7:09 AM Mar 13, 1996
ECONOMISTS CAN'T DICTATE SOCIETAL VALUESGeneva 12 Mar (Chakravarthi Raghavan) -- Societies have to make choices based on various considerations, but economists could not be allowed to dictate these choices based on pure economics, the Secretary-General of UNCTAD, Mr. Rubens Ricupero suggested Tuesday. He was answering questions at a meeting with the NGO Committee on Development and was referring to the social, moral and even wider economic questions arising out of complete reliance on market forces and competition in a globalising economy. Earlier, in his introductory remarks on the forthcoming Ninth Session of the UN Conference on Trade and Development, Ricupero explained his moves to get greater participation and involvement of the non-governmental sectors and actors at UNCTAD -- of the private enterprises and business sectors, non-governmental organizations, academics and research centres in the policy-formulation or design of policies and their implementation. His own basic approach to economics and trade, Ricupero said, had been inspired by his passion for development, not as an end in itself, but for its central role to overcome poverty, ignorance and enable better conditions for human rights and protection of the environment. "While poverty and under-development could not serve as an excuse for violation of human rights or despoliation of the environment, there could be no denying the fact of the linkage between deprivation and poverty and the bad record on human rights and environment," he said. His own experiences in Brazil as a Minister for the Amazon and Environment had made him aware of the dialectics involved in the dialogue between the organs of civil society and those who have power -- a dialectics that has an element of conflict and pressure, but a necessary one to get the attention of governments or international organizations and to persuade them to take the hard decisions they need to on these matters. At a more general level, he noted, everyone was in favour of human rights and environment protection, but when it came to concrete steps to be taken deep differences emerged -- economic in the case of environment and political in the case of human rights. Governments by nature were reluctant to take actions and had to be pressured into doing so, but "that is how democracy works... One has to build up constituencies and pressures". In such conflictual situations though, he had generally found that NGOs were usually right and this was what had shaped his mind in favour of such a dialectic and attention both at national and international levels. There was now a general crisis facing the international organizations and systems, and it was not one merely related to the United Nations or the UN system, but a much broader one. There was a widespread feeling of dissatisfaction with international organizations in general, but it also affected the Bretton Woods Institutions -- the IMF and the World Bank were also facing such a situation. While there were many reasons for the feeling of dissatisfaction, among them was the sense of fatigue with the conference system which had evolved from the 18th and 19th centuries as the only way to organize and get the agreements of governments on concrete specific problems. But when one dealt with problems of a more chronic nature -- problems of under-development, poverty, disease etc -- solutions became less amenable to such an approach and this gave rise to feelings of frustration. Another reason was the inability of multilateral organizations to incorporate the new actors, the most important innovators in international relations, into their processes. Though within the UN they had always had NGOs, the dominant actors in international relations had been governments. The presence of Transnational Enterprises and the private sector, as organized pressure groups, were felt in trade negotiations, but not the NGOs, research centres etc. And none of these have been incorporated into the international process. In 1919, after the first world war, the governments accepted something revolutionary, when they created the tripartite ILO, with employers and workers having a voice and a vote in the multilateral decision-making process. But this process had not gone forward in other places. This was why he had proposed, in his report to the Conference, to provide a place for NGOs, the private sector, research centres and academics, to be present and engage in a real partnership for development. One could not develop effective tools to help, for example, small and medium enterprises without having their presence and their experience of their problems. Economists and bureaucrats lacked that experience. But he would not under-estimate the difficulties of this approach, and governments were generally very cautious. Reflective of the internal structures of countries, some were more open than others to such NGO participation, and were afraid of losing control over the deliberations in international organizations. But it should be possible to start a process of such involvement in the design of policies to meet challenges of poverty and underdevelopment. But it was not easy. One of the problems to be faced was in choice or selection. In the case of countries, governments of countries had a natural legitimacy and this was recognized in international law. But it was much more difficult to agree on a choice of who represents the private sector - only the large corporations, or small and medium ones, and who would select them? This was also a problem relating to the NGOs. But it was not an impossible task however, Ricupero said. Ricupero was asked how NGOs could be associated deliberation and decision-making in international conferences and how the problem of the business lobbies masquerading as NGOs. The questioner complained about the focus of the FDI division of UNCTAD and its promoting the interests of the TNCs. From a business point of view, of profits, one could understand the interest of the U.S. TNCs to close down their US operations and relocate abroad where they could cheap labour. But there were also moral issues and questions as a result of the ensuing unemployment and the effects on communities. Did Ricupero consider this to be only a moral question or also a economic one. It seemed to the NGO community that the UNCTAD division seemed only to be concerned with the interests of business, but not of workers or their families or the community. Communities should benefit from FDI, and not merely the companies? The questions, Ricupero agreed, raised some fundamental questions. It was not merely a moral one, but involved economics and how societies are organized. "Economics is only one aspect of social life and economics alone cannot dictate the goals and values of society," he said. Some of the dilemmas stemmed from the fact that economics is seen as an autonomous sector of society, something governed by rules and laws like those of physics. But in reality one knew that even in physics there was no such exactitude and "it is much less in economics". If one considered globalization as a worldwide economic process, in its planetary dimensions, with national barriers disappearing and with one only single space, one consequence of this would be that competition would be exacerbated. "National and regional boundaries," the UNCTAD head said, "are mechanisms to mitigate the negative effects of competition. But once competition is made the central philosophy, the problems become much more. When you decide that everything will be decided by efficiency and everyone will benefit from efficiency, it has already become a choice of values. And not all societies and cultures are ready to make that choice. "Competition and its problems are acute even in western societies. The United States values and gives more prominence to competition than Europe where there have been many mechanisms to mitigate the negative effects of competition. Each society will have to make its choice through a political process." "In my opinion," Ricupero added, "economics and decisions by enterprises cannot lose sight of the social impacts of the decision since even in pure economic terms it would have implications." He referred in this connection to the recent merger of the two Swiss pharmaceutical firms - Ciba Geigy and Sandoz -- to create one large firm which would be globally more competitive, but resulting in some 13000 jobs lost, 4000 of them in Switzerland. This outcome, he noted, had provoked much debate and one of the academics from Lausanne had pointed out on TV that while the firms had looked at the job losses in terms of saving labour costs and increasing their profits, the workers who were employed and paid were also consumers who made purchases and consumed them, and paid taxes. Economists would say that at the end of the day everyone would still gain by this efficiency. But if companies were to behave absolutely on the basis of market, competition will be supreme and one made this kind of decision. But competition was a game and all games have rules. Even in the Roman arena, the gladiators could not kill the losers without a sign from the emperor. It was the duty of governments and international organizations to establish the rules and act as referees. "It is not impossible to have rules to limit the destructive potential of such decisions," Ricupero said and referred in this connection to a recent essay by the US Labour Secretary, Robert Reich, outlining some ideas to give tax incentives to enterprises to make them aware of the effect of their decisions on jobs, wages etc. "Each society would have to establish the terms to make companies behave in a different way," he said. "Economists," Ricupero added, "tend to think along different lines, but economists should not be allowed to dictate our choices. They do not have the monopoly of wisdom. Often the work of many economists have been shown to be wrong in the judgements they make. In practice economists also ignore the psychological effects of the policies they advocate and results in what economists themselves call lack of consumer or business confidence." The UNCTAD head cited in this connection the efforts being made by the French government to promote consumption by the French public who, because of the various uncertainties over their future and jobs were 'saving' rather than 'spending'. "While economists agree that it is the psychology that moves the economy, in practice they do not act as if the responses depend on the decisions of people," Ricupero said in clearly questioning the confidence reposed in the ability of economists to shape the social organisation of the future. Asked about the alternatives to the conference system, Ricupero felt that the conference system was now becoming ritualistic and year after year there are the same debates, the same speeches on the same problems, and solutions are identified but not applied. However, it would be wrong to say no solution comes out of a debate, he said and referred in this connection to the debates in UNCTAD on the debt problem, and the UNCTAD that emerged that constant renegotiation and rescheduling would not solve the Third World's debt problem and at some point the root of the problem had to be addressed by reducing the debt burden. "In the beginning the reaction was negative, but after a time this was accepted and resulted first in the Baker, and then the Brady plans. "But no credit was given to the people who were saying it in the first instance," he said. Justifying the need for new actors, and involvement of NGOs, Ricupero said his own experience in Brazil had shown that most often solutions to specific human problems -- for e.g. that of street children in Rio de Janeiro or Sao Paulo or children of prostitutes in the northern Bahia region -- had come from the NGOs and their initiative. This was also the case in relation to protection of forests, not merely the Amazon forests, but the forests of the Atlantic coast, and how to help the people to learn to protect the forests while earning a living. The UNCTAD was reminded of the experience of the UNCED process which helped bring to the international discourse a large number of not only international NGOs, but national and sub-national and local groups and were able from Prepcom-2 to put poverty and poverty eradication on the UNCED agenda. But by the end of the process, the questioner said, the NGOs had become angry and frustrated that the transnational business groups were given, by the secretariat, the predominant voice in the shaping of the outcome and public interest NGOs were sideliined. How would he avoid such an outcome in the UNCTAD process. And while some governments were very much in favour of NGOs involvement and in human rights or environment and bodies dealing with them, they were opposed to similar voices in economic bodies, trade or even political bodies like those on disarmament. Ricupero said that in terms of UNCTAD-IX, they were trying to go a little beyond and see how micro-enterprises who are in a better position to help the poor, and not merely the large TNCs, could be involved. There was no doubt of the existence of a conflictual situation in the environment field between NGOs and enterprises and their economic interest. But he felt the potential for cooperation was much greater in the UNCTAD process. In any event where major economic decisions are involved it would be difficult to ignore the enterprises and business actors. He hoped that things could be worked out in a positive way. Asked whether the processes he had in mind for UNCTAD could be used also to influence the World Bank, the IMF and even more the WTO, Ricupero said that the problem of NGO involvement in the old GATT also remained in the new WTO. It stemmed from the contractual nature of the relationships and direct participation from the private sector would accentuate conflicts. Even inside countries in these matters there were conflicts between sectors and it was already becoming difficult to negotiate. He cited the US case where its textiles and clothing industry and the footwear industry did not want any trade rules to liberalise, while others sectors wanted it. Ultimately the government had to take the decision. One could not negotiate in the WTO except among governments. There would be conflicts involving different sectors and enterprises and only the governments could make the choice. There would be similar problems in dispute settlement process if private actors were to be allowed to participate. UNCTAD was not now having a strong rule-making role or providing for dispute settlement, but was acting as a pre-negotiating forum on important issues which could be negotiated later elsewhere, and as an institution with a good analytical capacity to analyze results of the negotiations and how they are being implemented. In such a process he did not see many problems of NGOs and other non-government actors participation. UNCTAD was also in the process of establishing good working relations with the WTO, particularly in areas of trade and development, trade and competition, trade and investment and trade and environment and the situation of African and Least Developed Countries. One of the important areas for future work in UNCTAD was in the area of economics of the environment. Trade and environment was only part of this complex. He referred to the work done in UNCTAD on the idea of tradeable permits for carbon emissions. Though the major industrialized countries appeared to have in between changed their views on the climate change issues, ricupero was confident that the issue would return to public focus and return with a vengeance calling for international actions to address the problem.