STWR - Share The World's Resources

Today, in the era of neo-liberal globalisation dominated by large multinational corporations, the governments of the rich and powerful countries are outdated. The old political economy has lost its relevance - and must be replaced by a sustainable system that can create a better world, argues Zeki Ergas.

25th September 08 - Zeki Ergas ~ STWR

A new political economy is needed to deal with the new challenges faced by the world; in other words, the old political economy has lost its relevance, has done its time and is not working anymore. It must be replaced by a new political economy so that a better world that is sustainable can be built.

Two important events happened recently that confirm that need: one is the massive financial crisis that has shaken to their foundations the American and, by way of incidence, the world's financial systems - and the bail-out that will cost the American taxpayer close to a trillion (one thousand billions) dollars almost certainly does not deal with the causes of the problem, but with its symptoms, which means that the problem itself is simply pushed forward.

The main problem is, of course, the American debt: the external debt, that is, the trillions of dollars accumulated by international lenders such as the central banks of China, Japan, Russia and the European Union; and the internal debt, the trillions of dollars that are owed by ordinary Americans to banks and other financial institutions in America. So, what this rescue package does is to postpone the final reckoning which when it comes will be even more catastrophic than the present one.

The second important event is the recent adjustment by the World Bank of the extreme poverty level or line, whose definition has been moved up from an equivalent of US$ 1 a day, to US$ 1,25 a day, a move that seems almost negligible in absolute terms, but which has increased, as a single stroke as it were, the number of extremely poor people in the world by about 50 per cent or 400 million people, a huge increase that brings the total of the extremely poor to about 1,250 million people. 

To make things even worse -- yes, when things are caught up in a downward or vicious spiral that can continue to deteriorate and the bottom continues to recede -- it appears that the chances of the much-ballyhooed Millennium Development Goals (MDGs) to be realized in a predictable future are vanishing.1 This is at a time when the number of billionaires is growing by leaps and bounds and has, probably, already passed the number of 1,500 around the world, and may reach 2,000 before the decade is out.

Definition of the concept of political economy

Political economy is the concept that defines or explains how income and wealth are created and distributed. They are created through the production of goods and services that are needed by the people to satisfy their needs. These needs cover most aspects of life and are: material and physical, psychological and cultural, and ethical and spiritual. Very largely, they include: food, shelter, health, transportation, communications, education, social justice, peace, a clean and healthy environment, respect for one's religion freedom and cultural rights such as the ability to express oneself in one's own language, customs and traditions.

To understand how income and wealth are distributed, we have to delve briefly into Marxist, liberal and post-liberal doctrines. At the core of Marxist theory, there is the belief that class struggle explains the distribution of income and wealth. The bourgeoisie which owns the means of production receives the loaf, the proletariat which has to sell its labour in order to survive, the crumbs. Liberal theory focuses on the role of the entrepreneur who brings together capital and labour and is responsible for progress and innovation. The rewards among owners, managers and workers are distributed according to a market mechanism, that is, by supply and demand.

That is what explains the huge sums made by the billionaire owners and managers of Microsoft, Google and Yahoo. They deal with a world market, their products satisfy the needs of billions of people. Is that fair? Does that justify making billions? These questions are of an ethical nature and must be resolved by applying ethical considerations. What are the values by which our societies should live? A huge question which will require enormous debate.

Today, in the era of neo-liberal globalisation dominated by large multinational corporations and their allies, the governments of the rich and powerful countries, both the Marxist and liberal theories appear to be outdated. That is so because they do not offer solutions for the life-and-death challenges mentioned above. The main reason for this is that the system is based on unlimited economic growth, and we can no longer have that in a world or planet of limited resources. A second problem is unlimited greed which has caused the collapse of the financial system. A third, an economic system that has corrupted the political system, especially in America, but not only there, practically all the political systems, including China, India, Russia and European Union are more or less corrupt. So, from the philosophical and ethical points of view, there is something that is very wrong with that system.

Why is the old political economy is no longer appropriate, or relevant?

Today, owing partly to the extraordinary productivity of the system - unbelievable productive technology in the rich and developed countries' agricultural and industrial sectors -- much of what passes for the Gross Domestic Product (GDP) has nothing to do with producing goods and services that satisfy genuine needs. The large majority of capital is not used to produce goods and services that are needed by the people.

That is so, firstly, because the production of luxury goods and services form a disproportionate part of the GDP. Secondly, the financial system largely creates money, that is, profits for the small minority of speculators. Greed is the main engine of these financial activities. Their perpetrators, assuming that they know what they are doing, which often is not the case, are prepared to take huge risks which eventually lead to catastrophes of the sort that the world is experiencing presently.

When the crash occurs, as it has in the US, its repercussions are felt all over the world - it is still true that, even if it is less so, that when Wall Street sneezes, all the other stock markets around the world catch cold. But the bottom line is that ordinary people suffer the most. Rich people can weather the crisis, partly because they are cushioned by their own wealth, partly because they are bailed out by the government using taxpayers' money. And who are the taxpayers? Largely middle class people whose numbers are fast decreasing. So, the biggest flaw of the system is that it is largely profit- and not people-oriented. That is the logic of the market, and it is a twisted logic.2.

Meanwhile, political power is in the hands of the rich people who defend their privileges tooth and nail. In addition, there is a lot of waste in the system.3 It has been estimated that probably more than half of the goods and services produced in America are either of a doubtful utility or clearly bad for the consumers. Typical examples are: television commercials, the large majority of television programs and of commercial movies, endless legal litigation, the activities of the military-industrial complex, and so on. To add insult to injury, all of this produces enormous amounts of pollution that creates global warming with already frightening consequences around the world. Finally, assuming that the no-holds-barred competition among the great powers for natural and energetic resources will continue, the likelihood that it will all end in an apocalyptic global war is far from negligible. 

What are the contents of a new political economy to build a better and sustainable world?

The things that we need to do are all linked together, they form a whole which is more than its parts. Perhaps the most important piece of the puzzle is the replacement of unlimited and quantitative economic growth by limited (and eventually decreasing) qualitative economic growth. That involves banning luxury goods and services and reducing the extremely wasteful lifestyles in the western world. We need to teach young people a new system of values that underline ideas such as that many beautiful things in life are free or cost very little: reading a good book, for example, listening to good music, a walk in the countryside, playing a game of chess with a friend, dancing with one's girlfriend or boyfriend, making love, having a good meal together, acting together to reduce human suffering, sharing ones competencies or qualities, and so on.

The second big piece of the puzzle is the need to build a culture of peace to replace the culture of war under which we live. The ministries of war (called euphemistically ministries of defence - the American army going to Iraq, killing a hundred thousand people is presented as an act of defence ...) should be replaced by ministries of peace. Bills have been introduced both in the British and American parliaments to that effect.4 For the time being, they are very far from gathering the majorities they need, the war and arms lobbies are among the strongest in America whose defence budget is more than half of that of the whole world.

The third big piece of the puzzle is the need to eradicate extreme poverty in the world, which is indeed  genocide by omission - and we are all, in the rich and developed countries, responsible for a very serious crime against humanity.5

Fourth piece: Limits must be established to income and wealth. This is beginning to be acknowledged even by moderate and mainstream observers because some of the revenues of big executives - some of whom are responsible for the financial meltdown - are simply disgraceful. To have billionaires in this world in which we live is an insult to human ethics and sensibilities.

Fifth piece: Natural and energetic resources should be considered as belonging to the world community as a whole, and must be distributed so as everyone's basic needs are satisfied. These are five big pieces of the puzzle. There are, of course, many others.

What would it take to have a new political economy adopted by the powers that be of this world?

Let us not fool ourselves. Given human nature, selfishness, greed, envy, etc., the powers that be of the rich and developed countries will not adopt policies and strategies that are needed to establish a new political economy. Or, rather, it will be done in small doses, too little too late, and the world and the planet will risk destruction. So, it is up to the people, civil society organizations, non-governmental organizations, to put pressure on the powers that be, the owners and managers of large multinationals and the governments of the rich and powerful countries.6

How? Massive demonstrations of the kind that changed things in Gandhi's India and in America during the Vietnam war cannot be avoided. It has been done in the past. It worked. And we need to do them again. Of course, it is by definition non-violent resistance that we are talking about. Yes, the people must resist. Things have already gone too far. It may be too late. The world can no longer afford to wait. The time to act is now. Before either global warming, or a nuclear conflagration, or both, destroy the world.7

The American people must take the lead in this. Hopefully, Barack Obama will be elected president of the United States on November 4 - one cannot imagine how a ticket that has Sarah Palin at a heartbeat of presidency can win. So, at the end, when all is said and done, there is good chance that the American people will rise to the challenge and elect the Obama-Biden ticket with a comfortable margin. Thus, the American people will once more surprise the world, but this time it will be a very nice surprise that will do a great deal to restore the very badly-mauled prestige and reputation of the United States around the world.8

Dr Zeki Ergas is a writer, scholar and social activist. Secretary General of PEN International’s  Swiss Romand Center, he is also a member of that organisation’s Writers for  Peace Committee and founder of Millennium Solidarity, a small civil society group based in Geneva.  Dr Ergas is the author of five books, of which two are novels; he also wrote a large number of academic articles on African development, two dozen or so essays on the need to build a better world, in addition to a number of poems and short stories. He is married, has two sons, and lives in Geneva. He can be reached at: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it This e-mail address is being protected from spam bots, you need JavaScript enabled to view it This e-mail address is being protected from spam bots, you need JavaScript enabled to view it This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Notes:

1. See: Adam W. Parsons, World Bank Poverty Figures: What Do the Mean?; David Hill, Fighting Poverty: A Global Challenge; and Steve Schitteres, World Poverty ‘More Widespread', all posted in www.stwr.org recently.

2. A new form of greedy and exploitative capitalism has appeared that Naomi Klein describes as disaster capitalism. For example, each time there is a major natural catastrophe, like Katrina in New Orleans or the tsunami in Malaysia, these capitalists descend like vultures on a dead carcass to take advantage of the situation. See: Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism, Forthcoming. Her interview with Any Goldman was posted in www.stwr.org on August, 17, 2007

3. See: Half of all Food Produced in the World Wasted, in www.stwr.org

4. A Ministry for Peace and Running for World Peace, in Positive News, Nos. 37 and 38, in the fall of 2003 and winter of 2003-4

5. John Roth, Ed., Genocide and Human Rights. A Philosophical Guide (New York: Palgrave MacMillan, 2005) is an essential reading to understand the true ethical dimensions of the present situation based on the old political economy.

6. Share the world's resources, www.stwr.org and the Global Marshall Plan Initiative, www.globalmarshallplan.org are good examples of effective and progressive  civil society organisations (CSOs).

7. See: IPCC (Intergovernmental Panel on Climate Change), Fourth Assessment Report (Paris: February 2007)

8. Walden Bello argues that America should forgo its role of policeman of the world, that for many reasons, ethical, economic and political, see his: Toward a New American Isolationism posted recently in www.stwr.org

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