On Friday, April 14, 2000 the International Forum on Globalization (IFG)
held a 12-plus hour non-stop Teach-In at the Foundry United Methodist Church
in Washington D.C. on the subject of "Beyond Seattle -- Globalization: Focus
On The International Monetary Fund And The World Bank ." The following is a
hypertext transcript of David Korten, second speaker in the evening panel on
"The Casino Economy: The Anatomy of Global Control." He was introduced by
John Cavanagh, Director of the Institute for Policy Studies.
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One World--One World Government
Bretton Woods or The United Nations?
IFG Washington - World Bank/IMF Teach-In
David C. Korten
4/14/00
Our first speaker on this panel is a best-friend a movement can
have in the sense that he has impeccable credentials and total
devotion. In 1992 David Korten's career took a very surprising
turn. A former U.S. Agency for International Development field
specialist and a faculty member at the Harvard University School
of Business left that world of development elites -- and I think
we should announce to everyone in that world, We welcome you if
you want to come over to our side! -- and he founded a new
organization called the People-Centered Development Forum. Many of
you know David through his remarkable books, When Corporations
Rule the World and The Post-Corporate World. He is also the chair
of the board of a terrific magazine which is helping to lay out an
alternative future, YES! Magazine. Please welcome David Korten.
Thank you-thank you all you wonderful people! I missed you all in
Seattle and I'm glad to be with you tonight.
A few weeks ago I met with a group of students at Harvard
University who told me a new international program has just been
introduced there to prepare students for careers in the World
Bank. Let us assure that those who join that program have very
short careers.
For more than half a century the World Bank and IMF have advanced
a development model that wantonly destroys the lives of people,
society, and the planet to make money for the super rich. Together
they are arguably responsible for more human death and suffering
than any other nonmilitary organizations in human history -- a
true plague upon the earth. Closing them down on Sunday and Monday
will be an important symbolic act toward the larger healing goal
of permanently closing their doors.
A newly globalizing civil society is awakening to a basic insight.
The institutions of global corporate tyranny have only the power
that we yield to them. We can and we must withdraw that power.
Indeed, for the first time in human history, we the people of the
world have the opportunity and the necessity to rethink and
recreate our institutions to align them with a vision of a world
built on a foundation of radical democracy that works for every
person, every community and for the whole of life. We must make
full use of that opportunity.
The police violence in Seattle against those who sought only to
exercise their right of nonviolent political expression exposed
the visible face of a more subtle tyranny that uses money as its
instrument of political and social control. Tonight I will focus
on one example, the use of the debt mechanism, in the name of
development, to subordinate Southern countries to the interests of
a small Northern elite.
Much of my turnaround in relation to the international development
establishment occurred when I really came to terms with the nature
of authentic development which is about increasing the capacity of
a people to use their domestic resources to better meet their own
needs -- trading with their neighbors at the margin for essential
resources, goods, and services not reasonably available at home,
while freely sharing information, technology, and culture as an
act of cooperation. It is a model eloquently advocated by the
widely revered British economist John Maynard Keynes, who once
wrote that:
I sympathize, therefore, with those who would minimize,
rather than with those who would maximize, economic
entanglement between nations. Ideas, knowledge, art,
hospitality, travel -- these are the things which should
of their nature be international. But let goods be
homespun whenever it is reasonably and conveniently
possible, and above all, let finance be primarily
national.
(Got this right out of Herman Daly's book!)
Authentic development based on such principles offers little
opportunity for colonial extraction. Whether from intent or from
ignorance, the North mobilized after World War II through the
Bretton Woods institutions to assure that authentic self-reliant
development would gain no foothold in the newly liberated
colonies.
It was all so simple. The World Bank trained cadres of young
economists, teaching them to believe that rapid development
depends on foreign borrowing to supplement investment based on
domestic savings. Few seemed to notice the obvious -- that when
you borrow abroad you are borrowing foreign money that is only
useful to buy foreign products, thus increasing your economy's
dependence on imports. You are also building up foreign debts that
can only be repaid by exporting ever more of your domestic
resources and production. Almost inevitably you end up at the
mercy of foreign lenders -- like the World Bank.
In truth the World Bank has functioned first of all as an export
financing facility for Northern corporations. That's what the
lending is really about. And with time the debts created by
foreign borrowing, that the bank encouraged, grew so large that
more and ever larger loans were needed just to keep up with the
payments due on old debts. By the early 1980's the world's bankers
were concerned that these debts might bring about a collapse of
the entire global financial system.
The IMF and the World Bank then swung into action to restructure
the economies of indebted nations, redirecting their resources to
loan repayment and opening them further to foreign exploitation.
Adjusted governments, as you know, were required to:
* Cut government spending on education, health care, the
environment, and subsidies for necessities such as food
grains, and cooking oils.
* Devalue their national currencies and increase exports by
accelerating the plunder of natural resources, reducing real
wages, and subsidizing export-oriented foreign investments.
* Liberalize financial markets to attract speculative
short-term portfolio investments, which set the stage for the
Asian financial crisis John just described.
* Increase interest rates to attract foreign capital, thereby
forcing domestic businesses into bankruptcy and imposing new
hardships on indebted individuals.
* Eliminate tariffs and other controls on imports, increasing
the import of consumer goods purchased with borrowed foreign
exchange, undermining local agriculture and industries unable
to compete with cheaper imports, increasing the strain on
foreign exchange accounts, and deepening external
indebtedness.
And what happened when you complied? You were rewarded with still
more loans -- rather like pouring gasoline on a burning house to
put out the flames. The results, of course, were disastrous. In
1980 when concern began to mount that the debts were unpayable,
the total external debt of low and middle income countries was
$580 billion. In 1997, after fifteen years of structural
adjustment it totaled $2.2 trillion. In 1996 sub-Saharan Africa
paid $2.5 billion more in debt service than it received in new
long-term loans and credits. Africa's interest payments on foreign
debts are now four times greater than its expenditures for health
care.
It is an all too typical case of how the rich use debt as an
instrument of control to expropriate the resources of the poor.
It is very interesting if you take a logical extension of the
structural adjustment policies, it suggests that the World Bank
and IMF consider the ideal to be a country in which all assets and
resources are owned by foreign corporations producing for export
to generate foreign exchange to repay international debts. Their
ideal country has no public services and all its domestic needs
are met by goods and services imported from abroad and paid for
with money borrowed from foreign banks. And they have the audacity
to insist that this is all for the benefit of the poor.
Resistance is essential, but resistance alone is also a losing
strategy. We must claim the initiative to transform a world
dedicated to the love of money to a world dedicated to a love of
life. This is why I am deeply involved with YES! Magazine which
John mentioned, a publication that documents the growing momentum
behind deep change and tells how we can each connect with the
countless positive initiatives being taken by people everywhere to
create a world that works for all. Check out the YES! exhibit
upstairs in the tabling room.
So let's look for a moment at alternatives to world rule by the
Bretton Woods institutions. Here we face a very critical global
reality.
Currently, global governance is in fact divided between two
competing systems: the United Nations system -- comprised of the
United Nations secretariat and its specialized agencies; and the
Bretton Woods system -- comprised of The World Bank, the IMF, and
the World Trade Organization. For all its deficiencies, the United
Nations has generally aligned with the cause of human rights,
human development, and the environment. The Bretton Woods
institutions, by contrast, have consistently aligned with the
interests of money, banks, and global corporations. We have only
one world. There must be only one world government, the United
Nations.
The founders of the United Nations intended that responsibility
for managing global economic affairs -- including the overall
supervision and policy direction of the Bretton Woods institutions
-- would fall under UN jurisdiction. In reality the Bretton Woods
institutions separated themselves entirely from the United
Nations. Though the United Nations has been starved of resources
and is in desperate need of reform, it remains the appropriate
focus of our hopes for democratic global governance responsive to
the needs of people and planet. The challenge of building a
strong, effective and accountable United Nations is now even
greater than it was when the UN was founded after World War II,
because now we must dismantle the Bretton Woods institutions and
undo the enormous damage they have wrought, while simultaneously
creating the institutional framework for a planetary system of
locally rooted, globally cooperative, just, sustainable, and
compassionate economies based on the principles of authentic
development and responsive to the needs of all. The following are
some specific recommendations.
* By its every action the World Bank increases the foreign
indebtedness of low income countries. Let us replace it with
a United Nations International Insolvency Court (that a
number have recommended) to which indebted countries can turn
for assistance in freeing themselves from the chains of
international debt and from IMF conditions without
sacrificing their ability to provide essential public
services.
* The International Monetary Fund forces countries to give up
control over the flow of money and goods across their
borders, leading to massive trade imbalances, international
indebtedness, exploitation, and financial instability. Let us
replace that institution with a United Nations International
Finance Organization responsible for:
o Limiting the build up of international debt, monitoring
national trade and current account balances, and
facilitating negotiations toward agreement on corrective
action where consequential and persistent imbalances
between imports and exports are found.
o Helping national governments establish capital controls
that strengthen domestic employment, domestic
investment, domestic ownership of productive resources,
and domestic technical capabilities; and that discourage
financial speculation.
o Control money laundering by international and offshore
banks and tax evasion by individuals and corporations
using offshore tax havens.
You begin to get the pattern here. What we need are
institutions that do exactly the opposite of what the Bretton
Woods institutions are doing.
* Then we come to the World Trade Organization, which regulates
national and local governments to prohibit them from
regulating transnational corporations, trade, and finance in
the public interest. Let us replace the World Trade
Organization with a United Nations Organization for Corporate
Accountability. This organization would:
o Coordinate international anti-trust actions to break up
global concentrations of corporate power, with special
attention to banking, media, and agribusiness.
o Initiate dechartering procedures against transnational
corporations with repeated convictions for criminal
behavior.
o Enable those harmed by a corporate subsidiary in one
country to sue the parent company based in another
country for damages.
o Establish an internationally enforceable code of conduct
covering all corporations with operations in more than
one country, including a strict prohibition on corporate
political participation of any kind.
There is a lot of work to be done at all levels to fix the damage
created by more than fifty years of Bretton Woods and to set
humanity on a more positive course, including serious political
reforms at local and national levels to establish the democratic
accountability of often badly corrupted governments. No where is
this more important than here in the United States.
Regrettably for many of us who grew up loving our country and
believing it to be the bastion of democracy and the defender of
world freedom, it is a sad thing to come to the realization that
the United States government has been the chief architect of the
destructive policies of the Bretton Woods system and has
time-after-time acted to undermine democracy and authentic
development in Southern countries. It is the chief barrier to the
reform of the destructive structures of corporate globalization.
For those of us who hold U.S. citizenship we have a special
obligation to the world to end this travesty through the deep
reform of our political system. We have for example, too long
acquiesced in the ritual choice between two largely identical
candidates both owned body-and-soul by corporate money. In our
upcoming presidential election let us not waste our votes on Al
Gore in the futile hope he might eventually actually get around to
reading Earth in the Balance.
This year we have the opportunity to vote for a serious candidate
who has proven time and time again over a long and productive life
to be an uncorruptible champion of the issues we all care about so
deeply -- a true modern hero. He will be joining us here tonight.
His name is Ralph Nader. He is running under the banner of the
Green Party. We must give him our support and our votes.
We must prove that we are committed to real change. Vote for Ralph
and the Green Party, and subscribe to YES! Magazine.