[stop-imf] ZNet: Albert and Weisbrot / IMF and Vision

[Robert Weissman]

This post come from ZNet, information about which precedes the two pieces:

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IMF "Rescue" Won't Help Latin America
By Mark Weisbrot

When I was a child growing up in Chicago, we heard stories of lifeguards
who saved panicked, drowning beach-goers by first knocking them out with
a punch to the face, then hauling them to shore. This seemed like a
risky strategy to me, and I never knew if it actually worked.

The International Monetary Fund has a similar "rescue" strategy for
countries in financial trouble. Does it work? We are now seeing it
tested yet again in Argentina and Brazil.

Fearing "contagion" of the type that spread financial panic from Asia to
Russia to Brazil a few years ago, the IMF has offered a $15 billion
credit to Brazil. In order to qualify, Brazil will have to cut another
$2.5 billion from its budget, even as its economy is slowing and foreign
investment is drying up. Argentina is also being forced to cut spending,
despite being stuck in a recession for three years.

One problem with evaluating the Fund's policies is that most economies
eventually resume growth, and so the architects of austerity, "shock
therapy," or any other punishment can always claim success at some
point. South Korea eventually recovered from the Asian economic crisis.
Brazil grew at a respectable 4.0 percent in 2000, and Russia last year
registered its highest growth (over 8 percent) in two decades.

But these growth spurts followed IMF policies that clearly failed to
accomplish their objectives. The Fund's $41 billion loan to Brazil at
the end of 1998 was to stabilize the Brazilian currency; that currency
collapsed a few months later, losing 40 percent of its value. The same
was true in Russia: the Fund loaned billions of dollars to prop up the
ruble -- but it was the ruble's collapse that allowed the Russian
economy to recover.

In both of these cases, the IMF insisted that these over-valued
currencies had to be supported, no matter what the cost to the economy.
This meant high interest rates that cripple economic growth, budget
austerity, and massive borrowing to support the exchange rate.

Their only economic argument was that if the currency were allowed to
fall, the country would lapse into hyper-inflation (because of the
increased cost of imports). But both the Brazilian and Russian
currencies did collapse, and the hyper-inflation never came. Instead,
there was growth.

Now Argentina is being put through the ringer to save its over-valued
peso. Interest rates on government bonds have risen to 14 percent, and
the government has borrowed $40 billion in a deal arranged by the IMF.
For comparison, imagine our government borrowing $1.4 trillion (70
percent of our entire federal budget) in order to keep our own,
overvalued dollar from falling.

It would never happen here, and it shouldn't be happening there either.
Throughout Latin America, the expertise of the IMF's mad scientists --
always standing by with more loans and unpleasant elixirs to swallow --
is falling into increasing disrepute.

In fact, this is the great fear among the US foreign policy
establishment right now: that Latin Americans will decide that
Washington's cures are worse than any disease that they could catch on
their own, and will go their own way. Their nightmare: First, a
devaluation of the Argentine peso -- another failed showcase
macro-economic experiment. Then Argentina defaults on, or has to
renegotiate, its foreign debt.

Then Brazil elects a Workers' Party government in its national elections
next year -- something voters came within a hair of doing in 1990. There
is enormous public sentiment in Brazil for defaulting on its massive
international debt, and little that could be done to punish the country
if it did. (Brazil's economy is still fairly closed, with exports
amounting to only about 7 percent of the economy).

In short, the whole experiment in "neoliberalismo," as it is regularly
denounced among Latin Americans, could go down the drain. And well it
should. For 20 years now, Latin America has followed Washington's
economic advice. They have slashed their tariffs, swallowed IMF
austerity, and sold off tens of billions of dollars of state assets to
foreigners.

It's been a lot of pain, and no gain. Over the last 20 years, income per
person grew by a mere 7 percent in Latin America. This compares to 75
percent for the previous two decades (1960- 1980), when national
governments exercised much more control over their economic policies.
And the gap between rich and poor has also grown.

Summing up the Russian experience, Putin's economic adviser Andrei
Illarionov said recently "We didn't need IMF money before, and we don't
need it now. It causes nothing but harm."

Most governments in Latin America could say the same, and they will. The
only question is when.

Name: Mark Weisbrot E-mail: <weisbrot@cepr.net> Co-Director: Center for
Economic and Policy Research 1015 18th Street NW, Suite 200 Washington,
DC 20036 www.cepr.net



What Are We For? Part Two
By Michael Albert

Anti-globalization activists have a vision problem even after we
describe alternative global economic institutions (as in part one of
this two part commentary). Everyone knows that international norms and
structures don't drop from the sky. It is certainly true that once in
existence they impose severe constraints on domestic arrangements and
choices, but it is also true that global relations sit on top of and are
propelled and enforced by the dictates of domestic economies and
institutions. The IMF, World Bank, and WTO impose capitalist
institutions such as markets and corporations on countries around the
world. But the existence of markets and corporations in countries around
the world likewise propels capitalist globalization.

So when anti-globalization activists offer a vision for a people-serving
and democracy-enhancing internationalism in place of capitalist
globalization, we are proposing to place a very good International Asset
Agency, Global Investment Assistance Agency, and Global Trade Agency,
plus a foundation of more grass-roots democratic and transparent
institutions on top of the very bad domestic economies we currently
endure. The persisting domestic structures inside our countries would
continually militate against the new international structures.
Persisting corporations and multinationals would not positively augment
and enforce these new international structures, but at best temporarily
succumb to pressures to install them, perpetually emanating pressures to
return to more rapacious ways.

So when people ask activists "what are you for?" they actually aren't
asking only what are you for internationally. They also mean what are
you for in place of capitalism? If we have capitalism, they reason,
there will inevitably be tremendous pressures for capitalist
globalization and against anti-capitalist innovations. IAA, GIAA, and
GTA sound nice, but even if you got them put in place, the domestic
economies of countries around the world would push to undo them.
Capitalist globalization is, after all, markets, corporations, and class
structure writ large. To really replace capitalist globalization and not
just mitigate its effects, you would have to begin to replace capitalism
too. Efforts to improve global relations couldn't be an end in itself,
but would have to be part of a larger project to transform the
underlying root capitalist structures. If you have no alternative to
markets and corporations, many feel, your gains would be at best
temporary. This assessment is widely held and fuels and is fueled by the
reactionary slogan that "there is no alternative." To combat this we
need an alternative regarding international agencies and global
economics, but also an alternative regarding markets, corporations, and
domestic economies.

Capitalist economics revolves around private ownership of the means of
production, market allocation, and corporate divisions of labor.
Remuneration is for property, power, and to a limited extent
contribution to output causing huge differences in wealth and income.
Class divisions arise due to property and due to differential access to
empowered versus obedient work. Huge differences in decision-making
influence and quality of circumstances exist. Buyers and sellers one-up
each other and the broader public reaps what self-interested competition
sows. Anti-social trajectories of investment and personality development
result. Decision-making ignores or exploits ecological decay. Reduced
ecological diversity results.

To transcend capitalism, suppose we advocate the same values as used
above for global assessments: equity, solidarity, diversity,
self-management, and ecological balance. What institutions can propel
these values in domestic economics, as well as admirably accomplish
economic functions?

To start, we might choose to advocate public/social property relations
in place of privatized capitalist property relations. In the new system,
all citizens own each workplace in equal part. This ownership conveys no
special right or income. Bill Gates doesn't own a massive proportion of
the means by which software is produced. We all own it-or symmetrically,
if you prefer, no one owns it. At any rate, ownership becomes moot
regarding distribution of income, wealth, or power. In this way the ills
of private ownership such as personal accrual of profits yielding huge
wealth, disappear.

Next, workers and consumers could be organized into democratic councils
with the norm for decisions being that methods of dispersing information
to decision-makers and at arriving at preferences and tallying them into
decisions should convey to each actor about each decision, to the extent
possible, influence over the decision in proportion to the degree they
will be affected by it. Councils would be the seat of decision-making
power and would exist at many levels, including subunits such as work
groups and teams and individuals, and supra units such as workplaces and
whole industries. People in councils would be the economy's
decision-makers. Votes could be majority rule, three quarters,
two-thirds, consensus, etc. They would be taken at different levels,
with fewer or more participants, depending on the particular
implications of the decisions in question. Sometimes a team or
individual would make a decision pretty much on its own. Sometimes a
whole workplace or even industry would be the decision body. Different
voting and tallying methods would be employed as needed for different
decisions. There is no a priori single correct choice.
There is, however, a right norm to try to efficiently and sensibly
implement: decision-making input should be in proportion as one is
affected by decisions.
Next, we alter the organization of work changing who does what tasks in
what combinations. Each actor does a job, of course. Each job is
composed of a variety of tasks, of course. What changes from current
corporate divisions of labor to a preferred future division of labor is
that the variety of tasks each actor does is balanced for its
empowerment and quality of life implications. Every person participating
in creating new products is a worker. The combination of tasks and
responsibilities you have at work accords you the same empowerment and
quality of life as the combination I have accords me, and likewise for
each other worker and their balanced job complex. We do not have some
people overwhelmingly monopolizing empowering, fulfilling, and engaging
tasks and circumstances.

We do not have other people overwhelmingly saddled with only rote,
obedient, and dangerous things to do. For reasons of equity and
especially to create the conditions of democratic participation and
self-management, when we each participate in our workplace and industry
(and consumer) decision-making, we each have been comparably prepared by
our work with confidence, skills, and knowledge to do so. The typical
situation now is that some people who produce have great confidence,
social skills, decision-making skills, and relevant knowledge imbued by
their daily work, and other people are only tired, de-skilled, and
lacking relevant decision making knowledge due to their daily work.
Balanced job complexes do away with this division of circumstances. They
complete the task of removing the root basis for class divisions that is
begun by eliminating private ownership of capital. They eliminate not
only the role of owner/capitalist and its disproportionate power and
wealth, but also the role of intellectual/decision making producer who
exists over and above all others. They apportion conceptual and
empowering and also rote and unempowering responsibilities more
equitably and in tune with true democracy and classlessness.

Next comes remuneration. We work. This entitles us to a share of the
product of work. But this new vision says that we ought to receive for
our labors an amount in tune with how hard we have worked, how long we
have worked, and with what sacrifices we have worked. We shouldn't get
more by virtue of being more productive due to having better tools, more
skills, or greater inborn talent, much less by virtue of having more
power or owning more property. We should be entitled to more consumption
only by virtue of expending more of our effort or otherwise enduring
more sacrifice. This is morally appropriate and also provides proper
incentives due to rewarding only what we can affect, not what we can't.
With balanced job complexes, for eight hours of normally paced work
Sally and Sam receive the same income. This is so if they have the same
job, or any job at all. No matter what their particular job may be, no
matter what workplaces they are in and how different their mix of tasks
is, and no matter how talented they are, if they work at a balanced job
complex, their total work load will be similar in its quality of life
implications and empowerment effects so the only difference specifically
relevant to reward for their labors is going to be length and intensity
of work done, and with these equal the share of output earned will be
equal. If length of time working or intensity of working differ
somewhat, so will share of output earned. Who mediates decisions about
the definition of job complexes and about what rates and intensities
people are working? Workers do, of course, in their councils and with
appropriate decision-making say using information culled by methods
consistent with employing balanced job complexes and just remuneration.

There is one very large step remaining, even to offering a broad outline
of economic vision. How are the actions of workers and consumers
connected? How do decisions made in workplaces, and by collective
consumer councils, as well as by individual consumers, all come into
accord? What causes the total produced by workplaces to match the total
consumed collectively by neighborhoods and other groups and privately by
individuals? For that matter, what determines the relative social
valuation of different products and choices?
 What decides how many workers will be in which industry producing how
much? What determines whether some product should be made or not, and
how much? What determines what investments in new productive means and
methods should be undertaken and which others delayed or rejected? These
are all matters of allocation.

Existing options for dealing with allocation are central planning (as
was used in the old Soviet Union) and markets (as is used in all
capitalist economies with minor or greater variations). In central
planning a bureaucracy culls information, formulates instructions, sends
these instructions to workers and consumers, gets some feedback, refines
the instructions a bit, sends them again, and gets back obedience. In a
market each actor in isolation from concern for other actor's well being
competitively pursues its own agenda by buying and selling labor (or the
ability to do it) and buying and selling products and resources at
prices determined by competitive bidding. Each person seeks to gain more
than other parties in their exchanges.

The problem is, each of these two modes of connecting actors and units
imposes on the rest of the economy pressures that subvert the values and
structures we favor. Markets, even without private capitalization of
property, distort valuations to favor private over public benefits and
to channel personalities in anti-social directions thereby diminishing
and even destroying solidarity. They reward primarily output and power
and not only effort and sacrifice. They divide economic actors into a
class that is saddled with rote and obedient labor and another that
enjoys empowering circumstances and determines economic outcomes, also
accruing most income. They isolate buyers and sellers as decision-makers
who have no choice but to competitively ignore the wider implications of
their choices, including effects on the ecology.

Central planning, in contrast, is authoritarian. It denies
self-management and produces the same class division and hierarchy as
markets built first around the distinction between planners and those
who implement their plans, and then extending outward to incorporate
empowered and dis-empowered workers more generally. Both these
allocation systems subvert rather than propel the values we hold dear.
What is the alternative to markets and central planning?

Suppose in place of top-down imposition of centrally planned choices and
in place of competitive market exchange by atomized buyers and sellers,
we opt for cooperative, informed choosing by organizationally and
socially entwined actors each having a say in proportion as choices
impact them and each able to access needed accurate information and
valuations and each having appropriate training and confidence to
develop and communicate their preferences. That would be consistent with
council centered participatory self-management, with remuneration for
effort and sacrifice, with balanced job complexes, with proper
valuations of collective and ecological impacts, and with classlessness.
To these ends, activists might favor participatory planning, a system in
which worker and consumer councils propose their work activities and
consumer preferences in light of accurate knowledge of local and global
implications and true valuations of the full social benefits and costs
their choices will impose and garner.

The system utilizes a back and forth cooperative communication of
mutually informed preferences via a variety of simple communicative and
organizing principles and vehicles including indicative prices,
facilitation boards, rounds of accommodation to new information, and so
on-all permitting actors to express their desires and to mediate and
refine them in light of feedback about other's desires, arriving at
compatible choices consistent with remuneration for effort and
sacrifice, balanced job complexes, and participatory self managing
influence.

Is the above a full picture of an economic alternative to capitalism? Of
course not, it is too brief. But it is hopefully provocative and
inspiring.

.	Democratic workplace and consumer councils for equitable
participation

.	Diverse decision-making procedures seeking proportionate say for
those affected by decisions

.	Balanced job complexes creating just distribution of empowering
and dis-empowering circumstances

.	Remuneration for effort and sacrifice in accord with admirable
moral and efficient incentive logic

.	Participatory planning in tune with economics serving human well
being and development

Together these constitute the core institutional scaffolding of
participatory economics, a systemic alternative to capitalism and also
to what has been called centrally planned or market socialism. Are there
fuller formulations of this particular economic vision? Most certainly
there are. If interested, consult www.parecon. org for articles,
interviews, whole books, and further references.

The main point of all this, however, is that while in the long term the
ultimate answer to the cynical, reactionary slogan that "there is no
alternative" is to actually enact an alternative, in the near-term the
answer is to offer a coherent, consistent, and viable model of
preferable institutions and their dynamics. We need domestic and
international economic vision that everyone can understand and refine
and make their own. We need it to generate hope, to provide inspiration,
to reveal what is possible and valuable, and to orient and also
democratize our strategies so that they might take us where we desire
rather than in circles or even toward something worse than what we now
endure.