Globalisation, economic policies and crisis
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Transcript of Globalisation, economic policies and crisis
Globalisation, Economic Policies and Crisis
Feride Aksu Tanık
İzmir, 11 July 2014
This lecture will try to give…
A general framework of
Crisis of Capitalism
Law of value
Relations of production and distribution
Determinants of health
The ways of how crisis effect health
Globalization and historical background of neoliberal policies
IMF and “structural adjustment packages”
WB and “Poverty Reduction Strategies”
WTO and “GATS, TRIPS agreements”
Homo sapiens Homo faber
Homo consumens
Is it a Financial Crisis or Production
Crisis?
• Let’s remember the “law of value”
• c + v + s = W
• c: capital
• v: variable capital - labor
• s: surplus
• W: value of the product
s v demand
Capitalist Production
Mechanization
Less need for labor
Unemployment
Inadequate consumer demand
technological level
wages
surplus value
Inadequate consumer demand
Rate of profit is higher in financial sector rather than the production sector
Kondratiev Wave
Waves of capitalism
• Expansion
• Stagnation and
• Recession
What are the Determinants of Life?
Relations of distribution
Property relations
Relations of
production
Relations of Production
• constitutes the economic structure of society
• the real foundation
• on which arises a legal and political superstructure
• to which correspond definite forms of social consciousness
Relations of Distribution of Income
and Products
• determined by property relations
• reproducing the relations of production,
• the mode of production of capital reproduces the relations of distribution corresponding to it
Superstructure
• Education
• Culture
• Law
• Health
What is Health?
Physical, mental, social wellbeing
The ability of
• collective production and equal distribution
of the needs
• protection of biological and mental integrity
of human beings
• socialization in an organized society
The Determinants of Health
• Main determinants
– Relation of production
– Relation of distribution
• Intermediate determinants
– Economical
– Political
– Social
– Environmental factors
The Crisis of Capitalism Effects Health
in 2 Ways
1. need for labor a. Unemployment
b. of wages
c. poverty
2. of public investment and spendings – Transfer of public
funds to capitalists
– of the coverage of social insurance
– of the coverage of health package
– of the prices of medicines
Intermediate determinants and the health
results in the structural crisis of capitalism
Unemployment
of wages
poverty
Food consumption
Hunger
Deprivation of the life conditions
of the coverage of social insurance
of the coverage of health package
Out of pocket payments
of the prices of medicines
Infant Mortality Rate
Low Birth Weight
Malnutrition
Depression
Suicide
Alcohol and cigarette consumption
Communicable diseases
Epidemics
Complications of chronicle diseases
‘Globalisation’
1. Global village – communications, travel and transport
– health concerns: communicable disease, tobacco, etc
2. Global economic integration – trading relationships
– money flows
– ownership and control
3. Global regime of economic governance – economic, political and military power
Globalisation as a regime of economic and political governance
• Bretton Woods Institutions – IMF, WB and WTO
• United Nations system – EcoSoc, UNCTAD and UNDP on the economic side
– WHO, UNAIDS, UNICEF on the health side
• ‘Public private partnerships’ in health – GFATM, GAVI
• Various conventions and agreements – WTO agreements
– declarations on economic, political, cultural and social rights
– Kyoto Agreement
– International Health Regulations
– Framework Convention on Tobacco Control
Bretton Woods Conference (1944)
• World Bank (1944)
• IMF (1947)
• General Agreement on Tarrifs and Trade
World Bank (1944)
• Liberalization of trade
• Deregulation of banking system
• Privatization of public enterprises
• Tax reform
• Privatization of agriculture
World Bank
• “The World Bank promotes – long-term economic development and – poverty reduction”
• “It provides technical and financial support to help countries reform particular sectors or implement specific projects.” For example, building schools and health centres, providing water and electricity, fighting disease, and protecting the environment.
The different divisions of the World bank
One group - Five agencies
• IBRD (The International Bank For Reconstruction and Development): provides loans and development assistance to middle-income countries
• IDA (International Development Agency): Interest free loans and grants to poorest countries
• IFC (International Finance Corporation): Financing private sector investments and technical assistance to governments and business
• MIGA (Multilateral Investment Guarantee Agency): Provides guarantees to foreign investors – also technical assistance to help developing countries promote investment
• ICSID (International Centre for the Settlement of Investment Disputes)
International Monetary Foundation (1947)
“Improving the international trade”
– Opening the borders to powerful monopols
– Giving up the principles of Social State
• Starting in early 1980s, IMF, WB and regional development banks required the application of Structural Adjustment Programs (SAPs) as loan conditions.
– SAP: program for reforming an entire sector or economic
structure of a country.
• During the 1980s, more than 70 developing countries apply SAPs designed by the IFIs on the pretext of reducing or avoiding indebtedness.
• During the 1990s, most of former centrally-planned economies apply SAPs recommended by IFIs, claimed to be necessary steps for building a market economy.
Structural Adjustment Programs (SAPs)
Conditions for getting new loans or for obtaining lower interest rates on existing loans
• Cutting social expenditures • Focusing economic output on direct export and resource
extraction • Devaluation of currencies, • Trade liberalization • Increasing the stability of investment with the opening of
domestic stock markets • Balancing budgets • Removing price controls and state subsidies • Privatization • Enhancing the rights of foreign investors vis-a-vis national
laws, • Improving governance and fighting corruption
Declared Philosophy
• Reduction of role of the state will lead to
countries attracting more private investment
into the economy.
• The liberalisation of trade and investment will
reduce prices, increase productivity and
stimulate economic growth.
• Reduction of labour costs will increase job
creation, and reduce unemployment and
poverty!
The Reality…
• The IFIs have not succeeded in preventing an increase of poverty and inequality.
• In general, there has been slower growth and more inequality after the introduction of SAPs in the 1980s.
• During the 1990s, the number of people living in extreme poverty has increased in all regions except Asia.
• In most developing/transition countries, real wages have fallen.
28
Impact of structural adjustment on health
Widening of inequalities
Reduced purchasing power for the poor (increased prices, withdrawal of subsidies, freezing of wages)
Downsizing of public sector
User pays in health care
Joint initiatives
• The IMF and World Bank have jointly launched two major initiatives to help poor countries. In 1996, the IMF and the World Bank introduced the Heavily Indebted poor Countries (HIPC) initiative – “reduce the external debt burdens of the most heavily
indebted poor countries”.
• In 1999, the IMF and the World Bank initiated the Poverty
Reduction Strategy Paper (PRSP) approach – “a country-led strategy for linking national policies, donor
support, and the development outcomes needed to reduce poverty in low-income countries”.
30
Poverty Reduction Strategy Papers
• Documents required by IMF and WB before a country can be considered for debt relief within the Heavily Indebted Poor Countries (HIPC) initiative
• PRSPs are also required before low-income countries can receive aid from most major donors and lenders
• SAPs reinvented
• Country governments required to devise their own SAPs
• IMF funding is still contingent on neo-liberal ‘reforms’ (the Washington Consensus)
Washington Concencus
• Fiscal policy discipline • Redirection of public spending from subsidies toward primary
education, primary health care and infrastructure investment • Tax reform • Interest rates • Competitive exchange rates • Trade liberalization • Foreign direct investment • Privatization of state enterprises • Deregulation of financial institutions • Legal security for property rights
‘Investing in Health’ (WB, 1993)
• Response to criticism of impact of SAPs on health
• Reconciling structural adjustment with health improvement? – health improvement despite
poverty
– proceeding with SAPs regardless
Health Packages based on Cost Effectiveness
1. Limited coverage: a health package can/should not
cover everything
2. Content should be prioritized: what should be covered?
Evaluation of Cost-Effectiveness → DALY / Burden of Disease
World Bank, 1993
Investing in Health 1993, National Burden of Disease & Cost efficiency Survey, 2004
According to World Bank
• 100 $ is cost effective
• 250-999 $ is middle level cost effective
601,05
1121,25
254,07
2003,93
87,36
3928,92
221,49 208,21
0
500
1000
1500
2000
2500
3000
3500
4000
temel hizmet paketleri
Public health
Child Health
Mother and Child Health
STD
Cancer
Diabetes and Hypertension
Oral health
Mental health
Cost less than 500 $
Detailed package
COLD and LRSI
Osteoarthritis
Most common 20 diseases
100 $
999 $
Packages
0
1000
2000
3000
4000
5000
6000
7000 6141
4054
1529
891 581 576 474 419 340
trachea, bronchus, lung
ovaria
colon, rectum
breast
melanoma
prostate
stomach
bladder
servix
National Burden of Disease & Cost efficiency Survey, 2004
$
Depression
Who should decide Where should the patient be treated?
135,13
2182,28
0
500
1000
1500
2000
2500
depression
primary care
hospital care
$
National Burden of Disease & Cost efficiency Survey, 2004
Cost efficiency Minimum health package
The needs of patients Clinical independence
World Trade Organization
• 1995, Geneva • International, Multilateral organization • Organizing the global trade • 30 agreements • 150 member states
Agreements particularly relevant to health •GATS •TRIPs
GATS General Agreement on Trade in Services
The treaty was created to extend the multilateral trading system to service sector
• Health care • Education Any services won’t be excluded
“public services available for economic benefit !”
The Principles of GATS
…”you don’t have to include all services to GATS. You can have exceptions. You can exclude some services which are strategic for you.”
…”Although you have included service areas to GATS, you can say that foreigner doctors, teachers etc. Can not work in my country.”
But… • The country which signed the agreement can not return from
the decision (stand still) • Every five years there must be a restructuring (built-in) • The exceptions based on the sector can take maximum ten
years!
GATS and Commercialization…
• Eventhough the services are given by the public sector – Should be sold with market prices
– Employment should be similar to private sector
• Flexible
• According to quality norms
• Performance based
• Insecure
Commercialization of public sector
TRIPS (Agreement on Trade-Related Aspects of Intellectual
Property Rights)
Products without trademark and patent will not have a share form world trade
What is Patent?
TRIPS • Provides to the producer right of monopoly of
producing and selling the vaccines and drugs for 20 years
• In addition prohibits the others from using, selling, importing the product
• This means millions of preventable diseases and deaths for underdeveloped countries
• 2005 – all the vaccines are covered by patent protection
Patent Coverage
Number of patents granted per year for each country
In the above image, the proportion of the world's patents granted per year is represented for each
nation by its size on the map. The number of patents granted by a nation per year may have no
relationship to the creativity of people living in that nation. Note that regions of the world where
many innovative people live are under-represented in patenting.
© Copyright 2006 SASI Group (University of Sheffield) and Mark
Newman (University of Michigan), www.worldmapper.org
Struggle for Access to Vaccines and Drugs
• HIV Pandemics in Africa and Latin America
• The struggle for the production of antiretrovirals – South Arfica
– Brazil
• Flexibility of TRIPS
DOHA Declaration (November 2001)
Agreement can and should be interpreted and implemented in a manner supportive of WTO members' right to protect public health and, in particular, to promote access to medicines for all.
Flexibilities of TRIPS is possible in following conditions
• If there is an epidemic of HIV/AIDS, tuberculosis, malaria
• If the national laws allow Flexibilities of TRIPS is possible till
2016
49
Brazil
• Compulsory licences issued for generic equivalents of antiretrovirals
• Free care for all HIV+ people, AIDS-related deaths halved in four years, spread of the HIV reduced
• Savings of half a billion dollars by producing the generic equivalent of the patented drugs, saved $422 million in hospitalisation costs.
• Brazil taken to a WTO dispute panel by US over its patent legislation but not the issuing of compulsory licences
50
South Africa
• 1996 South Africa passes a new law for the procurement of medicines; sourcing brand name drugs internationally through cheapest supplier
• 1998 39 drug makers sued South Africa arguing that the law contravened international trade agreements
• 2001 Medicins Sans Frontiers petition against the lawsuit collects 250,000 signatures
• 2001 companies withdraw their lawsuit and agreed to pay the government's legal costs
The Indian Pharmaceutical Industry • Huge manufacturing capacity, large
generic sector
• Exports to 150 developing countries
• Half of drugs used to treat AIDS in developing countries come from India – Cipla offered to sell (to MSF) a three-drug
cocktail for AIDS treatment at $US350 per year (compared with $10,000 to $12,000 a year in western markets)
• ‘The pharmacy of the developing world’ is covered by TRIPS
Transatlantic Trade & Investment Partnership (TTIP)
Between EU & USA ; to remove regulatory ‘barriers’ of our most prized social standards and environmental regulations such as
labour rights
food safety rules
regulations on the use of toxic chemicals
digital privacy laws
new banking safeguards introduced to prevent a repeat of the 2008 financial crisis
To create new markets by opening up public services and government procurement contracts to competition from transnational corporations, to introduce a further wave of privatization in health and education
Neoliberal Theory
Benefit of society is related to market mobility
All human activities should be in the domain of the market
Harvey, 2007
Neoliberal Reforms!
• All the regulations protecting the working class against the economic power of capital have been purged
Boratav, 2011
Another World is Possible!
• How to struggle against?