International structures are key to the future

Abderrahman Youssoufi, Prime Minister of Morocco and leader of the Socialist Union of Popular Forces, calls for international structures with a human dimension

Issue 4, Volume 47, 1998

Clearly the topic of how we can ensure that world markets work better on behalf of everyone is more important than ever. It is one of the main vocations of the SI to allow us a forum, in the present global circumstances, to exchange our ideas and thinking on the economic and financial upheavals that in one way or another affect our economies and societies. However, it is also our collective task to come up with some elements for a solution to such turmoil.

Of course we know very well that neither globalisation, nor the recurring economic and financial crises which punctuate its course, are new phenomena. However this process has increased in intensity and in impact in an unprecedented manner, due to the dimension of what we call financial globalisation.

Never before in the history of humankind have such large amounts of capital flows moved so rapidly. Never has speculation been the order of the day to the extent that it is now with regards to goods and direct investment which are of course at the root of actual wealth and employment. Never before has the financial economy had such an impact on the real economy.

The financial storm that started in Thailand and spread to the rest of South Eastern Asia, which affected more or less directly Japan, already in recession, then Russia, followed by Latin America, has affected the rest of the planet to various degrees. This crisis has long destabilised Asian markets and economies through excessive speculation, property speculation and corruption, an excessive level of public, and in particular private, debt, fragile external balances and vulnerable financial institutions.

Beyond the financial consequences and behind the impervious figures we should not forget that there are millions of men and women, tens of thousands of families, that overnight have fallen into deep despair, into unemployment, without a safety net, without the means to make a decent living and have thus lost their dignity. There are also tens of thousands of immigrant workers who in many places, in Malaysia, in Thailand, in South Korea, and elsewhere, are being expelled back to their home countries without further ado.

Morocco so far has not suffered that much financially, since it is fundamentally a very stable country and due to its extremely prudent rules of its banking and financial system, as well as to the small foreign presence at the Casablanca Stock Exchange.

The international economic and financial crisis, which started in Asia, is still filled with danger. As the Director General of the International Monetary Fund said himself we allowed capital markets to develop in complete anarchy. This situation shows us, once again, if there were any need, the limits of believing that the markets can regulate themselves, that all will go well under the `laissez-faire' doctrine. If globalisation, which appears to be irreversible, is no longer questioned, the different forms take it takes certainly can be.

Such a situation means that we need fresh thinking on the international financial and economic architectures. Of course greater transparency in the markets is important, or a greater respect for prudent banking and financial systems. What is necessary more than ever is better control of the movement of short term capital, as this destabilises economies the most, in particular the most vulnerable ones.

The suggestion by James Tobin, the economics Nobel prize winner, that transactions on the exchange markets should be taxed at a maximum figure of 0.1 per cent, to penalise movements of speculative capital, perhaps deserved more attention. Many experts have shown that, despite what others say, such a tax would not be technically that difficult to implement.

We talk about a modern economic and financial system that is adapted to the markets of the twenty-first century but this should not be the concern of economic powers alone. Equally all those countries that suffer the most from the absence of rules of these international monetary and financial games should make their views known.

In this way the idea of establishing a new committee - the `Committee of the 22' - a grouping of the countries of the G7 and 15 developing countries, or the suggestion that was made to set up the Economic Security Council within the United Nations, are ideas that should be further developed.

It is high time that the real economy recover its rightful place as only this can lead to growth. Productive investment and employment should be high on the economic policy agenda. Human beings and well-being should once again be the ultimate objective of development and international solidarity should become a top priority. Politics has to recover its rightful place and I think that this is one of the main reasons for the Socialist International's existence.