Globalisation and health

David LeggeIPHU (September 2008)

Purpose

• To explore the links between population health and ‘globalisation’ (understood as a global regime of economic governance)

• To draw some implications for policy-making and for strategy for health activists

‘Globalisation’

• Global village – communications, travel and transport– health concerns: communicable disease,

tobacco, etc • Global economic integration

– trading relationships– money flows– ownership and control

• Global regime of governance– economic, political and military power

Globalisation as a particular configuration of economic

activity

• Changing patterns of production and trade, financial flows and investment, wealth accumulation and income flows– global markets, global sourcing– foreign direct investment– role of transnational corporations– increasing size and power of the financial sector– changing patterns of production and

employment

Globalisation as a regime of economic (and political) governance

• Formal regulatory structures: multilateral institutions and agreements (UN, WHO, IMF, WB, WTO)

• Empires, big powers and nation-states• Transnational corporations (and peak

bodies)• Constituencies and social movements• Information, knowledges and discourses

Formal regulatory structures: multilateral institutions and agreements

• Bretton Woods Institutions– IMF, WB and WTO

• United Nations system– EcoSoc, UNCTAD and UNDP on the economic side– WHO, UNAIDS, UNICEF on the health side

• ‘Public private partnerships’ in health– GFATM, GAVI

• Various conventions and agreements– WTO agreements– declarations on economic, political, cultural and social

rights – Kyoto Agreement– International Health Regulations– Framework Convention on Tobacco Control

Empires, big powers and nation-states

• Governing the regulatory structures – WTO negotiations– regional FTAs and BITs

• Occasional direct disciplinary action– trade sanctions– covert destabilisation– armed intervention

• ‘Development assistance’ including funding and advice

Transnational corporations (and peak bodies)

• Growing in size, increasing number, carrying increasing proportion of global trade

• Global reach; national sponsorship– transnational but with domestic roots– leverage also with other governments– communication media (WEF, media,

markets)• Cases

– big pharma and IPRs– water privatisation

Constituencies and social movements

• Beyond the empire, the nation-states, the international institutions and the transnationals

• More diffused opinion hard to map but still influential– commonalities, identities, alliances and

solidarities – nationality, ethnicity, class, caste, religion,

language and race• Features

– rise of global middle class– fundamentalism (and the decline of modernity)– social movements, eg environmental, womens, – solidarity movements, eg Jubilee– NGOs and CBOs

Information, knowledges and discourses

• Global power of – information, eg health statistics– research and analysis, eg DALYs– discourses, eg comprehensive PHC, cost-effectiveness– ideologies, eg neoliberalism, fundamentalisms

• The information organizations– academic and research centres (eg Harvard SPH)– discussion fora (eg DAC of OECD) – media (eg reports, press coverage, etc)

• Cases– role of the WB in promoting ‘cost-effective packages of

health interventions’– role of NGO websites in informing campaigns against big

pharma

Method• Review the changing dynamics and

regulatory strategies regarding the global economy since WWII

• Review some key reports, episodes, phases and struggles in global health in the context of changing strategies of economic regulation

• Trace some of the interplay between health issues and the wider debates and struggles regarding economic regulation

• Pull some themes from this review which might inform policy making and the practice of public health practitioners

Framing the analysis: an economic history

• 1945-1975: the ‘long boom’ (and trickle down)

• 1975-85: stagflation• 1975 onwards

– looming threat of ‘over-production’ (post Fordist crisis) and

– rise of neoliberalism

The long boom (1945-1975)• The post-WW2 environment

– need for reconstruction (huge demand)– increasing productivity (motor vehicles and

cheap oil)• The boom

– capital and labour brought together to make things and services that people need and are able to pay for

– increasing productivity (associated with new technology) frees up labour to make new things and to recycle wages as consumption (hence more profit, investment and sales)

– some ‘trickle down’ to the poor (associated with Keynesian policies) and to the Third World (benefiting from trade opportunities associated with rapid growth)

1975-85 - Stagflation and the failure of Keynesianism

• Recession (cyclical slowdown on top of structural over-production)– growing imbalance between productive capacity and market

demand; – emergence of ‘jobless growth’; weakening role of employment in

recycling wages as consumption• Emerging inflation

– Keynesian counter-cyclical policies deployed to contain the slow down; ineffective (because slow down structural, not cyclical) but contribute to inflation because increase money supply and inflation without boosting employment and local business but at the cost of budget deficits and inflation

– goods and services for the Vietnam war sourced from outside the USA paid for in dollars (because of the international status of the dollar) flood the world with dollars (increase of global money supply) lead to inflation and depreciation of the dollar (leads to rejection of glold standard in 1972)

– increasing price pressures as different players seek to defend against price increases fought out through various forms of monopoly power (oil with OPEC, labour with strong unions, brand names and protected technologies)

Ascendancy of monetarism

• Monetarism defeats Keynesianism• Monetarism argues for sole reliance on

interest rates to control the business cycle• and argues for‘fight inflation first’

(because of the costs to business of uncertainty)

• but increased interest rates used to control inflation further slows the economy at a time when it was already in recession

The Debt Trap

• The trap set– 1973: OPEC price rise; oil producers flush with

cash; deposited in banks– Banks send salesmen around the world lending

money at low and negative interest rates (negative after taking inflation into account)

• lending to corporations (but with government guarantee) in South America

• lending direct to governments in Africa

• The trap sprung– 1980: interest rates escalate (peaking at 17% in

the US in 1981) at a time of recession, imposing repayment and servicing burdens that many poor countries could not carry

– the 1980s as ‘the lost decade’

From 1980 to the present

• Two parallel dynamics– the continuing dynamic of the

long boom (eg China and India)– the continuing threat of post-

Fordist crisis (jobless growth, structural over-production)

• Further contingencies– climate change– peak oil

The threat of ‘over-production’ (and ‘post-Fordist’ crisis)

• Where expanding (capital intensive) productive capacity (with stagnating employment growth) exceeds ‘demand’ owing to– saturated (‘mature’) markets and/or– markets with real needs but limited purchasing capacity

• ‘Compensatory’ mechanisms which exacerbate the damage from ‘over-production’– understood in the corporate world in terms of reduced

profitability – understood in the policy world as falling growth rates– eliciting a range of corporate strategies and policy

responses– many of which exacerbate the risk of crisis

Reduced profitability: compensatory corporate

strategies• New markets, new products and better

marketing (incl commodification of family and community)

• Externalise costs (including to labour and to the environment)

• Increase market power (and capacity to increase prices)

• Consolidate production and increase market share through mergers and acquisitions*

• Reduce wages (union busting, relocation)*• Replace well paid labour with technology*• *These strategies will further reduce demand

(reduce the role of employment in recycling wages into consumption)

Slowing growth: compensatory policy responses

• Outsource and privatise public sector service provision (new market opportunities)

• Deregulate environmental controls (converting natural capital into recurrent revenue)

• Force TW countries to open their markets and economies (under the slogan of free trade and open markets)

• Cut taxes (in particular, reduce corporate and executive tax burden) to compete for new investment*

• Labour market deregulation (union busting) to reduce labour costs*

• Force repayment of debt from TW countries*• *These strategies further reduce demand

Corporate and policy responses

• Exacerbate the over-hang of productive capacity over effective demand

• Postpone the crisis for the rich world (and rich classes)

• Other unintended adverse consequences– destabilise global environment– increase unemployment and inequality– weaken family and community– decay social infrastructure– transfer value from South to North– two worlds stratification (unified global

bourgeoisie but fragmented global proletariat)

So what prevents the crisis from engulfing the economy globally?

• The situation is already critical for millions of poorer people (in rich and poor countries)– trading regime which enforces the flow of value from poor to rich

countries– policy regime enforces the divide between those who participate in the

new global economy and those who are excluded– for these groups the crisis has already arrived

• However, continued growth globally (albeit slower) is supported through– growth in China and India– commodification of family, community, government functions

(including health care)– unsustainable exploitation of environmental ‘services’– intensified transfer of value from periphery to centre (from South to

North)– growing role of debt in sustaining demand (recycling capital as

consumption)– global support for US consumption (supporting an over-valued dollar)

Capital recycled as consumption through debt

• Profits and savings redirected as loans:– corporate rationalisation (in particular mergers and

acquisitions) financed through corporate debt – household consumption supported through increasing

debt (recycling profit and savings as consumption)• Increasing size, wealth, turnover and power of the

financial sector (banks, insurance, etc):– slowing growth so business redirects profit into financial

sector (as portfolio investment and speculation) rather than into new direct investment

– new financial derivatives increase risky lending and speculation

– bidding up of asset values on borrowed or non-existent money (asset bubbles) feeds consumption expenditure (wealth effect)

– privatisation of pensions (superannuation) redirects billions from tax into savings held by private financial institutions (lent on for asset speculation and consumption)

Global support for US consumption

• US trade deficit– imports exceed exports– US traders need to buy more foreign currency than they

earn – ‘should’ lead to fall in value of dollar making US exports

cheaper and imports more expensive

• But China, OPEC and other corporations and countries lend to the US (by buying US govt bonds) have– kept the price of USD high– kept US consumption spending high (and inflation low)– kept the global economy ticking over

• Up until the ‘sub prime mortgage’ crisis; what now?

Implications of ‘sub-prime mortgage crisis’

• Extensive use of doubtful collateral (securitised debt) to support borrowing revealed

• Credit squeeze: banks withhold credit because of exposure

• Asset bubbles pricked; widespread loss of ‘wealth’; likelihood of recession

• Foreign holders of US Govt bonds sell off or stop buying (buy oil futures instead)

• Value of USD falls• Threat of global recession because of significance

of US market to exporters globally

Continuing transfer of value from periphery to centre (S

N)• Debt repayment

– role of IMF (and SAP / PRSP) as the enforcer

• Borrowing (high interest) while generating surplus (low interest)

• One sided trade liberalisation– free trade in manufactured goods– protectionism for IP and agriculture

• including escalating tariffs

– barriers to free trade in people

• Brain drain• Declining terms of trade

– commodities vs manufactures

Free trade - the key to growth and development?

• ‘Free trade’ - a catch-all slogan obscuring countries’ and corporations’ manoevering for advantage

• Regulatory framework defining ‘free trade’ discriminates in favour of the rich North

• Globalised free trade risks exacerbating the crisis of overproduction

• Protectionism, can have important benefits as well as drawbacks

Alternative strategies of global economic management

• (Really) free trade?• Global Keynesianism

(UNCTAD)?• National self-sufficiency and

regional (south south) trade (Amin)?

Recap: exploring the links between health development and

globalisation• Purpose

– to explore the links between global health and the prevailing regime of global economic governance (‘globalisation’)

• Method– review some key episodes in global health

policies since WW2 against the– changing dynamics and pressures arising

in the sphere of economic regulation– interpreted in the light of the account

presented of the global economy since WW2

Bretton Woods to AIDS/HIV (1944-85)

• 1944: Bretton Woods (IMF, WB, GATT)• 1950s: Health development policy: DDT, doctors and

hospitals, population control• 1955: Bandung Conference and birth of the Non-Aligned

Movement (more confident TW voice)• 1964: UNCTAD 1 (and G77) leads to call for New

International Economic Order in May 1974• 1973: First OPEC price rise• 1977: last case of small pox• 1978: Alma-Ata Declaration (PHC, reference to NIEO)• 1975-80: Onset of stagflation, end of the long boom,

emergence of monetarism• 1981: escalating interest rates, debt trap sprung• 1981: ‘Selective PHC’ (the response to Alma-Ata)• mid 1980s onwards: IMF develops and imposes SAPs • mid to late 1980s: rise of AIDS/HIV• 1987: ‘Adjustment with a Human Face’

Break up of Soviet Union to Seattle (1985 - 2000)

• 1989: Break up of the Soviet Union• 1991: USTR attacks Thai administration over pharmaceuticals

policies• 1992: WHO: ‘Health Dimensions of Economic Reform’• 1993: WB: ‘Investing in Health’ (virtuous cycle story, SAPs

can be compatible with health development, new interventionism)

• 1995: WTO established• 1995-98: OECD drive for MAI (note role of NGOs and internet;

but continuing push in WTO under ‘Singapore issues’)• 1997: Sth African parallel import legislation passed,

challenged (challenge defeated April 2001, note role of MSF and other NGOs and internet)

• 1999: PRSPs implemented (new and improved SAPs)• 1999: WTO in Seattle: outrageous process; dramatic protests• Dec 2000: People’s Health Assembly and People’s Health

Charter

Treatment Action Campaign to Hong Kong (2000-08)

• April 2001: Defeat of big pharma in South Africa (note role of TAC, MSF and global social movements)

• April 2001: Norway Conference (WHO accepts differential pricing)• June 2001: CMH Report (warning about health and stability; virtuous cycle

story repeated, ‘CTC model’ and scaled up interventionism; reliance on increased aid (and GFATM) and PRSPs)

• Sept 2001: 9/11• Nov 2001: Doha and the Statement on Public Health (especially Para 6

and compulsory licensing; note rearguard action by US)• Oct 2002: Bristol Myers Squib defeated in Thai DDI case• Mar 2003: Invasion of Iraq (US unilateralism; widespread opposition; limits

to US power apparent)• Oct 2003: Negotiations for US Thai FTA commence (at risk: compulsory

licensing, data access, extended IPRs)• Nov 2003: Cancun: G21+China stands up to G7; deadlock over agriculture

and ‘Singapore issues’; US moves to focus on bilateral and regional FTAs• Nov 2003: Miami FTAA-lite (US knocked back by Latin America)• Jan 2004: IMF report critical of US twin deficits• July 2004: Framework for Doha Round adopted • Dec 2005: Hong Kong Ministerial• Feb 2008: Sub-Prime Crisis breaks• Sept 2008: Report of WHO Commission on Social Determinants

Against TNA: outcomes not inevitable

• Delegitimation of SAPs• Jubilee 2000 and the Drop the Debt campaigns• MAI-non!• Doha 01 - TRIPS and access• Cancun 03 – advancing the demand for

agricultural reform and resisting the Singapore issues

• Miami 04 – resistance to US ambitions for a FTAA• Arenas of struggle: global regulators• Delegitimation and the role of (globalised)

popular movements • Another World is Possible! • Emergence of the PHM

*TNA – “There is no alternative” (attributed to M Thatcher)

Issues which link health policy with global economic regime

• SAPs and nutrition• TRIPS and access to drugs• GATS and the building of comprehensive PHC• Health and fair trade (with special and

differential treatment)• AoA and small farmers’ loss of livelihood (and

health consequences)• Policy reports (such as CMH) which deny (by

obscuring) the disease burden created by the prevailing regime of economic governance

Another world is possible! Another US is necessary

• We have – reviewed the interplay of economics and health

at the global level over the past 60 years– interpreted the interplay of health and

economics in relation to a particular story about the global economy over this time

– drawn some conclusions about strategy for global health activists

• Key conclusions– recognise, celebrate, learn from and work with

popular movements for health and economic justice

– keep global economic in/justice at the centre of health needs and health policy discussion