The global economic landscape is changing at a faster pace more than anyone could have ever imagined. Photo: Pixabay
The global economic landscape is changing at a faster pace more than anyone could have ever imagined. Photo: Pixabay
The Economist thinks that the liberal values have decreased poverty. Photo: Pixabay
The Economist thinks that the liberal values have decreased poverty. Photo: Pixabay
The European Central Bank accumulated well over €2.4tn of assets since it launched its quantitative easing programme in 2015. Photo: Pixabay
The European Central Bank accumulated well over €2.4tn of assets since it launched its quantitative easing programme in 2015. Photo: Pixabay

JOHANNESBURG – The global economic landscape is changing at a faster pace more than anyone could have ever imagined. First the rise of multinational corporations was seen as a great opportunity to foster integration of global markets as well as to allow movements of capital without any restrictions.

Migration lagged behind as countries closed their borders in fear of growing numbers of foreigners, yet anything to do with commerce was encouraged. Think of the emergence of the World Trade Organisation (WTO) and World Intellectual Property Organisation (WIPO) as key players in supporting and reinforcing the power of developed economies and multinationals in the world.

However, those who insisted on an ‘open world’ acted as if the current global economic order was not beset with problems and or as if it was never going to be challenged. The backlash as a consequence of this triumphant attitude has resulted in multi-pronged responses. Not only is the current economic system opposed but it is criticised for raising poverty and inequalities.

Also, the rise of the star of the game China was never really imaged when the capitalist system was conceptualised. Based on Western triumphalism, no one ever imagined that a non-Western power would emerge in the near future to unsettle global liberals. The United State’s reaction towards China isn’t madness but a sign of desperation.

Just last month, The Economist magazine celebrated 175 years since it was founded in London by James Wilson, in September 1843. Perhaps for one to understand the battle between the liberalism one has to read headline story of the issue 13th September 2018, titled: ‘A manifesto for renewing liberalism’.

The Economist is as desperate as Donald Trump in wanting to restore Western economic and political power. Its headline article calls for the return to the values of liberalism, that is “a universal commitment to individual dignity, open markets, limited government and a faith in human progress brought about by debate and reform.”

It therefore wants the rules of engagement to be re-drawn in order to place Western countries in pole position as they quickly lose ground.

The Economist thinks that the liberal values have decreased poverty. Photo: Pixabay
The Economist thinks that the liberal values have decreased poverty. Photo: Pixabay

Decreased poverty

It is of interest that a global publication like The Economist appears to yearn for the good old old days of British imperialism, or its successor the American empire. Astonishingly, The Economist thinks that the liberal values have decreased poverty and also improved global life expectancy.

For example, it says the share of people living below the threshold of extreme poverty has fallen from about 80% to 8%. It also claims that literacy rates are more than 80% to date. If one were to take countries such as Haiti, Niger, Bangladesh and Paraguay, this assertion proves to be way off the mark. Even with the US and the United Kingdom, these figures show serious disparities.

Liberals look at the world from the purview of the developed world and are less concerned about the struggles of the developing countries, and the less fortunate. Poor and emerging economies have never enjoyed any prosperity, and many people put blame on the developed countries for the present social, political and economic challenges.

“Liberal democracy came to dominate the West and from there it started to spread around the world,” claims The Economist. The article deliberately omits to mention that excessive force force was used to spread liberal democracy. It thus fails to acknowledge the fact that only one year it was created, the Berlin Conference took place.

This gathering of European nations at the end of yet another inhumane system of transatlantic slave trade was abolished to concentrate efforts in pillaging and exploitation of the African continent. The conference in Berlin sought to regulate their colonisation and trade in Africa.

Often referred to as ‘the ultimate point of the scramble for Africa’, brought misery and despair to others while Europe prospered. The Economist ascribes the success in the West to the liberal value system but not to its disregard for humanity starting with the invasion of the Americas and enslavement in the 15th century.

The pride of liberals refuses to admit that liberal democracy has not succeeded in many parts of the world. Even in Europe and the United States, there is generally dissatisfaction in the manner liberal-sponsored capitalism has penned out.

The findings of a global non-governmental organisation Freedom House indicate that “civil liberties and political rights have declined for the past 12 years—in 2017, 71 countries lost ground while only 35 made gains.” At the heart of this decline is the West and its ideologies. The belief that the entire world has to have one system leads to aggression and intolerance.

War and push for profits appear to be a constant dark side of liberalism.

Liberal democracy

In its plea to the Western governments to revive liberal democracy, The Economist urges them “to shore up the liberal world order through enhanced military power and reinvigorated alliances.” in this instance, liberals see both China and Russia as a problem. “Russia plays the saboteur and China asserts its growing global power,” the publication argues.

The Economist also propagates ‘Western exceptionalism’ in a world where the West has continued to obliterate and undermine civil and economic liberties. It is quite sad that a top publication such as The Economist views the world from a broken lens.

It therefore calls for “a manifesto for a liberal revival—a liberalism for the people” instead of demanding a serious rethink of how society needs to be reorganised and managed.

In a changing world that is so much different from one hundred and seventy-five years ago, a new system that seeks to create equal political and economic opportunities and fairness at a global scale is needed. Liberal democracy might have worked in the West but the same cannot be said in other regions of the world.

The most famous export of democracy to this day is capitalism and its profit-seeking corporations. Strangely, The Economist appears to disown mess that the present economic system has created. It says, “The economy must be cut free from the growing power of corporate monopolies and the planning restrictions that shut people out of the most prosperous cities.”

This insistence by economic conservatives still fails to admit that markets alone are incapable of creating a fair and just society where everyone has equal opportunities and chance to life. The old script of ‘trickle down’ economics has not worked. Hence, central planning and government intervention in the economy have been necessary to ensure that none of the citizens go hungry while others reap all the benefits.

When markets collapsed in 2008, the US government announced a massive economic stimulus package worth U$D832bn in February 2009. The New York Times mentions that this government intervention created or saved an average of 1.6 million jobs a year for four years; raised the US economic output by 2 to 3% from 2009 to 2011; and prevented a significant increase in poverty.

The European Central Bank accumulated well over €2.4tn of assets since it launched its quantitative easing programme in 2015. Photo: Pixabay
The European Central Bank accumulated well over €2.4tn of assets since it launched its quantitative easing programme in 2015. Photo: Pixabay

Financial markets

Also central banks in Japan, England, European Union and the US enacted quantitative easing by bonds or other financial assets on financial markets from private financial institutions in attempts to prop up economies of these countries. The ‘invisible hand’ could not decide favourably to boost markets, and government had to timely intervene to avoid a total collapse.

For example, the Financial Times and CNBC estimate that the Fed’s balance sheet, its total assets, ballooned from U$D900bn to U$D4.5tn when it purchased Treasuries and mortgage-backed securities between 2008 and 2017. Assets of the Bank of Japan were ¥440.67tn in 2017 consisting of mostly government bonds (40%)and stocks purchased from large corporations.

The European Central Bank accumulated well over €2.4tn of assets since it launched its quantitative easing programme in 2015. The ECB bought corporate bonds from Shell, Eni, OMV, Volkswagen, etc. In all instances, the countries that had one or more stimulus type avoided downgrades or recessions. But the welfare of citizens has generally been been relegated in favour corporations, see also the recently announced South African stimulus package.

Increasing taxes and extending social security coverage as well as rolling out of free education and universal health care are some of other interventions that are at the disposal of governments to protect vulnerable people from exploitation and marginalisation.

The present economic system disfavours sharing wealth with others, and this leads to impatience and agitation for change.

To spread the idea of free-markets “in the name of efficiency and economic freedom,” many states have been compelled to open up their markets to allow competition but with dire consequences. It is therefore unsurprising that globalisation is detested in most countries. What is of interest though is how the US trashes the international trade regime it helped create due to frustrations.

The Economist insists nonetheless that “globalisation has lifted hundreds of millions of people in emerging markets out of poverty.” It is unclear where liberals reside, in space or somewhere in fictitious Wakanda. Organisations such as Oxfam have proven more than once than the gap between the rich and poor is depeening within countries and among them.

Wealth is concentrated in the hands of the few. Perhaps, the super rich are the only ones who enjoy life under liberalism.

Encouraging, The Economist comes back to the senses and hits a positive note by advising that “Liberals need to spend less time dismissing their critics as fools and bigots and more fixing what is wrong.” it adds that liberals “should approach today’s challenges with vigour. If they prevail, it will be because their ideas are unmatched for their ability to spread freedom and prosperity.”

As much as the larger-than-life article by The Economist is written as if to speak to global liberals, it essentially yearns for cordial better transatlantic relations: “America must draw on the self-reinforcing triad of its military might, its values and its allies.”

In essence, The Economist misses the old days of dominance by the West in both political and economic terms under the flagship of liberalism. However, my take is that multipolar world with numerous players will save the world rather than a failed ideology. It is a pity that Africa and Latin America sit on the sidelines and watches the ping-pong trade and economic game being played by superpowers.

Siyabonga Hadebe is an independent commentator on socio-economic, politics and global matters based in Pretoria.

The views expressed here are not necessarily those of Independent Media.

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