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The Cloudland Collective: G20 is neoliberal and dangerous

The G20 may not make decisions that can be imposed on member states. It may not have a public service working for it that can monitor to what extent member states have implemented G20 recommendations. Yet it is the most significant economic forum in the world. It serves to streamline neoliberal policies across the 20 leading economies and is a very real threat to our communities and environment.

The most significant discussions in the G20 do not occur amongst the “leaders” but between national finance ministers. In practical terms they map out a direction for their national economies in accordance with the neo-liberal principles that characterise the G20.

Extraordinarily, following the most devastating economic crisis since the 1930s, widely understood to have been caused by unregulated capitalism, the G20 remain committed to breaking down barriers to the free operation of the market. Far from the crisis spelling the demise of the neo-liberalism, G20 member states are convinced that neoliberalism is still the most effective way to restore profitability by making the majority of citizens shoulder the burden of economic turmoil.

Although there is some acknowledgement in recent G20 documents that policies attacking wages will have a detrimental impact upon consumer confidence, the main objective of the G20 today is to ensure that there is maximum support amongst member states for neo-liberal policies. The determination to stay the neo-liberal course is evident in the practical measures adopted by each G20 economy at the end of each summit. Annex 3 of the 2013 Petersburg Action Plan, is highly instructive. Buried beneath the doublespeak we find plans to cut social spending, subject what remains of the public sector to market mechanisms and further entrench corporate rule. Here are a few examples:

Canada:

                  “Adjusting the Public Service Pension Plan so that public service employee contributions equal, over time, those of the employer.” (Forcing workers to pay more for their retirement.)

“Budget 2012 also committed to ensuring  that the Old Age Security (OAS) pension and the Guaranteed Income Supplement (GIS) remain on a sustainable path. The age of eligibility for the OAS pension and the GIS will be gradually increased … from 65 to 67” (Cuts to age pension.)

European Union:

Economic governance – “On various occasions, Euro-area Member States have committed to provide support, through the European Financial Stability Facility … to programme countries implementing their adjustment programme.” (European Stability Mechanismc are similar to Structural adjustment Programs used by the IMF. ESMs spell out the austerity measures a nation, such as Greece, Portugal and Spain must endure in order to get more credit)

India:

                  Structural reforms – “The Government is promoting PPPs as an effective tool for bringing private sector efficiencies into the creation of economic and social infrastructure assets and for delivery of quality public services.  Major initiatives have been taken. . . By the end of 2012, over 900 PPP projects are at various stages of implementation…”  (PPPs are based on the flawed premise that the private sector can deliver better results than the public sector.)

Indonesia:

                  Fiscal policy – “Improving design and effectiveness of spending including revisiting subsidy mechanism and focusing budget more on capital spending, and improving the quality of fiscal decentralization.” AND “Cuttting oil subsidy by adjustment of fuel prices. Diesel price rise IDR 1,000 & Premium price rise IDR 2,000/litre.”  (Announced cuts were devastating for poorer Indonesians.)

Italy:

                  Structural reform – “Public expenditure will continue to be rationalized, including in relation to the levels of government and the costs of doing politics, also to ensure transparency and fairness. The tax system will be made more growth-friendly” (Cuts to services as well as the levels of corporate tax levels. A clear example of shifting wealth from the majority to the corporate elite.)
AND “As part of the overall effort to increase the efficiency of the Italian economy, the Government intends to pay special attention to: a) the liberalization of sectors such as local public services, including transports, also by strengthening theannual law on competition.” (Introducing market mechanism into the public sector.)

South Africa:

                  Fiscal policy – “Government is committed to remaining within its expenditure ceiling. New policy initiatives will be financed from savings, efficiency gains and reprioritisation over the next three fiscal years.” (Public sector cuts.)

AND “Intermediate objectives: reduce growth in expenditure, and change the composition of expenditure towards infrastructure investment. (Public resources redirected to infrastructure projects aimed at supporting business.)

Turkey:

                  Structural reforms – “Privatization of 19 out of 21 electricity distribution companies has been completed. The privatization of remaining distribution companies is planned to be completed by the end of the 2013.” AND “Work on privatization of public inactive properties and electricity distribution companies, highways, bridges and harbors will continue”.  (A clear neo-liberal agenda.)

United Kingdom:

Structural Reforms – “Reforms to the welfare system continue to build on the Government’s commitment to deliver a progressive tax and welfare system that is affordable, fair and provide the right incentives for people to work.” AND “The total benefits payment cap will increase the incentive for people on out-of-work benefits to find work, with households where somebody is in work set to be exempt from the benefit cap. The cap … will be completed nationally by the end of September 2013.”   (A return to workhouse approach to welfare. The assumption is that unemployment exists because people are not really committed to working rather than there being structural obstacles locking people out of the labour market.)

Fiscal reform – “At Autumn Statement 2012, the UK Government announced that permanent savings from current spending in the Spending Review 2010 period, specifically £4 billion from Resource Departmental Expenditure Limits and £2.6 billion from current welfare spending over 2013-14 and 2014-15, will be used to fund £5.5 billion of additional investment in infrastructure and support for businesses in the short term.” (Shifting resources from the majority to the corporate elite)

                  The cuts to the public sector being undertaken by G20 member states flows directly from the most recent G20 action plan which explicitly backs the notorious Structural Adjustment style policies of the IMF and the World Bank, policies which have caused immense suffering in many nations in the Global South. “Events in recent years have shown the importance of debt sustainability for all. We, therefore, endorse continued attention to this issue by the IMF and the World Bank. We also support the implementation of the IMF-World Bank Debt Sustainability Framework for Low-Income Countries and will take the Framework into consideration in order to better inform our practices and promote sustainable financing and sustainable growth and development through appropriate channels.” (G20 Leaders Declaration September 2013, Russia).

The G20 do not want to see movements against cuts to jobs and services put pressure on governments, or impose restrictions upon the flow of capital across borders, or uphold laws that protect working conditions and the environment, or default on debt repayments. This is the real intent behind austerity in Europe. We can play our role here by demonstrating to Abbott, Newman, as well as to Obama, Merkel and Cameron that we will not allow our living conditions and our planet to be sacrificed to keep their sick system standing.

Neo-liberalism

                  Neo-liberalism is both an ideology and an economic strategy. It emerged during in the mid-1970s following the end of more than 2 decades of economic growth.  Before the world economy slowed around 1973 the platform for the next phase of the global economy had already been established. World trade was truly global and firms were directly investing in countries outside of their national base. The new period of crisis forced governments to rethink how they could best look after the interests of the big corporations within a globalised context.

Neo-liberalism as an economic strategy offers corporate elites and governments an approach that would force ordinary people to bear the burden of the crisis while shifting government resources to the private sector. The ideological component eroded people’s sense of solidarity – society did not exist, there was just a collection of individuals battling each other to stay afloat.
This kind of competition was portrayed as “natural” as was the operation of the free market. What was “unnatural” were attempts by governments or citizens to obstruct the free play of market forces by constructing universal health care and passing legislation to protect the environment.

The new doctrine required prophets and warriors. It found them in the form of Milton Freidman who advised Pinochet how to reorganise the Chilean economy after the opposition had been murdered in football stadiums. In Britain, Thatcher believed that the unions had to be destroyed in order to liberate the market. In Australia the Hawke/ Keating governments deregulated huge chunks of the public sector.

Wherever neo-liberalism has been embraced it has had a number of characteristics: government owned assets are privatised; market mechanisms are introduced into the public sector; government services are outsourced; the private sector receives massive levels of public money; the banking sector is deregulated. And all of this was apparently quite “natural”.

The “reforms” can often go alongside episodes of state intervention in the economy as governments attempt to deal with the fallout of economic crisis. This kind of intervention does not mean that a government is any less neo-liberal if the economic policy mix remains dominated by the kind of elements listed above. One economist, Alfredo Saad-Filho, believes that unless neo-liberalism is powerfully challenged we could be witnessing its evolution rather than its collapse.

Defeating neo-liberalism    

The recent Chicago Teachers Union strike provides an inspirational example of how neo-liberal policies can be defeated. Twenty seven thousand teacher unionists fought against the Democratic mayor, Rahm Emanuel’s plans to shut down schools and impose performance based pay. For 9 days teachers marched through the streets shutting down the central business district. They held daily rallies and organised regular picket lines. And they rejuvenated their own union by making radically democratising its structures and making the elected leadership far more responsive to the opinions of the rank and file.  The strike received impressive levels of support from the broader community prompting Emanuel’s education chief to confess “we severely underestimated the ability of the Chicago Teachers Union to lead a massive grass-roots campaign against our administration.”

This kind of grassroots organising can defend jobs and services here. Rallies and protests against the G20, strongly grounded in communities and unions, will send a clear message that we reject any attempts by the likes of Newman and Abbott to make us pay for their economic turmoil.

The Cloudland Collective — Action for jobs, services and civil liberties.

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