Brian Holmes on Fri, 4 Oct 2002 21:44:56 +0200 (CEST) |
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<nettime> The end of neoliberal globalization? |
Monday's edition of Le Monde included an article entitled "How Far can the Stock Markets Fall?" It made me think more than a little of the nettime post I wrote on July 16, about the chances of a deflationary spiral afflicting the more-or-less integrated world economy. Here are the most striking passages from the Monde article: "What are the investors afraid of? "The rising probability of a war with Iraq has already been taken into account in the current market drop. According to the Societe Generale, the volatility of the stock market is already greater than its maximum during the Gulf War. The price of oil has already risen to 30 dollars, and analysts are evoking the figure of 35 dollars, if the war is as short as the first Iraq campaign. "The menace of a Gulf war also reinforces the fears of recession. The quarterly results of businesses don't show any signs of an upswing. This could lead to the reproduction of a 'deflation' scenario as in Japan, where a fall in the value of financial holdings led to a fall in prices, which fed the fall in profits, leading to a fall in stock values, etc. A real vicious circle. Some analysts also point to the possibility of a krach in the bond market if ever the stock market came back, since trading in government issue has risen due to a flight of capitals rendered fearful by the crisis of confidence." (www.lemonde.fr/recherche_articleweb/1,9687,292507,00.html). And it goes on like that. As all kinds of articles do, from across the spectrum, if you just google around a little with words like "deflation," "recession," "capital flight," and similar dismal terms from the dismal science. It now appears certain that the US stock market will not return to its dizzying heights any time soon, but is likely to fall even further, particularly when consumer demand finally starts to decline, both as a result of all the layoffs happening now and because of the closure of the easy-money spigot. As the article continues: "Over one in every two American households possesses stock, and the majority of retirement funds are invested in stock. The whole question is whether households, whose expenditures represent two-thirds of American economic activity, are going to continue to fuel growth by maintaining their level of consumption, despite the drop in the value of their holdings." Not to mention the disappearance of their jobs. Among the other things the Monde article doesn't mention is the eventuality, as in the Japanese scenario ten years ago, of the coup de grace coming from a bursting bubble in real-estate markets, which act, for a time, as one of the (not so) "safe havens" when the stock-market floor falls out. There'll be a lot of pissed-off people if things go that far in the US. And that's just part of the story. In July I said "the krach is happening, in the center of capital accumulation and therefore on a global, systemic scale. It is going to place enormous political pressure on the post-89 world system." If I were religious, I'd now say "pray for the Latin Americans." Because the ton of bricks is coming down on their heads. Whether or not Lula, in all probability the next Brazilian president, turns out to be as "reasonable" as the IMF and private bankers have been saying he will be - ever since they realized, about 2 or 3 weeks ago, that their scare campaigns had failed and that, communist or not, he was going to win the election - the fact is that there is no way the Brazilian economy can fail to go into a serious recession if it is faced both by the Argentine black hole and by a stalled US economy. Already, the IMF has staked its remaining credibility on a 30-billion dollar loan to enable Brazil to go on "servicing" its national debt to public and private banks, which has grown to around 300 billion all told. What happens when the IMF money runs out? Does anyone really believe there's going to be some spectacular "return to world economic growth" within the next year or two? How is a president who came into power with the votes of labor unions and landless peasants going to chose to bleed his country to death in order to save the credibility of the IMF? What we will be looking at, in the event of a Brazilian default, is nothing less than the end of neoliberal globalization - the end of a paradigm where world economic development is invoked and coordinated at a distance by private capital flows, within an industrial and financial environment that has been engineered by powerful interstate forces exclusively to satisfy corporate strategies and investor appetites. This is the paradigm that literally built today's Latin America (and today's South-East Asia). If the IMF loses its 30-billion dollar bet in Brazil, it will lose its position as the key regulator of the world economy, and the OMC and the still-unimplemented FTAA will probably go down with it, as collateral damage. The violence of a world market unable to provide the majority of the world's people with enough to eat will lead to a return of single-state regulation. Presidents like Lula, and Hugo Chavez, and whatever governing structure emerges in Argentina, will have to make some attempt at a qualified autarky that can direct each country's resources to its own people, rather than to foreign bankers. But the question that over a century of history obliges any lucid person to ask, right now, is this: will the U.S. tolerate any regulation other than its own in Latin America? Those in the counter-globalization movements who have drawn their conclusions from the political experiences of the twentieth century know that the contradiction between liberal capitalism and statist discipline is sterile. It gives you the never-ending cycle of global laissez-faire collapsing into battles between populist states (because the only way to reassert economic discipline over pseudo-democracies is through some form of populist rhetoric). The way out would be to let the modes of value-production multiply locally, while at the same time looking for new modes of translation between the values: means of exchange which are not so homogenizing and hierarchical as interest-earning money. This is the anarchist ideal, now reinterpreted as "the multitudes." If you're optimistic you can see that ideal becoming reality on many small levels. But nowhere can you see it on the larger horizon, as neoliberal globalization unravels. The decisive thing over the next decade, beyond the still-stoppable war in Iraq, is going to be where the anger of a bunch of pissed-off North Americans gets channeled - whether into changing their own painfully distorted system, or into meddling at gunpoint with everyone else's disaster. We can see what the Bush people want, with consequences immediately in the Muslim world, then soon after in Latin America. Despite whatever hopes you may have (but I don't know why) for the EU to propose another model of development, it seems that only an effective resistance movement within the US, supported by pressure from the outside, can make any other decision about the world's near future. # distributed via <nettime>: no commercial use without permission # <nettime> is a moderated mailing list for net criticism, # collaborative text filtering and cultural politics of the nets # more info: majordomo@bbs.thing.net and "info nettime-l" in the msg body # archive: http://www.nettime.org contact: nettime@bbs.thing.net