By Ben Cohen: The popularity of austerity in America and most of the industrialized world has revealed the truth about how modern economics works: Economies are beholden to banking institutions and have little control over their own destinies. Austerity measures are not working, but because the financial system dictates that the measures must be followed, governments have little choice other than to take orders. Who controls the money controls policy, and through debt the banks literally have the world at their feet. The popular uprisings across the European continent and the election of a socialist in France are a sign that the dynamics are changing, but there is an uphill struggle and no guarantees that the power of financial institutions can be reigned in.
If the supposed enlightened nations want to know what a future without the dictatorship of banks looks like, they'd do well to look at Latin America where popularly elected governments are working diligently to control their own destinies. Here's Noam Chomsky talking about the extraordinary changes happening on the continent that have either been ignored or vilified in the western press:
What’s happened in Latin America in the last 10 years is just spectacular. I mean, in the last 10 years, for the first time in—since the Spanish and Portuguese conquerors—that’s half a millennium—Latin America has freed itself, substantially freed itself from Western domination and control, meaning mainly U.S......
U.S. and Canada are isolated in the hemisphere. And in fact, there’s a new organization, just formed about a year ago, CELAC, which formally excludes the U.S. and Canada, includes everyone else. It’s quite possible that that may replace the Organization of American States, which is U.S.-run. One sign of it is the U.S. has been essentially kicked out of its military bases in South America. They’re also moving towards dealing with some of their internal problems, which are severe.
And the other thing that’s exciting there is the role of popular movements. I mean, there are mass popular movements of indigenous people, working people, others who have just been—you know, who have been extremely successful in substantially changing policy. That’s of historic significance.
As Francesca Ghersenti of International Democracy Watch notes, CELAC (Community of Latin American and Caribbean States) was created at an interesting time:
The creation of CELAC comes at a specific historical juncture, in which the Western countries are facing extreme economic and financial difficulties. Contrary to this, Latin America is experiencing an economic boom and restored cultural and identity due to the 200th independence anniversary. As a result, it could be the economic and financial crises and the historical moment themselves to be speeding up and strengthening the process towards strong regional integration.
In fact, the CELAC economic agenda expects to consolidate integration and social inclusion as a way to maintain economic growth and protect the continent form the current financial crises.
CELAC has proposed a “new international financial architecture,” more specifically the creation of a reserve funds bank that would guarantee stable source of funding for the Latin American countries. Predictably, the US media's response to CELAC was less than enthusiastic. As Alex Main form the Center for Economic Policy and Research writes:
The minimal coverage that the summit garnered in the U.S. media was mostly limited to reports that downplayed the significance of the new regional bloc. It was depicted in some articles as “Chávez’s baby” and – according to one U.S. pundit – “will probably last as long as Chávez is willing to underwrite it.” Miami Herald columnist Andres Oppenheimer insisted in a headline that the “Group will have no Teeth.” Based on conversations with a White House official and a representative of a right-wing Latin American government, Oppenheimer was able to determine with certainty that CELAC “will hardly make it into the history books.”
Contrary to those reports, Main argues the organization has some very significant and historic momentum behind it:
There is a new geopolitical reality south of the Rio Grande which has created a fertile terrain for deep and effective Latin American and Caribbean integration.
Only a decade ago, nearly all of the governments of the region embraced the Washington Consensus dogma of free markets, deregulation, privatization and the downsizing of the state and its role in the economy. By the early 2000s, however, the tide turned as the peoples of the region went to the ballot boxes and overwhelmingly rejected policies that had led to stagnant economic growth, increased inequalities, and decreased access to education, healthcare and other public services.
Having suffered centuries of colonialism, invasion, and economic strangulation, Latin American countries are beginning to take their future into their own hands and creating financial structures that work for people rather than banks. They are doing it by electing politicians who refuse to endorse neo liberalism or take orders from financial institutions - and looking at the regions staggering growth rate, it is working.
And if it is working in Latin America, there's no reason it can't work here.