George A. Papandreou’s Concluding remarks

To the « The Financial Crisis, the US Economy, and International Security in the New Administration » conference

par George A. Papandreou
Langue : anglais - Traduction : Conclusion de George A. Papandreou

I share your profound concern about the financial crisis, which began here in New York and spread throughout the world. As the president of the Socialists International, I usually had great difficulties

mentioning my title in the United States without provoking shock and awe. That changed slightly when I came here last time. It was the very day when Wall Street crashed. When I presented myself at a charity

meeting, a lady told me: “we need more people like you here in the United States”. Some time later I felt that I was in great company when Barack Obama was accused of being a socialist.

In all honestly, I’m very proud to be heading this movement, which has had active leaders in the past, such as Willy Brandt or François Mitterrand. Our movement represents more than 160 parties around the world, from Latin America to Asia. Yet the world order has been dominated by the neo-liberal and the neo-conservative agenda over the past decades, an agenda that loathes words like social justice, empowerment, equity, democratic accountability and oversight, transparency, solidarity, stimulus packages, regulation of markets, unemployment benefits and fair distribution of wealth for green development. So we’re presently surprised and delighted to see that these words are once again à la mode.

Solving the financial crisis is certainly not a technical matter, even though it is very important that we look at the technical aspects. It is fundamentally, I believe, a political task. It concerns the most fundamental global choices that we have to face in the 21st century. We need to solve today’s crisis in a way that empowers our citizens, peoples, societies, and with them, empowers our global, political, and financial institutions so that we can deal with daunting planetary challenges.

« Solving the current crisis is not just a technical matter; it is fundamentally a political task »

International institutions are important, but they need legitimacy, I would say the necessary powers. Who are the decision makers in global governance? This is a fundamental question for a new geopolitical balance. And what do we mean by a democratic governance at a globalscale? Unless we believe in an enlightened global aristocracy that will govern the world, the challenge is basic. It is about democracy. We need democratic change for democratic global governance, one that ensures the participation of the disempowered, the poor, the middle class, the small and medium-sized enterprises, the productive forces of the world; one that democratically sets new priorities at a global scale and uses our common resources in a sustainable way.

When we think about international institutions, whether it’s the IMF or some new institution, we need to remember that these institutions have to be founded on a set of rules, which may seem technical but behind which there are true values and political principles. And this means that there are some basic values which we all must share. I often have been involved in the dialogue of cultures and religions, where the idea is precisely the quest for common values. Coming from Greece, as foreign minister I had many occasions to work together with Turkey; as you know the part of the world I come from is that of great cultural and religious diversity; there are Greek Orthodox, Catholics, Jews, Muslims – quite a mishmash, and it has been that way for many centuries. And I truly believe that we need to establish a set of principles based on our common values. At the same time we must respect the diversity, whether it is political, cultural or economic. That balance is crucial. We need both: central control and consensus, but also decentralized power, innovation, a dynamic in our societies. In that respect, I think the European experience is important; we have been able to unite quite different cultures and different

political traditions and make them work together as nation-states in a coordinated system. New rules must emerge from a new understanding of democracy as both a global condition and a philosophy that includes economic institutions, not just political institutions. This is the challenge. How do our nation-states, our democratic institutions, cope with globalization?

Humanity has amazing capacities – technological prowess, wealth, innovation, knowledge, and creativity – to influence our lives for the better. Yet we very often feel disempowered. Our generation, and certainly the generation that follows, is facing the most difficult and complex issues humanity has ever faced. Climate change on a vast scale linked to carbon-based energy consumption, new and old pandemics, poverty, the bottom billion, arms, drugs, and human trafficking bringing in profits that overshadow the GDP of many countries in the world – issues that we can deal with if we had concerted, coordinated, global efforts.

But what do we see? Instead of global solutions, our problems are compounded by the financial crisis, one which has revealed major flaws: the amazing concentration of money by the few, only paralleled by the concentration of media power, the concentration of political power, the corruption of our democratic institutions – the uncontrolled power.

This is a democratic challenge. Our democratic institutions, the rule of law have either been captured or circumscribed, as Paul Davidson said concerning labor relations and labor laws, by big interests. The state, the markets, politics have been captured. Today we have, in a sense, a welfare system for the rich and the powerful.

It’s in this spirit that I invited Joseph Stiglitz to the commission we set up for a global social-democratic response to the financial crisis. We’ve come up with an interim report where we state that we

need more cooperation in order to limit the consequences of this dramatic failure of unregulated markets, not just in the U.S., but globally. As markets freeze and recession begins, our duty is not only to think

about Wall Street. If we are to save banks, we should do so in a way that, first of all, saves the right to employment, to pensions, to education and health services – in short: in a way that strengthens the real economy. Regulation of global financial markets must be thoroughgoing, must reestablish public control of the private markets, and must be prepared at every turn to combat the excesses of speculation and greed that have brought us where we are.

Secondly, we need to put a floor under the slide into recession, maintaining and enhancing social protection systems, supporting working men and women, insuring productive enterprises, avoiding layoffs, limiting damage to our productive capacity. We certainly need to continue assisting the less developed countries and show solidarity beyond borders.

And thirdly, we need investments – and certainly public investments – in order to stimulate our economies and create a new engine of growth around the concept of green development. Mobilizing resources in a time of crisis has been done mostly in times of war; our challenge is to show that we can do this in a peaceful way. I would go as far as to say that either we move towards green development or towards conflict and war. Either we move towards democratic empowerment, social justice, solidarity and green development; or we move towards global barbarism.

No country will do this alone, but the U.S. will have a key role to play, for three reasons: First of all, it has a huge responsibility in having created the mess in the first place. Secondly, not even the U.S. can escape from the global interdependency. And thirdly, there is a new administration which will command great respect, and therefore legitimacy, around the world. But it cannot lead by force or dictate; it can only lead by example. Preventive diplomacy rather than preventive wars, globalization for the people and by the people, markets that serve people.

The challenge of global governance is immense. If we fail, our citizens will be prey to all forms of extremisms, absolutisms, fundamentalisms and populisms. They will retreat either into passivity or into violence.

I see Barack Obama’s victory as a revolt against the demise of our democracy, as a hope to re-empower our citizens and societies, certainly in the United States, but I think that’s seen as the same sign and symbolism throughout the world. It is a daunting challenge, a huge responsibility and also a huge opportunity. A new page is to be written, and it must not be written in haste. Your role as economists, as progressive economists, is and will be crucial in writing these new pages of our global, political and economic history.

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