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 3: Social Policy: Global Perspective
The third session attempted to capture the overall state-of-play at this juncture in the crisis. The panel found states are competing to reduce the welfare state to pay off debts. The global downturn was being used as an opportunity to reduce the wages of workers. The downturn was being characterised as not a banking failure, but a social one: the message being given is that income inequalities are not caused by economic causes but by social choice.
The orthodoxy of neo-liberalism is well-prepared and is taking advantage of the crisis, while left alternatives are much more divided. The neo-liberals see this an opportunity to roll forward the neo-liberal agenda, not roll back. As one panellist said: “I wish it was the demise of neo-liberalism, but it is not.” It’s a crisis for the left – capitalism will stagger back onto its feet.
Ben Fine from London’s School of Oriental and African Studies, drew attention to the fact 200,000 homes could have been built for the cost of bailing out the failed UK lender Northern Rock.
The “crisis has sharply discredited the model of development we have been under for the past 30 years. But I am afraid it is being resurrected,” concluded Fine.
The panellists outlined the conditions for a sustainable developmental state. Two things are required: do not have exclusion; and reduce inequalities that affect 60 to 70 percent of people.
With neo-liberalism far from finished, we do not hear the articulation of an alternative that is strong as we build a new world order, added the panel.
The global downturn has led to emerging crises: 1) cost will be distributed on to labour, yet it is very difficult for workers to move around, 2) it will be distributed from North to South – example, a reduction in economic aid, 3) youth employment: mostly young workers will suffer with unemployment, and they will live with climate change.
Any alternative vision put forward will have to resolve these crises.
Anger was directed towards the two Bretton Woods institutions: the World Bank and the IMF. It was claimed the World Bank is destroying what has been achieved in Vietnam – and they did not recommend any country borrow from the World Bank. Other options include the Asian Development Bank (ADB), which is more progressive.
Some of the policy options the panel suggested included prices/incomes policy, debates over limiting incomes of the elite, and introducing high taxes on financial transactions.
The panel noted that hardly anyone has raised questions on global governance, “and the structural failure of the UN system to deliver really depresses me,” concluded one panellist.