On the Crisis of Economic Globalization

                       Siena, Italy, September, 1998

In the midst of the rapidly growing global financial crisis that has already reached unprecedented proportions, the following statement was prepared by the Board of Directors of the International Forum on Globalization (IFG), an alliance of leading scholars, activists, economists, researchers, and writers representing over 40 organizations in 20 countries. The meeting was held in Siena, Italy, in September 1998.   
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1. The undersigned have long predicted that corporate-led economic globalization, as expressed and encouraged by the rules of global trade and investment, would lead to an extreme volatility in global financial markets and great vulnerability for all nations and people. These rules have been created and are enforced by the World Trade Organization (WTO), the International Monetary Fund (IMF), the General Agreement on Tariffs and Trade (GATT), the North American Free Trade Agreement (NAFTA), the Maastricht Agreement, the World Bank and other global bureaucracies that currently discipline governments in the area of trade and financial investment. This volatility is bringing massive economic breakdown in some nations, insecurity in all nations, unprecedented hardships for millions of people, growing unemployment and dislocation in all regions, direct assaults on environmental and labor conditions, loss of wilderness and biodiversity, massive population shifts, increased ethnic and racial tensions, and other disastrous results. Such dire outcomes are now becoming manifest throughout the world, and are increasing daily.

2. The solutions to the crises that are currently being offered by the leadership of the above-named trade bureaucracies, and the leaders of most western industrialized states, as well as bankers, security analysts, corporate CEO’s and economists – the main theoreticians, designers and promoters of the activities that have led us to this point – are little more than repetitions, even expansions, of the very formulas that have already proven socially, economically and environmentally disastrous. The experts who now propose solutions to the financial meltdown are the very ones who, only months ago, were celebrating Indonesia, Thailand, South Korea and other "Asian Tigers" as poster-children for the success of their designs. They later stated that the Asian crisis was fully contained. Notably, these experts have been wrong in nearly every predicted outcome of their policies.

Now these "leaders" advocate that we solve the problem by further opening markets, further opening and liberalizing the rules of investment (as they promote such draconian formulas as the Multilateral Agreement on Investment, and expanded IMF powers), further suppressing the options of nation-states and communities to regulate commerce for the good of their own publics and environments, further discouragement of such models as "import substitution" that have the chance to enable nations to feed and care for themselves, and further centralization of control within the same governing bodies as at present. In other words, more of the same.

According to these architects of globalization, it is only a matter of "fine tuning" or "first aid" while on the way to continued expansion of the same failed dream of theirs. They cite "cronyism" among the Third World’s nations as contributing to the problem, but say nothing of the cronyism exhibited by the U.S. Treasury-Wall Street-IMF collaborations by which western bankers bail out other western bankers for their disastrous policies.

Clearly, the architects of the present crisis have not understood what they have wrought, or, if they have understood it, cannot afford to admit it.

3. As for the tens of millions of people who now suffer from this experiment, the expert solutions include no bailouts. Many of these people, formerly self-sufficient in food, are now dependent on the absentee-ownership system of the global economy. Now abandoned, they are left to seek solutions outside the system, from foraging in the (fast disappearing) forests, to barter systems, to social upheaval as means of expression. Many are finding that their attempts to return to prior means of livelihood – such as small scale local farming – are impossible, as their former lands have been converted to industrial corporate agricultural models for export production. Land on which people formerly grew food to eat has been converted to corporate production of luxury commodities – e.g. coffee, beef, flowers, prawns – to be exported to the wealthy nations. Poverty, hunger, landlessness, homelessness, and migration are the immediate outcome of this. Insecure food supplies, lower food quality, and often dangerous contaminated foods are a secondary outcome. The situation is unsustainable.

4. Its creators like to describe the global economic system as the inevitable outgrowth of economic, social and technological evolution. They make the case that centralized global economies that feature an export-oriented free trade model, fed by massive deregulation, privatization, and corporate-led free market activity in both commodity trade and finance — free of inhibiting environmental, labor and social standards — will eventually bring a kind of utopia to all people of the planet. Now it is clear that it is a corporate utopia they have in mind. But even this will fail to achieve its goals, as the entire process is riven with structural flaws. No system that depends for its success on a never ending expansion of markets, resources and consumers, or that fails to achieve social equity and meaningful livelihood for all people on the planet, can hope to survive for very long. Social unrest, economic and ecological breakdown are the true inevitabilities of such a system.

5. It is appropriate to recall that the present structures of globalization did not grow in nature as if they were part of a natural selection, evolutionary process. Economic globalization in its present form was deliberately designed by economists, bankers, and corporate leaders to institute a form of economic activity and control that they said would be beneficial. It is an invented, experimental system; there is nothing inevitable about it. Globalization in its recent form even had a birthplace and birthdate: Bretton Woods, New Hampshire, 1944. It was there that a design was agreed to by the leading industrial nations. The WTO, the IMF, the World Bank, et. al. were instruments that grew out of the design plan, to facilitate and further the process.

Great expectations have led to despair. After 50 years of this experiment, it is breaking down. Rather than leading to economic benefits for all people, it has brought the planet to the brink of environmental catastrophe, social unrest that is unprecedented, economies of most countries in shambles, an increase in poverty, hunger, landlessness, migration and social dislocation. The experiment may now be called a failure.

6. With the crisis now obvious in Asia, Russia, Brazil, Mexico and soon, predictably, in other places including western industrial nations, many peoples of the world, and many nation-states, have begun to recognize that the globalization experiment is doomed to fail. They have begun to specifically ask if globalization – especially free trade in financial flows – is in the best interest of their own nation, or any nation. We have seen serious corrective actions recently taken by China, India, Hong Kong, Malaysia, Russia and Chile which, by various means, have tried to counter the destabilizing force of unregulated private investment that has proved to benefit no one but the crony capitalists who advocate it. As we write, many more nations are showing renewed interest in these expressions of resistance and withdrawal from uncontrolled global capital. Importantly, the nations that have put, or maintained, controls on capital have demonstrated a higher degree of stability, and are better able to act successfully in the interests of their own resource and economic bases and in the interests of their own populations.

We applaud such actions and urge more nations to investigate and adopt currency and investment controls, as appropriate to their unique situations, rather than continuing to take dictates from distant bureaucracies who have proved they do not know what they are doing.

7. Though the current crisis tends to be reported as strictly "financial" in nature, it is worth noting that the problems are deeper and more endemic to the inherent flaws in the design of the global economy itself. All peoples of the world have been made tragically dependent upon the arbitrary, experimental acts of giant self interested corporations, bankers and speculators. This is the result of the global rules that remove real economic power from nations, communities and citizen democracies, while giving new powers to corporate and financial speculators that act only in their own interests; and that suppress the abilities of local economies, regions and nations to protect resources, public health and human rights, This has left the peoples of the world in a uniquely isolated, vulnerable condition; dependent upon the whims of great, distant powers. This too is an unsustainable condition.

8. Any truly effective solution to the current financial crisis, and the larger crises of economic globalization, must include the following ingredients, among others: a) Recognition and acknowledgment that the current model, as designed and implemented by present-day, corporate led global trade bureaucracies is fundamentally flawed, and that the current crises are the inevitable, predictable result of these flaws. b) Convening of a new Bretton Woods-type international conference which would bring to the table not only representatives of nation-states, bankers and industry, but an equal number of citizen organizations from every country to design economic models that turn away from globalization and move toward localization, re-empower communities and nation-states, place human, social and ecological values above economic values (and corporate profit), encourage national self sufficiency (wherever possible) including "import substitution," and operate in a fully democratic and transparent manner. c) Efforts to build on the experiences of Chile, Malaysia, India and the other countries that have placed controls on capital investment and currency speculation. Encourage all activity that reverses present policies that expand the freedoms of finance capital and transnational corporations, while suppressing the freedoms of individuals, communities, and nation-states to act in their own behalf. d) Immediately cancel all efforts toward completion of the Multilateral Agreement on Investment (MAI), or the expansion of the International Monetary Fund to include ingredients of the MAI that give added freedom to finance capital to operate free of national controls.

Finally, the undersigned wish to state that we are not opposed to international trade and investment, or to international rules that regulate this trade and investment, so long as it complements economic activity that nation-states can achieve for themselves, and so long as the environment, human rights, labor rights, democracy, national sovereignty and social equity are given primacy.

SIGNED BY: The Board of Directors, International Forum on Globalization

Maude Barlow, Council of Canadians, Ottawa, Canada
John Cavanagh, Institute for Policy Studies, Washington, D.C., U.S.
Tony Clarke, Polaris Institute, Ottawa, Canada
Edward Goldsmith, The Ecologist, London, U.K.
Martin Khor, Third World Network, Penang, Malaysia
Andrew Kimbrell, International Center for Technology Assessment, Washington,
D.C., U.S. Jerry Mander, Public Media Center, San Francisco, CA, U.S.
Helena Norberg-Hodge, International Society for Ecology and Culture,
Dartington Totnes, U.K. Mark Ritchie, Institute for Agriculture & Trade
Policy, Minneapolis, MN, U.S.
Vandana Shiva, Research Foundation for Science, Technology & Natural
Resource Policy, New Delhi, India
Lori Wallach, Public Citizen, Washington, D.C., U.S.

ALSO SIGNED BY: (PARTIAL LIST) (Organization names shown for identification
purposes)

John Acquay, FOE Ghana
Thomas Akabzaa, Third World Network, (Ghana)
Miguel Altieri, Ph.D, ESPM-Division of Insect Biology, University of
California at Berkeley ESPM-Div. of Insect Biology
Louis Lefeber, CERLAC, York University, (Canada)
Harriet Barlow, HKH Foundation
Tom Barry, Co-Director, Foreign Policy In Focus Project Interhemispheric
Resource Center Medea Benjamin, Director, Global Exchange
Peter Berg, Planet Drum Foundation
Wendell Berry, Lanes Landing Farm
Agnes Bertrand, Observatoire de la Globalisation Economique, (France)
Max Bollock, Legislative Director, Peace Action of San Mateo County
Beth Burrows, Edmonds Institute
Leslie Byster, Silicon Valley Toxics Coalition
Bruce Campbell, Executive Director, Canadian Centre for Policy Alternatives,
(Canada)
John Cavanagh, Institute for Policy Studies
Nilo Cayuqueo, Abya Yala Fund
Kevin Clements, Director, Vernon and Minnie Mynch Chair of Conflict
Resolution
Kevin Danaher, Global Exchange
Donald E. Davis, Armuchee Alliance Dalton College
Maria de la Luz Arriaga Lemus, Trinational Coalition of Defense of Public
Education – USA, Canada, & Mexico, (Mexico)
Chris Desser, Migratory Species Project
Oronto Douglas, Environmental Rights Action (ERA) Nigeria, (Nigeria)
Richard Douthwaite, FEASTA, The Foundation for the Economics of
Sustainability, (Ireland) Fiona Dove, Director, Transnational Institute
(TNI), (Amsterdam)
Ulrich Duchrow, Kairos Europa, (Germany)
Ramon Duran, AEDENAT, (Spain)
Jan Eastman, President, Canadian Teachers’ Federation, (Canada)
Tewolde Gebre Egziabher, Natural Environment Protection Authority,
(Ethiopia)
Anne Else, New Zealand social and economic analyst and writer
Chowdhury Farouque, Friends of the Earth Bangladesh
Allison Fields, Global Exchange
Ed Finn, Canadian Centre for Policy Alternatives, (Canada)
Paige Fischer, Pacific Environmental Resource Center
Alan Fricker, Convenor, Sustainable Futures Trust, (New Zealand)
Jeanne Gauna, Southwest Organizing Project (SWOP)
Susan George, Associate Director, Transnational Institute, (France)
Maria Gilardin, TUC Radio
Fred Goff, Data Center
Larry Goodwin, Director, Africa Faith and Justice Network
Alan Griffiths, Campaign coordinator, ‘STOP MAI’ Campaign, (Australia)
Ricardo Grinspur, Centre for Research on Latin America & the Caribbean,
(CANADA) Richard Grossman, Program on Corporations, Law and Democracy
(POCLAD)
Jonathan Hardy, National Secretary, Campaign for Press & Broadcast Freedom,
(England) Randall Hayes, President, Rainforest Action Network
Ladislav Hegyi, Coordinator, SpoloEnos? priate