---

It is ten years since many of us met in London in one of the earliest Asia Europe People’s Forums. Our solemn mood then was shaped very much by the fall-out of what was called the Asian economic crisis. In that context, one economy after another – Thailand, Indonesia, South Korea, the Philippines – went belly-up. And the once-praised developmental model fell into disrepute.

Ten years fast forward - the high priest of free market ideology Alan Greenspan the former Chairman of the US Federal Reserve of 18 years in his book Age of Turbulence heaped praise on the magic of financial markets and criticized as foolishness those who called for greater regulation of the financial markets. In fact he asked “why do we wish to inhibit the pollinating bees of Wall Street”.

One year into the publication of the book world financial markets have been gripped with panic. Financial uncertainty and fragility is the buzz word. Global stock markets have hit rock bottom and are in a free fall. Wall Street lost its top five investments banks. The US congress passed a USD 700 billion rescue package fearing that the US financial system might collapse, and it constitutes the biggest US government intervention in history.

Similarly the British government announced a 500 billion pounds bail-out package to save its financial institutions. Workers lost their life savings. Fears of a global recession or a depression are being predicted, one worse than in the 1930’s. The present Chairman of the Federal Reserve Ben Bernanke admitted, “we have no control any more”. The world changed in September 2008.

Just as in 1997, the cause of the financial crisis was unfettered liberalization of financial markets. Just as in 1997, the governments subsidized the rich, including their plunder and recklessness through bail out and rescue packages.

The Chairmen of the failed Lehman Brothers is reported to have received about USD 484 million in various kind of compensation even when the company was in trouble. In fact, the captains of industry continue to cheat, and plunder because they do not pay for the crisis. The victims are workers who might be out of a job and who might have lost all savings. This is your classic socialism for the rich and free market poverty for the poor.

What is peculiar about the 2008 financial crisis is that it is taking place along-side a food, energy and an ecological crisis. Furthermore, it humbled the world’s economic super powers. They are asking developing countries like China to help solve the credit crisis through coordinated interest rate cuts.
Back in 1998, it was already clear to activists from the social movements and civil societies of both Asia and Europe that far-reaching, progressive responses were needed to address both the causes of the crises and their bitter consequences. The writing was on the wall.

We in the AEPF called for a radical new policy agenda – one which addressed the impact of economic policies on ordinary people, human rights and the environment. In short, we demanded that ASEM should broaden its agenda to include governance and human rights issues, environmental sustainability and people-centred development.

***

Did the governments of Asia and Europe listen to the calls for a different model of development? Did they put into place the kinds of responsive and accountable governance mechanisms that could anticipate and deal effectively with periodic crises?

The answer should be clear enough. In their collective wisdom, the political leaders, policymakers, corporate captains, and media and academic supporters ignored in almost every detail what had gone so drastically wrong in 1997 and 1998. Instead of reflecting critically on the dangers of rapid liberalization, deregulation and privatization, these neoliberal ideologues actually launched an even more intensive and extensive assault, driven by the motor of market-led politics.

One important outcome of the assault is that transnational finance increased its control over all the major circuits of the global economy. The result has been an unprecedented concentration and centralization of economic power, dominated more and more by giant conglomerates working hand in hand with a hidden banking system.

The results are clear for all to see. Today, a decade on, we can feel the aftershocks of yet another capitalist crisis. The masters of the market have been forced to eat humble pie for their own recklessness. They are consumed by fear.

At the same time, ordinary people around the world – working people, marginalised groups, developing countries – brace themselves to pay the price – already running into trillions of dollars – not only for the greed of the super-rich but the structural failings of an economic system based explicitly on exploitation and injustice.

This time round, the scope of the crisis is truly global. Its epicentre is the very heart of the neoliberal capitalist order: in Wall Street, in the City of London, in Tokyo’s Nihonbashi district. And its seismic shockwaves reach to every part of the world where the logic of the market prevails. As has become abundantly clear there is no hiding place from the markets’ ring of fire.

While today everyone is obsessed with the sickness of the banks and other financial institutions, only a few months ago the world’s attention turned (at least for a while) to the most acute food crisis in decades – with “routine” hunger transforming into what has been called “the great hunger of 2008″.

And of course the circuits of finance capital and the food crisis including the energy crisis are intimately related. The rapid and simultaneous rise in the world prices for all basic food crops – corn, wheat, rice, soybeans and cooking oils – has not been because of a lack of production. Rather it lies in the way that food has become just another item in global commodity chains, subjected to the same irrationalities of the markets as other commodities.

In fact, there is something wrong with our food system. Agri-business has transformed food into a speculative commodity as opposed to ensuring people right to food and livelihoods. In fact at the heart of the food crisis are neoliberal policies that focus on free trade as opposed to self sufficiency.

It appears that agricultural policy has been detached from the aim of feeding people. Thus it comes as no surprise that the UN World Food Programme warns that about 100 million people will go hungry as a result of the recent price hikes.

Speculation in the futures market has become endemic as the massive food conglomerates and financiers make common cause. Hedge Funds and other speculative and investment funds control about 50-60 per cent of the wheat traded on the global commodity markets.

One estimate shows that the amount of speculative money in commodities futures – markets where investors do not buy or sell a physical commodity, like rice or soya or wheat, but merely bet on price changes – has ballooned from US$5 billion in 2000 to US$175 billion in 2007. This is the new face of profit amidst hunger.

And then there is speculation in oil. Goldman Sachs speculative money in oil amounts to USD 80 billion. Since 2005 Morgan Stanley has been accumulating warehouse space in the Netherlands to store its hottest property oil. At present the investment bank supplies fuel to United Airlines.

In fact speculative investment demand in commodities increased from USD 70 billion in 2006 to $215 billion in 2008, about 300 percent increase in a short two year period. Much of the trading by hedge funds is driven by sophisticated computer-trading models. The models, known as black boxes, use complicated formulas to determine trades for a hedge fund.

Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street, Nymex in New York and the ICE (Intercontinental Exchange) Futures in London.

In addition, there is the longer term horizon of the ecological catastrophe – in a year when leading scientists have predicted the environmental problems facing humanity have reached an irrevocable “tipping point”.

The global ecological crisis, deepening remorselessly, threatens the world as never before. It is an outgrowth of unrestrained corporate power that today colonizes every realm of human life. Neoliberal capitalism’s overexploitation of nature’s resources is based on its pursuit of growth at any cost.

Once again, we can point to the inner logic of a system in which the unceasing drive for expansion in the name of profits and accumulation destroys our planet’s very survival.

***

So, once again we stand at an historical moment in a sombre mood – surveying the wreckage of crises that are both long-term and of immediate consequence; of crises that are both structural and conjunctural; of crises that demand not cosmetic reforms but a deep-rooted and sustainable transformation of how we shape the global order.

What is certain is that supporters of neoliberal capitalism went onto a major offensive towards economic restructuring. In reality, this was nothing less than a comprehensive project for market-led capitalist development.

Of course, over the past decade financial liberalization has been accompanied by a deepening of trade liberalization. We are all too conscious of the programmatic assault by the transnational corporations – working through the World Trade Organisation and a bewildering array of regional and bilateral arrangements – to pry open markets not just in goods and services, but in every conceivable area of social life. “Free trade imperialism”, the project of the British Empire in the nineteenth century, today finds its modern equivalent in the unfettered empire of corporate capital.

Thus, the architects of post-crisis restructuring ten years ago took seriously the task of re-making the world as they saw fit – a world fit for business to operate with impunity.

The overwhelming majority of governments in both Asia and Europe came to accede in the project of capitalist transformation – a project that placed the logic of market competition, corporate profits and commodification at the very centre of its policy regime.

The work of the official ASEM process must be seen in this light. It, too, embeds formal intergovernmental institutions as well as informal networks of private actors to persuade us all that the business of ASEM really is business.
A new spirit is abroad in the world – and it is a spirit driven by the imperatives of the global market and dependent development.

***

Chairperson and friends –

If we are to seriously combat the current system, if we are to offer comprehensive and not piecemeal alternatives, then it is also vital to look below the surface – beyond even today’s pressing financial, food and ecological crises – and understand the deeper processes that are at work.

I think this deeper structure can best be understood by reference to three key aspects of the current crisis-ridden system, conveniently the three Cs:

The politics of competitiveness

The politics of regulatory convergence

The politics of new constitutionalism

Let me begin, then, with the politics of competitiveness. With many of the instruments of deregulated market politics in place in most countries of the world, the dynamics of economic and political change are increasingly being shaped by the pursuit and promotion of capitalist competitiveness.

Crucially, the governments of the leading capitalist economies—such as those in the EU – are not pursuing competitiveness for themselves alone. They are actively promoting it too in other countries and regions of the global economy – notably in the “emerging markets” and low and middle income countries of Southeast Asia.

The draft recommendations from the European Commission on how to set about negotiating the EU-ASEAN Free Trade Area is absolutely explicit on this:
new competitiveness-driven FTAs would need to be comprehensive and ambitious in coverage, aiming at the highest possible degree of trade liberalization, including far-reaching liberalization of services and investment.

The Commission goes to stress “the need to ensure that we share similar ambitions with our prospective partners at the outset”. This, then, is the real meaning of a so-called “partnership of equals” between Europe and Asia.
Second, together with the huge political effort to promote competitiveness and entrepreneurship in Europe’s so-called business and trading partners, the project has been driven by nothing less than a new “politics of convergence”.

This effectively means four things:

The first is the development, largely among international institutions, of a set of ‘appropriate policy choices’ seen as generating of capitalist competitiveness.
The second is the use of systematic surveillance, international benchmarking and peer review as the means of promoting the policies concerned to those national governments—the EU calls this “regulatory transparency” and “conformity assessment” in its ASEAN directive.

The third, and as I highlighted earlier, is the identification of national governments as the agents responsible for implementing change.

And the fourth is the insistence that a key part of the task of national governments is to shape public opinion to the logic of global competitiveness.
This would create “the right kind of competitive pressures”: competitiveness is to be promoted, on as wide a scale as possible, for the disciplines it imposes upon the national economies of all countries.

Both ASEM and the proposed EU-ASEAN FTA can thus be seen as part of this wider process of regulatory convergence around a whole cluster of competitiveness and liberalization policies.

And lastly, in order to be successful in its own terms, the competitiveness and convergence dynamics need also to be re-shaped by long-term frameworks designed to “lock in” commitments to a neoliberal path of development.
The proliferation of international trade agreements such as the EU-ASEAN FTA type is precisely such frameworks. We can call this development the emergence of a “new constitutionalism”.

New constitutionalism is the political-juridical counterpart to the disciplinary neo-liberalism associated with the deepening of the logic of liberalization, market values and competitiveness.

New constitutionalism involves a whole array of political and legal reforms to redefine the political via a series of mechanisms. These include constitutions, laws, property rights and various institutional arrangements, designed to have quasi-permanent status.

A central objective of new constitutionalism, then, is to prevent future governments from undoing commitments to a disciplinary neoliberal pattern of development. And it entails efforts to contain and deflect challenges to its competitiveness and liberalization agenda on behalf of large-scale corporate capital.

***

This, then, is where we have come in the decade in which the world economy has lurched from crisis to crisis. The neoliberal ideologues pretend that economics can be separated from politics. They pretend that the market is best left to develop on its own terms unfettered by governmental regulation. But as we have seen, the project of capitalist reconstruction in our era is a deeply political project. The politics of competition, the politics of convergence and the politics of constitutionalism are all part of a concerted political project to guarantee the rights of capital at the expense of working people and at the expense of a degraded environment.

It should be clear to all of us that the very developments that are supposed to reinvigorate capital are actually the sources of catastrophic crises. And it is at the very moment of crisis that the artificial separation of economics and politics collapses before our eyes. Governments, regional organisations, international institutions like the IMF and World Bank this past weekend – all scramble in unseemly haste to bail out their benefactors through subsidies for the rich. How ironic that the “free markets” are today totally dependent on state intervention. The capitalist state is fulfilling its historic task of providing all the necessary guarantees for the survival of property.

Meanwhile, it is clear that the social costs of stabilization are being borne largely by working people. For most of us, an ever-sharper attack on working-class standards of living will be the main consequence of the current crisis. We can only hope that the scale of hardship and the depth of popular resentment will also encourage the rejuvenation of popular struggles.

It seems to me that the scale of the crisis and the popular outrage today provide an historic opening for the renewal of the kind of radical politics that advances a genuine alternative to capitalism.

This is the task that we should set ourselves – not only here in this Asia Europe People’s Forum but also when we return to our countries and recommence the long-term task of popular mobilisation.

And absolutely vital to this rebuilding is to get people to think ambitiously again and to strategize more robustly about what is possible. We all know that however deep the crisis and however widespread the outrage, the renewal of a radical politics in an age of crisis will require hard and committed work by a great many activists.