JH. But maybe what is happening here is a struggle to develop the best model for global capitalism. And the Anglo-American model is best because it’s the most competitive, the most vicious, and most exploitive. In fact, most large Europeans and Japanese corporations are taking to it like fish in the water. European corporations are more than willing to throw social-democrat arrangements on the garbage heap of history and exploit European workers using this model. And yes, of course there would be cultural and historic predisposition to struggle for a European, Japanese or Anglo-American model. But perhaps what is emerging here is not so much an Anglo-American model, but a world model that is the most competitive and efficient in which they all share.

In finance we’ve already seen this. Because in finance Japanese banks just don’t have yen, Citicorp just doesn’t have dollars, German banks just don’t have marks. They all have international capital and trade in trillions everyday. So their money at a global level is already integrated. They accumulate and operate based on worldwide strategies, so it’s not so much the yen versus the dollar versus the deutschmark, but how they develop and stabilize a world system of accumulation.

WB. Well there are several things I would respond to on that. I think if European and Japanese capital are reacting to do away with their own past social accomodationists policies a lot of this is a defensive reaction precisely to the brutal competitive capacities of US firms. At the same time despite the fact that there is a practical as well as a rhetorical acceptance of deregulation there is a great deal of resistance with continued state support for industries. The same Japanese banks that are global players are criticized by the US Treasury for having a cozy relationship with the Japanese state in protecting their financial market. The same thing when it comes to Europe. The big players, both state and financial, are accused by the United States of continuing to sustain European firms. The example of Airbus shows the Europeans have definitely made a stand. Over the last two decades this was an industry that was developed from scratch through subsidies. The Boeing and Airbus competition is just as indicative of the future as is other features, the more integrationist aspects of global capital.

So my point is one; a lot of the deregulation and neo-liberalization of Europe is a defensive reaction; two, there is a lot of rhetorical interaction with the free market, but a continuing state/corporate relationship in both Japan and Europe; and three is that in certain industries one can see national champion strategies continuing to be advanced.

JH. I know you call for the abolishment of the IMF and World Bank, as many others have, as well as many on the right. On the otherhand many anti-global activists take the position that as bad as the IMF is, at least it’s on a ministerial level and has governmental membership and therefore subject to political pressure. They argue abolishing the IMF would result in markets being dominated by international financial institutions where we would have very little influence or political leverage. So what would replace the IMF and World Bank, and would that empower the huge banks and financial institutions, or would getting rid of the IMF and World Bank empower the mass movements?

WB. I have no doubt that abolishing the World Bank and IMF would create precisely the space in which national economies would be able to follow strategies of their choice. We have to understand that the IMF by its structural adjustments have decimated those economies. People who argue that you really need the IMF, if you look at the record, for what? The way the IMF has applied structural adjustments has just made stagnation, poverty and inequality part of these economies. That is the central aspect, the central role that the IMF has played. So I really do not see what benefits there would be for continuing the IMF.

If it were converted into a research institution that monitors world capital movements and exchange rate movements that would be fine as an information source. But as a policy making body that by the power of loans has the capacity to distort Third World economies I think that is what we want to remove. So if you are asking if the IMF should remain a research body, fine. But as a policy making body it ought to really be abolished.

There is this big fear that anarchy is going to replace the abolition of the WTO, IMF and WB. I think we must realize that it is only since the 1970s that there has been a tremendous expansion of the powers of these organizations. The WTO only since 1994. What existed before was the relatively flexible GATT system. Under GATT there was a level of pragmatism and recognition of special differentials of Third World countries. There was more space inside of GATT precisely for countries to achieve combinations within the world economy. It allowed them to interact with the world economy with their own development strategies. Under the WTO and the iron rules of its dispute mechanism that space is no longer there.

The possibilities of a world without the IMF showed up during the Asian financial crisis. A number of countries within the region of Asia banded together and they were going to create the Asian Monetary Fund. This meant pooling the resources of these various countries that could be deployed to save their currencies, but under very loose conditions. If the AMF had been created we would have had a very different outcome of the Asian financial crisis. You would have had stabilization. The possibilities of the AMF showed it need not be anarchy, instead there could be regional funding mechanisms with trade agreements and other principals beside free trade. For instance, in the Association of Southeast Asian Nations there has always been a very strong tariff, it is not a free trade arrangement but rather a regional import substitution strategy.

What would be accomplished with the abolishment of the IMF and WTO is the creation of space by which countries would be able to follow strategies of their choice in terms of their relations with the outside world. The past has shown that a system without one iron uniformed set of rules is the most congenial for the weaker countries to develop. It’s precisely the creation of the World Bank, IMF and WTO that eliminated these possibilities. I’m not saying we just return to the pre-WTO days. Of course we’re not saying that. But we do want a global system that provides the space for maneuver of the weaker economies.

JH. Well this brings up an interesting point. I like to think of ourselves as internationalists rather than globalists, although in the press you see attacks calling the new movement isolationists. What are our alternatives? Can we develop a delinking or South to South strategy, are the national political forces in the Third World strong enough to become truly independent without revolution, can they create that space and model for independence and development without the disappearance of global imperialism?

WB. In terms of delinking I don’t think the alternative we have put forward is deglobalization. We’re not talking about withdrawal from the international economy, but changing its rules. Middle size countries need the space to determine the trade, industrial and developmental strategies of their choice without having to be put into one free market model. What this basically means is not withdrawing from the international economy, but reemphasizing or reconfiguring ones participation in the global economy so as to strengthen the capacity of the national economy. Rather than participating in the international economy through finance and export trade that weakens the national economy we are talking about a set of practical policies with reemphasizing production for the domestic market.

For example, a reemphasis on raising capital for development from within local markets rather than having to move into global financial markets. This would mean among other things taxing our elites. Moving to the global markets have always been a substitute for governments that have feared making the political choice of taxing Third World elites, which are very rich. This means having to undertake the agenda in many countries of income redistribution. In many countries it would mean completing land reform. Because this would create domestic markets for prosperous consumers that would be the engine of the economy. We know that the global export markets were, politically speaking, always put forward by our elites as a substitute for having to tackle the income redistribution question. The Asian export model argued you needed high growth rates so you could let some trickle down and pacify the population. But the greater part of the growth was for the elites. We want to look away from the heavy emphasis on growth to a very controlled low growth strategy that becomes possible because of the emphasis on income redistribution. If we carry out these income redistribution measures we can talk about environmentally sensitive growth in the Third World for the first time.

I think we would be talking about a new relationship between civil society, the market and the state in which while the state would perform a fairly strong interventionist regulatory role in the private sector, both corporations and the state would be checked by a very strong civil society. We’re also talking about the creation of new production and exchange complexes that would be based on private enterprise, excluding transnational corporations. An important factor here is to produce at the local level what can be made at a reasonable cost. Production in fact plays more than just production functions. Economic activity has cultural, political and other aspects. If you totaled it all up you find the net effect of keeping an industry within the community, within the country, is higher than its alleged lack of efficiency if you just deal with it in cost efficiency terms.

The last principal is saying clearly that the reduction of unit costs that is the driving force of free market capitalism should not be the ultimate value. But one that is dominated by other fundamental values that are more important, community, solidarity, equity, justice, democracy. These values should be dominant in an economic strategy. As Polanyi said, we should reinvent the economy for society rather than having the economy drive society. In this way we are reinvigorating and enhancing the capacity of the community, local and national economy.

If we would like to reintegrate our disarticulated economies in a new way, we must at the same time create international institutions that promote this objective. This is why we need to dismantle and reduce the strength of the central institutions like the WTO, and then strengthen other regional and international bodies like the ILO. So you have a multiplicity of institutions that check and balance one another, and in that check and balance countries are able to find their way and create their space for maneuver. We must begin to create these institutions that protect this space for these countries to pursue their projects of development, and protect diversity. This is really what we’re talking about. I think this is very far from the notion of delinking which is impractical. We are part of an international economy. The question is do we let the global economy overwhelm us, or do we use the global economy to enhance our national economic capacities.

JH. You know we started off talking about the role of socialists in the anti-global movement, so this brings us full circle because the ideas you have been articulating on economics are linked to what a new vision of socialism needs to be. Industrial socialism had so much to do with bigness, centralization and the ideas that came out of the enlightenment. But the ideas you’ve articulated are really a very different vision of what socialism and a new economy should be. We’ve been talking about many of the same things in Chicago at Cy.Rev. The idea of moving away from the concept that the state owns and controls everything, and that the diversity and multiplicity of economic activity is really also a question of democracy.

WB. Yes, I fully agree with you about this old statist view that the state holds everything. I think that is not on the agenda anymore. I think we must defend the role of the state in terms of regulation of private capital, even the role of the state in production, but we must also see the limitations of the state as an economic agent. A country’s political economy should be precisely a factor that liberates different types of systems of production, which include the importance of community ownership, the role of civil society control, the role of cooperatives and of hybrid arrangements between cooperatives, private business and the state.

I think this bigness, this centralization of production is something very common to IBM, the Soviet state and the karitsus. Some of these Jurassic organizations might in costs efficiency terms be more efficient. But I think when you look at the total costs they impose on society there has been a tremendous damage to people and the environment.

The one thing we can not include in the Third World production system is the transnational corporation. We are now at a phase were transnationals are really obsolete organizations. Because of the tremendous damage that they poise in every way the transnationals just can not be engage in productive activity without being criminal.