Democracy: The big issue
By Andrew Simms
LONDON (DPA): In a few days' time two things will happen that could reshape the global economy. The United States will elect a new president amid blanket media coverage. And, very quietly in New York, a door will close on the chance to influence the best kept secret in global economic governance -- the UN-led Finance for Development process.
The campaign that took Bill Clinton to the White House had as its slogan, "It's the economy, stupid". It answered the unspoken question, "What's the big issue?" If the question were now asked about globalization, the reply would be "It's democracy, stupid".
Two thirds of the world's countries lack democratic control over their economies. In an age when financial institutions proclaim transparency, a simple comprehensive list of countries that are subject to hugely influential agreements with the World Bank and IMF is not readily available, even to many of the bank's own staff.
But why does it matter? The poet Dante said that, of all the hidden truths, the "most useful and most unknown" was knowledge of temporal world governance.
If you tried to buy votes in a national election there would be allegations and court cases. At the international financial institutions, buying votes has been considered a virtue since Harry Dexter White of the U.S. Treasury Department said at the founding of the World Bank and IMF, "the more money you put in, the more votes you have".
That is how the Group of Seven wealthy countries, who don't use the organisations' services, came to control nearly 50 percent of the votes on their boards. It is the modern equivalent of 17th-century rule by aristocracy.
All the developing and transitional economies put together, who rely on the institutions' services, control only around four in every 10 votes. At the United Nations General Assembly those same countries have more than eight out of 10 of the votes.
Adding insult to penury, a committee set up to reformulate voting allocations at the IMF recently came to an embarrassingly wrong conclusion.
The so-called Cooper Report suggested a scheme that would increase the United States' already dominant influence, and shrink Africa's small voice. The fact that Asia, too, would benefit little from proposed quota changes is likely to encourage those calling for a separate Asian Monetary Fund, one more in tune with the region's needs.
The original vision for the UN included a role in global economic management to ensure more equal distribution of the benefits from trade and development. But, as the bank and fund have grown more influential, UN agencies have been undermined, attempts to control multinational corporations shelved and senior staff removed.
Conservative philosopher Karl Popper wrote that an open society needed democratic institutions. He believed only genuinely democratic institutions could solve problems. The World Bank and IMF have proved appalling at solving problems.
Popper also crystalized the inherent contradiction of the free markets, writing: "The paradox of economic freedom, which makes possible the unrestrained exploitation of the poor by the rich... results in the almost complete loss of economic freedom by the poor."
Seen like this the financial institutions become enemies of an open global society. While they aspire to be universal, they ferociously protect minority rule of the world economy. Under this regime the anomalies and inequalities of globalisation have darkly flowered. But now there is a chance to correct historical wrongs, and reshape global governance.
The UN has begun a little talked about process called Finance for Development. Technically, it is meant to try to give poor countries a better deal in everything from trade to aid. Its deeper mission is to write new terms of engagement between the UN and the World Bank, IMF and World Trade Organisation. But the first opportunity to influence the outcome and set the scope of the process will be over next week, almost before anyone is aware that it has begun.
The street protests that seem set to haunt every international economic meeting are just another symptom of the global democratic deficit. When the new U.S. president's advisers in the coming months wring their hands and inevitably cry, "Why are the protesters getting at us?" the president should turn to them and whisper, "It's democracy, stupid."
The writer is a former researcher at Christian Aid in London and head of the global economy program at the New Economics Foundation
-- Guardian News Service