The first meeting of Asian Social Movements took place against a background of what is shaping up as the worst crisis of global capitalism since the Great Depression 70 years ago. Charting our direction for the future is greatly dependent on understanding the nature and dynamics of this crisis. We are talking about a crisis that is actually an intersection of four crises.
The first of these involves the crisis of legitimacy and the increasing inability of the neo-liberal ideology that underpins today's global capitalism to persuade people of its necessity and viability as a system of production, exchange and distribution. The disaster wrought by structural adjustment in Africa and Latin America; the chain reaction of financial crises in Mexico, Asia, Brazil and Russia; the descent into chaos of free-market Argentina; and the combination of massive fraud and the spectacular wiping out of USD 7 trillion of investors' wealth – a sum that nearly equals the US' annual GDP – have all eaten away at the credibility of capitalism. The institutions that serve as global capitalism's system of global economic governance – the International Monetary Fund (IMF), the World Bank, and the World Trade Organisation (WTO) – have been the most negatively affected by this crisis of legitimacy and thus stand exposed as the weak link in the system.
Intersecting with the crisis of legitimacy is the second crisis, one of over-production and over-capacity that could portend more than an ordinary recession. Profits stopped growing in the US industrial sector after 1997, a condition caused by the massive over-capacity that had built up throughout the international economic system during the years of the US boom in the 1990s. The depth of the problem is revealed by the fact that only 2.5 percent of the global infrastructure in telecommunications is currently utilised. Overcapacity has resulted in investment moving from the real economy to the speculative economy, to the financial sector, a development that was one of the factors behind the stock market bubble, especially in the technology sector. Enormous surplus capacity continues as a global condition and thus the continuing absence of profitability. The global recession is, as a result, deepening. But precisely because severe imbalances built up for so long in the global economy, this recession is likely to be prolonged, it is likely to be synchronised among the major centres of capitalism, and there is a great chance that it could turn into something worse, like a global depression.
Running alongside and intersecting with these two crises is the third crisis, one of liberal democracy, which is the typical mode of governance of capitalist economic regimes. In places like the Philippines and Pakistan, popular disillusionment with elite democracies fuelled by money politics is rife among the lower classes and even the middle class, being in the case of Pakistan one of the factors that allowed General Pervez Musharraf to seize political power. But the crisis is not limited to the South. In the United States, there is a widespread popular perception that President George W Bush stole the election and, thanks to current revelations about his questionable ethics as a businessman, he serves mainly as the president of Wall Street rather than of the country. In Europe, there is also much concern over corporate control of political party finances, but even more threatening is the widespread sense that power has been hijacked from elected national parliaments to unelected, unaccountable Euro bodies like the European Commission. Electoral revolts like the Le Pen phenomenon in France and Pim Fortuyn in the Netherlands are manifestations of deep alienation with technocratic democracy.