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AFSC's analysis of the global economy

AFSC's analysis of the global economy

Published: March 31, 2010

An Executive Summary

Global economic justice is the bedrock of a peaceful world. As an organization long committed to achieving peace and justice, the American Friends Service Committee commissioned this report to stimulate reflection and discussion among the Service Committee, the Religious Society of Friends, and the wider community in order to advance the structural changes needed to build a just global economy - an economy founded on respect for inherent dignity and equal rights.

The report's introduction acquaints the reader with AFSC's rationale for putting dignity and rights at the heart of the global economy. Before advancing policy prescriptions, section 1 describes the dynamics of our current global economy where one out of five people lacks access to safe water and where billions of people struggle to survive on too little food, healthcare and other necessities. Some improvements over the past forty years are noted such as the increase in life expectancy from 46 to 63 years for developing countries as a whole; and mortality rates for children under five that have been more than halved. Yet, the last decade has seen some disturbing reversals that have left people poorer in 46 countries and hungrier than they were a decade ago in 25 countries. Sub-Saharan Africa, in particular, has suffered significant reversals especially considering the terrible impact the HIV/AIDS epidemic has had on the region. In addition, we continue to witness shocking gaps between the haves and have-nots. For example, in Sub-Saharan Africa women have a 1 in 16 lifetime risk of maternal death while in developed countries the risk is 1 in 2,800.

Beneath these statistics lies a history of policy reforms - some successful ones that have helped regions like South and East Asia, and others that have clearly failed the majority of people. The next section takes a look at the history of globalization before and after 1980 and the complex determinants of countries' successes and/or failures. The term globalization is widely used to mean both a trend - with both positive and negative aspects - as well as a deliberate project led by powerful institutions, people, and countries that applies a single economic strategy to all countries and situations. This template is often referred to as "market fundamentalism" and refers to policies that maximize freedom for private enterprise and minimize the role of government in regulating private enterprise, providing social services, and in protecting the common good including the environment. Market fundamentalism, and a more specific variant called the " Washington consensus" which became entrenched during the 1980 - 2000 period, is not the same as market economies that come in many varieties, with governments playing a weaker or stronger role in the economy. The market fundamentalist reforms popular during the 1980 - 2000 period generally failed poor people. In fact world GDP grew faster before 1980 than after; world trade declined compared to the 20 years before 1980; and global progress in life expectancy, infant and child mortality, and education and literacy was also generally greater during 1960 - 1980 than 1980 - 2000. Those countries that did achieve high growth during the last two decades, such as China, India, South Korea, Singapore, and Taiwan, pursued national policies that differed substantially from the market fundamentalist template.

The following sections unpack a selection of key policies - trade, finance, migration, militarism, and the environment - that have had an enormous impact on the shaping of today's economy. The policies are each analyzed, ways in which dignity and rights are, or are not, promoted are identified, and suggestions for change are offered. For example, trade liberalization is one of the policies promoted over the past two decades with a mixed record creating both opportunities and problems for development and poverty reduction in many countries. Due to the structural pressure for international migration that the global economy creates, the migration section boldly proposes recognizing a human right of mobility which would mean equal protection for citizens and non-citizens, priority consideration for those under duress or fleeing natural disaster, nondiscriminatory application of immigration laws and more. The economics, peace, and militarism section details ways in which these topics are interrelated such as when a country uses military force to impose economic and social models on other sovereign states; or how war undermines the basis for a functioning economy that locks countries and communities in chronic poverty. Lastly, today's global economy is simply not sustainable. This section discusses how our environment is threatened by the costs generated by the current economy such as global warming, the dependence on non-renewable fossil fuels, and pollution of our waterways.

This is a key time in history to examine the ways in which we govern and organize our communities. For this reason, section 2 examines all levels of governance - international, national, private sector, local, and individual - by describing current actors and practices, identifying positive steps already being taken, and pointing out places ripe for change. If we are serious about the task of putting dignity and rights at the heart of the global economy then we must transform the principles and rules that govern interactions among institutions and people. For example, a reformed United Nations, through a more effective Economic and Social Council, could be charged with providing transparent and effective oversight of the World Bank and the International Monetary Fund, as well as assuring that decisions made by the UN are not undermined by policies passed at The World Trade Organization. Participation, transparency, and accountability are essential elements of governance structures that promote a just economy and codes of conduct and regulations are needed to harness the market in the interest of economic, social and environmental goals.

The faith tradition of the Friends, wisdom received from people in the communities where we work, and networks and alliances with whom we work have all informed our organization and helped shape AFSC's role in fostering a just economy which is discussed in the next section. Recognizing economic justice work as an essential form of peace work; believing that no person regardless of their beliefs or the policies of their government should go hungry; and recognizing the life and death urgency of these issues leads AFSC to working towards the realization of the vision put forth in this paper.

This call leads us to work as providers of humanitarian help, as supporters of community-based economic development both in the U.S. and abroad, and as advocates for policy and structural change such as debt cancellation, fair trade policy and increased funding for development.

We conclude with a call for action. We have ample evidence that it is possible to build a global economy based on dignity and rights - that good wages and worker satisfaction make for a healthy and vibrant economy and that nonviolence is an economic and not just a moral imperative. We need creativity and experimentation, we need thriving participatory governance at all levels, and we need to boldly stand with impoverished people and countries. Throughout the document we have made recommendations which are summarized in Appendix A. Quakers have taken up difficult challenges before - from the struggle to abolish slavery to movements for peace continuing in our time. Let us tackle the challenge to abolish poverty and build a just global economy with that same dedication.

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