A Crisis of Crises: How Neoliberalism 1.0 Became Neoliberalism 3.0 and What We Need to Do About It

A Crisis of Crises: How Neoliberalism 1.0 Became

Neoliberalism 3.0 and What We Need to Do About It

Ronald LabontéUniversity of Ottawa

The truth is that there is as yet no credible, socially just, ecologically sustainable scenario of continually growing incomes for a world of nine billion people.

UK Sustainable Development Commission, Prosperity without Growth? 2009

Redistribution, regulation and rights

“Policies should provide for:• systematic resource redistribution between countries and within

regions and countries to enable poorer countries to meet human needs,

• effective supranational regulation to ensure that there is a social purpose in the global economy, and

• enforceable social rights that enable citizens and residents to seek legal redress.”

Deacon, B., Ilva, M., Koivusalo, M., Ollila, E., & Stubbs, P. (2005). Copenhagen Social Summit ten years on: The need for effective social policies nationally, regionally and globally (GASPP Policy Brief No. 6). Helsinki: Globalism and Social Policy Programme, STAKES. Available: http://gaspp.stakes.fi/NR/rdonlyres/4F9C6B91-94FD-4042-B781-3DB7BB9D7496/0/policybrief6.pdf.

Neoliberalism 1.0

Washington Consensus:•privatization of state assets•deregulation of economic markets•lower corporate and individual taxes •more user pay for public services•government deficit reduction•trade and financial liberalization

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10

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30

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60

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Number of financial crises by year, 1971 - 2002

Costs of the Financial Crisis• Direct public subsidy to banks: over USD 100

billion dollars annually by the US and UK governments

• Knock-on recessionary effects and lost global economic income: around USD 4 trillion dollars annually, expected to persist for many years, and likely ranging between USD 60 and 200 trillion dollars

Source: Andrew Haldane, Executive Director, Financial Stability, Bank of England: The $100 Billion Question. Institute of Regulation and Risk, Hong Kong, 30 March 2010

Health Consequences of the Crisis: Low-Income Countries

• Increase in those living below the abject ($1.25/day) poverty level: 50 – 200 million by 2009/2010– For 390 million poorest Africans, a 20% drop in income

• Increase in global unemployment: 55 - 100 million• Increase in child mortality: 200,000 to 400,000 excess

deaths• Increase in child labour and domestic violence• Decrease in remittances• Decrease ($300 billion, or 25%) in financial flows to

developing countriesWorld Bank. The Global Economic Crisis: Assessing Vulnerability with a Poverty Lens, 2009; Marmot M, Bell R. How will the

financial crisis affect health? BMJ 2009;338:858-60; International Labour Organization. Global employment trends 2009. Geneva: ILO, 2009; Overseas Development Institute. Children in times of economic crisis: Past lessons, future policies. Background Note. March 2009.

“Poor social policies, unfair economics and bad politics are killing people on a grand scale.”

Those who support fiscal tightening argue that it is indispensable for restoring the confidence of financial markets, which is perceived as key to economic recovery. This is despite the almost universal recognition that the crisis was the result of financial market failure in the first place… (p.V)

Karmjeet Sekhon, project manager for Indian food company Karuturi Global, with crops in Ethiopia's

Gambella province. Photograph: John Vidal for the Guardian

Ethiopia has sold leases to 3.4

million hectares of its best

farmland to foreign

companies

yet relies on 700,000 tonnes of emergency food

aid each year

UN Social Protection

Floor Initiative

http://www.socialsecurityextension.org/gimi/gess/ShowTheme.do?tid=2485

Low-income countries

High-income countries

The way forward is:

‘tough, sustained bilateral negotiations’

(WTO/TRIPS++)

US Trade Representative Ron Kirk 7th WTO Ministerial

A Way Forward

• A life that is secure• Opportunities that are

fair• A planet that is livable• Governance that is just