[Marxism] Reformism and the impact of financial globalisation

Jurriaan Bendien andromeda246 at hetnet.nl
Wed Jun 23 13:06:14 MDT 2004

Interestingly, in their IMF paper "Effects of Financial Globalization on
Developing Countries: Some Empirical Evidence", Eswar Prasad, Kenneth
Rogoff, Shang-Jin Wei and M. Ayhan Kose argue that, while there is no
strong, robust and uniform evidence for the neoliberal argument that
international financial deregulation delivers higher rates of economic
growth, countries in the early stages of financial integration have been
exposed to higher volatility of both net output growth and of consumption.
http://www.imf.org/external/np/res/docs/2003/031703.htm .

David Held gives a social-democratic critique at
http://www.opendemocracy.net/debates/article-6-27-1918.jsp and argues the
reformist case for a new social contract (a global "covenant"). Only
question is, once the financial genie has got out of the bottle, how do you
get him back in again ?

Confronted by an enormous increase in income inequality between social
classes, that would require strong state regulation and a strong progressive
taxation and redistributive policy. But, in turn, that requires a political
support base that would force through a state policy of that type - a mass
of workingclass and middleclass people sufficiently organised politically to
do it. Not very likely, in view of the extent of depoliticisation these

But supposing that such a political support base could be found, what
prevents corporations from divesting, and exporting capital somewhere else,
in response to a new social contract that doesn't benefit them ? In the
longer term, a populist response to mass discontent with the fall-out of
neoliberal policies is I think inevitable, but it's not clear that it would
create the kind of social contract that Held favours.


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