Book Review:

The False Dilemma - Globalization - Opportunity or Threat?

By Oscar Ugarteche

Published by Zed Books Ltd, 2000. http://www.zedbooks.demon.co.uk

March, 2001

Oscar Ugarteche approaches the so-called developing country, and in particular Latin American "debt crisis" - from a completely different viewpoint. He argues in this cogent, easily readable book, written with inimitable wit and style, that the crisis is actually an advanced capitalist country crisis. Rich countries are suffering a severe and systemic productivity crisis, caused by capital’s inability to recover its productivity in Japan and Western Europe. Ugarteche has always argued that there is a relationship between the productivity crisis, particularly of capital, in advanced countries, and the export of capital in the form of long-term credit.

Ugarteche explores the reasons for capital’s failure to recover its productivity under the neo-liberal economic "reforms" of the last twenty years. He suggests that "the crisis of capital as a whole - .. is due to the fact that the lower cost of processing information brings with it greater technological obsolescence and a quicker depreciation of capital than in the period before 1975" . "It is worth warning" he writes, " that a process of generalized technological change can end up strangling capital itself, since the investment required to carry it out cannot be recouped before the next phase of renewal must begin". While there is widespread recognition of the slowdown in productivity growth in OECD countries, some might contest Ugarteche’s analysis of why this has occurred, but his thesis is certainly well argued. Ugarteche notes that current "ups and downs of the stock market are an indication of the weakened health of the world economy and of the fact that the productivity problems of capital were not resolved between 1994 and today".

In useful chapters on the economies of Latin America as a whole, and those of Central America, Ugarteche analyses the development path taken by different countries. He notes that over the 1980s, a decade of economic restructuring, "Chile ended up with a reduction in its share of developing-country manufacturing exports, from 0.4% to 0.2% - a result experienced by all other countries of the region, save Mexico. The rate of growth of OECD imports of Latin American goods between 1986/89 and 1989/92 fell from 12.7% to 3.8%, while OECD exports to the region grew dynamically from 12.7% to 14.9%, over the same period".

Ugarteche challenges the IMF/ World Bank’s export model of the economy: the "false dilemma of having to choose between exporting or dying, (which) conveniently leaves out why a country exports in the first place: to favour the development of the internal market, which another way of saying the collective well-being of society, the beginning and end of economic relations".

Ugarteche asserts human values against the inhumanity of today’s economic liberalism, which he argues, "has no relation with humanity... the real reason for the economy to exist is humanity. In other words, rather than a doctrine (neo-liberalism) is the exercise of power".

This book is a "must-have" for campaigners interested in examining the causes of today’s debt crisis, and Latin America’s crisis in particular. And it is a powerful shot across the bows of neo-liberal ideology.

Reviewed by Ann Pettifor,