Richard KozulWright UNCTAD UNIVERSITY OF LJUBLJANA February 28 th 2023 Polycrisis French complexity theory through JeanClaude Junker to WEF I ts just history happening or There are decades where nothing happens and there are weeks where decades happen ID: 1043755
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1. FROM POLYCRISIS TOWARDS INCLUSIVE AND SUSTAINABLE INTERNATIONAL DEVELOPMENTRichard Kozul-WrightUNCTADUNIVERSITY OF LJUBLJANAFebruary 28th 2023
2. PolycrisisFrench complexity theory through Jean-Claude Junker to WEFIts “just history happening” or “There are decades where nothing happens; and there are weeks where decades happen”Global crises happen less and less in isolation; they interact with one another so that one crisis makes a second more likely and deepens their overall harms. The polycrisis concept thus highlights the causal interaction of crises across global systems. (Cascade Institute)
3. UNCTADThe scale, complexity and urgency of the rebalancing challenge outlined in this report cannot be overstated. This is familiar territory for UNCTAD. What is different this time is how closely interconnected the crises in finance, food and fuel, along with growing demographic pressures and the mounting threats from a warming world, have become. Together, these have already caused untold hardship across the world economy, and continue to stretch the social, economic and environmental fabric towards breaking point. It is a truism that policymakers, at the national and the international level, failed to see this coming. It will require the full and dedicated commitment of the entire international community to put things back on track (UNCTAD XII Report, 2012)1964 ... decolonisation; non-aligned; dependency; core-periphery; N-SNot a trade organization .. At least in the GATT sense (closer to ITO) .. ISI vs EOIFocus on global rules, norms and constraints; asymmetric interdependenceDevelopment seen through a structural transformation lens not a poverty lens … history geography and structure have always been intertwined – developmental state and policy spaceNIEO … debt crisis .. LIEOFrom reformists to critics .. Swimming against the tide for 40 years is tough going!
4. Kapuscinski and PrebischWe know everything about the global problem of poverty. What we can't figure out is how to reduce it in practical terms. [The moment we try] there appear obstacles that cannot be surmounted, and interests one cannot go against.From an interview with Kapuściński published in Press magazine, 2006Another idea has now appeared which fires the enthusiasm of some Northern economists, that of eradicating poverty – a phenomenon which, apparently, they have just discovered. Who could refuse to fight against poverty? ... But, is this possible outside the context of development and an enlightened international cooperation policy? Poverty, we are told, is mainly rooted in agriculture, and the productivity of that sector must be increased. Quite so. However, increased productivity produces redundancy in the labour force and the surplus labour must be employed in industry and other activities. The expansion of industry requires exports and this is one of the major external obstacles which, far from having been eliminated, is becoming worse. And the greatest of the internal obstacles is capital accumulation (both physical capital and the capital of human skills) which requires a vast effort on the part of developing countries themselves in addition to international financial cooperation Prebisch, 1979, pp. 1–2
5. Age of anxiety .. polytrendsHyperglobalised world shaped by footloose capital, concentrated corporate power and neo-liberal policiesGrowing inequality (winner takes all; races to the bottom); jobs more precarious, government services have decayed and social contract has frayed leaving many working families insecure and financially squeezed; add climate, technological and demographic pressures … age of anxietyGrowth driven by private credit creation and wealth extraction (rent-seeking) rather than capital formation rapid productivity growth and rising wages … and taking the environment to the brink … age of extractionIf we don’t tackle economic insecurity and environmental emergency together age of anxiety will become an age of extinctionCovid-19 further exposed the underlying inequities stresses and fragilities .. and added to them … health inequalities combined with the massive profits of pharmaceutical companiesPost Covid-19 the promise was to build back better; but recovery has been uneven with a partial return to “business as usual” (monetary policy back in charge) in advanced economies (with some important “deviations”) and developing countries fiscally squeezed and many in debt distress
6. FinancializationNumber of countries with inflation-targeting central banks
7. A heavily indebted worldDebt in Emerging Market and Developing Economies (EMDEs)Per cent of GDP(Percent of GDP)Debt in Emerging Market(Percent of GDP)Source: World Bank (2022), Figure SF1.5.A. Note: GDP-weighted averages based on a sample of up to 153 emerging market and developing economies.
8. Financial dependencyNet Capital Flow, Low- & Middle-Income Countries, 1998-2021Net resource flows to developing countries a more complicated story: upwards of a trillion dollars annually (and on some assessments much more)The hierarchical dollar-based systemExternal shocks
9. Corporate powerConcentration indices for revenues,top 100 non-financial firms, 1995−2015 0102030405060708019952000200520102015RevenuesEmploymentPhysical assets Other assetsShare of surplus profits in total profits, 1995–2015(Per cent)419231630400510152025303540451995–20002001–20082009–2015All firmsTop 100 firms onlySource: UNCTAD secretariat calculations, based on CFS database,.
10. Austerity (neo-liberalism)
11. Increasing inequality
12. The investment squeeze
13. Energy climacteric
14. Climate instabilityInsured Losses since 1970 Source: Swiss ReAverage temperature anomaly, GlobalSource: World in Data
15. The politics of hyperglobalizationTINA goes global (Washington Consensus) In the era of rapid globalisation, there is no mystery about what works – an open liberal economy, prepared constantly to change to remain competitive. The new world rewards those who are open to it. Thanks to globalisation, policy decisions in the US have been largely replaced by global market forces … it hardly makes any difference who will be the next president.Nothing normal (or spontaneous) about this hyperglobalized world; a game that is rigged by a set of rules, practices and policies that benefit the few and reinforces existing positions of power -- what Roosevelt called “government by organised money” or more a Medici Vicious Circle … diminished voice and trust.“morbid symptoms” go from tax havens and illicit financial flows to international economic courts and freeports … populism vs cosmopolitanism?Lack of international coordination and cooperation reinforce the sense of an increasingly fragmented world … and multilateralism is drifting
16. Green new deal(s)Clean energy investment agenda of $3.6tr pa between 2021-2050 (Pollin)$20 pt Carbon tax -- with rebates ($160bn)5 per cent transfer from military budgets ($90bn)Green bond funding by Fed and ECB ($200bn)Reducing fossil fuel subsidies ($750bn)Special-purpose green development banksA massive investment push needed in a series of interconnected public goods: from billions to trillions (World Bank); additional 2-3 per cent of global GDP per yearEnding austerity and shift to wage-led growth, positive effects on aggregate demand … Increases of public spending on goods, services, and transfers around industrial and environmental transformation but including the care economyReductions in energy intensity of production and consumptionChanges in the composition of energy production to reduce CO2Progressive direct taxation for revenue and redistributionPrivate investment crowded in by aggregate demand stimuli and structural shift; but needs industrial policyDomestic credit directed to productive, green and employment intensive activity (public banks inc more active CBs)Policy coordination (industrial, macro, trade policies) … strategic planning
17. A global green new dealCan’t be a Northern agenda … the importance of development policy and coordination … but the multilateral system is falling shortBack to 1944?What did Morgenthau want to do? Committee on Banking and CurrencyAvoid deflationary adjustmentMake finance serve the real economy (the “ general welfare”)Boost economic independence to support political independence; cant have inclusive development in a world of economic aggression and bullyingStill relevant … but lots of problems with practice of post-war multilateralism .. A new narrativeA global green new deal refers to a set of principles and policies that can be applied to different regions and countries working collaboratively at the international level, taking different conditions into account, with active participation of citizens, implemented by accountable local national and global institutions
18. Principles for a New MultilateralismThe Case for a New Bretton WoodsGlobal rules and practices geared to promoting ends, not meansCollective state action to deliver global public goods and protect the global commons based on common but differentiated responsibilitiesGlobal regulations should prevent destructive unilateral economic actions that block other nations from realizing common goalsGlobal institutions should ensure sufficient policy (and fiscal) space to pursue national development strategies tailored to local needs and circumstancesGlobal institutions premised on a public ethos, accountability, diversity of viewpoints and voices with balanced dispute resolution systems
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26. Beyond the tranquilizing drug of gradualismMore radical eforms are needed at the international level to make this work:Expand policy space and coordination; why Europeans are pulling out of ECT. Start with revising FTAs and BITs, freedom to regulate (including capital controls) and rejecting «one-size-fits-all» policy lending; voice mattersClamping down on corporate tax avoidance; Beyond BEPs project a common unitary taxation system with global minimum tax rate set at 20–25 per cent; a global competition authority?A debt jubilee: a huge programme of debt relief and new rules to help debt distressed states in the future: an international debt authority?A properly funded global climate bank to support green transitions across the world but particularly in the SouthA Green Marshall Plan; technology transfer + specific adaption funds for developing countries different funding mechanisms SDRs; ODA;