Why a World Social Forum?
29th August 2002
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After World War II, integration of the international economy (globalisation) has
been increasing. By late 20th century, it had reversed the decline of the
inter-war period, reaching the level prior to World War I by gross measures -
for example, volume of trade relative to the size of the global economy. But the
picture is considerably more complex.
Post-war integration passed through two phases:
- the Bretton Woods period until the early 1970s; and
- the period since, after the dismantling of the Bretton Woods system of
regulated exchange rates and controls on movement of capital.
It is phase (2) that is usually called globalisation. Phase (2) is associated
with so-called neo-liberal policies: structural adjustment and reform along the
lines of the Washington consensus for much of the Third World, and since 1990,
others, such as India and the transition economies of Eastern Europe; and a
version of the same policies in the more advanced industrial societies
themselves, most notably the US and UK.
The two phases have been strikingly different. For good reasons, many economists
refer to phase (1) as the golden age of industrial state capitalism, and
phase (2) - the globalisation period - as the leaden age, with
significant deterioration of standard macroeconomic measures worldwide (rate of
growth, productivity, capital investment, etc.), and increasing inequality. In
the world's richest country, for most of the workforce,
wages have stagnated or declined, working hours have dramatically increased, and
benefits and support systems have been reduced. Through the golden age, social
indicators closely tracked the GDP; since the mid-1970s, they have steadily
declined, to the level of 40-years ago according to the most recent detailed
Contemporary globalisation is described as expansion of free trade, but that
is misleading. A large part of trade is in fact centrally-managed, through
intra-firm transfers, outsourcing, and other means. Furthermore, there is a
strong tendency towards oligopoly and strategic alliances among firms throughout
the economy, along with extensive reliance on the sate sector to socialise risk
and cost, a key feature of the US economy throughout this period.
The international free trade agreements involve an intricate combination of
liberalisation and protectionism, in many crucial cases (particularly
pharmaceuticals) allowing mega-corporations to gain huge profits by monopolistic
pricing of drugs that were developed with substantial contribution of the public
sector. The enormous explosion of short-term speculative capital transfers in
phase (2) sharply restricts planning options for governments, hence restricts
popular sovereignty insofar as the political system is democratic.
The constitution of trade is far different from the pre-World War I period. A
large part now consists of manufacturing flows to rich countries, much of it
intra-firm. These options, along with the mere threat to transfer production,
are another powerful weapon against working people and functioning democracy.
The emerging system is one of corporate mercantilism, with decisions over
social, economic and political life increasingly in the hands of unaccountable
private concentrations of power, which are "the tools and tyrants of
government", in James Madison's memorable phrase, warning of the threats to
democracy he perceived two centuries ago.
Not surprisingly, the phase (2) effects have led to substantial protest and
public opposition, which has taken many forms throughout the world. The
Social Forum offers opportunities of unparalleled importance