It presents the constitutive role and functional character of crises in capitalist development; the structure-agency dynamics in recurrent financial crises; the opposing responses to the global crisis; and the emergence of distinctive political-economic regimes in the world.
CRISES and CAPITALIST DEVELOPMENT
Course on: GLOBALIZATION AND CHALLENGES TO THIRD WORLD DEVELOPMENT
Global Development Studies
Aalborg University, Denmark
Lecture for the
Masters in Development and International Relations Programme
Aalborg University, Denmark
23 February 2010
I. How can we make sense of crises in capitalist development?
Relationship between Crises and Neo-liberalism ? (constitutive and functional)
II. Why financial crises keep on recurring?
Mechanisms behind recurrent financial crises and the conflict between finance
capital and real economy ? (structure-agency contradiction)
III. How do the multilaterals, regional organisations, states, and civil society
respond to the current global crisis?
Current responses to the global crises ? fundamentally the same
IV. What are the general implications of the global crisis for political-
Resurgent ?nationalism? in US and Europe
Emergent ?authoritarian liberalism? in East and Southeast Asia
(1) THE CONSTITUTIVE ROLE AND FUNCTIONAL CHARACTER OF
CRISES IN THE EVOLUTION OF NEO-LIBERALISM
? Relationship: Crisis and Neo-liberalism
? Dysfunctional or Functional (or both)
? Constitutive Role of Crisis and Neo-liberalism
? Born out of crises
? Evolved through crises
? Died of crises???
The Global Political Economy of Development, 1960s - 2010
National Developmentalism Washington Consensus Post-Washington Consensus
1960s 1980s - mid-1990s mid-1990s - present
(National Development) (Open Market Economy) (Global Competitiveness)
[post-WWII, Keynesianism, Golden Age] [Structural Adjustment Programmes: [Deep institutional reforms; policies
privatisation, liberalisation, on labour market ?flexibility? and
deregulaiton] ?human capital? ]
POLITICAL State-led development and its crisis First wave neoliberal offensive ?Second generation? reforms focus
HISTORICAL on institutional reform
INDUSTRIAL State-controlled authoritarian systems Deregulation, low wage assembly and Labour flexibility and high
RELATIONS AND export zones productivity
POVERTY AND Selective state action Market (trickle-down) effects Accumulation of human capital
CAPITAL AND Control FDI Remove controls Attract investment through creation
CURRENCY of attractive climate
INDUSTRIAL Protect local investment Remove protection and privatise Create globally competitive
TRANSFORMATION industries; allow exit and entry
REGIONAL Cooperative developmentalism Free trade and open borders Meta-governance to promote
THE DEVELOPMENT State-dominated participation Individual civil rights; rule of law Good governance and independent
OF CIVIL SOCIETY civil society (?social capital?)
ENVIRONMENTAL Disregard for environmental concerns Measures to limit market-driven Sustainability as a principal
EFFECTS AND environmental degradation objective
TECHNO-ECONOMIC ?Maturity? of the mass production paradigm ?Installation? period of the Information ?Turning point? of ICT paradigm
PARADIGM and Communications Technology
*Thanks to Professor Paul Cammack, Manchester Metropolitan University, UK.
NEO-LIBERALISM WAS BORN OUT OF CRISES
Complex interaction of forces/events/phenomena...
...Mutually reinforcing tendencies
? recession in the developed capitalist economies after 1973, the OPEC oil crisis, and the
collapse of the Bretton Woods system
? de-linking from the ?gold standard?
? internationalisation of financial markets as a result of the widespread abandonment of
? the massive increase in foreign bank lending to the Third World as consequence of the
recession in the major economies
? the growing stagnation of command economies
? the shift from import substitution in favour of export promotion in the Third World and
the rise of the NICs in East Asia
? the imposition of structural adjustment programmes (SAPs) on the heavily-indebted
Third World as conditionality attached to rolling over foreign debt
? the restructuring of global production towards ?post-Fordism? and the growth of MNCs ?
? the revolution in macroeconomic policy that resulted in the weakening of trade unions,
the cutting of state budgets, deregulation, privatisation, etc.
? the advances in ICT (as the new ?techno-economic paradigm?) ?
NEO-LIBERALISM HAS EVOLVED THROUGH CRISES
From crisis to crisis in the last 35 years....
? National Developmentalism (postwar-1970s)
? Crisis of Fordism/Keynesianism (stagflation)
? Washington Consensus ? 1 Generation Neoliberal reforms (1980s ?
? Crisis of market fundamentalism of the Washington Consensus ? ?East
Asian Miracle? (8 HPAEs showing high growth and high equity with state
? Post-Washington Consensus ? 2 Generation reforms (mid-1990s -
? Cacophony of crises: financial crises, overaccumulation, overproduction,
over-/under-consumption, climate change, ecological degradation, political
legitimacy, global governance crisis, oil crisis, food price crisis, subprime
National Developmentalism: post-World War II - 1960s
? Keynesian economic policy
? Active role of government in
the economy (full
employment; monetary policy,
? 'populist' import-substituting
development (Latin America)
? 'developmental state' (East Asia)?
? 'Golden Age' (1950-1973):
productivity & real wage in harmony
? Fordism: mass production ? mass
Crises of the 1970s gave way to Neo-liberal globalisation
gave way to
From Statism to Market Fundamentalism
March into Socialism (1949)?
March into Neo-liberalism (1980s-2009)
1. state-managed stabilisation policies
2. principle of redistributive taxation
2. fiscal reforms that encourage
3. price regulation
3. deregulation of prices
4. public control over the labour and the
4. labour and market affairs have
been left to the market forces
5. public enterprises that satisfy wants
5. 'the sphere of wants' is a task to
6. all types of social security legislation
be satisfied by the market
6. restructuring of social security
legislation to work for the market
*Socialism is understood ?as that organisation of society in which the means of production are controlled, and the
decisions on how and what to produce and on who is to get what, are made by public authority instead of by privately-
owned and privately-managed firms? (Schumpeter, 1949).
Neo-liberal Policies: 10 Reforms
[Washington Consensus: SAPs]
(John Williamson: for Latin America [?not all countries?]
as of 1989 [?not at all times?])
1. Fiscal Discipline
2. Reordering Public Expenditure
3. Tax Reform
4. Liberalizing Interest Rates
5. A Competitive Exchange Rate
6. Trade Liberalisation
7. Liberalisation of Inward FDI
10. Property Rights
East Asian growth amidst global crises....
Growth Rate GDP Per Capita of World Selected Regions
Regional Average Selected Period between Years 1000 - 2001
(Annual Average compound Growth Rate)
Africa Asia (Japan excluded) Latin America World
1000-1500 1500-1820 1820-1870 1870-1913 1913-1950 1950-1973 1973-2001
Source: original data extracted from Angus Maddison, The World Economy, Historical Statistics, OECD, Paris, 2003, p. 263
Two Periods of Neo-liberalism:
Not simply ?state vs market?, but different in focus and goals
Washington Consensus Post-Washington Consensus
(1980s - mid-1995)? (mid-1995 - 2009) ?
Limited macroeconomic broader, more extensive and
policies intrusive policies
Goal: ?open market economy? Goal: ?global competitiveness?
Approach: ?shock? tactics; ?sound Approach: ?deep? institutional and
macroeconomic principles? behavioural change
? SAPs (privatisation, ? ?flexible? labour, ?human capital?
etc) ? ?social capital?: non-market?
responses to market
? Rollback of the state imperfections
Development Paradigm: State vs Market
NEO-LIBERALISM DEVELOPMENTAL STATE
(Washington Consensus, 1980s-present) (East Asian Miracle, 1965-1990)
Privatisation, Liberalisation, Deregulation,
Industrial Policy and active role of state in
Open Market Economy, Competitiveness
High growth, high equity with state
intervention (8 HPAEs)
NEO-LIBERALISM HAS DIED OF CRISES (???)
RIP Neo-liberalism (1980s-2008)
? Is neo-liberalism dead?
? Depends on what we mean by ?neo-liberalism?....
? The neo-liberal form (i.e., market fundamentalism)
? But not the substance of capitalism as a:
? of capital accumulation;process
? in which labour is subordinated to capitalrelations
Neo-liberalism: A strategy for market-led
development, A blueprint for crisis management
Neo-liberal values: well-being of the financial institutions over well-
being of the people
? Debt crisis in Latin America (1982)
? Crisis Response: SAPs
? Financial Crises: Scandinavia (early 1990s); Mexico (1994); East and Southeast Asia
(1997); Russia (1998); Argentina (2001); Turkey (2001-02); US Subprime
? Crisis response: ?open? international financial architecture
? US subprime crisis (2007-09)
? Crisis response: Bush-Paulson-Bernanke-Obama Bailout Programme (restore
power of corporations; assure ascendancy of finance capital)
In times of crisis,
?assets return to their rightful owners?!
?Financial crises have always caused transfers of ownership and power to
those who keep their own assets intact and who are in a position to
create credit, and the Asian crisis is no exception....there is no doubt
that Western and Japanese corporations are the big winners.....The
combination of massive devaluations, IMF-pushed financial
liberalization, and IMF facilitated recovery may even precipitate the
biggest peacetime transfer of assets from domestic to foreign owners
in the past fifty years anywhere in the world, dwarfing the transfers
from domestic to US owners in Latin America in the 1980s or in Mexico
after 1994. One recalls the statement attributed to Andrew Mellon: "In
a depression assets return to their rightful owners?.?
?R. Wade and F. Veneroso (1998),
?The Asian Crisis: The High Debt Model versus the Wall Street-Treasury-IMF Complex,?
in The New Left Review, 228 (1998), 3-23.
The Multiple Crises Today
? Finance (securitisation, speculative investments, Ponzi
? Climate (global warming/cooling)
? Food (post-Green Revolution, the Great Hunger of 2008)
? Governance (WB, IMF, WTO, states)
Marx?s Theory of Crisis
? Crisis of OVERPRODUCTION
¥ Crises in realising surplus value (overcapacity)
¥ Too much is produced for the capitalists to sell at a profit
¥ Capitalism: production for profit, not for needs
? Tendency of the rate of profit to fall
¥ Crises in extracting surplus value
¥ ?The real barrier of capitalist production is capital itself? (Marx?s
Capital, Vol. III)
¥ The amount of total capital invested has increased, without
changing the amount of surplus value generated
Capitalism emerging from crisis...
?...Capitalism does live by crises and booms, just
as a human being lives by inhaling and
exhaling. First there is a boom in industry,
then a stoppage, next a crisis, followed by a
stoppage in the crisis, then an improvement,
another boom, another stoppage, and so
on.... The fact that capitalism continues to
oscillate cyclically...merely signifies that
capitalism is not yet dead, that we are not
dealing with a corpse. So long as capitalism is
not overthrown by proletarian revolution, it
will continue to live in cycles, swinging up and
down. Crises and booms were inherent in
capitalism at its very birth; they will
accompany it to its grave.?
?Leon Trotsky (1973)
(2) DYNAMICS OF RECURRENT FINANCIAL CRISES:
STRUCTURAL INSTABILITY AND AGENTIAL GREED
Mechanisms of Financial Crises and their Effects on the Real Economy
of goods and
THE CIRCULAR FLOW OF ECONOMICS
COMPLEMENTARY FUNCTIONS, DIVERGENT NATURE
Money and paper wealth
human capital, good will
Tied to fixed assets, to
Essentially mobile knowledge of products,
Knowledge indifferent processes, capabilities,
clients and markets
Socio-economic results will differ
depending on the criteria that lead investment
SHIFTING ROLES OF
MONEY ON THE REAL ECONOMY
?In the years preceding the First World War
there were in common use among economists a number of metaphors . . .
'Money is the garment
'Money is a wrapper in which goods com ; e?
draped round the body of economic life?; 'money is a veil behind which
the action of real economic forces is concealed? . . .
During the 1920s and 1930s
. . . money, the passive veil, took on the appearance of an evil genius; the garment
became a Nessus shirt; the wrapper a thing liable to explode.
Money, in short, after
. . .
being little or nothing, was now everything
Then with the Second World War,
the tune changed again. Manpower, equipment and organization once more
came into their own. . . .?
The role of money dwindled to insignificance
Arthur Cecil Pigou (1949) The Veil of Money, Macmillan pp.18-19
Three basic and complementary mechanisms behind the conflicts
between the real economy and the financial economy
1. EFFECT OF COMPOUND INTEREST
2. TECHNOLOGICAL REVOLUTIONS CREATE
3. THE MINSKY EFFECT (Ponzi scheme, endogenous
instability, greedy economic agents)
The Effect of Compound Interest
?A shilling put out at 6%
compound interest at our
Saviour?s birth would . . .
have increased to a
greater sum than the
whole solar system could
hold, supposing it a
sphere equal in diameter
to the diameter of Saturn?s
English Economist, 1769
Technological Revolutions and Finance Capital
(A ?love affair?)
Approximate dates of the installation and deployment periods
of the great surges of development -- 1771 to the present
IRRUPTION FRENZY SYNERGY MATURITY
Revolution 1770s 1793?971771 and early 1780s late 1780s early 1790s 1798?1812 1813?1829
Age of Steam
1829 1830s 1840s 1850?1857 1857?1873
to continent and US)
Age of Steel, Electricity
and Heavy Engineering
1875 1875?1884 1884?1893 1895?1907
3 USA and Germany
Age of Oil, Automobiles
and Mass Production
1908?1920* 1920?1929 1943?1959 1960?1974*
USA (spreading to Europe)
Age of Information
1971 1987?2001 20??
to Europe and Asia)
Note: * Observe phase overlaps between successive surges.
A PANORAMA OF THE CHANGING CONTEXT OF THE TWENTIETH CENTURY
The Age of Steel The Age of Information Technology
and Heavy Engineering and Global Telecommunications
The Age of Oil, Automobiles and Mass Production
to Third World; of Soviet system
Viet Nam war
& Cold War mass production
FRENZY Early development
draining of stock markets
1930?s Depression and WWII
C 2000Coorporate scandals Recession?rporate scandals Recession?
THE MINSKY EFFECT
(Endogenous instability, Ponzi schemes, Corrupt economic elites)
? ?destabilizing stability?: long periods of stability lead to
Types of financing
1. HEDGE financing
? Low risk - can fulfill contractual payment obligation
2. SPECULATIVE financing
? involves future renegotiating of the debt (rollover)
? A typical speculative position consists on financing long term assets
with short term liabilities.
3. PONZI financing
? expected revenues can not afford even interest payments, and agents
are submitted to increasing debt
? Ponzi schemes (such as subprime loans)
? cause financial institutions to redefine the
? they no longer compete for market share
but instead pull out in order to be more
(Charles Ponzi - police mugshot, 1910)
? In this way also, SOUND PROJECTS
ARE REFUSED CREDIT, AND A
DOWNWARD SPIRAL STARTS.
? Third World debt/lending was also a Ponzi
? Myrdalian ?perverse backwashes?
? Funds tend to flow
from poor to rich
Greedy, corrupt, inept economic elites reinforcing
financial market?s endogenous instability....
?The poor decisions of holding company executives are the primary cause for the bond
insurers? problems, but the rating agencies also share responsibility.
The rating agencies encouraged the bond insurers to diversify into structured finance risks
and gave them additional rating credit for doing so. The rating agencies understated the
risks of the new strategy while earning much higher fees for rating these structures.
The rating agencies? profits soared along with the growth in structured finance issuance.
Insurance regulators relied on the rating agencies and management teams to assess the
risk of these new structures.
The rating agencies were paid by the issuers of these securities and helped in structuring
these exotic instruments to meet the ratings agencies? insufficient standards for Triple A
ratings. The rating agencies only received their full fees if they approved the Triple A
ratings for these transactions.
The combination of aggressive risk taking by management, poor judgment by conflicted
rating agencies, and over-reliance by regulatory authorities on rating agency judgment led
to the current situation.?
?William Ackman (14 Feb 2008), ?The State of the Bond Insurance Industry?,
Statement before a hearing of the US House of Financial Services Committee
THE GLOBAL CRISIS AND THIRD WORLD
DEVELOPMENT: INFORMAL ECONOMY
? Mainstream analyses of crises: not so
applicable to the Third World
? A big majority of economic activities:
informal sector (including in China and
? THE NEOLIBERAL EFFECTS
? SAPs: de-industrialisation
? WTO/GATT: de-agriculturalisation
? Crises: de-skilling / de-servicing
? What is left?: Informal economy!!!
(3) FUNDAMENTALLY THE SAME RESPONSES TO THE
? ?IT HAS TO BURN OUT ALONE?
? ?REPAIR IT?, but without encouraging the very behaviour
that caused the problem in the first place.
? ?REPLACE IT? ? overthrow crisis-ridden capitalist system;
establish socialism, a democratic economic planning
?Times of innovation ... are times
of effort and sacrifice, of work
for the future, while the
harvest comes after.... The
harvest is gathered under
recessive symptoms and with
more anxiety than rejoicing....
[During] recession ... much
dead wood disappears
?Joseph Schumpeter (1939)
For these strong reasons,
therefore, I am inclined to the
?I sympathize, therefore, with
belief that, after the transition
those who would minimize,
is accomplished, a greater
rather than with those who
would maximize, economic
entanglement among nations.
isolation among countries
Ideas, knowledge, science,
than existed in 1914 may
hospitality, travel ? these are
tend to serve the cause of
the things which should of
peace, rather than otherwise.
their nature be international.
At any rate, the age of
let goods be homespun
whenever it is reasonably and
was not particularly
conveniently possible, and,
successful in avoiding war;
let finance be
and if its friends retort, that
. Yet, at the
the imperfection of its
same time, those who seek to
success never gave it a fair
disembarrass a country of its
chance, it is reasonable to
entanglements should be very
point out that a greater
slow and wary. It should not
success is scarcely probable
be a matter of tearing up roots
in the coming years.?
but of slowly training a plant to
grow in a different direction.
? John Maynard Keynes (1933 ),
?Modern bourgeois society with its
relations of production, of
exchange and of property, a
society that has conjured up
such gigantic means of
production and of exchange, is
?These are signs of the times, not
like a sorcerer who is no longer
to be hidden by purple
mantles or black cassocks.
able to control the powers of
They do not signify that
the nether world whom he has
tomorrow a miracle will occur.
called up by his spells.?
They do show that, within the
ruling classes themselves, the
foreboding is emerging that
?Karl Marx and Frederick Engels (1848)
the present society is no solid
crystal, but an organism
capable of change, and
constantly engaged in the
process of change.?
?Karl Marx (1867)
Capital, Vol. 1
Demise of the Multilaterals?!?
?Never again? became the slogan of a number of the affected
governments. The Thaksin government in Thailand declared ist
?financial independence? from the IMF after paying off its debts in
2003, vowing never to return to the Fund. Indonesia has said it will
pay off all its debts to the IMF by 2008. The Philippines has refrained
from contracting new loans from the Fund, while Malaysia defied it by
imposing capital controls at the height of the crisis.
Ironically, then, the IMF has become one of the key victims of the 1997 debacle.
This arrogant institution of some 1,000 elite economists never recovered from
the severe crisis of legitimacy and credibility that overtook it?a crisis that was
deepened by the bankruptcy of its star pupil Argentina in 2002. In 2006, Brazil
and Argentina, following Thailand?s example, paid off all their debts to the
Fund in order to achieve financial independence. Then Hugo Chavez let the
other shoe drop by announcing that Venezuela would leave the IMF and the
World Bank. This boycott by its biggest borrowers has translated into a budget
crisis for the IMF.?
?Walden Bello (30 July 2007), ?All Fall Down?,
in Foreign Policy In Focus
The World Bank, IMF and their G-20 allies:
Using the global crisis to their advantage....
G-20: IMF is back!
Dominique Strauss-Kahn, Managing Director of the IMF, G-20 Press Conference, 2 April 2009
?Maybe some of you were in the IMF press
conference at the end of the Annual
Meeting last October. And if some of you were there,
then you may remember
that what I said at that time is that IMF is back.
Today you get the proof when
you read the communiqué, each paragraph, or
almost each paragraph ? let's
say the important ones ? are in one way or another
related to IMF work.?
WORLD BANK: Exactly the same global neo-liberal project!
World Bank, Global Monitoring Report 2009: A Development Emergency, p. xii.
The report sets out six priority areas for action to confront the development emergency that now faces
many of these countries. First, we must ensure an adequate fiscal response in developing countries to
protect the poor and vulnerable groups and to support economic growth. Priority areas must be
strengthening social safety nets and protecting infrastructure programs that can create jobs while
building a foundation for future productivity and growth. The precise fiscal response needs to be tailored
to individual country circumstances, consistent with maintenance of macroeconomic stability. Second,
we must provide support for the private sector and improve the climate for recovery and growth in
private investment, including paying special attention to strengthening financial systems. Helping small
and medium enterprises get access to finance for trade and investment is vital for job creation. But the
crisis has also underscored the importance of broader reforms to improve the stability and soundness of
the financial system. Third, we must redouble efforts in human development and recover lost ground in
progress toward the MDGs. We can do this not only by strengthening key public programs for health
and education, but also by better leveraging the private sector?s role in the financing and delivery of
In support of these efforts to help developing countries, the report emphasizes three key global
priorities. Donors must deliver on their commitments to increase aid. Indeed, the increased needs of
poor countries hit hard by the crisis call for going beyond existing commitments. National governments
must hold firm against rising protectionist pressures and maintain an open international trade and
finance system. Completing the Doha negotiations expeditiously would provide a much-needed boost in
confidence to the global economy at a time of high stress and uncertainty. Finally, multilateral
institutions must have the mandate, resources, and instruments to support an effective global response
to the global crisis. The international financial institutions will need to play a key role in bridging the
large financing gap for developing countries resulting from the slump in private capital flows, including
using their leverage ability to help revive private flows.
Source: World Bank, Global Monitoring Report 2009: A Development Emergency, p. xii.
World Bank President Robert Zoellick (31 March 2009, prior to the G-20
Meeting): New Powers for the Multilaterals!
? ?a WTO monitoring system to advance trade and resist
economic isolationism, while working to complete the Doha
negotiations to open markets, cut subsidies, and resist
? ?a monitoring role for the IMF, to review the execution of ..
stimulus packages and assess results, calling for further
action if necessary?;
? IMF and World Bank Group monitoring of actions and
results in the banking sector, with financial sector
assessments to be extended to developed countries, ?with
the results published, taken seriously, and followed up?;
? an overhaul of the financial regulatory and supervisory
system? in which ?most of the actual authority over
regulation will rest with national governments?, but within
which an expanded FSF [Financial Stability Forum] ?could
become another important institution of a stronger
multilateral system, working with the IMF and the World
Bank group on implementation?
IMF: ?An opportunity to make progress on seemingly intractable issues?
IMF (February 2009), Initial Lessons of the Crisis for the Global Architecture and the IMF
Bottom line. The crisis has revealed flaws in key dimensions of
the current global architecture, but also provides a unique
opportunity to fix them. On the flaws, surveillance needs to
be reoriented to ensure warnings are clear, successfully
connect the dots, and provide practical advice to policy
makers. An effective forum for policy makers with the
ability and mandate to take leadership in responding to
systemic concerns about the international economy is key.
Ground rules for cross-border finance need to be
strengthened. And, given the growing size of international
transactions, resources available for liquidity support and
easing external adjustment should augmented and
processes for using them better defined so they are more
readily available when needed. These are all ambitious
undertakings. But the damage wrought by the crisis
provides an opportunity to make progress on seemingly
intractable issues. The moment should not be missed.
ADB and ASEAN: Banking-as-usual for the private sector and
for free flow of capital, goods, services and investment
Loans under LIBOR for economic Towards a competitive ASEAN
recovery, private sector single market by 2015
development, and open market
(less on social protection)
UN Commission of Experts on Reforms of the International
Monetary and Financial Systems: Heterodoxy Rearticulated
? Joseph Stiglitz (Keynesian)
? Jomo KS (critical political economist)
? José Antonio Ocampo (Hirschmanesque)
? Jan Kregel (post-Keynesian, Minskyian)
? François Houtart (WSF activist)
Global Economic Coordination Council and International Panel of Expert ? New
Credit Facility ? system of risk management reform ? new global reserve
system ? exit strategy from stimulus policies ? etc.....
Global Civil Society: ?We told you so!?
?Another World Is Possible?
Challenge to Global Justice Movements
? ?Another World Is Possible, Necessary? ?
?(People) make their own history, but they do not
make it as they please; they do not make it
?The crisis consists precisely
under self-selected circumstances, but under
in the fact that
the old is
circumstances existing already, given and
transmitted from the past. The tradition of all
dying and the new
dead generations weighs like a nightmare on
; in this
cannot be born
just as they seem
the brains of the living. And
to be occupied with revolutionizing
interregnum a great
themselves and things, creating something
variety of morbid
that did not exist before, precisely in such
epochs of revolutionary crisis they
anxiously conjure up the spirits of the past
to their service, borrowing from them
names, battle slogans, and costumes in
?Antonio Gramsci (1971)
order to present this new scene in world
history in time-honored disguise and
?Karl Marx (1852)
The Eighteenth Brumaire of Louis Bonaparte
States? Bailouts and Resiliency Plans
(Bailouts for the poor???)
First stimulus measure: increase
Economic Resiliency Plan (ERP):
capitalisation of a government
investment company by USD 5 PhP 330 billion
billion (also to stabilise stock
Crisis as a ?Turning Point?
? CRISIS from Greek ?krisis?
? ?the turning point of a
disease when an important
change takes place, indicating
either recovery or death?
? People from left, right, centre look
at the crisis the ?Chinese way? ?
i.e., an opportunity to advance
their respective interests!
UN Commission of Experts on Reforms of the International
Monetary and Financial Systems: Crisis as opportunity and danger
This crisis should be seen as an opportunity to
engage in necessary reforms. Historically,
moments of crises often provide a rare
chance for fundamental reforms that would
otherwise be impossible. But there is also a
existing power structures can seize
hold of these moments of crisis and use
them for their own benefit, reinforcing
. There may be a
inequalities and inequities
greater concentration of economic and
political power after the crisis than before.
This has happened in the past and seems to
be happening in this crisis in certain
countries, as the share of the too-big-to-fail
banks has increased even further
(4) RESURGENT ?NATIONALISM? IN US AND EUROPE
?Buy American? ? ?Buy European?
? Imperialism (continuous dependency, intensifying ?war on terror?)
? Protectionism (against free market ideology)
? Bailouts (of corporations and financial institutions, not of the workers)
? Xenophobia (anti-foreign/migrant/refugee sentiments)
(4) EMERGENT ?AUTHORITARIAN LIBERALISM? IN ASIA
(Authoritarian Polity, Market Economy)
? PEACEFUL CO-
Lessons of the 1997 Asia Crisis
? Democratisation may be stalled.
? Justification for authoritarian rule (e.g. ?Asian Values?)
? Human Rights compromised.
? Human rights obligations sidelined in the name of
surveillance and internal security (Malaysia, Singapore)
? The poor severely neglected.
? e.g., ASEM Trust Fund failed to target the poor,
workers, and the vulnerable, adversely affected groups.
1. The Role of Crises in the Evolution of
i. was born out of the crises of the 1970s
ii. has evolved through a series of crises over the last
iii. died of the cacophony of crises culminating in the
current global economic crisis.
As it shows, crises have so far been ,
rather than dysfunctional, to neo-liberalism:
? Crises reshape class and social relations but in ways that perpetuate
the hegemony of capital over labour and the preservation of elite
? Crises restrategize development plans of institutions from
international organizations to states to further advance, not retreat
from, market-led development.
? Crises restructure states and societies in which social institutions are
oriented towards the logic, requirements, and imperatives of neo-
2. The of financial markets is
endogenously fragile, and the greedy
economic agents exacerbate it.
Mainstream analyses of the global crisis, however,
do not capture the reality of the overwhelming
economic activity in the informal
economy/sector in the Third World!!!
3. The respective responses to the global crisis from the
multilaterals, to regional organisations, to states to activists
are fundamentally the same through the years, with or
? But the catastrophic impacts of the crisis differ
across social classes, among the poor, marginalised,
There is a movement towards the strengthening
of practices and institutions of:
? ?nationalism? in US and the EU, and of
? ?authoritarian liberalism? in East and
(Market economies embedded in authoritarian political framew )ork
Thank you.... (?,)