14 theSun | TUESDAY NOVEMBER 11 2008

speak up!

What Obama’s victory will mean for the world

by Eric S. Margolis
AMERICANS are still euphoric after
the historic victory last week of Sena-
tor – and now, president-elect – Barack
Obama. But his honeymoon will be
brief. He inherits a nation mired in
bankruptcy caused by an orgy of reck-
less borrowing and criminal fraud.
Obama’s victory, and Democratic
control of House and Senate, offer him
a unique opportunity to resolve some
of America’s most vexing foreign
problems.
His first step should be to demilita-
rise US foreign policy by taking policy-
making away from the Pentagon and
returning it to the State Department.
America’s most important national
security challenge is not Osama bin
Laden or Iraq, but ties with Russia,
which has thousands of nuclear
warheads targeted on the US.
George Bush and Dick Cheney
enraged and provoked Russia with
their foolish anti-missile plan, and their
backing of Georgia’s attack on South
Ossetia.
Obama should terminate the
useless anti-missile programme, tell
Georgia to settle down, and renew
President Dwight Eisenhower’s calls
for worldwide nuclear disarmament.
Washington and Moscow must
work out an agreement that guaran-
tees Ukraine’s continued independ-
ence but avoids making it a Nato
spear pointed at Russia’s heart. Nato
forces must move away from Russia’s
borders.
Obama should accelerate his
pledge to remove US troops from Iraq.
Let the Arab League assume security
responsibility. He should throw his
weight behind Israel’s centre and left
parties who support a genuine land
for peace deal.
An Obama administration should
swiftly shut Guantanamo, improve
relations with Latin America and end
the shameful blockade of Cuba.
But hopes for more sensible, mature
US foreign policy will be immediately
challenged by Washington’s mighty
special interests like the military-
industrial-petroleum complex, Israel
lobby, auto industry and farm lobby.
Obama faces Bush’s mess and
other grave problems. But not since
the days of new president John F.
Kennedy has the world’s heart been
so open and filled with good feelings
for the United States of America.
Eric Margolis is a contributing editor to
the Toronto Sun chain of newspapers,
writing mainly about the Middle East
and South Asia. Comments: letters@
thesundaily.com

Challenging casino
contracts are as integral to British and
Comment German financial centres as they are to
New York. Even Saudi Arabia, one of the
by Chandra Muzaffar countries invited to the summit, whose
economy is purportedly “Islamic” is deeply
A NUMBER of Asian and European entrenched in the US helmed international
governments are convinced that there has financial system. Besides, the US elite, while

to be an effective international regulatory
framework to ensure accountability and
transparency on the part of capital markets
and rating agencies. They feel that the
absence of a regulatory framework is
the primary cause of the global financial
crisis. At the crucial Nov 15 summit of
the leaders of 20 of the world’s most
important economies in Washington, they
are expected to push for greater market
surveillance and oversight.
Can we expect Asian and European
leaders at the Washington Summit to
go beyond that? Can we also expect
them to call for the permanent banning
of unregulated short selling of stocks
and shares? Will they ask for a ban on
unscrupulous trade in derivatives? Will
they seek to prohibit speculation on shares,
currencies and commodities? Are they
prepared to propose fundamental structural
changes to the international financial
architecture to ensure that the prohibition
of speculation remains effective? Are they
ready to commit themselves to the eventual
goal of eliminating casino capitalism itself,
once and for all?
For casino capitalism is at the root of
the global financial crisis. As the author of
the term, the late British academic, Susan
Strange, observed some 22 years ago,
“The Western financial system is rapidly
coming to resemble nothing as much as a
vast casino. Every day games are played
in this casino that involve sums of money
so large that they cannot be imagined. At
night the games go on at the other side of
the world. In the towering office blocks that
dominate all the great cities of the world,
rooms are full of chain-smoking young
men all playing these games. Their eyes
capitalism
are fixed on computer screens flickering
with changing prices. They play by
intercontinental telephone or by tapping
electronic machines. They are just like the
gamblers in casinos watching the clicking
spin of a silver ball on a roulette wheel and
putting their chips on red or black, odd or
even ones.
“As in a casino, the world of high
finance today offers the players a choice
of games. Instead of roulette, blackjack, or
poker, there is dealing to be done – foreign
exchange market and all its variations; or
in bonds, government securities or shares.
In all these markets you may place bets
on the future by dealing forward and by
buying or selling options and all sorts of
other recondite financial inventions. Some
of the players – banks especially – play
with large stakes. There are also many
small operators. There are tipsters, too,
selling advice, and peddlers of systems to
the gullible. And the croupiers in this global
financial casino are the big bankers and
brokers.”
The growth of casino capitalism can
perhaps be traced back to 1973 though
the signs were already present in the
sixties. It was in 1973 that there was an
effective devaluation of the dollar “and
the accompanying decision to leave the
determination of exchange rates to the
markets”. This decision followed the
unilateral abrogation of the Bretton Woods
system by US President Richard Nixon
in August 1971. By allowing markets to
determine exchange rates, market volatility
increased. It is this volatility brought about
by floating rates that has opened the door
to massive speculation, accelerated no
doubt by the ever expanding reservoir of
capital from the eighties onwards, and the
computer revolution.
The adverse impact of speculation upon
the rapid exit of capital from markets has
ruined many an economy and left millions
of people destitute. In recent years we
have witnessed the pain and suffering
it has caused to the poor in Indonesia
and Argentina. Today, tens of thousands
of Americans who have lost their jobs
have become the latest victims of that
unfettered capitalism of the casino that the
worshippers of the market idolise.
Casino capitalism has also led to the
concentration of wealth and the widening
of income and social disparities between
the upper and lower echelons of society
on a global scale as never before. In the
US, this is reflected in the astronomical
personal incomes of the fat cats of Wall
Street that exceeded a billion US dollars in
the five years from 2003 to 2007. Among the
industrial economies of the Global North,
the US has the worst income differentials
between rich and poor. Indeed, in a number
of other countries which once boasted of
fairly equitable income distributions, such
as South Korea and Singapore in the East
and Canada and Germany in the West,
the globalisation of casino capitalism has
resulted in increasing income gaps.
If these income disparities and the
increasing concentration of wealth in the
hands of a few appear to be acceptable to
the majority of the populace, it is partly
because casino capitalism has succeeded
– as no other ideology before it has – in
institutionalising and legitimising greed
as a social phenomenon. The rapacious
acquisition and accumulation of wealth
by an elite is sanctified as a vital pre-
requisite for the progress and prosperity
of the people. The poor, it is argued, will
eventually benefit from the wealth created
by the elite.
It is doubtful if Asian and European
leaders will want to expose the evil of
casino capitalism at the Washington
Summit. Though the state driven capitalism
of East Asian states such as Japan, Korea
and China and the social market capitalism
of much of Western Europe are in some
respects different from the casino capitalism
that originated in the US, their economies
are so interlocked today that it would
be almost impossible for the former to
disengage from the latter without serious
repercussions for their own societies. It is
widely acknowledged for instance that it
is in the interest of China and Japan who
hold billions of dollars worth of US treasury
bills and other financial instruments to
ensure that the US economy remains afloat
in the face of the present crisis. Similarly,
derivatives trading, options and futures
making some concessions here and there,
can be expected to defend casino capitalism
to the last currency speculator since it
ensures the global financial hegemony of
the US.
This is why the real challenge to casino
capitalism will have to come from people’s
movements and other civil society groups
outside the State. Groups in the US in
particular and the West in general will
have a big role to play. Civil society groups
in other parts of the world will be their
partners. In this regard, it will be recalled
that it was the sustained challenge from
labour and socialist movements that forced
nineteenth century European capitalism to
shed its uglier features and attempt a degree
of transformation.
Civil society groups should not only
intensify their criticism of, and campaign
against, casino capitalism in all its
ramifications. They should articulate
with much greater intellectual vigour and
moral candour an alternative vision that
goes beyond the crisis of the moment.
Eliminating speculation and establishing
an effective regulatory framework aside,
they should suggest how a just international
monetary system could be created which
would have phased out the US dollar as the
world’s reserve currency. A people based
banking system with citizens’ oversight and
a global taxation system to prevent transfer
pricing and tax evasion should also be
explored as part of this alternative vision.
The alternative vision should
incorporate new ideas on expenditure and
investment. Military expenditure should
be reduced drastically at national levels.
Let us not forget that US military spending
in Vietnam was one of the reasons why it
chose to abandon the fixed exchange rate in
the earlier seventies. The Iraq War which
some economists estimate has already cost
the US three trillion dollars is one of the
indirect causes of the present financial mess
in the US.
The savings made from the military
budget of the US and other militaristic
states and the huge reserves accumulated
by China, Japan and other countries should
be directed towards eradicating global
poverty, providing basic social services
such as water, electricity, health, education
and housing, and building roads, railway
lines and ports in areas that lack the
infrastructure for economic development.
Governments should also be encouraged
to invest substantially in agricultural and
industrial research and in environmental
protection and enhancement.
Most people everywhere I suspect will
endorse this alternative vision, aspects
of which have been put forward by some
social movements and non-governmental
organisations which had participated in the
People’s Forum that had paralleled the Asia-
Europe Meeting (ASEM) in Beijing in the
middle of October. It is those in the vortex of
casino capitalism and the governments and
elites aligned to them who will oppose the
vision and the transformation it promises.
It underscores the critical importance of a
global people’s movement to fight casino
capitalism, and indeed, capitalism itself.
Dr Chandra Muzaffar is president of the
International Movement for a Just World
(JUST) and professor of global studies at
Universiti Sains Malaysia in Penang.