United Nations Conference on the Financial crisis and itis impact on development - New York, June 24 -26 2009

Present and future impact of the crisis

1 July 2009 by François Houtart

Much has been said on the impacts of the crisis on the fundamentals of the economy and its social consequences, because of the artificial and unequal character of the growth and its proved vulnerability, affecting developed and developing countries
However what specifies the present situation, if compared with other financial crises, in particular the one of the 1930’s, is the convergence of various crises, food, energy, climatic with combined social consequences on employment, poverty and migrations.

Such a coincidence is not accidental. There is a basic historical logic linking all of them. The financial crisis, recurrent in the prevailing economic system is a mechanism of rectification, has been aggravated by the uncontrolled global development of financial capital, allowing a high and rapid rate of profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. . Food crisis has been accentuated conjuncturally by speculative investments and structurally by the fact that agriculture has become a new frontier for capital accumulation, with the development of monoculture Monoculture When one crop alone is cultivated. Many countries of the South have been induced to specialize in the production of a commodity for export (cotton, coffee, cocoa, groundnuts, tobacco, etc.) to procure hard currency for debt repayments. . Energy crisis has been linked with the increase of petroleum prices, partly for speculative reasons, and necessary investments for a structural solution for a change of energy cycle (from fossil to other sources) has been seriously hindered by the huge injection of money to save the financial system. Climatic changes have been accelerated by an irrational use of natural resources, in particular fossil energy due to the model of growth of the post Second World War period. This one has been also at the origin of increasing inequalities, combining spectacular growth for about 20 % of the world population and inhuman poverty for more that one billion people on the planet.

Facing such effects which are related to a common logic of increasing rates of profit and ignorance of ecological and social externalities, two main questions can be raised: to regulate for how long and to repair the financial and monetary system for what ?

The first interrogation is in relation with the great crisis of the end of the 20ies. At that time also, the solution has been to bring a new set of rules to tape the market, recognizing the illusion of its autoregulation. It has been the New Deal and its various applications. But when the economic system begun to recover (including thanks to the reconstruction after a world war), pressure to deregulate increased up to the point of establishing what has been named “the Washington Consensus”,
which means the neoliberal era of the capitalist system. Will the same logic prevail, as it seems to be the case in many declarations ? In this case, in a few years we will face the same consequences again. A first logic for the short and middle term is thus to propose permanent regulations and not just provisional medicines.

The second question is much more serious. Efficient measures are proposed to allow the financial and monetary system to function anew on sound bases, in order to restore growth, development and prosperity. But what does this mean? To begin again like before, with the same logic which provoked the present situation?
Shall mankind continue to exploit natural resources destroying the ecological system? Will the financial institutions promote the automobile industry (even a little greener) help to extend monocultures destroying biodiversity, soils, water, especially for agrofuel? The Copenhagen Conference on climate, initiative of the United Nations, if it wants to be efficient, will have to propose very strong measures to save the planet, in direct contradiction with some powerful economic interests, already lobbying to mitigate the resolutions.

Will the restoration of the financial system be based again on a logic of unequal growth, eventually with important assistential policies for poor sections of the world population, but without challenging the main philosophy of the world economic organization? Will it serve to finance wars for the control of scarce natural resources and energy supplies ? In other words will it mean: business as usual?

It has been repeatedly affirmed that the Objectives of the Millenium will be affected by the crisis, but such Objectives are already in themselves an admission of failure: inspite of the unprecedent riches of the world, some half a billion people will still suffer of hunger and poverty in 2015. Such an approach is well illustrated by the fact that Africa is supposed to get an international aid, smaller than the intervention of the United States of America Government to save General Motor.

Hence the necessity of raising the question of paradigms: we do not only need regulations, but alternatives. We need another definition of growth, of development, of prosperity, of civilization. This affects the fundamental aspects of human life in the planet: relation with nature, production of goods and services for life, socio-political organization and meanings of life and ethics.

It is around these four themes that new paradigms could be developed for the Common Good of mankind. First a renewable and a responsible way of using natural resources, in a relation with nature, not of exploitation as a commodity, but of respect, because it is the source of life. Second, priority given to use value on exchange value, the economy being the human activity to produce the basis of the physical, cultural and spiritual life of all human beings in the world. Third, generalized democracy to all institutions and human relations, including gender and finally multiculturality, to assure the participation of all cultures, knowledge, philosophies and religions to the meaning and the ethics of human life in the planet.

It may appear utopian, but all those principles have direct and concrete applications, which already exist in many parts of the world. They are experimented locally by social movements, translated in political forms by governments, theoretically systematized by intellectuals. It could become one day a Universal declaration of Mankind’s Common Good by the United Nations, parallel to the one on Human Rights.

Such a perspective is the kind of utopia the world needs to motivate collective action, to encourage social commitments, to realize political projects. Many signs are existing in the world of a collective vitality, such as the appeal of the social movements to the African Heads of State, the proposed chart of the peasant’s rights and so many initiatives, fruit sometimes of very hard struggles for justice. They are sources of hope for the future of mankind.



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