By Emiliano Brancaccio*
ATTACOctober 23, 2002
Translation. Lorraine Buckley.
Advanced nations must be free-traders, less developed ones can be, if they so wish.
I generally use this slogan when I express my opinions on trade policy matters. The reason I use it is that it expresses a possible situation, but one which is reversed compared to current reality; moreover it defines the responsibilities of wealthy countries in clear terms; and finally, this slogan has the merit of letting protectionist policies back into the Left's toolbox, after years of senseless ostracism. I do not however consider trade policy matters decisive for the future of the movement, or for that of the Left in general. Rather, I feel that if they become so, it will mean that things have gone worse than we expected. Therefore, at the risk of going slightly off the point, I will now give my view on the Porto Alegre movement, starting from my personal experience. In September 2001 Attac-Italy charged me with drafting the text of a citizens' bill to introduce the Tobin Tax in Europe. By mixing with members of Attac and of all the other organizations which supported the Tobin tax campaign, and by analyzing the way in which the People of Porto Alegre have metabolized the tax, I have been able to overcome the typical distortions of a viewpoint "from abroad" and to understand more fully the potential and the current limits of the movement.
To start with, I must say a few words on the original meaning of the Tobin tax. In James Tobin's intentions, his proposal to tax currency transactions was supposed to correct two serious distortions in today's international monetary system. The first distortion is the instability of markets caused by the gambling on exchange rates, which speculators do every day, and which is continually the cause of dramatic economic and social crises. The second is the loss of sovereignty of the individual countries' monetary authorities, which, even during a recession, cannot cut interest rates because of the permanent threat of flight of capital. According to Tobin, a tax on currency transactions would allow both these problems to be addressed. In fact, by discouraging speculation, it would give the global monetary system more stability and would thus constitute a buffer against the disasters caused by exchange rate fluctuation. Moreover, by making currency exchanges more costly, the tax would discourage movement of capital and allow individual countries to fix lower interest rates than those prevailing on the international market.
These then were the fundamental aims of the Tobin tax. Extremely ambitious aims, since they were set to influence the level and the dynamics of exchange and interest rates, in other words, the "cost of money" on a worldwide level. In fact, many theorists have doubted the tax's capability of attaining such momentous objectives. These are in general well-founded criticisms, to which I personally have responded maintaining that the merit of the Tobin tax campaign lies primarily in having got the debate on the reform of international monetary policies onto the political agenda and also in having opened the door to potentially more radical proposals. What counts now, however, is to make clear that both Tobin and his critics always considered the income obtainable from the tax a totally secondary benefit, the pleasant collateral effect of a medicine the therapeutic value of which is far broader. This is a very clear vision, yet it seems to have magically disappeared at the very moment in which the Tobin tax moved from the Economic Journal articles yellowing with age to the movement's brightly colored banners. "Take from the speculators to give to the poor": this is the basic message with which the People of Porto Alegre have re-christened the tax, their feelings towards the original debate varying from indifference to diffidence.
Of course, it would be quite naí¯ve to criticize the movement for proposing a very different interpretation of the Tobin tax from that of its inventor. The problem, rather, is to understand why on earth, considering the three objectives of the tax mentioned above, the movement chose to center its attention on the most moderate aspect, i.e. the transfer of resources from speculators to the poor. In order to understand the moderate character of this objective compared to, for example, that of reintroducing control over interest rates, we must recall an important distinction between distribution policies effected during the production of wealth and policies limited to the terminal part of the process. Taking away from speculators to give to the poor represents a "re-distributive" action in the technical sense, because it reallocates income which has already been produced: in the initial phase the financiers, taken as a whole, produce their income; and it is only subsequently that the tax authorities (be they the State, the UN or whoever) would intervene to take away a part of that income and share it out.
The fact that the movement has so far shown interest only in actions after income has been produced is, in my opinion, the umpteenth proof of the twenty-year-old identity crisis of the Left and its policies. As has frequently been pointed out, sticking to ³downstream actions² implies a painful surrender, a confession of inability to try to govern the mechanisms of wealth distribution during the creation of wealth and not only afterwards. To hope to build a satisfactory model of social justice based solely on ex-post compensation measures, such as taxes and similar, is completely unrealistic. The movement and the left must certainly include these measures in their arsenal, but by considering them sufficient they will end up getting lost amid the haze of liberalism and Christian charity.
Political intervention during the production of wealth appears, therefore, the way (extremely arduous but the only way) for the left to recover a meaning and an identity, and for the Porto Alegre movement to mature fully. To this end, they will have to fight against the cliché which states that any political intervention during the production of wealth governed by the market would be unjustifiable and harmful, and actions should therefore be limited to ³downstream² ones. Note that this battle will be particularly strenuously fought within the left itself, the whole left: it is in fact undeniable that a certain, generic diffidence towards political interference, supported for the last twenty years by the predominant ideology, has wormed its way into the movement (particularly among the young), despite its markedly anti-liberal approach. I dare even to suggest, along these lines, that the generalized tendency to metabolize only the redistributive aspects of the Tobin tax and the ignoring of the chance to reduce interest rates that it would give the monetary authorities, is caused by a subconscious absorption of the dominating ideology, which also manifests itself in the exalting of the movement's "network" structure, and in a certain resistance towards any coordinated forms of political action.
But, apart from the "internal" cultural battle that has to be undertaken, it is on the political level that we will encounter the biggest obstacles. Unfortunately the means available today to practice "intervention during the production of wealth" are almost impossible pipe dreams: more aggressive wage negotiation, a revision of property and factory management rights, an equalitarian education system, controlled prices, maneuvers on interest rates and credit lines, programming, state production; and, on an international level, the obligation for countries with a surplus to buy from those with a deficit, a lender of last resort with a "Rawlsian" vocation, control over transfer of capital, and so on. All these measures, which have in common their capacity to directly impact on the mechanisms of creation and primary distribution of wealth, will float out of oblivion under certain economic and institutional conditions in the distant future. What counts for the moment is to consider them essential components of the Left that we want, amongst whose fundamental objectives the political control over manufacturing and distribution processes must be a top and driving priority compared to compensating actions taken ex-post.
A very first step in this direction would be to turn our attention back to the main objectives of the Tobin tax. In this way, the movement would start to face the challenge of control over interest rates, perhaps with the intent to exhume that old, fascinating prospective of a society without rentiers. Moreover, greater attention to the objective of limiting currency and financial instability would allow us to point the finger at the biggest chink in contemporary capitalism, that which manifests itself in price speculation and in the consequent capricious and dishonest pattern of investments. Besides, saying once again that this capitalism is not merely unjust, but above all irrational, is exactly the change of step we are waiting for, the final test of the movement¹s true intentions. That change would be, in summary, the best way to cross the threshold into the future and to offer a credible prospective to the people of Porto Alegre: the prospective of really planning the other possible world, which until now we have only evoked.
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