Some people involved in global anti-poverty campaigns have been watching the global financial crisis engulfing rich nations with a sense of deja vu. Ann Pettifor, who did so much to campaign against the unsustainable and illegitimate debt of less developed countries, warned about the development of similar debts inside G8 economies. But the big question facing those of us involved in both crises – global poverty and the global credit crunch – is whether these are two different crises with similar features, or actually the same crisis. And do they need different solutions, or one big solution? The balance of evidence seems to be swinging towards the one crisis, one solution camp.
Kofi Annan, Michel Camdessus and Robert Rubin, writing in this weekend’s Financial Times, edge towards a combined solution. At its simplest, this thesis says that the credit crunch could, like climate change, ‘make poverty permanent’. It will hurt the poorest worst (a pan-European conference of women trade unionists concluded on Friday that women would as usual bear the brunt.) And it must not allow richer nations to slash overseas development assistance.
But we need to go further than this. What the world needs now is global Keynesianism – public spending increases in the G8 must be matched by the same in the global south (which will need increased overseas aid aimed at public education, health and water). In a globalised economy, stimuli to demand anywhere will feed through into every economy through increased (or at least stabilised) trade.
We also need a new, more efficient paradigm of equality. We need to recognise that gross inequalities of wealth and power, within and between nations, are morally wrong and economically inefficient. Those inflated bonuses and stock options aren’t just repugnant, they do actual harm.
And finally, we also need a new global architecture, built on the ruins of the Washington consensus that saw self-flagellation by G8 finance ministries and appalling vandalism inflicted on public services in the poorest nations on the planet. We need global institutions like the IMF and World Bank that have reformed and widened governance – and a voice for civil society – and which allow governments to reflect what their electorates want and need by boosting spending on public goods.
In a truly global crisis, we need truly global solutions. On 15/16 November, the global financial summit (expanded from the G7 to the G20 which is a start but not enough) will take place in Washington DC – an appropriate venue to drive the final stake through the heart of the Washington consensus. Two weeks later, a wider community will gather for the Financing For Development summit in Doha. They should have the same agenda.