Reference:
Copyright 1997 People's News Agency. All rights reserved. Material provided by PNA may be reprinted if the author is mentioned and if the following information is included: "Reprinted with permission of People's News Agency, Platanvej 30, 1810 Frederiksberg C, Denmark, gtimes@post8.tele.dk.
The rectory of a suburban San Diego church hardly seems like an appropriate place to hold an important business meeting. Yet, although the organisation running this meeting deals with money, investments, risks and profits, it is not a bank as we know it. The two women present, accompanied by their children, run tiny, one- to three-person companies and are looking for business loans.
The first woman needs two hundred dollars to buy another sewing machine so that she can increase the activity of her tailor shop. The second woman is planning to open a home-care agency for the elderly and is looking for a small amount of capital to pay for the necessary equipment.
Neither of the two "entrepreneurs" has a credit rating which would allow them to obtain loans from the traditional banking system. However this is not a problem for the Non-Governmental Organisation (NGO) that has organised the meeting. Once the applications have been examined, the two women sign a very simple form and the loans are granted. A small enterprise can now expand its activity and employ a third person while a brand new one is created, initially hiring two unemployed nurses.
Core of world labour Millions of micro-enterprises like these are the core of world labour - not, as we may think, big corporations whose labels and products are internationally known. Fifty percent of U.S. and German exports are produced by companies employing less than 19 persons, while companies with at least 500 workers produce only 7%. The 500 major companies listed by "Fortune" account for only 10% of the US economy, as opposed to 20% in the 1970s.
The 500 biggest corporations of the world contribute nearly one-fourth of total world production and control 70% of world trade, but employ less than 0.05% of the world's population. Over the last few years these same 500 corporations have fired 4.5 millions workers, at the same time doubling their sales, increasing their capital by 2-3 times and raising executive salaries by more than six times.
Called "downsizing", this has had the effect of inflating these corporations' stock value and, as a consequence, the capital gains of stock holders. The world of finance is increasingly detaching itself from the world of production as a result, just as labour providers are breaking away from the destiny and welfare of their employees.
In addition, only 49 of the top 100 world economic "entities" are sovereign states, while 51 are multinational corporations. The infinitesimally small percentage of multi-billionaires that this system has helped to create is linked in an exclusive global union which is cemented by personal interests and by those of affiliated enterprises. In this respect there is no longer any point in discussing economic disparities between North and South: the concept of geographical inequality has been replaced by that of economic class.
Moving on a global scale, multinational corporations are for the most part beyond local government control; the programs of international financial organisations in developing countries definitely supersede national laws. These governments have essentially abdicated their function of representation and defence of citizens, delegating these functions to these huge corporations which, by their nature, meet only the needs of their stock holders.
But a nation cannot be considered simply like a corporation in global competition, as many seem to assume nowadays.
End of an era A recent article by David Korten in "Foreign Affairs" reports that only 10% of the added value of the U.S. economy is actually exported, while 90% of goods and services are produced for internal use. This should place high value on the importance of a country's domestic social and economic climate. Appropriate laws should be enacted in order to obviate, as far as possible, the paradox of this past decade - "he who wins, wins a lot, but he who loses, loses a lot more".
Socio-environmental deterioration and increasing economic disparity are destroying developing countries but also undermine nations traditionally considered highly developed. This cannot be considered as only a warning anymore, and should rather be seen as a confirmation that the industrial era is close to a natural death and that new choices must be made. Social tensions like those presently affecting South Korea demonstrate that even success stories like those of the so-called "Asian Dragons" do not always have a happy ending, and that the price that any given nation has to pay for this "success" could become much higher than any pessimistic forecast.
Social disintegration, environmental pollution and the increase of violence at all levels are only symptoms of that single-minded approach of both politics and economics to growth and globalisation. The "accessory" or "external" costs of this developmental model are incalculable. The economy can, and should, instead be considered as an extension of ecology: if it does not follow the principle of ecological sustainability it will become unsustainable itself.
Localisation of capital Economic and methodological complexities are deeply ingrained but not insuperable, and in fact the system itself offers practical solutions. An inversion of the system would primarily mean increasing the localisation of capital, starting from the above-mentioned micro-enterprises, in both developing and developed countries. The example of the Grameen Bank in Bangladesh (US$500 million loaned each year, average loan equivalent to 100 dollars, 94% of recipients are women, money returned in 98% of cases) is there to show us that great results can also be attained from massive numbers of small investments. Similar successful experiments are also taking place in Malaysia, Sri Lanka, Malawi and in the Philippines, not to mention the slums of Chicago.
Capital for such projects could be raised, for instance, with the so-called "Tobin Tax" on those 1000 billion dollars of speculative trading that flows each day across oceans and continents. It was calculated that a one percent tax of this amount would be equivalent to the total debt of all developing countries combined. Former French President Mitterrand once submitted this idea at the World Summit for Social Development in Copenhagen, unfortunately with no other powerful voices backing him up. Once again it is clear that there is potentially no lack of capital or practical solutions, but rather only the political will required to make a more "logical" use of resources.
Luigi Brunamonti is editor of Cultura e Natura in Rome.
*