Capitalist economists, media magnates, business people and politicians tell us that we are moving towards a "globalised" world economy in which capital and investment can move around freely and the Third World can compete in a "free" international market.
In reality, all that is being globalised is poverty and the power of the huge corporations based in the advanced capitalist countries and international institutions such as the International Monetary Fund (IMF), World Bank and the World Trade Organisation (WTO).
The vast majority of the owners, sales and production of the world's biggest corporations remain in the rich capitalist countries. According to the United Nations' World Investment Report 1993, in that year there were 37,000 transnational corporations, which had 170,000 subsidiaries abroad. Ninety per cent had their headquarters in the developed capitalist countries.
The vast majority of investment and trade is also confined to the First World. In 1992, 60% of international investment and 84% of world trade flowed between North America, western Europe and Japan.
World wealth
Inequality between the First and Third Worlds is growing, not decreasing: the average per capita income of the richest countries was 11 times that of the poorest countries in 1870, 38 times in 1965 and 58 times in 1985.
According to the UN Human Development Report 1997, the combined wealth of the 225 richest people in the world was more than $1.7 trillion, equal to the annual income of some 2.5 billion people (47% of the world's population).
Within the First World countries, government policies driven by businesses pursuit of more and more profits — cutting welfare, health and education funding, and shifting the tax burden onto ordinary people — are creating increasing inequality. In the Third World, direct colonial subjugation has given way to other methods of keeping the people poor and extracting increasing profits.
The debt owed by Third World countries to the IMF, World Bank and major First World banks totals more than US$2030 billion (not including debts incurred by eastern European countries), an increase from $567 billion in 1980 and $1400 billion in 1992. Servicing this debt cripples Third World economies.
The poor countries' debt keeps growing. In 1997, the rich countries lent $8 billion to the poorest countries, while the latter repaid $8.2 billion. In return for loans, the IMF and World Bank demand that "structural adjustment programs" be implemented. These involve large-scale privatisation of public assets and the cutting of government spending on public services.
Huge debts promote an emphasis in government policy on export industries rather than meeting local needs. The debt also encourages unsustainable exploitation of natural resources, producing hunger and environmental devastation.
Much is being made of a debt relief plan announced last year by the United States and the other six powerful G7 countries. However, the plan will leave most poor countries paying nearly as much as they do now, and all debt relief is conditional upon closely monitored structural adjustment.
IMF and World Bank
The IMF's mission is to ensure financial "stability" by extending loans to impoverished countries to stabilise their currencies and meet debt repayments. The sums lent flow back into the coffers of the Western banks, whose loans were threatened by the instability. The debtor countries, however, still have to repay the loans with interest and abide by whatever conditions the IMF imposes (which are much the same as structural adjustment plans).
For example, the IMF encouraged Asian countries to open their borders to speculative finance invested in currency, stocks and short-term securities. The 1997-98 economic crisis in east Asia resulted from a sudden and massive withdrawal of this investment.
Once the crisis hit, the IMF made things worse by requiring structural adjustment as a condition for loans. The result was a surge in bankruptcies, lay-offs and poverty.
The IMF bailouts in Asia, like others in Russia and Mexico, meant that the Western banks avoided major losses, while the mass of people paid dearly.
The World Bank is supposed to provide "social" investment for poor countries. However, notorious examples of World Bank projects include the construction of dams and major infrastructure in these countries which produce little benefit for the people, and displace and destroy numerous communities.
The World Bank is supposed to alleviate poverty, but its International Finance Corporation finances and advises private sector ventures and projects in the Third World, in partnership with private companies including Exxon Mobil, British Petroleum and Coca-Cola.
The WTO
The WTO replaced the General Agreement on Tariffs and Trade in 1995 as the international body to police trade "liberalisation" — the removal of barriers to the importation of goods and foreign investment, and the removal of provisions which protect domestic industries and jobs.
A mutual opening up of markets always hurts the weakest economies. The historical subjugation of Third World economies has left them struggling with lower productivity rates and outdated technology, problems they cannot overcome because of the domination of the First World.
The WTO now covers services, as well as an extended range of industries, such as textiles and clothing, and agriculture. It can rule that environmental regulations are a barrier to trade and its control over intellectual property is currently under discussion (that is, the extent to which it should allow private ownership of commercially valuable knowledge like software, agricultural innovations and even plants, animals and genetically modified organisms).
Countries not participating in the WTO are denied access to markets. Punitive economic sanctions can be imposed on those countries that do not comply with WTO agreements. Only the most powerful players — like the US — can ignore or bend the rules.
Enough!
The IMF, World Bank and WTO do not exist to help the Third World. They exist to impose those economic policies agreed on by the First World countries which control these institutions.
In the IMF and World Bank, the decisions are made on a vote-per-dollar basis. The WTO has a one-member, one-vote constitution, but key decisions are made in informal meetings among the key countries.
Resistance believes that these institutions should be abolished and all Third World debt must be cancelled. We would also support the formation of alternative international bodies.
At the G-77 heads of state and government meeting in Havana, Cuba, April 12-14, Cuban President Fidel Castro proposed a 1% tax on speculative financial transactions which would "permit the creation of a large indispensable fund, in excess of US$1 trillion every year, to promote real, sustainable and comprehensive development in the Third World".
Such policies would help, however the might of large corporations and the governments of the advanced capitalist countries needs to be abolished too if real equality and justice are to prevail. Campaigns such as those outlined is this broadsheet are stepping-stones towards the goal of a new, democratic and socialist world run in the interests of people, not private profit.