United Nations Research Institute for Social Development

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.

Just as now (2021) 2009 was a year in which the questions revolved around receiving a vaccine (for H1N1) and how best to affirm a person’s identity and citizenship.

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.

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

Session 2: Social Policy: Country and Regional Perspectives

Session 3: Social Policy: Global Perspective

Session 4: Political Economy Dimensions of Crisis

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

This work is licensed under a Creative Commons Attribution 4.0 International License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2021

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

Just as this chart showed at the time of the Global Financial Crisis, the countries in “The Ring of Fire” have experienced exceptional turbulence and turmoil in the years after the crisis. For example, the UK has had austerity budgets, a no-growth economy, Brexit and the ‘shock therapy’ of the COVID-19 pandemic. The US, on the other hand, has clashed with its allies, seen a new cold war emerge with rivals China and Russia, and experienced significant domestic unrest, culminating in the storming of its seat of Government, the Capitol.

Just as now (2021) 2009 was a year in which the questions revolved around receiving a vaccine (for H1N1) and how best to affirm a person’s identity and citizenship. Photo: David South

Iceland saw its banking system collapse during the Global Financial Crisis, sparking demonstrations (October 2008-2011) and the “Pots and Pans Revolution”. Photo: David South

A conference in Geneva struck a pessimistic note on the current global financial crisis and any hope for a new social and economic order. The conference asked “whether current policy reforms are conducive to a transformative social change or if they only reproduce the status quo.”

A March 2009 IMF report on the downturn’s affect on the Global South and developing countries found that “fluctuating commodity prices, high fuel costs, the rise in food prices in addition to a decrease in remittances, foreign direct investment and aid flow could mean an increase in the financing needs of low-income countries by at least US $25 billion.”

The presenters at the conference painted a picture of a robust neo-liberal economic order that is already in the process of dusting itself off from the crisis and restoring its dominance.

Bob Jessop, from the University of Lancaster, captured the paralysis of opposition to the neo-liberal order by saying “They are busy doing it and we are busy talking about it.”

To paraphrase philosopher Friedrich Nietzsche, that which does not kill us makes us stronger. Neo-liberalism may in fact be strengthened by the crisis, according to presenters. It will evolve and take on new forms, they argued.

The world’s business elites have an enormous capacity to re-shape the rules of the economic game back in their favour. While the massive state support to the banking sector had led some to believe governments were restoring faith in public investments, in fact state support is seen as “timely, targeted and temporary.”

When asked about the future as the crisis passes and countries come out of recession, the presenters believed this was a short-term recovery, and that far worse economic crises would be coming in the next five to 10 years.

Andrew Martin Fischer, from the Institute for Social Studies at Erasmus University, believes the harmful effects of the bailouts will be pushed to the periphery over the next five to 10 years, harming the poor. He also believes a major financial crisis is brewing in China. He called ‘China the fault line in the future.’

The powerful, he pointed out, displaced the costs of their mistakes onto other people. Proponents of different approaches had missed the moment because they were not able to present off-the-shelf strategies that could be deployed in a crisis on short notice. Thus, they had left the field open to neo-liberal solutions.

The global crisis in the short-term has not been worse because of unprecedented global cooperation. Keynsian measures have been used to solve the crisis, but are also used to preserve Wall Street. Also, the enormous contribution of growth in China and India means there are other sources of wealth in the world than just the North.

Getting back to normal should not be what we are doing, the panellists concluded at the conference’s final session. Governments should look at new opportunities for social policy. The panellists were disturbed that the International Monetary Fund (IMF) is seen as part of the solution. This means deep cuts in public expenditure are coming. There will not be a trickle down of wealth and the imbalances from before the crisis will remain. In short, the system was not working before the crisis.

Some policy suggestions put forward included: rural income guarantees, managed migration to support development goals, making a gender perspective critical to development. Governments should take a preventive approach to tackle future crises. Unfortunately, it now seems no money is left to address these problems. Yet business as usual is not an option with so many inequalities and imbalances.

“This conference on the social and political consequences of crisis is a critical subject for debate at this juncture,” said UNRISD’s director, Dr. Sarah Cook. “We are now at a point where many countries, particularly in the North, are emerging out of the severe shock of immediate crisis. Discussions of alternative policies and institutional arrangements at national and global levels may become less urgent; the status quo is reasserting itself and the space for ideas and policies that offer the possibilities of more stable, sustainable and equitable development will quickly shrink.”

Session 1: Impacts, Coping Strategies and Livelihoods

Session 2: Social Policy: Country and Regional Perspectives

Session 3: Social Policy: Global Perspective

Session 4: Political Economy Dimensions of Crisis

Southern Innovator Magazine was developed from 2008-2010 in London, New York and Iceland by the United Nations in response to the Global Financial Crisis and was launched in 2011.

Business Insider has reproduced a fascinating presentation about the crisis put together by the French bank, Societe Generale (SocGen). The presentation can be found here: http://www.businessinsider.com/socgen-prepare-yourself-for-the-worst-case-scenario-2009-11#first-it-starts-with-sky-high-public-debt-1

From 1997 to 1999, I worked as the head of communications for the United Nations mission in Mongolia. The country was already experiencing a severe economic crisis as a result of its transition to free markets and democracy from the Soviet economic system. The scale of the economic collapse following the fall of communism was described at the time as the worst peacetime, post-WWII economic collapse. On top of this challenge, the Asian economic crisis erupted.

You can read the Mongolia Update 1998 book I wrote here: http://www.scribd.com/doc/20864541/Mongolia-Update-1998-Book. It shows how chaotic events are in the middle of a major crisis. Some of the key lessons we learned during this time include: 1) transparency: trust was critical and all our work was done under the full glare of public and media scrutiny, 2) action: with our existing budgets we made sure to keep doing and spending to hire people, 3) strategy: to encourage the growth of businesses and innovation, in particular the take-up of new information technologies.

This work is licensed under a Creative Commons Attribution 4.0 International License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

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

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

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