The conference “Russia, world crisis and WTO” with more than 40 participants from different countries and Russian regions was held in Moscow 7-8 December backed by the Rosa Luxemburg Foundation (Germany) and the Institute of Globalization and Social Movements (Russia).
The reasons of the ongoing crisis, possible future scenarios of its development and post-crisis world structure – these issues became the main subjects of discussion at the conference section “Neoliberal strategies and the world economic crisis”.
Trevor Evans, professor of the Berlin school of economics, described the logic and the stages of development of the modern crisis as a result of moving finance of capitalist economy out of public control, as well as a result of the dismantling of the post-war economic model with its state mechanism of influence on politics, economics and financial sector.
Professor Andrei Kolganov sees the cause of the crisis in the exhausting by capitalism its growth possibility mainly due to the reducing of its extensive growth possibilities. Capital is not interested anymore in stimulation of the people’s income growth. As a result it comes to the third world countries, but those countries with cheap labor force gradually face the beginning of the struggle for working-people rights. The countries with lower labor price face insufficiency of qualified workers. Developed countries face employment cuts and production reducing. Possibilities of exploitation of the cheap but qualified labor force are approaching to its limits – said Mr. Kolganov.
Thus, accumulated capital could not be profitably invested anywhere except financial sector. So, it rushed there “blowing financial bubbles”. The “bubbles” began to burst 1999-2000, but this process was successfully delayed or stopped that time. However, we see the downfall of the global financial pyramid in 2008.
Investments were put not in real economy sector but primarily in financial sector, media and information technology or in such specific production branches as military-industrial complex.
Thus, according to the opinion of Mr. Kolganov, the cause of the crisis lies in the fundamental nature of the capitalist economy, though its direct preconditions are market deregulation, capital flows moving out of national control and the activity of WTO.
Alexander Buzgalin, doctor of economics, Moscow State University professor, pointed that the world came back to the usual cyclic crisis (though in financial sector). Its reasons should be seen either in the returning to the “old capitalism” (of the XX century beginning) due to the neoliberal reforms, or in the system crisis due to the fundamental defects rooted in capitalism. Global problems appeared unsolvable – social-democratic institutions reject power and capital while liberal mechanisms do not work.
Certainly, there should be mentioned the postulate of capitalism apologists about “temporal difficulties”, but it can hardly stand up to criticism.
William Engdahl, historian and researcher of the geopolitical processes, considers crisis as a dollar system crisis. He emphasizes that the world dollar expansion began to develop gradually since 1946. Since 1971 ‘dollar was not secured by gold anymore but by US army’. Asian crisis 1998 became the next step of this system – American financiers opened financial markets of new industrial countries and began to kill these tiger economics. This system can be headed by Obama as well as by Donald Duck It doesn’t matter. It will be anyway connected with war – pointed Engdahl ironically.
A very exotic but original theory of the crisis origin was proposed by Alexander Blinov, engineer from the town of Vysniy Volochek (Russia). He supposed that money is a kind of live system with its own ability to multiply itself that goes out of control. While approaching certain stage it bends people to its will. Money can win soon, so there would be no need in people at all.
Although, professor Buzgalin agreed with one of his points, he told about the works of his student Levina, who introduced the term “homo finansus’ to define a new people generation with financial part of life as the most important.
Dot Keet (SAR) and Christian Felber (Austria) paid attention mostly to the specific features of and social effects of the crisis. Dot Keet pointed that while crises of capitalist system happen constantly, the modern crisis raised in financial sector had later on overgrown it as a system crisis affecting food providing of the planet population and ecological problems as well.
Christian Felber pointed that all modern financial policy is a part of liberalization policy developing since 70-s. Social positioning of modern power (in Austria at least) has shown its worth in bailing out with the state finance a private bank that provides services only for rich people. Meanwhile the state doesn’t take any steps to limit unemployment and poverty.
While discussing prognoses of the crisis development and post-crisis development, participants proposed a large scale of possibilities to solve the problem.
Israeli professor was one of a few people there who expressed his opinion that capitalist crisis is not so fatal. “We underestimate the ability of capitalism to evolution. As Hodorkovsky said: ‘speculator is always better than any regulator’ – said he. He reminded that Israeli hi-tech companies don’t pay dividends because share speculation is considered to be profitable.
The way out of crisis probably lies in searching new technologies and possibilities of investment of the pension funds finance accompanied with the forbiddance to sell out shares half a year after its buying. These means should partly limit uncontrolled development of the finance speculation – the main cause of the crises. Economist Trevor Evans pointed that big companies are forming the line of pressure upon smaller companies and workers, thus, intensifying crisis. He expressed also his opinion that the world would be decentralized after the crisis. The role of China will increase while the US domination would come to an end.
Alexander Kolganov thinks that capitalism will outlive the crisis limiting itself with a ‘compromise’ and will use financial machinations more carefully. The capitalist economy is approaching its growth limits while it follows its own basis principles. So, the question is: ‘when it will run across absolute limits to growth as a means of production’? Treating the crisis by money infusion into financial structures (what some governments use in present situation) is like ‘treating fire by kerosene’.
As to the Buzgalin’s opinion, the crisis can lead to one of three possible results:
a) to the victory of neoconservatism and isolationism (among ‘empires’ and national-liberation movements as well);
b) to the renaissance of traditional social-democracy but without social-liberalism (its hardly believable);
c) to the ‘Utopian version – world revolution’.
It is very difficult to predict how the post-crisis world (including Russia) will look like. We should not consider the process of nationalization (possible as a result of crisis) as a certain gift for the lefts and democratic movements. We see some dangers of such nationalization too - it can be a mechanism of greater pressure and exploitation of society as well as a method of greater alienation of society from political and economic processes.
The section devoted to ‘The aims and principles of WTO’ revealed two-faced character of this organization. On the one hand, it positions itself as an organization aiming at equalization of the global economic and social space. But it’s a very specific kind of equalization. In the sense, it positions itself as a noble organization aiming at a democratization and humanization of the world. On the other hand, such kind of equalization quite the contrary hides increasing inequality as well as increasing possibilities of leading countries to control less developed countries and prevent them from the effective socio-economic development. The main secret of the newest kind of expansion is an applying equal measure and equal principles to the primary unequal regions which cannot be equally effective when using these principles. Quite the contrary – they lose.
Foreign experts - speakers of this section have been for a long time researching the activity of WTO, that seems to be distant and abstract for many Russians.
Dot Keet reminded that it is impossible to enter WTO if not to accept principles of neoliberal policy in different areas – from labor market to educational sphere. Norms of WTO require minimization of the state role and the abolishing of the native companies’ preferences. In the SAR the native state educational institutions exactly get more financial support in order to overcome the effects of apartheid policy. However, Australian and American universities require equal state financiering for themselves when they open their branches in the SAR.
WTO management often acts using double standards. It uses sanctions, for example, against states that support their agriculture, though it ignores subsidizing by the US and EU own farmers. The US ignores many resolutions of WTO as a matter of principle.
Probably the only positive aspect of WTO is the possibility of the ‘third world countries’ to unite and together resist the policy of western countries. Nevertheless, biased approach of the WTO management to the members makes the struggle difficult.
Economically weak countries are often pressed in order to crush them, as it happened in case of Kenya.
Trevor Evans, professor of the Berlin school of economics, stressed the aggressive expansion (with the help of WTO) of the US agriculture production (called ‘American black gold’) including genetically modified products (GMP). The US reached such an influence in this area due to the Reagan reforms of the mid-80-s when they could wage a new attack in this direction. Although there were important steps in this direction a bit earlier (that allowed to create dependence of the USSR from the US food supply in the 70-s backed by Henry Kissinger diplomacy). Such policy was also baked by Rockefeller Fund.
The countries that tried to forbid importing of such products or to mark it at least were blamed for establishing food barriers. In June 1987 the US came out against some countries’ requirements of food safety. The US, Japan, Canada tried to push other countries out of this market sector. Using the defense of the people’s right to choose, WTO ‘advocates’ (defending GMP) achieved quite the opposite results. The US confirmed that it follows such direction when the US Supreme Court approved the right to patent GM products and crops.
Trevor Evans thinks that Russia could take up an important place on the international agriculture market as an exporter of green production, so, entering WTO could only impede it.
Christian Felber (Austria) noticed that WTO is not a democratic organization. It is out of the UN system being an example of ‘institutional autism’. Similar structure of the UN Conference on Trade and Development was rejected by rich countries because it was too active (in theirs opinion) in supporting interests of the third world countries. As a result countries of the ‘golden billion’ created WTO. Following the same logic the US didn’t want creating of the International Labor Organization in its time.
As to the people’s support of WTO in western countries – 90% in Austria are against it.
Moreover, Felber severely criticized theoretical ground of WTO activity based on liberal doctrine of Adam Smith and David Ricardo. Providing that such theories were right for the XIX century when economics could hardly expand beyond its limits, nowadays such theories have lost urgency due to the development of transport system and new technologies.
He emphasized that China achieved economic success but didn’t follow WTO requirements, though formally being its member.
Don Keet noticed that WTO doesn’t take into account different level of the members’ economic development. It too often uses tough policy. A hard pressure was put upon Kenya when this country tried to resist some WTO requirements.
Conference section called ‘The influence of socio-economic crisis on socio-labor relations’ was being held at the same time. Karin Cleman, Andrei Demidov (Institute for ‘Collective Action’) and other participants told there about their views on prospects of labor discrimination resistance. It was the mostly visited section showing the urgency of the subject.
Employment situation was characterized by all speakers as tremendous. According to the government’s prospects the level of unemployment will be more than 7 million (including 2 million of officially unemployed) but with the exception of workers in forced leaves and working short week.
All abovementioned breeds escalation of xenophobia and fascism. Such situation can come out of control any time and lead to spontaneous riots. ‘It’s a way to nowhere’ – said Karin Cleman (chief of the ICA). The only constructive way out is a development of trade-union movement.
One of the speakers noticed that while power is afraid of social burst it begins to prepare series of preventive measures ranging from public receptions to ‘anti-crisis’ headquarters attached to the local departments of internal affairs.
As to the trade-unions – their members appear to be the first to cut. When employer chooses somebody to fire - he prefers to get rid of rebels. Trade-unions active workers constantly face this problem when employer tries to evade the labor code point about impossibility to fire elective body members without trade-union approval. This point is also used by trade-union active workers who elect as many co-chairmen and assistants as possible. Trade-union is also useful concerning another problem – employer is obliged to inform trade-union about future cuts 3 months before (workers – 2 months before).
Well-organized trade-union is an effective form of collective labor rights defense. A man entering trade-union can rely not only on support of his\her colleagues but also on support of all-Russian, international trade-union federations and solidarity campaigns.
‘It is necessary to help trade-unions and their potential members to find each other’ – thinks assistant director of ICA Andrei Demidov. On the one hand, there is a mass inquiry of information about possibilities to resist pressure of an employer. On the other hand, real trade-unions are still poorly presented in information space. Moreover, these trade-unions are too weak. They have no necessary resources for the development of information and consultation work. The number of appeals to lawyers concerning labor rights increased lately while the number of people able to give a professional answer and help remains the same.
Round-table participants consider it necessary to inform workers about their rights, methods of its defense and to prepare information materials. The question is about preparing of small instruction booklet called ‘Attention! You can be fired!’ with popular stated strategy of struggle ranging from individual court appeal to creating trade-unions.
This instruction booklet should emphasize the necessity of collective struggle strategies as far as individual defense after reforms of the labor laws and due to the courts’ corruption became not so reliable. Trade-unions representatives promised to make such instruction booklet ready soon.
The next point of discussion – forming set of anti-crisis claims to power and employers including the most important one – to change trade-union legislation. Although, ‘United Russia’ and the Federation of Independent Trade-Unions block such amendments declaring that it is inexpedient to change labor laws during the crisis.
There also has come the time to approve set of anti-crisis amendments such as: delays of credit payments, abolition of commercial secret of the enterprises that has declared mass cuts.
As said Peter Zolotaryov, chairman of the trade-union committee ‘Unity-AutoVAZ’: ‘coordination of demands with the trade-union ranks and collecting signatures is in the process of work’. Other trade-unions are also proposed to join this process.
Only mass public campaign can obviously force to insert such alterations. It was also stressed by Jisilda Lima - Brazilian trade-union organizer. She gave an example of Brazilian trade-unions that organize mass demonstrations twice a year to support their claims. Russia still has no such experience. Actions and campaigns are weak, but such attempts need to be done. It’s necessary to learn.
Don Keet at the conference section ‘Russia’s commitments in the view of entering WTO and its socio-economic effects’ told about cases of WTO pressure upon countries that decided to support their own economies to the detriment of western capital and transnational corporations. She stressed that every country can bring an action against another one to the WTO court if it decides that its corporations are exposed to discrimination on the territory of another country. Thus, Indonesia was subjected to sanctions for subsidizing own agriculture. So, Russia can wait for sanctions too if it wants to subsidize its agriculture. Besides, stressed she, WTO can just disappear in some years as a result of crisis, while crisis would crush those who would like to liberalize their economies. ‘WTO is a dead-end – a way to nowhere. The longer I live – the more I’m convinced of it’.
She also stressed that it’s not the best time now to enter organization that forces to use methods of economic deregulation while all other countries are forced to use protectionism. It would be better for Russia to unite with CIS countries and to look for partners in this direction.
Christian Felber reminded that WTO will interfere in ‘public services’ of each country including education, health services, power engineering and water supply. It’s an attempt to open for capital new ways of investments that are nearly exhausted in other directions.
Meanwhile, neoliberal theorists always stress that private sector would more readily invest into the area of its own engagement providing there lower prices. However, in case of public services it’s not always so. In Great Britain, for instance, entire drinking water supply became private – that’s led to the firing of 70% of personnel. Water prices were raised so high that poor people couldn’t pay for water. Moreover, water quality had dropped so much that company representatives have been brought under inquiry.
Privatization of British railroads, Californian energy supply system as well as Austrian postal system also led to disastrous effects.
In addition, it is impossible to abandon such policy within WTO. According to the norms of organization, economic deliberalization during the first three years after entering WTO is forbidden. Then it is possible only with approval of all other members (there are more than 150 of them, so it makes this way unreal).
Alexandra Zhdanovskaya (Russia) pointed at negative role of WTO policy concerning ecology, what was also emphasized by ‘Greenpeace’ representatives.
WTO leaders come out against Kioto Report and Washington Agreement on Endangered Species Protection. They do not recognize Basel Convention on hazardous wastes. They direct WTO member countries toward maximum export of natural resources.
Moreover, WTO court consists of people who worked before for big corporation (e.g. ‘Nestle’) – that can evoke nothing but suspicion of their bias. It’s a mechanism of pressure but not a method of fixing justice. The EU has run across the US pressure concerning European wish either to stop GM product exporting from the US or to mark it in the proper way. In this case the US National Committee on Free Trade (in addition to WTO) became an organizer of the campaign against EU, declaring that claims to GMP are anti-scientific.
Gulnara Aitova (Moscow, the Institute of Philosophy of the Russian Academy of Sciences) devoted her speech to the negative role of WTO in educational sphere. WTO requirements lead to the standardization of education as well as to the entire knowledge transferring into the sphere of money-commodity relations. She also touched upon the problem of Russia’s joining Bologna process. She emphasized the interdependence of both processes in the frames of imposing globalization – attempts to include Russia into WTO and the advance of Bologna process. Anna Ochkina, sociologist from the town of Penza, calls this process ‘mini-WTO’.
Moreover, if formerly it was declared that the innovations of Bologna process would affect only private higher educational establishments, nowadays it became quite clear that such innovations would be spread over state ones too. Russia must accept the standards declared by Bologna process by 2010-2011.
Gulnara Aitova stressed also that bachelor’s degree introducing before September 2009 is illegal, so, this point can be used while opposing the process.
Lika Shershukova, the representative of the International Trade-Union of Food Industry Workers, pointed that WTO policy helps to rise the number of starving people, first and foremost – in agriculture countries while international investments do not improve people’s life quality. International labor division can also lead toward disastrous effects. Such division was formed during globalization times when countries entirely began to turn toward the production of expensive but temporally demanded production (e.g. palm oil instead of rice and grain).
The idea of using biofuel also leads to negative effects. Properly speaking, it is not cleaner than traditional fuel, but its production requires using of agriculture products.
She gave an example of other WTO-like international organizations including NAFTA (North American Free Trade Agreement) where corporations also have right to bring in an action against countries including prosecution for ‘the lost profit’. As it was in the case of ‘Ethyl’ corporation that brought in an action against Canada when it forbidden some toxic petrol components. ‘Ethyl’ made Canadian government to recede and pay compensation.
Christian Felber touched upon not only WTO but other WTO-like international financial organizations (like NAFTA) that support the interests of international capital. Corporations in the frames of this association have right directly to bring in an action against states to the tribunal of the organization, while states can bring in an action to WTO court only against other states.
Trevor Evans emphasized that Russia should not take China as a pattern in this case as far as Beijing’s decision was more politically motivated than economically profitable.
Dot Keet stressed that due to Russia’s resources, Europe and the West need Russia more than Russia needs Europe and the West. That’s why Russia shouldn’t yield to pressure and enter WTO. ‘You are Africa for Europe’ – stressed she.
At the conference section ‘Protests against WTO as a part of resistance to neoliberal regime in Russia and in the world’ Thomas Seibert (Germany) told about actions of German alterglobalists (including well-known demonstration in Heiligendamm 2007). Then Christian Felber gave examples of such actions in other countries of the world, e.g. actions against corporations that have taken control under water trade in Bolivia.
In the morning of December 8, the summary report containing conference conclusions was made public. Press-conference presenting conference summary to journalists was held at 12.
Thus, international experience and analysis of situation within and around WTO both show that entering this organization in crisis time would be for Russia a way to nowhere. Although higher officials would hardly be affected by such kind of information, Russian citizens who don’t think that ‘it doesn’t matter’ would set to thinking over it and draw proper conclusions.