A crisis-opportunity moment

Paul Rogers author pic
Paul Rogers
27 October 2008

The world's financial nervous breakdown is far from over. The stock-market turmoil continues, the huge debt issues left by the collapse of major institutions remain potentially destabilising, and there could still be major shocks to come (not least in east-central Europe). The reverberations of a crisis that began in the global north are working their way across the global south. These trends indicate that the convulsions of September-October 2008 - from the fall of Lehman Brothers to the emergency bailout-investment model of British prime minister Gordon Brown - are only the prelude to a worldwide economic recession.

Paul Rogers is professor of peace studies at Bradford University, northern England. He has been writing a weekly column on global security on openDemocracy since 26 September 2001

The evidence of downturn in what is still quaintly called the "real economy" is accumulating everywhere - with workers in the United States at the sharp end. There, "(employers) are moving to aggressively cut jobs and reduce costs in the face of the nation's economic crisis, preparing for what many fear will be a long and painful recession" (see Neil Irwin & Michael S Rosenwald, "Job Losses Accelerate, Signaling Deeper Distress", Washington Post, 23 October 2008). The scale of current troubles is indicated by a tale of two months: September 2008 saw more mass-layoffs in the US than any since September 2001.

The falling market indices are reinforcing fears in much of the non-west about what is to come. Pakistan, whose reserves of currency are dangerously low, is in discussion over a support-package from the International Monetary Fund which could bring it $5 billion in the short term; the Argentinean stock-market sank by over 16% on 22 October amid the planned takeover of pension-funds by the country's troubled president, Cristina Kirchner; and even China - for so long the most optimistic story in the global economy - is facing difficulties, as economic planners realise how much more must be done to satisfy an expectant population (see Jim Yardley & Keith Bradsher, "Faced with global slump, can China keep up economic growth?", International Herald Tribune, 23 October 2008).

Some on the political left see a renewed opportunity for statist solutions, while others welcome the prospect for effective local responses. But the belief in the possibility of progressive outcomes at all requires a dose of caution, for painful economic circumstances often result in people's arc of concern becoming smaller and less generous (see Andrew Dobson & David Hayes, "A politics for crisis: low-energy cosmopolitanism", 22 October 2008). After all, the world has been here before in the last four decades - twice.

In addition to his weekly openDemocracy column, Paul Rogers writes an international security monthly briefing for the Oxford Research Group; for details, click here. Paul Rogers's most recent book is Why We're Losing the War on Terror (Polity, 2007) - an analysis of the strategic misjudgments of the post-9/11 era and why a new security paradigm is needed

Two moments

The first such modern "crisis-opportunity" moment came in the early 1970s, when there was a growing awareness of the risk to global society from environmental constraints. At the time, the main concern was not about the then relatively little-understood problem of climate change but about pollution, resource-depletion and the potential of critical food shortages. The first United Nations Conference on the Human Environment (UNCHE) was held in Stockholm in June 1972; it focused attention on the "limits to growth" debate, and there was much talk of sustainability and appropriate technology.

In Britain there was at the time a vigorous if largely middle-class movement towards practical self-sufficiency, reflected in a flowering of innovative publications such as the radical science magazine Undercurrents (1973-84). Alongside this energetic current of ideas was awareness of the urgent need to reshape the world economy in favour of the majority world (see "A world in flux: crisis to agency", 16 October 2008).

In the event, plans for a "new international economic order" collapsed as retrenching industrial states focused on their own selfish interests, while stagflation and recession occupied people more than home-insulation and solar-panels. By the start of the 1980s - with two Ronald Reagan and Margaret Thatcher elected to power - there was a new emphasis on diminishing state involvement in the economy (on the grounds that government was "the problem, not the solution") in order to allow the free market to flourish, enrich the deserving....and, eventually, "trickle down" to the poor.

The second "crisis-opportunity" moment came in the late 1990s. The anti-globalisation movement, decentralised and amorphous, announced its presence as a new radical force at the World Trade Organisation summit in Seattle in November-December 1999. It struck a chord across the world, far more widely than among its core supporters and sympathisers. The sense of unease among the world's rulers was palpable, starting with the World Economic Forum at Davos that followed; "a crack began to appear in the edifice of Western economic control" (see Losing Control: Global Security in the Twenty-first Century, Pluto Press, 2nd edition, 2002).

In the midst of this nervous elite mood, the neo-conservative wave broke in the United States. In its early phase in the first months of 2001, George W Bush implemented a raft of policy changes that revealed that any expectation that his narrow election victory might be the prelude to consensual politics was no more than a pipedream. The new administration refused to ratify the comprehensive nuclear test-ban treaty (CTBT); resisted strengthening the biological and toxin weapons convention (BTWC); allowed the anti-ballistic-missile treaty to wither; opposed commitment to the International Criminal Court; and withdrew from the Kyoto climate-change accords. The "new American century" would be a free-market era with no recognition or acceptance of environmental concerns and little interest in the global socio-economic divide.

These changes caused consternation in some European capitals; but there was also a sense that Washington would over-reach itself, and that these early unilateral excesses would not stick. This is where the 9/11 attacks were so significant. The appalling shock of those attacks, just when Washington seemed so confident, massively reinforced the belief that there was only one way forward. Even the Enron and the WorldCom scandals were sidelined as everything became subsumed into the "war on terror" - part of the much wider project of cementing the United States's global leadership (see "The world as a battlefield", 9 February 2006).

The "war on terror" waged in pursuit of this aim can seven years later be seen even more clearly for what it was and is: a deeply counterproductive endeavour that has come to cast doubt on the viability and coherence of the idea of a unipolar world (see "The war on terror: seven years on", parts one and two, 2-9 October 2008). On that basis alone, the current financial crisis and deepening recession should be a precious opportunity for a new approach to the world economy that is rooted in a genuine multilateralism (see "Wanted: a new global paradigm", 8 November 2007).

Third chance

A summit of the G20 group of leading industrial and developing countries will be held in Washington on 15 November 2008 - an occasion, therefore, when the existing G8 states will face representatives of emerging economies such as China, India, Brazil and Indonesia around the same table. The agenda and the management of the summit will be vital: it is probable that the event's leading planners will attempt to limit debate to the stabilisation of financial markets, but there is at least a chance that the question of global economic planning and governance will also be aired. Whether the conclusions begin to reflect the realities of the world economy and the needs of the majority of the world's people remains to be seen (see "Bush to host world finance summit", 22 October 2008).

It seems unlikely. At root, the delegates in Washington will be officials from governments representing that 20% or so of the world's population that has since the 1960s consistently forged ahead of the rest (see James Davies, Susanna Sandstrom, Anthony Shorrocks & Edward N Wolff, "The World Distribution of Household Wealth", WIDER Angle, 2/2006 [World Institute for Development Economics Research, Helsinki]). The membership of that elite community is global: it may be 150-million strong in China, 100-million strong in India and over 20-million strong in Brazil, as well as including the majority of the people of north America, western Europe, Japan and Australasia. But this albeit large group is decidedly not the "majority world" and the actions taken by those in officialdom rarely take account of the interests of people in this much larger category.

By coincidence, on the very day that George Bush announced the date of the G20 meeting, a report published by the United Nations Human Settlements Programme (UN-Habitat) on the state of the world's cities concluded that the rising inequalities there were likely to lead to persistent social unrest and the risk of violence (see John Vidal, "Wealth gap creating a social time bomb", Guardian, 23 October 2008). The organisation had earlier confirmed that 2007 was the first year in history that the majority of the world's people were now living in cities; UN-Habitat's new analysis highlights deepening divisions within the world's cities - in wealthy countries such as the United States as well as less-developed ones like India and Brazil (see "A tale of two towns", 21 June 2007).

This is a specific yet fundamental effect of the failure of the global economy to deliver socio-economic justice. It is one that political leaders seldom acknowledge. Even more striking is that these leaders seem to be ignorant of the likely impact of several years of recession on urban populations, which in turn are far more aware of their own marginalisation than was true in the 1980s. The G20 meeting and the other summits to follow carry the risk that policy responses will again be so narrow as to focus on only a minority of the world's people. That will be deeply unethical - and ever more dangerous too.

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