- When someone refers to the "Group of Seven Finance
Ministers," most Americans have no idea who they are or what they
do. Since 1975, those who serve in the capacity of secretary of the treasury
for the top seven industrialized countries have met to consider financial
and economic policies that will eventually pertain to all countries. These
finance ministers, along with their respective central bank ministers,
just concluded the second of four meetings for the year.
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- At their first meeting in February, U.S. Treasury Secretary
John Snow announced what appears to be a new dollar policy. He began his
press briefing with these words, "All countries are interdependent.
The market is central to global growth and [t]he value of the dollar is
to be determined by the market and not the strength or policy of government."
What does this convey to you? For me, it basically was a very historic
statement which most of the mainstream press missed.
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- Let us consider, "All countries are interdependent."
In 1962 President Kennedy called for a "Declaration of Interdependence"
in which he was signaling a change in our sovereign status by working in
concert with other nations, instead of independently. It was Bill Clinton
who passed NAFTA and GATT, which became the World Trade Organization, and
who also started a regional free trade zone for our hemisphere, the Free
Trade Areas of the Americas. In April 2003, President Clinton told university
students that their biggest challenge would be to "move from interdependence
to integration." Interdependence is defined as "depending on
one another" while integration is defined as "making or forming
into a whole." What Secretary Snow did was to build on the structural
political and economic changes that have occurred since 1962 through the
United Nations, the Group of Seven Finance Ministers, the Group of Eight
heads of state, and the World Trade Organization.
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- Secondly, Snow stated that "The market is central
to growth." It was Margaret Thatcher who, when elected in 1979, rejected
Keynesianism and adopted Friedrich von Hayek's The Road to Serfdom which
proposed a "market-based economy" through privatization. Privatization
is when government sells off national assets to free up cash. The U.S.
passed the Monetary Control Act of 1980 which was responsible for shifting
vast sums of money from the banking sector to the stock market. Kevin Phillips
writes in Wealth and Democracy, "In 1980, the average daily volume
of shares traded on the New York Stock Exchange was 45 million, in 2000,
it was 1.041.B." Ronald Reagan ran on a platform of "getting
government off our backs" which adopted Thatcher's privatization of
government.
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- The move to the markets as a key power to be reckoned
with is documented by Daniel Yergin and Joseph Stanislaw in their book,
The Commanding Heights-The Battle Between Government and the Marketplace
that is Remaking the Modern World. They tell of Joseph Lenin, who was
criticized for allowing private agriculture to resume even if it was to
prevent an economic breakdown in 1922 at the Fourth Congress of the Communist
International. Lenin countered by explaining that the "state would
control the 'commanding heights.'" The authors devoted the remaining
387 pages of their book to support their thesis that the markets of the
world have now become the commanding heights.
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- Lastly, Snow signaled that the "value of the dollar
is to be determined by the market and not the strength or policy of government."
In light of the above, Snow unveiled a profound change in domestic economic
policy for he shifted the value of the dollar from the auspices of government
to the markets-the commanding heights.
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- In trying to get a clear statement from our Treasury
Department, Undersecretary for Global Affairs John Taylor told me nothing
I did not already know when he referred me to the G7 statement. I then
asked Treasury Secretary Snow, "In February you said the markets would
determine the value of the dollar and not the policy or strength of government.
Is this a new global policy?" Using a lot of "ahh's",
he said, "What it basically says is that we endorse the concept of
flexibility in exchange rates."
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- The move to the markets has been called "market
based democracy" which is defined as a form of government that does
not involve traditional bureaucratic government but uses the markets to
encourage productive behavior.
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- If this is the case, then we can understand the reinventing
of Lenin's "commanding heights" to "market based democracy."
This sounds as utopian as communism-for if there are no barriers any longer
between the nation-states, then that means the strongest and most powerful
(the bourgeoisie) can "skim off the top" of the currency, equity,
bond, commodity, and metals markets at any time in order to use the market
for their own personal gain, leaving you and I (the serfs) with the crumbs.
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