<nettime> The end of neoliberal globalization?

[Brian Holmes <brian.holmes@wanadoo.fr>]

Monday's edition of Le Monde included an article entitled "How Far 
can the Stock Markets Fall?" It made me think more than a little of 
the nettime post I wrote on July 16, about the chances of a 
deflationary spiral afflicting the more-or-less integrated world 
economy. Here are the most striking passages from the Monde article:

"What are the investors afraid of?
"The rising probability of a war with Iraq has already been taken 
into account in the current market drop. According to the Societe 
Generale, the volatility of the stock market is already greater than 
its maximum during the Gulf War. The price of oil has already risen 
to 30 dollars, and analysts are evoking the figure of 35 dollars, if 
the war is as short as the first Iraq campaign.
"The menace of a Gulf war also reinforces the fears of recession. The 
quarterly results of businesses don't show any signs of an upswing. 
This could lead to the reproduction of a 'deflation' scenario as in 
Japan, where a fall in the value of financial holdings led to a fall 
in prices, which fed the fall in profits, leading to a fall in stock 
values, etc. A real vicious circle. Some analysts also point to the 
possibility of a krach in the bond market if ever the stock market 
came back, since trading in government issue has risen due to a 
flight of capitals rendered fearful by the crisis of confidence."
(www.lemonde.fr/recherche_articleweb/1,9687,292507,00.html).

And it goes on like that. As all kinds of articles do, from across 
the spectrum, if you just google around a little with words like 
"deflation," "recession," "capital flight," and similar dismal terms 
from the dismal science. It now appears certain that the US stock 
market will not return to its dizzying heights any time soon, but is 
likely to fall even further, particularly when consumer demand 
finally starts to decline, both as a result of all the layoffs 
happening now and because of the closure of the easy-money spigot. As 
the article continues: "Over one in every two American households 
possesses stock, and the majority of retirement funds are invested in 
stock. The whole question is whether households, whose expenditures 
represent two-thirds of American economic activity, are going to 
continue to fuel growth by maintaining their level of consumption, 
despite the drop in the value of their holdings."

Not to mention the disappearance of their jobs. Among the other 
things the Monde article doesn't mention is the eventuality, as in 
the Japanese scenario ten years ago, of the coup de grace coming from 
a bursting bubble in real-estate markets, which act, for a time, as 
one of the (not so) "safe havens" when the stock-market floor falls 
out. There'll be a lot of pissed-off people if things go that far in 
the US. And that's just part of the story.

In July I said "the krach is happening, in the center of capital 
accumulation and therefore on a global, systemic scale. It is going 
to place enormous  political pressure on the post-89 world system." 
If I were religious, I'd now say "pray for the Latin Americans." 
Because the ton of bricks is coming down on their heads. Whether or 
not Lula, in all probability the next Brazilian president, turns out 
to be as "reasonable" as the IMF and private bankers have been saying 
he will be - ever since they realized, about 2 or 3 weeks ago, that 
their scare campaigns had failed and that, communist or not, he was 
going to win the election - the fact is that there is no way the 
Brazilian economy can fail to go into a serious recession if it is 
faced both by the Argentine black hole and by a stalled US economy. 
Already, the IMF has staked its remaining credibility on a 30-billion 
dollar loan to enable Brazil to go on "servicing" its national debt 
to public and private banks, which has grown to around 300 billion 
all told. What happens when the IMF money runs out? Does anyone 
really believe there's going to be some spectacular "return to world 
economic growth" within the next year or two? How is a president who 
came into power with the votes of labor unions and landless peasants 
going to chose to bleed his country to death in order to save the 
credibility of the IMF?

What we will be looking at, in the event of a Brazilian default, is 
nothing less than the end of neoliberal globalization - the end of a 
paradigm where world economic development is invoked and coordinated 
at a distance by private capital flows, within an industrial and 
financial environment that has been engineered by powerful interstate 
forces exclusively to satisfy corporate strategies and investor 
appetites. This is the paradigm that literally built today's Latin 
America (and today's South-East Asia). If the IMF loses its 
30-billion dollar bet in Brazil, it will lose its position as the key 
regulator of the world economy, and the OMC and the 
still-unimplemented FTAA will probably go down with it, as collateral 
damage. The violence of a world market unable to provide the majority 
of the world's people with enough to eat will lead to a return of 
single-state regulation. Presidents like Lula, and Hugo Chavez, and 
whatever governing structure emerges in Argentina, will have to make 
some attempt at a qualified autarky that can direct each country's 
resources to its own people, rather than to foreign bankers. But the 
question that over a century of history obliges any lucid person to 
ask, right now, is this: will the U.S. tolerate any regulation other 
than its own in Latin America?

Those in the counter-globalization movements who have drawn their 
conclusions from the political experiences of the twentieth century 
know that the contradiction between liberal capitalism and statist 
discipline is sterile. It gives you the never-ending cycle of global 
laissez-faire collapsing into battles between populist states 
(because the only way to reassert economic discipline over 
pseudo-democracies is through some form of populist rhetoric). The 
way out would be to let the modes of value-production multiply 
locally, while at the same time looking for new modes of translation 
between the values: means of exchange which are not so homogenizing 
and hierarchical as interest-earning money. This is the anarchist 
ideal, now reinterpreted as "the multitudes." If you're optimistic 
you can see that ideal becoming reality on many small levels. But 
nowhere can you see it on the larger horizon, as neoliberal 
globalization unravels. The decisive thing over the next decade, 
beyond the still-stoppable war in Iraq, is going to be where the 
anger of a bunch of pissed-off North Americans gets channeled - 
whether into changing their own painfully distorted system, or into 
meddling at gunpoint with everyone else's disaster. We can see what 
the Bush people want, with consequences immediately in the Muslim 
world, then soon after in Latin America. Despite whatever hopes you 
may have (but I don't know why) for the EU to propose another model 
of development, it seems that only an effective resistance movement 
within the US, supported by pressure from the outside, can make any 
other decision about the world's near future.

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