Calm the markets, redistribute income, set a sovereign and inclusive course

Countries seeking to set a sovereign and inclusive course face risky situations of economic and political instability. They are challenged to “calm the markets”, redistribute income and, at the same time, consolidate the chosen course. There is much to unmask when it comes to defining measures in the context of the circumstances that are crossed.

We begin by considering the significance, constraints, and options of each of the three challenges to conclude with a kind of synthesis if a national, sovereign, and inclusive course is to be established or reinforced.

Calm the markets

Calming markets is an expression that often conceals the interests of the handful of actors who control markets. “Perfect” ideal markets seldom exist, but rather, oligopolistic markets led by powerful corporations predominate. These corporations operate by strictly applying the ordering criterion of maximizing their profit. The other purposes they have are subordinate to that main criterion.

It is worth noting that no one would want to disturb or untemper the markets for the sheer pleasure of doing so. What happens is that it is not possible to calm those who dominate the markets without guaranteeing that they can continue to maximize profits, even if this would harm the majority of the country’s population. In this sense, the expression “calming the markets” is a euphemism used to cover up the defense of the prevailing concentrating order.

The mechanisms used to impose hegemonic interests are many and diverse. In one way or another, they seek to destabilize the foundations of any government that threatens their predominance. They plant alarms, fears, and aggravate uncertainties to force adjustments in public policies that favor them. They induce exchange rate instability and inflationary pressures, manipulate exports and imports (they do not register movements, sub or over invoice as it suits them), evade or avoid taxes, and the flight ill-gotten capitals. If sustaining all this implies calming the markets, we would be punishing middle and popular sectors harshly.

Is this way of “calming the markets” the only way possible? Aren’t there policies that improve the functioning of markets without reinforcing the concentrating process? There are indeed but only those that involve wrestling or antagonizing the prevailing economic power.

It is worth remembering that markets are not homogeneous spaces that endure indefinitely; on the contrary, their structures and dynamics change permanently. History shows that every system is vulnerable to circumstances that affect its sustainability either because of the struggle of actors who resist submission to hegemonic forces, or for the impact of technological changes, environmental or health crises, geopolitical confrontations or, also, because of the decomposition within systems.

With this in mind, we point out that there are alternative strategies to “calm the markets”, very different from those that only favor the dominant corporations. These strategies are aimed at dismantling speculative operations, market power abuses with which they subject workers and the broad base of the productive apparatus. These and other measures aim to make the productive process itself to ensure fair wages and that value chains work in a way that capitalizes all those who participate and not only the companies that lead and control them. To materialize these changes of course requires a State not subject to economic power, capable of regulating the economy based on equality and systemic effectiveness. Far from destroying markets, this way of “calming” them reinforces them as it manages to clear obstacles and contradictions that distort their functioning.

Hence, an alternative way of “calming” the markets poses very different measures than the dominators. Among others, the need to reduce fiscal deficits without sacrificing social and environmental spending but improving the tax structure and the effectiveness of public spending, eliminating tax evasion and ill-gotten capital flight, promoting changes in the productive matrix to avoid recurrent bottlenecks in the external sector, strengthening and diversifying export activity and import substitution, promote grassroots, associative, and family ventures, allocate the necessary resources to science and technology. These are just a sample of strategic alternatives.

This way of calming the markets does not reinforce the concentrating process but seeks to mobilize productive and cultural factors of the country that have been dammed or sterilized. It makes for a phase of the sovereign and inclusive course.

Redistribute income

When we talk about redistributing income, we mistakenly assume that it is about redistributing in favor of middle and popular sectors. I wish it were, but often, income is redistributed from the bottom of the social system to those who continue to concentrate wealth and decision-making power. Hence, although it might astonish some, the first thing to settle is in favor of whom are we going to redistribute income. This is a political decision of the highest level necessary to unmask what is usually covered up.

If the redistribution of income is clearly aimed at favoring middle and popular sectors, it is also necessary to decide why income is redistributed. That is, it is redistributed to attend to an occasional social emergency (it is essential to face it) or a shortage that does not yield (red alarm light). In this second case, the redistributive purpose changes since it is necessary to face causes and not only the effects of the concentrating process by negotiating with uneven force the resources to redistribute. This is extremely dangerous because in cases where neoliberalism regains control of the state, it can reduce amounts and change redistributive destinations, as it usually imposes. To avoid brutal countermarches, it is necessary to consolidate what is proposed to calm the markets, strengthening institutions, and allocating resources to redistribute in much greater magnitude.

They would no longer be initial measures to calm the economy but structural measures aimed at fully mobilizing productive capacity, distributive justice and environmental care of the entire society.

It is worth considering some concrete examples. As far as a possible fiscal deficit is concerned, it would no longer be a question of reducing it but of consolidating it at an appropriate threshold for national development. This will require establishing a progressive tax system, complemented by regulations, control, and harsh rules for those who evade and flee ill-gotten capital. Another critical allocation of part of the redistributed income should be aimed at transforming the structure of the productive matrix by encouraging activities with low demand for imported inputs. and high export potential. Other redistributed revenue should fund developers and trusts specialized in establishing or strengthening grassroots ventures, far beyond a small scale such as it is usually raised, but at a level consistent with the magnitude of the popular economy. These and other applications of redistributed resources would help dismantle the concentrated appropriation of wealth and the consequent decisional oligopoly.

Sovereign and inclusive course: making it possible

A sovereign country that makes decisions to benefit the entire population faces a process that is not sudden, but is built with collective determination sustained over time. As noted, progress can be made even when the demand to calm the markets arises, and it can be done for or against middle and popular sectors. Moreover, sovereign and inclusive course is forged when redistributive measures are approved, defining who is favored with redistribution, for what purpose, to finance what aspects, with what magnitude and what strategic sequences.

The initial obstacle is to demystify the deception that there is only one way of doing things, the one that favors the dominators. With cover-up words, the promise that the wealth that is concentrated today will “later” be poured out into society is never fulfilled. Hence, it is worth pointing in another direction, that wealth (assets and income) is generated already distributed from the productive, cultural, and care process. That is, wealth generated within all value chains expressed in fair wages for workers, in prices to small and medium suppliers that enable them to close the capitalization gap with respect to leading companies, and protect consumers so that they do not have to give up revenue in the face of abuses exerted by the oligopolistic corporations.

It is clear that this sovereign and inclusive course does not aim to destroy productive activities but to reinforce them by ensuring equity in the distribution of the results that society generates. Not only do owners of capital generate wealth, they attribute it to themselves by abusing the power they hold. Wealth is generated by the whole of society, workers, social organizations, development entities and the State with the services it provides and infrastructure it builds. If one were to ignore how wealth is generated, society would be exposed to a cunning ideological justification of domination.

As a closing a reflection that many of us make on the viability of what is proclaimed. It is not possible to confront oppressing powers with a fragmented, demobilized population, prey to fear and hopelessness. Dominators know how to manipulate public opinion and impose values and commonsense that serves to weaken resistance. To overcome subjugation, it is essential to overcome social fragmentation, to converge wills, to align the diversity of interests that nests in middle and popular sectors. It is about building another power that emerges from establishing enlightened political coalitions that allow electoral success and, more fundamentally, govern effectively without betraying the social base represented.

If you like this text, by filling up the form that appears in this page you can subscribe to receive once a month a brief summary of Opinion Sur English edition.

Leave a comment

Your email address will not be published. Required fields are marked *