Reflection introducing the conference “Towards a just International Finance“ in Bad Homburg
Good Morning, everybody
I was very surprised being asked to make a reflection this morning. Because reflection normally is the field of theologists and philosophers. But I am an econimist and – even worse – I am journalist. And what do journalists reflect on? The more articles I read the more I get the impression that journalists do not reflect on anyhing at all.
For this reason I asked myself what I can offer you. And I decided to put it all very personally. I would you like to take you on a kind of jounrnalistic journey through the financial system. It is my journalistic story. I am presenting not for the reason of vanity, but to create some kind of personal basis for the discussion of so many complicated issues.
My life has been determined by two very important developments. First of all I was born on in den even South of Germany. When I grew up there, people were either catholic oder they were nothing.
I was a catholic and christian ideals had a deep impact on me – an impact which I still stick to today.
Secondly I studied economics. Since then my life has been determined by one crucial question: Can an economic order be compatible with christian ideals?
Normally this question does not necessarily lead to a topic like international finance. But in my case it does. The reason ist pretty simple. After my studies which orginally specialized in currency issues I went to the International Monetary Fund in Washington D.C.
I arrived there in the year 1982 - just in time to experience directly how the IMF got deeply involved in the debt crisis of the so called Third World. In August 1982 the minister for financial affairs of Brazil went to the IMF and brought the message that his country is not able to pay foreign bills anymore.
From this moment on the IWF became busier and busier day by day. 6500 economists made programmes to tackle with the problems of the highly indebted countries. I was one of them and during the first weeks I really felt enthusiastic. But then I got into more and more doubts. I got into doubts because the only thing we calculated in our files and computers were programmes forcing the highly indebted countries to cut public spendings, to cut wages, to open up their countries for imports and foreign capital.
Then I realized that the IMF hat a very narrow sight oft what was meant by public spendings. For example. According to the IMF the word public spendings did not and does not include military spendings. Military Spendings were sacrosanct. The term public spendings war reserved for social spendings especially subsidies on food or public traffic. So the consequences of all these programmes implemented on all highly indebted countries alike were always the same: food prices went up by huge percentages (up to 100 percent). The same applied to public transport. The social consequence was obvious. The poorer the people were - the more they were hit by these measures. And whenever anybody criticized the strategy of the IMF it was always justified with the same argument: If people and countries are ill the medicine has to taste bitter – otherwise it is of no use.
At this moment I tried to memorize what the christian principles were which I was so deeply impacted. And I remembered that there are there principles any economic order should be submitted to:
As far as my experience within the IMF is concerned its politics did not and does not follow any of these principles. The radical public expenditure cuts hit the weakest part of the population first.
The whole strategy aims at creating the highest economic growth rates possible without regarding the consequences on the environment. Und even worse. The IMF forced the highly indebted countries to export even export tropic wood out of the rain forests by cutting the rain forests – without regarding the consequences on the climatic changes.
And the answer to the question of ideology is the same. The dogmatic approach of the IMF proves to be very ideological. Radically spoken the IMF follows a kind of free market stalinism which subordinates people to anonymous mechanisms far out of their control.
But this fact is not confined to the IWF only. The whole international financial system hurts christian ethics day by day.
Every day billions of dollars are shiftes from one asset to another, from one currency to another, from one security to the next one. And these shifts of billions of dollars are not just a statistical issue. If billions of dollars are shifted from one currency to the other, the value of the currency which is sold out, will drop. Hundred thousands of people can lose their jobs, million people are not able to finance their living because the living costs explode. The weakest members of society are hurt most.
The same applies to the ecological question. It is an open secret that the globalization of the economy spreads a mode of production and living to all corners of the world which is by no means compatible with a sustainable development of the whole world. During my research activities I met a lot of people who are clear about this problem. Two voices hit the point best. A few months ago we had a guest visiting our magazine. His name is José Lutzenberger. He is a german-born chemist who emigrated to Brazil and was minister for environmental affairs a few years ago. I asked him what would happen if all people in the world bought and drived as many cars as the Germans.
His answer was as follows: “Today we have 500 million cars on earth and six billion people. If all people worldwide had as many cars as all Germans we would have three billion cars. Then we would die within a few minutes. “
The second important voice I was impressed by is the voice of John Reed. For many years he was chairman of the City Corporation, the largest bank of the USA for many years. A few years ago I had the chance to make an interview with him. And during this interview I asked him about the consequences of the whole speculation business on the environment.
His answer was as follows: “ The global markets and the huge capital pools have shortened our time horizon. Twenty years ago we had a lot of time to create what we wanted to create. Nowadays the developments on the stock exchanges are so rapid that we cannot afford to do things which take more than two or three years. Under these circumstances the conservation of the rain forests tends to be a kind of luxury which we cannot afford anymore.“
So what do these views say? They say that the world – men and nature - is threatened by destructive forces which are by no means compatible with christian ideals about how economy should serve the people.
The consequence is that these christian basics about our economy have to implemented into the economy from outside.
“From outside“ – that means that we need a social and ecological framework for the free market economy worldwide. And all instruments which can be part of this framework such as the tobin tax or measures to dry out tax havens have to be discussed intensively.
But “from outside“ does not only refer to measures implemented by governments. It also refers to the power of the civilian society, to the power of a civilian movement being able to overcome the powerful resistance of those who profit from a market system working als freely as possible and who only want to defend that system which garantees their privileges.
Among all the important forces and movements of the civilian society christian people like myself hope for the churches. Not because I love clerical institutions. But simply because churches are global players themselves and could provide a network connecting many other civilian movements to create a broad basis for the globalisation from below against the powerful forces of the globalisation from above.
And the churches have at least partly shown that they can act this way. The Jubilee Campaign would not have been as successful as it was without the commitment oft many churches.
But nevertheless there are more questions than answers about the willingness of churches to really enforce the movement for a just economic and financial order. For example. Can churches place themselves on the side of the poor and repressed people if their elites are often part of the political power system in their countries? Can a church like the catholic one, which has more in common with dictatorships than with democraties, really support democratic movements worldwide? Are churches really able and willing to cooperate with people and organisations who do not follow christian ideals, how ecumenical are the churches? And last but not least? Are churches prepared to to change a financial order which they profit from themselves, because most of the churches are simply not prepared to invest their own reserves in alternative banks or ethical funds, because they offer lower returns than the ordinary stock exchange?
So there are a lot of questions to be answered before the churches will be part of a democratic network to create a just economic and financial order. I cannot predict whether these questions can be answered. All I can predict ist that the answers will be all the more promising the more people are committed to this process. How to get more people beeing committed to that process will be one of the questions of today. And I hope we will find as many good answers as possible. All I hope for can best be put in a satirical way:
May be we have no chances but nevertheless we should try to use them