Archive for October, 2010

PSSP Participates in National Care Workers Rally

Posted in activities on October 18th, 2010 by pssp – 2 Comments

On October 16, demonstrated our support for nurses’ aids, childcare workers, workers who assist the elderly and disabled people and other care workers by participating in a National Care Workers Rally. The protest, held in front of Bosingak (bell tower), a historic site in downtown Seoul, was attended by care workers and many of their allies, including social movement organizations, progressive political parties, student organizations and labor unions. All together roughly 200 people attended.

The main goal of the day were to demand that the government and public take responsibility for ensuring care workers’ work conditions and that care workers’ labor rights be guaranteed. Specifically, we called for 1) a living wage and job security for care workers, 2) an end to marketization of social services, 3) government efforts to strengthen the system for care service provision, 4) an end to the government’s plan for confronting South Korea’s low birthrate through marketization of social services and the consequent victimization of care workers.

Care work is a relatively new issue in South Korea. Until recently, care work services were performed mostly by women in the home as an element of unpaid reproductive labor. Recently, however, care work is being performed more and more as a form of low-paid wage labor, and has become and object of government policy. Rather than recognizing care work services as essential to social welfare, the government seeks their marketize, a policy which will result in further deterioration of the conditions in which care workers work. PSSP recognizes that in order for care workers’ to win proper work conditions and respect for their labor rights, social awareness of the importance of care work must be raised. For this to happen care workers themselves must organizing and come forward themselves to claim their rights.

It is with this understanding that PSSP has been supporting the struggle of care workers.
We not only participated in the National Care Workers’ Rally, but also assisted in planning and organization ahead of Oct. 16. Our new movement dance team also performed for the first time on Oct. 16. In the future we will continue to support care workers empowerment and leadership, and work in solidarity with their struggle

Basic Overview of the G20 Part II:

Posted in articles, resources on October 10th, 2010 by pssp – Be the first to comment

Part II:

Table of Contents
1. What is the G20?

2. The History of Capitalism and the G7/G20
1) The birth and background of the G7
2) The structure and role of the G7
3) The Asian financial crisis and the birth of the G20

3. The Economic Crisis and the G20
1) The 2008-2009 economic crisis
2) What has the G20 done?

Part II:
4. Main Issues
1) So, is the G20 a decent institution?
2) How should we understand financial regulation?

5. What Should be our Goals in Protesting the G20?
1) A fight against the Lee Myung-bak administration
2) Refusal to pay for capital's crisis and a struggle against complex crises
3) A movement for a new world

4. Main Issues

1) So, is the G20 a decent institution?

-There are some who say that the G20 is more inclusive than past international institutions, which have been dominated by a few powerful countries. Therefore, they say, we should adopt an stance critical engagement with the G20, not direct opposition. Is this the right strategy?
-No. The G20 is fundamentally unrepresentative, illegitimate, and undemocratic. It is unrepresentative because, as a group of only 20 countries chosen based on the size of their economy, there is no way it can represent the interests of the 190 countries of the world. It is illegitimate because the countries that dominate it are the ones responsible for forcing neoliberal policies and creed on people around the world and, in so doing, creating the global economic crisis. It is undemocratic because participation in meetings is closed to non-members and meeting proceedings are not made public.
-Like the G8, the G20 has no basis in international law. There is no clear standard for why it includes 20 countries. Rather, the 12 emerging economies chosen were included based on the size of their economies and geopolitical factors at the end of a two-year period of trial and error. The G7 made the final decision on who would be invite in and who left out.
-It is true that some developing countries are now participating in the G20, but most of them are the 'strong men' in their respective regions and, as such, are supporters of the U.S.-centered world order. There is no means for the 170 countries excluded from the G20 to voice their opinions or have their interests represented.

*The need of an open democratic framework
-These problems are the reason that 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 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. 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.
-While the UN clearly has is own 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. Anti-G20 struggles are being carried out around the world based on this understanding.

*An internationalist perspective
-The inclusion of South Korea and a few other developing countries in the G20 does not in anyway alter the G20's basic nature. The G20 must be understood from a perspective that prioritizes the universal rights of people all over the world, not from the perspective of national self-interest. From this perspective, it is clear that a new democratic framework is needed to replace the G20. This new framework should centralize the needs of the people of the global South who have historically been victims of capitalist plunder, not of countries of the North, which have built their wealth through histories of imperialism, and which are responsible for the current crisis.

2) How should we understand financial regulation?

-From its first Summit on, the G20 has been promising stricter financial regulation. Unfortunately, after two years, it has shown little by way of results. Therefore, social movement organizations around the world have been calling for stronger controls on financial capital than those being discussed at the G20.

*ATTAC's demands
-In December 2010, the ATTAC released as statement entitled, 'The time has come. Let's shut down the Financial Casino: ATTAC's Statement on the Financial Crisis and Democratic Alternatives.' The statement includes the following four demands: 1) creation of a new democratic global economic order; 2) end to the dominance of financial capital and that the real economy and social needs be put first; 3) that those responsible for the economic crisis pay for its cost; 4) introduction of policies for controlling finance through reform of central parts of the financial system.

*Other demands being made
-The financial regulations being pursued by the G20 cover only a very small part of only the fourth of these demands. They are clearly insufficient to bring about substantial change to the current economic order out of which the crisis developed. As such, social movement actors have been making demands that each of the reforms being discussed by the G20 be notched up a level. 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.

*Financial Transaction Tax
-Another demand that has gotten significant attention is that for a tax on all financial transactions (called the Robin Hood tax or the financial transaction tax) . The financial transaction tax is an expansion of the Tobin tax proposal, which involves a tax on foreign exchange transactions. The financial transaction tax would be a levy of 0.001% ~ 0.05% on all financial transactions, including those involving stocks, bonds, and foreign exchange. 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'.

*The need for comprehensive change
-How should we view these various demands for stricter financial regulations? Simply put, they are needed, but they are nowhere near enough. The majority of 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 putting social needs and the real economy before financial capital's profits, and to make those responsible pay for the crisis. In terms of the fourth call for fundamental policy reform to control the power of finance, this can be achieved through the introduction of a financial transaction tax if it is coupled with prohibitions on Large and Complex Financial Institutions [LCFIs], prohibition on privatization of public enterprises and pensions, and a transformation of distributive policy.
-The strategy of critically engaging with the G20 amounts to using lobbying tactics to get the reform measures being proposed within the G20 made a little but stronger, or getting one or two policies, such as the financial transaction tax, added. This strategy does not make fundamental systemic transformation possible.

*How can we bring about real change?
-It is not possible to truly constrain the power of financial capital with 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 efforts that focus on the possibility of implementing micro-level policy reforms will have a very difficult time even achieving their stated goals. Beyond this issue 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.

5. What Should be our Goals in Protesting the G20?

1) A fight against the Lee Myung-bak administration

-The Lee Myung-bak administration has painted South Korea's holding of the G20 Summit as a 'great diplomatic feat' and 'splendid occasion' for the nation. The government is now even carrying out a campaign to get Korean people to adopted the proper 'etiquette' while the Summit is going on. What should we make of these propaganda efforts?

*Is South Korea's winning the chairmanship of the next G20 Summit a 'great diplomatic feat' of the MB administration?
-There are essentially two reasons why South Korea is getting to hold the G20 Summit. First, it was South Korea's turn, by rotation, to chair the upcoming G20 Meeting of Financial Ministers and Central Bank Governors. Last year the U.K. got to host the G20 Summit for the same reason. Even more important than this, however, is the position South Korea occupies within the G20. South Korea plays the role of the 'model developing nation', which faithfully represents the position of advanced countries, led by the U.S. From the perspective of dominant countries, South Korea, which has on its own adopted free trade principles and sings the praise of capitalist development, is very welcomed in comparison to the countries of the global south and social movement forces who are annoyingly criticizing the inequality inherent in the current system. From there perspective, South Korea is very symbolically important.

*The destruction of civil and democratic rights
Civil and democratic rights are being destroyed under the guise of the G20. The Lee Myung-bak administration is using the G20 as an excuse to carry out widespread crackdowns against migrant workers, street vendors, and homeless people. Government discourse paints undocumented migrant workers as potential terrorists who threaten the safety of international meetings, and street vendors and homeless people as defiling Seoul's streets. In addition, the government has passed a 'Special Law on the Safe Escort of the G20 Summit', which allows the Blue House Minster of Escort to establish areas in which demonstrations are completely prohibited at will, and even permits the mobilization of the army to put down dissent.
-Such measures are being implemented far beyond South Korea as well. The G20 is acting as a strong force of repression against democratic rights and social movements around the world. Each of the four G20 Summits held in the last two years stimulated critique and protest. In response, the governments of the countries hosting the meetings enacted measure that restricted people's rights to express their opinion and violently put down protests. The G20 Summit held in Toronto, Canada, last June is case in point. The Canadian government erected a 3-meter high wall of concrete and iron around the meeting site, and mobilized 20 thousand police, who indiscriminately arrest 600 protestors while firing tear gas canisters and rubber bullets randomly.
-These acts of repression are starting to set a new standard. Similar measures occur around every international meeting and are becoming more and more frequent. In the end, even the basic concepts of civil rights and democracy are being destroyed. This problem is spreading around the world through the mechanism of international meetings.
-The Lee Myung-bak administration sees the G20 as its main project for the second half of the year. If we are going to send a message of warning that we will not tolerate violations of civil and democratic rights and put a stop to MB's violence, we have to be prepared for mass struggle at the time of the G20 Summit.

2) Refusal to pay for capital's crisis and a struggle against complex crises

*The crisis has not ended
-The economic crisis has not ended. Countries around the world have been implementing fiscal and monetary policies in attempts to get past the crisis. In this process, common people have been forced to pay most of the costs. The principle of 'privatization of profits, socialization of loss' is being put into practice over and over again.
-Despite all the money we have shelled out, doubt remain as to whether all the speculative bubbles have been extinguished and all the bad assets of financial institutions have been disposed. In addition, some countries, particularly developing countries in Europe, are facing continued crises perpetuated by excessive spending and trade deficits.
-It is highly likely that the fiscal crises now faced by countries who spent heavily in their efforts to overcome the global economic crisis will get worse. In addition, warnings that economic stagnation could return in the form of a 'double dip' are growing stronger. This is because recovery in the real economy is being retarded by the fact that high levels of debt-driven consumption are now no longer an option.

*Complex social crises growing more severe
-The problems of poverty, climate change, energy, and agricultural are also getting more severe. Although the threat of climate change grows more severe every day, no party has yet stepped forward to offer a sincere solution. Air pollution and global warming due to fossil fuels are getting worse, yet the transition to environmentally-friendly renewable energy is proceeding at a snail's pace. Small farmers and their families are dying due to the unsustainable practices of corporate agriculture, and the price of cereals is rising due to commodity and fuel speculation. Economic growth has become detached from employment, such that unemployment is increasing, while labor unions and labor rights are under attack. Inequality and poverty rates remain as high as ever and are even rising in some areas. These problems only stand to worsen amidst continuing economic crisis unless assertive solutions are found.

*Refusal to pay for capital's crisis
-Economic and social crises have very uneven effects depending on region and class. Groups that do not have the resources to respond to crises are the ones who are victimized the most. This is not the only problem. The cases where policies implemented as 'solutions' to the crisis only exacerbate these geographic and class inequalities are numerous. Those who are responsible for creating the crisis are the ones who should pay for it. It is essential that a proper solution to the crisis be implemented immediately.
-We need a movement that opposes the privatization of profit and the socialization of loss. When capital makes massive profits through risky speculation, it keeps all those profits for itself. On the other hand, when a problem arises, workers are laid off and wages are cut, while tax payers' money goes to save corporations. The case of Ssangyong Motors in South Korea is typical. Our movement must be able to expose this pattern of pushing the burden onto common people and to stop it.

*A struggle against structural adjustment and the diminishing of social welfare
-Our movement must fight against structural adjustment in the public sector and the reduction of social welfare. Since they have spent vast amounts of money to support corporations, many countries are now saying its time for austerity measures. At the Toronto G20 meeting in June, heads of state agreed to a basic framework for austerity measures. Most austerity measure result in an attack on workers in the public sector and diminishing of social welfare. At the same time, tax cuts to the rich are further reducing revenues. The Lee Myung-bak administration's plan for 'advancement of the pubic sector', which involves unilateral cancellation of collective bargaining agreements and structural adjustment, is an efforts to facilitate these measures. Fiscal health needs to be achieved through heavy increase in taxes on the rich and corporations.

*A struggle to protect labor rights
-Our movement has to stand up to the destruction of labor rights and the flexibilization of labor. All over, the economic crisis is being used as a pretext for cutting wages and weakening labor standards. The G20 has agreed that the economic crisis should not be an excuse for destroying labor rights, but this is nothing but talk. In countries around the world, workers are under attack and labor flexibilization is become more severe. In South Korea, the Lee Myung-bak administration is using such tactics as non-recognition of unions, the time-off system, and the cancellation of collective bargaining agreements in an attempt to annihilate the labor movement. The government is also pushing forth new labor flexibilization policies including the expansion of agency work and introduction of a flexible work-time system. It is essential that workers come out in force for the worker's day demonstrations (November 6-7) and to protest the G20.

*-A struggle against interrelated social crisis
Our movement also has put an end to governments' avoidance of multiple social problems such as climate change and poverty, and demand real solutions. The G20 has said it would promote development in poor countries, work on the issue of climate change, and abolish fossil fuel subsidies, but it is in fact taking a passive attitude towards these problems. We cannot rest our hopes on the G20. We must come up with real solutions our selves. We must make our struggle a fight for complete forgiveness of foreign debts, massive funding towards the abolition of poverty, direct reduction of greenhouse gases, and general use of renewable energy sources.

3) A Movement for a New World

-The continuing crisis brings with it a clear message: It is time for a new world!

*The alterglobalization movement
-During the past ten years a movement against neoliberal globalization has developed. This movement has grown from being simply a negative 'anti-globalization' movement into a positive 'alterglobalization' movement. The alterglobalization movement must have following characteristics:

1) The movement is based on the principle of people's rights and self-determined action. The movement is working to define concrete people's rights as a way to move past the fallacy of international economic organization's call for 'globalization with a human face' and the conservative and regressive elements of anti-globalization discourse. Instead, the movement seeks to eliminate the cause of people's alienation from one another in the midst of globalization and create the conditions necessary for the fulfillment of mutual and expansive rights. The movement also prioritizes the achievement of alterglobalization goals through people's self-determined action.

2) The movement seeks the development of revolutionary strategy and demands necessary for collective struggle against financial globalization. These strategy and demands cover the political, economic, and social arenas. For example, in the face of foreign debts crises in peripheral and newly industrialized nations, the movement demanded the dismantling (or fundamental transformation) of international financial and trade institutions, forgiveness of the foreign debt of third world countries, and a financial transaction tax as a means for controlling capital. The farmers' movement, one of the most active forces among global social movements, is currently carrying out a struggle for food sovereignty (meaning not simply national self-sufficiency in food production, but also farmers' rights to land, biological diversity, genetic resources, and agricultural knowledge) , land reform, and the introduction of a new agricultural model. Women in the alterglobalization movement are developing demands and a struggle against the femanization of poverty and increasing violence against women caused by globalization.

3) The movement emphasizes solidarity between national groups and communities that have been historically and geographically divided. It rejects the world vision produced through western imperialism and seeks to replace it with an internationalist perspective. It actively seeks a framework for communication and solidarity between diverse areas and social movements.

*The anti-G20 struggle
-The struggle against the G20 for the last two years can be seen as generally fitting into the alterglobalization framework.
-The future depends on our ability to create and strengthen a movement that dreams of a new world. Let us fight for this new world. Toojeng!

Announcing the Launch of the PSSP affiliated Research Institute for Alternative Workers Movements, Oct. 21

Posted in activities on October 6th, 2010 by pssp – Be the first to comment

On Oct. 21, the PSSP affiliated Research Institute for Alternative Workers Movements held its launching conference and ceremony at the Franciscan Education Center.

Our Mission

The Research Institute for Alternative Workers Movements was established in 2010 to contribute to the revitalization of the workers movement in South Korea and beyond. Through empirical and theoretical study and dialogue with workers themselves, we are working to critically analyze the conditions workers face amidst the structural crisis of capitalism, and develop concrete policy for a workers movement that both improves workers’ lives and strives towards an alternative political-economic system.

Central to our work is the concept of social movement unionism, which calls for unions and other workers' organizations to play a leading role in political and social transformation. Social movement unionism also signifies union collaboration with social movement forces and the articulation of the struggle for labor rights with struggles against other forms of structural oppression, including the women's, anti-war, anti-racist and environmental justice movements.

By fostering social movement unionism in South Korea we seek to cultivate the Korean workers movement as part of a worldwide alterglobalization movement.

The Research Institute for Alternative Workers Movements is affiliated to the social movement organization People's Solidarity for Social Progress, founded in 1998.

The program for the day was as follows:

3:00pm ~ 6:30pm Launching Conference
- The Economic Crisis and the Prospects for the Workers Movement; Hasoon Park, Executive Director, Research Institute for Alternative Workers Movements
-The Korean Labor Movement: Theoretical Perspective and Tasks Ahead, Jiwon Han, Research Director, Research Director, Research Institute for Alternative Workers Movements
Discussants: Tae-yeon Kim (Executive Director, Workers’ Front); Seung-cheol Im (Steering Committee Member, Innovation Network); Il-bu Jeong (Korean Institute for Labor Movement)

7:00pm ~ 8:00pm Launching Ceremony

Contract Information: email: website:

Basic Overview of the G20, Part I:

Posted in articles, resources on October 3rd, 2010 by pssp – Be the first to comment

Part I:

Table of Contents
Part I:
1. What is the G20?

2. The History of Capitalism and the G7/G20
1) The birth and background of the G7
2) The structure and role of the G7
3) The Asian financial crisis and the birth of the G20

3. The Economic Crisis and the G20
1) The 2008-2009 economic crisis
2) What has the G20 done?

Part II:
4. Main Issues
1) So, is the G20 a decent institution?
2) How should we understand financial regulation?

5. What Should be our Goals in Protesting the G20?
1) A fight against the Lee Myung-bak administration
2) Refusal to pay for capital’s crisis and a struggle against complex crises
3) A movement for a new world

1. What is the G20?

-The G20 is group of 20 countries: The G7 (the U.S., The United Kingdom, Germany, France, Japan, Italy, Canada) + BRICs (Brazil, Russia, India and China) + Asia-Oceana (South Korea, Indonesia, Australia) + Middle East/Islamic Nations (Saudi Arabia, Turkey) + Central and South American (Argentina, Mexico) + Africa (South Africa).

*Why was the G20 formed?
-When the global financial crisis took a turn for the worse during the second half of 2008, leaders of the world quickly got together. They decided to upgrade the G20, which had been formed in 1999 as a meeting of Financial Ministers and Central Bank Governors in the wake of the 1997-1998 Asian Financial Crisis, to summit-level and make it the main body responsible for tackling the crisis.

*Why was the G20 given this role? What are the characteristics of and issues dealt with by the G20?
-To answer this question we have to begin with the G7. This is because the G7 was, until recently, the highest-level informal meeting dealing with the global economy. In addition, the G20, which operates as an informal network-style organization, has been modeled in structure and form on the G7. (Yes, I said informal. You’ll see in a second.)

2. The History of Capitalism and the G7/G20

1) The Birth and Background of the G7

-The G7 was formed in response to the crisis of the Bretton Woods system and the economic crisis of the early 1970s.

*What is the Bretton Woods system?
-At the end of WWII, economic representatives from the victor nations met in Bretton Woods, New Hampshire to discuss how to revive the world economy, which had been destroyed through years of fighting. Here, they decided that the U.S. dollar would become the world currency, backed in goal, and agreed to form the International Monetary Fund (IMF) and the World Bank as international financial institutions. They also gave each nation the authority to strongly control the movement of finance capital. This was, in effect, an internationalization of Keynesian economic policy.

*The boom of the 1950s and 60s
-After WWII ended, United States implement massive aid programs to rebuild devastated Europe and Japan. These policies were justified in terms of the Cold War, which also provided the ideological means for quieting domestic dissent. The U.S. pursued a policy of containing communism (making the Free World free for capitalism) and supporting development for pro-U.S. leaders, which, by mid-century, had brought about the revival of national economies and (re)integration of the capitalist world economy through established trade relationships, all centered on the U.S. Recording high growth rates, world capitalism entered a golden age.

*The 1970s crisis
-This boom period could not last for long, however. Going into 1970 profit rates bean to fall and economies around the world were thrown into crisis. The value of the dollar had also become highly unstable due to continuous printing in pace with economic growth. Faith in the exchangeability of dollars for gold was lost and a gold rush occurred. In 1971 U.S. President Richard Nixon unilaterally put a stop on dollar-to-gold conversions, bringing an end to the Bretton Woods system. In 1973 the first oil shock hit, worsening the crisis.

2) The Structure and Role of the G7

-The G7 was made in response to the economic crisis of the early 1970s. In 1973, the U.S. Secretary of Treasury first proposed meeting of this sort, and in 1974 financial ministers and central bank governors from the U.S., the U.K., Germany, France, and Japan met as the G5.
-At that point a G10 in fact already exist. The U.S., however, thought it included too many countries from Europe. The G5 was started precisely because the U.S. wished to substitute the G10 with an even smaller elite. Later, Canada and Italy were added to make the G7.

*The board of directors of global capitalism
-Unlike the UN or the IMF, the G7 had no status in international law and has no formal secretariat or headquarters. At the G7 leaders of the most advanced nations in the world capitalist system met to discuss issues pertinent to the world economy. Basically, the G7 is an informal network-like group of the top bureaucrats from powerful nations.
-This is precisely why the G7 is fundamentally undemocratic: Powerful elite bureaucrats from a few dominant nations get together to make decisions on the main issues facing the world economy, which effect the rest of the world. Meetings are not open to the public, and the only official disclosure of the content of the meeting comes with the announcement of the final resolution.
-The G7 is, nonetheless, very powerful. The G7 Meeting of Financial Ministers and Central Bank Governors is held before the meetings of the IMF and World Bank and this is were administration of the two institutions is actually decided. In fact, the G7 has decisive influence in all international financial institutions and regulatory bodies. Seen from this light, the G7 looks much like a Board of Director of the major shareholders of the world capitalist economy headed by the U.S.

The G7 Summit and the Meeting of Financial Ministers and Central Bank Governors
-The G7 Summit and the G7 Meeting of Financial Ministers and Central Bank Governors are separate entities. In 1975 Italy joined the G5 countries and the first G6 Summit was held. The Summit was originally a proposal made by financial ministers of Germany and France, Helmut Schmidt and Giscard d’Estaing after they become Prime Minister and President of their respective countries. In 1976, President Gerald Ford of the United States, which was then acting as G6 chair nation, invited Canada and expanded the G6 into the G7 Summit. In 1997, Russia was invited to the Denver Summit. It began to participate as a formal member in 1998 and the G7 was expanded into the G8.
-The Meeting of Financial Ministers and Central Bank Governor continued separately from the Summit as the G5 until 1985. In 1986, it was expanded into the G7. In September 1985, the G5 Meeting of Financial Ministers and Central Bank Governors reached the Plaza Agreement. (The Plaza Agreement included provisions for the appreciation of the yen and the mark, and consequently the depreciation of the dollar, as a means to improve the United States’ current account deficit.) Since major decisions affecting the world economy were being made at the G5 Financial Meeting of Financial Ministers and Central Bank Governors, Italy and Canada asked the it be opened to countries participating in the G7 Summit. Thus, from 1986 on the G7 (including heads of state, financial ministers, and central Bank governors) became the highest-level meeting

*The pilot of neoliberalism
- At its beginning, the G7 dealt primarily with coordination between national economic policies and adjustment of exchange rates. With regards to the latter, adjustment of the value of the dollar as appropriate to the U.S.’s economic situation was of top importance.
-But the main issues covered by the G7 changed going the 1980s.
-First, coordination of exchange rates became less of a focus. In the 1990s emphasis on national fiscal policies (taxation and spending) was replaced with emphasis was on monetary policy (change in interest rates and money supply) aimed at curbing inflation and strengthening the independence and credibility of central banks. Exchange rates became increasingly less important as a policy focus of the G7. This is because doubts about the possibility of effective intervention in foreign exchange markets increased as private domestic and international foreign exchange transactions increased.
-Secondly, the range of issues discussed by the G7 expanded. In particular, during the 1990s reform of international financial institutions, development in developing nations, and foreign debt became important topics of discussion. This change came with and supported the implementation of neoliberal policy reforms and neoliberal financial globalization.
-Through this process, the G7 promoted the spread of neoliberalism through its involvement in international financial institutions and gave this neoliberalism an air of legitimacy and a means for entering countries around the through with aid and development policies. Given that the G7 was always working in the rear behind the IMF and the World Bank, we can say that it has acted as the pilot of neoliberalism

3) The Asian Financial Crisis and the Birth of the G20

*The increased importance of developing nations
-After the 1980s, awareness developed that the G7 was limited in its ability to ensure global economic stability given the steady growth of developing nations.
-Given this situation, assertions that a more inclusive institution was necessary grew stronger. Such an institution was created after the 1997 Asian Financial crisis reverberated throughout the entire global economy.

*The U.S. and the G7′s agreement
-Recognizing that the participation of developing nations was necessary for reform of the international financial system and stabilizing the world economy, the U.S. and the rest of the G7 led the way in the formation of the G20.
-In November 1997, U.S. President Bill Clinton first proposed a G22 Meeting of Financial Ministers and Central Bank Governors in order to work on reform of the international financial system at a APEC Summit, in Vancouver. The G22 held its first meeting in Washington in April 1998. In October the same year an expanded G26 meeting was held, and in March of the following year the meeting was against expanded to the G33. Many expressed doubts about this meeting’s efficiency however. As such, G7 financial ministers and central bank governors agreed to the formation of the G20 at a G7 meeting held at the same time as the IMF annual meeting in December 1999. The G20 was to include the G7 countries, 12 newly emerging economies and the country holding the presidency of Council of the European Union. The first G20 meeting was held in December 1999 in Berlin. After this, it was made the regular grouping for the Meeting if Financial Ministers and Central Bank Governors. We can say, therefore, hat the G20 was made through two years of trial and error in the wake of the Asian Financial Crisis.

Participants in the Various ‘G’s
*G7: the U.S., the U.K., France, Germany, Japan, Italy, Canada + Russia =G8
*G10: G7 + the Netherlands, Belgium, Sweden, Switzerland (observer status)
*G22: G8 + South Korea, India, China, Thailand, Hong Kong, Singapore, Indonesia, Malaysia, Poland, Australia, Brazil, Argentina, Mexico, South Africa
*G26: G22 + Netherland, Belgium, Sweden, Switzerland
*G33: G26 + the Ivory Coast, Chile, Saudi Arabia, Spain, Turkey, Egypt, Morocco
*G20: G8 + South Korea, India, Indonesia, Mexico, Brazil, Argentina, Saudi Arabia, Australia, Turkey, South Africa, the country holding the presidency of the EU

3. The Economic Crisis and the G20

1) The 2008-2009 Economic Crisis

-After Lehman Brothers’ filed for bankruptcy in September 2008, financial crisis erupted and quickly led to stagnation in the real economy. Soon, the world was facing them most severe economic crisis it had seen since the Great Depression.

*The problem: neoliberalism
-Many people agree that neoliberal globalization is the main cause of the economic crisis. President Nicolas Sarkozy of France and American economists Joseph Stiglitz and Paul Krugman have also said that neoliberalism is a problem. In South Korea, former Democratic presidential candidate representative Jeong Dong-young has also issued a written statement of regret that he had not paid sufficient attention to the problems of neoliberalism.

*Neoliberal financial globalization
-Neoliberalism is not simply a misguided economic policy, however. And, the current crisis is much deeper and more generalized then even these people admit. The current economic crisis is both a crisis of neoliberal financialization and a crisis of the capitalist system itself.
-As soon as profit rates began to fall in 1970, capitalists began looking for new ways to make money. They began to turn their attention to making profits through financial transactions and speculation.
-In other words, neoliberal financial globalization is the outcome of capital’s attempt to respond to the crisis of the 1970s. Capital has sought to get around the lack of profitability in the real economy through financialization: speculative investment in stocks, bonds and real estate. This speculation expanded and expand… until the system collapsed.
-We can say that the current crisis is the result of capital’s continuous financial accumulation, once it found it could no longer make a rebound through the real economy. In other words, it is the result of a structural crisis internal to capitalism. This can be summed up as follows: 1) falling profit rates in the real economy -- 2) financial accumulation (neoliberal globalization) -- 3) formation of speculative bubbles -- 4) financial and economic crisis.
-The approach of the G20 and mainstream economists to the current crisis is to look for solutions through adjustments in the areas of 3) and 4) above, without considering the entire process. If we understand the entire process, however, we realize that the only way to truly prevent another crisis is through new economic reform that can stop falling rates of profit in the real economy. Unfortunately, if we look at the current state of the economy a means for doing this is not readily visible. We call the current crisis a ‘structural crisis of capitalism’ because it is doubtful that capitalism has the capacity overcome to overcome its internal problems.
-It is highly likely that the capitalist economy will be swept up in long period of low growth and instability. In this process crises developing in multiple areas including poverty, climate change, energy, and agriculture will only get worse. It is, therefore, time now, more than ever to make a break with the current economic order and develop an alternatives to capitalism.

2) What has the G20 done?

-The G20, however, is only approaching the economic crisis as a problem of policy, while seeking to maintain the existing hegemonic system In fact, the agreements the G20 has reached in the last few years are highly disappointing and have only made the situation worse.
-G20 heads of state have agreed to the principles of improving financial regulation and oversight, strengthening financial market transparency and international financial institution responsibility, increasing international cooperation, and increasing quotas for developing nations in the governance of international financial institutions.

*Increasing the power of international financial institutions
-There has been no discussion of structural controls on the power of financial capital or creating a new financial institution to replace the IMF. To the contrary, the complete responsibility for developing the details of financial reform has been delegated to the Financial Stability Forum (FSF) (now the Financial Stability Board (FSB)) and the IMF, thus expanding their authority.
-The G20 is completely ignoring demands that the system for allotting decision-making power in financial institutions based on size of economy and amount of contributions be changed and that the policy of forcing neoliberal structural adjustment be abolished. Instead, it is seeking to maintain the existing structure while adjusting the quotas allotted to each country to account for change in the size of their economies.

*Untrustworthy financial reform
-At the G20 Summit held in Toronto last June leaders failed to agree on implementation of a bank tax. The concept behind the bank tax is that since financial institutions have received bailouts paid for by taxpayers, they should shoulder some of the burden in the future. Unfortunately, agreement on this measure faltered due to the competing interests of various countries.
-The bank tax, a levy on large banks and financial institutions, is a partial, passive measure aimed at getting back a portion of the money that went into bailouts. It is much less overarching than the financial transactions tax that social movement forces have been demanding, which would require payment of a tax on all financial transactions. Nonetheless, the G20 has not been able to agree to even this limited measure leading to a decision that each participation country would makes its own policies with regards this matter.
-Discussions on regulation of hedge funds, private equity funds, and risky new financial commodities have stalled in the same way. As we can see, the G20 has not even been able to get started on the most important of financial reforms. In fact, it has no intention of fundamentally controlling the power of financial capital. This makes sense, since countries that house the financial centers of the world, such as United States and the UK, are of course, not interest in limiting financial capital’s activity.

*All words, no action
-While weak on action, the G20 has been good at hiding its problematic nature and packaging itself nicely. As soon as the economic crisis appeared to be letting up in the second half of 2009, the G20 began to make references to employment, development, and the environment.
-The fact is, however, that international meetings like the G20 have a record of failure with regards to these problems. Heads of state generally make a nice show of their friendship and unity, and make grand statements for the press. In fact however, as time wears on we see that that their promises have no real content.
-The G8 is a typical example. As soon as the G8 found itself on the receiving end of criticism for pursuing neoliberal policies, it began to claim it also saw issues such as development aid cancellation of foreign debts 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.
-The G20 is just the same. The G20 has made vague promises to work towards achievement of the Millennium Development Goals, address 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 Myung-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. This is true for many other countries as well.

*Avoiding responsibility and maintaining hegemony
-As can be seen from the above, the G20 is doing nothing to bring about a real transformation of the system that has rule the world for the last 30 years. Its goal is to revise policy only to the extent it does not threaten the interests of participating countries. In this process, most of the aims of dominant countries like the U.S. and the U.K. are being satisfied, while others are being made to bear the burden of the economic crisis. The G20 has no intention of abolishing neoliberalism or of creating a alternative international order to replace neoliberal globalization. In the end, the G20′s primary intention is find a means for smooth management of the world system that maintains the current hegemonic structure.

To be continued