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Coronavirus could unravel globalisation

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The following article was written for Tribune magazine, and published on 21 March, 2020. A heavy price is being paid by the world’s poorest for the ongoing commitment to the internationalisation of capital – and for the role globalisation plays in transforming epidemics into pandemics, and health crises into systemic financial crises.  Millions of people living in low income countries are now threatened by the lethality of the corona virus; by economic failure at home, and by the power of the US Federal Reserve and the mighty US dollar. Capitalists – investors and/or speculators – are using the globalisation system to shift  vast sums of money out of non-OECD countries and into the relatively safe haven that is the United States. The Mexican Peso plunged 30% over

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The following article was written for Tribune magazine, and published on 21 March, 2020.

A heavy price is being paid by the world’s poorest for the ongoing commitment to the internationalisation of capital – and for the role globalisation plays in transforming epidemics into pandemics, and health crises into systemic financial crises.  

Millions of people living in low income countries are now threatened by the lethality of the corona virus; by economic failure at home, and by the power of the US Federal Reserve and the mighty US dollar. Capitalists – investors and/or speculators – are using the globalisation system to shift  vast sums of money out of non-OECD countries and into the relatively safe haven that is the United States. The Mexican Peso plunged 30% over the last month. Argentina’s currency fell almost 18 per cent this year, and yesterday the South African Rand hit a new low against the dollar. Such exchange rate disruption causes havoc to the economies of poor countries, dependent on dollars to buy food, oil and electronic kit.  

Economists predict “violent recessions” for countries like the country of my birth, South Africa. 

How did we get into this godawful mess?  

We are where we are thanks to the architects of dollarised globalisation – a system of rules and norms devised by powerful states and corporations, mainly in the interests of free-roaming international finance; and in the interests of the United States. It is a system that enforces borders for people, and tariffs for trade, but that allows capital to roam freely. 

It is a globalised system largely sustained by the right, and upheld by an almost defunct social democracy in Europe and the US. 

An invisible, mutant superbug now threatens to blow up the dollarised globalisation model and all its ‘rules’ and norms. Branko Milanovic, once the World Bank’s lead economist, warned in Foreign Affairs last week “that if the crisis continues, globalization could unravel….The continuing fear of another epidemic” he argued in a tone of grave alarm  

“may motivate calls for national self-sufficiency. In this sense, economic interests and legitimate health worries could dovetail. Even a seemingly small requirement—for instance, that everyone who enters a country needs to present, in addition to a passport and a visa, a health certificate—would constitute an obstacle to the return to the old globalized way, given how many millions of people would normally travel.” 

This criticism is aimed more or less directly at The Case for the Green New Deal, in which it is argued that to ensure a more sustainable ecosystem, we will have to limit the ability of “millions of people (that) would normally travel” while curtailing their desire for endless ‘wants’.  We argued for constraints on air travel because of the role airlines play in generating greenhouse gas emissions. But also because international journeys and airlines are vectors for lethal diseases. 

Branko Milanovic bemoans the possibility that these vectors will be constrained. 

The Green New Deal focusses on providing society’s essential needs, not its endless wants. To achieve sustainability and economic justice at an international level, we have to become more self-sufficient at national levels. We have to stop exploiting valuable, if finite resources like the water tables of countries like Kenya, where global corporations capitalize on cheap labour, grow green beans and then fly the product across the world and on to western dinner tables. And then in a crisis, move their capital out at the click of a computer button. 

Furthermore, to build more economically just societies, we will need to dismantle the current capitalist model of dollarised globalisation, which bestows an ‘exorbitant privilege’ on the world’s most dangerous and unstable empire, and empowers the US Federal Reserve to draw in, or expel capital from across the world, and to dictate exchange and interest rate policy to countries large and small, rich and poor. 

However, while clear that national self-sufficiency will be a virtuous path given the above threats to human civilisation – we are also clear that national self-sufficiency should be matched always and everywhere by international solidarity, cooperation and co-ordination. Greenhouse gas emissions, the world’s wildlife, and dangerous pandemics do not respect borders. Management of these global threats requires solidarity, cooperation and co-ordination by public, international institutions like the  UN and IPCC, and in the case of pandemics, the WHO.  

Such an approach requires that we on the left must demand an end to the internationalisation of capital – by permitting governments to manage their economies by imposing capital controls. 

In other words, as the TUC’s Geoff Tily argues, we must demand the “the internationalisation of labour” – with capital subordinated to the interests of labour. 

National self-sufficiency nested within the internationalism of labour is the very antithesis of nationalism. It is the very antithesis of the dollarised globalisation that over the past few years has unleashed racist, nationalist policies and led to the rise of authoritarian leaders. 

We know the internationalisation of labour works, because we have tried it before, under the 1945-71 Bretton Woods system set up to prevent the economic and political catastrophes of the 1930s; to subordinate finance to the interests of society; to steady trade balances between nations, and to restore political and policy autonomy to democratic states. 

We have additional priorities now. But know that if we could do it then, we can do it again. 

All it takes is the international solidarity of labour.

Ann Pettifor
I’m Ann Pettifor, author and analyst of the global financial system, and co-author of The Green New Deal (2008). I predicted an Anglo-American debt-deflationary crisis back in 2003, and in September, 2006 published The Coming First World Debt Crisis (Palgrave). I am known for my work on the sovereign debts of low income countries and for leading an international movement for the cancellation of debts, Jubilee 2000.

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