The latest UNCTAD report is out. We have been warned.
In sharp contrast to the ambitions of the 2030 Agenda for Sustainable Development, the world economy remains unbalanced in ways that are not only exclusionary, but also destabilizing and dangerous for the political, social and environmental health of the planet. Even when economic growth has been possible, whether through a domestic consumption binge, a housing boom or exports, the gains have disproportionately accrued to the privileged few. At the same time, a combination of too much debt and too little demand at the global level has hampered sustained expansion of the world economy.
Austerity measures adopted in the wake of the global financial crisis nearly a decade ago have compounded this state of affairs. Such measures have hit the world’s poorest communities the hardest, leading to further polarization and heightening people’s anxieties about what the future might hold. Some political elites have been adamant that there is no alternative, which has proved fertile economic ground for xenophobic rhetoric, inward-looking policies and a beggar-thy-neighbour stance. Others have identified technology or trade as the culprits behind exclusionary hyperglobalization, but this too distracts from an obvious point: without significant, sustainable and coordinated efforts to revive global demand by increasing wages and government spending, the global economy will be condemned to continued sluggish growth, or worse.
The Trade and Development Report 2017 argues that now is the ideal time to crowd in private investment with the help of a concerted fiscal push – a global new deal – to get the growth engines revving again, and at the same time help rebalance economies and societies that, after three decades of hyperglobalization, are seriously out of kilter. However, in today’s world of mobile finance and liberalized economic policies, no country can do this on its own without risking capital flight, a currency collapse and the threat of a deflationary spiral. What is needed, therefore, is a globally coordinated strategy of expansion led by increased public expenditures, with all countries being offered the opportunity of benefiting from a simultaneous boost to their domestic and external markets.
The Sustainable Development Goals (SDGs) agreed to by all members of the United Nations two years ago provide the political impetus for this much-needed shift towards global macroeconomic policy coordination. The Trade and Development Report 2017 calls for more exacting and encompassing policy measures to address global and national asymmetries in resource mobilization, technological know-how, market power and political influence caused by hyperglobalization that have generated exclusionary outcomes, and will perpetuate them if no action is taken.
This Report argues that, with the appropriate combination of resources, policies and reforms, the international community has the tools available to galvanize the requisite investment push needed to achieve the ambitions of the SDGs and promote sustainable and inclusive outcomes at both global and national levels.
–Mukhisa Kituyi, Secretary-General of UNCTAD
Fifty years ago, at New York’s Riverside Church, Martin Luther King made a passionate plea for a more equal, more just, more peaceful and more dignified world. Calling for “a radical revolution of values”, King concluded, “We must rapidly begin … the shift from a thing-oriented society to a person-oriented society. When machines and computers, profit motives and property rights are considered more important than people, the giant triplets of racism, extreme materialism and militarism are incapable of being conquered”.
There is a contemporary ring to King’s call for a more inclusive agenda. The “giant triplets” that he warned about are resurfacing, accompanied by a retreat into resentful nationalism and xenophobic comfort zones. The gaps between the rich, the middle class and the poor have almost certainly widened since King’s time. And across much of the world, the drive to achieve full employment with strong welfare provision was thrown into reverse gear decades ago, as governments effectively reinvented themselves as “enablers” rather than “providers”.
Ten years after the gales of financial destruction originating in Wall Street swept across the heartland of America and beyond, the world economy remains marooned in a state of sub-standard growth, while the social and economic inequities exposed by the crisis show few signs of moderating. Governments have closed down the most egregious loopholes and toxic instruments exposed by the crisis; but however good their intentions, the reality is that few who caused the crash have been held accountable for their actions, and little has been done to tackle its root causes.
As “hyperglobalization” with the help of the very visible hand of the State has recovered its poise, business as usual has set in; the push for “light touch” regulation is under way yet again, and austerity has become the preferred response to “excessively” high levels of public debt. Meanwhile robots, rents and intellectual property rights are taking precedence over the livelihoods of people and their aspirations. History, it seems, has a troubling knack of repeating itself.
Unlike the textbook world of pure competition, hyperglobalization has led to a considerable concentration of economic power and wealth in the hands of a remarkably small number of people. This need not necessarily be antithetical to growth. But if history is any guide, it tends to generate political tensions that clash with wider public and social interests. Indeed, more clear-headed supporters of “the market”, since Adam Smith, have warned of the political dangers that can follow the concentration of economic wealth. It is therefore hardly surprising to find a popular backlash against a system that is perceived to have become unduly biased in favour of a handful of large corporations, financial institutions and wealthy individuals.
The real threat now is to the underlying trust, cohesion and sense of justice that markets depend upon in order to function effectively. No social or economic order is safe if it fails to ensure a fair distribution of its benefits in good times and the costs in bad times.
Insisting that “there is no alternative” is yesterday’s political slogan. People everywhere desire much the same thing: a decent job, a secure home, a safe environment, a better future for their children and a government that listens and responds to their concerns; in truth, they want a different deal from that offered by hyperglobalization. The 2030 Agenda for Sustainable Development, codified in a series of goals, targets and indicators, points in that direction. What is still needed is a supportive policy narrative and bold political leadership; there are hopeful signs that some of the discarded strategies and solutions that helped re-build the global economy after the Second World War are receiving a much welcomed twenty-first century makeover and are attracting a
new generation determined to build a better world.
This time around, any new deal will need to “lift all boats” in both developing and developed countries and face up to the challenge that many of the imbalances inhibiting sustainable and inclusive growth are global in nature. Prosperity for all cannot be delivered by austerity-minded politicians, rent-seeking corporations and speculative bankers. What is urgently needed now is a global new deal.
The Trade and Development Report 2017 was prepared by a team led by Richard Kozul-Wright. Kozul-Wright is Director of the Globalization and Development Strategies Division in the United Nations Conference on Trade and Development (UNCTAD). He has worked at the United Nations in both New York and Geneva. He holds a Ph.D in economics from the University of Cambridge UK.
The United Nations Conference on Trade and Development (UNCTAD) was established in 1964 as a permanent intergovernmental body.
UNCTAD is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues. The organization’s goals are to: “maximize the trade, investment and development opportunities of developing countries and assist them in their efforts to integrate into the world economy on an equitable basis.”
The primary objective of UNCTAD is to formulate policies relating to all aspects of development including trade, aid, transport, finance and technology. The conference ordinarily meets once in four years; the permanent secretariat is in Geneva.
The creation of UNCTAD in 1964 was based on concerns of developing countries over the international market, multi-national corporations, and great disparity between developed nations and developing nations. The United Nations Conference on Trade and Development was established to provide a forum where the developing countries could discuss the problems relating to their economic development. The organisation grew from the view that existing institutions like GATT (now replaced by the World Trade Organization, WTO), the International Monetary Fund (IMF), and World Bank were not properly organized to handle the particular problems of developing countries. Later, in the 1970s and 1980s, UNCTAD was closely associated with the idea of a New International Economic Order (NIEO).
The Real News interview with Richard Kozul-Wright: http://therealnews.com/t2/story:20290:Finance-Has-Become-the-Dominant-Force-in-Shaping-the-Global-Economy