DAVOS

2001

NEW WORLD ECONOMIC ORDER

UNDER FIRE AGAIN

With the opening of the 2001 World Economic Forum (WEF) meetings in Davos, satellite TV viewers worldwide have once again witnessed drastic security measures against the threat of protests. From Seattle to Switzerland, in recent years global economic policy meetings have come under fire from a broad coalition of what the media call ‘anti-globalization’ or ‘anti-capitalist’ forces. With emotionally charged images of street battles between armor-plated police and black-masked anarchists as a backdrop, most news reporting seems to focus on the potential for violence, but neglects the issues raised by the protestors. Following the American election imbroglio and amidst growing fears that the American economy is entering a recession, the WEF delegates at Davos 2001 are under mounting public pressure to justify and explain their own goals and policies.

The recent wave of protests, whether directed at the World Economic Forum, the World Trade Organization, the World Bank, or the International Monetary Fund, are symptomatic of growing international discontent with the economic policies promoted by these transnational entities, policies which are collectively termed ‘neoliberalism.’ Developed in the 1960s by a minority cadre of conservative American economists led by Milton Friedman, and fueled by a network of foundations, research centers, and publishing houses, neoliberalism has emerged as the dominant paradigm and the ideological engine of the new global economy, steadily overturning the Keynesian welfare state model developed in mid-century.

In the 1980s, neoliberalism was put into practice in the US and UK under the aegis of ‘Reaganomics’ and ‘Thatcherism,’ and its precepts also inform brutal structural adjustment programs imposed by the World Bank on poor African, Asian, and South American countries. Insisting that privatization, competition, and efficiency inform all decisions on economic and public policy, and supplemented by a strict form of social Darwinism, neoliberalism has re-directed the world economy at the turn of the millennium. In the neoliberal worldview, anything that has not yet been privatized is inefficient, and this belief informs the incessant drive to privatize the public sector, including healthcare, education, welfare and social security. Ironically, though neoliberalists are incorporating the welfare state, many of the sectors they now seek to privatize were initially constructed at the public expense.

The privatization of large public sector industries often ended up handing them to banks and investment firms. In Britain, for example, public employees were only able to purchase two percent of publicly-held shares when Thatcher privatized the telecommunications, aviation and aerospace industries, and many formerly public services are now run for the benefit of investors, and in some cases have been run into the ground. More recently, with the California power grid on the verge of collapse, activists and community organizations in the US and elsewhere are blaming such problems on the deregulation and privatization of public utilities.

Neoliberalism has tended to benefit the wealthiest segments of the societies in which it has become the dominant force in the economy. In the US, for example, income distribution shifted radically under Reagan’s neoliberalist policies. During the 1980s, the wealthiest 10 percent of American families increased their income by nearly 20 percent, while the top 5 percent took home a staggering 25-30 percent more. But the majority 90 percent of Americans lost income, with the bottom 10 percent losing over 15 percent of their already paltry limited earnings. While the income of the wealthy 10 percent doubled to $400,000 per year, the income of the bottom 10 percent fell to $3,500. American corporate executives became notorious for taking home astronomical salaries, up to 200 times higher than those of their average workers who often struggled just to keep their jobs in the face of increasingly weakened trade unions, massive work layoffs, and benefit cutbacks.

Neoliberalists insist on a definition of the free market characterized by three overlapping features: freedom of trade, freedom of capital, and freedom of investment. Anything that inhibits this utter economic liquidity is labeled as a ‘trade barrier.’ The capstone of these efforts was the creation of the World Trade Organization in 1995, which came about after meticulous negotiations largely out of sight of the public eye. In practice, this means putting strict limitations on the power of the state to regulate investment, industry and trade, which often ends up curtailing trade unions, small businesses and environmental regulations, thus reducing the power of national governments to determine their own economic policies, and then providing a friendly environment for mega-corporate predators.

Established in 1971 and based in Geneva, the WEF is a powerful engine for neoliberalism. The Forum consists of 1000 of the largest private corporations and another 1000 of up-and-coming ‘global growth’ corporations, supplemented by 1000 delegates selectively invited from government and academia. The WEF was influential in promoting neoliberal trade pacts such as the Uruguay Round of the General Agreement on Trade and Tariffs (GATT) and the North American Free Trade Agreement (NAFTA). The new global economy is increasingly governed by this networked club from the G7 countries, with a few honorary members, who direct it through the WTO, IMF and the World Bank, which are becoming the sole regulatory powers of the world economy, superceding national regulatory bodies.

The international economic policy meetings like those at Davos, which are often billed as ‘informal’ gatherings, create the cultural and personal links among members of an emerging transnational ruling elite, while largely excluding the voices of the vast majority of the world’s population. But the growing tide of public protest is becoming difficult to ignore. With the weakening of national governments and other public entities under neoliberalism, the fate of humanity now seems to have been turned over to the private sector. In addition to voicing public anger and discontent, the protests can be seen as a way of reminding the transnational ruling elite that there are broader and more pressing concerns to life than simply hoarding more wealth and privatizing the public sector. So far, the very real concerns raised by protestors have been met by the new global ruling elite with brutal police repression, coupled with public relations ploys such as inviting representatives of carefully selected non-governmental organizations to participate in highly publicized but toothless and utterly useless ‘open forums.’
The rising tide of protest has pressured the WEF to publicly legitimize itself and open its behind-closed-doors decision-making processes. For thirty years the WEF has convened in virtual secrecy with little or no news reporting, and few people even knew of its existence. Now it is in the spotlight, along with many of the other financial organizations driving the global economy. The recent protest agenda has consistently included debt relief for poor countries, more transparency in international economic organizations, and public taxes on international financial speculations. As more voices enter the discussion, more recommendations may emerge. With the current uncertainty in the Western system of politics and economics, a door is now open for the rest of humanity to participate in potentially meaningful ways to understanding and solving the world’s problems for everyone. It is tragic, however, that the door remained firmly locked for so long, while the neoliberal economic order was constructed, but it is also imperative that public pressure continue in order to prevent neoliberalism from gaining any more ground.