Global Economics
The Connection to Health
In today’s globalized world, the health of literally billions of people is closely tied to economics. Major forces in economics today include the International Monetary Fund (IMF), the World Bank, the World Trade Organization (WTO) and multinational corporations. All of these organizations have certain things in common: they are dominated by wealthy nations and corporations, they are used by the wealthy to force policies in poor countries that are not in their interests, they do not place a high premium on making health and welfare services available to all, and they pursue policies that widen the gap between the rich and the poor. Debt servicing continues to plague communities around the world as they try to build local infrastructure in the face of international pressures to privatize public services and cut spending in health, education, and sustenance programs. In a multiplicity of ways the economic policies that are being implemented on a global basis are detrimental to the health of individuals, communities, nations and ultimately to the entire ecology upon which we all depend.
Key Issues
World economics is at the present time dominated by “neo-liberal” economics. As the brief but informative article Neoliberalism: a primer summarizes it, “neoliberalism promotes the freedom of markets to operate with minimal regulatory interference, including rules that may protect the environment and public health, or govern wage and price controls.” At its core we find the belief that the profit motive, if left to operate by itself, will eventually best meet the needs of all people in all spheres of life. The tenets of neoliberal philosophy are now being applied even to areas that have most often been viewed as the responsibility of the state, such as providing for health and welfare services, education, and correctional facilities. There are a number of very serious problems associated with this simplistic view of economics:
- No safety net is provided for those who are not able to meet their basic needs within the system
- In a globalized context, labor has been unable to organize adequately to provide a balance the the profit motive, and to provide workers with some control over their working conditions.
- As Herman Daly makes clear in his article, Sustainable Development: Definitions, Principles, Policies the current neo-liberal approach with its emphasis on continuous growth is not sustainable.
- Especially in a globalized context where as of yet it is impossible to establish globalized systems of control, the real costs of producing products can be externalized with devastating effects of the environment.
- The neoliberal commitment to giving free reign to multinational corporations that are motivated soley by the profit motive is leading to a dangerous increase in the gap between the rich and the poor.
- Services that are needed but which are not necessarily that profitable – such as education for non-wealthy people – tend to be under-financed.
- Especially in social services, other values, such as the humane treatment of people and involving consumers in decision making are displaced by the profit motive.
The neoliberal agenda is being forced on the word by the “Bretten Woods” institutions (the World Bank and the International Monetary Fund) working in combination with the large multi-national corporations. David Korten, in his article “One World -- One Governance System” points out that allowing these institutions complete control of the world economy without restraint by any elected governments creates a number of serious problems – the loss of democratic control being one of them. The World Trade Organization must also be included in this critique. As Korten makes clear, “the WTO has consistently given priority to trade over concerns for labor, health, food safety, food security, and environmental standards.” His suggestions with regard to these areas of concern are well worth considering.
Because the inefficient and highly centralized system of the Soviet Union eventually collapsed, many have concluded that only a system that is as extreme in the opposite direction makes sense. In fact, however there are economies that have done quite well in meeting the needs of their people while aggressively rejecting many of the neoliberal tenets. One example is explored in the article Sweden -- A Third Way This article does not contend that Sweden is the final model that all economic systems must use. It does suggest, however, that a more balanced system has proved itself workable, and that that it has met the basic needs of its people better than economies that are dominated by the neoliberal philosophy.
Third world debt provides World Bank and the IMF its strangle hold on developing countries as it forces its sometimes disastrous policies upon them. The Jubilee Research institute provides an excellent critique of the role of third world debt in the Globalization process.
The structures of control supported by neoliberal policies – the multinational corporation and the institutions that support them – are just as centralized, just as “top down” in their decision making, and just as alienating to people who must live in the world that they create as were the centralized bureaucracies of the old Soviet Union. Again it would seem worthwhile to search for alternatives. Worker owned businesses are one alternative that has worked quite well in number of situations.
How do we know whether we are making “progress”? In economics usually the growth in the Gross National Product is used as the primary measure. This is a problem on at least two counts: 1. It is predicated on the assumption that continuous growth is desirable, when in fact such growth is not sustainable. 2. It reflects a rather narrow understanding of the purposes of an economic system and the meaning of progress. An economic system should provide for the material, health and welfare needs of all of its citizens without creating inhuman or exploitive environments or destroying the ecology. Given an enlarged understanding of what an economy should do, we need an enlarged way of measuring when it is successful. The article Gross National Happiness suggests the general idea that needs to underpin the much needed new ways of measuring economic success.
The multi-national corporations and their supporters have taken advantage of some of the dislocations connected with globalization to create a situation that is full of serious inequities, excesses and dangers. The problems have been so overwhelming and pervasive that they have caused many well intentioned people to question the desirability of globalization per se. The article “You Can't Turn Back the Dawn‘’ suggests that globalization is inevitable, and that if it is managed in an equitable, reasonable and democratic manner, it may even be a blessing.
Connections With Other Topics
The impact of economic policy and practice is so pervasive that there is no topic that is not related to it. Some of the most obvious and crucial connections are indicated below:
This is undeniably one of the most important connections. Whenever neoliberal policies are implemented it becomes much more difficult for poor people, or even middle income people, to access needed services. One’s own life becomes a commodity. If you can’t pay for life saving medicines, you die.
Corporations are essentially a-moral. Their one imperative is to make money. Many people who work for corporations may be quite ethical, but they must set aside their ethics if they come into conflict with the profit motive if they are to survive in the system. The arms industry, big pharmaceuticals, and the tobacco industry all actively pursue policies that will result in the death of large numbers of persons in order to make a profit.
Neoliberal economics undercut democratic processes in a number of ways. The root difficulty is that multinational corporations, rather than any elected body of people, have become the real rulers of life in virtually every sphere. With advertising multinationals create desire. With control of the media, they manufacture opinion. They buy elections and then inundate the elected officials with lobbies. Globalization has enabled multinationals to elude the control of any government.
Virtually all corporations externalize whatever costs they are able to. Their impact on the the environment is one of the easiest costs to externalize. The consequences for the ecological integrity of the earth are devastating.
Because of the pervasive influence of big corporations in life, schools have come to see themselves as existing solely to prepare children for their places in the work force. Corporations want a work force that is trained to respect authority, work hard for extrinsic rewards, and obey orders. Schools therefore do not teach students to think, to question established opinions, or to act out of their own desires and interests.
The policies of neoliberal economics are leading to a widening of the gap between the rich and the poor. The resulting inequity is the root cause of a great deal of the violence that we see, and will continue to see, in the world today.
As has been rightly understood by many political activists, if we want real changes in society we must target the inequitable and undemocratic policies of the World Bank, the International Monetary Fund, the World Trade Organization and multi-national corporations. Only be bringing such organizations more under the control of elected governments can globalization begin to take a more positive turn. The notion that corporations have a God given right to not be bothered by the state is absurd. They are creations of the state.
Articles
Economic theory
Bretton Woods institutions
Multinational Corporations
World Trade Organization (WTO) and Free Trade
Third World Debt
Labor
Worker Owned Businesses
Measuring Progress