Published on Pambazuka News, by Horace Campbell, Febr. 17, 2011.
The task ahead for the Egyptian people may be enormous. But the same will, determination and sense of collectivism and focus with which they triumphed over Mubarak should be drawn upon for the reconstruction phase of the revolution, writes Horace Campbell … //
… RECONSTRUCTION AND CAPITAL CONTROLS VS DEREGULATION
The deregulation and privatisation of Egypt’s economy under Mubarak, as it was in many other societies, meant that government corporations were sold to private capitalists, and that the government drastically cut back its regulation of capitalist activities to accumulate wealth on the back of the working class and at the expense of the environment. In Egypt, this privatisation ensured that Egyptians owned up to 51 per cent of stakes in private corporations. But ‘Egyptians’ in this case became Mubarak, his family and their elite cronies, who control bank accounts and assets worth billions of dollars of Egyptian people’s money in various countries, including Switzerland.
However, these local elements did not act alone in their corruption and accumulation by dispossession. They were backed up by a global ‘free market’ system of capital flow, championed by the global financial institutions like the IMF and enabled by the global banking and financial sectors. As one commentator opined, ‘[t]here is no democracy for its economy. The tyrant here is not only Mubarak, but the IMF, the World Bank, the Banks, the Bond Markets, the Multi-National Corporations.’
In my view, the Egyptian revolution challenged this model, so there should not be a reconstitution of this structure or model after Mubarak’s exit.
The outflow of the money meant for education, health care, housing, sanitation, and living wages is now bringing the question of capital control to the fore in the international financial system. Egyptian youths have to follow this debate in their bid to forge a new course for societal reconstruction. This question of capital control is one of the realities that make structural transformation imperative.
Capital control is one of the policy tools that has emerged to strengthen the health of the real economy in a society against the stranglehold of the global financial sector. The corruption and dangers of the neoliberal global finance were exposed by the recent financial crisis that started in the USA. This structural corruption is what we mean when we assert that Mubarak and his own corruption cabal are not the only problem – an entire global architecture facilitated the Mubarak regime’s illicit accumulation and financial outflow. This outflow took various forms, including bribery, theft, kickbacks, tax evasion and other forms of illicit financial transactions from the major exporters of oil in Kuwait, Qatar, Saudi Arabia and the United Arab Emirates. Egypt was a regional hub for international capital.
Elsewhere, the debate that there has to be some measure of popular and domestic control over financial mobility or outflow has arisen out of awareness that the global financial oligarchs, their proxies and partners-in-corruption thrive on a ‘free market’ ideology based on the economic disenfranchisement and dehumanisation of the mass of the population.
We know that in today’s capitalist crisis, many emerging markets and developing nations are using capital controls to counter the quantitative easing policies of the USA, in order to protect the domestic sources of growth of their real economies against the financial speculation-driven asset bubbles and upward pressures on their exchange rates. Of course, we can be confident that the West will offer ‘aid and support’ for Egypt’s next government and expect in return that it does not consider such alternative policies as capital controls. But for the revolution to go beyond removing Mubarak and seeking the return of the wealth he accumulated, to exploring how to initiate processes of structural transformation, one policy litmus test for a future government would be whether or not it considers the use of capital controls as a tool to support the growth and development of Egypt’s ‘real economy’ for the creation of jobs and small business development beyond tourism.
Evidence of the success of countries using the capital control policy tools dates back to the post 1997 economic reconstruction, when Malaysia (unlike Thailand and South Korea) went against the IMF, US Treasury, and World Bank policy dictates on how to respond to the Asian financial crisis. Malaysia was strongly criticised and told that foreign investment would never come back to its territory. The threats turned out to be wrong, as 10 years later the IMF admitted that Malaysia’s was a legitimate policy response. In recent years, other countries that have adopted a variety of capital control measures include Thailand, South Korea, and Brazil.
That said, capital control measure is one thing, and releasing the capital for the benefit of the mass of the people is another. The constant mobilisation and vigilance of the people will be required to ensure that the country’s resources are used to improve their standards of living.
The Egyptian people must learn from the neoliberal capitalist crisis in the West, where there continue to be cuts in the provision of social services, tight state budgets, and all forms of austerity measures, while the corrupt financial sector is being propped up in the face of the failure of trickle-down economics and the free market ideology of deregulation. The Egyptian reconstruction process is thus faced with the choice of an alternative path that prioritises the interests and well-being of the people over that of corrupt local, regional and global financial oligarchs.
The dominant one per cent of the Egyptian ruling class will manoeuvre to hijack the reconstruction process in order to maintain their economic stranglehold. They would want to deploy their ill-gotten wealth to dominate the discourse on elections and the new politics, as well as buy access to power or prop up a section of the military that could help them maintain their privilege. To sustain capitalism in Egypt, military forces backed up by Israel and the USA will be needed to crush the fledgling revolutionary process.
The challenge of the second phase of the revolution is therefore poised between the reconstruction of the society for the betterment of the quality of lives of the people and the reconstruction of capital for a new dominant class of elites along with the external forces who have supported the dominant one per cent elites of the population.
INFORMATION AND THE OPENING OF THE FILES OF MUBARAK: … (full long text).