Financial interests a threat to democracy
Sharon Beder
Citation: Sharon Beder, ‘Financial Interests a threat to democracy’, Canberra Times, 5 June 2006, p. 11.
This is a final version submitted for publication. Minor editorial changes may have subsequently been made.
RECENT polls show that governments are no longer responding as they should to community views. In Australia, as in other nations, democracy is being undermined by the power of financial and business interests.
An ACNielsen/Herald Poll found that a sizeable majority of Australians would have preferred that the Government spent more on public services than provide the recently announced tax cuts.
Previous polls have found that the majority of people prefer those services to be provided by government; for example, they have consistently opposed the full privatisation of Telstra, yet the Howard Government is determined to go ahead with it.
A couple of weeks ago a Morgan poll found that four out of five Australians believed that we had to act now to control environmental problems and a majority said that globalisation ''causes more problems than it solved'' as well as threatening fundamental social values.
Financial deregulation has ensured that private international financial markets are able to discipline governments that don't introduce and maintain policies that suit these markets. For example, governments have to keep tax rates low to attract capital and are unable to have large budget deficits as this scares away investors.
Thomas Friedman uses the term the ''electronic herd'' to refer to ''the faceless stock, bond and currency traders sitting behind computer screens all over the globe, moving their money around with the click of a mouse from mutual funds to pension funds to emerging market funds'' and the ''big multinational corporations who now spread their factories around the world, constantly shifting them to the most efficient, low cost producers''. It is they who determine government policy.
Rising share prices are now a major arbiter of good policy. Forget what the public wants. What counts these days is the stockmarket. And while their policies elicit positive market responses, politicians know them to be right.
Countries can still retain a veneer of democracy with choice between major parties, but because of the constraints imposed by the need to please international financial markets, the policy differences between the major parties is minimal. Whether it is a labour party in Britain or Australia, or the Congress Party in India, they all adopt the same free market policies. Governments that try to deviate are punished by the markets.
Financial deregulation was demanded by business interests, particularly large financial firms and transnational corporations who want to be free to move their money around. The economic argument for financial deregulation was supplied by free market think tanks and economic advisers, who have argued that the free and unregulated movement of capital is more efficient, because capital can move to where it gets the best returns.
Those same business interests and allies have promoted ''free trade'' as a higher ideal than environmental protection, human rights, or the protection of other social values. The World Trade Organisation and its rules represent the culmination of years of corporate political mobilisation, much of it carried out before civil society became aware of what was being accomplished.
Today the WTO has greater powers than any other international institution, including powers to punish non- complying nations that are not even available to the United Nations. More than 130 nations are now members of the WTO. It has become a form of global government in its own right with judicial, legislative and executive powers. WTO rulings can declare legislation put in place by democratically elected governments as illegal.
WTO rules also take precedence over other international agreements, including labour and environmental agreements such as the Convention on Biodiversity.
The idea that governments should protect citizens against the excesses of free enterprise has been replaced with the idea that government should protect business activities against the excesses of democratic regulation.
The increasing importance accorded to markets mean that transnational corporations are eclipsing the nation state as the driving force behind policy- making. So-called ''free'' markets are becoming the new organising principle for the global order.
Dr Beder is a professor in social sciences at the University of Wollongong, and author of Suiting Themselves: How Corporations Drive the Global Agenda (Earthscan - available in Australia from DA Trade, Melbourne).