Panel discussion hosted during the World Social Forum, 2004, Mumbai, India
19th January, 1-4 pm

International development Economics Associates (IDEAs) hosted a panel discussion meant for an extensive audience of 4000 during the World Social Forum. In this event, its partner organizations were the 'Initiative for Policy Dialogue', New York, US and 'Focus on the Global South', based in Bangkok, Thailand.

The session was chaired by Alicia Puyana from Mexico and the panelists included Samir Amin from Senegal, Korkut Boratav from Turkey, Diane Elson from UK, Jomo K.S. from Malaysia, Joseph Stiglitz from the US, and Prabhat Patnaik from India.

The intention of the discussion was to focus on the changed character of imperialism and to analyse the workings of national and international markets in the age of 'free' global trade and the dominance of finance. The emphasis was on finance as a tool for dominating developing country economies. This not only implies severe deflation in developing countries with major adverse consequences for ordinary people but also the conversion of financial markets into sites for primitive accumulation by means of corporate malpractices and/or corporate crimes. Further, the new imperialism has also been characterised by greater violence and more specifically, war. Where other instruments of domination have failed, war, as a threat or as a reality, has been used. All the three instruments of trade, finance and war have thus been used in conjunction and in different combinations to subjugate the south.

Samir Amin, from The 'Third World Forum' based in Dakar, Senegal, talked about the nature of capitalism with special emphasis on the features that are dominant today. He advocated the view that developing countries must de-link their economies from that of the developed countries.

Earlier, Samir Amin pointed out, capitalism had another more progressive role when it was first established. But over time its nature has undergone substantial changes. It has become more aggressive. Thus, Capitalism has a destructive dimension that displays certain essential features. It treats human beings as nothing but labour force that can be bought and sold in the market. It therefore dehumanised the human being, and made commodities out of them.

Second, capitalism also has in its basic nature a tendency for destruction of life. It runs on a short-run rationality and therefore it tends to destroy natural resources. The more powerful its productive forces, the more destructive of ecology and environment in the longer run it is. This had been recognised before by the old ecological movement in the 19th century including Marx, but now have almost been forgotten, even by Marxists.

Capitalism today has felt increasingly threatened. In its desperation to hold onto its control, it is destroying the people around, especially people in the south. It is also destroying the environment and earth's natural resources.

Third, capitalism today requires a new form of slavery. It wants everyone to be the same, to be homogeneous identical objects. They should not have individual identities, individual aspirations. But paradoxically, today's capitalism is creating two very distinct classes within the people, a small class of the rich and a large class of the poor. By its very own mechanism, it is separating the world into two compartments, there is a deepening of racism, a hate of the poor, on a global scale. In this process, capitalism has been destructive of nations and peoples. It has fostered divisions within people. Its expansion has overshadowed the positive constructive dimensions that were evident earlier.

Capitalism today is also sending out some very distinct signals. It represents and pushes three families of vision.

The first of these is the supremacy of the 'market'. If humans are intelligent the market will ensure that they do well. They can make use of their 'comparative advantage'. So if a section of human beings do not do well under today's capitalist society, the inference is that they are not intelligent. So the market is supreme, it knows all. It also apparently ensures that the strongest, the most intelligent do well. This is an ideology that is prevalent among the right and the left, even among people who are active and not passive, even among people who have good intentions. It was wrong, Prof Amin pointed out, to assume that demand for social security from the south had to be adjusted to the framework of the market. This was the vision of the ultra-right in the US, but also the vision of the working class in the US. However, this need not be the vision of the people of the south.

Second, capitalism today not only spreads through the expansion of markets, but also through war. In other words, military control of the planet is the aim of capitalism today. Where markets cannot be expanded economically, it uses freely the instrument of war to spread its control. This military control is intended to compensate for economic deficiencies of the capitalist system, in the US. This particularly undermines advances that could be made through social and democratic struggle.

Prof. Amin ended his speech by pointing out that most people think that this growing commodification of everyone and everything around us is a natural outcome and is inevitable, but they are mistaken. There is also an alternative to the growing contradictions that capitalism has generated. The US ruling class has manipulated the public opinion within their own country and this needed to be discussed.

He strongly suggested that there is an alternative in the form of communism that prevents such commodification and what he called the 'renewed forms of self-centered development'. He talked of building a new internationalism of peoples that can ensure simultaneous advances in three directions: social progress or economic progress accompanied by social benefits for all, democratization of society in all dimensions including economic, social and political, and finally, the affirmation of society-wide economic and social development.

The next speaker, Korkut Boratav from Ankara University, Turkey, traced the historical path of imperialism that gave us important lessons. He described the historical process by which foreign capital had entered Turkey and had a destructive impact on its economy. He outlined how open trade had actually acted as the route for this process. His discussion also highlighted how the process of imperialism creates and in turn, works through, structural imbalances in the economy.

Taking a detour into 19th century Turkey, he described how British rope used to be imported into Turkey and were very cheap compared to Turkish rope. As a result, these flooded the domestic market. While rope was an illustrative example, a trade agreement between Britain and the Ottoman Empire in Turkey in 1838 gave unlimited access for British goods into the Turkish domestic market. Though initially it represented a net resource transfer from Britain to Turkey, British imports of many other such industrial products came into Turkey in such huge quantities that the Turkish economy was soon facing structural dependency on these imports.

This process had two major impacts. First, it destroyed the Turkish industry completely. The economy witnessed a process of severe de-industrialization, which made it even more dependent on foreign imports until Turkey reached sovereignty in terms of trade policy almost a century later. The terms of Trade also moved in favor of Britain and experienced a 35% decline for 40 years after 1855.

Second, such huge imports created a large and growing trade deficit that led to increasing external indebtedness. Through this came dependency – both political and fiscal. When the time ultimately came to finance this external debt, the government had no choice but to allow metropolitan capital into its domestic industrial sector. It allowed not only foreign direct inflows but also opened up its financial sector to foreign financial flows.

This dual process ultimately made the economy completely vulnerable to the movements of foreign capital flows. This is how, the speaker pointed out, that British ropes that were very cheap ultimately became a noose around the Turkish economy.

This illustrative example of metropole-periphery linkages, argued the speaker, is relevant even today. This involves not just a surplus transfer from the periphery but a relation of structural dependency that only Japan and Southern Europe were able to overcome in the 20th century.

Under the policy of capital account liberalization prescribed by the neo-liberal policy regime, there is an initial resource transfer from the metropole to the periphery, similar to the historical example. This is largely an inflow of short-term capital flows or hot money. This is accompanied by dependency of the periphery and domination by the metropolitan capital.

The movement of capital flows is also dependent on the 'performance criteria' set by international institutions like the IMF. These criteria exclude national governments as active agents in macroeconomic expansion. It also has the habit of co-opting the ruling classes and national policy increasingly identifies with these criteria since that is the only way to ensure respectability in the eyes of these institutions and therefore guarantee capital inflows and growth and stability. These policies force reductions in government expenditure and leads to a loss of employment and income in the economy.

In addition, like in the past, the problem is that capital flows act like a pendulum. It flows from the metropole to the periphery at first, thus increasing dependency. However, it also flows out to the metropole, resulting in poverty and political control in the periphery. This is because this initial resource inflow does not get translated into net resource flows or current account deficit mainly because of 3 reasons. 1) Hot money also flows out very fast and to a much greater extent, 2) the rising magnitude of reserve accumulation by peripheral economies, and 3) foreign inflows become negative (debt amortization, repatriation of portfolio investments) in times of financial distress & crises. This process implies an increase in external indebtedness (not connected to the current account deficit) that not only generates growing vulnerability to financial crises and increases the dominance of institutions like the IMF, but also results in higher ratios of interest & profit remittances from current balance. At the same time, lower growth and debt pressures lead to a declining current account deficit. These factors combine to create a net resource transfer from the periphery to the metropole.

Interestingly, this situation is compounded by the fact that the US runs a huge current account deficit, which generates a pressure on developing economies to move to current account surpluses. It is strange that in a scenario where policies of reduced government deficit are being advocated as the pivotal solution for a healthy economic system, the US does not follow the rules that the IMF sets.

However, its extreme external indebtedness, i.e. extremely high dollar reserves held by the North and South, makes it financially vulnerable to action by reserve-holding economies (Asia & China /Japan). There is, argued the speaker, an opportunity here to move into structural surpluses (i.e. capability to realize current surplus under high growth) for some underdeveloped economies. However, till the turn of the century, China and South Korea seemed to remain the only possible countries which are in a position to do that.

The next speaker, Diane Elson, from the University of Essex, UK and a member of the 'International Association for Feminist Economics' (IAFFE), discussed the effects of the present economic system from the women's perspective. She pegged her discussion to the socialist feminist core of reproduction, where the central module of analysis is the role of women who spend all their efforts on others, on taking care of husbands and children without being paid. This ensures that society carries on and its basic needs are taken care of. Most analyses of social, economic and political mechanisms are oblivious of this dimension.

She pointed out that in many conferences and discussions during the World Social Forum, it had become increasingly clear from the voices of participating women that the forces of imperialism specially undermine the role of women. Imperialism pretends that it liberates society and women in particular, from old traditions. But this is only pretense. The new imperialism, argued Prof. Elson, simply restructures patriarchy and in no way eliminates it. In fact, the new imperialism commodifies everything, including patriarchy. The new patriarchy now strengthens religious fundamentalism but also trade and financial fundamentalism. The wars fought in Iraq and Afghanistan had nothing to do with liberating women and doing away with patriarchy. They were fought for furthering trade and financial fundamentalism and extending the base of imperialism. Now finance operates, as an instrument, not for production but for expanding capitalism.

The women in the World Social Forum and progressive women everywhere, argued the speaker, reject unequivocally all kinds of fundamentalism.

The dominance of finance and capital under today's capitalist society, which is geared towards making the large producers richer, has key implications for social reproduction. The new financial system is such that national governments are pressured by IMF conditionalities and their roles are being increasingly reduced. They are using unpaid women workers to fill in the buffer, the slack in this tightly pressurized system. Women have worked more and more to fill in this gap, to fill in the void that the withdrawal of the government has left. The feature of trade and financial systems today that has been pointed out by economists is that government expenditures must come down. This implies a reduction in the state's ability to provide for basic services. However, economists have failed to point out that women have to bear a lot of the brunt. This is because women are ultimately responsible for putting food on the table and ensuring that their household runs smoothly, that day-to-day living is carried on with minimum hardship to other members of the family.

The focus on full employment in the current economic context is also not beneficial for women, Prof. Elson argued. Women are already overworked. They need less work but better paid work. Simultaneously, there is also need for better balance between the world of paid work and that of social reproduction. The system should leave more time free for men so that they have time for sharing at least some of the work of social reproduction. Their wages, therefore, must also go up.

In addition, if one has to talk of full employment, it must not be only in terms of the male breadwinner. This overemphasis on the male breadwinner would make the women dependent on them forever. There must be provisions for women to earn.

One effect of the new trade and financial order is the charging of user fees for basic services along the lines of market rationality. This has meant a denial of education, water, and electricity among other services. Now women have to put in more time and labour to get basic facilities and services for their households.

Simultaneously, because of the pressure on governments to not tax the rich individuals and companies including the multinationals, as well as the trade sector, the tax burden on women, especially in the poorer sections of the society, has gone up.

While expenditure on social sectors has gone down, increase in expenditure on war and arms race has meant a lot of diversification of funds from socially beneficial uses. This has prevented a better future for millions around the world.

Finally, Diane Elson, gently reprimanded the progressive economists who sometimes do not take into account the role of women in the economic and social conditions today. She argued that progressive economists must take into account not only the paid economy but the unpaid economy of social reproduction.

The next speaker was Jomo K S from the University of Malaya, Kuala Lumpur, Malaysia who is also the Chairman, Executive Committee of IDEAs. He began his speech by highlighting the role of 'imperialism' in particular. He pointed to the fact that despite objections to the expression 'imperialism' by many in the 'centre', there are people both on the left and the right, who recognize the current situation as one that re-asserts imperialism. He argued that imperialism today is very different from imperialism from a century ago. There was then a broad coalition against imperialism and recognition of the concentration of economic power in Europe that in turn dictated the public policy that resulted in colonialism or what we call imperialism.

However, the international power structure that exists today does not represent colonialism but still represents imperialism, Prof. Jomo argued. The term 'imperialism' still explains much better what is happening in the world today, much more so than surrogate terms like 'globalization' which leaves unclear the actual intent and nature of the mechanism. It is very important to recognize 'imperialism' for what it is.

One reason behind the need to re-think imperialism is to remove many of the misconceptions that surround it today regarding the role of the state and the role of politics. In addition, to counter the force represented by imperialism, the speaker emphasized the need to form a broad front, which had to come from the South. There is an urgent need to form a broad coalition, he pointed out, because at the moment, civil society groups are very isolated, and especially in terms of impact on public policy. Such discussions during the WSF, arranged by different civil society groups including IDEAs, were an important endeavor in this direction.

Prof. Jomo went on to speak about the specific themes of the panel discussion i.e. the role of war, trade and finance in furthering the cause of imperialism.

On the theme of war, he argued that it is commonly believed among many economists that 'war' or 'military keynesianism' may provide the basis for new economic recovery, especially that of the US. The speaker pointed out that while war had contributed to economic recovery and growth in previous periods, the character of arms trade today does not allow itself to be the basis for such a recovery.

The role of arms production in today's economic context cannot be underestimated. Most of foreign exchange earnings for the US is coming from intellectual property rights, followed by financial services, followed by arms sales. Arms sales and production remain areas of great corruption. More importantly, the growing importance of this sector represents a concentration of physical production that is harmful to society. There is an urgent need to look for an alternative basis for economic recovery, for an alternative global keynesianism, perhaps to the basis of providing international public goods or global public goods. This requires, among others, a degree of deficit financing both at national and international levels.

The new imperialism is also marked by the advocacy of the wrong kind of policies. Deficit financing could have worked in fostering an economic recovery, but international financial institutions like the International Monetary Fund prevent the use of it and instead they advocate the use of deflationary policies that have resulted in slower economic growth. European countries and Japan experienced this to a large extent. It is ironical, therefore, that those very policies are being advised for the developing countries as well. So in a way it is becoming imperative to save capitalism from the capitalists themselves.

On the role of trade, he argued that it is important to recognize that even from the perspective of neo-classical international-trade theory, there is no basis for the policies currently being proposed as trade reform. The only effect of the present trade policy regime has been a slowing down of the world economy and even in Jagdish Bhagwati's words, 'the immiserisation of growth'.

The logic of trade openness does not really work if we look back at history. From the early years of its establishment, the US had used protective policies to develop its country, to develop competitiveness because it was then unable to compete with the European countries. During this period, when the early initiatives regarding trade liberalization were taking place around the 1947s, the US had severely opposed any such multilateral trade negotiations and prevented the birth of any international trade organization, which reflected the lack of confidence of the US.

But now it is the US, which has pushed for the replacement of the General Agreement on Tariffs and Trade (GATT) by the World Trade Organization (WTO), because now it is in its direct interest to do so.

In addition, the WTO now includes sectors like agriculture. It was advanced as a justification for including agricultural trade in the purview of the WTO that this would help the developing countries, especially African countries. However, it is now obvious from all serious agricultural trade projections that even if trade is liberalized, the likely benefits for developing countries would be modest and the main beneficiaries would be the former European settler colonies of North America and Australasia.

Now, with the establishment of trade reforms, the international terms-of-trade for primary commodities compared to manufactured goods have declined drastically. Terms of trade for tropical products have also fallen. Terms of trade of those industrial products for which there are no strong intellectual property rights have also followed the same pattern. Therefore, the developing countries have definitely not benefited from the new trade arrangements. If we look at US history, the protectionist blueprint advocated by Alexander Hamilton after 1976, for trying to catch up seem to be very relevant for developing countries today.

On the role of finance, Prof. Jomo went on to elaborate that the experience following financial liberalisation has proved false many of the claims forwarded by its proponents. First, it has not resulted in capital flows from the capital-rich to the capital-poor countries, as promised, but the converse, except during episodes, e.g. East Asia during the early and mid-1990s. Second, the real cost of finance has actually gone up, instead of coming down, as promised by the proponents of FL. Instead, there is clear evidence of more rents accruing to finance. Third, the argument that FL would lead to financial deepening, which in turn would lead to a more stable financial system, has proven to be completely false. However, with financial deepening, risk has simply been shared, i.e. shifted to a counter party, so systemic risk is, in fact, much more concentrated, thus leading to a more volatile and unstable system.

So, the development of the system and the instruments of control have actually made risk more concentrated and intense. This is one reason why currency crises have become more common. The nature of the risk control instruments that have been developed by the market and the IMF has actually not addressed the nature of the system. Further, any attempts to find a solution have tended to be subverted by the US government. More than two decades after promoting FL, recent IMF papers now concede that FL has not contributed to growth, but increased volatility!

With the increase in importance of finance, there has been a pressure to follow deflationary policies – e.g. 'inflation targetting' has become the new buzzword, with New Zealand being its pioneer. But this has been the cause of slower economic growth around the world in the last two decades. In addition, historically, the availability of long run development finance has been crucial for development. But now, with the advent of financial liberalization, this has almost been wiped out. Now, most regional banks, even those like the Asian Development Bank, have stopped giving out long-term development finance in trying to emulate the World Bank. Considering that development in many countries like Japan, South Korea, Brazil (to name just a few), has been heavily dependent on such finance, its unavailability will crucially undermine the process of development in today's developing economies.


The next speaker was Joseph Stiglitz, representing the 'Initiative for Policy Dialogue' (IPD), New York, USA. He drew on the central theme around which the World Social Forum revolves - that 'another world is possible' and that alternative policies must be considered. A broader section of voices and opinions needed to be included, he argued, into the decision-making processes. He went on to point out that the panel discussion that he attended in the morning indicated that economic and social security are often ignored by economic policies. This particular panel discussion itself indicated, he pointed out, that politics and economics are very closely intertwined. Issues like the balance and use of power and the dynamics between politics and economics, can change the rules of the game to preserve a certain set of issues.

Next, he discussed the role of capital markets. He argued that capital market liberalization had led to greater instability but this, was overlooked for ideological reasons by the IMF and the World Bank. There are many theories as to why capital market liberalization had not contributed to increasing growth in developing countries and in fact contributed to poverty. He argued that there was another explanation behind this. This was that in the field of finance, international rules of the game of capital markets could easily undermine democratic processes. For example, in Brazil, widespread concerns were expressed in the capital market before the elections that if Lula won the elections, there would be severe negative impact on the economy. These fears could actually change the outcome of the democratic process, though this did not eventually happen in Brazil.

But in addition, there is also the problem that today's policies of trade and financial liberalization has contributed to poverty in developing countries. Globalization has inflicted rising insecurity on the people of the third world. He also criticized the international institutions for prescribing privatization of social security to nations and argued that this would eliminate the little security that was still left for the poor and the unemployed people of the world. He discussed how during his stint as advisor to the Clinton regime, the then US Government had strongly opposed the Republican demands for privatization of social security. Ironically, at the same time, the World Bank and the IMF were pressurizing other countries to privatize their social security systems. He went onto suggest that in the so-called development rounds of the WTO, the issue of providing more jobs should have a central place on the agenda instead of just pushing policies such as increased privatization and liberalization of trade and capital markets.

Next, Prof. Stiglitz moved the discussion to the arena of 'conflict', which, in his opinion, is of great importance in today's world. For the rest of his speech, he focused on the issues of arms and economic conflict, more specifically, on the interaction between these forces. There is now mounting evidence that civil strife has been a major cause of the lack of development, particularly in Africa. Evidence has also shown that poverty and unemployment that generate a sense of insecurity are major causes of violence. There is an intertwining between these economic and social dimensions. Therefore policies that lead to high levels of unemployment and generate a sense of despair, will inevitably lead to increased violence.

This violence in turn creates an atmosphere that restricts growth and prevents the translation of growth to broader aspects of economic and social development. In addition, because of the violence witnessed as an aftermath of these policies, the international institutions do not want to advance any more money to these regions and this will therefore compound the problem.

On the specific issue of arms, Prof. Stiglitz elaborated that government expenditure on arms takes away valuable resources from productive uses. This undermines development needs considerably.

Another phenomenon that is of increasing concern is that countries that possess natural resources are not growing. Western companies, suggested the speaker, which extract these resources to maximize profits try to get control over the resources at the lowest price possible. This creates a great deal of conflict of interests. This process, therefore, generates turbulence and contributes to political instability within the country.

On a constructive note, Prof. Stiglitz put forward a six-point agenda that he felt will not solve all the problems of the developing world but could at least contribute to a peaceful world with stronger economic growth and a greater reduction in poverty.

First, more attention needs to be paid to the social dimensions of economic growth and especially, to increases in employment. That must be one of the major tasks of an economic agenda that attempts to evaluate alternative policies. Here the question that must be asked is, what will be the effect of any alternative policy regime in terms of meeting those objectives.

Second, the rule regarding the provisioning of financial assistance should be changed. He suggested that a country should be given assistance only if it reduces expenditure on arms. If there is a possibility that the aid forwarded can be spent on arms, it becomes 'bad' aid.

Third, there must be an international agreement that restricts the export and production of arms. In an economist's language, there are externalities like violence and war that emerge out of the sale and production of arms. The economist's solution to prevent these externalities should be to effectively use the tools of taxation, regulation and control of the arms industry.

Fourth, there is a great need to increase transparency regarding the sale of natural resources. It has been seen that very often, the proceeds from the sale of natural resources do not go to the national government or the people. Had it done so, these proceeds could have been used for financing development. Instead, these end up going to private companies. So in this context, there is a need to check whether the company that is buying or utilizing this resource is paying a market price for it. There is also the need to recognize that when resources are taken out of a country, that country is being made poorer. Therefore, growth based on natural resource extraction is not sustainable unless such depletion of resources is replaced by capital. There must also be rules that specify that the prices at which resources are taken out are fully disclosed. This is, argued the speaker, a feasible strategy that could easily be pursued.

Fifth, there must be transparency in bank accounts. Earlier, there was an attempt by the OECD countries to increase bank secrecy, which was opposed by the US. However, after the events of September 11 there has been a realization that secret bank accounts can be used for other purposes like terrorist activities. In addition, bank secrecy also facilitates corruption and capital flight, undermining growth in poor countries.

Sixth, in the process of globalization, there has been a loss of identity for many communities. This aspect has given rise to communalism and violence. It is therefore, very important to maintain the sense of national identity, and to see that trade agreements and other international agreements do not impede countries' ability to do so.

In conclusion, Prof. Stiglitz stated that it is now widely recognized that the inability of the neo liberal doctrine to integrate social dimensions into the analysis has been the root of many of its failures. There is a need for international dialogue on those policies that will keep in mind the social and political dimensions of economic policies and the interplay between economics and politics at both national and global levels. This will help to create a constructive agenda that, if not able to solve the problems, can at least improve matters.

The last speaker on the panel was Prabhat Patnaik from Jawaharlal Nehru University, New Delhi, India. He emphasized the role of the deflationary bias of neo-liberal policies and its impact on developing countries. He described imperialism as a phenomenon that refers to the domination of global economy by metropolitan capital. It is also characterized by very complicated relationships between trade, capital and workers. What has changed now from an earlier period, pointed out the speaker, is the nature of metropolitan capital, the relations between the different fractions of metropolitan capital and the mediations through which this phenomenon of domination takes place.

This new nature of metropolitan capital is characterized by the fact that international financial capital has built a superstructure over metropolitan capital. It is driven by an autonomous quest for speculative gains that surpasses specific national objectives. This new characteristic, the new role of financial capital has gone beyond national boundaries and now has an international character. The effect of this new character is a tendency towards a subsiding of inter-imperialist rivalry and a much greater unity among imperialist powers.

The new character of today's imperialism generates a deflationary bias in the economic system. When finance can move freely from one country to another, this bias get strengthened. In this situation, finance capital flies out of a country unless the national government exerts deflationary pressure on its own policies to maintain the confidence of its investors. So governments must fall in line in imparting a deflationary bias to their economic policies. The implication of this deflationary bias is to create unemployment and generate recession in that economy.

Prof. Patnaik went on to point out that many people feel that as long as this international capital is globally mobile it generates deflation everywhere. It is democratically oppressive and hence there does not arise a question of imperialism. But Prof. Patnaik argued, that since the finance capital came from developed capitalist countries it had a bias towards those countries and did not operate on a democratic basis. It would always tend to flee from the South to the North because the North was the home base of capitalism.

More important, deflation is a mechanism for centralization of capital. This deflationary bias has the effect of strengthening multinational corporations in their bid to take over assets and natural resources because it eats up smaller capital. This is so because if demand is low, smaller businesses would find it more difficult to survive. The other side of the coin is of course generates unemployment for workers, adverse terms of trade for agricultural products, price instability for the peasantry, increasing debt and pauperization of peasants.

Why does this economic squeeze on workers and peasants translate itself into resistance? What kind of mechanisms does the new imperialist system have to check and thwart this resistance? There are mainly three mechanisms behind this, argued the speaker.

First, all governments, as long as they are open to the movements of globalized finance capital will have to necessarily pursue deflationary policies. Otherwise capital will fly out. So the only policy choice is that of deflation if capital control is ruled out and there are major threats and difficulties of opting out of such a process.

Second, in situations of unemployment that is generated by such deflationary pressure, the likes of religious fundamentalism, regionalism, ethnic divisions gets strengthened. Divisive and destructive forces dominate the social, political and economic structure of societies and thwart possibilities of resistance.

Third, terror and war are used as tools to further the end of imperialism. Capital always needs the protection of a state. Globally mobile capital needs ideally the protection of a global state. This does not exist but an approximation can be found in the form of a super imperialist state of the US to which there is acquiescence from the bourgeoisie, even in developing countries. In this scenario, according to the dictates of this super-imperialist state, any attempt at resistance from below is thwarted with the help of the legal framework by national governments. Anti-terrorism laws have been conveniently used for suppressing any protest, any resistance to the dominance of international financial capital. Some states that have a record of resistance can be termed as rogue states and actions can be taken against them.

The functions of war are to ensure that super imperialism continues. This use of war and terror is done for 3 reasons.

1) To break down any resistance from so-called rogue states.
2) For gaining the economic strength that supports super imperialism, from access to oil, access to resources, from access to strategic materials.
3) To maintain the dominance of the leading capitalist country and its currency. The currency is taken to be as good as gold and inspires institutional sanction. Even though there is no institutional legitimisation these days such a widespread acceptance is necessary because this enables the US government to increase its expenditure as much as it wants. So it is important that the ability of this currency to buy commodities should not collapse. Therefore it is of vital importance to the US to gain control over resources like oil the rising importance of which could have destabilized a number of currencies including the dollar.

Wars are conducted for a variety of reasons all of which has to do with protecting the new super imperialism. But wars represent also the Achilles heel of super-imperialism. It will be war that will ultimately lead to the downfall of super-imperialism.

February 23, 2004.