Markets Uber Alles

Consumer sovereignty is a pleasant fiction designed to reassure the powerless. While business people might find such rhetoric useful for public relations, they speak a different language when they address each other. For example, Walter Wriston, former Chief Executive Officer of Citibank, described a future that was sure to delight his business readers in a book, tellingly entitled, The Twilight of Sovereignty. There, after asserting that information is the driving force in modern society, Wriston elaborated on his perspective of the world from the commanding heights of high finance:

Today information about the diplomatic, fiscal, and monetary policies of all nations is instantly transmitted to electronic screens in hundreds of trading rooms in dozens of counties. As the screens light up with the latest statement of the president or the chairman of the Federal Reserve, traders make a judgment about the effect of the new policies on currency values and buy or sell accordingly. The entire globe is now tied together in a single electronic market moving at the speed of light. There is no place to hide.

This enormous flow of data has created a new world monetary standard, an Information Standard, which has replaced the gold standard and the Bretton Woods agreements.The electronic global market has produced what amounts to a giant vote-counting machine that conducts a running tally on what the world thinks of a government's diplomatic, fiscal, and monetary policies.That opinion is immediately reflected in the value the market places on a country's currency. [Wriston 1992: 8-9]

In this new world order:

capital will go where it is wanted and stay where it is well treated It will flee from manipulation or onerous regulation of its value or use, and no government can restrain it for long. [Wriston 1992: 61-2]

The consequences of capital rapidly fleeing a country can be catastrophic, as the Asian economies discovered a few years later in 1997. William McDonough, president of the powerful New York branch of the Federal Reserve Bank, was not exaggerating when he observed: "domestic policy mistakes elicit quick and harsh punishment on an economy from international sources" (McDonough 1995: 15).

So, Wriston was absolutely correct in announcing that the global marketplace "has produced what amounts to a giant vote-counting machine." This particular vote-counting based on dollars has the power to annul the will of the people. Yes, people may be free to vote as citizens however they may choose, but if their choice displeases those who sit in the trading rooms they will suffer dire consequences.

For example, two years after Wriston's book appeared, Bob Woodward, of Watergate fame, published his account of the Clinton administration. Woodward recounted a scene from the newly elected president's team meeting in Little Rock, Arkansas intended to shape the economic agenda for the incoming administration. Clinton had campaigned on the promise of a massive program to renew the country's deteriorating infrastructure of bridges, sewage treatment plants, water systems and the like, while creating a large number of jobs in the process. Now that the election was over, his advisors explained that the bond market would not approve if he were to follow through on his promise. Then Woodward paints the scene that followed:

At the president-elect's end of the table, Clinton's face turned red with anger and disbelief. "You mean to tell me that the success of the program and my reelection hinges on the Federal Reserve and a bunch of fucking bond traders?" he responded in a half-whisper.

Nods from his end of the table. Not a dissent.

Clinton, it seemed to [Alan] Blinder, [whom Clinton later appointed as Vice Chairman of the Federal Reserve Board] perceived at this moment how much his fate was passing into the hands of the unelected Alan Greenspan [Chairman of the Federal Reserve Board] and the bond market.

[George] Stephanopoulos [Clinton's Communications Director in the 1992 campaign, realized that the administration's] first audience would have to be the Fed and the bond market. [Woodward 1994: 84]

Indeed, once Clinton took office, his Secretary of the Treasury, Robert Rubin, would give him daily briefings about the mood of the bond market.

Over and above the market forces that Wriston described, corporations have devised new legal systems to protect their interests against the will of the people. For example, prodded by corporate interests, the United States has led the way in creating trade agreements that allow business interests to challenge laws that supposedly restrain trade. For example, according to the North American Free Trade Agreement, food exporters from Mexico and Canada can sue federal, state, or local governments in the United States for such trade-unfriendly behavior as passing legislation banning pesticide residues on food. In theory, governments do not have to repeal the legislation. They merely have to pay the exporters for the profits that such legislation supposedly denies them. A committee that meets behind closed doors determines the penalty.

The World Trade Organization allows governments to take measures to punish countries that pass laws to protect the environment or the food supply. Unless a government can satisfy a secret World Trade Organization panel that its laws rest upon sound science, it must cease to enforce the law or else potential exporters can levy penalties on the offending country. So far, these tribunals, generally staffed by corporate-friendly personnel have been very unsympathetic to such regulation.

+1 0

Post a comment