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Eric Toussaint

The Tyranny of Global Finance

Translated by Raghu Krishnan

with the collaboration of Vicki Briault Manus

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

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

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Book Details
 349 p
 File Size 
 13,746 KB
 File Type
 PDF format
 0 7453 1417 1 hbk (Pluto Press)
 0 7453 1412 0 pbk (Pluto Press)
 1998, CADTM, 29 rue Plantin,
 1070 Brussels, Belgium   

When this book is released in English by Pluto Press in the spring of
1999, it will have already appeared in six other languages: French,
Dutch, Spanish, German, Turkish and Greek. For a book that does not
hide its hostility to the neo-liberal project, this in itself is a sign of
renewed interest in global alternatives to mainstream thinking.
Meetings have been organised to launch the book in a number of
countries in Latin America, Africa and Europe. The meetings have
provided an opportunity to test the validity of the book's main
arguments. The results have been encouraging. As a result of the
exchange organised around the proposals advanced in chapter 17,
these proposals will be reworked in line with the thoughtful criticisms
and additions I have received.
A number of significant events have taken place since the book was
completed in May 1998. They provide the raw material necessary for
fine-tuning the book's main theses.

In a number of key countries around the world, we have seen either
outright drops in production and consumption or significant drops in their rate of growth.
The term 'systemic crisis' is fitting in so far as the economic strategy
of a number of big states, large private financial institutions and
industrial multinationals has been unsettled - due to the growing
number of sources of imbalance and uncertainty in the world economic situation.
From the very start, the capitalist system has gone through a large
number of generalised crises. On occasion, its very survival was in
doubt; but it has always managed to weather the storm. However,
the human cost of these crises - and of the ways in which the
capitalist system has emerged from them - is incalculable.
Capitalism may once again weather the storm. It is by no means
sure that the oppressed will be up to the task of finding a noncapitalist
solution to the crisis. Although victory is far from
guaranteed, it is imperative that the oppressed reduce the human
cost of the crisis and pursue a strategy of collective emancipation that
offers real hope for all humankind.

Recent studies carried out by economists in government and UN
circles, have confirmed just how far buying power has dropped in
various parts of the world. The Clinton administration's former
Secretary of State for Labor, Robert Reich, for example, has said:
'Workers have less money to spend on goods and services [...] The
crisis is upon us'. He adds: 'The sluggishness of American income
levels is a highly sensitive matter, given the role played by household
spending in overall economic performance. [Household debt]
accounted for 60 per cent of available income at the beginning of the
1970s; it is now more than 90 percent [...] We have hit the ceiling'
(Robert Reich, 'Guerre a la spirale de la deflation', Le Monde, 21 November 1998).

The 1998 report of the United Nations Development Programme
(UNDP) gives some idea of the levels of household debt. In response
to the drop in real income, households have clearly opted to finance
a greater and greater share of their spending with debt. 'Between
1983 and 1995, as a share of available income, debt has risen from
74 to 101 per cent in the USA; from 8 5 to 113 per cent in Japan; from
58 to 70 per cent in France.' In absolute terms, US household debt
was 5.5 trillion (5,500 billion) dollars in 1997.

This phenomenon can also be found in the most 'advanced'
countries of the Third World. For example, in Brazil in 19 9 6, fully two
thirds of all families earning less than 300 dollars per month were in
debt - that is, one million of the 1.5 million families in this category.
According to the UNDP, bad cheques are a common method for
financing consumer spending in Brazil. Between 1994 and 1996,
the number of bad cheques rose six fold.

Robert Reich is quite right when he says that a ceiling has been
reached. A recession in the North and an increase in interest rates in
the South could lead to a huge drop in consumer spending in the
North and across-the-board bankruptcy of households in countries
of the periphery - in line with what we saw in the 1994-1995
Mexican crisis, and with what we have seen in the Southeast Asian
crisis ofl997-1998and the Russian crisis of 19 9 8.

Three examples illustrate this fall in income for the majority of the
world's population. First, the UNDP notes that in Africa, 'Consumer
spending has on average dropped 20 per cent over the last 25 years'.
Second, the UNDP notes that in Indonesia poverty could double as a
result of the 1997 crisis. According to the World Bank, even before
the crisis there were 60 million poor in Indonesia out of a total
population of 203 million. Third, according to Robert Reich, real
incomes continue to fall in much of Latin America. According to a
World Bank report released at the end of 1998 (Agence France
Presse, 3 December 1998), 21 countries experiences a fall in per
capita income in 1997. The same report estimates that in 1998, some
36 countries - including Brazil, Russia and Indonesia - will register
a drop in per capita income.

According to a 26 November 1998 press release issued by the
Russian undersecretary of the economy, unemployment was
expected to rise by 71 per cent between the end of 1998 and the
beginning of 2001 - from 8.4 million to 14.4 million.

Table of Contents

List of Tables and Figures vii
Acknowledgements x
Foreword by Christian de Brie xi
Preface to English Edition xvii
Introduction 1
1. Globalisation and the Neo-Liberal Offensive 14
2. The Concentration of Capital 31
3. Globalisation and Exclusion: the Marginalisation of
the Third World and the Strengthening of the Triad 3 6
4. Financial Globalisation 47
5. Globalisation and the Growing Debt Burden 65
6. The Debt Crisis in Historical Perspective 70
7. The Third World Debt Crisis in the 19 8 Os and 19 9 Os 80
8. The Transfer of Wealth from the South to the North 9 3
9. The World Bank and the IMF: 50 Years is Enough! 112
10. The World Bank and the Third World Debt Crisis 127
11. Structural Adjustment Programmes 134
12. The Two Phases of Structural Adjustment 140
13. Neo-Liberal Ideology and Policies in Historical
Perspective 170
14. Debt in the 1990s: Latin America and Sub-Saharan
Africa 189
15. Case Studies 200
Argentina 200
Mexico 205
Rwanda 212
16. The Asian Crisis and its International Repercussions 218
17. Towards an Alternative 238
18. Globalising Resistance 252
Chronology: The World Bank, the IMF and the Third World 265
Glossary 277
Bibliography 294
Index 314

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Up until early 1998, International Monetary Fund (IMF) director
Michel Camdessus had played down the scale of the Mexican and
Asian crises. By the time of the October 1998 joint World Bank-IMF
summit, however, he had come around to saying that the crisis was
indeed systemic. At that same gathering, Bill Clinton declared that the
crisis was the most serious one the world had experienced in 50 years.