BOOK REVIEW
The Passage to a New World

A New Democracy: Alternatives to a Bankrupt World Order
By Harry Shutt
London and New York: Zed Books, 2001; Manila: Ibon;
176 ++ pages

The free market myth is being peddled to erase the damages wrought by the “speculative conspiracy theory” and this is coupled by the usefulness of “political chaos and international or ethnic conflict” to further legitimize the imposition of economic and political control.

By JPaul Manzanilla
Bulatlat

Books on political economy being published nowadays on the whole summon radical departures from the temper of international relations. Scholars, activists, academicians and technocrats, however disparate their partisanship, somehow agree that the current global political and economic situation is no longer tenable and must be transformed. It is in this light that Harry Shutt’s A New Democracy: Alternatives to a Bankrupt World Order participates in the debate.

The book opens with a prophesied doom: the crumbling of civil order, soaring number of people seeking asylum and the emergence of a growing underclass. What this horrible condition secretes is the “synthetic euphoria over globalization,” the triumphant call for the new economy that promises to break against all odds of present-day misery. Consider: in the most industrialized countries, the deteriorating state of public services, fall of living standards and the negligible value of pension funds; in poor countries of the Third World and the former Soviet bloc, the massive destabilization of inflows and outflows of capital.

Who calls the shot in this global downturn? It is not the imperial powers of yesterday but a worldwide alliance of economic interests protected by states that is culpable for this poverty. Shutt describes Western leaders as “[managing] to shut themselves off from reality by surrounding themselves with advisers – and packing the media with commentators – who tell them nothing they do not want to hear.” Yet the actions of these same leaders who trumpet human rights and democratic values call for the incompatibility of imperialism with democracy.

The first chapter on The Waning of Imperialism points to the successive upheavals of nations against colonial masters, a perpetual struggle of asserting sovereignty largely based on Enlightenment values of freedom and independence. In Asia and Africa, the rise of national consciousness and the principle of national self-determination give birth to nation-states of, by and for, in the words of the African revolutionary Frantz Fanon, the “wretched of the earth.” Before, the League of Nations was limited on the provision that colonized peoples are sort of a protectorate of their colonial masters, indeed, the absence of commitment to the ending of colonial rule. Now, the United Nations enshrines the sovereign equality of all nations and the rights of citizens to elect their own governments. But this is sharply undermined in that this international organization’s most powerful body, the Security Council, privileges five permanent member-countries with veto power on the global state of affairs.

Paper tiger

Alas, sovereignty is a paper tiger once we critically examine that member-states are uneven in the distribution of wealth and, with it, power! With this are the horrors of the Cold War showing the painful consequences to people of brutal undemocratic governance – the betrayal of the so-called socialist cause by their own leaders. For most of the UN members, a genuine form of representative democracy remains a dream to be fulfilled as examples of this are being subverted in the “more mature” democracies.

The problem for the Axis and Allied powers after the Second World War is how to sustain economic strength crucial to their political consensus and in support of the superpower status of the United States. Because most of the peoples of the world can only cower in fear in the midst of the epochal battle of the United States and the Soviet Union, they had to decide on what terms and ideologies to favor. But the protagonists in this conflict are both imperialist in their thrusts and hence, the Cold War as an excuse no longer became credible. Poorer and weaker countries gained their own historical victories in the examples of the Vietnamese triumph and the Nicaraguan government’s successful prosecution of the undeclared war of the United States in the International Court of Justice in 1984. As a damage control measure, the Carter administration put more emphasis on the promotion of human rights in foreign policy. We can still see this former president touring the world and building homes and brokering peace. Are they for real social advocacy or a propagandistic tool of the myths of imperialist-led democracy?

A more subtle approach is the present media frenzy over the Middle East – its histories, its peoples, its cultures. And there is no finer word than terrorism. The projection of Islamic fundamentalism as the scourge that afflicts the civilized and free peoples of the world reaps the accusation of religious and even racial discrimination. It effaces the contradictory position of terrorism’s “opponents;” for terrorism as a practice is based on various beliefs, and in the case of national liberation movements, supported by covert and open operations of the US through the Central Intelligence Agency and its armed might dispersed all throughout the world. We can only protest in loathing against the US’ refusal to support the International Criminal Court even though an overwhelming number of states voted to establish it.

To this day we wonder at how the US government audaciously topple enemy states while supporting undemocratic regimes, most notably the Kingdom of Saudi Arabia that brazenly denies touted modern liberal values to its subjects. Questions on the establishment of a nation-state for the Palestinian people languish, owing to the tight-rope balancing act of collaboration and compromise between “democratic” Israel and “authoritarian” Arab states. In addition, the US government did not utter an official protest against the Tiananmen Massacre in China when its government has become a favorable partner in capitalist investments. Today, the most common though overlooked method is the denial of official development or loan finance. Tactics vary, from “offering material and propaganda support to a favored party within the ‘democratic’ process of individual states and the usual panoply of bribes to political leaders in return for their support for US interests.”

Traditional imperialism

Shutt’s main thesis on this discussion is that traditional imperialism is “simply incompatible with any interpretation of the principles of liberal democracy.” We should also depart from traditional historical analysis that pins international relations solely on the “secular rise and fall of empires or attempts to maintain a balance of power.”

For the author, the global downturn has four components: declining economic growth rates, intensifying competition for markets and shrinking outlets for investments, rising unemployment and public indebtedness, recurrent inflation and increased currency instability. This generates a resistance to market forces driven by the “fear of the political consequences of slump” and the “desire of big business to avoid major financial losses and corporate collapses.” However the measures being implemented do not help as there is a steady “intensifying squeeze” on public expenditure hitting social welfare benefits, this kind of solution fails to tap the vein of the crisis flow which is the rampant profit-making facilitated by the breaking of barriers of capital, goods and services across nation-states of the world. This borderless word or the “rolling back of the frontiers of the state” pushes privatization of state-owned enterprises and cuts in taxation

The struggle to contain global crisis inhibits the effective utilization of state powers in the use of greater tax incentives to investment, denying the use of profits for public interests, and the greater relaxation of controls on financial markets reaching the point of inviting manipulation, as what happened in the Southeast Asian crisis of 1997. In the end, governments scamper to rescue ailing corporations especially when they are considered too big to fail. There are also two new long-term constraints for the global market economy: the information technology (no real investment in terms of consumer demand and employment) and the environmental constraints to growth.

What fuels the drive to imperial power is the expectation of economic gain. In the current rules of trade, extreme orthodoxy and liberalization persist in the manner of structural adjustment or “shock therapy.” The free market myth is being peddled to erase the damages wrought by what the author calls the “speculative conspiracy theory” and this is coupled by the usefulness of “political chaos and international or ethnic conflict” to further legitimize the imposition of economic and political control. No matter the calamitous implications of neo-liberalism there is a “refusal to accept a greater degree of collectivism” and the ostensible “extreme desperation on the part of the ruling elite to cling to power. This is cogently expressed in the Philippine political dispensation where the various factions of competing comprador and landlord elite are only functional in offering an assortment of economic palliatives that further pauperize the citizens such as the extortion of additional taxes from the populace, faithful adherence to the payment of foreign debt inflected by the bayanihan spirit which blights traditional Filipino collectivist spirit. Even the leading global financial institutions fail to coordinate their actions and are victimized by criminal elements taking on a parasitical and cannibalistic trait on itself a profiteering industry.

There is accordingly the convergence of two crises: imperialist political control and the capitalist economic system. It is to be stressed at this point that the imperialist crisis stems from the capitalist free market-oriented model that logically demolishes all stumbling blocks to profit.

Persistent untruth

A persistent untruth awaiting the most rigorous of our critique is that “the interests of economic welfare are best served by privately owned corporations” as explained by the free market competition that pushes prices of goods and services down and impels the raising of quality. What this selling point precludes is the monopolistic character of private enterprises that inform the homogenizing character of what is to be bought and, more importantly, the lack of public accountability of these profit-making formations. Shutt enumerates the problem with competition: market uncertainty – supply usually surpasses demand, the use of cost-reducing technology and the improvement of quality and design by competitors reduce sales considerably, predatory pricing and buying out of competitors; imperfect access to information; wasteful duplication of capacity and; financial destabilization. After the chaos caused by all these, state intervention is, argues Shutt, inevitable. A particular regulation is on “where it is deemed appropriate to provide a public subsidy of private profit in order to keep an enterprise in business it must also require the beneficiary company to adhere to specific commitments as a condition of support – whether in terms of investment, employment or price levels.” Western democracy as a key to solving the problem is itself battered by salient flaws tied to the capitalist enterprise like the financing of political parties by private corporations, effective control of the press and mass media. We are reminded at this moment by the media company ABS-CBN that, in the last election, supported the incumbent president by lending its talents in the image campaign and defended anti-people policies in the most abominable fashion.

Belying the free market promise of higher living standards is the global oversupply of labor. Generally, unemployed people do not register unless they can claim welfare benefits and in Third World states, data are not compiled at all. This has a social bearing in terms of its inverse relation to the prison population: the more number of people not working decently, the higher the number of inmates in prisons. It is to be avoided in the critical project that industrialized and capitalist countries are wont to regulate at all, as for Shutt, there is a “de facto rejection of free trade” in the situations of Asian economic tigers like South Korea that combines “both strong protection against imports and heavy subsidization of exports.” Even in terms of the vaunted level playing field, this is a “fantasy” because the rich industrialized countries already have a competitive advantage. A patent case in point of protectionism is the agriculture industry which the US wants to exempt from the General Agreement on Tariffs and Trade (GATT) and, with the OECD countries, bailing their farmers in events of economic failure. The anarchic deregulation compounding the whole world ravages economies with the unhampered and rapid movements of capital and profits across nation-states, as what happened in Thailand and Mexico in the 1990s. In place of all these, the author proposes “more cooperation, less competition,” “protection of weaker economies” and “economic integration” based on non-discriminatory free trade.”

To search for a new model in solving the crisis of underdevelopment, Shutt calls forth to discard the “bankruptcy of conventional models of development.” The developmentalist impulse is a farce considering that transfers of aid “have been forced to concede that it has not only failed to generate self-sustaining growth in developing countries but has too often been a stimulus to waste, corruption and unserviceable debt burdens.” To be independent, we must be interdependent for us to build a binding structure between rich and poor countries, like giving grants rather than loans for the poorest countries of the world. Opposing the total transformation of the neo-colonial paradigm are the local elites which in the Philippines there was, as pointed out by the author, “the emergence of a comprador bourgeoisie from the more or less feudal landowning elite,” a rather adaptive course of ensuring the hold on economic and political power. A new international order should be based on the “principles of democratic accountability and the rule of law” that has two brands of integration for nation-states: the creation of regional economic blocs and more structured relations with industrialized donor countries.

Collectivist framework

To replace the free market, a collectivist framework that has a proper balance between the interests of the public and private sectors and which “puts capital in its proper place” must take hold. There should be instability instead of out of hand growth, a cap on the making of profits and the recognition that “holding down corporate profits is broadly in the public interest.” Reasoning the new economics is a “post-capitalist ideology” with the following attributes: conscious political choice replacing consumer sovereignty, a new economic calculus revaluing costs and benefits of the commercial market, and a general bias in favor of greater equality of personal income and wealth. On a political level, restrictions on the funding of political parties, a limit on patronage and the delimiting of the ownership of mass media are to be imposed. Third World countries should be prioritized based on the goal of greater self-sufficiency. Even discrimination is a need on the concerns of employment, environmental protection and the corporate behavior as a whole.

What is uncanny in the post-Word War II order – when all peoples should have nation states at long last – is the disorder in that sovereignty is not inviolate after all. This is concretely manifested in the absence or lack of economic independence for most countries. There is also the “ambivalence on human rights” on which the integrity of the nation rests. Unilateralism takes its toll by means of military, judicial and economic interventions. A reform of the United Nations should not be a process long in coming; from being an “essentially passive” international body, the UN must be transformed into a “more cohesive and accountable international organization with sufficient authority to fulfill the more complex role which today’s world demands.” In lieu of regional blocs, global unity should reign supreme, grounded on a new UN which has “legitimacy to assume administrative responsibility, on a basis of democratic accountability to the population affected, for any territory whose government was unable to discharge its functions.” Shutt designates the European Union as an alternative case in the drive toward integration, arguing that it has a promise in its balancing acts by way of the link between economics and politics, the need for representative government and a common currency.

Genuine freedom

The final chapter on The Path to Democracy is a trajectory that, taking the most instructive lessons of the past, ushers all of us to a world where genuine freedom reigns; indeed, the recognition and satisfaction of human needs and aspirations. In a crisis of credibility, the power-holders are relentlessly attacked by the power of the people in carving out more representative and democratic spaces in the iniquitous status quo, while constructing a strategic gain for multisectoral interests. Contradictions of and in the Third World are to be resolved by resisting the impositions of foreign institutions on local policy, ensuring the transparency on party fund sources, rejecting the “minimalist state” paradigm that exacts the gravest exploitation by weakening governmental powers and the “drastic revision of the rights and functions of corporations as well as the institutions of state.” Economic democracy should also take cognizance of the perils of involving civil society and other stakeholders in decision-making, for this is just an empty gesture as the mentioned formations are legally powerless and customarily marginalized. Corporate governance must be subjected to “effective public accountability” and the “effective separation of control from ownership.” The “essence of a post-capitalist economy would,” for the author, “be the substitution of conscious political choice for the dictates of blindly destructive or dishonestly manipulated market forces.” In making governments more representative and accountable: the following measures should be ensured: restricting the influence of moneyed interests, access to the media for divergent opinions, empowering the voters, limiting patronage and holding officials to account.

Shutt’s effort is an intellectual and scholarly intervention requiring the most demanding of our praxis. For progressive government officials and policy makers, the recognition that things are not fair and well at the least, and something must be done. For social activists, the poor and majority of the people, all of us, that we deserve a far better world than the present and things ought to change. Changing this rests on our hands. Not just a collective responsibility but a bad present passing. To say the least, in the light of our struggle and through the darkness of history, there is a bright future whose process should not be long in coming. Bulatlat

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