[PDF]Your Money Or Your Life - Eric Toussaint

Eric Toussaint








Eric Toussaint





Your Money or Your Life!
The Tyranny of Global Finance


Translated by Raghu Krishnan
with the collaboration of Vicki Briault Manus


Pluto 4 h Press Mkuki na Nyota Publishers


LONDON ¢ STERLING, VIRGINIA DAR ES SALAAM


Disclaimer:
Some images in the original version of this book are not
available for inclusion in the eBook.


First published in French by CADTM (Belgium), CETIM (Switzerland),
Editions Luc Pire (Belgium) and Editions Syllepse (France), 1998,
as La bourse ou la vie: La finance contre les peuples


First English language edition published 1999 by Pluto Press
345 Archway Road, London N6 5AA

and 22883 Quicksilver Drive, Sterling, VA 20166-2012, USA
and by Mkuki na Nyota Publishers, 6 Muhonda Street,
Kariakoo, PO Box 4246, Dar es Salaam, Tanzania


Copyright © 1998, CADTM, 29 rue Plantin, 1070 Brussels, Belgium
This translation © Raghu Krishnan 1999


The right of Eric Toussaint to be identified as the author of
this work has been asserted by him in accordance with
the Copyright, Designs and Patents Act 1988


British Library Cataloguing in Publication Data
A catalogue record for this book is available from
the British Library


ISBN 0 7453 1417 1 hbk (Pluto Press)
ISBN 0 7453 1412 0 pbk (Pluto Press)
ISBN 9976 973 54 3 pbk (Mkuki na Nyota Publishers)


Library of Congress Cataloging in Publication Data
Toussaint, Eric.

[Bourse ou la vie. English]

Your money or your life! : the tyranny of global finance / Eric
Toussaint ; translated by Raghu Krishnan with the collaboration of
Vicki Briault Manus.

p. cm.

Includes bibliographical references and index.

ISBN 0-7453-1417-1 hbk

1. Debts, External—Developing countries. 2. International
Monetary Fund—Developing countries. I. Title.

HJ8899.T6813 1999
336.3'435'091724—dc21 99-13344
CIP


Designed and produced for Pluto Press by

Chase Production Services, Chadlington, Oxford, OX7 3LN
Typeset from disk by Stanford DTP Services, Northampton
Printed in the EC by T.J. International Ltd, Padstow








Contents


List of Tables and Figures
Acknowledgements

Foreword by Christian de Brie
Preface to English Edition


Introduction


16.


Globalisation and the Neo-Liberal Offensive

The Concentration of Capital

Globalisation and Exclusion: the Marginalisation of
the Third World and the Strengthening of the Triad
Financial Globalisation

Globalisation and the Growing Debt Burden

The Debt Crisis in Historical Perspective

The Third World Debt Crisis in the 1980s and 1990s
The Transfer of Wealth from the South to the North
The World Bank and the IMF: 50 Years is Enough!
The World Bank and the Third World Debt Crisis


. Structural Adjustment Programmes
. The Two Phases of Structural Adjustment
. Neo-Liberal Ideology and Policies in Historical


Perspective


. Debt in the 1990s: Latin America and Sub-Saharan


Africa


. Case Studies


Argentina

Mexico

Rwanda

The Asian Crisis and its International Repercussions


112
127
134
140


170


189
200
200
205
212
218


VI/YOUR MONEY OR YOUR LIFE!





17. Towards an Alternative
18. Globalising Resistance


Chronology: The World Bank, the IMF and the Third World
Glossary

Bibliography

Index


238
252


265
277
294
314








List of Tables and Figures


TABLES
Table 1.1 Evolution of the Real Income of US Households 20
Table 1.2. Turnover or GNP in $ billions 27
Table 2.1 Company Acquisition and Creation by Foreign

Capital in the US 32
Table 2.2 Some Examples of Global Concentration at the

End of the 1980s and in the 1990s 33
Table 3.1 Origin and Destination of FDI Flows in 1990

(percentage of total world FDI) 37
Table 3.2. 1987-92 FDI Flows to Developing Regions 38
Table 3.3. Relative Share of the World Market in

Manufactured Goods 39


Table 3.4 The Share in Global Exports of the Three Main
Blocs of Developing Countries between 1950


and 1990 43
Table 4.1 Daily Value of Financial Transactions and the
Total Annual Value of Global Exports 53


Table 4.2 Finance Expanding More Quickly than GNP: Trade
and Foreign Direct Investment in OECD Countries


(1988 compared to 1980) 54
Table 5.1 Growth in Financial Assets, 1980-92 67
Table 5.2 Share of Financial Markets in Foreign Debt 67
Table 7.1. Nominal Interest Rates, Real Interest Rates and

Inflation 90
Table 8.1 Gross and Net Debt — end of 1995 104
Table 14.1 Evolution of External Debt in Latin America

and the Caribbean 190


Table 14.2 Evolution of sub-Saharan Africa’s External Debt 195


vii


VIII/YOUR MONEY OR YOUR LIFE!





Table 14.3 Evolution of the Balance of Trade in
sub-Saharan Africa

Table 14.4 Net Flow of Foreign Direct Investment in
sub-Saharan Africa

Table 14.5 Profit Repatriation by MNCs Operating in
sub-Saharan Africa


FIGURES


Figure 3.1 Distribution of Foreign Direct Investment

Figure 4.1 The Evolution of Financial Assets by Investor
Type, 1980-94

Figure 5.1 Share of Nine Most Indebted Third World
Countries in Total Third World Debt, 1995


196


196


197


36


61


68








Dedication


This work is dedicated to my parents, José Toussaint (1920-97) and
Rose Clermont-Toussaint; to Ernest Mandel (1923-95), Marxist
activist in word and deed; and to Carl Cesar (age 10) of Muriqui, Rio
de Janeiro state, in the hope that he will have both the desire and the
right to go to school; and to all those women and men struggling for
their emancipation.








Acknowledgements


My heartfelt thanks to Denise Comanne, without whom this work
would not have been possible. I also wish to thank the following
people for their help, their criticism and their encouragement, under-
standing and patience: Ivan, Tristan and José Toussaint; Rose
Clermont-Toussaint; Frans Maggio; France Arets; Annick Honorez;
Pierre Galand; Didier Brissa; Brigitte and Isabelle Ponet; Dalhia
Luksenburg; Anne-Marie Raison; Luc Pire; Philippe Tombal; Roland
Pfefferkorn (Université de Strasbourg); Michel Chossudovsky
(Université d’Ottawa); Patricia Camacho (Mexico); Bruno and Nadji
Linhares (Brazil); Gustavo Codas (CUT-Brazil); Ernesto Herrera, Aldo
Gili and Marita Silvera (Uruguay); Alejandro Olmos (Argentina);
Pierre Cours-Saliés (Université de Paris VIII); Christian de Brie (Le
Monde diplomatique); Michel Husson (IRES); Jacques Bournay, Gus
Massiah (AITEC); Bernard Teissier (ENSSIB, Lyon I); Florian Rochat
(CETIM-Switzerland); Robert Went (University of Amsterdam and
IIRE); Samir Amin and Amady Ali Dieng (Forum Tiers Monde,
Dakar); Binta Sarr (APROFES-Senegal); friends at the AIRS (Algeria);
and the entire team at COCAD (Belgium).

This project was assisted by the CEDGVIII/B2. This institution is in
no way responsible for the ideas expressed by the author.








Foreword


Contemporary history can be described as that of the conquest of the
world by an ever smaller number of huge conglomerates organised
into multinational corporations. These corporations are engaged in
a permanent war with one another to control markets with the
shared aim of subordinating all human endeavour to the logic of
private profit.

While the processes of capital accumulation and concentration
have long been with us, in recent times they have been dramatically
accelerated as a result of a number of technological upheavals.
Thanks to the transformation of data storage, processing and trans-
mission techniques — computing, robotics, telecommunications — for
the first time in the history of human civilisation it is possible to
pursue planetary strategies in real time. In other words, it is possible
from a given location to track and evaluate continuously the
application of decisions anywhere else on the planet — and to adapt
the content, location, operating conditions and outputs of any type
of activity accordingly.

The effect of this technological revolution has been amplified by
two other upheavals, of a political nature.

The first is the challenge by multinational companies —in the name
of ‘freedom’ — to the sovereignty of governments and of their
regulatory role. This is especially the case in the fields ofthe economy
(currency, exchange, customs, interest rates, capital flows, monetary
policy, taxation and fiscal policy, the public sector) and social policy
(social programmes and labour laws, from the minimum wage to
family benefits, and also trade union rights, pension plans, healthcare
and education). This challenge has been legitimised by a particularly
aggressive brand of liberal ideology, and backed by the full weight of


xi


XII/YOUR MONEY OR YOUR LIFE!





those that hold the reins of economic and cultural power. No effort is
spared to promote the idea that private initiative is superior to public
intervention, contrasting the efficiency and profitability of the former
to the incompetence and wastefulness of the latter. Or the idea that
humans naturally prefer private initiative over collective solidarity.
Or the need to limit the state and government to the sole task of
upholding law and order, social control and the defence of personal
safety and private property. While this ideological campaign never
tires of insisting that a free country is one in which there is freedom
to do business, it remains curiously silent about the permanent
collusion between the state apparatus and big business lobbies. It
has, however, led to the implementation of policies of systematic
deregulation that seek to fulfil two wide-ranging objectives.

In the first place, there is the objective of progressively establishing
—sector by sector —a global space, or rather a world market, in which
the only law is that laid down by multinationals to regulate the
competition between them, a kind of chivalrous code for economic
warfare. The task of drawing up and overseeing such a code, for
example, has been devolved to the World Trade Organisation (WTO)
— a gargantuan organisation that renders null and void the
legitimacy of national states and governments.

The second objective is that of providing the best possible
opportunity for those with the requisite astronomical wealth — that
is to say, the multinational corporations — to take full advantage of
the potential created by the new technologies. This is especially so in
the financial sector — where the split-second transmission of capital
and the mushrooming of exchanges, brokerage houses, financial
products and speculative instruments have created a massive
financial bubble out of all proportion to economic realities. Between
$1,200 and 1,500 billion are traded each day on the markets, the
equivalent of one week of US GNP and 60 times the funds needed to
settle actual international transactions in goods and services. This
bubble could burst at any time and do irreparable damage, as has
already been the case in Mexico and, more recently, in Southeast
Asia. This financial bubble is the scene of the hottest investments and
the most risky speculative operations; it is also the destination of
choice for a significant proportion of the savings deposited in mutual
and pension funds, and for the liquid assets of banks and companies.

The second political upheaval was the fall of the Berlin Wall in
December 1989, an event symbolic of the collapse through implosion


FOREWORD/XIIT





of the bloc of socialist countries led by the Soviet Union. It was also
symbolic of the disappearance of an economic and political system
that put itself forward as the historic alternative to an increasingly
unpopular capitalism. The socialist sphere of influence put up no
resistance and displayed a kind of greed-induced naiveté; it was
quickly conquered by the Western free market democracy model.
This has not been the case for a handful of countries in the process of
rapid transformation (such as Vietnam) or reduced to decrepit
museums of a long-gone era (such as North Korea). Nor has it been
the case of China, which intends to retain its political autonomy
behind a wall of market socialism in which there is a great deal more
market than there is socialism. The triumph of capitalism resulting
from the disintegration of its arch-rival put an end to the East-West
conflict, which had overdetermined international relations and the
fate of peoples and nations for some 50 years. This triumph also put
an end to the ‘Third World’, a term used to describe the often risky
attempt by countries of the South as a whole to use the superpower
conflict as a means to protect their economic and political indepen-
dence. Above all else, this capitalist triumph over the Socialist Bloc
has confirmed the historic defeat of the working classes and of the
world proletariat. Henceforth, they will be condemned to limitless
exploitation by a brutal and arrogant capitalism that, at long last, has
been delivered from its age-old fear of world revolution.

This is the state of affairs as we embark upon an era in which the
world’s new masters seek to establish a universal totalitarianism.
Indeed, this is the only possible way for the handful of all-powerful
economic warlords, who will soon own most of the planet, to
perpetuate their domination over many billions of victims. The
progressive establishment of this new order is being carried out in
three main areas.

In the first place, there is the near-monopoly of the ideology of the
ruling classes and of the neo-liberal discourse that legitimises their
rule. Be it the printed press, radio and TV, publishing, academic insti-
tutions, think-tanks, or talks and seminars, there is very little in the
field of the production and dissemination of mainstream ideas that is
not directly or indirectly controlled by those in positions of wealth
and power. The scope for manipulation provided by the mass media,
their potential for ‘manufacturing consent’ and adapting their
message to each audience, gives them unlimited possibilities for
subjecting ever greater sectors of the population to their influence,


XIV/YOUR MONEY OR YOUR LIFE!





especially those most likely to become their victims. Fewer and fewer
people have the wherewithal to extricate themselves from the
dominant discourse. An overwhelming majority of intellectuals has
been won to the new dominant ideology. Before, the intelligentsia
were mobilised in opposition to the Establishment; now they have
become its well-paid guard dogs. A veritable caste of arrogant and
cynical intellectuals has emerged to defend the liberal faith, to declare
the ‘end of history’, to hunt down and burn at the stake all those who
dare contest the new doctrine. They monopolise the written and
spoken word, recite the free market mantra, and pull economic
‘miracles’ out of thin air. These new theologians and dedicated
scientists of the liberal faith do not hesitate to falsify history to erase
anything that might contradict their regurgitated ‘truths’, nor do
they baulk at manipulating statistics to give their pontificating a
scientific gloss. In this, they have continued a proud tradition of
totalitarian practices that began with the nationalist bourgeoisies
and was perpetuated by fascist and socialist regimes. From a very
young age, children are enrolled in the economic war, put forward
as the unavoidable choice between life and death — both at school and
in their sporting activities, where each is pitted against all and where
victors and the powerful are praised and losers and the weak are con-
temptuously dismissed. For all this, however, no attempt is made to
pinpoint the exact purpose of this indefinite and perpetual war of the
kind described by George Orwellin 1984. The war’s objectives, one’s
allies and one’s conquests are ephemeral, in a constant state of flux.

Secondly, there is the attempt to submit the whole of human
activity to the market order and the rule of profit. No sphere can
escape this process, neither the protection of privacy, nor the right to
breathe unpolluted air, nor the use of human genes. Everything can
become a commodity, including spirituality, and enter the circuits of
capital in order to be made profitable. The goal is that of granting
capital totalitarian control over human and biological life and
development. This shameful pillage of humanity’s collective
inheritance has necessarily been accompanied by wide-ranging and
growing criminalisation. While the old order has been destroyed and
the rules governing relations between states and between states and
multinationals are no longer effective, the resulting vacuum has not
been filled by a new set of rules and corresponding sanctions for the
new order. Brutal competition between the various economic
warlords has, instead, been greased by generalised corruption. Not a


FOREWORD/XV
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