Major downturns in the global economy are nothing new; they have been common since capitalism became the dominant form of economic organisation 200 years ago. There is, however, every reason to believe that the present downturn may yet prove the most cataclysmic ever, and that an unavoidable collapse is about to overtake the global financial markets. This, at least, is the view of a former trade union official turned financial consultant, Harry Shutt.
Shutt has a compelling case, if weak alternatives. Circumstances are combining to make the collapse of our economic system more likely, and official policy is dedicated "as never before to use the resources of the state to conceal or suppress the symptoms of economic imbalance and market failure". Signs of these imbalances and failures are all around. Economic and financial globalisation has exacerbated the plight of developing countries and the former communist states. There is growing popular disgust at the destructive impact of World Bank/International Monetary Fund structural adjustment policies on poor countries, and at the influence of the big corporations over state policy.
Free trade is a historical myth. Shutt points to the lack of evidence that western countries attained their industrialised status by opening up their domestic markets without any form of protection for local producers. No country has ever practised anything resembling free trade, with "the possible exception of Britain between 1860 and 1914". Western countries protect their economies - the European Union through its Common Agricultural Policy, for example - while preaching free trade to others. The attempt by rich countries to persuade poor countries that free trade can benefit them "amounts to a big lie, acceptance of which can only disadvantage the latter". And while western leaders talk about making globalisation (the end result of free trade) work for the poor, their actions betray them. At the meeting of the World Trade Organisation in Doha in 2001, developing countries put forward more than 100 proposals to make trade rules fair to the poor. But western countries did not want to know.
So what are the alternatives? Shutt argues for a restructuring of the international economic system to place more emphasis on co-operation rather than competition among nations. There is a need for economic democracy, not least to tackle the "huge and unaccountable power of big corporations". The idea that poverty can be solved by economic growth should no longer be admissible.
The weakness of Shutt's position is that he relies too much on state control and central planning. However, the collapse of Enron, and now WorldCom, shows the vulnerability of a corporate-dominated economic system. None the less, the search for alternatives goes on. And, especially with so much of the world mired in poverty, the debate remains urgent.