Bonn Juego and Johannes Dragsbaek Schmidt, "The Political Economy of the Global Crisis: Neo-liberalism, Financial Crises, and Emergent Authoritarian Liberalism in Asia", Presentation at the Fourth APISA Congress on "Asia in the Midst of Crises: Political, Economic, and Social Dimensions", Mandarin Oriental Hotel, Makati City, Philippines, 12 November 2009
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1 The Political Economy of the Global Crisis: The Political Economy of the Global Crisis: Neo-liberalism, Financial Crises, and Emergent Neo-liberalism, Financial Crises, and Emergent Authoritarian Liberalism in Asia Authoritarian Liberalism in Asia Bonn Juego and Johannes Dragsbaek Schmidt Global Development Studies Aalborg University, Denmark E-mail: [email protected] / [email protected]Presentation at the Fourth APISA Congress on Asia in the Midst of Crises: Political, Economic, and Social Dimensions Mandarin Oriental Hotel Makati City, Philippines 12 November 2009
Transcript
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The Political Economy of the Global Crisis:The Political Economy of the Global Crisis:
Neo-liberalism, Financial Crises, and EmergentNeo-liberalism, Financial Crises, and EmergentAuthoritarian Liberalism in AsiaAuthoritarian Liberalism in Asia
Bonn Juego and Johannes Dragsbaek SchmidtGlobal Development StudiesAalborg University, Denmark
Presentation at the Fourth APISA Congress onAsia in the Midst of Crises: Political, Economic, and Social Dimensions
Mandarin Oriental HotelMakati City, Philippines
12 November 2009
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CONTENTSCONTENTS
1.1. Relationship between Crises and Neo-liberalism Relationship between Crises and Neo-liberalism —— (constitutive (constitutiveand functional)and functional)
2.2. Mechanisms behind recurrent financial crises and the conflictMechanisms behind recurrent financial crises and the conflictbetween finance capital and real economy between finance capital and real economy —— (structure-agency (structure-agencycontradiction)contradiction)
3.3. Current responses to the global crises Current responses to the global crises —— fundamentally the same fundamentally the same
4.4. Emergent Emergent ““authoritarian liberalismauthoritarian liberalism”” in East and Southeast Asia in East and Southeast Asia
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(1) THE CONSTITUTIVE ROLE OF CRISES(1) THE CONSTITUTIVE ROLE OF CRISESIN THE EVOLUTION OF NEO-LIBERALISMIN THE EVOLUTION OF NEO-LIBERALISM
Relationship: Crisis and Neo-liberalism Dysfunctional or Functional (or both)
Nature of Crisis and Neo-liberalism Born out of crises Evolved through crises Died of crises???
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NEO-LIBERALISM WAS BORN OUT OF CRISESNEO-LIBERALISM WAS BORN OUT OF CRISESComplex interaction of forces/events/phenomena...Complex interaction of forces/events/phenomena...
recession in the developed capitalist economies after 1973, the OPEC oil crisis, and thecollapse of the Bretton Woods system
de-linking from the ‘gold standard’ internationalisation of financial markets as a result of the widespread abandonment of
exchange controls the massive increase in foreign bank lending to the Third World as consequence of the
recession in the major economies the growing stagnation of command economies the shift from import substitution in favour of export promotion in the Third World and
the rise of the NICs in East Asia the imposition of structural adjustment programmes (SAPs) on the heavily-indebted
Third World as conditionality attached to rolling over foreign debt the restructuring of global production towards ‘post-Fordism’ and the growth of MNCs the revolution in macroeconomic policy that resulted in the weakening of trade unions,
the cutting of state budgets, deregulation, privatisation, etc. the advances in ICT (as the new ‘techno-economic paradigm’) Etc....
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NEO-LIBERALISM HAS EVOLVED THROUGH CRISESNEO-LIBERALISM HAS EVOLVED THROUGH CRISESFrom crisis to crisis in the last 30 years....From crisis to crisis in the last 30 years....
National Developmentalism (postwar-1970s) Crisis of Fordism/Keynesianism (stagflation)
Washington Consensus – 1st Generation Neoliberal reforms (1980s –mid-1990s) Crisis of market fundamentalism of the Washington Consensus — ‘East
Asian Miracle’ (8 HPAEs showing high growth and high equity with stateintervention)
Is neo-liberalism dead? Depends on what we mean by ‘neo-liberalism’....
The neo-liberal form (i.e., market fundamentalism)is dead;
But not the substance of capitalism as a:
processprocess of capital accumulation; relationsrelations in which labour is subordinated to capital
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Neo-liberalism: A strategy for market-ledNeo-liberalism: A strategy for market-leddevelopment, A blueprint for crisis managementdevelopment, A blueprint for crisis management
Neo-liberal values: well-being of the financial institutions over well-being of the people
E.g.
Debt crisis in Latin America (1982) Crisis Response: SAPs
Financial Crises: Scandinavia (early 1990s); Mexico (1994); East andSoutheast Asia (1997); Russia (1998); Argentina (2001); Turkey (2001-02); US Subprime mortgage (2007-09) Crisis response: ‘open’ international financial architecture
US subprime crisis (2007-09) Crisis response: Bush-Paulson-Bernanke-Obama Bailout Programme
(restore power of corporations; assure ascendancy of finance capital)
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In times of crisis,In times of crisis,““assets return to their rightful ownersassets return to their rightful owners””!!
‘Financial crises have always caused transfers of ownership and power tothose who keep their own assets intact and who are in a position tocreate credit, and the Asian crisis is no exception....there is no doubtthat Western and Japanese corporations are the big winners.....The
combination of massive devaluations, IMF-pushed financialliberalization, and IMF facilitated recovery may even precipitate the
biggest peacetime transfer of assets from domestic to foreign ownersin the past fifty years anywhere in the world, dwarfing the transfers
from domestic to US owners in Latin America in the 1980s or in Mexicoafter 1994. One recalls the statement attributed to Andrew Mellon: "In
a depression assets return to their rightful owners”.’
—R. Wade and F. Veneroso (1998),‘The Asian Crisis: The High Debt Model versus the Wall Street-Treasury-IMF
Complex,’ in The New Left Review, 228 (1998), 3-23.
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The Cacophony of Crises TodayThe Cacophony of Crises Today
scheme) Environment Climate (global warming) Oil Food (post-Green Revolution, the Great Hunger of 2008) Governance (WB, IMF, WTO, states) Etc.
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(2) STRUCTURAL INSTABILITY OF FINANCIAL(2) STRUCTURAL INSTABILITY OF FINANCIALMARKETS AND THE GREEDY ECONOMIC ELITESMARKETS AND THE GREEDY ECONOMIC ELITES
”Black Box”Production
of goods andservices
Money/capital
Therealeconomy“Güterwelt”
Financialeconomy“Rechenpfennige”
THE CIRCULAR FLOW OF ECONOMICSTHE CIRCULAR FLOW OF ECONOMICS
Mechanisms of Financial Crises and their Effects on the Real EconomyMechanisms of Financial Crises and their Effects on the Real Economy
Socio-economic Socio-economic results will differ results will differdepending on the criteria that lead investmentdepending on the criteria that lead investment
Production capitalFinancial capital
Money and paper wealthStatic property“Investible” capital
Wealth-producing wealthFixed capital,technical capital,human capital, good will
AssetsAssets
Essentially mobileKnowledge indifferent
MobilityMobility
Tied to fixed assets, toknowledge of products, processes, capabilities,clients and markets
Wealth-creating assets,LONG-TERM GAINS
BiasBias Quasi-liquid assets, SHORT-TERM GAINS
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“In the years preceding the First World Warthere were in common use among economists a number of metaphors . . .'Money is a wrapper in which goods come'Money is a wrapper in which goods come’’; 'Money is the garment drapedround the body of economic life’; 'money is a veil behind whichthe action of real economic forces is concealed’ . . .
During the 1920s and 1930s
. . . money, the passive veil, took on the appearance of an evil genius; the
garment became a Nessus shirt; the wrapper a thing liable to explode.
Money, in short, after being little or nothing, was now everythingMoney, in short, after being little or nothing, was now everything . . .
SHIFTING ROLES OFSHIFTING ROLES OFMONEY ON THE REAL ECONOMYMONEY ON THE REAL ECONOMY
Then with the Second World War,the tune changed again. Manpower, equipment and organization once morecame into their own. The role of money dwindled to insignificanceThe role of money dwindled to insignificance. . .”
Arthur Cecil Pigou (1949) The Veil of Money, Macmillan pp.18-19
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Three basic and complementary mechanisms behind the conflictsThree basic and complementary mechanisms behind the conflictsbetween the real economy and the financial economybetween the real economy and the financial economy
(Financial Crises)(Financial Crises)
1. THE HAMMURABI EFFECT (Babylonia ca. 1795 – 1750 BC)
• The Effect of Compound Interest.
2. THE PEREZ EFFECT (Carlota Perez, Venezuelan economist)
3. THE MINSKY EFFECT (Hyman Minsky, US, 1919-1996)• Liquidity preference turning point• + ‘bad projects’ killing credit to healthy projects.
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THE HAMMURABI EFFECTTHE HAMMURABI EFFECT((The Effect of Compound InterestThe Effect of Compound Interest))
“A shilling put out at 6% compoundinterest at our Saviour’s birthwould . . . have increased to agreater sum than the whole solarsystem could hold, supposing it asphere equal in diameter to thediameter of Saturn’s orbit.”
—Richard Price, English Economist, 1769.
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THE PEREZ EFFECTTHE PEREZ EFFECTTechnological Revolutions and Finance CapitalTechnological Revolutions and Finance Capital
Crash Institutionalrecomposition
The IndustrialRevolutionBritain
Age of Steamand RailwaysBritain (spreadingto continent and US)
Age of Steel, Electricityand Heavy EngineeringUSA and Germanyovertaking Britain
Age of Oil, Automobilesand Mass ProductionUSA (spreading to Europe)
Age of Informationand TelecomunicationsUSA (spreadingto Europe and Asia)
Note: * Observe phase overlaps between successive surges.
Approximate dates of the installation and deployment periodsApproximate dates of the installation and deployment periodsof the great surges of development -- 1771 to the presentof the great surges of development -- 1771 to the present
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THE MINSKY EFFECTTHE MINSKY EFFECT((Endogenous instability Endogenous instability and and Ponzi SchemesPonzi Schemes))
“destabilizing stability”: long periods of stability lead toinstability
““The poor decisions of holding company executives are the primary cause for the bondThe poor decisions of holding company executives are the primary cause for the bondinsurersinsurers’’ problems, but the rating agencies also share responsibility. problems, but the rating agencies also share responsibility.
The rating agencies encouraged the bond insurers to diversify into structured finance risksThe rating agencies encouraged the bond insurers to diversify into structured finance risksand gave them additional rating credit for doing so. The rating agencies understated theand gave them additional rating credit for doing so. The rating agencies understated therisks of the new strategy while earning much higher fees for rating these srisks of the new strategy while earning much higher fees for rating these structures.tructures.
The rating agenciesThe rating agencies’’ profits soared along with the growth in structured finance issuance. profits soared along with the growth in structured finance issuance.Insurance regulators relied on the rating agencies and management teams to assess theInsurance regulators relied on the rating agencies and management teams to assess therisk of these new structures.risk of these new structures.
The rating agencies were paid by the issuers of these securities and helped in structuringThe rating agencies were paid by the issuers of these securities and helped in structuringthese exotic instruments to meet the ratings agenciesthese exotic instruments to meet the ratings agencies’’ insufficient standards for Triple A insufficient standards for Triple Aratings. The rating agencies only received their full fees if they approved the Triple Aratings. The rating agencies only received their full fees if they approved the Triple Aratings for these transactions.ratings for these transactions.
The combination of aggressive risk taking by management, poor judgment by conflictedThe combination of aggressive risk taking by management, poor judgment by conflictedrating agencies, and over-reliance by regulatory authorities on rating agency judgment ledrating agencies, and over-reliance by regulatory authorities on rating agency judgment ledto the current situation.to the current situation.””
—William Ackman (14 Feb 2008), “The State of the Bond Insurance Industry”,Statement before a hearing of the US House of Financial Services Committee
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(3) FUNDAMENTALLY THE SAME RESPONSES(3) FUNDAMENTALLY THE SAME RESPONSESTO THE GLOBAL CRISISTO THE GLOBAL CRISIS
SCHUMPETERIAN: ‘IT HAS TO BURN OUT ALONE’
KEYNESIAN: ‘REPAIR IT’, but without encouraging the very behaviour
establish socialism, a democratic economic planning
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“Times of innovation ... are timesof effort and sacrifice, of workfor the future, while theharvest comes after.... Theharvest is gathered underrecessive symptoms and withmore anxiety than rejoicing....[During] recession ...[During] recession ... muchmuchdead wood disappearsdead wood disappears.”
—Joseph Schumpeter (1939)Business Cycles
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““I I sympathize, therefore, with those whosympathize, therefore, with those whowould minimize, rather than withwould minimize, rather than with
those who would maximize, economicthose who would maximize, economicentanglement among nations. Ideas,entanglement among nations. Ideas,
knowledge, science, hospitality, travelknowledge, science, hospitality, travel–– these these are the things which should ofare the things which should oftheir nature be international. But lettheir nature be international. But letgoods be homespun whenever it isgoods be homespun whenever it is
reasonably and conveniently possible,reasonably and conveniently possible,and, above all, let finance beand, above all, let finance be
primarily national.primarily national. Yet, at the same Yet, at the sametime, those who seek to disembarrasstime, those who seek to disembarrassa country of its entanglements shoulda country of its entanglements shouldbe very slow and wary. It should notbe very slow and wary. It should notbe a matter of tearing up roots but ofbe a matter of tearing up roots but ofslowly training a plant to grow in aslowly training a plant to grow in a
different direction.different direction.
For these strong reasons, therefore, I amFor these strong reasons, therefore, I aminclined to the belief that, after theinclined to the belief that, after thetransition is accomplished, a greatertransition is accomplished, a greatermeasure of national self-sufficiency andmeasure of national self-sufficiency andeconomic isolation among countries thaneconomic isolation among countries thanexisted in 1914 may tend to serve the causeexisted in 1914 may tend to serve the causeof peace, raof peace, rather than otherwise. At anyther than otherwise. At anyrate, the age of economic internationalismrate, the age of economic internationalismwas not particularly successful in avoidingwas not particularly successful in avoidingwar; and if its friends retort, that thewar; and if its friends retort, that theimperfection of its success never gave it aimperfection of its success never gave it afair chance, it is reasonable to point outfair chance, it is reasonable to point outthat a greatethat a greater success is scarcely probabler success is scarcely probablein the coming years.in the coming years.””
—— John Maynard Keynes (1933 [1972]) John Maynard Keynes (1933 [1972]) NationalNationalSelf-sufficiencySelf-sufficiency
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““Modern bourgeois societyModern bourgeois societywith its relations ofwith its relations ofproduction, of exchangeproduction, of exchangeand of property,and of property, a societya societythat has conjured up suchthat has conjured up suchgigantic means ofgigantic means ofproproduction and ofduction and ofexchange,exchange, is like a sorcereris like a sorcererwho is no longer able towho is no longer able tocontrol the powers of thecontrol the powers of thenether world nether world whom he haswhom he hascalled up by his spells.called up by his spells.””
——Karl Marx and Frederick Karl Marx and Frederick Engels Engels (1848)(1848)Communist ManifestoCommunist Manifesto
““These are signs of the times,These are signs of the times,not to be hidden by purplenot to be hidden by purplemantles or black cassocks.mantles or black cassocks.They do not signify thatThey do not signify thattomorrow a miracle willtomorrow a miracle willoccur.occur. They do show that,They do show that,within the ruling classeswithin the ruling classesthemselves,themselves, the forebodingthe forebodingis emerging that theis emerging that thepresent society is no solidpresent society is no solidcrystal,crystal, but an organismbut an organismcapable of change, andcapable of change, andconstantly engaged in theconstantly engaged in theprocess of change.process of change.””
Demise of the Multilaterals?!?Demise of the Multilaterals?!?
“Never again” became the slogan of a number of the affectedgovernments. The Thaksin government in Thailand declared ist
“financial independence” from the IMF after paying off its debts in2003, vowing never to return to the Fund. Indonesia has said it will
pay off all its debts to the IMF by 2008. The Philippines has refrainedfrom contracting new loans from the Fund, while Malaysia defied it
by imposing capital controls at the height of the crisis.
Ironically, then, the IMF has become one of the key victims of the 1997 debacle.This arrogant institution of some 1,000 elite economists never recovered from
the severe crisis of legitimacy and credibility that overtook it—a crisis thatwas deepened by the bankruptcy of its star pupil Argentina in 2002. In 2006,Brazil and Argentina, following Thailand’s example, paid off all their debts tothe Fund in order to achieve financial independence. Then Hugo Chavez letthe other shoe drop by announcing that Venezuela would leave the IMF andthe World Bank. This boycott by its biggest borrowers has translated into a
budget crisis for the IMF.”
—Walden Bello (30 July 2007), “All Fall Down”,in Foreign Policy In Focus
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The World Bank, IMF and their G-20 allies:The World Bank, IMF and their G-20 allies:Using the global crisis to their advantage....Using the global crisis to their advantage....
G-20: IMF is back!G-20: IMF is back!Dominique Strauss-Kahn, Managing Director of the IMF, G-20 Press Conference, 2 April 2009
Maybe some of you were in the IMF pressconference at the end of the Annual
Meeting last October. And if some of you were there,then you may remember
that what I said at that time is that IMF is back.Today you get the proof when
you read the communiqué, each paragraph, oralmost each paragraph – let's
say the important ones – are in one way or anotherrelated to IMF work.
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WORLD BANK: WORLD BANK: Exactly Exactly the same global neo-liberal project!the same global neo-liberal project!World Bank, Global Monitoring Report 2009: A Development Emergency, p. xii.
The report sets out six priority areas for action to confront the development emergency that now facesmany of these countries. First, we must ensure an adequate fiscal response in developing countries toprotect the poor and vulnerable groups and to support economic growth. Priority areas must bestrengthening social safety nets and protecting infrastructure programs that can create jobs whilebuilding a foundation for future productivity and growth. The precise fiscal response needs to be tailoredto individual country circumstances, consistent with maintenance of macroeconomic stability. Second,we must provide support for the private sector and improve the climate for recovery and growth inprivate investment, including paying special attention to strengthening financial systems. Helping smalland medium enterprises get access to finance for trade and investment is vital for job creation. But thecrisis has also underscored the importance of broader reforms to improve the stability and soundness ofthe financial system. Third, we must redouble efforts in human development and recover lost ground inprogress toward the MDGs. We can do this not only by strengthening key public programs for healthand education, but also by better leveraging the private sector’s role in the financing and delivery ofservices.
In support of these efforts to help developing countries, the report emphasizes three key globalpriorities. Donors must deliver on their commitments to increase aid. Indeed, the increased needs ofpoor countries hit hard by the crisis call for going beyond existing commitments. National governmentsmust hold firm against rising protectionist pressures and maintain an open international trade andfinance system. Completing the Doha negotiations expeditiously would provide a much-needed boost inconfidence to the global economy at a time of high stress and uncertainty. Finally, multilateralinstitutions must have the mandate, resources, and instruments to support an effective global responseto the global crisis. The international financial institutions will need to play a key role in bridging thelarge financing gap for developing countries resulting from the slump in private capital flows, includingusing their leverage ability to help revive private flows.
Source: World Bank, Global Monitoring Report 2009: A Development Emergency, p. xii.
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World Bank President Robert World Bank President Robert Zoellick Zoellick (31 March 2009, prior to the G-20(31 March 2009, prior to the G-20Meeting): Meeting): New Powers for the Multilaterals!New Powers for the Multilaterals!
• “a WTO monitoring system to advance trade and resisteconomic isolationism, while working to complete the Dohanegotiations to open markets, cut subsidies, and resistbacksliding”;
• “a monitoring role for the IMF, to review the execution of ..stimulus packages and assess results, calling for furtheraction if necessary”;
• IMF and World Bank Group monitoring of actions andresults in the banking sector, with financial sectorassessments to be extended to developed countries, “withthe results published, taken seriously, and followed up”;
• an overhaul of the financial regulatory and supervisorysystem” in which “most of the actual authority overregulation will rest with national governments”, but withinwhich an expanded FSF [Financial Stability Forum] “couldbecome another important institution of a strongermultilateral system, working with the IMF and the WorldBank group on implementation”
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IMF: IMF: ‘‘An opportunity to make progress on seemingly intractable An opportunity to make progress on seemingly intractable issuesissues’’IMF (February 2009), Initial Lessons of the Crisis for the Global Architecture and the IMF
Bottom line. The crisis has revealed flaws in key dimensions ofthe current global architecture, but also provides a uniqueopportunity to fix them. On the flaws, surveillance needs to
be reoriented to ensure warnings are clear, successfullyconnect the dots, and provide practical advice to policymakers. An effective forum for policy makers with the
ability and mandate to take leadership in responding tosystemic concerns about the international economy is key.
Ground rules for cross-border finance need to bestrengthened. And, given the growing size of internationaltransactions, resources available for liquidity support and
easing external adjustment should augmented andprocesses for using them better defined so they are morereadily available when needed. These are all ambitious
undertakings. But the damage wrought by the crisisprovides an opportunity to make progress on seeminglyintractable issues. The moment should not be missed.
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ADB and ASEAN: Banking-as-usual for the private sector andADB and ASEAN: Banking-as-usual for the private sector andfor free flow of capital, goods, services and investmentfor free flow of capital, goods, services and investment
Loans under LIBOR for economicrecovery, private sector
development, and open market(less on social protection)
Towards a competitive ASEANsingle market by 2015
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UN Commission of Experts on Reforms of the InternationalUN Commission of Experts on Reforms of the InternationalMonetary and Financial Systems: Monetary and Financial Systems: Heterodoxy RearticulatedHeterodoxy Rearticulated
Joseph Stiglitz (Keynesian)
Jomo KS (critical political economist)
José Antonio Ocampo (Hirschmanesque)
Jan Kregel (post-Keynesian, Minskyian)
François Houtart (WSF activist)
Global Economic Coordination Council and International Panel of Expert — NewCredit Facility — system of risk management reform — new global reserve
system — exit strategy from stimulus policies — etc.....
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Global Civil Society: Global Civil Society: ““We told you soWe told you so””
““Another World Is PossibleAnother World Is Possible””
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Global Civil Society ChallengeGlobal Civil Society Challengeand the Challenge to Global Justice Movementsand the Challenge to Global Justice Movements
—— ‘‘Another World Is Possible, NecessaryAnother World Is Possible, Necessary’’ ——
““TThhe crisis consistse crisis consistsprecisely in the factprecisely in the fact
thatthat the old is dyingthe old is dyingand the new cannotand the new cannot
be bornbe born; in this; in thisinterregnum a greatinterregnum a great
variety of morbidvariety of morbidsymptoms appear.symptoms appear.””
—Antonio Gramsci (1971)Prison Notebooks
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StatesStates’’ Bailouts and Resiliency Plans Bailouts and Resiliency Plans(Bailouts for the poor???)(Bailouts for the poor???)
Malaysia
First stimulus measure: increasecapitalisation of a governmentinvestment company by USD 5billion (also to stabilise stock
exchange)
Philippines
Economic Resiliency Plan(ERP): PhP 330 billion
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Crisis as a Crisis as a ‘‘Turning PointTurning Point’’
CRISIS from Greek ‘krisis’ “the turning point of a
disease when an importantchange takes place, indicatingeither recovery or death”
People from left, right, centre lookat the crisis the ‘Chinese way’ —i.e., an opportunity to advancetheir respective interests!
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(4) EMERGENT AUTHORITARIAN LIBERALISM IN(4) EMERGENT AUTHORITARIAN LIBERALISM INEAST AND SOUTHEAST ASIAEAST AND SOUTHEAST ASIA
Democratization may be stalled.Democratization may be stalled. Justification for authoritarian rule (e.g. ‘Asian Values’)
Human Rights compromised.Human Rights compromised. Human rights obligations sidelined in the name of
surveillance and internal security (Malaysia, Singapore)
The poor severely neglected.The poor severely neglected. e.g., ASEM Trust Fund failed to target the poor,
workers, and the vulnerable, adversely affected groups.
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CONCLUDING REMARKSCONCLUDING REMARKS
1. The Constitutive Role of Crises in the Evolution ofNeo-liberalism
i. was born out of the crises of the 1970s
ii. has evolved through a series of crises over the last30 years
iii. died of the cacophony of crises culminating in thecurrent global economic crisis.
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As it shows, crises have so far been functional,rather than dysfunctional, to neo-liberalism:
Crises reshape class and social relations but in ways thatperpetuate the hegemony of capital over labour and thepreservation of elite rule.
Crises restrategize development plans of institutions frominternational organizations to states to further advance, notretreat from, market-led development.
Crises restructure states and societies in which social institutionsare oriented towards the logic, requirements, and imperatives ofneo-liberalism.
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2. The structurestructure of financial markets isendogenously fragile, and the greedy
economic agents exacerbate it.
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3. The responses to the global crisis from themultilaterals, to regional organisations, to states toactivists are fundamentally the same throughthe years, with or without crisis.
But the catastrophic impacts of the crisis differacross social classes, among the poor,marginalized, vulnerable sectors.
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UN Commission of Experts on Reforms of the InternationalUN Commission of Experts on Reforms of the InternationalMonetary and Financial Systems: Monetary and Financial Systems: Crisis as opportunity and dangerCrisis as opportunity and danger
This crisis should be seen as an opportunity toengage in necessary reforms. Historically,moments of crises often provide a rarechance for fundamental reforms that wouldotherwise be impossible. But there is also adanger: existing power structures can sexisting power structures can seizeeizehold of these moments of crisis and usehold of these moments of crisis and usethem for their own benefit, reinforcingthem for their own benefit, reinforcinginequalities and inequitiesinequalities and inequities. There may be agreater concentration of economic andpolitical power after the crisis than before.This has happened in the past and seems tobe happening in this crisis in certaincountries, as the share of the too-big-to-failbanks has increased even further
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4. 4. There is a movement towards the strengtheningThere is a movement towards the strengtheningof practices and institutions of of practices and institutions of ““authoritarianauthoritarianliberalismliberalism”” in East and Southeast Asia. in East and Southeast Asia.
(Market economies embedded in authoritarian political framework(Market economies embedded in authoritarian political framework)
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