BY EVA CHENG
Prompted by the 1997-98 world economic crisis and after two years of rapid growth, the fledgling international movement for a "Tobin tax" — a tax on currency transactions to help curb financial speculation — is seeking to speed up its campaign, by pressing for the European parliament to formally investigate the tax's merits and feasibility.
A motion calling for such a study was put to a vote on January 20 but despite the support of 200 parliamentarians was narrowly defeated. Undeterred, the campaign is planning to table a revised resolution during the third quarter of the year.
Meanwhile, it has also launched a petition for the tax, with the goal to win the support of at least 1000 parliamentarians from around the world. By mid-July, it had already secured about 400 such signatures.
A proposal to use taxation to discourage currency speculation was first promoted by Nobel Prize-winning economist James Tobin in 1972 but it's only in the last few years that a campaign has grown around the idea.
Discourage speculation
The movement's central goal is straightforward: institute a small basic tax, say 0.02-0.1%, on all currency transactions, and a much higher surcharge, say 100%, on speculative gains made on currency swings outside a predetermined range.
Given currency trading totals around US$450 trillion per annum, the proposed tax — even allowing for some dampening of transactions due to thinner profit margins — is estimated to collect well over $100 billion a year. (In comparison, the Organisation for Economic Cooperation and Development's "official development aid" to the Third World amounted to only US$48 billion in 1997.)
The campaign has also proposed putting the expected collection in the care of a "democratically organised institution" for poverty alleviation in poor countries. The essential details, such as how this body is to be constituted and what steps will be taken to ensure that the fund's distribution is consistent with its stated goal, are still being ironed out.
In April, Cuban leader Fidel Castro lent his support. During his formal address to the G77 summit in Havana, Castro called for a Tobin tax "to arrest unrestrained speculation" and to collect much-needed funds "to promote a real, sustainable and comprehensible development in the Third Word". He, however, stressed that the tax rate must be at least 1% to be effective.
Hitherto, this worldwide campaign has enjoyed the support of a range of organisations from across the political spectrum and has pursued a strategy of popular action. Though aid, church and non-government organisations and politically non-affiliated individuals have the largest presence, many socialists are also active participants.
ATTAC, Action for a Tobin Tax to Assist the Citizen, is a driving force in Europe, with more than 100,000 members in over 100 French cities and associated "chapters" in fourteen other, mainly European, countries.
Other active bodies in Europe included War on Want in Britain, Caritas International and the Economic and Social Council in France. The Italian city of Genoa, where the 2001 G7 summit of rich nations will be held, in July declared itself a "Tobin town" to express its commitment to the campaign. Fifty French towns have made similar declarations, as part of a wider move to build "an international network of Tobin towns".
A group in Canada, the Halifax Initiative, has attempted since 1995 to get its government's commitment to raise the idea at the G7. While the Canadian government has rejected such a proposal, the campaign has been growing in leaps and bounds.
In March 1999, groups such as Robin Round, Ecumenical Coalition for Economic Justice, Results Canada, the Council of Canadians and some labour unions succeeded in help pushing the passage of a motion — by 164 to 83 — through the Canadian lower house of parliament, which calls on the government to join other countries in investigating the feasibility of Tobin-type taxes.
In the United States, a new group, Tobin Tax Initiatives, has just been formed.
Political direction
While not every participant believes that the tax will have the magical effect of halting financial speculation, bringing real stability to the world financial system or endangering capitalism, many agree that the imposition of such a tax would be a significant victory which boosts the people's movement and could lead to other progressive possibilities.
While the immediate gains may be useful, in and of itself the tax will contribute little to tackling the root causes of speculation, which arise from fundamental contradictions within the capitalist system itself.
Conflicting perspectives on this issue have arisen within the movement, leading to an emerging tension between those who seek to humanise capitalism (by minimising its "excesses" and making it more tolerable and acceptable) and those who pursue the tax as one step in an anti-capitalist struggle.
The January European parliament motion calling for a study of the tax provoked much controversy. Considerable objections were raised to clauses in the preamble which seemed to steer the campaign's demands in a liberal reformist, rather than anti-capitalist, direction.
The motion's preamble stressed the importance of a regulatory framework capable of removing the "current excesses" of the international capital markets and calls for "stronger regulations" for scrutinising the financial sector.
The preamble lays the blame for financial crises at the feet of (an undefined) "globalisation" and of the faulty budgetary and monetary policies of individual corrupt and nepotistic governments.
Economic liberalisation has been inadequately regulated by the law or the financial supervisory system, the preamble goes on to say. It calls on developing countries without a "mature capital market" to shore up their foreign currency reserves, so as to discourage wild swings in short-term capital movements.
The implied conclusions are clear: the world financial system will work better if it's more effectively regulated, with more "excesses" removed and the poor countries taking "prudent" financial measures.
More radical, anti-capitalist amendments were rejected and, as a result, more than 20 progressive European deputies didn't support the motion, which lost by just six votes.
These deputies came from French far-left parties Lutte Ouvriere (Workers Struggle) and the Ligue Communiste Revolutionnaire (Revolutionary Communist League — LCR), as well as from the GUE (the United European Left, a formal group within the European parliament which comprises deputies from about 20 left parties) and the European Greens.
Let's fix capitalism?
A heated debate about the left-wing deputies' action resulted, both inside and outside the European parliament. LCR deputy Alain Krivine, who has actively campaigned for the tax but who abstained on the vote in protest at the motion's eventual content, was one subject of the finger-pointing, even from within his own party.
Rouge, the LCR's weekly newspaper, on February 3 carried a joint statement by four LCR political bureau members critical of Krivine's vote. While acknowledging that the motion's preamble framed the tax proposal from "the most liberal angle imaginable", the four argued that its adoption would nevertheless have constituted a useful pressure point for wider debate on controlling the financial markets.
But another LCR deputy in the European parliament, Roseline Vachetta, unable to vote on January 20, wrote to Rouge stating that she too would have abstained because of the "unacceptable" preamble.
The objectives that had to follow from the preamble, she pointed out, would be to promote a "greater stability of the monetary, financial, economic and social system on a world scale" and "the need for a regulating framework capable of ensuring the optimum functioning of the global financial markets, free of their excesses".
"No, we couldn't possibly agree with that", Vachetta wrote. "We are not in parliament to contribute to the perpetuation of the financial markets!"
Vachetta also strongly objected to the motion's call to return the revenue collected by a Tobin tax into the hands of the financial markets. "Voting for this resolution would be to renounce for a long time a commitment to redistribution borne by many people's movements", Vachetta wrote. "It would contribute to the consolidation of the world order, rather than its disorder."