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|Civil Society Responses to the Global Financial Crisis|
Since the crash of 2008, global justice activists have begun to make progress in reining in the excesses of the financial industry. Organising, education, and advocacy efforts have encouraged new policies aimed at ensuring a more equitable and sustainable economic recovery, says a report by Sarah Anderson.
24th November 2010
22nd November 2010 - Sarah Anderson, Institute for Policy Studies
This white paper outlines organizing, education, and advocacy efforts being undertaken in response to the financial and economic crisis by groups working in coalition in the United States and around the world.
During the first two years of the economic crisis, civil society groups have used various strategies to push for new policies aimed at preventing future crises and ensuring a more equitable and sustainable economic recovery. This paper provides describes specific collaborative initiatives in five areas:
Each of the case studies briefly describes who’s involved, strategies and actions, and key results. The paper does not attempt to provide an exhaustive analysis of global civil society work in response to the crisis. The focus is primarily on U.S. coalitions that view their work in a global context.
22nd November 2010 - Sarah Anderson, Institute for Policy Studies
At the onset of the Third World debt crisis in the 1980s, many economic justice activists were afraid to engage on the issue because they felt it was just too complicated. Then, in the 1990s, the hot issue was trade. And again, many people thought, “I’ll never understand the World Trade Organization.” But eventually, in both of these cases, large numbers of people bit the bullet and learned enough to have a voice in these debates. And they built strong movements for debt and trade justice that continue today.
Now the issue of the day is finance. And once again, many people are intimidated by the complexity of the issue. Without a doubt, we need more activist education around the world on the workings of financial markets. At the same time, it’s remarkable to see how much progress has been made by global civil society groups since the crash of 2008.
In the United States, labor unions and consumer groups joined forces to make positive steps toward reining in Wall Street’s worst excesses. Given the intense opposition of the industry lobby, it’s no surprise that the bill enacted in July didn’t go nearly far enough to transform the financial system to serve the needs of people and the planet. This was only round one of a longer fight. Some next steps will be to build international links to make sure the positive elements in the U.S. financial reforms are not undermined by a lack of regulation in other countries. Groups are also working across borders to tackle some issues not dealt with in the U.S. legislation. These include key civil society demands for a financial speculation tax and against commodity index funds.
The financial speculation tax was high on the agenda at an International Peoples Conference held parallel to the G-20 summit a few weeks ago in Seoul, South Korea. Before the conference, activists had organized a global civil society statement in support of financial speculation taxes that was endorsed by 183 organizations from 42 countries. The proposal is to place a small levy on each trade of stocks, derivatives, currency, and other financial instruments as a way to generate revenues for jobs and other domestic and international needs. Such taxes could also discourage the short-term financial speculation that has little social value but poses high risks to the economy.
Korean labor and other social movements organized a rally with 40,000 people during the G-20 summit. Banners calling for financial transactions taxes were a clear sign of how the issue has been both popularized and internationalized.
Although the G-20 leaders were too bogged down by disputes over currencies to make progress on financial taxes, 2011 might prove to be a breakthrough year. French President Nicolas Sarkozy will host the next leaders’ summit in November 2011 and has vowed to make the tax a top issue on the agenda. A broad coalition of French activist groups has already issued an international “call to mobilization” for the G-20 in France.
Global activists are also coming together to push for an end to excessive speculation in commodities markets. Although a complicated issue, commodity trading also affects everyone in direct and personal ways through the price of food and gas.
In 2008, the United States had the highest food inflation rates since 1980. In many of the world’s poorest countries, food price spikes sparked rioting. Speculation alone did not cause rising food prices, but excessive speculation in the commodity futures markets dramatically exacerbated the volatility of world food prices.
The U.S. financial reform bill made some progress in increasing the transparency of derivatives markets, and U.S. and European activists are working together to help win similar changes in EU laws. But the U.S. reforms did not address the problem of commodity indexes. A surge of investments in these funds by pension funds and endowments is a factor in price volatility.
A coalition of family farm, faith-based, and anti-hunger groups, along with business associations, has initiated a campaign to persuade investors to pull out of commodity index funds. Their first target: CALSTRS, the California teachers' retirement system, which had been considering shifting $2.5 billion of its portfolio into commodities.
In response to the divestment campaign, the CALSTRS board decided on November 4 to invest no more than $150 million in commodities for 18 months, while further studying the potential problems.
Next steps for the coalition will be to develop university campaigns for students and teachers to pressure their endowments to divest from commodities, and to work with civil society in other countries to pressure their own financial institutions.
Despite the increase in global activism around financial issues, no single network pulls everyone together around a comprehensive agenda. Nevertheless, campaigns like those on financial speculation taxes and commodity index funds have proved useful tools for basic financial education. People who care deeply about reducing hunger and creating jobs have dived into dense subjects such as financial clearing and settlement processes and swap hedging. It has been re-assuring to remind ourselves that the so-called “experts” clearly don’t understand how all this stuff works either. Remember when the International Monetary Fund adjusted its global economic forecast – upward -- in the late summer of 2008?
This educational foundation will produce dividends not just in the campaigns of today but in years to come. It’s not just a question of transparency and equity. Thanks to the work of global civic activists, we might even prevent the next economic crash.
|Climate Change & Environment|
|Global Financial Crisis|
|Global Conflicts & Militarization|
|IMF, World Bank & Trade|
|Poverty & Inequality|
|Aid, Debt & Development|
|The UN, People & Politics|
|Food Security & Agriculture|
|Health, Education & Shelter|
|Land, Energy & Water|
|Economic Sharing & Alternatives|