(Updated April 2) Eric Toussaint on G20: `Putting a fresh coat of paint on a world that is collapsing'; police attack protesters
Stop press April 2
George Monbiot: G20 protests: Riot police, or rioting police?
At the G20 protests in London only one group appears to be looking for violent confrontation – and it's not the protesters.
Contrary to media reports, people did not pelt the police as the man who died during the G20 protests was being taken out. Andrew Kendle reports from Wednesday night’s protest frontline.
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By Eric Toussaint and Damien Millet, translated by Christine Pagnoulle in collaboration with Elisabeth Anne
April 1, 2009 – The G20 summit meeting in London from April 1 onward was loudly announced and publicised. Those 20 industrialised and emergent countries (G20) are meeting to find solutions to the economic crisis. But long before the end of the summit, it is clear that they will not rise to the challenge.
The G20 was not created in order to provide genuine solutions; it was hastily summoned for the first time in November 2008 to salvage the powers that be and try and to plug the breaches in capitalism. It is therefore impossible for this body to opt for measures that are sufficiently radical to save the day.
Public opinion will be told to look in the two directions that are expected to focus aggravation: tax havens and the CEOs' incomes.
Tax havens have to be abolished, that goes without saying. To achieve this it should be easy enough to make it illegal for companies and residents to have any assets in, or relationships with partners located in, tax havens. The EU countries that function like tax havens (Austria, Belgium, the UK, Luxembourg…) as well as Switzerland must do away with bank secrecy and put an end to their outrageous practices. Yet such is not at all the orientation chosen by the G20: a couple of emblematic cases will be cracked down on, minimal measures will be required from those countries, and a black list of non-cooperative territories that will be eventually made public will have been carefully vetted (Luxembourg or Austria have already been promised they will not be on it).On the other hand CEOs' incomes, including golden parachutes and other bonuses, are indeed outrageous. In times of growth the employers claim that those who brought such benefits to their companies had to be rewarded to prevent them from moving to another. Now that we live in a time of crisis and those companies have to admit to increasing losses, the same executives still claim similar rewards. The G20 will try to regulate their incomes for a limited duration. The logic of the system is not questioned.
Apart from tax havens and CEOs' superbonuses, which will not be hit by any specific penalties anyway, the G20 countries will further bail-out their banks. Though globally discredited and delegitimised, the IMF will be put back at the hub of the political and economic game thanks to a new provision of funds that will have been made available by 2010.
Popular mobilisation needed
The G20 strategy is to put a fresh coat of paint on a world that is collapsing. Only a strong popular mobilisation will make it possible to lay solid foundations to build another world in which finance is at the service of people, and not the other way round. The March 28 and 30 demos were big: 40,000 people in London, thousands and thousands in Vienna, Berlin, Stuttgart, Madrid, Brasilia, Rome, etc. with the common motto “Let the rich pay the crisis!” The week of global action called for by the social movements from all over the world at the World Social Forum at Belém in January thus had a gigantic echo.
Those who had announced the end of the movement for another globalisation were wrong. It has proved that it is able to bring large crowds together, and this is only the beginning. The success of the mobilisations in France on January 29 and March 19 (3 million demonstrators were in the streets) is evidence that the workers, the unemployed and young people all want other solutions to the crisis than those which consist in bailing out bankers and imposing restrictions on the lower classes.
As a counterpoint to the G20 summit, the president of the UN General Assembly Miguel d'Escot, has called a general meeting of heads of states and governments in June and asked the economist Joseph Stiglitz to chair a commission that will draft proposals to meet the global crisis. The suggested solutions are inadequate because they are too timid, but they will at least be discussed at the the UN General Assembly.
New debt crisis
A new debt crisis is looming in the South, it is a consequence of the real estate private debt bubble bursting in the North. The recession that now affects the real economy of all countries in the North has led to prices of raw material plummeting, which considerably has reduced the strong currency revenues with which governments of countries of the South repay their external public debts. Moreover, the current credit crunch has induced a rise in borrowing rates for countries of the South. The combination of these two factors has already resulted in suspension in debt repayments by those governments that are most exposed to the crisis (starting with Ecuador). Others will follow suit within one or two years.
The situation is absurd: countries of the South are net creditors to the North, starting with the US whose external debt is over US$6000 billion (twice the total external debt of all the countries of the South). Central banks in countries of the South buy US treasury bonds instead of setting up a democratic bank of the South to finance human development projects. They should leave the World Bank and the IMF, which are tools of domination, and develop South-South relations of solidarity such as those that exist between countries that are members of ALBA (Venezuela, Cuba, Bolivia, Nicaragua, Honduras and Dominica). They ought to audit the debts they are asked to repay and put an end to the payment of illegitimate debts.
The G20 will see to it that the core of neoliberal logic is left untouched. Its principles are asserted again and again, even though they have blatantly failed: the G20 maintains its attachment to a global economy based on an open market. Its support to the god of free market is non-negotiable. Everything else is hocus pocus.
[Eric Toussaint is president of the Committee for the Abolition of Third World Debt (CADTM), Belgium (http://www.cadtm.org), author of A diagnosis of emerging global crisis and alternatives (Mumbai: Vikas Adhyayan Kendra, 2009) and The World Bank: A Critical Primer (London: Pluto Press, 2008). Damien Millet is spokeperson for CADTM France. Toussaint and Millet are joint authors of 60 Questions 60 Answers on the Debt, the IMF and the World Bank, English version to be published in 2009.]
Reactions to G20: Morales, Chavez, Bello, Panitch & activists
Morales about the IMF: “the wolf can not keep the flock”
http://www.ennaharonline.com/en/economy/793.html?print
ennahar 03 April, 2009 07:35:00
The Bolivian President Evo Morales has denounced Friday the injection
of more than 1,000 billion dollars through the IMF against the global
crisis, saying that countries at the root of the crisis can not solve
it, or his words, that “the wolf can not keep the flock.”
“It's like giving money to the wolves, or to entrust the care of the
flock: the wolf is not going to keep the sheep, it will devour them,”
Morales told the foreign press in La Paz, commenting on the decisions
G20 in London to fight against the crisis.
“It is not possible that the countries of capitalism, which has caused
the financial crisis, are now the same from where comes the solution,”
said the Socialist leader, adding that few countries are at the origin
of this financial crisis, but “180 must cope.”
Bolivia is experiencing the beginning of economic deceleration, and is
5% growth at best in 2009, against 6.5% in 2008.
“As long as we do not touch the structural points of capitalism, it
will be difficult to resolve the financial crisis,” said Morales about
the G20. “If we want to solve economic problems, we must first end the
free market, then the speculative capitalism.”
Morales has challenged the role of the International Monetary Fund
(IMF), accusing him of the award of credit conditions, as “the
privatization of our natural resources, our basic services, to
implement the business models that are part of the capitalist system.”
Ennaharonline / AFP
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Venezuela's Chavez slams results of G20 summit
03/ 04/ 2009
http://en.rian.ru/world/20090403/120895476.html
MEXICO CITY, April 3 (RIA Novosti) - Venezuelan President Hugo Chavez
has harshly criticized the plans to overcome the global financial
crisis announced by G20 leaders after their summit in London.
"I did not expect that such unreasonable and silly decisions would be
taken at the G20 summit," said in a telephone interview with
Venezolana de Television.
The leaders who met in London on Thursday agreed to allocate $5
trillion by the end of 2010 to resolve the global economic crisis,
with one-fifth of the funds going to the International Monetary Fund
and other financial institutions.
Speaking during a visit to Iran, Chavez said the decision to give the
money to the IMF was senseless and would only make things worse, going
on to criticize declarations of increased financial regulation.
"At the summit there was a lot of talk about strict regulation of
financial markets, but they are worth nothing. You have to understand,
it is impossible to regulate the financial monster spawned by the
capitalist system," Chavez said.
According to an aide, Russian President Dmitry Medvedev, who was among
the leaders of industrial and developing countries at the summit,
welcomed the decision to inject funds into the IMF, but said such a
move should be contingent on reform of it and other international
financial institutions.
============
Chavez touches on G-20 summit failure
Venezuela's Chavez says capitalism needs to go down.
http://www.presstv.ir/detail.aspx?id=90388§ionid=351020704
Fri, 03 Apr 2009 19:53:48 GMT
Venezuelan President Hugo Chavez says the G-20 summit failed to
address the real reason behind the global meltdown -- capitalism.
Speaking during a visit to Iran, the Venezuelan leader on Friday said
the G-20 nations' plan to spend more than a trillion dollars would
strengthen "one of the great guilty ones behind the crisis: the
International Monetary Fund."
The leaders of the group of 20 industrialized nations who met in
London on Thursday agreed to allocate USD 5 trillion by the end of
2010 to resolve the global economic crisis, with USD 1.1 trillion
going to the IMF.
The IMF and the World Bank are "tools of imperialism" and must be
eliminated, Chavez said, the Associated Press reported.
He also criticized the groups' plan to enlarge the IMF, saying it was
like "entrusting beef to vultures".
In earlier remarks, he also blamed the United States and Britain for
the global financial turmoil, because of the financial model they have
been forcing on the world for years.
"It's impossible that capitalism can regulate the monster that is the
world financial system... Capitalism needs to go down. It has to end,"
Chavez stressed.
Billionaire investor George Soros, meanwhile, has warned that if G-20
efforts to restore stability in the international market fail, the
global economy will head for a huge meltdown.
"That could push the world into depression. It's really a
make-or-break occasion. That's why it's so important. The chances of a
depression are quite high - even if that is averted, the recession
will last a long time. Look, we are not going back to where we came
from. In that sense it's going to last forever," Soros was quoted by
Newsmax.
***
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Leo Panitch
http://therealnews.com/t/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=3521&updaterx=2009-04-03+10%3A07%3A13
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After The Summit: What Was Accomplished & For How Long?
Apr 03, 2009 By Danny Schechter
Danny Schechter's ZSpace Page / ZSpace
Summits Come and Summits Go As The Economy Continues Its Slide
The eyes of the world have been on the Economic Summit in London but the ideas of the world were mostly conspicuous by their absence. Here we have a global crisis. The house is on fire. Unemployment is climbing. The real estate contagion is now claiming condos and even shopping malls. It's bad and by most accounts, getting worse. And, all the "leaders" of the world can do is devote ONE DAY to a forum that must have cost millions to stage.
Our media and politicians love spectacles and political celebrities. The spin was on what Michelle was wearing, not on what Barack was thinking when he was so unwilling to agree to an international regime of regulation which is so clearly needed in a globalized world economy.
The New York Times was properly critical of the Summit for falling "short," mostly focusing on the failure to commit to a larger stimulus package-what the US wanted but didn't get. They went lightly on their criticisms on the regulatory issue. The group also agreed to crack down on tax havens and, on a country-by-country basis, impose stricter financial regulations on hedge funds and rating agencies - necessary though insufficient steps to avoid a repeat of the current disaster." They never asked nor did they fully report on why Obama is "fiercely resistant to the idea of a global regulator." (Bob Jackson of Arizona offered one plausible explanation: "'The one smart thing the President did in London was to establish that the U.S. would not be regulated by global politicians. Our own politicians are corrupt and imcompetent enough, without overt collusion of the politicians from the rest of the world.")
Fortunately, other Times Readers were ahead of the paper and the politicians in comments that could have been but weren't probed in most media outlets.
Jacob Olsson writes: "The lack of deep understanding of economics on the part of American journalists seems to be one explanation for the cheerleading of fiscal stimulus. It is the only solution that has been offered to them by people they trust. The reason this solution has been offered is that it is the only one that is seen to be able to preserve the financial oligarchy, which both Republicans and Democrats hold so dear."
Dwight writes from Brazil: "The US and UK could likely have gotten more concessions on stimulus if they'd admitted that the epi-center of this man-made quake was New York and London, and that thus the US and UK would assume a disproportionate share of the burden.
The Times editorial is full of continued American hubris. Vaguely euro-bashing. No assumption of America's leadership in creating a disaster."
Patrice Ayme writes from Switzerland: "The fundamental cause of the crisis is that the financial sector sucked up all the available world financial credit, and more. Then it lost it all in a fury of ill considered entanglements.
The way out is to outlaw it all retroactively (bankruptcy judges do this all the time at their own scale, so there is no constitution problem to do this, whatever Mr. Summers grumbles about "abrogation"."
Kevin writes from Georgia: "The Europeans were not going to agree to larger stimulus packages for one very good reason. They do not need to have very large stimulus packages. Most G20 European countries have robust safety nets that already take care of their citizens when the economy falters. They also do not have the crumbling infrastructure that America has with regards to transportation, especially mass transit and technological infrastructure."
Butler Crittendon adds from San Francisco: "You seem in denial about America's role in creating the financial disaster we now face. Sure, other global capitalists participated, but in general it was a failure of neoliberal economic policies, spearheaded by U.S. and British bankers. You mention hedge funds, etc., but the only reason we had these monsters was because we permitted it. The exact details of the causes of the crisis are still unknown -- and probably unknowable after so many rats hid their money in secret foreign accounts and had in place a $1000 Trillion of derivatives, CEOs, and the alphabet soup of concocted poisonous 'instruments.'"
These are all important issues but most were buried in the fine print when covered at all. Of course, as is so often the case, high flying rhetoric-and Gordon Brown threw out that old canard about a "new world order"-will not be remembered. What countries do, or fail to do will.
As former CBS correspondent Tom Fenton wrote from London, "The agreements reached at the summit depend on the willingness of individual countries to carry them out. There will be a follow-up summit this fall to check on progress. President Obama said it will take a year or two to tell whether the summit has been successful in lifting the world out of recession. He was right to be cautious."
He was also right to recognize that he didn't accomplish his goal, as veteran British journalist Andrew Neil wrote on the Daily Beast: "For a start, the President did not get what, for him, was the original purpose of this G20 summit: a coordinated global fiscal stimulus. The British media may still fawn before the Obamas the way the US media used to, the First Lady can even touch the Queen in Buck House without being sent to the Tower of London; but the Obama charisma and character could not get an extra cent out of the world community."
So we are back to square one. The markets rose the day after the Summit not because of what was said there but because interest rates were cut in Europe and China released a positive report.
Many politicians have been complicit in the policies that led to the crisis. A banker who was there. Stephen Roach, chairman of Morgan Stanley Asia, said he was worried that "many of the world leaders had gotten into something that was over their heads." Probably true.
What was accomplished? Some windows were broken . A demonstrator died, The police, as usual, overreacted. The media has moved on.
In all, not too encouraging.
News Dissector Danny Schechter blogs for Mediachannel.org. He is making a film based on his new book PLUNDER: Investigating Our Economic Calamity (Cosimo Books at Amazon.com) Comments to dissector@mediachannel.org
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After the G20 Summit
Capital's New World Symphony
By JOHN WIGHT
The G20 summit in London has seen the first redrawing of the global economic map since Bretton Woods in 1944, which officially announced the United States as the major global capitalist power, the axis around which every other nation was to revolve economically in the postwar world.
The fact that a G20 summit was convened for the first time, with twenty of the world’s largest economies meeting to decide a new economic template in response to the global recession instead of the usual eight (though Russia’s inclusion in the G8 was merely in deference to her strategic weight rather than her economic size or strength), is significant in itself, an acknowledgement by the postwar capitalist order that the emerging economies of China, India, and Brazil, etc. will be key players in the coming period, not only as sources of cheap labor and resources but as markets for exports.
In effect, emerging from the G20 summit has been the admission that the formerly major markets of Europe and the US can no longer supply the demand for commodities which underpins the global capitalist system, and at bottom the financial system responsible for the economic collapse that has swept the globe.
As the largest economy in the world, the US, under the Obama administration, has embarked on a new strategy as it adapts to the economic reality of the disappearance of the free market from the stage of capitalist history. Managed demand, the adoption of Keynesian doctrine on a global scale, is to be the way ahead, with global institutions such as the IMF and World Bank, formerly twin pillars and enforcers of the Washington free market consensus, now to play the role of ballast of the global economy through the disbursement of aid in order to maintain demand among nations of the G20.
Conditions, of course, are to be attached to such aid in order to ensure that none of the G20 economies adopt protectionist measures to block imports and thereby interfere with that holiest of holies – free trade.
Be that as it may; this new strategy of the US has been adopted with the same priority of global hegemony which has dominated the actions of US administrations since the end of the Second World War. With a 2008 GDP of just under 14 trillion dollars, the US economy continues to stand head and shoulders above its nearest economic rival, Japan, with a GDP of just under 4.5 trillion dollars. In order to maintain this gap, and with it the lifestyles of US consumers, the US realises that it has to ensure that markets for US exports don’t dry up, else demand at home will fall, leading to an increase in unemployment, poverty, and economic slump domestically.
The continuing role of the US dollar as the major international reserve currency, used for the purchase of primary goods such as oil, gas, minerals, and so on by global economies, will continue to allow the US to ramp up huge deficits in order to service a national debt of 11 trillion dollars and continue to fund its monstrous expenditure on defense and war, as well as continuing to meet its diminishing social spending requirements without taxing the rich proportionate to their income.
In other words, attacks on the poor and the working class which have defined US society under both Democrat and Republican administrations since the end of the Vietnam War will continue, though less aggressively than under previous administrations going back to the Reagan years, when the free market structural adjustment of the US economy was unleashed.
By far the most significant aspect of the G20 summit has been the formal inauguration of China as a First World economic power. China’s growth over the past few years has been staggering. The huge growth in Chinese exports over the past few years ($900 billion in 2006) has seen China overtake major export economies such as Germany and Japan, with some economists predicting that China will eclipse the US by 2010 as the world’s major exporter, despite the slowdown caused by the global recession.
However, it is China’s foreign exchange reserves that have increasingly been a major cause for concern to US economists, politicians, and military planners. By the end of 2008 they amounted to $1.9 trillion, a trillion of which is in US treasury bills and notes, making China a major financier of the US deficit. The danger this poses to the US is that if China were to stop purchasing US treasury bills, or worse start dumping them on international markets, the value of the dollar would plummet, the value of US stocks would hit the floor, and an economy already in major recession would fall flat on its back.
But with the current recession being global in scope, and with China’s main export market the US, it is neither in Chinese nor US interests to act in a way that would impact negatively on the other in the current period.
The Obama administration understands this, which is why it has sought to replace the aggressive macroeconomic strategy vis-à-vis China, pursued by the Bush administration, with a more conciliatory one.
The invasion and occupation of both Iraq and Afghanistan was part of this aggressive grand strategy, when using 9/11 as a pretext, the US set out to seize control of Iraq’s vast oil reserves in order to break OPEC’s monopoly and control of oil prices, whilst at the same time being able to control the ever-increasing energy requirements of emerging economies such as China and India. Afghanistan’s role in this process was as a vital transhipment route of energy reserves located in the Caspian Basin.
The economic drain of these military adventures in the short term has had a deleterious impact on the US economy, however, which is why that section of the US ruling class represented by the Obama administration is desperate to pull out as soon as is it is feasibly possible to do so.
As for the majority of the world’s population living throughout the so-called developing world, despite the usual rhetoric about alleviating global poverty, etc., immiseration and despair looks set to continue. Free trade between the G20 economies will not extend to the exports of the world’s poorest economies - economies which for so long have been plundered and ravaged mercilessly by the developed world, making them reliant on loans and aid with a welter of free market conditions attached.
This in effect has turned governments of the developing world into enforcers acting on behalf of global corporations against their own populations, forced to implement the wholesale privatization of social services along with the destruction of domestic agro-economies unable to compete with the subsidised agro-economies of the West.
The end result of this process has been a race to the bottom as workers throughout the developing world have been forced to compete for poverty wages, a direct consequence of those same global corporations scouring the globe looking to drive down production costs in order to maintain profits.
So whilst the global recession is far from over, the complete collapse of capitalism - ruefully predicted by free market ideologues and gleefully predicted by anti-capitalists and socialists - looks to have been averted.
John Wight is a writer and political campaigner based in Scotland.
G20 slammed for 'shortsighted' deal
02 April 2009
NEWS HOOK
Thursday, 2 April 2009 G20 summit ends in London
Millions will suffer from summit failure, says charity
The anti-poverty charity War on Want today condemned Gordon Brown and other G20 leaders for throwing money at the global economic crisis rather than addressing its root causes.
According to War on Want, the G20 has used the London summit to resurrect the failed policies and institutions of the free market era, in a deal which prioritises short-term action at the expense of fundamental reform.
It called for a new world economic system based on principles of public benefit not private profit, achieved through democratic control and a fair redistribution of the fruits of globalisation.
War on Want executive director John Hilary said: "Millions of people will pay a high price for the G20's refusal to address the root causes of the current crisis.
"The world demanded a new economic system which puts the needs of people first. Instead the G20 have just thrown money at the failed institutions of the past."
War on Want said a stimulus package for the developing world is desperately needed. But the G20 decision to treble money available to the International Monetary Fund will resurrect an institution which lacks legitimacy and continues to impose crippling free market conditions on countries which turn to it for help.
The charity also attacked the G20 for its failure to take decisive action to close down tax havens. Tax dodging by corporations costs the UK economy £100 billion a year and deprives developing countries of an estimated £250 billion a year - money which could meet the UN anti-poverty goals several times over.
The charity warned that the G20 leaders' renewed insistence on a conclusion to the Doha world trade talks will deepen unemployment already soaring due to the global economic crisis. This puts 7.5 million workers at risk in Argentina, Brazil, Colombia, Costa Rica, Indonesia, Mexico, Philippines, Tunisia and Uruguay, and millions more in other countries.
http://www.waronwant.org/news/press-releases/16515-g20-slammed-for-shortsighted-deal
David Harvey: G20, the Financial Crisis and Neoliberalism
April 03, 2009 By David Harvey
Source: Democracy Now!
AMY GOODMAN: For some analysis on the G20 summit in London and the financial crisis overall, I'm joined now by a leading thinker on the global economy, David Harvey. He's a Marxist geographer and distinguished professor of anthropology at the Graduate Center of the City University of New York. He's author of several books, including The Limits to Capital and A Brief History of Neoliberalism. He has a lengthy interview on the financial crisis in the latest issue of n+1 magazine, nplusonemag.com. David Harvey joins us now on Democracy Now!
We welcome you to Democracy Now!
DAVID HARVEY: Thank you.
AMY GOODMAN: What do you think is the—what is being proposed by the G20 leaders? And what needs to be done in this country?
DAVID HARVEY: I think Tony Benn was exactly right in the earlier segment, and it's a great pleasure to be here after him. I was always an admirer of his.
What they're trying to do is to reinvent the same system. And I think this is a collective concern, and there's a lot of squabbling on the details, as it were. But the fundamental argument they are making is, how can we actually reconstitute the same sort of capitalism we had and have had over the last thirty years in a slightly more regulated, benevolent form, but don't challenge the fundamentals? And I think it's time we challenge the fundamentals.
AMY GOODMAN: What are those fundamentals?
DAVID HARVEY: The fundamentals have to do with the incredible increase in consolidation, if you like, of class power. I mean, since the 1970s, we've seen a tremendous increase in inequality, not just simply in this country, but worldwide. And in effect, the assets of the world have been accumulated more and more and more in few hands. And I think when you look at the nature of the bailout programs, the stimulus programs and all the rest of it, what it really does is to, in effect, try to keep those assets intact while making the rest of us pay. And so, I think it's time we stopped that and kind of said, well, actually, we should actually be getting more of the assets and, you know, much greater equality.
AMY GOODMAN: And how would we get more of the assets? How would there be greater equality?
DAVID HARVEY: I think, for example, the nature of the bailout of the banks and the sort of restructuring that is going on is, in effect, about saving the banks and saving the bankers, while actually sticking it to the people. I mean, we're the ones who are going to have to pay for this in the long run. So what I'm kind of arguing for is a political awareness that that is happening.
In fact, it has been happening over the last thirty years, sort of step by step. It's been disguised in this kind of rhetoric about individual liberty and freedom of markets and all those kinds of things. But if you look backwards, you will see that this is not the first financial crisis we've had. We've had many of them over the last thirty years, and they all have the same character. We had our own savings and loan crisis back in the 1980s. There was a Mexican debt crisis back in 1982, when, in effect, Mexico was going to go bankrupt. And if they had gone bankrupt, then the New York investment banks would have gone under. So what did they do? They bailed out Mexico, therefore bailing out the New York investment bankers, and then they made the Mexican people pay.
AMY GOODMAN: Why would the banks in New York have gone under?
DAVID HARVEY: Because they had lent the money to Mexico in the first place. And if Mexico had just defaulted on its debt, what would the—you know, what would the bankers have done? They would have lost a tremendous amount.
AMY GOODMAN: If you were Timothy Geithner, if you were the Treasury Secretary—
DAVID HARVEY: Yes, if I was Treasury Secretary.
AMY GOODMAN: —what exactly would you be doing?
DAVID HARVEY: Oh, I would take a lot of that money, and I would put it into some kind of a national reconstruction corporation. And I would say, "Look, your first duty is to take care of the foreclosure crisis and the people who have been foreclosed upon. So go into cities like Cleveland and so on that have been devastated, and go into sort of areas in California and so on and take care of the foreclosure crisis."
AMY GOODMAN: How would you do that?
DAVID HARVEY: Well, I think one of the ways you could do that is to start to buy out all of those houses that are about to be foreclosed on and put them into some kind of, I don't know, municipal housing association or some collective form of that kind, and then allow people to remain in those houses, even though they're no longer necessarily owners. So the ownership rights would shift.
I mean, we have a myth in this country that homeownership is the gospel, as it were. But for a lot of people, homeownership is not a good idea. And I think, actually, it's not a good idea in general.
AMY GOODMAN: Why?
DAVID HARVEY: For two reasons. One is, it makes you actually very vulnerable if you're a heavily debt-encumbered homeowner. And actually, the initial legislation was kind of interesting, the debate around it back in the 1930s, when it kind of said debt-encumbered homeowners don't go on strike, and because it's—you know, you've got to pay your mortgage. And so, this becomes, as it were, a millstone around your neck. And that then makes you very vulnerable to fluctuations in the market like we're seeing right now, particularly if you have variable rate mortgages, things of that kind, and you can really easily get caught out. So, in effect, what we've seen in the housing market is a tremendous plundering of the assets of some of the most vulnerable people in the country. I mean, this has been the biggest loss of asset wealth to the African American population that there's ever been.
AMY GOODMAN: And the response of some that, well, they should never have bought houses to begin with, because they couldn't afford them?
DAVID HARVEY: Well, some of them, so that's right, you know, but this is a familiar story. The first wave of foreclosures was really in impoverished neighborhoods, African American, immigrant and very often single-headed household women. And, yeah, they probably should not have become homeowners. But on the other hand, they were taking a risk. But who took the real big risks in this economy, if it wasn't the bankers? So, in a sense, they're being made to pay, while the bankers are still walking away with a tremendous amount of money.
AMY GOODMAN: What is the connection between gentrification and the mortgage crisis?
DAVID HARVEY: The gentrification process in here in New York and the like was again about kind of reconstructing urban environments in such a way, and a lot of that reconstruction entailed, particularly when it was corporate-led, entailed a big investment in housing. You then have the problem of who's going to buy the housing. And it's not only gentrification, it's also a lot of that new development, new condominiums and all the rest of it.
And it's kind of interesting. Finance controls both the creation of housing, the production of housing, and also its consumption. You lend money to the developers. They go in and gentrify a neighborhood. You lend them money to the people who are going to occupy it. And even if they don't have—you've got to find that market for the gentrification once that process goes on. And so, the connection there in this, the financial operators are working on both ends of this game, if you like.
AMY GOODMAN: Can you talk about what you mean by "the right to the city"?
DAVID HARVEY: What I mean by the right to the city is that we have, I think, a real need right now to democratize decisions as to how a city shall be and what it should be about, so that we can actually have, if you like, a collective project about reshaping urban—the urban world. I mean, here in this city, effectively, the right to the city has been held by the mayor and the Development Office and the developers and the financiers. Most of us don't really have a very strong say. I mean, there are kind of community organizations and so on. So I think the democratization of the city, of city decision making, is crucial. And I think we want to reclaim the right to the city for all of us, so that we can all actually not only have access to what exists in the city, but also be able to reshape the city in a different image, in a different way, which is more socially just, more environmentally sustainable and so on.
AMY GOODMAN: What does this current crisis mean for the future of capitalism, David Harvey?
DAVID HARVEY: You know, crises are terribly important in the history of capitalism. They are what I would call the kind of irrational rationalizers of the system. What happens is that capitalism develops in a certain way, has real problems, then it goes into crisis, and it comes phoenix-like out of it in another form. We went through a long crisis in the 1970s. There was a long crisis in the 1930s. So a crisis, then, is a moment of reconfiguration of what capitalism is going to be about. And right now, as I've said, the powers that be are more about trying to reconstruct the pre-existing power structure or save the pre-existing power structure without intervening in it in any way.
The way I see it right now is, however, we may be in a different kind of world. Put it this way. Capitalism historically has grown at a 2.5 percent compound rate of growth since 1750. OK. And in good years, it's growing at three percent. Obama, the other day, said, "Well, in a couple of years, we'll be back to three percent growth." Gordon Brown says, "Well, actually, the economy will double in the next few years." Now, when capitalism was constituted by everything going on around Manchester and a few other hot spots in 1750, three percent compound growth rate was no problem. You're now looking at a situation where you're going to say three percent compound rate of growth on everything that's going on in East and Southeast Asia, Europe, North America and everywhere in the world. We're looking at a different kind of world.
The total economy back in, say, 1750 was about $135 billion. It was $4 trillion by the time you get to 1950. It's $40 trillion by the time you get to 2000. It's now $56 trillion. If it doubles in the next year, we're talking about $100 trillion. And by 2030, you're going to have to find three trillion employment, if you like, profitable opportunities for capital to operate at that point.
Now, there are limits, if you like, and I think we're hitting those limits environmentally, socially, politically. And I think it's time we started really thinking about an alternative. In other words, we have to think about a zero-growth economy.
AMY GOODMAN: What does that mean?
DAVID HARVEY: It means that instead of growing at three percent per year, you just keep it constant.
AMY GOODMAN: And how do you do that?
DAVID HARVEY: And that means a completely—it means it has to be non-capitalist, because that means there's not going to be any profit around for anybody to have. In effect, you're going to have to have a nonprofit economy. And how you do that, of course, is a big, big question. I'm not—I don't have the blueprint for it. But I think that this is one of the key questions we should be thinking about right now. And what disturbs me is we're going through this crisis right now, and we're not asking those kinds of big questions that we should be asking.
AMY GOODMAN: What do you make of the massive protest against the, well, smallest percentage of the bailout money, which is going to the executives, certainly something people can identify with?
DAVID HARVEY: Well, I got—actually, I got upset about all this fuss about the AIG. I mean, we're talking about $165 million in bonuses or 220? Last January 2008, the Wall Street bonuses collectively came in at $32 billion. OK. And at that time, two million people had already lost their houses. Figure, two million people have lost their houses; Wall Street rewards itself $32 billion. Nobody got angry about that. And I was extremely angry about that. It seemed to me this was class robbery. This is like the bankers going down into the hold of a sinking ship and grabbing all the gold and going up and getting on a lifeboat and then disappearing and then leaving everybody else on this sinking ship. And at that time, I thought that was outrageous. And that's $32 billion instead of this $165 or $235 million we're talking about.
That money is already gone. I mean, when this guy wrote in to the New York Times, kind of saying, "I'm not going to—I'm just going to give mine away"—he's going to give away $740,000 or something. And he said, "But my family is not affected." But there are people starving right now in many parts of the world. Children are starving because of this. Nothing's happening about that. And that seems to me—
AMY GOODMAN: So what's the difference between last year and now?
DAVID HARVEY: The difference between last year and now is that, actually, the thing has got much worse. I mean, the toxic assets, if you like, become more and more apparent. And we've had, of course, the destruction of the investment banks, Lehman going bankrupt and the others merging, and so on. So I think the difference right now is that Wall Street is clearly having to completely reconstitute itself.
But I don't think we should kid ourselves into thinking that actually there's not a lot of money—people are still making good money on Wall Street.
AMY GOODMAN: Who?
DAVID HARVEY: It's just it's consolidated now, as it were. We've got four major banks left in this country. And it's a tremendous centralization and consolidation of class power.
AMY GOODMAN: Professor Harvey, what is neoliberalism?
DAVID HARVEY: Neoliberalism, for me, was a political project, which formed in the 1970s. And it was a political project to try to consolidate and reconstruct class power. And it did it, if you like, through a whole kind of set of mechanisms about privatization, about free markets, individual responsibility, withdrawal of the state from social provision. But the state never withdrew from the economy. I mean, that's a myth. The state has been bailing people out all along. Actually, the savings and loan crisis, I mentioned earlier.
But as soon as the big guns get into trouble, the state bails them out. And this is what we call moral hazard, that actually because you're bailing out Wall Street all of the time, then Wall Street will take high risks. And they've taken immensely high risks over the last thirty years and again and again and again being caught out. And each time they get caught out, the state steps in and saves them. That's the connection, if you like, between the state and Wall Street. That's the connection that has to be broken.
AMY GOODMAN: What do you see as the role of social movements?
DAVID HARVEY: I think right now it's a desperate moment, in the sense that if we're going to come out of this crisis in any different kind of way, it's going to be because of the formation of very strong social movements that say enough is enough. We've got to change the world in a very, very different way.
Now, social movements of this kind don't sort of form overnight. They take a little while. I mean, it's interesting when you look back. In 1929, there's the stock market crash. The social movements didn't really start getting into motion until 1932, '33. It took about three years. Right now, I think we're in a legitimation crisis. They're trying to rescue the system as is. And I think more and more people are beginning to say this is an illegitimate system, and therefore we have to think about doing something different.
Out of that, likely to come, all kinds of different social movements. We have this movement, which is a relatively new movement, called the Right to the City movement. It's here in New York City, and it's several other cities in the United States. There's a national coalition. It's small right now, and it's getting its act together. But these kinds of things can grow very fast, very quickly. So there is likely to be many movements of that kind.
In other countries, there are already quite massive social movements. This country is a little bit behind on that trajectory.
AMY GOODMAN: And what would you identify as those massive social movements elsewhere?
DAVID HARVEY: In Brazil, for example, there are—there is a Right to the City movement in Brazil around housing provision and dwelling and so on. There's a landless peasants' movement in Brazil, which is very, very active and very successful in many of the things that it does. So, those movements are really very strong. There's a peasant movement in India, too, which is actually really quite, quite strong.
And so, I think there's a real moment here, where we also have to think about these things getting together globally, which is, of course, where the World Social Forum originated. And so, there are ways in which we can start to think about coordination between different parts of the world.
AMY GOODMAN: Professor Harvey, how does war fit into this? US is still pursuing the war in Iraq, though President Obama says that we will eventually withdraw there, but expanding the war now in Afghanistan, not just 17,000 more troops, then another 4,000—that made it 21,000—today the Pentagon asking for another 10,000 troops?
DAVID HARVEY: Right, right. Well, interestingly, there's two aspects to this. First, you know, since 1945, what you call the military-industrial complex, it's been a terribly important vehicle in American development. It has been the center of what we call military Keynesianism. I mean, it's the one sector where deficit financing was thoroughly permitted, and it was the one sector under Reagan that expanded immensely and has never been let go, in spite of the end of the Cold War. So there's been a very important economic function to what the military is about.
The second thing is that, as we've seen over the last couple of years, commodity prices are very unstable. And command over commodities and resources becomes absolutely crucial. So, in my view, a lot of the interventionism in the Middle East and elsewhere has been clearly built around US interest in controlling oil supplies. And it's not only about that, but it's very strongly connected with that, so that then arguments are made about, well, we've got to get rid of a dictator. Well, there have been plenty of dictators around the world the United States has not taken any notice of, because it didn't control oil. And so, the kind of war machine, if you like, and the covert machines starts to become very important in terms of maintaining corporate access to the resources of the world and, at some point, also to the labor resources of the world, not only the natural resources.
AMY GOODMAN: How do you see the US in relation to the rest of the world, the balance of power? US versus Europe, US and China—do you see China emerging as the major dominant economic power?
DAVID HARVEY: No, I don't see it becoming the major dominant economic power. I think there was this National Intelligence Council report, which came out last year. It kind of said, basically, the US is no longer going to be the dominant power in the world. It's going to be a very important player in the world, but we have to look forward to a multi-polar world, in which East and Southeast Asia, for example, is economically as powerful as the United States. The European Union, if it gets its act together, is likely to be as powerful as the United States. So the United States has to look towards a multi-polar world.
That's actually both unstable and potentially rather dangerous. Whether we like what the US has done with its domination, at least there was only the US versus the Soviet Union kind of world. When you start to look at the multi-polar world, you start to think back to what happened to the 1930s, when the groups decided they were going to go it alone and got into economic conflict between each other. And I worry about the future—
AMY GOODMAN: What do you mean, "the groups"?
DAVID HARVEY: At that time, the Japanese Co-Prosperity Sphere; Germany, with its own kind of interests; the British. And, you know, everybody was going it alone. And I think the threat of the G20 is what we're going to see as sort of a fracturing of the global economy along those lines. And that could be a good thing, in the sense that if there is fracturing and coalitions emerging at the same time, that's one thing, but if it turns into fracturing and then rivalries between the power blocs, I think that would be very dangerous.
AMY GOODMAN: Your assessment of President Obama?
DAVID HARVEY: I think he needs a really, really strong, powerful social movement behind him to do the things he really needs to do. Right now, he has to deal with Congress. And, you know, there's a group in Congress I would call the party of Wall Street, that is deeply implanted in the Democratic Party, it's deeply implanted in the Republican Party. And so, he can't do battle with Wall Street, given the significance of the party of Wall Street in Congress. I mean, for example, our New York senator, Charles Schumer, has raised immense moneys from Wall Street, and he's a great friend of Wall Street. And so, the Democrats are not going to go against Wall Street. And one way or another, the Republicans are not going to go against Wall Street. So. I don't know exactly where Obama would like to go, but certainly he can't go against Wall Street, unless a whole bunch of people really force him to.
AMY GOODMAN: Do you see neoliberalism as dead? And what gives you the most hope?
DAVID HARVEY: I don't see the neoliberalism as dead, if you say that neoliberalism is about consolidation of class power, because actually we're seeing the further consolidation of it right now, rather than the lessening of it. And that's what I—when I talk about the bank bailout, that's what it was doing. So I'm kind of concerned.
AMY GOODMAN: Were you for no bank bailouts?
DAVID HARVEY: Well, I was in favor of solving the foreclosure crisis. You see, if you've solved the housing crisis, the banks wouldn't be holding any toxic assets. If you had gone in and bailed out all of the people, there would be no problem on Wall Street. They wouldn't be sitting there with all the toxic assets. You wouldn't have the foreclosures. So we should have gone in there right at the beginning and actually held down the foreclosure crisis.
AMY GOODMAN: And why didn't they?
DAVID HARVEY: Because that would mean bailing out poor African Americans and people of that sort, and they're not concerned with that. They're concerned with protecting the bankers, not with protecting the people.
This then gives me hope, you see, because I think now that people might see it, that that is actually what's been happening over the last thirty years and is really highlighted now—I mean, it hits you in the face straightaway. You know, this is what's happening. And something different has to happen. Some sort of movement has to come out and say, "Look, enough is enough. We're not going to continue in this particular way."
AMY GOODMAN: Professor David Harvey, I want to thank you very much for being with us.
DAVID HARVEY: I thank you.
AMY GOODMAN: David Harvey is a Marxist geographer and distinguished professor of anthropology at the CUNY Grad Center. That's the City University of New York. The Limits to Capital, one of his books, A Brief History of Neoliberalism.