A framework based on true cooperation

Juan Somavía, Director-elect of the International Labour Organisation, talks of the need for true multilateral cooperation of international institutions

Issue 4, Volume 48, 1998

There are four elements of the global scene which all of us involved in international affairs must recognise.

Firstly, I believe that the so-called Washington Consensus of the 1980s and 1990s, or `la pensée unique' as it is called in France, died in the turmoils of the Asian crisis. It was inspired by an understandable need, at that time, for more open economies, and less state intervention.

But it was too ideological, too simple, too removed from the real life of people. At one point it spun out of control and with it went an extreme version of globalisation that forgot the need for some essential balances in society. Now that the pendulum is coming back, our challenge is to be innovative, creative and imaginative: to propose solutions that, on the contrary, are pragmatic and realistic in order to make global markets work for all. For this to happen, we all face the need to develop a responsible and equitable framework for the management of the emerging global economy and its impact on our societies.

This present crisis has confirmed that integration into the global marketplace can bring great benefits, but carries with it serious risks if it is not managed well. The new global economy is not a force of nature nor a biological, nor a natural phenomenon. It has come about as a result of promoting specific policies and developing concrete technologies. Those policies, those technologies can be marshalled, policies can be changed, technologies can be made more human. Its negative effects can be countered by judicious and prudential management at the national and international levels. But to better confront this type of situation in the future, we need a global rapid response capacity so that individual countries and international institutions, together with the private sector, trade unions and civil society organisations, can play their respective parts effectively to forestall crises, to see them coming, to act à temps and resolve them expeditiously when they occur.

Secondly, it is becoming evident that we are in a prolonged period of adjustment to an emerging global economy which will probably last a number of years if not decades. For many it is not clear where we are heading, who is in charge of change and not even whom to complain to when things go wrong. This sense of uncertainty is shared not only by common people, but by leading practitioners of business and influential policy makers. For example, George Soros tells us that `what used to be a medium of exchange (the market) has usurped the place of fundamental values... society has lost its anchor'.

I think that in order to find stability and security in the future we need balance. We need equilibrium between the regulatory role of the state, the wealth creating capacity of markets and the stabilising role of social development in a democratic framework.

Everyone has to acknowledge that there cannot be economic efficiency without social efficiency; that there cannot be macroeconomic equilibrium without macrosocial equilibrium. That well-being in the North and destitution in the South will bring conflict not peace. Ultimately, that there are no stable investments in unstable societies. That people matter and democracy without social cohesion will not stand the test of time.

These were the central messages of the World Summit for Social Development held in Copenhagen in March 1995. I had the honour to chair its preparatory committee. It became the biggest meeting of Heads of State and Government in the history of the world.

These messages are today being promoted by many world leaders, not least by President Clinton who recently stated, and I quote: `If citizens tire of waiting for democracy and free markets to deliver a better life for them, there is a real risk that democracy and free markets, instead of continuing to thrive together, will begin to shrivel together'.

We face then the dual challenge of promoting equity and productivity at the same time: sustainable growth and social justice at the same time.

One thousand two hundred million people living in poverty throughout the world. One billion unemployed and underemployed have become the new apartheid of the global economy. A new Berlin Wall crosses most societies separating the included from the excluded. We must all understand, and particularly the decision makers of international bodies, that the moral quality of our societies is really measured by the life of the poor and not by the well-being of the rich. This is the direction we must take.

Thirdly, the solutions we seek will express themselves in economic and social policies, but will be determined by political values. They need to be determined by political values. We need political decisions not just technical options. We need political conviction not just sociological analysis. In the end we need political leaders who dare to lead, and who dare to lead in a difficult situation.

We know that all politics is local, but we also know that more and more national politics are driven by global events. Yet these realities continue to be disconnected.

The lack of sophisticated understanding of these linkages can generate simplistic reactions which produce enormous dangers. Politically, I see in many societies a creeping expansion of what I would call `blame the foreigner mentality', and this happens in the 183 members of the United Nations, and all over the world. Putting the blame on low cost foreign products, too many foreign immigrants, low paid foreign workers, irresponsible foreign speculators, alien foreign values, inadequate foreign measures to adjust the economy. Ultimately, the belief of the foreigners' incapacity to understand the reality of others.

Although sometimes reflecting legitimate and differing perspectives, these are, of course, the first steps in the direction of the beggar-thy-neighbour policies of the 1930s which led to the breakdown of international cooperation and into war. The problem is not others, the problem is how we cooperate between all of us on problems that are common.

Fourthly, I believe that in the world of today there is no possibility of dealing with the global crisis by applying sectorial or piecemeal solutions. There are no sectorial or piecemeal solutions to integrated, systemic and interdependent problems. Those solutions do not exist.

Why is this relevant to our policy dialogue? Basically because I am convinced that none, and I very much say none, of our international institutions acting individually, with its own set of policy measures and its own interpretation of events, has any meaningful chance to help steer the world towards more economic, social and environmental stability.

If we only concentrate on building a new financial architecture, and we do not now take the opportunity to put together all the components of the international system, in order to have an integrated view of an integrated problem, a global vision of a global crisis, specific solutions and methods of solutions to different areas of the crisis, the financial monetary development, trade, social issues if we do not do this we are going to find that partial solutions will probably express themselves in the markets in the short term, but we are going to lose the opportunity of dealing with the substantive issues that produce the crisis to begin with.

We need much greater multilateral cooperation to reach a closer and better understanding of the new rules that are required. We need to progressively develop an integrated policy outlook that reflects common objectives by all countries.

For example, we can promote macroeconomic balances together with a careful eye for the microeffects on the lives of people, or stimulate productive investment and entrepreneurship while ensuring respect for the basic rights of workers and the environment. We can reap the benefits of financial deregulation while ensuring transparency and dampening speculation.

Above all, we need a policy outlook that does not rest on the laurels of yesteryear, but on the contrary, is renovated, up-to-date, modern and responsive to the needs of individuals, their families and the communities in which they live. Policies with which we can look people in the eye without feeling ashamed of what these policies are doing to their lives, to their hopes and to their children. Policies that understand that the same objective can be reached through different means in different societies and levels of development.

For this concerted approach to be put together we need to develop a high-level policy dialogue between the Bretton Woods institutions, the United Nations Development Group, the World Trade Organisation and the International Labour Organisation, ILO, which is the social pillar of the global economy. I am deeply convinced that unless the central role the ILO plays as the social pillar of the international and global economies is acknowledged, recognised and reinforced there is no possibility that the required balance between financial and monetary issues on one side, and the life of real human beings and workers on the other, can actually happen. You need to put all those visions and interests together.

This evolution, that is putting these organisations to work together, will not come about simply by more spontaneous dialogue between the secretariats of these institutions. We need political decisions by the leaders of the G7, of the European Union, and transitional and developing countries to call for this integrated outlook and instruct cooperation among principal multilateral organisations in the social and economic fields. This is not a problem of secretariats; it is a political decision of how to address the crisis in the future.

Looking from the multilateral perspective this is a particularly significant moment in the evolution of our multilateral institutions and in their mutual cooperation. It is so clear that the current strains in the international financial and trading system, the continuing challenge of poverty eradication and social exclusion and the need to orient the forces of globalisation so as to balance the imperatives of economic growth, social equity, workers' rights, gender equality and environmental protection, pose a global challenge that none of our institutions can cope with singlehandedly.

Frankly speaking, I think we have not yet shown, in the multilateral system as a whole, that we are up to the task. People everywhere have a right to demand more.

In this respect, the unique contribution of the International Labour Organisation is its tripartite structure. We represent governments, together with business and workers' organisations. It is at the same time one of the oldest international institutions, it was founded in 1919 by the Treaty of Versailles, and also the most modern because it had the vision to go beyond governments and incorporate real social actors. When everybody in the multilateral system is running towards civil society, running towards business, running towards political partners on the outside, the ILO in its first conception understood that these issues had to be dealt with in an integrated manner within itself.

I will assume my functions in March. But I want to invite all of you as of now to reflect on the need to reinforce the social pillar of the global economy which is what the ILO and the World Summit for Social Development stand for. In particular I want to highlight the need to promote at the same time growth, investment, enterprise creation with employment, and the respect for the fundamental rights of workers, particularly of women who continue to suffer discrimination at the workplace.

This is another essential balance required by the global economy as expressed by the recently approved ILO Declaration of Fundamental Principles and Rights at Work.

The challenges are clear, the political options available, the need to act is evident. Behind it all lie our values, our beliefs, our convictions. More than ever in the midst of the moral indifference of our days, we need passion and the will to make the world a better place for all.




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