Remarks by Juan Somavia
Director-General, International Labour Organization
Managing Globalization
Conference in Honour of Joe Stiglitz
25 October 2003
Columbia University, New York
To Joe’s friends, thank you for organising this very special event. Thank you for inviting
me to make a contribution. This Conference is one big brain storm in honour of one of the biggest
brainstormers of all. So I feel free to talk beyond the areas of my official responsibilities and to
do so also in my personal capacity.
I love Joe. I love his personality. I love his unique combination of pragmatism,
sensitivity and intellectual rigor.
The sum of his ideas have emerged at a right time. The present global economic
paradigm is running out of steam, new ones are in the offing but not yet crystallized. It is the
moment of innovation and creativity.
I thank Joe for his particular interest in the work of the International Labour Organisation,
which as well as being the oldest of the global multilaterals, is the only one where governments
share their votes with business and labour organisations. Our field is the world of work. It’s the
closest you come to real actors of the economy having decision making capacity within the
international organizations.
In terms of academic disciplines we are at the intersection of law, economics, industrial
relations, sociology, politics and international relations—which is where you’ll find Joe.
Joe is attracted to places where various categories of intellectual inquiry and the theories
they generate confront reality. He has spent most of his life working on these sorts of problems
starting with the complexities of labour markets.
He has freely questioned and re-examined theory when it fails to offer a useable
explanation of reality and, most importantly, ways of improving people’s well-being. He has
explained both the disconnects with reality and the discontents of people in very understandable
ways.
Joe has clearly demonstrated that much of the economic theory that justifies the policies
that are currently shaping globalization need to be revisited. Many have profited, but far too
many others live in a state of anxiety and insecurity. The process seems on autopilot, the rules of
the game are not fair, and the lack of global governance is pitifully evident.
That’s why I was proud that he accepted my invitation to be a member of the World
Commission on the Social Dimension of Globalization—chaired by President Halonen of Finland
and President Mkapa of Tanzania. The Commission consists of leading thinkers with diverse
experiences and interests. The mandate is to find common ground and develop comprehensive,
practical people-centered proposals of difficult but doable reform for a more fair and inclusive
process of globalization. The report will be released early next year.
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In addressing the management of globalization, let me speak as a political person. Five
issues trouble me.
First, worldwide unemployment. Nearly one billion women and men, a third of the
world’s workforce, are either unemployed or unable to earn enough to keep themselves out of
extreme poverty. There are 100 million new entrants into the labour market each year. Up to 90
percent in some regions are in the informal economy. 180 million kids are engaged in the worst
forms of child labour. Put it all together and it is not only morally unacceptable, but politically
dangerous.
It is the consequence of treating employment as a hoped-for result of other policies: low
inflation, low growth of the money supply, a restricted budget deficit, reduced trade barriers. All
of these goals are no doubt highly desirable, but they have become an end in themselves—
regardless of social or economic consequences.
We cannot continue to marginalize employment and enterprise creation in policymaking.
Decent work is at the heart of the search for dignity for the individual, stability for the family and
peace in the community. I think this is a key, but much neglected issue in the debate about
managing globalization. Labour markets are about people. And people have a right to be treated
with dignity and respect. Yet demand for labour is derived from the demand for goods and
services. Businesses have to sell on competitive markets. Rules governing employment thus have
to reflect both the human rights at work of individuals and the social importance of work, as well
as the need for entrepreneurs to innovate and change what and how they produce in order to stay
competitive.
This is a difficult balancing act that is compounded by the increasing mobility of capital
and the relative immobility of labour.
A key issue in managing globalization is therefore how we organise the global investment
and labour markets to meet the needs of flexibility for enterprises, security for workers and
quality for consumers. We need new proactive policies that focus directly on how authorities in
the public and private sphere can blend economic and social policies with an enabling
environment for private initiative to create market opportunities for Decent Work.
It is perfectly possible in open economies and open societies. The policy tools are there.
We just have to make it a priority political objective.
And that leads me to my second point. Blending, integrating, coherence, policy dialogue
is basically absent among international organizations. We are great at agreeing on common
goals—through the UN Conferences of the 90s and lately the Millennium Development
Declaration. But when it comes to implementation, policies not only run parallel—although there
is a lot of cooperation on projects—but worse, they can actually run in contradiction with each
other, particularly on social policy issues.
More than ever before, countries need integrated policies to manage their development
process in a globalizing world. Yet our multilateral system is failing to deliver. I think the most
promising opening for improved policy coherence would be to focus on employment, investment
and sustainable growth.
It should be possible to put in place a policy coherence initiative among the IMF, the
World Bank, WTO, (UNDP), ILO (and other relevant UN bodies) in which all converge on a
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policy package to make enterprise development and decent employment a common policy goal.
It would be key to helping reach the yet unreachable goal of the MDGs.
I also think that by focussing on important areas of policy convergence, we can spread the
political load involved in responding to globalisation.
When everybody’s various fears about globalization are dumped on the WTO or the
International Monetary Fund, it naturally places a heavy strain on their negotiating machinery,
their systems of accountability, and the image of the institutions. What the WTO is living through
already happened to the OECD when it tried to draft a Multilateral Investment Agreement on its
own.
But if we start to look at how complementary action by several agencies could come
together in a package, I think we could offer a more balanced and therefore more useful
framework for socially inclusive development. To make this happen, the main responsibility lies
with national governments. Mainly the G-8. Again it’s a political decision. The technical
capacity to do it is available.
Third, accountability. On the one hand governments have their responsibilities to their
own electorates, on the other they also are bound to varying degrees by the collective decisions
reached in multistate organisations. And then we have to recognise that governments and
international bodies have had to increasingly respond to questioning by civil society
organisations on issues of globalization.
Partly as a result of their activism, partly their capacity to mobilise, partly the mass
membership of some NGOs and partly because they are occupying a political space created by
the distance between people and the decision taking processes of governments and the
multilateral organisations, they have acquired legitimacy in the public eye.
One of the governance challenges of this new century—nationally and internationally--is
how to acknowledge the strong emerging network of what is sometimes termed participative
democracy, while recognizing that most governments owe their legitimacy and are accountable to
the mechanisms of representative democracy.
We should be looking to deepen our understanding of how participative democracy, built
on the concept of freedom of association, can support and strengthen representative democracy.
In our complex world, we know that accountability to citizens once every few years
through the ballot box is not a sufficient check and balance.
Parliaments and other representative bodies need to interact with citizens organisations to
perform their role. And at the global level we need to find a way to gain from the energy and
sense of a global community spirit that inspires many civil society activists in ways that reinforce
the responsibility of democratically elected governments.
In this context, I believe a new notion will become necessary. All international
organizations, while responsible to their respective boards or governing bodies, should be more
widely accountable for the impact on individuals, families and communities for the policies they
pursue and the conditionalities they impose. When we look at the growing levels of
unsustainable foreign debt repayment, issues of moral hazards will have to be addressed.
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As Joe has written, “If we demand that before programs (such as structural adjustment
programs) are adopted, there be a “labor impact statement” then it is more likely that policies
which minimize the adverse impact on workers will be adopted.”
Joe has demonstrated in theory and practice that the principles of transparency and
participation are so critical to policy making that truly reflects the public interest.
Fourth, I speak as a Latin American who spent a long time, too long, struggling against
dictatorship—the ultimate lack of accountability--to recover our democratic rights. I am thus
extremely concerned that many Latin American governments are currently under tremendous
political pressure with several elected Presidents resigning as a consequence of tensions provoked
by policies that did not take adequate account of their social impact.
I would be the first to argue that many of our region’s governance problems are home
grown. And the list is long. Nevertheless, international financial conditions are placing many
debt-ridden democratically elected governments in a dilemma. Either accept a policy package
which runs counter to priority needs of people and deal with ensuing protest or lead your country
into a damaging dispute with your creditors and ultimately into bilateral political tensions with
the controlling countries.
The institutional response to the debt crisis of many middle-income countries has had an
ideological tone that inhibits new thinking. As Joe knows only too well, the more that innovative
but reasonable propositions challenge received wisdom, the more the status quo fights back.
We have to escape this intellectual “trench warfare” and look afresh at what works in
practice to get economies growing again.
There is no one size fits all policy paradigm. And purely adjustment medicine is clearly
not saving the patient.
And, yes, strong nation states in an increasingly interdependent global economy do have
to take account of the effect of their actions directly or indirectly on others. We do need an
international governance system. However, it must be one that strengthens democratic processes
and does not put the weaker—be it individuals, families, communities, companies, or countries-at the service of the strong.
Which brings me to my fifth, and final and very short point. Addressing the impact of
globalization begins at home. International policies have forgotten the local. Everything has been
done to facilitate the global – finance, trade, investments – and very little to reinforce local
communities – where people are born, live and generally want to stay. We need a globalisation
that leaves no one behind and this means reinforcing the capacities of communities to create jobs,
educate the children, organise health care and provide the support to families where they were
born and where they want to live, which the word “community” should mean.
The organisers asked for research ideas that would eventually win a Nobel prize. Well I
think the team that successfully puts together an economic and social policy framework for
global full employment in decent working conditions based on local development, that would
command the support of all stakeholders and all international organizations concerned, should be
awarded the prize. I am sure they would get it not just for economics, but also for peace in the
world.
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To help thinking move in that direction, let me announce today the future establishment
by the International Labour Office through the Institute of Labour Studies of an annual award to
recognize outstanding policy projects to promote Decent Work and enterprise development from
the local to the global level. I am pleased to announce that Joe has agreed to serve as Chair of the
selection panel.
There is no better person for the job. Fighting for social justice, after all, is in our
Constitution. It’s in his, too.
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