implementation of the austerity plan aimed first at reducing the budget deficit from 8% of the GDP to 7.7% in 1999 (this is the main aim of the orientation plan negotiated with the IMF).
Taxation increases and budget restrictions are a genuine social purge which already amount to $23 billion. Brazil's economy accounts for 45% of the America's sub-continent GDP. It could pay a heavy cost for its role as a last dike against the financial crisis which is threatening the whole Latin-American continent of a domino effect.
President Cardoso's austerity plan meant a 3% recession in 1998 and an important rise of unemployment. The Saý Paulo state alone counted 2 million unemployed people in 1999. 29% of the Brazilian firms consulted recently have already planned layoffs for the year to come. Manufacturing industry, which has lost 2.5% since 1997, intends to adapt to the recession by imposing mass redundancies.
According to professor JosÚ Marco Camargo, of the Economics Department of Rio de Janeiro University, quoted by the French daily La Tribune of November 26th 1998, Brazil is about to go trough a difficult situation. According to this newspaper, unemployment is going to increase by 8 to 12% of the active population. Those are the official figures, for there are estimates that only 48% of jobs would be declared ones, 52% being informal jobs as small employers cannot pay the social charges.
According to La Tribune again, trade unions, employers, bankers, newspapers are standing up against the excesses of globalisation and ask for guarantees in the future in order to give better protection to national industry and finance.
The Brazilian Central Bank intends to follow the Chilean example taking up the principle of the "Tobin tax" and to impose after the crisis a 10% tax on short-term investment foreign capital.
The United States is targeted concerning trade relations. It is accused of imposing prohibitive taxes on orange juice and anti-dumping tariffs on steel. European countries, which have also tariff barriers against Brazilian agricultural products are also denounced.
Employers ask for an industrial policy and a firm protection of national industry. 270 products (toys, lamps, tools, etc) are being carefully checked by the customs in order to control if they are in conformity with the Brazilian industrial norms.
A - AN ECONOMY TOTALLY CONTROLLED BY TRANSNATIONAL FIRMS.
According to Octavio Barros, director of the SOBEET, a company studying transnational firms, "the international community mobilised so promptly to help Brazil because it had a lot to lose in case of a serious accident."
Figures are impressive indeed. With a stock of direct foreign investments of $100 billion and a neat investment of $22 billion this year, Brazil is the most industrialised of developing economies. About 400 out of the 500 biggest multinationals are present in Brazil, as opposed to 300 in Mexico.
As a result, the national industry occupies a leading position in only two sectors, paper and steel. "Our industry is dominated by foreign capital. One must acknowledge this," Octavio Barros says in La Tribune.
The United States is omnipresent with one third of the total investments, far ahead in front of France for instance which has only 6.7% of the investment stock and Germany, which has 10%.
This explains why the Federal Reserve quickly diminished its interest rates when Brazil began to flounder, in order to prevent any tendency to capital flight from the country. Still, these measures appear to be inadequate. U.S. big industrial investment efforts took place in Brazil after Canada. One not only finds here General Motors or Ford, but all the main telecommunication companies: Southern Bell, which acquired the reproduction rights for the production of mobile phone in Saý Paulo, MCI, which took over EMBRATEL, the operator of long distance calls.
But the United States is also represented by multitudinous small societies from the "talent hunter" to the "rent a roof" for TV antennas societies. Financial investments were colossal. The Brazilian foreign debt to private banks reaches $33.7 billion out of a total debt of $223 billion .
All these elements explain the international community's interest in Brazil and especially the U.S. interest. The "rescue plan" for Brazil and its currency under the vigilant control of the IMF, the Central Bank right's hand, should be considered in that context. The austerity plan demanded by this international organisation in exchange for the rescue plan prompted hostile reaction of the trade unions which is quite understandable. Antonio Carlos Spis, first secretary of the Brazilian Workers Federation (CUT), declared:
"We never supported the RÚal plan. Inflation was done away with at the price of major social exclusion and the new austerity plan is aggravating the situation again. Begging money from the IMF to avoid bankruptcy is the best proof that this system is a failure." For Brazilian President Cardoso, in search of popular support, conciliating social demands and the international lenders' demands is a tightrope-walking exercise. AFRICA
The serious problems encountered on the African continent should not be considered as a whole. One should distinguish between Sub-Saharan Africa, Austral Africa and North Africa.
The serious situation in which many of the African countries are plunged has led the UN general secretary Kofi Annan to submit a report on July 6th, 1998 on "the causes for conflicts and the promotion of lasting peace and development in Africa".
The UN General secretary underlined in his introduction that since 1970, "30 wars or more have occurred on the African continent. A majority of them were the consequences of internal conflicts. In 1996, 14 of the 53 African countries were plunged in armed conflicts which are responsible for more than half the deaths caused by conflicts the world over, while more than 8 million people are refugees or have been displaced. The consequences of these conflicts seriously compromised the efforts of Africa to guarantee stability, prosperity and peace on the long term."
The UN General secretary recalls what he calls the "legacy of the past", especially the Berlin Congress of 1885. At that time, colonial powers divided Africa among themselves, artificially dividing kingdoms, States and communities and regrouping into arbitrarily zones and populations with no link among them.
At the time of their political emancipation in the sixties, the new independent States inherited these colonial borders and at the same time the problems they raised for territorial integrity and aspirations to national unity. The new political structures most often followed the structures inherited from the colonial powers, that is to say structures accentuating local division in order to better exploit them afterwards. This led to centralised policies rejecting multipartism, engendering nepotism, corruption and power abuses.
At the economic level, the trade relations set up by the colonial powers brought about long-term distortions in the economic policies of Africa. As the UN general secretary notes: "the transportation network and connected infrastructures were conceived to answer the need to trade with the metropolis and not to help develop a balanced growth of the local economies."
Besides, economic activities were essentially privileging mining industries and raw material production aimed at export. They served the interests of a minority by maintaining structures which were contradictory with the people's needs in the field of education, formation and skilled work. For the leading fractions, which most of the time played one imperialism against the other, it was more interesting to use the institutions of the colonial era than to change them.
While an ideological confrontation between the West and the East was on, order and stability were more or less maintained except in some regions such as Namibia and Angola, where the competition between superpowers found a ground for direct confrontation. The proximity of South Africa confronted with apartheid and the political problems which it produced fed the civil war which still goes on today in the interests of fractions themselves acting as proxies of transnational firms wishing to take control of natural resources such as oil and precious gems. This explains the tragedy in Sierra Leone.
As the UN General secretary underlined: "Almost everywhere in Africa, despotic regimes hostile to democracy were supported and helped by superpowers in the name of broader concerns. But when the Cold War ended, Africa was suddenly forgotten."
It is not quite so true today, since Africa is becoming an important for American influence as shown by the part played by their imperialist policies in southern Africa, the Middle East and also North Africa.
The attempts to resist on the part of the former French colonial power has had the effects we know in the Rwanda drama.
In Africa, like elsewhere, the United States intends to play a role as suzerain by using a network of vassals capable of assuming the tasks they are assigned. As Brzezinski let slip in his essay "Le Grand Echiquier", France has not yet that capacity. He argues his case in referring to the 1991 Gulf War where he writes: "The French general staff was not that impressive." He expects France's return to NATO (it joined the general staff in 1994), for a change in situation. The UN general secretary bitterly observes that the UN failure in Somalia "has made the international community lose taste for intervention in the event of conflict and wary about maintaining peace elsewhere in the world."
We must point out that the UN general secretary stops short of what his conclusion should be.
When he talks of the international community's hesitation he should put the United States in the front row, because it is of course the United States who is totally free to decide, whenever its interests are at stake, what military intervention has to be undertaken in the name of the UN, or even without it, as was demonstrated in Iraq in December 1998.
Reality can appear brutal, but taking into account the forces that are present, one has to admit, that if the UN cannot do without the United States, mainly for financial reasons, the United States, on the other hand, can easily do without the UN, as has been proved since 1989.
Today, in the context of a world crisis opening new fields for imperialist manoeuvres and economic parasitism, Africa just like the Balkans, has become an ideal pitch for all sorts of Mafia business and above all for arms sales.
Confessing to be powerless, the UN general secretary regrets that "publishing the names of arms salesmen and their activities can be nothing more than a vain hope . The Security Council should take immediate means to study this question and examine in particular the role that the UN could play in seeking to find out and publish this information."
A TRIBUNAL FOR AFRICA
In a document prepared by the ILC comrades in Bingerville (Ivory Coast) between the 27th February and 1st march 1998, one can find the preliminary elements for the drafting of a report which aims at launching a campaign for a Tribunal to judge those responsible for the crimes being perpetrated today against the peoples and workers of Africa.
A preparatory meeting, prior to the Tribunal is planned in Johannesburg (South Africa) on the 27th and 28th February 1999. Those who took that initiative write: "Africa is a plundered continent where populations are deliberately massacred." For every dollar invested in Africa, ten dollars leave the continent in payment on the debt and especially as interest on loans. But what debt is it?
As a recent World Bank, semi confidential study (and one can understand why), establishes, if these loans, which Africans are made to pay off today, had effectively been invested in production, the revenue per capita in a country like Zambia would have been $20,000 per year and not $640 !
$13, less than 90 French francs -that is the annual expenditures per person for health expenses considered as "optimum" by the World Bank for Africa. The World Bank advises African states to do away with expensive services so as to pay off the debt
In order that this bloodletting be pursued further the World Bank is busy organising the separation of Customs and Tax Service Administrations from the Civil Service. They are being turned into "special zones" controlled directly by the international financial institutions.
As for "tribal wars", according to a recent and very discreet UN report on one of the African countries: "Control of the diamond production was one of the major objectives of the warring factions". According to another report, these conflicts "are more and more under the control of international security firms. A market which is dominated by British (PSL) American (MPR) and south-African (Executive Outcomes) firms."
14 million Africans have been forcibly displaced as a result of these wars; those are the official figures established by UN census. Millions of others are wandering all over the continent and are not counted in the "official census".
The authors of the Bingerville report underline the contrast between the optimism shown by the World Bank and the real situation which is totally different. The World Bank which considers that "Africa is moving forward", notes that gross national product in countries south of the Sahara had a 5% increase in 1995 as compared to 3% increase for the population, that is in more than half of the 44 countries on that continent. According to the World Bank, financial and economic activity linked to the opening up of African markets should shortly be confirming statistics showing the improvement in living standards for millions of Africans.
This does not seem to corroborate the last world report on development as established by the PNUD (United Nations) in 1997.
According to this organisation, in the nineties, 32% of the people living on the African sub-Sahara continent would not live to the age of forty. Gross national product per capita in Sub-Sahara Africa is $550 .
Infant mortality is 100/00. There is one doctor for 18,000 inhabitants. Only 42% of the population has access to drinkable water. Sub-Sahara Africa has accumulated a 21% decrease of its real gross national product per capita. This loss has affected not only countries engaged in structural adjustment plans but others as well, making living conditions worse for the poor.
Gross national product per capita has decreased in 27 of the 35 countries of the area for which we have statistics. The most serious instances of decrease are to be found in Gabon (58%), in Nigeria (50%), in the Ivory Coast (42%), in Mozambique and Niger (32%), in Zaire (25%) and also in the Congo and Zambia (20%).
Between 1990 and 1994, growth per capita was negative in Sub-Sahara Africa ( minus 2.4% per year) and in the Arab countries (minus 4.5%).
The epidemic affecting great areas of the continent is a new source of impoverishment and represents a setback in terms of past achievements. In the 30 countries which register a decrease in gross national product, several of them must put this down, to a certain degree, to the spreading of the AIDS virus. That is the case of Botswana, Burundi, Cameroun, Congo, Kenya, Rwanda, Togo and Zimbabwe, which had all made great progress during the years from 1970 to 1980.
Since then life expectancy went down to 5 to 10 years, bringing these countries back to the level of human development of the sixties.
The outlook projected for the year 2010 shows that life expectancy could go down to 33 years (instead of reaching 61 years without AIDS) in Botswana and to 35 years (instead of 61 years) in Burkina Faso. Infant mortality is likely to reach 148 deaths for a 1000 births in Botswana (instead of going down to 38/00). In 18 of the 22 countries that were studied, most of them being in Sub-Sahara Africa, the AIDS epidemic should lower life expectancy by at least 10 years.
In 14 of these countries, infant mortality would anyway be expected to go up with 50 more deaths for a 1000 births.
As the Bingerville memo report points out, on the one side, you have the general impoverishment of the African continent and on the other, the policies of the structural adjustment Plans.
As we have indicated, this of course brings to the fore the problem of the debt and its repayment, because, according to an inquiry done by the French monthly Le Monde Diplomatique (October 1997), the World Bank multiplied by ten its loans between 1968 and 1973, increasing them even more rapidly in the five following years.
A document published in October 1997 by a French trade review Accomex (nÁ17) indicates clearly what the weight of the debt and its repayment amounts to: "The Sub-Sahara debt tends to stabilise at around 230 billion dollars. This level of debt is unbearable as it represents globally more than 320% of the exports of commodities and services. And if one does not take into account the two main exporting countries, which also have the lowest debt level, (South Africa and Nigeria, the latter with a debt ratio representing 280% of the exports of commodities and services) the debt ratio in relation to exportation goes up to 480%". Three quarters of African countries have a debt ratio relating to exportation of over 250%, which is considered as insupportable for poor countries.
The countries which are not yet engaged in the debt spiral are mostly situated in the southern hemisphere of Africa (Lesotho, Botswana, Mauritius, South Africa, Zimbabwe. Erythrea which became independent of Ethiopia in 1991, can be added, but it has not started paying off the debt?
Information given by another article of the French monthly Le Monde Diplomatique in its January 1999 issue reveals the situation:
"In spite of having repaid double the amount of its foreign debt between 1980 and 1996, Sub-Sahara Africa is three times more in debt than 16 years ago. She owed her creditors at the end of 1996 $235,4 billion as compared to $84,3 billion in 1980. In the meantime, the sub-continent would have paid up $170 billion in service on the debt (interest + capital), which represents each year a cost four times more important than that of the education and health budget. In spite of this effort, the 48 countries of the area have accumulated fantastic arrears $48 billion in 1994). 31 of them, 6 more than in 1994, are classed by the World Bank in 1996, in the category of low income countries with severe debt problems.
"To repay their foreign debt labeled in strong currency ($ etc), they have to use up a considerable part of their export revenue. To be freed of the whole debt they would have to allocate to its repayment the entire export revenues for a period over three years."
The problem of the debt in Africa has terrible social implications. All the countries on the continent are concerned by this in different degrees. An article of the Financial Times (February 12,1998,) quotes the case of Mozambique which is quite a typical example:
"Mozambique spends nearly half of its budget on the repayment of its debt, that is more than its total expenditure on health and education. In Mozambique 1 child in 5 dies before the age of 5 as a result of sickness which would de easy to prevent. More than half the children do not go to primary school. " As a reminder, don't let's forget that the global debt for the developing countries amounts to $2000 billion. The less advanced countries spend, on average, more than 20% of their export revenues on the service of the debt. This explains why the growing of cannabis, opium flower, coca plants for the narcotics market is being encouraged.
If the debt ratio were lowered by only 1 or 2%, as was the case for Germany after the war, these countries could invest what they save, in health, education, environment, which today is an impossible mission. EUROPE
As one the great geo-political areas, The European Community resulted from the Treaty of Rome. The Treaty of Rome had been agreed in 1957, between France, Germany, Italy, the Netherlands, Belgium and Luxembourg, and was to give birth to the first European Common Market. However, the free circulation of commodities was to be realised only thirty-five years later, on January 1, 1993.
At that date, the European Community was made up of twelve members. Denmark, Spain, Greece, Ireland, Portugal and the United Kingdom had joined the six founding members. Today this geographical entity has a population of 320 millions.
The twelve members of the EEC signed the European Single Act in February 1986. This decision by the heads of states can be regarded as driving European development forward, in order to enable commodities, persons, services and capital to circulate freely. They fixed December 31, 1992, as the date by which the Single Act could finally be applied and working.
Jacques Delors, the French representative, had been the Chairman of the European Commission since January 1, 1985. He was the real organiser of this important geo-political operation, after leaving the French Socialist Government. As the French Dictionnaire de Geopolitique states, Jacques Delors was convinced that only a large single market can stand up to the competition of USA. Of course, this view does not take into account the diversity of cultures, History, tradition and languages.
In order to get the Act applied more quickly, Jacques Delors obtained the agreement that the decision of the Council of Europe should base its decisions on a majority of those qualified to vote, and that unanimity was no longer necessary. This system strengthened the concept of supra-nationality because it obliged the legislature of each European member-State to express the European directives in the national legislation of each of them. Today 70% of the national declarations and rulings result from directives which have been imposed by the institutions of the European Parliament and, in the first place, by the Commission of European Communities.
Consequently, the national Parliaments now have, in three cases out of four, to vote for documents which they have neither proposed, nor amended nor discussed. Jacques Delors envisaged the integrated European Union as a driving wheel. Monetary unions was essential to it, and would inevitably mean that each member-State must completely surrender its national sovereignty and, in the first place, its historic, sovereign power to issue money.
This was achieved on January 1, 1999. The euro was recognised as a single currency, replacing the ECU. Eleven European countries joined the single currency. It poses economic problems as well as serious social problems which result from them. But it poses still more sharply the question of democracy in the establishment and working of the European institutions, for example, that of supra-nationality in relation to the institutions of the nation- State.
The European Parliament is elected by universal suffrage, though it has no power beyond a vague control over the Commission and the Councils. But the personnel, which staffs these structures and has the power to initiate proposals and to take decisions - such as the Council of Europe, the Council of Ministers and particularly the Commission of European Communities, which is really the supra-national executive arm of the European Union - are all co-opted or nominated. They are completely exempt from any accountability.
The French monthly, Le Monde Diplomatique (in its supplement No. 42 of December 1998, entitled "Mani¶re de Voir") emphasises the effects of "the European directive which changes everything". The article, which is signed by Bernard Cassen, points out that, by the directive signed on June 13, 1998, "Europe adopts the directive which completely frees the movements of capital, without at the same time harmonising the systems of taxing incomes from finance. In this way, it makes a major contribution to the project of world-wide de-regulation, which began in USA and the United Kingdom. Thanks to the European Single Act, which has made this directive possible, Europe of "Thatcher-ising" at high speed". (Editor's note: "Blair-isation does no less".)
It is the Finance Ministers of Europe who have promoted this directive, which they welcome. They are delighted that henceforth any citizen in the Community can open a bank account in a member-country other than his own, can buy shares abroad, etc. According to the promoters, this is a great victory for people who save... But what does it mean for working people?
The review Mani¶re de Voir quotes the reactions of MM. Boissonnat and Albert, who can hardly be suspected of "anti-Europeanism". These two authors can be regarded as part of the Christian Democratic movement. They wrote a book in 1988 (Crisis - Crash - Boom) in which they expressed their concern about such a measure, which, they wrote: "... was going to result in a tendency to a tax-free heaven for incomes from savings". According to these two authors, the people who draw large incomes from playing the stock markets will be pronouncing judgement every day on the tax-systems of all the member-States" They write: "The logic of the competition between European states, each with its own sovereign tax-system, will result in tax-evasion on such a large scale as will exempt the great majority of those who receive incomes produced by capital from paying income tax. It would, indeed, become necessary to shift the burden of taxation, which the large incomes will no longer bear, on to the incomes of the working people. Nor is that all. In order, despite all, to encourage wage-earners in each country to save, fiscal legislation will naturally tend to relieve the amounts invested from tax, and, in that way, will introduce a negative tax on savings, and discriminate against those among wage-earners who do not earn enough to be able to save and who therefore cannot benefit from these relieves."
Most of the ruling elite is involved in this ultra-liberal Europe, including the Social-Democrats, who have been won over to a "social-liberalism", which today brings them close to the parties which stand openly for "social-liberalism". All swear by the laws of the market. The enthusiasm of these people breaks out in odes to the most complete liberalism. Consequently, Claude Cheysson, who once was Minister for Foreign Affairs in the Mitterrand-Mauroy government, and then became a European Commissioner, can express the view that "the opening in 1993 of unrestricted hunting in the lands of the Community will give the chance of fine bags to people who are good shots, without having to bother about the social problems too much".
The victims of the "hunt" will be the ordinary working people. They will be able to appreciate Cheysson's rural metaphor to the full.
In reality, the flight-plan of liberal Europe, that of capital and the transnational groups, relies totally on leaving "the invisible hand of the markets alone" in the pilot's place.
On February 7, 1992, the "High Contracting Parties", that is, the twelve nations which formed the European Union, signed the Maastricht Treaty. It extends the Single Act and the free circulation of capital, and strengthens the liberal character of the Europe of the Twelve, in economic and monetary respects. On the social plane, the Maastricht Treaty opens the road to social de-regulation and to "flexibility" in employment. In this way it contributes to the process of "globalisation" and of an economy completely open to all its forces.
Article 3 (a) of the Maastricht Treaty sets out simply the Maastricht spirit: "For the purposes declared in Article 2, the activity of the member-States and of the Community is aimed, in the conditions at the speed envisaged in the present treaty, at installing an economic policy based on the close co-ordination of the economic policies of the member-States, on the internal market and the definition of common objectives, and directed in conformity with respect for the principle of an open-market economy, in which competition is free."
We shall have a chance later to analyse the consequences of this principle, especially, on the one hand, insofar as it affects the public services, collective social protection and, therefore, the status of those who are employed therein. On the other hand, we shall analyse how it affects legislation, as well as the social control which the working class and its organisations have won in each nation by their day-to-day struggles, in relation to their international structures.
The way in which Article 3 (a) of the Maastricht Treaty formally lays down the principle also poses the question of the liquidation of the nation-State.
This has been the historic framework within which democratic liberties have been forged, including those which permit self-organisation in political parties and trade union organisations, acting in complete independence solely on the basis of class.
Another chapter of the Treaty, Chapter IV, brings into existence "The Committee of the Regions". In this chapter, Article 198 (a) stipulates: "A Committee of a consultative character, made up of representatives of regional and local communities, is created, hereinafter entitled 'Committee of the Regions". This Committee is made up by the twelve member-States, on the basis of representation proportional to their demographic importance, possibly 189 members in all.
Despite its seemingly innocuous character, the Maastricht Treaty ensures that the nation-States will be liquidated, when it recognises the Europe of the Regions, with the "principle of subsidiarity" as the basis on which it will function. It means that decisions will be taken at the summit of the European Union, but will be applied differently in different regions, and be adapted by taking regional and local peculiarities into consideration. The principle of equality will be replaced by that of equity.
This orientation leads to a new kind of democracy. It is called "economic", or "participative" or "association" democracy. In a total concept, it pre-supposes that the whole of "civil society" will be institutionally integrated, (beginning with the working peoples' trade union organisations) in a corporatist structure which artificially negates class antagonisms.
The proposal to reform the United Nations goes in the same direction. It confirms that each level of institutions such as the European Union, at each stage of their construction, and the United Nations shall act as degrees in the achievement of globalisation. We leave the conclusion of this chapter to the Nobel prize-winner for Economics, the Frenchman Maurice Allais, He is a liberal economist and has concluded that he must denounce "the violation of the separation of powers", the very basis of the democratic system. In a book entitled "Errors and Blind Alleys in Constructing Europe", he writes: "The principle of the separation of powers must be regarded as a fundamental principle, with which no democratic society can dispense. It is a definitive conquest of a struggle which has gone on for centuries. In no circumstances must it be deliberately violated. We are dealing here with one of those inalienable rights of democratic peoples, which Parliaments themselves could not infringe with impunity".
The Europe which is being constructed is evidently the fruit of a totalitarian conception, which results from a total absence of countervailing forces emerging from the body of citizens. As a whole, the European institutions - with the exception of the Parliament, which plays only the role of a faÙade - are entirely the emanation of the executive powers in each member-State, even as far as the European Court of Justice is concerned.
The economist, Maurice Allais, makes quite clear the totalitarian nature of the European Union: "The fundamental mistake in the present project is the belief that Europe can be constructed without receiving what can ensure that it really exists. In fact, the lack of democracy about which there is so much complaint is the result only of the absence of suitable democratic institutions".
Monetary policy is determined by the European system of central banks, under the authority of the European Central Bank. Since January 1, 1999, Europe henceforth has a single currency, named the "euro". Up until January 1, 2002, the dual system of euro/national currency is maintained. From January 1, 2002 onwards, the national currencies will be withdrawn from circulation, for the benefit of the euro. The single European currency is a historic event of such importance that we still cannot measure its effects today. The introduction of the euro is another step towards doing away with the nation-States which make up political Europe.
As trade between nations developed in the past, the national currencies have served as " means for settling" the different balances in accounts. Devaluation, re-valuations and "floating" currencies have been used as instruments of economic flexibility. Often they have been used in order to defuse the social reactions to the economic situation of the country concerned. From now on, the stability agreement concluded at Amsterdam is in operation. It confirmed the convergence criteria which the Central Bank of Europe imposed (zero inflation, budget deficit fixed for the present at a maximum of 3% of gross domestic product (GDP), and to be reduced soon to 0%, and national debt never exceeding 60% of GDP). This means that the costs of production and primarily labour-costs, wages and social- contributions become the only remaining "variable means of settlement" available to the subsidiary states to meet the convergence criteria which the European Central Bank imposes. The result is that the European governments turn their attention to "wage-policies", which are imposed or negotiated within previously established limits. They go for "social pacts" and "pacts for jobs". This all pre-supposes that the workers' trade union organisations are totally involved in the Committees "for social dialogue" - the name makes no difference - which are subordinate to a "Committee for Social consultation". This "Committee for Social Consultation" brings together UNICE, the European employers' organisation, ECOFIN, the Council of finance ministers of each member-State, and the European Confederation of Trade Unions. It is involved in the present measures which are aimed at setting to work the "European Economic Government", which is the last piece in the system built in accordance with Jacques Delors' wishes.
These structural proposals extend the single currency and provide the framework for it. They strengthen the corporatist - and therefore totalitarian - character of the European Union. It is based, as we have said, on the principle of "subsidiarity", which gives more and more responsibility to regions. Already ninety territorial and local agreements have been concluded within the framework of the European directives.
The Council of Europe agreed at its Amsterdam meeting on June 16/17, 1997 on a draft treaty to open the road to enlarging the European Union. It also confirmed that maintaining an economic and financial "stability pact" is indispensable.
When the Council of Europe met at Cardiff on June 15/16, 1998, it laid emphasis on "the need to set to work a strategy for employment". This was to be done by "strengthening competitiveness and economic and social cohesion, in a context of macro-economic stability." Further on, the Council of Europe welcomed the declaration about "budgetary discipline." Their declaration states, with reference of the application of the "Stability Pact" which the Council adopted at Amsterdam on June 16/17, 1997 : "Support to the objective of a sound, that is balanced or nearly balanced budget, will allow all the member-States to face normal conjuncture fluctuations, while they keep their budget deficit below the reference-figure of 3% of GDP."
The "Stability Pact" recalls that: "The member-States continue to be responsible for their national budgetary policy, subject to what the Treaty provides. They will take the measures necessary to face their responsibilities, in conformity with these provisions".
As to the concept of "subsidiarity": "The Council insists on the capital importance of transferring into national law, correctly and at the proper time, all the legislation which the Council of Europe adopts. It underlines the necessity to fully inform citizens and firms about the single market, to apply community law actively in the member-States and to introduce procedures which enable problems to be settled more quickly and efficiently, by anticipating especially the deliberations at the level of the Council in cases of recurrent problems".
The insistence of the Council of Europe at Amsterdam confirms the supra-national character of the European Union and the progressive loss by the member-nations of autonomy and independence. Up to the present, working people have drawn no advantages from the construction of this liberal Europe which is directed towards federalism and which served the forces of capital world-wide. On the contrary, their conditions of life and existence have deteriorated in parallel with the planned destruction of all their social gains.
Policies of de-regulation and flexibility have become the rule, to the disadvantage of Labour Codes and collective bargaining. Systems of social protection, which were built up day by day in the framework of agreements and regulation, are now thrown into the dust-bin, to the great benefit of private insurers. The Single Act, which authorises capital to circulate freely, has encouraged amalgamations and concentrations of firms, which have been accompanied by re-structuring. Re-structuring is expressed in the loss of thousands of jobs, primarily in the industrial sector.
The victory-bulletins of the leaders of the European Union cannot conceal their counter-part: the scandalous wealth which has gone to a minority, while, at the very moment when Europe is born, this Europe of trusts and capital has fifty million people in poverty and eighteen millions unemployed, in an active population of about 160 million people. THE UNITED STATES OF AMERICA
The collapse of the Berlin Wall in 1989 and the end of the bi- polar world placed the United States in a position of absolute and undisputed world domination. According to the French review, Le Monde Diplomatique, for January 1999: "The United States dominates the world as no country ever has done in the past. It exerts a crushing superiority in the five domains of power: political, economic, monetary, technological and cultural".
Does this overwhelming power have beneficial results for the American people and the American workers, or for human development in general? If we refer to the review mentioned above, its results are far from beneficial. In a population of 250 million people, there are in the United States 32 million whose life expectation is less than sixty years. There are 40 million who have no medical insurance, 45 million who live below the poverty line and 52 million who are illiterate. The crisis in Asia and the persistent threats of crisis in Latin America have had no great immediate negative effect on the American economy. The leaders of the federal financial institutions, including Alan Greenspan, the chairman of the Federal Reserve (FED), acted immediately on the International Monetary Fund and on interest rates, to ensure that the crisis which affected Brazil would not have a "domino" effect upon the economy of the neighbouring countries and, in particular, on that of the United States, which was directly exposed, because of its very close economic links with the American sub-continent. At the present time, the measures which were taken to check the crisis in Brazil are far from having averted dangers that it may spread.
Demographically, the United States represents less than 5% of the population of the world. But the 250 million Americans themselves consume quarter of the resources of the planet. The Gross National Product is nearly twice that of Japan. It is a little higher than that of the European Community. According to the comments and the statistics in Dictionnaire de Geopolitique, (a French work produced under the leadership of Yves Lacoste), few countries, and certainly no exporter of primary products can do without the American market. It largely sets the world prices, which to a great extent are quoted in American dollars. As for the industrial countries, despite the technological and financial power of Japan (which is much exaggerated), the present crisis reveals Japan's weakness. It cannot do without the North American market, from which Japanese industry draws $50 to $60 billion annually. As for Europe, American imperialism broadly speaking can impose its will. The Europeans are being forced to give up their protectionist Common Agricultural policy and to adopt a system of agriculture which closely resembles that of the United States. It is the same with the genetically modified organisms (GM); the institutions of the European Union, including the ecological Greens, have bowed before the American chemical trusts. Dictionnaire Geo-politique (which we have already quoted) spells out that the deficits which the United States accumulates with its trading partners should normally be disastrous. But these do not matter, because no country can tolerate a weakening of the American currency or the American economy. The eyes of experts and financiers alike are fixed on the economic indices in the United States, on which recovery or recession in the world depend.
As to the financial crisis which is hitting the countries of Asia, the movement of investment capital which the economic boom attracted into the united States led in 1997 to a strong rise in the dollar. The Asiatic currencies linked to the dollar experienced the same rise. It meant that the products which they manufacture for export, on which their economies primarily depend, became dearer. In this situation, they lost their former customers. Speculation in these over-valued currencies developed. It was followed by a flight of capital and of investors. Economic and financial power can no longer be evaluated solely in terms of the balance of trade or the balance of payments. The American economic system has come to dominate the planet because the United States is at the heart of the world system. It is the refuge for capital seeking investment. (Between 1980 and 1990, the British invested $120 billion there, the Japanese $75 billion and the Dutch over $60 billion there. The European and the Japanese multi-nationals want to do business in the United States, and their American subsidiaries are often more important than the parent offices. Still quoting the Dictionnaire de Geopolitique: "The United States must no longer be evaluated in terms of economic ranking or relative weight. It cannot be avoided, and that condition will endure as long as the United States retains the formidable purchasing power and the decisive advantage which the tools of its economic empire represent."
Several elements help the United States to secure its domination. The first is its currency. The dollar is the primary monetary means of exchange because half of world trade is priced in dollars. The dollar represents one-third of the reserves of the central banks. It is used for 40% of the international borrowings of the industrialised countries. The attraction of the dollar is so strong that Argentine is considering abandoning its national currency in favour of the dollar. The French daily, Le Figaro, wrote on January 28, 1999: "Several academic economists have just launched a debate about Montreal accepting the US dollar as its currency. Richard Harris, a professor at Vancouver, stresses that the United States take 80% of Canadian exports and that the two nations have much closer relations than those between the eleven members of the European Monetary Union".
The article in Le Figaro by Pierre Robin points out: "China has two currencies, the yuan and the Hong Kong dollar. Both are linked to the American dollar. More surprisingly, the Iraqi dinar also maintains a fixed link with the dollar." The author comments: "Money has reasons of which politics are not aware." The central position of the United States gives her the unique privilege of living on open credit throughout the world. The American budgetary deficit is financed by issuing Treasury bonds. These may have a life of thirty years, which shows that those who subscribe to them, such as the central banks of countries with large export surpluses, either place exceptional confidence in them, or are driven by imperious political necessity. Japan, Germany, Taiwan or Saudi Arabia pay a modern "tribute" in this way, and their protection is guaranteed. It was the same in the Gulf War against Iraq; the United States having profitably financed their military operation.
Dictionnaire de Geopolitique also quotes the multi-national firms as "an instrument of the American empire". They operate 17,200 subsidiaries throughout the world, of which 11,000 are in industry. General Motors, Ford, the great oil firms, the information and communications industries are among the very foremost world enterprises. These firms are associated with others and spread their capital on the scale of the planet.
How long will the American economy support world growth? The French daily, Le Monde, raised this question on December 8, 1998. To be sure (it said) the tendency in the United States always is to euphoria. All the indicators present a picture which is very different from the forecasts which could be based on the situation in summer 1998. Today the crisis in the Stock Exchange has disappeared, with the help of inflation which remains under control. Prices bounced back on Wall Street. The Dow Jones returned to its earlier highest point, which it reached on August 17, 1998. While this recovery to a high level was going on, there was a strong movement towards re-structuring firms, driven by the search for the greatest possible size, intended to stand up to the competition which globalisation is sharpening, and imposing sharp reductions in costs.
In the United States as elsewhere in the world, re-structuring and concentration reveal themselves by suppressing jobs. The general activity concealed this in the overall statistics, which concealed the fact that the new jobs were most often precarious. Here we have a general phenomenon which affects all the advanced countries, and from which the United States is not exempt.
Fears born of the crisis in Asia of a cumulative development which, after Russia and Latin America, could lead to a world recession, appear to have faded away. The impact of the crisis on the emergent countries, which was feared because it might affect American exports and the growth in employment attached to them, was limited by immense international co-operation. At the moment when these lines are being written, the perspective which Le Monde outlined looks much less certain, because the difficulties which Brazil and other countries in Latin America have encountered do not in any way ensure that the world is safe from another earthquake.
30% of all US exports go the Asia, and two-fifths of these are agricultural products. We need to emphasise the fact that the jobs linked to exports are 15% better paid than others. The plans for drastic correction which the International Monetary Fund and the international agencies imposed on the countries of Asia, on Latin America and on Russia enabled them to restrict their budget deficits while structural reforms were in progress at the same time. But the labour force in these countries paid a heavy price, which we described in the chapter about Asia.
These "structural reforms" are already timidly opening up some promising new prospects for private capital in search of quick returns. Already interest is being shown in the United States in the openings which the collapse of the local currency, undermined by speculation, makes attractive.
The application of the aid plan to Brazil has been welcomed with great relief. Its results do not seem quite to match the enthusiasm for the plan. But, for the moment, Le Monde emphasised on December 8, 1998: "People feared that there might be a spin-off effect on the other countries of Latin America, and particularly on Argentina, because all of them are faithful customers of the Americans." The American effort receives all the greater welcome because its cost to U.S. finances is limited. The figures show that, out of a total of $42 billion, the International Monetary Fund is contributing $18.3 billion, the bi-lateral donors $12.5 billion and only $5 billion will come from the united States.
As for the rest, and especially NATO, the essential contributions will come from Europe. Finally, and above all, the American Federal Reserve has on three occasions, on September 29, and October 15, relaxed its monetary policy and brought down the short-term interest rate which it controls. This decision was partly responsible for the recovery in the markets, because it enabled many finance houses threatened with bankruptcy to get through the crisis. This reduction in American interest rates relieved the impact of the crisis by compensating for the spread of the influence of depression in Asia and by lightening the burden of the debts of Russia and the Latin American countries, which are expressed in dollars. "None the less", proceeds Le Monde, "what if this optimistic vision, hidden for a short while, does not take fully into account one of the fundamental elements in the American economy? How can consumption, which is the principal driving force for growth, continue to grow more quickly than income over the long term? Can the resulting drain on savings be endured for long?"
In fact, the collapse in household savings is certainly one of the important signals. The level of financial savings in 1982 was 12% of available income. Today it has become negative, for the first time in sixty years. Households are getting into debt, in order to consume and at the same time to play the stock market. Households which are enriched, or believe themselves to be enriched, by the rise in the income from their investments are consuming beyond their traditional incomes from work. According to Le Monde Diplomatique for August 1997, "In 1996, American households bought 220 billion of shares: two-thirds of these were bought by resorting to borrowing. These assets are particularly vulnerable to any prolonged drop in the price of shares bought on credit. All the more so in that the crude indebtedness of these households amounts to nearly a year's disposable income, its highest level since the 1960's.
The behaviour of the households drives the whole economy. The statistics of employment for January 1999 show that the United States created 378,000 new jobs during December 1998, while through 1998 American industry shed 575,000 jobs, or 33% more than in 1997. This figure is a good deal better than the forecasts and brought the level of unemployment to 4.3% of the active population, which was its lowest level since 1969. On the whole, the American economy created nearly three million jobs in 1998. The creation of these jobs makes up for the sackings which took place in 1998 following the restructuring and fusion of big groups like Boeing, Exxon-Mobil, etc..
But we must take note that the mass of earnings which result strictly from work does not necessarily rise when employment rises. We pointed out in 1995, at the time of the Banska-Bystrica Conference that "the significant example is that of the United States. In figures, unemployment has fallen remarkably. It stands at 5.7% of the active population, and amounts to 7,498,000 people. The negative side is that the fall in unemployment has been achieved by aggravating inequalities and by the fall in wages. In the United States the purchasing power of wages remained stagnant for twenty years."
The earnings of the labour force are no better than they were in 1995. As we have said, the supplementary part of its purchasing power comes from speculating in shares. Moreover, in a movement which is tending to gain ground in Europe, the economists admit that the wage-earner who is no longer confident that his earnings will rise will become a share-holder in the firm where he works. Michel Aglietta has emphasised, in the French review Expansion (December 16, 1998,): "The wage-earner becomes a shareholder (80 million American households own shares) either directly or by way of a pension fund. This also enables him to benefit from the profitability of the firm in a new form".
In the face of these practices, which have nothing whatever to do with the real economy, the financial bubble, which had begun to deflate last summer is once again the first factor in the share market. The Stock Exchange quotations reflect the prices of shares which are regarded as being too high, because they represent on the average twenty-five times the annual profits of the firms in 1998. Should the market turn down, the crash will be all the greater, with all these purchases financed by borrowing and with shares today representing an important part of the assets of households. The effects of the crisis in Asia and the devaluation of the Asian currencies provoked a fall in the prices of imports from that region. The American balance of payments found itself in a new difficulty, because American exports to the Asiatic countries were falling, in consequence of the fall in the consumers' purchasing power. For that reason there was a considerable rise in the deficit on current account, which reached $270 to 280 billion in 1998.
According to the French daily, Le Monde, "the deficit is financed by the entry into the United States of massive amounts of foreign capital, in the form of investment in shares, the stability of which is becoming questionable, in the context of over-valuation of financial assets." Again, according to Le Monde, "the United States is resentful of this burden, and is turning to Europe to demand that Europe share it, with threat, in default, to subsidise protective measures on its territory". The banana war today is part of this strong-arm match. Therefore, we cannot decide how healthy the American economy is, without taking account of all these elements and of the consequences which may flow from them for the world at any moment
The United States in the "open, world-wide, global" economy, is the keystone of a world economic structure, which controls and makes use of all the institutions of world economy, such as the buttresses of political, military and economic imperialism, to maintain their inter-active grip on regional spaces which transcend the nation-States. In order to understand this strategy, it is useful to refer to a book published in France by Hautes Etudes Strategiques, entitled "American Strategy and Europe" ("La strategie americaine et l'Europe") by Bruno Colson. In a chapter entitled "World Federation and New Manifest Destiny", Bruno Colson refers to Robert Strausz-Hupe, the founding father of the review Orbis, of Austrian origin, a professor in the University, a writer, an ambassador and an adviser of the White House.
In 1957, Strausz-Hupe was in favour of a universal order. He wrote: "The nation- state is an odious invention of French ideology and the most retrograde form of the 20th century. It has produced only violence and dictators".
Brian Colson proceeds: "Strausz-Hupe made himself the apostle of world federation. He saw the history of the 20th century as that of a struggle between federate power and nationalism, as the organising principle in world politics. The United States was the only real guardian of the principle of federate power. In 1957, Strausz- Hupe forecast that the United States would be victorious in its duel with the USSR, thanks to the superiority of its system. The American dream was going to become universal. The American federate power already consisted of three elements: its centre, the United States itself, with its de facto control over the Western Hemisphere and the Pacific region, then the Euro-American alliance, and finally the leadership of the United Nations, with NATO, where Strausz- Hupe was an ambassador, representing in his eyes the nucleus of the world federate process. The mission of the American people was to bury the nation-states. In this way, the new world order would be accomplished, novus orbis terrarum".
Along the same line, the French review Hautes Etudes Strategiques refers to declarations by Warren Christopher, when he was at the head of the U.S. State Department, with the following comment: "For him, the first task was to set on foot the most open commercial system in history. This priority is sometimes expressed differently as... "to ensure the competitiveness and the economic security of United States". The two aims were the same. What lies at the heart of the foreign policy of the Clinton administration is to open foreign markets to products and services 'made in USA'".
The successor to Warren Christopher is Madeleine Albright. She took up his programme and made it her own, when she declared: "We must continue to fashion a global economic system which works for America" (Statement before the State Foreign Relations Committee January 8: USIS, January 9, 1997, p.8). In this way the United States intends to place itself at the summit of a world architecture based on subsidiary zones of influence and on a global economy that is completely open and works for America.
Paris: February 1, 1999
Among the huge network of global economy, the major powers with the USA in the lead have given themselves institutions that are in effect, the headquarters of world capitalism.
The bulk of those institutions - IMF, World Bank, OECD, Bank for international payments, BERD, WTO, act everywhere on behalf of the dominant ideology that is a faithful worshipper of the market.
The IMF and the world Bank take their stance as wardens of the ideology, give bad pupils the rap in order to bypass state administration; the latter being gradually deprived of any independence and sovereignty.
The structural adjustment plans decided by the IMF urged by the imperialist powers, entail the dismantling of social structures, the impoverishment of populations, the crumbling of nation-states which are only offered the prospect of ethnic or religious conflicts as is the case in Africa, Yugoslavia, the former USSR but also in the years to come, in Asia especially in Indonesia wherever they are implemented.
The World trade Organisation (WTO) is the spearhead of transnational firms which are from now on organised as a network and that dictate their conditions to "host countries".
Each state's financial institutions have to toe the line drawn by the institutions of globalisation. The sweeping so-called "co-operation" treaties such as the European Union, NAFTA MERCOSUR, SEANA, PECA and so on, are the pieces of a globalised, world-wide jigsaw puzzle economy.
According to most outside observers, international organisations have become almost entirely autonomous.
Mme Josepha Laroche, Professor of Political Sciences in Versailles University College gave an interview to the French magazine "Alternatives Economiques" issue NÁ 10 In it, she pinpoints some details of this evolution. To the question "Seemingly, much is expected from international economic organisations, Why?" Mme Laroche answers:
"Those expectations come in the wake of the loss by states of their all-encompassing power. Citizens are under the impression that their governments can no longer guarantee their safety, in the economic field included. International organisations are seen as capable of making up for the vanishing welfare state and come up with ready made solutions for faults. They are bureaucracies which have far-reaching powers. They can easily be identified but are also the easy targets of criticisms (the IMF for one), the harshest ones tallying with the hopes they raised."
We grant Mme Laroche the right to utter a rather tolerant point-of-view on the institutions of globalisation. Let us however register that the dominant ideology weighs a lot including among professors.
For it is because of the shrinking space occupied by nation-states that the institutions of globalisation tend to become a tool of world economic "governance" supposed to keep the effects of globalisation in line. But it is evident that those institutions are commonly in the sway of the most powerful powers, with the USA in the lead, as well as that of private powers such as multinationals; that was easily seen when the blueprint of the Multilateral Agreement on Investments(MAI) was negotiated within the Organisation for Economic Co-operation and Development (OECD).
True, those international institutions are competing, invading each other's turf. Notably there is constant bickering between the IMF and the world Bank. That is always done at the expense of workers living in the zones, regions and states where the structural adjustment plans are implemented. The plans always spelling budget cuts; first and foremost social budgets. wage reductions, closures of firms that are considered non profitable, the inevitable consequence being unemployment and destitution.
On June 8th 1997, the International Liaison Committee, was convened in Geneva during the 85th convention of the ILO's yearly meeting. It gave a solemn warning to the participants of the meeting in order to inform them of the secret negotiations under way initiated by the OECD, purposely to adopt an international treaty which, had it been adopted, was destroying on a unprecedented scale all the rights, norms, guarantees and all the democratic rights that were part and parcel of the very existence of sovereign nations. That project, bearing the title of "Multilateral Agreement on Investment" (MAI), is drafted in order to give existence to the constitution of a single global economy with the purpose of freeing investment from an undersigning country into another undersigning country from any national constraint or national law.
The uproar it caused everywhere, especially in France where the government was forced to back from the negotiation, caused the OECD, the club of the rich countries to lose a battle, and a share of its credibility. There are 29 members of the OECD, the planet's wealthiest countries as well as three Eastern European countries, plus Korea and Mexico.
Its structure favours secrecy, therefore it is the main crucible of the ideology of globalisation. As a former member of the French delegation, M. Henri Chavranski writes: "The OECD is a place where analysis, thinking, advising are conducted behind padded doors, over thick carpets; the differences between western liberal and developed though competing economies are narrowed. For 35 years it has played the role of power behind the throne whose influence cannot easily be outlined because it assumes multiple forms. Its power lies mostly in its capacity to intellectually persuade member states."
The MAI had been negotiated on since 1995 within the OECD. The 29 member countries first wished to finalise an agreement on a treaty before bringing it in front of developing countries as a "fait accompli".
During the previous decades, capital has been flowing around the world at an ever growing pace, whereas investment was less evident to the public eye, the media, and political powers than commercial activity. Conversely, transnational firms and major financial establishments regard it with the utmost interest. M. Lori M. Wallach, managing executive of the Public Citizen's Global Watch, was writing in the French magazine "Manière de Voir" NÁ42:
"Using patience and aggressiveness, transnational firms and major financial establishments have managed to make the general rules tally with their own private interests and guarantee extended and strengthened power over states. Law makers and citizens have been kept in the dark concerning the discussion while the OECD's text (170 pages) was 90% completed."
M. Wallach says further that the affair of the MAI was revealed only through the American citizens' demonstrations against the "fast track" process of commercial negotiation, a process that enables the US Congress to give the President authority to undersign commercial agreements which can subsequently not be amended by the representatives. Therefore, the Congress came to know about the MAI negotiations in April 1997; those negotiations had been under way with the State Department and the Treasury for three years.
The "fast track" back-fired in a way, since Clinton became aware that he did not have a majority in Congress. In 1998, he gave up the fast track to negotiate a free trade zone for the Americas.
M. Wallach underlines that the collapse of the wall of silence reaches speedily beyond the boundaries of the USA. Quoting the case of France, he says:
"In France, the President of the committee for foreign affairs in the AssemblÚe Nationale, Jack Lang, who was however, directly concerned, was declaring in December 1997 that he did not know who was negotiating, what was being negotiated, on behalf of whom it was being negotiated".
The American government men denied the text existed till the day when an international coalition of citizens' movements laid their hands on a copy. The State Department and its OECD partners winced but that copy was made easily accessible on the web.
On that backdrop, as early as June 1997, the International Liaison Committee was able in its turn to break through the wall of silence, publicise and denounce the shady deals being carried on in Paris at the headquarters of the OECD.
The treaty aimed at giving and extensive definition of investment, meaning any asset held or directly or indirectly controlled by an investor. It would have had the weight of an international treaty which means that it would have superseded any national laws as well as bilateral or multilateral treaties including those of the European Union.
The treaty was schemed to impose unconditional submission of all the contracting states to international reference in the case of conflicting interests, when differences arise between states or when an investor brings an action against a state.
It must be remarked that the reverse, that is the case of a state bringing an action against an investor is never mentioned. Besides, in the MAI, an investor's liability is never mentioned, which underlines, should it be necessary, how weighty the multinationals are in the global political debate and how they weigh on all the segments of society.
In another part of the MAI draft treaty, the existence of public or private monopolies is not questioned but, as the text outlines, bringing a reservation into light, "they have to act in the light of commercial considerations".
But, what is most important in the draft text is that a monopoly can offer different prices in its political field of competence "when those differences are grounded on normal considerations such as taking into account the balance between offer and demand on those markets".
Such provision comes as a natural annex of the provision of the Maastricht treaty concerning "the existence of an open economy where competition is free". As we have said, the European Union is, in its place, an active part of the global economy.
This confirms the liberal general trend that entrusts multinational private enterprises or money- making associations with public services missions; that rapidly leads to the dismantling of public service, bringing in its wake all sorts of consequences on the status of the staff concerned.
Besides, the trend towards globalisation in the political sense of the term, becomes the only path for the policies that have been democratically decided by each of the contracting nation-states, since they can no longer take socialist measures of nationalisation or state ownership. The MAI imposes the ruthless law of total economic liberalism and rejects any intervention of the state whatsoever.
In the most hushed up and secret way, those states that have entered the MAI negotiations have accepted the imperialist law of transnational firms, the new global political entities that dictate their laws to the nation-states, kicking the citizen's aspirations in the teeth; ready to violate if needs be their own international commitments, especially to the International Labour Organisation (ILO) as well as the Charter of the states' economic rights and duties, adopted by the United Nations in 1974. That charter quoted that "each nation-state holds the unalienable right to manage foreign investment and to control investments."
With the repeal of the MAI, the OECD lost a first battle. Doubts remain however since some were compelled to give lip service to criticising the secrecy of the negotiation within the carpeted and padded drawing-rooms of "La Muette chÅteau" in Paris, the OECD headquarters, most of those engaged consider the negotiating process must be resumed in the broader framework of the World Trade Organisation.
In its NÁ 374 issue, the French weekly "Information Ouvriéres" was writing that "the notable draft multilateral agreement on investment (MAI), far from being rejected is actually. now being implemented". The weekly quotes a statement by the French socialist prime minister Lionel Jospin, delivered on October 14th 1998 in front of the Assemble Nationale, that is long after the secret negotiation on the MAI were abandoned on May 18th 1998. says the French prime minister:
"Some states and foremost the USA, stated considerable doubts on the very content of that agreement(...) France shall not participate in the negotiations due to be resumed on October 20th in the framework of the OECD (...) France will suggest to its partners that negotiations on the problems of investments be resumed on quite new bases in a framework that will associate developing countries. We consider the WTO to be the natural framework for that.
That opens no way for misgivings. Actually, concerning international investments, multinationals impose their conditions through bilateral agreements even without waiting for the negotiations on MAI to be resumed. The French magazine "Alternatives Economiques" issue NÁ 168 first highlights the prominent place taken by emerging countries in the world economy. The number of bilateral agreements increased twenty fold between the 1960's and the 1990's. That proves how large a share the Southern multinationals have acquired, 38% of the agreements have been signed between developing or being developed countries. Whereas thirty years ago, only 51 countries were involved, now 162 are, meaning nearly all the countries in the world.
Even when they are signed by two countries, those bilateral agreements on investment actually outline the rules of the game between the multinationals and the countries where they place their investments. Therefore, they rather serve the interests of the multinationals in so far as they define obligations only for host countries, not for the enterprises. An example: from now on, treaties include not one but several schemes to solve conflicts between enterprises and states. In all the cases, it is the investor who has the hand. Moreover, signing a treaty does not at all guarantee more investments in host countries. The size and rate of growth of the market are more decisive factors for the decision to invest. That is why the momentarily aborted draft on Multilateral Agreement on Investment (MAI) which will no doubt be taken up by the WTO, tends to give an official definition of a new right for multinational firms to impose their economic domination on the global scale.
The World Trade Organisation (WTO), was created in 1995. It succeeded the General Agreement on Tariffs and Trade (GATT), which had been created in Geneva in 1947. The GATT was a mere forum of negotiations about mainly Tariffs and customs duties on a list of commodities and services, each state remaining free to apply to one commercial partner the so called clause "of the most favoured nation".
According to the analysis given by Bernard Cassen in the French Magazine "Mani¶re de Voir" NÁ 42, the World Trade Organisation holds that "developing international trade allegedly remedies all the planet's evils. Consequently, it should not be submitted to any social, ecological or human right restriction whatever. In fact, the WTO is the spearhead wielded by transnational firms. the free-for-all free trade it brings about gives priority to the interest of the most powerful states' enterprises. Washington has the upper hand there.
There are currently 131 members of the WTO. China and Russia have not joined yet. The WTO now has the status of international organisation, whereas the GATT was just a body facilitating negotiation between states.
From now on, all the member states however radical their speeches or their avowed intentions, will turn a blind eye on the WTO's round the clock's efforts to produce free-trade.
From now on, concerning international trade, the national policies will be closely watched, any form of state intervention running counter to the rules of free-trade will be riled as protectionism and targeted by the WTO.
It should be remembered that the WTO is actually a tool at the hand of the 200 major transnational firms; it is becoming the active power of free- trade that has been set up as global dominant ideology, boosted by the institutions that transmit and control it.
The rules of international trade, especially those resulting from so-called "unnatural" competition by exporting countries where norms and working conditions are little respected or not at all, raised many discussions and controversy concerning potential application of the "social clause"; The American government, urged by Congress, itself pressed by enterprises, wishes to protect its domestic market against imports from countries where the minimum labour rules are not even applied, more precisely concerning forced labour, like for instance China where exploitation of child, women and political prisoner's labour is an unavoidable political element.
Moreover, not only the universal Charter of the rights of man is violated , the labour right charter , as defined by the constitutive Charter of the International Labour Organisation is violated too. It would be however wrong to assume that only so-called emerging countries are guilty of such violations. Indeed, the USA's government, elsewhere a doughty defender of those generous principles, has ratified only one of the seven conventions it wanted written in the "Declaration on the Fundamental rights of workers", voted by the general convention of the ILO in June 1998.
The WTO, an authority on free trade and free exchange, refuses to consider any form of "social clause", the latter being immediately branded as "protectionism". For other motivations, the WTO sides with the heads of states of emerging countries who are often the spokespersons of local bosses but ,above all of the multinationals established in their countries.
When one knows that most of these multinationals are based in America, one can assess how vain the desire expressed by the American government to have any form of "social clause" introduced is. The American administration's alternative is merely made for domestic policy's sake.
Against that backdrop and concerning labour protection, workers' trade unions are determining, especially those who act in countries where democracy's elementary rules are violated. Therefore, those organisations of workers' defence need the unfailing support of international organisations to have their demands met.
The grassroots themes of the WTO such as liberalising financial assets, protecting foreign investments, lowering customs duties in order to set up regional macroeconomics and interactive exchanges have a sole purpose: globalising ever more and bypassing nation-states discarded as shackles hampering the global development of exchanges.
"We have to meet the urgent needs of the world market , as there is no other option", Renato Ruggiero, WTO's general chairperson was declaring in a speech delivered in Geneva on November 12th 1995.
Besides, the selfsame Renato Ruggiero was hyping over international trade growth rising three times faster than that of the world output in 1995. quoted by the French magazine "Mani¶re de voir" NÁ 42, the American economist Paul highlights four types of phenomenon:
"-Increased horizontal trade, meaning exchanging the same commodities between similar countries.
- The capacity of producers to segment the chain of value by scattering the production process over numerous geographic sites.
- The resulting rise of commercial superpowers, of countries where the ratio trade/GDP is really high. - The news that causes most worry which is the export of huge quantities of manufactured goods from low wage countries to high wage countries."
Through this pattern, outlined mostly by a shrinkage of the solvent market, we are faced with fake trade since, especially in the first case quoted by Paul Krugman, commodities merely travel from one country to another, each time being the object of speculative transactions as a result of the "traffic on origin".
In the second case, those are merely "screw driver factories", that complete the production process as close as possible to the solvent market using the most favourable exploitation conditions for the firm. Scattering the process of production brings about instability of the fixed capital, undermining the economies based on exports as the crisis that hit Asian countries showed recently There have been immediate shock waves that hit the economies of developed countries, outsourcing entailing unemployment in the unskilled positions, downgrading of working conditions and extending casual jobs.
As everyone knows, one man's joy is another man's sorrow, which urges Bill Clinton, USA's president to write in 1996: "American companies are those which benefit most from the globalisation of trade".
To conclude this chapter on the WTO, it is interesting to quote the end of the lecture given by Karl Marx in 1848 under the title "Speech on free-trade".
"In the current state of society, what is free-trade? It is freedom for the capital. When you have brought down the few national ties that still restrict the market of capital, you will only have made its action entirely free. So long as you leave the relationship between salaried work and capital untouched, although the exchange of goods will be achieved in the most favourable conditions, there will always be an exploited class and an exploiting one.
"It is really difficult to understand the claims of the free-traders who imagine that more advantageous use of capital will bring the antagonism between industrial capitalists and salaried workers to nothing. Quite the opposite: the only result will be that the opposition between those two classes will be .sharper still.
The fraternity that free-trade would bring about between the world's different nations would not be more fraternal. The idea of calling world-wide exploitation universal fraternity, could only be put forth by the bourgeoisie. All the destructive types of phenomenon that free trade beget inside one country are copied in gigantic proportions on the market of the universe."
1944 corresponds both to the creation of the IMF and the signature of the Bretton-Woods Agreement. The IMF was meant to warrant a new international monetary order, grounded in the principle of fixed parity.
When President Nixon repealed the gold Exchange Standard in 1973, he put an end to the US dollar's being geared on the price of gold, thus pulling down fixed parity and introducing the system of floating exchange rates.
The IMF was brought in front of a fait accompli (which gives much to think about its independence), was turned into a warrant of the paying back of the foreign debt of states through the mechanism of the so-called "structural adjustment plans" whose harmfulness has everywhere been proved. Michel Camdessus is very vocal in his claim that "his economists are the best in the world". The authority of the institution and its general director in particular has fallen so far into disrepute, especially over the crisis in Asia that world leaders notably those of the USA consider that reforming the IMF is on the agenda.
For the 670 million people whose governments have had to submit to the IMF's directives, the parallel increase of the debt because of the interests' requisites, the slashing of social budgets and soaring destitution are facts. On closer scrutiny, the criticism leveled at the IMF and especially at its general director never question the ultra-liberal orientations that underpin the institution's action. They are however the harbinger of some worry over the social consequences and above all, the people's legitimate and often violent reactions which they bring about when those are faced with brutal cures applied without any qualms by the IMF.
Many have denounced the drastic rules imposed on dozens of poor countries in the name of "structural adjustment programmes" Recently, some, with special interests in view have joined others that represented less powerful interests.
Already, on September 24th and 25th the international Lima Tribunal was convened in order to judge the IMF's crimes together with those of the World Bank and the EEC.
What was presently to become the International Liaison Committee was denouncing there the brutalities of world capitalism that now had a free hand after the collapse of the Berlin wall in 1989; it especially denounced the behaviour of those institutions at its beck and call, foremost among them the IMF coined as "a device set up to plunder peoples".
The policy of the IMF has now been proven a failure. Writes M. Gabriel Kolko, an American historian in the French magazine "Mani¶re de Voir" already quoted: the bulk of those strategies has led those countries that underwent them to their decline, therefore to increased suffering of their societies.
The historian continues:
"They have shown how harmful that dogma the IMF shares with other international economic and financial institutions is: to-wit requiring development to be founded on exports. Paradoxically, the best arguments against the dangerous fallacies of the IMF and to demand its termination ,can be found in its own reports." Since 1987, the IMF has created "reinforced structural adjustment facility" (RSAF) to offer loan opportunities to developing countries with low GDP. Continuing on Gabriel Kolko's study, ten years later, in August 1997, out of 79 countries likely to use this process, only 36, inhabited by 670 million people, had decided to do so.
The IMF was giving those most heavily indebted countries some hope to right their balance of payment as a result of profit-giving investments; in exchange they were to pledge themselves to co-operate with it "to draft specific and assessable projects concerning financial policy"; it opened the tap of the World bank's finances.
When implementing those conditions, the contracting countries lose the right to have their say concerning economic provisions or planning.
To help pay back the debt and its interest, priority is given to production meant for exports. IMF coalescing with multinationals - in emerging countries those concerned with the agricultural sector, this leads to discarding small, food-producing plots of land to the benefit of mass production, such as sugar cane in Latin America. Latifundia owners benefit, making use of force to wrench lands from small sharecroppers. Naturally, corrupt governments turn a blind eye on those manoeuvres.
The arrival of genetically modified organisms that are infertile submits small sharecroppers to the seed providing trusts which thus wield a monopoly over seeds and therefore "a mastery over life" Besides, genetically modified organisms allegedly are not harmful for health. Yet, there is no proof of this claim concerning public health. The same is valid concerning Creutzfeld-Jakob disease, the so-called "mad-cow" disease; its has now been declared that "meat produces" used in cattle fodder was the culprit. The disease continues to wreak havoc whereas "meat produces" for cattle fodder have been banned for nearly ten years.
There is a partnership between the IMF, its structural adjustment policies and transnational firms.
The IMF's method makes sure that the imposed criteria be implemented in the contract. Contrary to national sovereignty, each contracting country hosts an IMF agent who makes decisions in the place of the political institutions of those countries. That is due to conditions that compel to accept "performance criteria" to be assessed every six months, sometimes every month, bearing on essential aspects of the domestic or foreign policy of those countries that are thus assisted.
Of course, those criteria have to be met if the World Bank's tap is to be left open as well as a huge share of bilateral help with other countries that do not want to loan "without security"
Gabriel Kolko, already quoted, concludes: "The IMF thus wields power that largely outranks its sole financial asset".
Despite the IMF's rosy promises, however, the expected results do not show; indebted countries are battered by the highs and lows of richer countries' economies and especially because of low demand, they have been sorely hit by the plummeting fall of raw matter's prices.
That has led to further plunge in debts, piling up of interests that far outsize the amount of the debt proper and an endless accumulation of loans whose outcome is, as we have already said, budget cuts, with social budgets coming first.
Once again, some, among whom France, ask that the poor countries' debts be annulled (official figure 2 170 billion dollars). The fear of serious social and political troubles spurs this initiative. Let us wait and see.
For the 36 countries which have as yet accepted structural adjustment plans, despite optimistic reports offered by the IMF's leaders, the per capita GDP by the year has fallen (minus 1.1%) between 1981 and 1985, that is before the programme was started. It is nil between 1990 and 1995.
To compare with countries outside the IMF's field of influence, the rates for the same periods are plus 0.3% and plus 1%. The foreign debt of countries where structural adjustment plans are rife rose from 82% in 1980-85 to 154% in 1991-95. In countries that remained outside the IMF's field of influence, the debt rose less steeply: from 56% to 76%.
The historian Gabriel Kolko uses two example as reference point in nearly similar economic conditions. The first one in India. The Indian republic did not sign any agreement with the IMF concerning reinforced structural adjustment plans (RSAP).
The second example is Pakistan and Bangladesh. Concerning India, on the opposite of other low GDP levels, that country shunned the solution of gearing its development on the growth of exports; the result has been a steady 3.2% rate of growth.
On the other hand, Bangladesh and Pakistan, in the tight grasp of the IMF's directives, have shown a rate of growth nearly three times lower than India's for Pakistan and twice for Bangladesh.
India withstood the crisis in South-east Asia better as it was not rocked by the fluctuations of the world economy since its priority had not been foreign trade. The IMF's influence leads to chaos by urging the most vulnerable countries to integrate world-wide, global economy, foreign investments lord it over and generate deflation, pull down the economies for the benefit of speculators' fictitious economy.
By playing the arsonist fire-fighter, the IMF is directly responsible for the situation of those 670 million people whose governments have had to bow to its directives and are now caught in the hopeless stranglehold of endless debts and destitution without remedy.
Ten years after it was denounced by the Peoples' International Tribunal convened in Lima in 1989, the continued plundering of peoples led by the IMF continues to pile up crimes and misdeeds
Faced with the development of transnationals, and with speedier flows of capitals and investments across borders, the governments of second rank nation-states deprived of any political will to say: "no" are now incapable to get a firm grip on the forces of the market.
From social liberalism to friendly liberalism, the whole array of institutional political forces openly recognise the laws of the market as their master.
They take their share in accepting the policies of nation-states to be totally liberalised and submitted to the sole rules of global economy under the decision making of American imperialism. Social-democracy, apart from its previous acts of capitulation in its history, could at least claim it represented a trend of the international workers' movement.
The example of Europe proves it, from now on, social-democracy groping for a third way turns into a loyal ally of world capitalism. It accepts to play the role of ambulance man of capitalism by limiting its action to making the losses of capitalism "socially friendly" by favouring the privatisation of its profits. That is the case in France whose social-democrat government opens nationalised enterprises to private capital while helping companies to speed up the restructurations, spelling lay-offs, flexibility and social deregulation.
According to Marxist logic, the French example can be copied everywhere all over Europe and the whole world. The result is expected: France has become wealthier by 80% since 1973, whereas poverty, as elsewhere, has steadily increased.
Globalisation organisations and institutions play a leading part by furthering and copying those patterns on the global scale, deepening the inequalities of power between states.
That is why the most powerful among them round up global institutions to serve their own interests and those of their companies to the detriment of the less well provided ones.
When one reads the statutes of the World Bank, the founding text of the institution bans the interference of any political consideration. Well, it is quite clear today that Iraq for one, even if its economic needs are blatant, will get no help from the World Bank, the IMF, and other such international organisations while Saddam Hussein remains in power. The same is valid for Cuba and Fidel Castro.
However, those self-styled models of democratic virtues do not turn a hair when it is China which is concerned. They did even less when Pinochet was ruling Chile according to his own wisdom. The French magazine "Alternatives Economiques" NÁ 40, quotes the case of after- war France:
"The first installment of help handed out by the World Bank which was due to finance the setting of French economy back on its feet was delayed till, in the words of the USA's State Department, French policy had been set on the right track, that is, till the communist ministers had left the government. As soon as that was done in May 1947, the World Bank forwarded funds within hours."
That brings substance to the principle of "loans on condition" favoured by the Bretton-Woods institutions (IMF, World Bank). It outlined with ever finer precision the new geo-political boundaries in the aftermath of the 1939-1945 conflict.
Those political conditions have increasingly been furthered by political conditions, at the expense of the less powerful developing countries. The old saying "only the rich can borrow money" has been fully applied. From this basic assumption have sprung "structural adjustment plans" implemented from the 1970-80's. From then on, those would-be incipient countries have had to accept drastic economic reforms while giving up their political powers of intervention.
For the structural adjustment plan is always granted on condition that the economy should work in a liberal way, discarding any intervention from the state whatsoever; total liberalism being supposedly the only road to development. It follows that the dictate of single liberal thinking is the antithesis of collective, nationalised, or socialised economy.
The structural adjustment plan imposes private enterprise, chooses what will be produced, always, as we previously said, with the purpose of exporting.
That is supposed to favour the paying back of debts to the IMF, the world Bank and bilateral lenders, but more certainly the paying of those pound-of-flesh interests; those now amount to more than the borrowed sum.
That has reached such a level that "debts and interests attached" owed by emerging countries have become assets in the stock markets through the "equity market".
That policy speeds up the process that tends toward the death of capitalism, since it is oriented towards exports at the expense of the domestic market. the latter increasingly loses its solvency because of sluggish and lowered spending power, artificially boosted as in the USA by credit sale and speculation on the stock market.
Writes economic observer Peter Georgescu:
"We are witnessing the death throes of capitalism. From domination of excess demand, the world has shifted to domination of excess offer."
That characteristic evolution of what is happening in Japan means deflation, hence, permanent crisis.
The logic of the IMF and the World Bank mainly serves the interests of major powers.
The 1997 crisis in Asia bears testimony to that when, screened by the IMF, the USA imposed the liberalisation of the Korean financial sector demanded by American banks.
The moguls of the private sectors deeply influence the institutions of globalisation, especially the transnational networks and their capital nuclei whose turnover often totals more that the Gross Domestic Product of more than half the UNO member states.
After the ups and downs of the MAI (merely postponed) because of the growing influence of American-dominated multinationals, an organisation such as the International chamber of Commerce, one of the most influential boss "lobbies" world-wide wrangle the right to act as "impartial referee" to smooth out differences between governments and companies.
The role and function of the institutions of globalisation increase as the influence and power of nation-states decrease, first in rank, the least strong ones.
Acting as weapon wielding bodies of dominant powers, deprived of any democratic legitimacy, those institutions herald the birth of global totalitarianism.
This is why the projected reform of the UNO is not haphazard. this reform has been imagined to give some democratic veneer to global institutions, which they to day lack; to take their share in setting up a universal consensus between the forces of capital, those of labour consensus that is supposed to leap over class antagonisms.
The title of this chapter is borrowed from survey that was written in 1993 by Robert Reich, a lecturer at the John Kennedy School of Government; he was appointed Labour Secretary of State in the Bill Clinton administration.
In his introduction, Robert Reich outlines the pattern of what is now called globalised economy as well as the transformation of nation-sates into regional entities depending on this globalised economy.
Writes Robert Reich: "What with lower costs of transportation, the extraordinary development of telecommunications and the inevitable opening up of frontiers, economy is going global. Against this new backdrop, large traditional firms gradually give way to traditional global networks whose working logic is quite different.
When watching the wonderful design of the latest Mazda, one may think that it once more proves the supremacy of Japan is this field. Actually the body is designed in California, the parts made in England, assembled in Mexico including electronic components conceived in New Jersey and manufactured in Japan. That example raises the question of who owns and does what inside present day closely overlapping economies. Nowadays, it would be obsolete to think in terms of nation. Therefore, the objectives and the means of industrial policy must be overhauled. In developed countries, the gap is widening between a minority of people who benefit by their capacities on the world scale and the remainder of the working population, who are now competing against third world workers. Inequalities deepen. But the wealth of a nation is its human capital. To put it to use and therefore guarantee future economic prosperity, an effort must be done specifically in favour of education and training."
One could say: what for and in the service of whom? We naturally grant the writer the right to reach his own conclusion; as we can see today, it is a far cry from reality. Dole queues are mostly made up of educated, trained, fully qualified men and women.
Actually it is not at all capital that is extensively developing, if we are to take Marxist analysis as a guideline. Robert Reich's description of the American crisis applies to a pattern that repeats itself all over the world, with slight differences brought about by the existence of national political structures, the most prominent being the place taken by the state in the process of production.
Because of the continued system of the private ownership of the means of production and exchanges, what Robert Reich describes, is in truth due to the fact that capitalism is faced with the tendency to decrease of the rate of profit, and tries to get adjusted to a shrinking market less able to pay its debts because of lower wage rate.
Taking the example of the United States, Robert Reich states that saying that major firms' profits have been going downhill for twenty years has become common place. The net average, tax- deduced profit of major, non financial American firms climaxed at nearly 10% in 1965, slumped during the 70s, rose between 1982 and 1985, then slumps again.
Taking into account price increase, the Dow Jones index (New York Stock Exchange) during the 1980s is actually below its January 1966 price.
Besides, the five hundred largest industrial firms have failed to create a single American job between 1970 and 1990; their share of civilian jobs has plummeted from 17% to minus 10% during the same period. Foreigners own an increasing share of American assets, a proof of globalised overlapping capitals. In 1977, non-Americans owned the value of a paltry 3.5% of the USA's manufacturing capacity. In 1990, foreigners controlled in effect 11% of the American industry and hired more than 10% of American industrial labourers. Meanwhile American companies sped up their investments abroad frantically.
Between 1980 and 1990 their investments in the USA have increased less than their spending abroad on new equipment. In most industrialised countries capital transfers are no longer controlled. Varied traffic, drugs, weapons, even in the most sophisticated fields are now given a free hand since frontiers have burst open, overriding states, usually helped along by Mafia-run networks that fill in the space of police functions left vacant by defaulting states.
Studying "economic nationalism", Robert Reich quotes Adam Smith, a British economist and his "Study on the nature and causes of the wealth of nations": "Adam Smith studies universal economic principles but he refers to a purely national framework. He condemns English mercantilism, not because it reduces the wealth of other nations but because it impoverishes the English citizens."
Today, globalised economy smashes the narrow framework of Nation-States. During the 50s, the nucleus of American economy was roughly made up of 500 companies producing half the industrial output.. General Motors, the world's first industrial society, produced single handedly 3% of the American Gross Domestic Product, equalling the Italian Gross Domestic Product.
General Motors existed within a global context, on a line with an industrial factory system based on mass- and standardised production favoured by the Ford model, bolstered by the motto: "what is good for General Motors is good for the USA What is good for the USA is good for the world!" Other companies that acted along the same lines as General Motors, complemented American industrial force. Faced with this sort of imperium, the "Securities and Exchange Acts" of 1933 and 1934 gave small shareholders some protection.
Small retailers got some negotiating power against chain stores thanks to the Robinson Patman Act and the laws on "fair trade" on the level of States. Such "counter-powers" actually legitimated the role and objectives of major companies in the USA. Gradually, the major firms' managers regarded themselves as "industrial manager-cum-statesmen" whose mission was to act as referees between the shareholders' demands, the wages earners and the American public at large. Surprisingly, as Robert Reich points out, the American public saw eye to eye with that view.
Along the same line, as soon as the war was over, the USA stepped forward on the industrial, economic and capitalistic turf as leaders, using the national territory as basis towards industrialising countries. Against this backdrop, the so-called Taft-Hartley Act, a law, voted in 1947 by a Congress that fully endorsed the new leadership in the business world laid out the first bases of liberal deregulation. It banned closed-shop hiring, secondary boycotts and cold-shouldering.
This law gave the president the power to ban the strikes that were a hazard to health of national security and to demand a 90 day freeze before the strike actually took place.
The American economy, against the period's background still worked in a closed circuit; yet it started to bear on the free world's economies. In 1960, only 4% of the cars bought by Americans were manufactured abroad. The same is true for steel, 4 % of which only was imported.
Hardly 6% of T.V. and radio sets and commodities using electronic components came from abroad and 3% of machine tools.
For strategic reason, the USA endeavoured to spread its consuming economic model, in order to erect yet another bulwark against the expansion of communism.
During the Summer of 1955, "Fortune" magazine wrote "Today the USA's free market is the wonder of the world".
Continuing its demonstration, the magazine wrote on: " Its international expansion would force the soviets to meet combined forces that they could not overcome while strengthening the statement of those principles of freedom on which our nation developed and rose to greatness.
That bears the hallmark of 17th century New England puritans who, hardly had they settled the colony, laid the foundation stone of American ideology. It was to last, come hail or high water, with the nearly religious feeling that it embodied THE social and political truth that was to assert itself everywhere in the name of the struggle of Good against Evil.
As for Robert Reich, he naturally realises that "the United States showed the way to world capitalism moulded on American capitalism". This global approach has to be compared with the one already defined by Strauss-Huppé (see above - USA) which in 1957 already, foresaw that "The USA would get the better of the USSR thanks to their superior system".
It has to be emphasised that all the events that took place during the 1950s - 1960s - 1970s which were called in the USA "objectives for the security of the nation" naturally and systematically met the major firms' interests. By helping to settle the world's dominant economies with the purpose of keeping communism at bay, the new global system of trade and help, sponsored by the USA, brought major firms new opportunities to develop and thrive.
Since the Bretton-Woods agreements, the dollar had become the reference currency of fixed exchange rates, American Firms and banks could straddle national borders without taking many risks. That entailed increased American power over those institutions stemming from the Bretton-Woods Agreements, first and foremost, the World Bank and the International Monetary Fund.
The USA increased its empire and its influence with the excuse of countering the spreading of the world's "communist imperialism" represented by the USSR and by China. The CIA used the excuse of "communist plotting" in those regions of the world where American major firms happened to own, sizeable chunks of natural resources or would have liked to.
Here again, we have to quote Robert Reich when he writes:
"When in 1953, an Iranian, anticolonial, nationalist movement, led by Mohamed Mossadegh, challenges the Shah's power and lays hand on the Anglo Iranian Oil Company, the CIA secretly provides officers with millions of dollars. They are in charge with setting the Shah back on his throne. Once this mission is fulfilled, the tap of Iranian oil is turned full flow on Gulf, Texaco, Socony, Mobil and Standard Oil of New Jersey."
By the same token and in the same way as the American ARAMCO had ditched the British, with the complicity of the Hashemite dynasty, the American companies, with the complicity of the Saudi dynasty ditched the British Petroleum Company, which had lorded it over Iran through the Anglo Iranian Oil Company.
The scene was played again in South America. In 1953 Guatemala's democratically elected president, Jacob, Arbenz Guzman, launched a programme of agrarian reforms. One of its principles was to confiscate plantations from the United Fruit. The CIA hired extreme right thugs. In 1954, helped by CIA pilots and planes provided by Nicaragua dictator Anastasio Somoza, they saved United Fruit from the throes of social confiscation.
The same happened in Vietnam where the French army, 70% financed by American money and defeated at Dien Bien Phu, was replaced by the US expeditionary force with the excuse of protecting a natural resource-rich zone from "communist"grasp, all averse to American interests.
In 1965, when the civil war in the Dominican Republic threatened American sugar plantations, Lyndon Johnson sent a task force of 30 000 marines to restore order. A similar situation was repeated in Panama in 1987. American agents laid hands on Antonio Noriega, a drug baron and a former CIA agent from 1972 to 1982; he was becoming a thorn in the side of Uncle Sam as he was pulling at the leash of American imperialism in order to favour France in token of admiration for Ferdinand de Lesseps who initiated the Panama Canal construction (he was awarded the Legion of Honour by France).
The American national compromise benefits from this policy. Robert Reich shows this when he reckons that during the after-war period and during the 1960s 1970s 1980's major planned American firms produced a large quantity of commodities, meanwhile trimming production costs. Since major firms were coordinated, monopoly prices remained high enough to maintain sizeable profits.
A large share of the profits was extensively invested back in new factories and new equipment, a significant part of those same profits benefited blue and white collar workers. During that period, writes Robert Reich, union activists shunned industrial action that would have hampered mass production. Capital and labour, refrained from setting prices at too high a level, which would have sparked inflation.
The government did not meddle in firms' decision-making, leaving private planning have a free hand, while helping them co-ordinate production and prices. Education prepared the American youth to fit in the industrial system based on mass production. The government subsidised the purchase of new lodgings and built a national road network; both decisions further boosted mass consumption.
This system worked along its own logic. The business world, major trade unions and the bulk of the collective body subsidised this mass production with a view to an increased volume of economy, which, in return, helped American middle class to gain weight, by giving it the means to buy this increasing production.
In a nutshell, Robert Reich's pattern shows a compromise on strictly national lines. The terms do not depend on domination of foreign markets as they used to do under the old forms of mercantilism and imperialism. American multinationals' investing abroad is rather considered as a supplementary means of widening the inner virtuous circle and, further, to prevent communism from spreading out in the world.
Thus, through this compromise tacitly agreed on by all the interested parts (except the blacks and women) the American middle class knew unprecedented development and prosperity during a quarter of a century. Europe and Japan shared in this boom, which the French economist calls "the thirty Glorious years".
Their own national compromise, less tacit than the American one, is founded on the same logic of standardised mass production which fuels upward mobility. Robert Reich gives a global analytical conclusion when he speaks of the immediate post war period.
30th of June 1980 "Business Week", concluding on the evolution of the so-called Krondatiev cycle, writes: " American industry's loss of competitiveness was a far cry from an economic disaster". Some American capitalists, as RCA, Westinghouse, Dupont, Armcosteel and General Electric, got outside the USA to sell patents to the Japanese, thus helping Japanese firms take their flight.
Indeed, the framework of America was proving too cramped since the USA standing on its after-war dominant position, has entered a phase of capitalistic depletion, alongside the fall in average profit rate; it strains at the national market, tending to burst through it and it brings about the end of the national compromise which it had entailed.
This new phase is extensively described in the French study written by Daniel Gluckstein, under the title "Class struggle and globalisation", especially in the chapter entitled: "The United States and the world: Crushing domination, not without inner contradictions" (Selio published)
American capitalism, after the euphoria of mass production, realises that foreign nations start their own mass and standardised production of manufactured commodities. American consumers grin when foreign firms, Japanese and Asian firms in the first line, start flooding the domestic market: cars, T.V. sets, domestic appliances, steel ingots, textiles, often better quality are sold cheaper than those produced by American firms. Wage and fringe benefits costs do not completely account for the difference.
Writes Robert Reich: "foreigners can build modern factories and manage them as efficiently as the leaders of national American champs. Then, they can ship their standardised products to the USA end sell them at remarkably low prices thanks to the growing efficiency of long distance transports and telecommunications - cargo ships and planes, sealed containers that can be lifted on to trains, ships, planes and lorries, submarine cables, then telecommunication satellites, transmitting signals from continent to continent.
Those products (Transistor T.V. printed circuits) have lost weight and volume while the cost of transportation by ship or plane of a kilo of American imports has fallen by more than 4% a year, constant dollar value."
Inescapable consequence: by the end of the 70s, major American firms can no longer impose their prices. They have to meet fierce competition head-on. Writes Robert Reich, it bites like the competition that, a century ago, accompanied the birth of mass production.
The great American firms that lead the social compromise bet on protectionism; they demand state intervention. Taking up ancient methods, American capitalism endeavours to prevent cheap products from entering the country. Textile firms and trade unions insist on new customs barriers. The same is true of steel producers and manufacturers of T.V. sets and other commodities based on electronics such as car and semi conductor makers.
By the end of the 80s, nearly a third of standardised goods produced in the USA is protected from international competition. a sure sign that this phenomenon is not limited to one country and that the global entity is looming ahead, the American model tends to be copied elsewhere. In France, in 1981 the unified left government, chaired by FranÙois Mitterrand, has customs authorities seize Japanese electronic commodities.
Americans contend that the rules of ‚normalé competition are not respected. Other Western world leaders follow suit: -1. Wage costs, low salaries, working conditions equal "dumping" and favour the exports of developing countries. - 2. A large exporting country such as Japan is accused of state-favoured dumping by subsiding export industries. - 3 - American and western firms accuse each other of "traffic of origin"; this means that a Western state gives its national label to goods bootlegged from developing countries. Great Britain and France are mostly targeted because of the tight links they maintain with their former colonies.
But exchanges running increasingly smoothly favoured by speedy communications hammer at rigid rules and tight national borders and smash them. Technological revolution leads to unhampered flow of capitals and a formidable growth of financial markets that impose their dictates to national economies and policies that eventually bow their heads.
From the American example, it is easy to show that protectionism strategies collide with the principle of "open" economies, spelt "democracy". From the collapse of the Berlin wall in 1989 whose shock wave shattered Eastern Europe's planned economies this tenet becomes predominant everywhere. As for China, it turns its own variety of "communism" into an authoritarian regime that gives little leeway to the capitalist mode of production. The same model is copied in other Asian countries that are all part of the "dollar" zone.
Liberalism comes to the test. Thus, after American iron- and steel-producers had blocked the way to imported steel, the three major American car makers realise they have to pay 40% more for their steel than their world competitors. The same is true for textiles and computer makers when foreign chips were banned from the American market.
Leaking frontiers and various schemes speedily overtake institutional protectionism since, in the USA, according to Robert Reich, the value of imported commodities compared with the domestic production soars from 14% to 38% between 1969 and 1979. In 1986, it rose again to 45%. When they spend 100 dollars on commodities manufactured in the USA, American buy 45 dollar worth of imported commodities.
In France, as soon as 1980, the export market covered 25% of domestic jobs. Add the fact that American protectionism shackles it on the world market as bilateral practise becomes the text book of commercial agreements.
Besides, it is obvious that this protectionism policy does not favour wage earners' spending power, quite the reverse. They face stagnating salaries whereas consumer prices cannot make up for the freeze in spending power.
The lack of expected results of the first strategy based on protectionism due to outside pressure is now known to all the industrialised OECD countries. Once again American major firms find something new and use a second strategy.
They consider that what foreigners can produce inexpensively, American major firms can do it too. The first step is to pressure salaries and labour costs downwards to achieve significant decrease. Following the lead of American major firms in the 1980s, decrease of labour costs becomes the order of the day for capitalists and their governments in all the industrialised countries of Europe and America. Along the American model, western countries industrialists tackle rationalised production by closing down factories that are considered not profitable and making workers redundant.
When those measures meant to pressure down labour costs are not sufficient, industrial firms delocalise their production abroad, selecting first those countries where commodity production is cheap, those that were considered guilty of pulling down profits.
From then on, the wage/ turnover ratio becomes the favourite auditing tool. Moreover , what with the weight of "institutional" investors, investment funds, bonds and now pension funds, an investment is assessed as profit-giving when it rakes in at least 15% surplus-value per capital invested in the stock market. A new cycle is therefore entered.
In his survey, Robert Reich remarks that the bulk value of imports from factories abroad, owned by Americans rises from 1.8 billion dollars in 1969 to roughly 22 billion in 1983, constant value currency. as they cannot discard this new phenomenon, major American firms try to join in.
As we are going to see, capital is not actually expanding as was the case in the rising phase of capitalism, while productive forces were being developed, allegedly to keep step with the movement. What is happening is that capital is being re-dealt It is faced with decrease of the rate of profit, in correlation with the shrinking of a market whose solvency is diminishing because of the constant decrease of wages and mass unemployment as a consequence of the glut of increased- profit seeking capitals hence of relative surplus value.
This strategy of new industrial deal cannot possibly restore the profits of most firms that use it Even driving labour costs down to the level of foreign competitors cannot restore profits. The resulting free-for-all competition rife all over the globe undermines the best firms. As industrial strategy cannot guarantee a steady average profit rate, firms move to the financial front line.
Robert Reich remarks that, in a movement that sprang by the end of the 196s-1970s, and gathered momentum during the two following decades, great American firms turned themselves into financial "holdings" by efficiently using their assets. Those companies that simply agglomerated without creating strong bonds have failed.
They are sold piecemeal and doomed to dismantling. A huge scrap market of factories opens in the USA. Sales and purchases become a true lobby with its winners and losers. Comes the reign of "readers" and "golden boys". Firms come and disappear overnight. Fortune flows in and out. Whole economic sectors such as steel works are swallowed by the Leviathan. The labour force is sucked in too.
According to the description given by Robert Reich, starting from the end of the 1970s, take-overs and bids, spelling "carving up" multiply. American firms and industrial sectors cease existing under a form that could distinguish them from the rest of the world economy. For R. Reich, "American people's standard of living as well as that of citizens of other nations, depends less on the national firms' success or even what could be called national economy, than on world demand for their competence and acumen."
Robert Reich, the author of the survey entitled "Globalised Economy", establishes that the typical American firm no longer plans nor realises the production of a large quantity of goods and services. It does not own nor invests in a vast array of factories, machines, laboratories, warehouses and other such tangible assets. It no longer promotes upward mobility for the middle class.
Actually, according to Robert Reich, "the typical major firm is no longer American. Increasingly, it is a facade structure behind which a teeming multitude of groups and decentralised sub-groups swarm. They ceaselessly reach all over the globe for agreements with production units that are as little defined." Further, "actually, concerning at least traditionally industrial nation, we have shifted from so-called mass production linked to the Ford system, to customised production."
The true assets of the customised production firm are not tangible. They are the skills to meet special needs and the reputation to have achieved success on the basis of fame and competence.
The outlines of power are growingly blurred. The major American firm is becoming a network of multitudinous societies scattered world-wide, each a link in the chain giving out "value".
In the system that is spreading to the planet, coined "customised production enterprise" by Robert Reich, the demands of those who identify problems and solve them, the demands of brokers and definers of strategies and other such "consultants" whom he gathers under the generic name of "symbol manipulators" come first; the demands of wage earners who do everyday work, those that he calls "routine workers" along his demonstration, and the demands of shareholders come second.
Consequently, in an economy of advanced stage, workers get a steadily decreasing part of each dollar (mark, yen or franc) spent. The surplus-value gained in the process is distributed along new lines, at the expense of wage-earners. By the same token, profits are compressed. Conversely, think-tank staff demand increasingly higher payments and side benefits.
In 1920, more that 85% of the price of a car went to workers and capital investors, the remaining 15% went to investment therefore to capital expansion.
In 1990, the two former groups get only 60%, the rest going to designers, engineers, stylists, planners, strategists, financial experts, managers, counsellors, advertising and marketing executives and to the technical and structural staff.
Nowadays hardly 3% of the price of an integrated circuit goes to those who provide raw matter and energy, 5% to factory owners, 6% to routine work, the rest is absorbed by "brain-work"; over 85% pay for services that specialise in development and patents on past discoveries. The same proves valid concerning macro-economics. Robert Reich reminds the reader that during the post war period, blue collar workers' wages steadily fell in the USA in terms of share of the GDP, from 11.6% in 1949 to 4.6% of the GDP in 1990.
Meanwhile, the share profits of societies in the GDP falls too. by the mid-sixties, societies' profits (adjusted to take profits and losses on stocks into account) reach 11.7% of the GDP. This ratio falls to 6.9% during the 1969-1970 recession. By the end of the 1980s, profits only represent 5.3% of the GDP.
The author emphasises that "as the share of GDP going to routine work and investors was steadily decreasing, the share going to problem identifiers and solvers, to brokerage was steadily rising".
As brain capital takes the better over physical capital as essential asset for a company, shareholders find their foothold increasingly wobbly. True, glamorous brands as General Motors, General Electric, Mercedes, Siemens, Renault, Mitsubishi and consorts, remain valuable assets.
Actually, those institutions have become decentralised networks of entrepreneurs, contract firm owners, retailers, franchised retailers, partners and other such temporary associates, linked by tight global communication networks.
Concerning selling, the great firm's brand names become their most valuable assets. Henceforth, they are set on the market for their own sake and have stretched the link with the production process to nothingness.
In 1989, John Gilbert Galbraith, the American economist published a book under the title "The New Industrial State".
He was expounding what he called the "inverted process"; on the reverse of standardised mass production that consumers were almost compelled to accept, a new choosy demand of a targeted consumer was emerging, thanks to advertisements and new marketing studies; the consumer was given an impression of being free to impose his/her desires through interactive conditioning.
Multiple quality offers, developing electronic means of communication radio consumer goods, T.V.s, minitel and, now internet, are going to transform consumer marketing. Alongside, credit cards and mail order businesses will develop as well as "discount" thanks to expanding hyperstores. The technological revolution is integrated to the global market even at the level of retail trade.
These radical changes will necessarily bear on industrial planning. New methods will activate sharper competition and will consequently influence prices. A growingly open economy going global will speed up the new deal of capitals world-wide, not in an extensive phase but along geographical lines, groping for ever lower labour costs and on a wage/productivity ratio based on growing capital intensity, boosted by transnational networks.
True the multinational structure of capitalism is no news. As soon as the 1920-1939 decades, large firms, especially American ones, had reached multinational dimension. Trade names such as Ford, General Motors, Dunlop or German Firms as IG Farben, Krupps, Siemens, or Dutch as Philips and in oil, Shell-Esso and others were known world-wide.
The Swedish firm SKF or Swiss NestlÚ made sure all the warring countries in the 1939-1945 war were buying their products.
There was however a fundamental difference with the current situation. Those firms remained structurally anchored on concentrated vertical integration that did not give leeway to capital flows as now, because of national frameworks and barriers that prevented it from spreading out and expanding.
That distinction should be kept in mind between capital going international yet obeying a number of rules and the current idea of globalisation that , in a way bears on the political aspect of things, a subject we will broach further on.
Today, capitals flow freely, skip frontiers, financial- and stock- markets are open round the clock; that gives those firms the required flexibility while promoting their division on the world scale where a branch sometimes outsizes the parent-company.
Speedy transports and tele-communications, satellites, fax machines, mini-computers today enable any resource person, any isolated financier - those coined "symbol manipulators" by Robert Reich - using such simple devices as cellular phone, modem and printing machine to put their skills to use anywhere over the planet. Transnational networks now function that way, detecting markets, selecting the world's best regions in order to produce in the most profitable way, fuelling a galaxy of contract- and franchised firms, minimising risks through a structure that gradually becomes a mere financial entity.
This trend tends to promote "zero storage"/("just on time delivery"), demanding services based on ever speedier transports. New world consortiums emerge along with, sub-contracting and franchising with independent carriers; as they demand "zero defects", they get rid of the financial burden of after sale servicing. Actually, the traditional industrial structure is undergoing change urged by flexibility that makes the limit between industry and service growingly tenuous.
The emergence of large scale distribution and "discount" urges firms to rationalise and plan their production and develops the "inverted trend" phenomenon described by John Kenneth Galbraith.
By constantly pressuring prices down in order to reach out to new consumers, hyperstores, using franchising, pit their own distributing units against each other while compelling them to buy their supplies from the parent-company's suppliers related to other groups on the basis of mutual financial stock holders. Those firms also run their own credit societies.
This scheme enables hyperstores to snatch an ever-growing surplus-value from the wage-earners of the industrial firm producing the products they buy. The industrial firm is obliged to lower its production costs, rationalise and cast about for ever-growing productivity therefore more relative surplus-value. That entails delocalisations, restructuring, mergers, capital concentration with the inevitable result of massive and lasting loss of industrial jobs.
Wages are the prime targets of labour cost reduction. To achieve it, the firm out sources its administrative managing services and planning departments and others.
As we previously wrote, the firms owning renowned trade marks, make use of "franchise". In this system, the owner who also orders production imposes strictly controlled specifications on the would-be contractor-manufacturer; the parent firm is in charge of advertising, market, sales network study, product conception, that is, the bulk of the dematerialised network. In exchange, the "franchised" manufacturer and retailer pay the "franchising" parent company "royalties". That is how the French textile firm "Lacoste" controls about a hundred manufacturer and retail shops scattered across the globe, especially in the third world; thousands of wage earners are concerned whereas the "parent-company" directly employs hardly 70 people.
The example of "Lacoste" is copied in shoe manufacturing business, sport articles, watch making and so on, hence the resulting market of fake goods.
In 1998, American ‚franchised" retailers numbered 509 000 and raked in 640 billion dollar worth of sales, that is over 10% of the American GDP. In 1990, Chrysler, now merged with Daimler, produced only 30% worth of the cars. Ford, about 50%; As for General Motors, they were buying half their drawing board activities from 800 different societies.
Robert Reich establishes that actually all industrial enterprises include some service activity and, more important, that the larger companies tend to fragment themselves into networks of smaller enterprises.
Thus in the USA, it is no wonder that, according to official surveys, the number of small firms increased nearly twofold between 1975 and 1990 and created thousands of jobs, right when the mass production bigger firm was becoming a decentralised network enterprise of customised production.
Writes the author of "Globalised Economy," the 500 "larger American industrial firms have failed to increase their staffing by so much as one person between 1975 and 1990 and their share in civilian jobs has fallen from 17% to less than 10%".
Conversely, the number of employers is on the rise with developing sub contracting and independent work, very often located on the same place as the parent-company, under the guise of small production units, very often subsidised by local and regional administrations.
Robert Reich writes that in 1950, 93 000 enterprises were created in the USA, whereas by the end of the 1980s, about 1.3 million enterprises sprang up. Robert Reich does no give the number of bankruptcies.
This trend is spreading to the bulk of industrialised countries. In countries such as Japan and Germany, capitals and industries used to be concentrated; currently, financial markets, taking the place of bank-only financing which was the order of the day in a still half closed economy, are battering their traditional structures to bits.
South Korea and its " Chaebols " have born the brunt of the international restructuration taking place in one way or another on the basis of the American model. The Asian , Latin American and Russian crises have the effect of hastening the " Americanisation " of all the economies.
Everywhere the American model applies, with social consequences that we will examine later. In this international restructuration reproduced everywhere, the classical big American firm transforms itself into a multitude of companies organised and linked on a world scale, each link in the chain is forced to produce a value, or to disappear by the will of the shareholders.
The transnational network has multiplied, especially since 1989, when the planned economies collapsed. The globalisation of the economy manifests itself at the same time by an intensive concentration of world-wide capitalism.
Today 200 transnational companies provide a quarter of the world production for a turnover of 6000 billion US dollars. This represents about the equivalent of the gross domestic product of the USA, that is 26% of the world product. Though linked to the intensity of capital, these firms only employ 18.8 million workers, that is less than 0 ;75 % of the world labour force.
We can consider that there are 40 000 multinational firms, employing over 30 million workers outside their national boundaries. And the sum total of these companies achieve two thirds of international trade, of which a third is trade of an intra-group type, that is trade between the mother firm and the subcontracting group.
The share of transnational capital in the gross world product has increased from 17% in the 1960s to 24% in 1982 and more than 30% in 1995.
Five developed countries - USA, Japan, France, Germany , the United Kingdom-on their own share 176 of the 200 most important multinational firms. We must emphasise that 70% of the total number of firms, networks, sub-groups in the world are of American origin.
In 1995 at the Banska Bystrica workers conference in Slovakia, we showed the increasing weight of the transnational networks on the world economy and the political pressure that this exerted on the Nation states, especially in the field of investment and liberalisation of capital, and on flexibility and social deregulation.
A single example defines the problem, when we know that in 1993, the assets of General Motors represented 191 billion dollars, those of Sony 40 billion and Daewoo's 39billion. We draw a parallel with the following figures- Portugal :23 billion-Egypt :31 billion-Peru :35 billion. The list is not exhaustive, the same record applies to many smaller industrialised countries like Denmark for example.
The present movements flowing from the internal war waged between capitalists results in fusion, mergers and restructurations that are totally to the detriment of the work force, which constantly modifies the map of multinational capitalism, giving priority to finance capital.
In an article published in the French daily newspaper La Tribune of the 8th April 1999, Mr Eric Belot, general director of the company Arthur P.Little (Consulting) poses the following questions : " Liberalism, the defeat of the economic ? Are we going to reach such a concentration that there will only be 2 or 3 World Companies by sector of activity? "
He continues : "The rupture between the economic (jobs, creation of values) and the financial is enough to prove that the threat of the megafusions on our society, because aren't the megafusions the fruit of the victorious financial logic, with economic consequences(such as massive reduction in jobs, on an average 10% per fusion) that are disastrous ? The effects on employment of successive fusion are often negative and the compensation of cut-backs by the creation of small subcontracting firms is in fact only marginal. These job reductions only reinforce those caused by the infamous " reengineering " programmes. Some analyses even predicted the eventual suppression of a quarter of all private sector jobs. How can this army of unemployed be managed on a social and human basis ? Massive job cut-backs pose the question of our society's priorities. The supremacy of the financial logic can also reveal itself to be a menace for democracy. "
He then concludes : "Liberalism in its extreme must be fought against or our society will be plunged into chaos. " In the picture drawn by Eric Belot, he makes the same analysis as others that finance capital is extending its grip on the whole of the economy, which is a sign of the crisis of capitalism.
In order to confirm this tendency, bear in mind that the trade in the world stock exchanges represents 1500 billion dollars per day, that is 70 times the equivalent of the value of world trade.
But within this enormous mass of capital in movement, the distribution is far from harmonious and equitable. In 1997, almost 75% of the private investment flows in direction of the developing countries were concentrated in a dozen countries. Thus, in this matter as well it is the shareholders and their demands of " returns " for investment that dictate the law.
The operations of megafusions and restructurations increase the process of desindustrialisation to the extent that some people predict that there will only be 7 or 8 giant firms based on thousands of subcontractors.
We can catch a glimpse of the dangers of the globalised economy and its vehicle, extreme liberalism. By repercussion, we can weigh up the effects of the labour force in general and in priority the perennially of the working class gains that the proletariat and its organisations have achieved over decades of social struggle, gains which today in the name of liberalism are piece by piece being put into question at the same time as the framework of the Nation State is being dismantled.
Globalisation of capital and its effects on the national and local economic structures leads to major upheavals in the very structure of the work force, its social gains and status.
The transition from mass production to personalised production is linked to increasing flexibility of capital, to fluidity of capital and to the physical property of firms and enterprises, which are constantly moving within the global networks.
The new world division of labour creates a ever increasing link between the profits of firms and the standard of living of the citizen of a given nation. The firms are overcome by the psychosis of social instability due to these permanent threats of delocalisation under pretext of looking for lower wage costs.
The structure of the labour force is in the front line of the economic and industrial cosmopolitanism. Stable jobs in a big firm or enterprise established within national boundaries gave workers a feeling of sharing a common destiny.
The global network shatters this concept, as the global firm can now be based on the level of a nation, but carry out activities on a world scale. We note this as we have already described previously, with the " franchisers " and the " franchised ".
The competitiveness of workers on the international markets no longer depends on the fate of an enterprise or an industrial sector, but on the functions it occupies in the production process and the volume of value they create in the world economy.
In his book, Robert Reich says : " The barriers that prevented the transmission of knowledge, money and material goods from one country to another are collapsing ; in each nation, groups of individuals are joining the global networks. In hardly more than a few years, it will be impossible to distinguish one national economy from another, apart from the rate of exchange of their currencies ; but even this distinction is losing its importance. "
This rediffusion in the globalisation causes increasing inequality between and within the social classes. These inequalities can only be accentuated because of the disappearance of the State and its function of intermediation within society. The dismantling of entire sections of industry hits all industrialised countries. In addition to mass unemployment this means the qualifications often of a high level are obsolete.
New technologies favour the global division of labour, with the development of long distance communications in instant time and speedy transport, all of which have effects on the very structure of the labour force.
A multitude of professions in the production of immaterial goods have arisen - producers of software, designers and long distance consultants, technicians, advertisers, marketing, all types of media, film and video producers, financiers, etc. - new activities that regroup people who are strongly integrated in the global network and who demand a new cut of the surplus value. These new social categories make up a special caste that can often be found in the sector of independent workers, whilst some of them were previously wage earners in the integrated firms.
This externalisation of production stretches nowadays to the entire economic activity and in addition to the generalisation of subcontracting.
In the USA, but it is not an isolated example, the production of immaterial goods has become the primary economic sector. Progressively the standard of living of these people is determined by the job they have within the global network rather than the success of the abstract entities that the integrated firm, industrial sector or national economies have become.
This rediffusion on the top level provokes an opposite tendency on the bottom level, by expelling an ever increasing number of people towards casual, unqualified, servile and domestic labour, with the resulting increase in social inequality, permanent insecurity of revenues and working conditions which causes the rebirth of categories that Karl Marx called the " lumpen proletariat ".
This disintegration on the lower level contributes to the decomposition of society, accentuated in many countries by the permanent nature of chronic unemployment that concerns as in England or France, two or three generations.
The first victims are immigrant workers and their families, women and also youth even those with qualifications, which even the State shows itself to be incapable of guaranteeing their value, because of its submission to the single global thought.
The quite natural tendency to look for substantial revenues leads to all kinds of dealing, in particular the drug trade with the passive complicity of public institutions which especially in big cities make out that this is a factor of social stability.
The human and material exploitation engendered by this new situation serving under the law of the jungle, is the most condemnable as far as children are concerned, but also men and women working in " free zones ", zones of no law, like the " maquiladoras " on the American-Mexican border, where multinational firms shamelessly exploit unprotected labour.
The new categories that are now integrated in the global network are designated as we have seen above as " symbol manipulators ", working above the notion of frontiers.
On the lowest level , Robert Reich distinguishes the " stuck in a rut workers " synonymous to " production workers ", survivors of mass production and who are henceforth in direct competition with the workers in developing countries. It is these categories which are in the front line of the effects of global competition and the constant demand to lower the cost of production.
Then come the workers of the "personal service and help ", that is the tertiary sector in its widest sense, from public relations, hostesses, health care to baby sitters, dog sitters, fast food delivery service etc. The mutations over the last twenty years have lead to an explosion of different jobs linked to the externalisation of services, the reintroduction of the notion of " bargaining " that had completely disappeared at the beginning of the century, and which as a form of work is prohibited in the French code of labour, but which, by devious means, is now developing in many sectors, as in particular in transportation and handling jobs.
Most of the workers in these underpaid jobs can be classified in the category of " poor workers ". This restructuration changes the classical view of the structure of production, such as it existed in the fifties after the war.
In order to illustrate this change, Robert Reich quotes the American example of Beverly Enterprises, a chain of home care nurses, operating throughout the USA and which employs as many Americans as does Chrysler (115714 to 116250). But the second is much better known to Americans than the first. However, it must be repeated that the structural evolution of jobs, due to the global diffusion of capital, is accompanied by precariousness in social protection, and thus accentuates social inequality. Countries like Japan or even Germany, where there is a certain tradition of job security have to bow under to the attacks of global economics.
The phenomena of globalisation, based on liberal ideology, including its social democratic adaptations, has hit all the industrialised countries, that formed the foundation of the post war international economy.
The social inequalities vary according to different countries in relation to the different tax and social security systems that redistribution of income, particular to each State, but whose permanence is under question by the liberal doctrine.
The gap between the rich and the poor has widened scandalously, especially in Great Britain, after the ultra reactionary experience of the Thatcher government, to which the present policies of the Tony Blair Labour government do not bring any significant changes.
This is also the situation in the USA, in which during the Reagan years the differences in income between the poor and the rich were deeply segmented, and which continue to do so today, despite the apparent prosperity based on parameters like credit, or speculation, or stock options which hide the reality that is about to explode at any minute, because of the ever increasing lag between a fictive economy( stock exchange capitalisation) and a real economy (real value).
The President of the American Federal Reserve, Alan Greenspan, thus warned against a brutal crash on Wall Street. This would not be without effects on all the world's stock exchanges, seeing the importance of the Anglo-Saxon investments, and especially the pension funds.
The Traditionally social-democratic countries of Europe are also marked by the phenomena of social inequality, highlighted by the disappearance of the welfare state.
This is the case in Germany, and the Scandinavian countries. The Latin countries are not exempt from this movement.
In France, the total income has increased by 80% since 1973, while poverty has continued to rise.
The struggle against inflation opened the way to monetarism, in reality indexed on the dollar which remains in spite of the Euro, the world's leading reserve currency, holding a virtual monopoly in international trade, in particular in raw products like oil.
Monetarism accompanies struggle against inflation, and replaces the Keynesian concept of giving priority to economic growth by budgetary deficit and social redistribution, by imposing on nation states over-all restrictions and important cut-back in public expenditure, especially, social budgets.
Only the USA, because of the dollar's place in the world monetary system, can get out while the going is good, by imposing their different deficits on the other economies of the world.
Indeed, if inflation is now reduced to zero as far as prices and costs are concerned, whilst provoking an economic cooling down whose social consequences we know, it has moved on to stock exchange values, nourishing speculation and a fictive economy which is even more dangerous for the balance of the world economy than inflation based on material parameters. The global logistic, aimed at the destruction of sectors of regulation contained in nation states, leads to the widening of the gap between the rich and the poor, between the exploiters and the exploited, in proportion to the individuals or groups of individuals within the capitalist production system.
Because it was capitalism itself during its development that necessitated the building of geographical frameworks that are the nation states, behind which it could carry out its development and which were the basis of its expansion. That is why the founding of nations marks the transition between feudal society and capitalist society.
But the capitalist mode of production, based on private property of the means of production and trade and the exploitation of wage labour is a regime in which all the classes are antagonistic. Under such a regime the social balance can only be maintained by a dominating power that ensures the respect of the smooth functioning of the system. So such a power, in this case the State, is only possible within the framework of a nation.
This regulation section ,the nation state, is today in conflict with the strategy of world imperialism at whose keystone is American imperialism. It is based on the globalised institution that it itself created in the economic and military fields with the objective of edifying a world state, as prefigured in the project of reform of the UN
Standardised mass production is a result of the existence, the structure and the policies of big firms which intervene and develop their strategy within the universal field of nation states. Workers trade unions were created in relation to the economic infrastructure of nation states in relation to the political orientations.
Globalisation and its subsequent regionalisation has an effect on the trade union movement, and we will treat this problem later on.
Big firms are rapidly splitting up to become world networks. This leads to fusion, restructurations and mergers which are followed by destruction of the labour force , but also in Marxist terminology, by destruction of productive forces.
Globalisation and the extension of networks creates competition between workers on a world scale and the impoverishment of entire populations, forced to accept subcontracting and casual labour.
If we examine the reports published regularly by the United Nations Programme on development, we can see that hour by hour the number of inhabitants increases by several tens of thousands, most of whom will probably accept to work later for a tiny fraction of the average but ever lowered wages of the workers in the so called " industrialised " countries .
Peter Georgescu, an advertiser, wrote in February 1999 : "We are watching the death of capitalism, because we moving from a world dominated by excess demand to a world dominated by excess supply. "
Indeed, the competitive price war over manufactured products waged by distributors, especially large scale distributors, heavily influences the deflationist tendency. And if in the industrialised world the price of labour power is constantly reduced to reduces costs and remain competitive in relation to the emergent economies, nothing will stop these countries in turn to reduce wages in order to be competitive. Thus we are in an infernal cycle, and the Asian crisis and the measures taken to overcome it have confirmed this phenomenon. It can be a question as to whether this crisis has not been provoked to counter the wage war.
Illustrating with examples in the USA of the degradation of working conditions and the increasing inequalities that are a result, Robert Reich speaks about the cutbacks in industry. In the case of General Motors, symbolic on a world scale, he indicates that it reduce jobs by 150 000 in the USA, while creating jobs in its delocalised factories abroad.
He quotes the examples of Philips, Sony, Toyota springing up all over the USA to the satisfaction of the governors and mayors who attract the firms by promises of tax reductions and subventions. These have now become current practice in the so called " industrialised " countries, and aggravate the social effects of competition in the name of " social well-being ".
It is far from evident that these implantation's have positive or long-lasting effects on local jobs or salaries, the disillusion often overrides the positive results.
Robert Reich also quotes another example. In 1977, it took 35 hours of ordinary production to make a car in the USA. It is estimated that by the middle 1990s the Japanese owned factories in the USA only took 8 hours to produce a car. Thus the productivity and the salaries of the technicians who supervise the robots are relatively high. But there are less and less jobs.
An analysis by the French monthly Le Monde Diplomatique in June 1997 showed that in the USA " those who do not have secondary school diplomas have seen their average hourly wage fall by a third in twenty years, from 11.88 $ in 1973 to 8.64£ in 1993 ". This tendency can be generalised to all the industrialised countries.
According to the Statistical Bureau of the American Labor Office, a third of the 2.8 million industrial workers who lost their jobs at the beginning of the 1980s have been re-employed in the service industries with an income of 20% less.
In France, with reference to the book by Denis Laval " Mondialisation et dÚsindustrialisation ", published by SELIO, after the massive wave of sackings, in 1995 there remained 3 863 275 workers in the whole of the industrial sector. From 1980 to 1995 this industrial work force had been amputated by 1 500 000 workers, that is a quarter of its number.
In 1995 in France industry represented a third of the number of workers in the private sector which represents 13.5 million employees and a sixth of the active population of 23 million. The decline of the industrial sector and the destruction of job in relation to increase in productivity only partially gave rise to new types of jobs in the service sector, ranging from high technology to low grade domestic jobs.
To caricature the demonstration, Robert Reich remarks that for every bank cashier who looses his job due to automatic cash points, there are three new jobs of aerobics teachers created. He cites a new expanding market, that of specialists in euthanasia. We know that these thesis are not foreign to certain economic thinking, as an answer to the so called negative incidence for the actuaries of the too greater proportion of inactive people in relation to the active ones.
At a time when the impressive technological and technical progress could be used for the benefit of the whole of humanity, the private ownership of the means of production and trade are an increasingly tight straight-jacket, strangling the productive forces and contributing to there destruction.
If we take the caricature to its logical end, we have the terrible image of the future of youth in a society whose only perspective is for it to push the elderly in wheel chairs.
The splitting up of firms in the global network creates new strata of society. The techno-structure, the " bourgeoisie ", the scientists, the researchers linked to American universities which are themselves converted into the world centre of research, studies and analyses in the service of global capitalism. The combing of these brains goes on a planetary level to be then concentrated in the USA.
Henceforth the symbol manipulators, the conceivers, the advertisers tainted by the American model sell their products and their ideas throughout the world. Because of this intellectual concentration the entire world has to refer to American competency now present on all the technological markets. We have already spoken of the semi-conductor and microprocessor market and the monopoly that the specialised American firm detain.
Foreign firms have no choice but to integrate the pyramidal structure that makes them dependant on the material and immaterial production based in the USA. The produce of this evolution has create a new class called " symbol manipulators " or techno-structure, which John Kenneth Galbraith considers has become a kind of collegial authority whose motivations are no longer in relation to those of yesterdays shareholders or managers
This new strata lives in a kind of aristocratic autarky with its clichÚs, meeting places, cultural and physical activities between its members, within or without, creating its own schools for its children, living in " closed towns ", sort of fortified communities under private police protection, thus unharmed by the imagined dangers of the outer world. As we have said this strata provokes the extraction by the bottom of the other categories such as production workers, domestic and personal services, and the poor become even poorer ; these are the categories that the 19th century bourgeoisie called " dangerous classes ".
Using a photo that captures the new division of society, Robert Reich quotes the American example to project it on the international scale. He says : "Because of the dissolution of the big American firm born from standardised mass production, and to the extent that the American firm itself becomes a global network, it is then impossible to distinguish it from the other global networks. Therefore, the people concerned by its activity become a vast and diffuse group, spread around the world. "
As the American firm sells more and more of its products and services all over the world, the spending power of American wage earners becomes less essential for its economic survival. This transformation of the field of activity of the firm and the diffusion of transnational networks weakens the links between the leading members of the firm and the workers, while the intermediary cadres are also victims of the restructurations caused by globalism and tend to join the workers in their preoccupation. An entire cohort of middle cadre that used to be classed among the white collar workers has evaporated. An increasing number of American cadres and also those of the other so called " industrialised " countries export their ideas through the global networks of the enterprises.
Accentuating the phenomenon of social inequality, the salaries and advantages of the leading cadres like those of their consultants and advisors have reach unimaginable heights, whilst the wages of the other Americans have declined. This fact established by Robert Reich concerns the USA. It can be applied to all the industrialised countries.
In this global transformation, where transnational networks can dictate their rules to nation states, the creation of elite has symbolic value. In the same way that standardised mass production has given way to personalised production, school and university education also become harsh instruments of selection.
At every level of education the original and missionary principles of forming individual who are free from material, moral and intellectual constraints has been abandoned and is becoming the instrument of implacable selection for the needs of the dominant ideology. The structure of teaching at all levels has integrated the global process of diffusion by networks, based on new technology like " internet ". This orientation breaks the social contract based on the concept of equality and neutrality in access to knowledge.
It is yet again the American model that is put in evidence to the political and economic leaders of the industrialised countries.
Robert Reich says : "Here again I do not pretend that the American schools and universities do their job correctly. My statement is more limited. I say that our best schools and universities give a tiny number of Americans an excellent basic training for the essential techniques to be symbol manipulators. "
And the author adds : "When we add to this motivated and interventionist parents, excellent health care, visits to museum, concerts, travel abroad, computer at home and all the cultural and educational gear that the symbol manipulating parents are happy to give their offspring, the teaching given to this minority of privileged children becomes an exceptionally good preparation for the world that awaits them. "
.In its report published on the 20 April 1999, the International Monetary Fund talks about Europe : " In many cases, including the three most important member countries, the reforms of the labour market have still to come to grips with the roots of structural unemployment. The key component to a solution lies in the measure enabling the increase flexibility of the labour market.
With the end to exchange rate adjustments in the euro zone, the single currency make these measures even more urgent. " Continuing on the theme of the labour market in the euro zone, the report says : "The central aim of the structural reform of the labour market is to increase the flexibility of the labour markets in Europe. "
The IMF's directive to Europe applies to the whole world on the basis of the universal slogan of always more flexibility and deregulation. These two elements, as we have developed in the preceding paragraph, also apply to capital in eliminating the obstacle that hamper their movement, and to investment which are henceforth the cornerstone of sovereignty in the new economic imperialism.
Flexibility and deregulation now apply to wages and working conditions in general, for the benefit of economic and financial adjustment in States which will disappear , no longer being the instrument of exchange rates that they previously used be in the regulation of the economy and finances.
That is how the new economic deal of global economy limits the autonomy of each State, now entirely subject to the imperative of the financial markets. In relation, there is a direct attack against wage earners and working conditions in general with head on confrontation with the social gains obtained by the working class over decades of class struggle.
For over a century and a half, in all the industrialised countries, the trade union movement has made a priority of the demand to reduce the length of the working day. The 1 May is a commemoration each year of a demand that in time is being wiped out.
Before it became a holiday in many countries the 1 May was and will remain a day of important demands and also a remembrance day of those working class militants who lost their lives in order that today we can live better.
Originally the demand of the 8 hour working day is tied to the history of the American working class, later to be taken up by the socialist international. In 1869, a secret society the " Noble Order of Knights of Labor ", was founded by nine tailors in Philadelphia.
These were the " knights of labour ". The Knights of labour first had many secret societies, arising from the demoralisation of worker militants over the negative results of the efforts.
The knights of labour movement reach its high point in 1885-1886 after victorious strikes : from 110 000 members in 1885 their numbers rose to 720 000 in July 1886.
The Knights of labour then launched a campaign of agitation in favour of the 8 hour working day : 5000 strikes insure the success of the trade union demands. 200 000 workers gain the right to a 10 hour working day. It must be remembered that 14 to 15 hour days were customary in the Chicago industries. During the workers demonstrations in Chicago the 1 and 3 May 1886, especially at the Mac Cormik factory, the police fired the unarmed demonstrators, and a bomb, probably set off by the " scabs ", killed and wounded many people on the 5 May 1886 at Haymarket.
The working class militants Spiess, Parsons, Fischer and Engels were condemned to hanging without the slightest proof and Fielden and Scwab condemned to forced labour.
In order to commemorate the martyrdom of the working class militants of Chicago the American Federation of Labor (AFL) that succeeded the " Knights of labour ", decided to make the 1st May a day of international demand for the 8 hour week. This demand was later to be more precise, in 1889, at the founding of the Socialist International, by the slogan : " 8 hours of work, 8 hours of rest, 8 hours of recreation. "
The action of the working class was to develop everywhere in favour of the reduction of the daily length of labour. Several important movements marked this struggle, often in a context of violence provoked by the reaction of governments and bosses. From the end of the IXth century to the post 1939-45 war years, improvements to legislation took place.
The reduction of the working day that took place was associated in all the industrialised countries by the right to two consecutive rest days per week. The civil week except for exceptional derogation, became the framework for labour law, and the daily amplitude was also regulated.
Night work and child labour were also subject to regulation.
Trade union action, whilst taking into account the different traditions in each country, has enabled pressure on the lawmakers in order to improve working conditions, and reduced the length of work.
Contractual bargaining and the policy of conventions have enabled the adjustment and improvements in these laws controlling working conditions. National collective agreements, either by branch, by enterprises or groups of enterprises, aimed at forcing the employers and the bourgeois class to recognise the organised working class as an active group, acting on the basis of class needs and not as a simple sum of individuals.
The new psychodrama forced the bosses to reach agreements and compromises with the newly organised force on the basis of " collective agreements ".
This structure of laws and regulation is today seriously threatened by the new global ideology, whose axis is liberalism.
Even before the IMF published its report, demanding an acceleration of the process of flexibility, an analysis of the OECD in 1994 more precise without ambiguity the urgent orientations to be implemented :
" The inflexibility of the regulation framework is an important factor of unemployment. The labour markets are not flexible enough to insure the best use of human resources. In order to obtain a given adjustment of wages, an even higher level of unemployment is necessary. "
The Bank of International Regulation holds the same theory and accuses " the rigidities of regulation frameworks " and deplores the fact that " the arrangements made to protect the wage earners are used against the unemployed. Thus and important number of workers will remain unemployed unless the market becomes more flexible, especially in Europe. "
Alain Minc, the president to the Commission of the Plan for the French government in 1994, entrusted by E. Balladur the Prime Minister, " to explore the economic and social challenges of the year 2000 " criticises what he calls " the corporatist thinking " and declares " for twenty year there has been a relationship of cause and effect between the living standards of the active population and the increase in unemployment. "
The welfare state is pointed to in accusation, especially in the benefits given to unemployed people and their families. In Great Britain, Mrs. Thatcher did away with what she considered social parasitism. Her successors have continued her work.
An article published in Business Week, 17 May 1999, emphasises that " the reform of the Welfare state works in America "
" The 1996 reform of social welfare was one of the most revolutionary since the creation of the welfare state half a century ago. The success of the first reforms in a few States has led to efforts by the Republican Congress and by President Clinton to put an end to welfare as we know it, by forcing the beneficiaries to seek jobs. The 1996 reform limited to two years the right to welfare for each phase of benefits and a maximum of five years benefits in a lifetime. " Thus there is a total agreement between the economic actors on a world scale to say that the working class gains concretised in laws and conventions have become shackles to the development of capitalism and the market economy.
All the globalist institutions and their regional relays like the European Union, have thus put a priority on flexibility and social deregulation.
In the field of the working day and week, previous laws are put to question by the system of " derogation ".
This means that a firm that pretexts slowdown in activity because of loosing a market or an order, cans say that its production costs are too high and then make an agreement with its workers on flexibility of the working timetable.
Agreements signed at company level, would have precedence over law and working hours could be implemented on a monthly rather than a weekly basis, and even on an annual basis, which is more often the case to-day.
In France, behind the pseudo-social facade of shorter working hours, the Aubry Bill on a 35 hour week, is in fact an incentive to more flexible working hours, as these tend to be generalised on an annual basis. What's more, the Aubry Bill has another twist in it : it implies that trade unions be coopted into decisions on work organisation at plant level.
The British work organisation is cited as a model example. In what way ? As far as work organisation and flexible working hours go, Great Britain has a very particular record. There is in fact, no longer any legislation on working hours that can be implemented, because of the way national, regional and local legal texts overlap. As a result, the maximum annual working hours are 8 760 - that is 24 hours a day for 365 days a year.
The production system based on " tight flow " (flux tendu) means less stock. Stocks, considered as dormant capital, are no more needed in this new custom based production system than they are on a production line where what is produced is piloted by large commercial companies, discounts and new marketing methods.
Firms have to adapt as speedily as possible so that production adjusts to demand. This means a percentage of more and more flexible employees, ready at all times to adjust supply to demand.
Does this justify the breaking up of the framework of collective bargaining agreements which guarantees protection for wage earners in the production process ? This is clearly a step too far, as we would then be taking on the contradictions and inconsistencies of the capitalist mode of production which is incapable of maintaining a balance between production and consumption. This is the reason for the periodical crisis which sap its structure.
Industrial sub-contracting is now an inevitable feature of the production process. For the sake of flexibility the firm who receives a contract order is wholly dependant on the firm who contracts out and has to follow demand closely, keeping a strict eye on costs.
As the market demands a more flexible work organisation, with the purpose of bringing down labour costs, there is a constant tendency to look for continuing increase in productivity. Does labour make any profit out of this ? It appears not. In an essay on the class struggle in the United States, Mika'l Lind writes : " Between 1972 and 1992 average productivity of American workers went up 30% while the real average wage fell 13% ".
The logic is implacable : " Whatever the increase in productivity, wages will go down if there is a large supply of workers fighting for less jobs. There is a sort of abundance created by the mass workers in the global economy which benefits firms based in the United States. "
The process of liquidation of workers' right has been set in motions everywhere. In order to increase productivity, bosses, supported by political forces are totally involved in " reorganising working hours ", term used to counter any real reduction of working hours without loss of wages, which would be wholly justified by productivity rates resulting from technical progress.
It is regrettable that certain trade unions, who are in the process of becoming real institutions (such as the European Trade Union Confederation) accept the framework of a global economy and accompany rather than oppose its strategy of flexibility and deregulation which the transnational network is busy pushing through.
Class action over the last hundred years led by labour organisations has helped bring in social legislation that could spread from industrialised countries and serve as a reference, a model to workers all over the world.
It was particularly so in the former colonial territories as they gradually gained independence.
At the same time that pressure was put on public authorities, bosses were under pressure too. This helped get through collective bargaining and contract measures which significantly improved the law.
The French Revolution in 1789, with its universal message as contained in the Declaration of Rights of Man and Citizens, was a consecration of the triumph of liberal individualism and economic liberalism. The individual up to that point a subject, now became a free man and a citizen in a political democracy.
The new political framework based on the three principles of freedom, equality and brotherhood, opened up the field for a fantastic development of productive forces which had previously been enchained in the feudal structures of the Ancient Regime as happened earlier in England.
This economic and industrial explosion gave birth to the proletariat. The proletariat will go beyond liberal individualism with its arsenal of repression against coalition, considered a crime. The proletariat will set up collective organisations to defend their class interests and following the traditions of each country, these will become trade unions, union federations and confederations.
In opposing the capitalist entrepreneur with its own organised force, the trade union forced bosses to recognise the proletariat and its specific class character, different to that of other social classes. Bosses were often forced to come to a compromise with the unions, not on the basis of an individual contract but of a collective contract, codifying worker rights at shop floor level, at factory level or as applying to a particular profession. This is how collective bargaining agreements and collective contracts began.
To-day the global economy demands a return to pure downright liberalism, even more liberal than it was at the start of the industrial revolution, when budding capitalism and the bourgeoisie, its political expression, created the framework of the Nation State to regulate the system.
To-day the global world economy tends to develop into a total market society, global, world-wide which naturally enters into conflict with the prevailing economic and political framework of the Nation State.
Social regulations and collective bargaining agreements have become an obstacle to capitalist expansion. Just as labour legislation and national regulations come under fire in different ways, from world capitalism and its institutes, so do territorial collective bargaining agreements. The purpose of all this is to get back to individual relations, individual contracts based on the sole law of supply and demand without outside interference.
We must remember what the American delegate of the AR Stanley Union, Mike Griffin said at the Workers Conference at Banska Bystrica in 1995 : " 18 months ago, we were forced to come out on strike and then we were faced with a lockout. The bosses want to push through a 12 hour working day instead of 8 hours and axe 600 jobs as well as our rights and guarantees. Our collective bargaining agreement contained 117 pages. Now there are only 15 left. "
This is not an isolated example. It is a perfect illustration of general deregulation. If we go back to the French case, pressure from bosses, relayed by government working on directives from the European commission, follows the same path. For certain " left-wing " or " modern " bosses, labour legislation, like territorial collective bargaining agreements should, in future, be strictly limited to general principles concerning hygiene and security. At the same time employees representation should be coopted in as an integral part of the company.
The rest, that is to say, wages, classifications, promotion, work conditions etc. should be dealt with at firm level with the possibility of disregarding regulations stipulated higher up the ladder, as long as they continue to exist without it being necessary to discuss and negotiate agreements at firm level with union representatives.
In setting up a " Union mandate " outside the firm the Aubry Bill in France gives an opening for unions to be officially transformed into non government organisations, which would lead to their being coopted into the globalisation process at world level.
Everywhere in Europe, as a result of policy tradition, the public sector had progressively become an important part of the national economy. This is also true in other countries. State Reform is now on the agenda, supposedly in the name of " the necessary adjustments to the new world context ".
As far as Europe is concerned and as we described the situation in the chapter on the European Union, the Maastricht Treaty in article number 3A, stipulates the Union's liberal logic :
" The action of state members and the European union, includes the drawing up of economic policies, based on a tight co-ordination of state members' economic policies in their home market as well as in the definition of common objectives. These economic policies must respect the principle of an open market with free competition. "
With the implementation of this article and as a result of European directives and the different treaties ruling the conditions of implementation of this principle, the Nation States are in the process of loosing their autonomy, the power to run their own affairs and the possibility of any free leverage.
This regional slant defined in a macro-economic framework of new spaces, such as the European idea of " the blue banana ", is part of a global logic, of global economics where national frontiers dissolve under the pressure of the transnational network and the weight of financial markets.
Once again we must refer back to Robert Reich's analysis of the process at work in the United States.
He writes : " There are many in the States, who still think it is possible to revive or get business started again by getting some new life into those old nation parameters, with a lead coming, from the big old firms with an international reputation who dominate inter state world trade. "
For Robert Reich : " this picture has only a very vague resemblance with the world economy of the 21st century where money and information circulate without any problem within firms' global network ". And the author concludes : " Soon there will be no more American firms or American industry. The American economy is nothing more than an area of the global economy, even if it is a relatively rich area ".
This global world mission, with the United States at the apex of the world economic architecture, means a considerable upheaval of the old structures. Foreign pressure on States from the economic environment and financial markets, leads them to reduce public expenditure with particularly severe cut backs in social spending.
As for Europe, the Amsterdam Treaty and the Stability Agreement which prolongs it, both follow directives from the European Central Bank fixing a ceiling of a maximum 3% budget deficit for the member states, with the short term aim of a 0% deficit.
Everyone is acquainted with the disastrous situation of the developing countries, particularly Africa, where the IMF structural adjustment plans impose big cut backs in social expenditure, making the health situation worse and increasing mortality, especially infant mortality. Africa is not the only case.
Even in the United States, a similar process is at work. Federal government tends more and more, to hand over responsibility for public investment to the different states, these in turn transfer this charge to the urban communities. In the United States, federal contribution to state and local community expenses amounted to 27% in 1978. In 1988 this had fallen to 17%. Contribution to local community expenses has been the most badly hit. The direct aid programmes for local communities have suffered the most from budget cuts.
In the eighties, federal dollars for purifying water, training schemes, low income housing, job transfers, recycling used water, collecting garbage, decreased by more than 50 billion dollars a year. Federal government 's contribution to collective transport system expenses went down by 50%. In 1990 the town of New York received only 9,6% of its resources from federal government as against 16% in 1981. This transfer of public services towards communities at the bottom end of the ladder has tended to increase, here as elsewhere, the differences between the rich and poorer communities in every field, especially that of social action.
Local communities are forced in this way to reduce running expenses by contracting out their services to private companies. These in turn are specialised in activities that were previously community services, such as water distribution, social aid, garbage collecting, community canteens, public hospital maintenance, etc ...
This is the case of the French company Vivendi, which is specialised in local community services and has achieved a multinational dimension. That is why employees in the public sector are bearing the full brunt of the effects of privatisation of the public sector. The number of employees with a regular status is constantly decreasing, their non replacement at retirement age for instance, means they will eventually disappear. Within the telecommunications, transport, gas and electricity sectors, subcontracting tend to enlarge the field for privatisation. The changes underway naturally threaten the status these employees enjoyed previously, such as guaranteed employment, wage guarantees and promotion.
From now on, new employees will be subject to private law regulations and therefore exposed to the vicissitudes of precarious job and general deregulation. Privatisation at world level affects all countries. As we can see with the Mexican example. Before Miguel de la Madrid came to power in 1982, the Mexican state owned about 1 550 state companies. Today only about a hundred are still state owned. But out of the remains of this public sector ten financial groups have emerged that control all 71% of the share quoted on the Mexican stock-exchange.
Decentralisation and the abandon of traditional state responsibilities in the public sector lead regional and territorial authorities to withdraw within themselves and develop a community type reflex.
States even relinquish their mission of keeping law and order, this is particularly true for the police and for citizen security and protection.
In the United States in the nineties, private security forces represented 2, 6% of the total working population, that is twice as much as in 1970, the number of private security forces being higher than the public police force.
In France the same process is at work, since the number of security employees in the private sector was numbered at a 140 000 in 1998 whereas the Home Secretary claimed there were a 130 000 police with civil service status. The French State also plays the private enterprise game and contracts out security jobs in front of the different ministries.
When the Berlin Wall fell in 1989, certain people thought that " was the end of the story ", as they announced the total victory of liberalism over the closed economy, the centrally organised and planned economic systems.
Since then, in the name of an open economy, deregulation, flexibility and less State have become the slogans of world capitalism.
The resulting precarious situation which afflicts all the working masses, tends to kindle competition, in spite of themselves, among workers in a labour market where jobs are rarer, because of the increase in labour force potential at world level especially in the manufacturing area. This competition which tends to drag wages and working conditions down, helps increase social differences and inequality creating more misery and poverty for ever-growing segments of the population.
The so-called " industrialised " countries are now also exposed to this pauperisation process, which affects previously protected categories of employees at executive level, just as it does production workers who are thrown out of the Taylor work system as a result of the new division of labour at world level.
Great slabs of regulated social guarantees established through collective bargaining and written in these agreements have been wiped out. Employment " activity ", disassociated from " labour force value " is at the root of what is called " employability ". This new barbarian term is interpreted as " the capacity of a man or a woman to change jobs or even to hold a job ".
This flexibility, this adaptability to the needs of a global economy puts the " active " worker, who used to be protected by a contract and status, in a new precarious, dependent situation of servility.
This new social relation, based on " employability ", a sort of amalgam of employment and activity, means that work contracts for an indeterminate period are part of the past. Work contracts, as established by law and implemented at professional level by collective bargaining agreements or by status and reference scales for civil servants, are considered to be too rigid. They do not reply to world capitalism's demand for more deregulation, flexibility and adaptability.
Firms that are constantly looking for lower production costs, are busy reorganising and restructuring business, externalising a lot of their activities.
Confirmation of this description can be found in the report on " Work in twenty years time "drawn up by the Commission presided by the economist Jean Boissonnat. This report was asked for by the French Prime Minister Edouard Balladur in 1995 and is very explicit on the running of firms :
"Because a certain number of activities are externalised, there is now a new picture of relations between employment and the firm. At the heart of the firm there is a hard core of employees in a stable situation with a work contract for an indeterminate period ; on the periphery there appear two other distinct groups. The first is made up of employees with a short term work contract and trainee temporary workers. The second is made up of collaborators from outside the firm who offer their services either as subcontractors or independent professionals ".
As the author of the report underlines it : " It all appears as if the work contract for an indeterminate period ensured a status that was the best adapted to a Taylor mass production world, whereas to-day, flexible production needs employees with a lot of very different statutes. " (Boissonnat talks about flexible production, while the American Robert Reich talks of personal production, which come to the same. The similarities in the analysis and the conclusion are obvious. -Author's note)
The passage from one type of productive society to another is obvious with the dismantling of the whole framework of regulations and clauses - won by workers' struggles - which provided protection for workers, men women and children, on the job site as well as in society generally.
To-day, in the name of " flexible " or " personal " production, as in the darkest periods of the XIXe century Industrial Revolution, working conditions are once again submitted to the sole market law of supply and demand.
The situation is developing along the same lines for wage indexing. Up to a certain period, collective bargaining agreements, collective work contracts, were able to ensure that the results of growth were shared out, so that wages and the wage scale qualification benefited from it. Very often, union action and a favourable balance of power, were a considerable help in achieving this fair share out. In the name of liberalism, wages and their components are now under attack from capitalists seconded in this by certain compromising on the part of unions.
Negotiations at professional branch level tend to be relegated to second place behind simple agreements at company or firm level. In this new geographical area of restricted negotiation, the shift in the balance of power tends to favour bosses who resort to " job blackmail ".
The weight of limited work contracts and externalisation paves the way for the development of individualised wages which correspond far better to the idea of flexibility than collective agreements.
As a result, wage structure, related to professional qualification is under fire everywhere.
In the previous system, professional qualification corresponding to a given level of stipulated knowledge in manual, technological or intellectual skills achieved by the employee and as often as not attested by a diploma, was classified, thanks to union action, in a qualifications scale. In the case of civil servants and those assimilated to civil servants this professional qualification was classified in a wage index scale.
A qualification with all it entails, and first of all a set wage, is in a certain respect the employee's property. A qualification is the basis of a work contract in the private sector and is the main element which determines an employee's status in the public sector.
Considering that a professional qualification is too rigid, employers tend to replace it by " competence ", a much more flexible concept, since it is employers themselves who define it as they like. The notion of " competence " which is now part of contract relations, is associated with the development of short term precarious contracts, where so-called " temporary work " firms act as " service hirers ".
The public sector, being faced with privatisation, is now subject to the same procedure. With public responsibility being handed over to private enterprise, employees suffer the same consequences.
" Competence " tending to replace " qualification ", becomes in fact and from a practical point of view, employer's property, because it is he who controls what it entails. This reversal of situations, related to capitalists' demands for flexibility and adaptability means a fundamental change in social relations. It calls for complete deregulation concerning wage structure, since wages as the counterpart of services rendered no longer conform to collective agreement rules, and at the same time deregulation of working hours.
The situation is becoming even more precarious in all the industrialised countries because of the introduction of new wage parameters, related to profit sharing and the rapid development of the distribution of stock options, which is spreading from the States, and is aimed at executive personnel and employees having a stable position in firms. In this way the mobile part of wages tends to grow faster than the fixed part which means the guaranteed core of the wage is reduced to a minimum. These mobile fractions of the wage are more and more dependant on stock exchange speculation and are therefore likely to be totally erased in the event of a crash on the stock market.
Union action has also resulted in the setting up of a wage regulator as with the " guaranteed minimum wage ". This is set up by law or by collective bargaining agreements. Deregulation in the world tends to make this minimum protection disappear since it is considered by prevailing liberalism to increase production costs.
In order to justify their position, liberals take up the position of Milton Friedman, leader of the Chicago school, and quote the case of California where he says : " a crowd of migrant workers find jobs there being any wage regulation which is proof that regulation creates unemployment. "
Milton Friedman is careful not to describe the work conditions these migrant workers suffer. From Milton Friedman's ultraliberal description one can see an increasing host of " poor workers " appearing, as a result of part-time jobs, because there is nothing else, and of multiple domestic, bond contracts. These jobs are dispersed so that manufacturing production is more flexible and this makes control by the administration more difficult. This explains the mass of " little jobs " which are often underground, illegal and a pure source of exploitation.
Work legislation, collective bargaining agreements, wages, working hours, minimum wages, job status, all these are under direct attack with flexibility and deregulation.
As for the Nation-States, they are being encouraged to make severe cutbacks in budget expenditure, particularly in social spending, so as not to hinder as they put it the play of free market forces which now tend to invade all political and social structures so that a market society be completely established. On this enormous social demolition site, social protection systems are the first targets.
Unemployment benefits for instance, their amount and the period of benefit are constantly being reduced, while at the same time, in France for example, bosses are continuing to receive important subsidies, supposedly to encourage new jobs. But unemployment everywhere goes on increasing, in one form or another.
OECD recommendations taking up Milton Friedmans' very liberal analysis are extremely clear on this point. In order to encourage flexibility, social assistance must be diminished. For quote : " Workers' keenness to accept low paid jobs depends to a great extent on the relative generosity of unemployment benefits (...). In all countries, it is time to shorten benefit periods when they are too long and to make stricter conditions for obtaining benefit. "
According to the main line of thought of " the new masters of the world ", the best way of getting someone out of work to accept any job is to deprive him of any unemployment benefit at all. The British model is totally inspired by this OECD recommendation.
It is still a reference basis, in spite of the labour majority now in power under Tony Blair who has completely adopted Margaret Thatcher's decisions in this field. The guiding line has not changed since expressed in The Times in the edition dated 14th June 1994. It showed there was an obvious trend towards the lowering of unemployment benefits and wages alongside with growing flexibility, at the same time unemployment statistics were going down.
The most absolute instance of flexibility in the British model, which is the envy of all liberals, is that no guarantee in advance for the employee of an hours work. The employee is in fact forced to wait at home for a call when his services are needed, system which is tending to develop in France in small and medium sized firms.
This form of forced duty at home is a means of avoiding payment of unemployment benefit. As we have seen in the States, social assistance based on Welfare brought in by Roosevelt in the 1930's to help repair the social damage created by the recession, has simply been buried by the Clinton administration in total contradiction with the promises made during the presidential campaign.
In order to achieve lower federal charges, it is the different states who are now responsible for handing out assistance and they insist on moral criteria, so that benefits " do not encourage vice (still religious Puritanism - editor's note) or laziness which tend to disrupt families ".
Puritan America can lift its head again. In the same way, British authorities encourage people to denounce their neighbours 'so as to fight against social fraud and parasites "
Almost everywhere in the world, and particularly in countries where the working class and its organisations had managed to win over the means of lessening hardship due to precarious living conditions for workers, social protection systems were set up to cover the needs of wage earners and their families from cradle to tomb.
Through liberal onslaught this network of social protection is being reduced to thread. It is the case of health protection whether it be for medical or ambulance care, or care in hospital. Because of cutback policies forced through as a result of pressure from abroad in favour of so-called macroeconomics balances, public health services like social assistance see their field of action reduced to the benefit of the private sector.
Because of the rise in medical costs and the decrease in repayments, an ever increasing proportion of individuals - men women and children - in a number of industrialised countries, find themselves faced with a situation where they no longer have the means of getting medical care to cure themselves or what's even worse, to prevent illness.
The whole situation is made worse by the very low purchasing power of the most vulnerable.
This is how illnesses, affections and other pathologies which had been wiped out are reappearing. This is particularly so in the case of tuberculosis. At the rise of the 21st century there is a return of malnutrition, particularly among children, even in developed countries and this leads to the spread of contagious illnesses.
This phasing out and decline of collective social protection, which is wittingly organised opens up the field to individual coverage and private insurance companies who intend to take the place of a part or the whole of the different social security systems.
In France, when the socialist government brought in a universal sickness coverage it officialised private insurance in the collective sickness insurance system and ended the monopoly of social security that had existed since the 2nd world war. The French case is not an exception. The same thing is happening in all developed countries. The aim is to set up " minimal " systems, run by a collective system or the State, the rest, the most important part being charged to the individual who then has to barter with private insurance companies. Repayments are proportionally related to the cost of individual complementary coverage and one can see a several tiered system being set up with medical care for the rich and medical care for the poor.
The problem is no different when applied to retirement systems. These are also affected by the drastic budget policies imposed on States by the global economy and international institutions who act as its spokesman.
As with sickness insurance, retirement pension systems are also much coveted by private insurance companies. This political line is dictated to governments whether they belong to the social-liberal or liberal-social stream, which comes to the same and aims at replacing the systems based on solidarity and a " distribution " between active and retired wage earners, by the capitalisation system based on the individual's own financial contribution.
The argument put forward by those in favour of capitalisation is based on the increase in life expectancy, inactive members of the population tending to become in time more numerous than the active, distribution founded on solidarity will be extinguished.
Actuaries, the authors of these projects, forget to take into account the prodigious development in productivity resulting from technical progress, which should logically compensate the " demographic deficit " instead of tending to enrich a tiny minority.
But the main reason for replacing " distribution " by " capitalisation ", is the capitalist's desire to find funds for speculation on the financial markets, for fictive capital accumulation through the creation of pension funds. To be able to work their members' pensions those who control pension funds act on all the stock exchanges everywhere in the world. In France these funds can represent something like 30 or 40% of stock exchange capitalised value.
These colossal amounts of mainly Anglo-American and Japanese capital, which are far more important than national budgets, even that of the united States, are on the move all round the clock in search of the most profitable openings. One can measure the risk for the whole world economy, built on sand, of this situation because stock exchange capitalised value is disconnected from the real economy.
In the context of a merciless commercial war between economic forces for the conquest of markets, capitalism, subject to it's own law can only survive by extracting a maximum gain in value, on a relative basis in industrialised countries and on an absolute basis in developing countries, these two factors often combining.
Everywhere and in whatever form there is a limitless exploitation of labour force. Child labour has become an inevitable factor in the production process.
The International Tribunal against child labour which was held in Mexico the 22nd, 23rd and 24th March 1996 drew up the accusations against companies and States all over the world who encourage the exploitation of infant labour.
From 1994 documents presented to the Tribunal established that child labour is developing all over the world. It is tending to extend in Latin American countries and in Asia. It is reappearing at a great pace in countries loosing their industry. There are an estimated 200 millions children working to-day throughout the world. The emerging or developing countries, like India, Bangladesh, Pakistan, Mexico, or more generally all the African, Asian and Latin American continents are particularly concerned by this. The American Labour department estimates at 400 million the number of children who are exploited at the rise of the 2nd millennium.
If manufacturing production in developing countries uses and exploits child labour, this phenomena is on the return in industrialised countries. Restructuring of industry with the move towards service and domestic jobs tends to encourage an upturn in abusive practices, of which there is more and more evidence apart from court sentences.
With the last world football cup which took place in France in 1998, the International Confederation of free Unions warned public opinion all over the world about child labour exploitation. The International Textile Federation led an enquiry which revealed that foot balls with the European logo were produced by children in workshops in Lialkot a town in Pakistan of 300 000 inhabitants. The enquiry showed that these children, who were hardly eight years old, earned about 75 American cents per foot ball, whereas the same ball was old in London for 75 dollars.
These children generally work 6 hours a day in a makeshift workshop, with no ventilation, in stifling heat. They are often bound by " discipline " to their work post, particularly so with the carpet makers in Pakistan where children and their work are used to repay money loans that bosses have agreed to make to children's parents.
In a number of Latin American and African countries, but also in Russia, there are a lot of children employed in heavy work, in agriculture, mining, building and material for construction work. Sexual exploitation comes on top of that with the prolific trade that goes on via Internet.
The International Labour Organisation will be a victim of the pressure exerted by globalisation
Since 1993, the International Liaison Committee for a Workers' and Peoples' International has centred its policy on the defence of the ILO's fundamental principles which were established after World War I by the 1919 Constitution, and during the Philadelphia Conference, after the German and Italian fascist regimes had collapsed and before Japan surrendered.
The basis of the 1919 Constitution, updated in 1944, affirm that a universal and lasting peace can be established only if it is based upon social justice. In the preamble established by the delegates, it is clearly said that the conditions of labour involve such injustice, hardship and privation to millions of people as to produce unrest so great that the peace and harmony of the world are imperiled. That's why it is made clear in the Constitution that:
"The High Contracting Parties, moved by the desire to secure the permanent peace of the world, agree to attain the objectives set forth in the Constitution of the International Labour Organisation such as the regulation of the hours of work, including the establishment of a maximum working day and week, the regulation of the labour supply, the prevention of unemployment, the provision of an adequate living wage, the protection of children, young persons and women, provision for old age and injury, protection of the interests of workers when employed in countries other than their own, recognition of the principle of equal remuneration for work of equal value, recognition of the principle of freedom of association, the organisation of vocational and technical education and other measures."
This passage is an extract from the preamble of the Constitution of the International Labour Organisation which became a specialised body joined to the UN as soon as the UN Organisation had been founded..
The founders of the ILO clearly believed that world trade had to be organised so as to deny any subsidies to countries refusing to include in their laws provisions protecting workers against hardship and arbitrariness.
Since 1919, through the impetus given by the workers and their organisations, the Declaration of the ILO Constitution has materialised thanks to the adoption of 176 conventions giving substance to what is called the international labour law.
Among other things, this framework of conventions is dedicated to: "the prohibition of child labour and forced labour, freedom to form trade-unions without prior consent, provisions enabling labour inspectors to work freely, equal remuneration for men and women."
When reading this list of principles in the light of the current situation resulting from the new free market order, we realise that the good intentions of the ILO are bound to fail because of global flexibility and deregulation. This is the core of the debate bringing into question the future and the very existence of the ILO.
As soon as the Constitution had been established, the ILO elaborated conventions protecting workers and their families in order to carry out the principles of the constitution and establish international law. The conventions which were adopted by a tripartite governing body composed of workers', employers' and governments' delegates on the basis of rules established by the ILO Constitution, had to be ratified by the contracting States which were supposed to commit themselves to including the adopted texts into their respective legislation.
Therefore, these contractual measures have force of law in the contracting countries, the very nature of the contractual text becoming coercive like any other law. With this procedure, a resolution which has been voted by the majority can remain a dead letter if it has not been ratified by the States themselves. For instance, the resolution on child labour is ignored by almost two-thirds of the member-countries including the USA, yet a keen advocate of the "social clause".
In spite of its defects and deficiencies concerning the application of the conventions, the ILO system could be used as a stronghold, especially by the workers' trade-union organisations for the working class fight back, in order to get the demands satisfied within the framework of the conventions adopted by the ILO.
During the 86th session of the ILO which was held at Geneva in June 1998, the Governing Body decided to place on the Conference agenda the question concerning "the Declaration on fundamental rights", including its follow-up mechanism.
This Declaration on the fundamental rights was adopted by the June 1998 Conference. Its purpose is to clearly acknowledge the importance for the international community to unanimously support many of the fundamental rights in the current international context, and mark the commitment of the Members to support the efforts made by the ILO to promote the universal application of these rights.
The aim of the Declaration is to reaffirm the principles set forth in the ILO Constitution.
But beyond the words and phrases, the Declaration is leading the ILO in a new direction since its aim is to update the social issues so as to place them within the framework of a globalised world economy instead of focusing on the relation between nations.
The Declaration of Principles includes issues which have been tackled with competence by the ILO since it was founded, concerning: -the prohibition of forced labour and child labour -freedom of association and trade union and the right to collective bargaining -equal remuneration for men and women based on the principle of equal remuneration for work of equal value. -elimination of social, religious and racial discrimination in respect of employment and occupation.
These principles have already been codified through seven fundamental conventions which are being subjected to a ratification campaign according to the ILO. Here are the conventions in question: Freedom of association and Protection of the right to organise Convention No 87 (1948), Right to organise and Collective Bargaining Convention No 98 (1949), Forced Labour Convention No 29 (1930), Equal Remuneration Convention No 100 (1951), Abolition of Forced Labour Convention No 105 (1957), Discrimination (Employment and Occupation) Convention No111 (1958), Minimum age Convention No 138 (1973).
The Declaration concerning Fundamental Rights goes in the same direction as some of the resolutions adopted during the World Summit which was held at Copenhagen in March 1995 under the aegis of the UN.
The commitment which the Heads of State and Government took during this social summit can be read as follows:
"We are expressing our commitment to further the objective of full employment by making it the basic priority of our economic and social policies and offer to all men and women the opportunity to secure themselves safe and stable means of subsistence, thanks to productive employment freely chosen.
To reach this goal at a national level, we shall try to provide quality employment and defend the workers' basic rights and interests and, thereby, promote the application of the relevant ILO Conventions including the ones concerning forced labour and child labour, freedom of association, the right to organise and collective bargaining, the principle of non-discrimination"
So here is the link between the resolutions adopted during the UN World Summit in 1995 and the Declaration of principles concerning fundamental rights adopted by the ILO in 1998.
A crucial question must be brought up. Is the Charter on fundamental rights going to put into question the contractual procedure which has been used by the contracting States up until now to improve their social legislation? Or else, in the global context of flexibility, deregulation and the disengagement of the State, will the Charter on fundamental rights be the mere expression of good intentions, enabling the WTO negotiators to ease their conscience by using this "social mask" to sign agreements with countries which had always been reluctant to foreign interference in their social legislation?
Or else, we may wonder if this is not the way to settle the question of the "Social Clause" which was continuously put forward by Clinton during the American elections in order to gain the sympathy of the workers' trade-unions.
We can obviously be worried when we see how much the American Administration pushed down with all its weight on the elaboration of the Charter of fundamental rights. To that effect, it is important to underline the fact that the US leaders never fail to reaffirm that trade globalisation goes hand-in-hand with the reinforcement of international standards. Yet, the USA have ratified only one convention out of the seven which have been set forth in the Declaration on the workers' fundamental rights.
It is clear now that the ILO tends to be turned into an instrument promoting globalisation and global economy in the same way as the IMF, the World Bank or the WTO, by playing the role of their social counterpart and good conscience.
This new orientation is directly linked to the economic power struggle at the international level and therefore within the globalisation authorities. For instance, the WTO, like other institutions, has a voting system on a majority basis based on "one country, one vote". But as far as the WTO is concerned, all the member countries do not carry the same economic weight considering that the USA and the European Union, acting together, represent half of the world trade.
In the face of such facts, the countries of lower power are confronted to a difficult choice: either they refuse to sign the agreement at the risk of putting themselves on the fringe of the world trade, or they become subordinated to the influence of the ruling economic bloc. It is most likely that the imperialist powers, and the USA in the first place, will try to chip away at the role of the ILO or transform it so as to open it up onto the "civil society".
NGOs and multinational companies would thus be appointed to the historical structure of the ILO based on tripartism.
Several signs, which we have tried to bring to the fore in this text, herald a major transformation of the ILO regarding both its composition and its historical mission established in 1919. This new orientation goes hand-in-hand with the reform of the UN.
From global economy to global government
Just before the World Summit was held at Copenhagen in March 1995, the UN General Secretary at that time, Mr Boutros-Boutros Ghali, stated in his address to the world leaders:
"If you can't find any solutions to the problems of unemployment, the disintegration of the social fabric and globalised poverty, you shall see new revolutions and extremely serious destabilisation."
There are two important aspects. On the one hand the global market is prevailing while on the other hand the States are totally subordinated to the dictates of the markets, especially the financial ones.
According to the World Bank "the market and the State are complementary, the latter having to set up the institutional basis that the market needs for functioning. That's the new redistribution." Still according to the World Bank, "the subsidiary function of the State is to attract private investment, by reinforcing the credibility of the government necessarily won over by the global economy doctrine".
The multilateral draft agreement on investments fits in the definition of the role of the state whose function is to get rid of the obstacles hampering the movement and setting up of investments and investors, which is a new form of sovereignty.
In the previous chapters, we have dealt with the consequences of globalisation on the workers' gains. The international situation confirms the social fact that society is divided into social classes with antagonistic interests. More than ever, class struggle from the economic point of view clearly shows the very confrontation between exploiters and exploited within the civil society. In the past, there have been attempts to transcend these contradictions in the common interest. All the corporatist theories have aimed at harmonising opposite interests. Political and representative democracy marked the separation between civil society, that is to say the economic sphere where opposite interests confront, and political society originating from the citizens' expression. Political and representative democracy has allowed salaried workers who were the victims of capitalist exploitation, to organise themselves within trade associations whose aim and function still consist in defending the workers' specific interests both inside and outside the company.
In the system of political and representative democracy, a distinction is made between the individual and his relation with the civil society, and his function of citizen in relation with the political society. The theories concerning the establishment of economic and participation democracy consist in establishing a link between civil society and political society within a global structure which has coined the phrase "corporatism" based historically on the dogmas of the catholic Church which were adapted to the 19th century Industrial Revolution in the "social Doctrine of the Church".
Since the Encyclic of Pope Leo XIII in 1891, Rerum novarum, up until today with Pope John Paul II in Fides and ratio, all the Pontiffs have theorised about corporatism. According to the definition written by the French writer Montesquieu in his book "The spirit of laws", the civil society limits the economic sphere where contradictory interests and the balance of opposites can be confronted. For Montesquieu, contradictory interests, the balance of opposites and the separation of powers are the foundations of democracy.
For the advocates of global economy and global government, the structural organisation of members of the civil society, especially wage-earners, in trade associations defending specific interests, is in direct opposition with the general interest organised by the States acting on behalf of the globalisation institutions in charge of the global economy, institutions which represent the two hundred biggest multinational corporations spreading their network all over the world.
Wage-earners' trade organisations leading the class struggle are currently being substituted by the NGOs which are officially financed by fees, but in fact, get most of the money not only from the States and globalisation institutions but also from multinational corporations, with the result that they are now playing the role of social shock absorbers so as to maintain the general consensus wished by the supporters of "global governing".
Non-governmental Organisations often regroup diverging interests in order to smooth over and supervise the decisions taken and implemented by the globalisation institutions. For instance, in the developing countries, the public services and social welfare which are financially stifled by the drastic measures set up by the IMF and the World Bank plans, are substituted by structural adjustment plans set up by the IMF and the World Bank within the framework of the NGOs.
In the industrialised countries hit by unemployment, for instance in Europe with 30 millions of "social outcasts", the disengagement of the public services is parallel to the increase in the number of " humanitarian associations", another form of NGOs. The growing development of the action of the NGOs is furthering the rise of a form of neo-corporatism on the international scale.
Transnational networks setting up the new globalising framework exert pressure world-wide on workers' unions to transform their structures drastically so as to have them participate in the institutions of "global government."
For instance in France, at a national level, some worker's union organisations as well as political ones, have led the way in this adaptation to the NGO "functioning" in order to participate in the management of the State. In Europe, the French example is no longer an exception. These orientations lie within the framework of the directives mentioned in the "Report on a changing world", presented by the World Bank in 1997 and called: "The State in a changing world" . In Europe, there are already " European works councils". The firm Volkswagen has recently decided to set up a " World works council".
The Transnational networks representing the embryo of "global governing" express themselves politically through the intervention of the G7 (The USA, Japan, Great Britain, Canada, France, Germany, Italy), and possibly Russia within the framework of the G8. This embryo of "global governing" needs a regulating apparatus directly linked to the workers all over the world. International trade-unionism is represented today by the International Confederation of free Trade Unions, which is easily the largest organisation, the World Federation of Labour of catholic origin ,and the remains of the World Federation of Trade Unions, composed of the trade-unions pledged to the Stalinist apparatus, but which has almost disappeared.
In addition to these International Confederations and Federations, trade-unions belong to vertical international structures: the International Trade-Unions. The ITU includes the National Trade-Union Federations.
During its XXIVÁ Conference held in Sydney (Australia) from the 14th to the 18th of March 1999, the executive committee of the International Federation of employees and technicians decided to found a new International for the new millennium. This new international called UNI (Union Network International) includes not only the IFET but also the Communication International, the International Design Federation, the Media and Entertainment International. The preamble stating the grounds for such creation emphasised "the necessity to be visionary and to prepare the future, the importance for trade-unions to be part of what's happening rather than just fight back, and the wish to take quick action as far as the Year 2000 date was concerned.
The general opinion agreed on the fact that structural modifications, along with the information technology revolution, are drastically changing the industry, the services, the communications, the design and media world. Almost everywhere local trade-unions are merging and so the same process had to take place at the international level. Many principles have been emphasised. The new international must have global and regional structures with strong bonds between the two levels."
The UNI draft statutes includes an institutional division of the countries with common ethnic groups and languages into "regions". This new global trade-union structure calls for the following comments.
With this regrouping of four different international trade-unions, the inter-trade feature of the UNI becomes clear. The geographical logistics of the UNI goes totally beyond the national structures of the affiliated members, that is to say the Federations and the Unions, the statutes setting forth the global structure based on regional trade-union structure.
It must be underlined that, unlike the traditional structures based on the federation system, the President and the general secretary of the UNI are directly elected by the UNI Conference and for four years. The very existence of that electoral device is not fortuitous. It tends to place both UNI leaders on an equal footing with the leaders of globalisation institutions such as the IMF, The World Bank, the WTO, the UN, NATO, etc.
The federal system in force is based on the affiliation of the national federations representing their trade-unions and their members at the international level. According to the UNI draft statute, it is made clear that any trade-union in contact with the UNI can become a member without belonging to a national federation.
At a structural level, because of its inter-professional characteristic, the UNI is obviously in competition with the other international confederations, especially with the ICFTU to which the four International Trade-unions in question belong.
We can easily guess the reasons for such new strategy. Structurally speaking, the ICFTU affiliates Confederations or national unions of trade-unions representing professional federations and inter-professional unions or national unions of trade-unions, each affiliated country functioning according to its own tradition. Thanks to this federalist structure, the ICFTU represents the trade-unions and their members through national organisations.
We may wonder whether such federal trade-union structure (the ICFTU) regrouping national organisations still corresponds to the scheme set up by the globalisation authorities with the view to establish a "global government" as counterbalance offering a semblance of democracy. This requires careful thoughts since, as far as the UNI is concerned, the answer seems to be negative.
In its principle declaration, the UNI has set forth a strategy of class collaboration, especially with the multinational corporations described in these words: "Multinational corporations expect trade-unions to be constantly willing to adapt to changes".
Thus, the UNI, as a global trade-union organisation, is clearly treading the way to co-opted unionism, turning its back to traditional unionism still attached to collective bargaining such as there is in political democracy. Hence, it is not a coincidence if the UNI has set forth the following postulate: "Priority to human dignity in the multinationals." This concept of "human dignity", whose spirituality is in opposition with the individual's materialism, is based on the "Social doctrine of the Catholic Church" which has always been against representative political democracy, the one respecting class struggle and diverging interests but resulting in conflicts and antagonisms.
The social doctrine of the Church has opted for the participation economic democracy based on the merging of the civil and political societies into one single "social body" transcending the class struggle for the "Good of humanity". Because of its partnership with the multinational corporations, the UNI has become a joint-manager of the new world order set forth in the UN draft Reform, in the same way as the workers' union organisations which conform to the line of the World Bank directives and accept the joint-management of the State and the national economy by means of "social pacts".
Consciously for some of them, unconsciously for other ones, these organisations have been turned into instruments of neo-totalitarianism at the international level.
Capitalism has always relied on the support of servile agents to carry out its schemes of domination as well as come to terms with its own contradictions. The financial crisis in Asia, Russia and Brazil- following the one in Mexico- and its consequences on the industrialised countries, has forced many observers to admit that free market economy is in a bad shape.
Some of the most famous economists are beginning to acknowledge again the virtues of monitoring the flow of capital and regulating national markets, which was the prerogatives of the nation-states before as a means of steering their domestic policies.
The multinational corporations are becoming the genuine world political powers. Capital holders tend to impose their dictates to the States so as to establish their economic domination through political law, just like the (MAI).
The disengagement of the Nations-States and the transfer of their traditional responsibilities to authorities in the private sector is drastically changing a whole series of social links, leading to the setting up of a new political concept with a dimensional approach totally different from what has been known up to now. The technological revolution in terms of real-time communication, the development of transportation facilitating people's travelling, all this is contributing to this sudden shift.
The power acquired by big multinational corporations, and consequently the United States of America as prevailing world power, has speeded up the reform of the States which have been subjected to the attacks of the "open economy" and financial markets and confined to the subsidiary role of a mere branch of neo-liberalism.
Within this global structure, the States function as instruments of the globalisation institutions, along with many other intertwining networks like the media, the communication networks, personal relationships as well as an oligarchy transforming the classical political game into shadow theatre, a springboard to power for power's sake, in the service of the sole "single thought".
Many observers, who are regular attendees to the meetings of the globalisation authorities participating in the Davos Forum, have noticed the shift in the attitude of big international firm leaders. In the French review, "Political economy", issued by "Economic alternatives", Mister Stephen Gilc from the University of York in Canada has written:
"In 1997, after having attended the Davos Forum several times, the sociologist Saskia Sassen pointed out that the big international firm leaders had shifted their centre of interests. Up to then they had focused again and again on the market as the centre of necessary reforms all over the world. Since then, and the 1999 meeting has confirmed that fact, the globalised elite's primary concern has been to reinforce the global economic ruling by furthering the transformation of the State into a guarantor of stable environment for the internationalised capital. This concern is also clearly expressed in the 1997 Report on development in the world issued by the World Bank. The same idea has been repeated in a commentary by the World Bank general director, Renato Ruggiero, stating: "We are currently writing the Constitution of the world economy."
As it is pointed out by Stephen GILC, the aim of this global strategy is to guarantee that investors get freedom of action and have their rights protected, taking into account the fact that these forms of guarantee can be modified according to the national traditions and contingencies of all the civil societies-States to which the so-called investors' law is confronted.
Referring to the neo-liberalism theorists, Friedrich Von Hayeck in 1944 and Milton Fiedman in 1962, Stephen Gilc stresses the fact that, according to both neo-liberals, the private authorities' power and authority cannot be fully established unless the definition of economic rules is separated from politics. That is what we define as the basis of representative political democracy.
But today new rules are being set, defined by neo-liberals and based on the lessons that they have learnt from the recent financial crisis. What is currently at stake is the way global constitutionalism tends to endow the private economic authorities with privileged rights of citizenship and political representation in such a way that public policies are adjusted to satisfy the needs of the investors who have become the mere source of sovereignty.
However, as it is pointed out by Stephen Gilc, compared to the situation at the end of the 19th century developed by Hayeck and Fiedman, when the economic forces were also in a prevailing position, today mass democracy is more and more widely spread all over the world. One of the characteristics of the new global constitutionalism is the fact that they cannot simply wipe out the democratic forces.
So these democratic forces must be compelled (see the Pinochet model), taken over and led so as to prevent any alliance which could bring into question economic liberalism and offer an organised, economic and social alternative to liberalism and capitalism. (underlined by us )
Following the example of MAI, it is necessary for investors and capital holders to set forth their prerogatives in the law in order to protect their interests against any political fight back. This orientation confirms our analysis concerning the evolution towards the implementation of a neo-corporatism representing the political expression of a market economy developing into a market society supported by the authorities of big regional bodies like NAFTA, the European Union, MERCOSUR, etc.
Neo-corporatism conflicts with political democracy since it is a system allowing the separation between civil society in which economic forces and socially organised forces can confront each other on the ground of class struggle, and political society in which the individual can exercise his citizen's right.
Thus, in case the social forces who have been the victims of global neo-liberal forces decide to fight back and put an end to the exploiting capitalist regime, nobody would be in the position to reject the possibility that the reactionary forces could ally themselves again with the same coercive schemes which had been used before the war to put down the working class, that is to say using fascist-like methods to both bring democracy down and save capitalism.
The primary aim of the new global constitutionalism is to try every possible means to prevent any possible fight back of the working class. Acting in complicity with all the States, they are trying to set up a consensus scheme by winning over the social forces, especially their leaders, while egging on their financial participation and association to the capital in order to crush class solidarity.
Thus, as it has been written before, the setting-up of "social pacts" at the level of each State makes up the elements of this globalising constitutionality like the "UN Reform" and the "Year 2000 Forum", inviting the civil society to participate.
The workers' trade-union organisations are the primary targets of the harnessing scheme of the global constitutionality. At the level of each State, the integrating process is on.
In Great-Britain, the Prime Minister Tony Blair feels free to address the British trade-unions sharply, calling "workers and employers to participate in a new industrial partnership."
One can read in the French daily newspaper, Le Monde, May 26th 1999: "The historic Conference held in London on Monday, May 24th , in which the main British trade-union confederation (TUC) and the main employers' association in the country participated, has somehow marked the advent of this "new industrial partnership" that the Labour government has been trying to organise for the past two years. Tony Blair was there and as expected, the man of the "third way" greeted the dawn of this new type of trade-unionism by offering from the outset 5 million Sterling pounds out of the public spending to support the project and train managers and trade-unionists wishing to substitute partnership for confrontation."
The Prime and -what's more- Labour Minister has become the most efficient spokesman of the globalising constitutionality and its totalitarian concept. France has probably the institutions which fit in best with the global theories. These Bonarpatist institutions of the 5th Republic have never been put into question since 1958, even less by the various left-wing governments totally won over by the planist ideas drawn from Christian corporatism. The Employment and Social Services Minister, Mrs Martine Aubry, stated in 1998: "Like it or not, trade-unions will have to adapt."
In Spain, in the Netherlands, in Scandinavia, worker trade unions' leaders are also submitting to the social consensus policies. In Italy, the so-called "Oliver branch" coalition in power is accelerating the consensus process integrating the civilian society to the political society, as a follow up to the thesis already developed in the 1920 by Antonio Gramsci in "New Order" in which he already made a theory on a form of new corporatism on a self-management basis he called "transformismo".
We could pile up examples. This strategy of institutional integration of workers trade unions lead to turn them into NGOs deprived of any ability to contest and confined to deal with "society issues", a rather ecumenical function.
The DGB German leaders assert themselves that it is an adaptation of trade unionism to global economy. The setting up of the UNI is not therefore fortuitous. It is part of this strategy of class collaboration.
In that general context of integration world-wide, important segments of resistance are maintained. This is true for instance in France concerning the CGT-FO leaders who oppose those of the CFDT , spearhead of integration. They refuse to participate in the management of State as they refuse the "industrial partnership" promoted by Tony Blair. Many organisations in the CGT are also refusing to follow such a line and oppose the ambiguous stand of their confederation leadership.
There are many other examples of labour organisations which don't hesitate to oppose the leaders' line of total participation to globalisation schemes.
In the USA, the AFL CIO has become an important resistance stronghold. The president of the US trade union made a speech at the Council on foreign affairs on April 1st, 1999. In his declaration, John Sweeney observes that for two decades now, the United States policies were to create a global market. The trade agreements broke customs, he says. These global agreements protect investors' ownership. This global market is dominated by a handful of big Transnational firms, controlling a growing part of the global market, that is to say one third of all industrial imports, 3/4 of all goods exchanges, 4/5 of technological services.
John Sweeney lists all the exaction deeds perpetrated in the name of liberalism and the strategy of multinationals exploiting labour forces without limit beginning with children in the Third world countries. China, Thailand, Mexico are providing goods created by labour exploitation and first of all child labour. John Sweeney denounces firms as Nike which profits from this situation.
This firm which has been delocalised is confronted today to the boycott of consumers informed of the conditions in which its shoes are produced. According to John Sweeney, there is a contradiction between the thesis developed by the defenders of ultra-liberalism demanding laws to protect their industrial properties and labels as well as their investments, who on the other hand to defend liberalism denounce as reactionary attacks against economic freedom the laws protection human rights and workers rights.
Delocalisations towards low wage countries are implemented by many American firms. Condemning the US government s' orientation which is to serve the big multinationals, John Sweeney is clearly a trade unionist decided to defend the interests of American workers and their families. He raises this simple question to define his stand point : What do US workers want at the eve of the new century ? We want to live in a country where one can raise a family without being forced to hold three jobs to succeed; where one is not forced to work for so long a time that there is not time left to go to the pictures or in a motel or to take care of one's children or grand children; where you standing in life will be determined by what you do and not by the colour of your skin or the place where you were born by accident."
Conscious of the threat on the US workers' interests created by the new economic spaces on the whole American continent, John Sweeney opposes and condemns the use of the so-called "fast track" to reach agreements such as the NAFTA, which he opposes. He does not do so because he oppose free trading or linking between nations, but because AFL CIO is against trading with countries refusing to implement the reasonable norms defined by the ILO.
Following the traditions of US trade unionism, the president of AFL CIO repeats in his own words that trade unionism can be nothing else but a gathering of men and women united by their will to defend the worker's specific interests in order to promote social progress.
This conception of trade unionism, taking into account the social history of each country, must reassert its total class independence from the ruling economic forces, that is to say capital forces of which the State as such remains the expression.
Al organisations proclaiming they defend the working class must go on maintaining their class independence o achieve their goals, including political alternative opposing global imperialism in order to put an end to the exploitation of man by man.
Workers' struggles with their organisations allowed to ameliorate the living conditions of workers the world over. They achieve the setting up of a social protection network which is threatened of destruction by globalisation's assaults.
It is therefore important for workers to rebuild workers solidarity on a healthy basis, fro which all compromising are excluded, in order to resist and fight to ensure the protection and perpetuate all workers gains which are threatened today. Men and women have in their heart a tenacious although often unconscious will to see their social conditions bettered.
The global constitution being prepared aims indeed at banning any possibility or attempt to set up an alternate policy. The attempt to set up a "global governance" is totalitarian and a consequence of this reactionary will.
This "global governance" this "global constitution" attacks to that end all forms of political democracy, and especially to the distinction between the civilian society and its components (wage earners, employees, peasants, liberal professionals, techno structures, associations, etc., regrouped in organisations taking in charge their specific interests, and a political society in which citizens express themselves.
NATO already gives global constitution and "global governance" a coercive apparatus to oppose all forms of reaction or global political alternation.
Alexander Zinoviev, former soviet dissident, wrote in an article published in the French daily Le Monde on May 15th, 1999 : "War against Serbia? It is a police raid to publish a people which had dared resist the plans of the global government."
The defence of political representative democracy is linked to the struggles led by the labour movement becoming aware of its demands. It leant very often upon the balance of force and strike. It cannot exist without a political regime respecting democratic rights and first of all the right to organise and demonstrate.
The international working class played a major role before, during and after the war in the struggles against all fascist regimes and the restoration of democratic rights .
Democracy also was a means of pressure for Western powers to force the restoration of democratic rights denied by all totalitarian Stalinist regimes.
The collapse of planned economies linked to a twin-polarised world, has lead the world leaders, those of the western world and first of all US imperialism, to reorganise the world on a globalisation basis.
For imperialist leaders, whose leading and single ideology is the expression of the capitalist system of production, political democracy would be out of date , useless and even dangerous, because it can generate a global political and economic alternative to the ruling capitalist system.
Since the Fall of the Berlin Wall in 1989 that some called the "end of history", "correct thinking" is being promoted and generalised in parallel to an accelerated disintegration of democracy at all levels, in all the spheres of public life in Western countries, and testify of a "very powerful attempt to general totalitarianism" as remarked Alexander Zinoviev I already quoted.
He adds: "I call that Western totalitarianism. The imposition of social systems in the countries of the former soviet bloc and USSR did not lead to Western democracy expansion , but to the expansion of the Western world winner of the cold war and leads to a specific type of totalitarianism."
Concerning the logistics and means used to extend "correct thinking", Alexander Zinoviev writes: "The Western world race to totalitarianism is occulted by the thick veil of desinformation, ideological propaganda and lies on a scale higher than that of Hitler and Stalin period. This is rue as well concerning the technical means and their scope as for their intellectual penetration and hypocrisy.
The war-mongering totalitarianism of West countries is proceeding forward under the guise of humanism, democracy, the struggle for human rights and justice. But because of its nature, acts and consequences , this new totalitarianism is more terrible and dangerous than its predecessors Hitlerism and Stalinism.
For its progression is hidden, goes deep and meet no serious opposition; it is more passive, with infinitely greater means, the support of the majority of peoples in the Western world and of the peoples in its sphere of influence which are ideologically numbed or thankful for Western presents."
This neo-totalitarianism is the antithesis of democratic political representation, for it demands to annex and integrate the economic and social forces of civilian society in the political structures, towards a global organism erasing all separation between individuals and citizens all amalgamated into a single person in a single community state.
Class independence and democratic political representation cannot be separated. As a consequence, the working class and its organisations cannot support the UN reform to be adopted by the Forum of year 2000 : its aim is to integrate a civilian society inside a world-wide global constitutional system opening the way for neo-totalitarianism.
Paris, May 31, 1999