U.N. Calls for Global Eco­nomic Makeover to Re­place Neo-Lib­er­al­ism


GENEVA (Reuters) - The world must ditch aus­ter­ity and eco­nomic ne­olib­er­al­ism and un­der­take a global “New Deal” to re­bal­ance the global econ­omy and achieve pros­per­ity for all, the U.N. trade and de­vel­op­ment agency UNCTAD said in a re­port on Thurs­day.

UNCTAD chief Mukhisa Ki­tuyi said the global econ­omy was pick­ing up but still not lift­ing off.

“A com­bi­na­tion of too much debt and too lit­tle de­mand at the global level has ham­pered sus­tained ex­pan­sion of the world econ­omy,” he said in a state­ment.

Much of the blame was aimed at “ne­olib­er­al­ism”, a term used to re­fer to govern­ments cut­ting back on their own role and leav­ing the pri­vate sec­tor to lead eco­nomic and so­cial de­vel­op­ment within a free-mar­ket cap­i­tal­ist sys­tem.

Af­ter decades of such poli­cies, the sys­tem was per­ceived to be un­duly bi­ased in fa­vor of a hand­ful of large cor­po­ra­tions, fi­nan­cial in­sti­tu­tions and wealthy in­di­vid­u­als, the re­port said. The world now needed a “21st cen­tury makeover”, it said. “The whole neo-lib­eral mantra that ‘there is no al­ter­na­tive’ has be­gun to fall apart,” Richard Kozul-Wright, UNCTAD’s glob­al­iza­tion di­rec­tor, told a news con­fer­ence.

”There are plenty of al­ter­na­tives out there and they are ur­gently needed given the kind of eco­nomic and so­cial im­bal­ances that we are cur­rently fac­ing.”

He said cen­tral bank chiefs such as Mark Car­ney in Bri­tain and Janet Yel­land in the United States seemed to think they had solved the cri­sis and blamed any con­tin­u­ing risks on China.

But the global sys­tem was still serv­ing nar­row in­ter­ests, and the change that was needed went be­yond sim­ply ”tin­ker­ing with ed­u­ca­tion or credit for poor peo­ple or ... putting the word ‘in­clu­sive’ in front of every pos­si­ble eco­nomic process you can imag­ine and be­liev­ing you’ve solved the prob­lem”.

“We need a global ‘New Deal’,” he said, re­fer­ring to the poli­cies that re­vived the de­pressed U.S. econ­omy in the 1930s.

The aim should be to end fis­cal aus­ter­ity, im­posed in 13 out of 14 lead­ing ad­vanced economies be­tween 2011 and 2015, and pri­or­i­tize re­fla­tion, full em­ploy­ment and de­cent jobs, rather than tack­ling in­fla­tion and cut­ting gov­ern­ment debt.

”It needs a se­ri­ous reg­u­la­tion of cor­po­rate abuse in both the fi­nan­cial and the cor­po­rate sec­tor and it re­quires se­ri­ous re­dis­tri­bu­tion­ary mea­sures – both fis­cal and more in­no­va­tive mea­sures,” he said.

Kozul-Wright said there were signs of a back­lash against aus­ter­ity in the An­gloSaxon world, in coun­tries such as New Zealand and Bri­tain, and the United States could also po­ten­tially fol­low suit.

But main­land Europe seemed to be ex­tremely re­sis­tant to such a change of di­rec­tion, he said.

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