Session 4: Political Economy Dimensions of Crisis

A Report from the UN Conference on the Social and Political Dimensions of the Global Crisis: Implications for Developing Countries (12-13 November 2009)

Organised by the United Nations Research Institute for Social Development (UNRISD), Geneva, Switzerland. Held at the Palais des Nations.

Session 4: Political Economy Dimensions of Crisis

A message of hope came from Bjorn Beckman of Stockholm University. He believed alternatives lie to the neo-liberal orthodoxy elsewhere, not in welfare capitalism but in places where workers are on the rise. They will provide the backbone to popular movements in the future. And this means new alliances have to be re-defined, the face of the balance of forces being massively against the working class and their organisations.

The ability of trade unions to defend workers’ rights depends on reaching out to the informal economy, where so many now work.

The impact of the crisis in South Africa has reinforced opposition to neo-liberalism, where auto and garment workers have suffered greatly. This has led to them pressuring government to introduce more reforms.

Nigeria chose to push with deregulation in the face of the crisis but found serious opposition. With a government that is corrupt and inefficient, the current crisis intensifies contradictions.

And he concluded that beleaguered unions in the North can only resist if they ally themselves with the South. The current crisis will not deliver change that is more democratic or increase workers’ rights. Instead, it presents more opportunity to suppress and to extort concessions. In short, no changes to the anti-union logic of neo-liberalism.

Another country to think it would not be severely affected by the crisis is South Africa. Yet, as Seeraj Mohammed of the University of the Witwatersrand pointed out, this is not the case.

Conventional wisdom in South Africa thought the economy and the country’s financial institutions were not caught up in the bubble mania. Yet, in reality, the dynamic was the same as was happening in the United States.

South Africa experienced debt-ridden consumption and the wrong kind of growth. There was limited social and infrastructure investment, property bubbles were allowed to happen, and liberalisation supported the financialisation of the economy. There was a casualisation of jobs, tending towards not high skill. For example, cleaning services rather than manufacturing. And the crisis has just made things worse.

During the crisis to date, 1 million jobs in manufacturing and services have been lost, many connected to the debt-driven economy. Unemployment is estimated to be between 22 percent and 40 percent.

There was significant growth in household consumption since 2003. Yet the flow of credit into the country went into financial assets, most of it into mortgages and credit cards. It was not invested.

Emma Allen from the International Labor Organization (ILO) focused on African cooperatives in the crisis. She found coops, by their structure, were both prescient – they had flagged up systemic problems in the economic system as far back as 2004 – and resilient, continuing to grow their memberships. They were not, however, immune to being hurt. In Africa, many members of financial coops had made the mistake of investing their funds in pyramid schemes/scams that then went bust in the crisis.

Ying Yu from the University of Durham found Chinese workers were withdrawing from the public pension system in the crisis. The vast number of migrant workers within China have learned protests are effective, and are using the internet to mobilise support.

Yu suggested new responses are required. These include third way localism and building mutual trust, collaboration between public/private sectors, for intellectuals to go local, and to forge specific action plans based on local characteristics.

Relevant stories previously covered in Development Challenges, South-South Solutions:

Making the World a Better Place for Southern Projects (https://davidsouthconsulting.wordpress.com/south-south-case-studies/development-challenges-south-south-solutions/making-the-world-a-better-place-for-southern-projects/)

Toilet Malls Make Going Better (https://davidsouthconsulting.wordpress.com/south-south-case-studies/development-challenges-south-south-solutions/toilet-malls-make-going-better/)

SOS Shops Keep Food Affordable for Poor, Unemployed (https://davidsouthconsulting.wordpress.com/south-south-case-studies/development-challenges-south-south-solutions/sos-shops-keep-food-affordable-for-poor-unemployed/)

Rainforest Gum Gets Global Market (https://davidsouthconsulting.wordpress.com/south-south-case-studies/development-challenges-south-south-solutions/rainforest-gum-gets-global-market/)

Disabled Congolese Musicians Become World Hit (https://davidsouthconsulting.wordpress.com/south-south-case-studies/development-challenges-south-south-solutions/disabled-congolese-musicians-become-world-hit/)

Other articles on the Global Crisis:

“Prepare for Global Collapse”: http://www.telegraph.co.uk/finance/economics/6599281/Societe-Generale-tells-clients-how-to-prepare-for-global-collapse.html

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