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close this bookCERES No. 158 March - April 1996 (FAO Ceres, 1996, 50 p.)
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View the documentLiberalism runs out of steam
View the documentLocal models work best
View the documentAncient tradition continues today

Liberalism runs out of steam

Le nouveau drdre nomique mondial: Aux racines des ecs de dloppement, by Georges Corm, Editions La Duverte, 9 bis, rue Abel-Hovelacque, 75013 Paris, France, 1993, ISBN 27071-2197-5 (Pbk), 168 pp., FF 98.

The Lebanese economist Georges Corm has provided a clear, incisive analysis of the serious economic and financial problems affecting the world today. He believes that neo-liberal doctrine is responsible for all the ills of the “millions of human beings whose fate rests almost entirely on the development aid dispensed by national bureaucracies of the major capitalist countries.”

Corm acknowledges the success of Southeast Asia shows that “the Westernization of the Third World” is not a total disaster. But, he says, liberalism has run out of steam. Drug trafficking, ever higher pollution levels and the brain drain to the North have arisen not only because of the state of dysfunction of the world economy but, more to the point, because the classic mechanisms of international commerce no longer work.

The author contends that development has failed because the discipline of political economics has failed. “In the course of this long century, it has only produced abstract, contradictory and conflicting theoretical models, characterized by a very high degree of abstraction of a philosophical mystical nature...often based on a Promethean vision of man.”

Economics has less and less to do with people and policies and more and more to do with specializations such as marketing, management, planning, Third World development, finance, currency, etc. It has become ever more mathematical and, in the absence of any political reference, has continued to evade reality. Poverty, however, is only too real.

What has happened to the questioning, critical spirit of the Enlightenment, the author asks. No doubt the gap has been filled by a “programmed mythology” of modernity and ultra-liberalism created by press and publishing moguls. And since the world seems to be back in the dark, it is almost impossible to see the connection between the way the “feudal giants” run the world economy and the rise in fundamentalism, nationalistic tendencies, wars and conflicts that are less ethnic and less religious than they appear to be.

Analysing fiscal and financial systems, Corm finds them too complex and inappropriate for the recent economic transformations, which are based on an egalitarian ideology. The negative effects of this ideology have given rise to a massive outflow of capital, public deficits and accumulations of hidden income.

Corm cites the illogical choices of Third World decision-makers, who have ordered “turnkey factories” and finished products. This way offers neither assimilation nor the real technology transfer needed to meet the challenge of a new world order. And this is what has maintained the illusion of industrialization and consumption to the detriment of agriculture and led to intellectual sluggishness, technological impotence, an accumulation of hidden fortunes, an extension of misery and colossal debts.

The response of the worried banking world was to advise developing countries to undertake structural adjustment. “But the bulimic habits of these states means that these mechanisms cannot be established without compromising the social equilibrium that has already been weakened by the crisis and the legitimacy of the powers themselves.”

Corm concludes with a plea for a return to real political economics founded on the laws of economics. “Entire sections of the economy slip through the net and are no longer bound by the principle of equal opportunity, the economy of unearned income undermines contemporary capitalism,” Corm says. “This has occurred as a result of certain kinds of state intervention in the economy, which has also led to a reduced sense of responsibility among executives of the big industrial and banking concerns. The feudalization of economic channels seriously affects the economy's efficiency.”

But, he says, clear, transparent economic rules applicable to everyone cannot be established without rethinking the state - and that is a political question.

- John MacWin.