Valid Questions on the New Economy

Valid Questions on the New Economy

 

Washington Post- By E. J. Dionne Jr., Friday , April 14, 2000 ; A25

 

Critics of this weekend's demonstrations against the World Bank and the International Monetary Fund will write off the protests as the work of the marginal, the cranky and the impractical.

 

There will be heavy emphasis on the more extreme groups sponsoring the marches, especially those with funny names--my

personal favorite is the Mad Anarchist Bakers League of Brady Lake, Ohio. There is no plausible alternative to a global

economy built on free trade and the free movement of capital, their critics will say, and the people in the streets should get with

the program. Any violence accompanying these marches will be used as further grounds for dismissing them.

 

If you're a reformer and not a revolutionary, some of the slogans and rhetoric surrounding this weekend's actions do seem

extreme. It's also true that if institutions such as the IMF and the World Bank suddenly ceased to exist, new ones would have

to be invented. A global economy needs organizations that can step in at times of catastrophe.

 

But this weekend's marchers are asking essential questions. You don't have to be a Mad Anarchist Baker to know that the new economy poses serious challenges to democracy.

 

The issue has never been whether we will have a global economy. The argument is over what rules should govern it, who will

make them, and whether the policies pushed by the IMF, the World Bank and comparable institutions help or hinder the

spread of prosperity to those who have the least. The debates are at least as much about values as they are about economics.

 

But economics matter, and those who think the global institutions are in need of reform got some powerful ammunition from

Joseph Stiglitz, the former chief economist and vice president of the World Bank and a former member of the president's

Council of Economic Advisers. Writing in this week's New Republic, Stiglitz argues that the IMF "likes to go about its business

without outsiders asking too many questions." While in theory supporting "democratic institutions in the nations it assists," in

practice the IMF "undermines the democratic process by imposing policies."

 

Stiglitz raises two core questions: whether the international financial institutions favor knee-jerk austerity policies that can

actually worsen the economic circumstances of countries they're supposed to be helping; and whether such policies lead to the

dismantling of safety nets and public services at the very moment (i.e., times of economic distress) when they are most needed.

 

All of the wealthy democracies endorse capitalism as the basic economic system, but none accepts an unregulated market as

the sole judge of what's important. We have social programs such as unemployment insurance, Medicare and Social Security

because we don't think workers, the elderly or the poor should be at the mercy of every economic blip or crisis. We've

adopted environmental rules to constrain certain kinds of competition--we want companies to make products more efficiently,

but not if "efficiency" means dumping sludge into our waterways. Worker safety rules say that tough and useful competition

among companies should not involve endangering those who work for them.

 

Such rules can be enforced within the national borders of robust democracies. They are not easily enforced within a global

economy. The challenge of the new economy is to preserve the social gains made in the prosperous old democracies and to

spawn growth, social justice and democratic accountability in the poorer nations.

 

That's easier said than done, and many organizers of this weekend's demonstrations acknowledge a great diversity of views

within their own ranks. "People who have characterized us as flat-worlders or Luddites don't understand the richness of the

coalitions coming together," says Medea Benjamin. She is the founding director of Global Exchange, a group that has used

consumer pressure to get Nike to treat its workers better and Starbucks to pay poor coffee farmers better prices.

 

The demonstrators, she says, are divided among those who want to reform the global bank apparatus ("Fix It or Nix It!" is one

of their slogans) and those who would abolish these institutions. But all of them, she says, are asking the question: "In whose

interest do we want the economy to function?"

 

This has been an essential American question since at least the days of Andrew Jackson. He waged his war against the Bank of the United States in the 1830s in the name of "the farmers, mechanics, and laborers." It shouldn't surprise us that this question is coming around again.

 

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