By Gu Jun-mo
PSSP Policy Committee
The G20 Summit will be held in Seoul, from November 11 to 12. In preparation, G20 leaders are busy looking for ways to protect existing power structures and the current economic and financial order. Similarly, activists in South Korea are busy getting ready to confront the G20 when it arrives. However, there is a lack of agreement within the South Korean movement as to how we should approach the G20. Opinions range from beliefs that 'critical engagement' is the best way to go to convictions that simple criticism is not enough. The former base their position on what they see as the positive points of the G20: that it seeks to solve the global economic crisis, that it includes South Korea and other developing nations, that it is implementing certain financial reforms. Many of us believe, however, that these 'positive points' are, in fact, hollow, and that the G20 is fundamentally problematic. We recognize that the G20's fundamental goal is to manage and protect global capitalism while furthering the interests of a few dominant countries. Thus, we believe it should be the target not of 'critical engagement', but of determined opposition. Moreover, we believe that building a people's alterglobalization movement-a movement that seeks democratic alternatives to global capitalism-is vital at this moment in history, and that the struggle against the G20 is a means towards this ends. The following article explains our understanding of the G20's nature and concludes by suggesting a direction for the people's movement in relation to the upcoming Summit.
I. How should we understand the G20?
A. Unrepresentative, Illegitimate and Undemocratic
The G20 is, at its core, unrepresentative, illegitimate and undemocratic. Out of the 190 countries around the world, only 20 participate in the G20. These few countries do not and cannot represent the interests of the rest of the world. Moreover, most participating countries have been the strongest promoters of neoliberal policies, which have already been proven to create poverty and inequality around the globe. The G20 countries are also the ones responsible for the current crisis. As such, the G20 has no legitimacy. Finally, participation at G20 meetings is closed, and the decision-making process and content of discussions are not made public. This makes the space completely undemocratic.
When the economic crisis spread throughout the world in the second half of 2008, the United States and hegemonic European states moved quickly to respond in the form of G20 Summits. Through the four meetings held during the last two years, the G20 has names itself the highest decision-making body on issues related to the global economy. In addition, by discussing many issues outside the realm of the economy, such as development, poverty and the environment, the G20 has sought to make itself the central instrument for the maintenance of international hegemony. However, like the G8, the G20 has no status in international law whatsoever. There is no standard for why this body includes 20 countries. Rather, the countries included were decided on through a process carried out within the G7 (the G8 minus Russia) between 1997 and 1999, at the end of which 12 developing countries were selected based on the size of their economy and geopolitical factors. It was the G7 who made the final decision on who would be invite in and who left out.
What gives these few countries the right to make decisions that affect the fate of the rest of the world? In many ways, the G20 is organized along the same line as the shareholders' meeting or board of directors of a corporation; economic scale is the basis upon which the right to participate and decision-making power are allotted. This clearly has nothing to do with democracy. Developing countries are now participating, but most of them, as the 'strong men' in their respective regions, are supporters of the U.S.-centered world order. There is means for the 170 countries excluded from the G20 to voice their opinions or represent their own interests.
This undemocratic and illegitimate character is the main reason why 900 social movement organizations in 115 countries, including Jubilee South, ATTAC (Association for the Taxation of Financial Transactions for the Aid of Citizens) and others have signed onto a "Statement on the proposed 'Global Summit' to Reform the International Financial System." This statement calls for a new framework for discussing alternative ways to solve the current economic crisis, one that protects democratic participation and debate (See www.choike.org/bw2/). These organizations propose that an international conference convened by the United Nations replace the G20 as the body for discussing reform of the international economic system. The UN conference they propose would: 1) include participation from all governments around the world, 2) include representatives from civil society, citizens' organizations and social movements, 3) have a clear timeline and process for regional consultations in areas most affected by the crisis, 4) be comprehensive in scope, tackling a full array of issues and institutions, and 5) be transparent, with proposals and draft outcome documents made publicly available with ample time for discussion. While the UN itself has clear historical and structural limitations, the fact that hundreds of organizations signed this statement demonstrates widespread recognition of the G20's fundamentally problematic nature. The simple question posed by Filipino alterglobalization activist Walden Bello-"Who gave them the authority to solve this crisis?"-speaks to the same recognition, and points to the basic premise upon which anti-G20 struggles are being carried out around the world.
The inclusion of South Korea and a few other developing countries in the G20 does not in anyway alter the G20's basic nature. Perhaps South Korea's participation, and its hosting of the next Summit, appear positive for national image and prestige, when viewed from the perspective of narrow self-interest. But the G20 should be evaluated, not in terms of its meaning to individual countries or their governments, but from a perspective that puts the rights of the common people around the world first. In other words, the G20 should be evaluated from an internationalist perspective. From this perspective, it is clear that a new democratic framework is needed to replace the G20. In particular, this new framework should centralize, the needs, not of countries from the North, which have built their wealth through histories of imperialism, and which are responsible for the current crisis, but rather of the people of the global South who have historically been victims of capitalist plunder.
B Management, not Change; Words, not Action
Despite the fact that the G20 was convened to deal with the economic crisis, it is not confronting the real issues at the center of the crisis-neoliberal ideology, the overwhelming power of financial capital, global inequality, and attendant social problems. Rather, the G20 is treating the crisis as a problem of tweaking policy. It is seeking technical and bureaucratic fixes, while strengthening the authority of the IMF, the institution most responsible for causing poverty and inequality around the world by forcing neoliberal structural readjustment programs. In other words, the goal of the G20 is to revise policy only to the extent it does not threaten the interests of participating countries and leaves in tact the structures of global dominance that have been in place for the last 30 years. It is looking for ways to manage the world system that maintain the current hegemonic system and is thus friendly to capital and dominant classes. Thus, it has no intention of overcoming financial globalization or abolishing neoliberalism.
The G20 is able to act this way because of widespread belief that the crisis can be solved without fundamental change. This, however, is not the case. The current crisis is a systemic one that cannot be overcome without extensive structural change. Neoliberal financial globalization is the result of efforts to respond to capitalist crisis in the 1970s. At that time, capital"s strategy for getting around a lack of profitability in the real economy was financialization, in particular speculative investment in stocks, bonds and real estate. Speculative activities grew deeper and deeper, getting more and more out of control… until the system collapsed. If we survey the capitalist economy now, we see that there is no clear area for investment that might function, like real estate did, as a bubble for financial accumulation, nor is there a new source of growth within the real economy. As such, the capitalist economy is facing the likely prospects of a long period of low growth and instability. During this period, the problems of poverty, climate change and agriculture will only get worse. The time is ripe, now more than ever, to break from the current order and look for an alternative to capitalism.
Rather than taking action, the G20 is disguising the severity of the situation through clever words and packaging. When, beginning in the second half of 2009, the economic crisis looked like it was weakening, the G20 began to make references to issues like employment, development, and the environment. We have, however, seen little real progress in these areas. G20 leaders boast of their friendship and unity and put on nice performances before the cameras. But as time goes on, promises made fall to pieces. We have seen all of this before with the G8. When G8 leaders found themselves on the receiving end of criticism for pursuing neoliberal policies, they began to claim they also saw issues such as foreign loan write-offs and development aid as important. These proclamations succeeded in giving the G8 an air of legitimacy. In fact however, very few steps were taken in these areas. Most of the talk was just that-talk.
It is the same with the G20. G20 leaders have made public promises in the areas of labor rights, the environment, and development, but there is no real substance. They have said they will work towards achievement of the Millennium Development Goals, take interest in the problem of climate change, develop policy concerning the use of renewable energy over fossil fuels, make efforts towards job creation, respect labor rights, etc., etc. But in each country, these pledges are already being broken. South Korea is case in point. At the G20 Summit in Pittsburgh, leaders promised that international labor standards would not be ignored or deteriorated. However, in South Korea the government of Lee Myeong-bak is weakening labor law protections and repressing labor activities. In addition, while stricter financial regulation is being discussed on an international level, in Korea the law maintaining a division between financial and industrial banks and regulations on financial commodities are being weakened and more power is being given to investors.
II. Financial Regulation: Implications and Limitations
A. Stronger Regulation and Taxation
The G20 has been promising stricter financial regulations since its first meeting. However, it has very little to show after two years of discussing reforms. Therefore, social movement organizations around the world have been calling for stronger controls on financial capital than those being discussed at the G20. A statement released by ATTAC in October 2008 entitled, "The time has come. Let"s shut down the Financial Casino: ATTAC"s Statement on the Financial Crisis and Democratic Alternatives" represents one of the most comprehensive statements of this position. ATTAC puts forth 4 demands: 1) the creation of a new democratic economic order, 2) breaking the dominance of financial capital and putting the real economy and social needs first, 3) making those responsible for the economic crisis pay for its cost, and 4) policies for controlling finance through reform of central parts of the financial system.
The financial regulations being pursued by the G20 cover only a very limited part of only the fourth demand. They are therefore, clearly insufficient to bring about substantial change to the current economic order out of which the crisis developed. Yet, many movement forces are focusing only on what is being said within the G20, demanding that the regulations being discussed are strengthen. For example, demands are being made that hedge funds and private equity funds be required to reveal to the public the exact portfolios and extent of leverage of the assets they have invested. Demands are also being made that the system for regulating financial commodities be changed from a negative system (listing only the types of commodities prohibited) to a positive system (listing all commodities that are allowed) so that each new financial commodity with be clearly brought under public supervision. And, demands are being made that tax havens for speculative capital and offshore financing centers be completely abolished.
In addition, a movement has developed calling for the implementation of what is being called the Robin Hood Tax. The Robin Hood Tax would be a tax of 0.001% ~ 0.05% on all financial transactions, including those involving stocks, bonds and foreign exchange. The idea for the Robin Hood Tax grew out of the Tobin Tax concept. The Tobin Tax would tax only foreign exchange transactions. Proponents of the Robin Hood Tax believe that the principle of taxing the profits made on commodity transactions should be applied to the financial sector without exception. They hope that such a tax would reduce the scale of short-term financial transactions. Moreover, they are calling for a fixed amount of the massive resources procured through this tax to be used to battle climate change and contribute to the development of impoverished countries-hence the name, 'Robin Hood Tax'.
B. Enough to Propel Change?
How should we view these various demands for stricter financial regulations? Simply, they are needed, but they are nowhere near enough. First of all, these demands are asking for only micro-level changes. They do not address most of ATTAC"s demands, namely the call for a new framework to replace the G20, for fundamental policy reform to control the power of financial capital, and to make those responsible pay for the crisis.
A tax on financial transactions is part of one of these demands-the call for fundamental policy reform to control the power of finance. But a financial transactions tax has to be coupled with other measures, including prohibitions on Large and Complex financial Institutions (LCFI), prohibitions on privatization of public enterprises and pensions, and transformation of distribution policy, if it is to be effective. If these elements are brought together something close to fundamental change is possible. However, many social movement organizations are focusing on just the financial transaction tax or just one or two other measures in isolation. Or, they are trying to make the reforms being discussed within the G20 a bit more progressive through lobbying-based strategies. In taking this approach, they are forgoing the goal of systemic change.
It is not possible to truly constrain the power of financial capital through a piecemeal approach. Because the opinion of each country is different and financial capital is still powerful, reform policies discussed within the G20 necessarily get distorted in the process of trying to mediate competing interests. The G20, which is linked to the interests of the U.S. and European powers, and through them to the interests of financial capital, has no reason to promote real change.
Without a complete change of direction based on agreement about the need to root out neoliberalism and financial globalization, individual policy reforms cannot be effectively implemented. Therefore movements that focus on the possibility of implementing micro-level policy reforms will also have a very difficult time even achieving their stated goals. Beyond this problem however, is the problem of seeing limited financial regulation as an end in itself, rather than as one step in a larger process of transformation. We need use the fight for financial regulation as a means through which to expose the essence of neoliberalism and create the force necessary to propel a movement for an alternative to global capitalism-an alterglobalization movement. Therefore, we must frame demands for thorough financial regulation within the context of wider demands for systemic change.
III. What should the goal of the G20 Struggle be?
So, what should be the goal of a struggle confronting the G20? In short, we should see this struggle as a chance to build a people's alterglobalization movement. The strategy of movement building has three component parts. First, the G20 struggle should be an opportunity to expose the fact that the economic crisis and the related social crises we are currently facing are deeply systemic and endemic to the capitalist mode of production. The reason that some people have hope that the G20 will provide solutions and believe critical engagement with the G20 is possible is that they misunderstand the economic crisis as temporary and superficial. When we understand financial globalization in terms of series of connected policies and act as if tweaking these policies will solve the problem, this misunderstanding is reproduce. It is also reproduced when we act as if climate change can be confronted simply through implementation of a few policies, introduction of new technology, and carbon emissions trading, rather than a fundamental revision of how we produce and consume. It is reproduced when we think of dealing with poverty and inequality only in terms of achieving the Millennium Development Goals, rather than in terms of new methods of distributing wealth. The struggle against the G20 needs to be made into an opportunity for expanded debate and discussion about the current political-economic conjuncture, not in terms of individual policies, but in terms of the root causes of inequality and of fundamental transformation. If we can do this, we will begin to be able to conceive of the alternatives we wish to pursue and the type of movement we need to build.
Secondly, we must use this opportunity to expose the real nature of the G20 by making it the focus of our struggle. It is, of course, important to use this opportunity to raise individual related issues, such as ending practices destructive to the environment and development aid to impoverished countries. Our main target, however, should be the G20 itself. The South Korean government's main propaganda thrust is to link the G20 to South Korea's prospects advancement. In response, we must expose the fact that the G20 is set up as an instrument for managing a capitalist system faltering on its own structural contradictions, that it is making a concerted effort to avoid rather than bring about real change, and that South Korea's role is to support U.S. hegemony while acting as if it represents developing nations. The Lee Myeong-bak government is planning to use every means available, including enactment of new laws and methods of intimidation, to shut down protests during the Summit. Therefore, strong resolve and great effort is required from social movement forces. It is important that the South Korean movement takes up this responsibility collectively and is not divided by the effort to focus on too many separate single issues.
Finally, we need to use this opportunity to develop our creativity and to begin discussing concrete alternatives to the current system-in other words, we need to use this opportunity to expand alterglobalization discourse. In the first part of this decade the alterglobalization movement was strong. Within it, people actively envisioned what a new society would look like. After the world economy plunged into serious crisis, however, this sort of thinking has actually decreased. The struggle against the G20 is an opportunity for as to being again to talk seriously with one another about the type of world we want to live in and would look like. Let's use this moment well.