The Socialist Solution to the Crisis

Thatcherism and Reaganism have failed on a momentous scale.

The job losses, repossessions, uncertainty, fear and misery faced by the people of Europe, the United States and Japan are a terrible stain on the consciences of those bankers and politicians whose doctrine of neo-liberal markets plunged us all into this crash. But the effect of the crisis on the Third World is of an entirely different magnitude. While developed countries scramble to save their economies, half of humanity languishes. For many, this means hunger, disease and death.

In Europe, we have been protected from the worst effects of the crisis thanks to welfare states built up over the past 60 years to cushion citizens from the threats posed by the free market. We can all count on state health care, social housing, education, unemployment support and other universal, tax-funded services.

The task facing us is to extend and adapt this unique recipe for prosperity and solidarity to the developing world, where according to the World Health Organization between 200,000 and 400,000 additional children will die each year due to the global economic downturn. Prices for natural resources are falling, the stream of earnings sent back to developing countries by migrant workers is drying up, government debts are being called in, and spending slashed.

In Asia, Africa and Latin America this will mean job losses in industry and strains on agriculture. Children are being pulled out of school to work in fields or to provide an extra income, livestock are being sold, and unscrupulous employers are extracting even more from overworked and underpaid sweatshop laborers. Political instability has already claimed governments in Guinea Bissau and Madagascar, and unrest is building elsewhere.

It is vitally important that we fight the global financial and economic crisis, but we must remember that this crisis comes on top of a number of crises in the developing world. It adds further misery to the food crisis, the migration crisis, the climate and energy crisis, and the environmental crisis.

So now, as we react to the near-collapse of the international financial system, and as people recognize the fundamental flaws in the neo-liberal recipe of deregulated, market-led globalization, we have a unique opportunity to develop a new approach.

The simplistic dictum of more markets and less government -- championed by Reagan, Thatcher and their ideological heirs -- has failed on a momentous scale. In the White House, President Hope has replaced President Tax Cuts for the Rich. As we go into the G-20 meeting in London, even European conservatives such as Nicolas Sarkozy and Angela Merkel are calling for a new global financial architecture, better financial regulation and a crackdown on tax havens. The previously unimaginable idea of a "Global New Deal" is suddenly on many people's lips.

We must press harder than ever for the implementation of the eight Millennium Development Goals agreed to by the United Nations in 2000, which include halving extreme poverty, achieving universal primary education, and reversing the spread of HIV/AIDS. A global crackdown on tax havens and tax avoidance could provide the funds to take the fight against such scourges as infectious diseases, maternal mortality and poverty to a whole new level. We could base our stimulus spending on smart green growth, making real progress in protecting the environment. Would that not be an inspiring way to combat the recession?

We must press for the strongest possible international agreement on climate change, and make it politically impossible for conservatives to argue that we cannot afford this. We must show that the costs of doing nothing far outweigh the costs of switching to a carbon-free economy, not least because the actions required have the potential to create millions of jobs.

We must also renew our faith in diplomacy as a means to achieve peace. The West now has no excuses for failing to establish dialogue with countries like Iran, countries whose aggressive strength is only augmented if we do not engage all players in peaceful conflict resolution.

I am hopeful that the G-20 will make progress on these areas. But we cannot just leave it to them. We must keep up the pressure by demanding a globalization that works for everyone, and forge new alliances and new lines of communication across national boundaries. We must develop new, progressive ways to achieve global justice.

That's why, as the G-20 meets in London, an even larger group will meet in Brussels -- a group of progressive politicians, trade unionists, NGOs, academics and figures from major international institutions. This is the world conference of the Global Progressive Forum (GPF), which will bring together speakers from five continents to develop a new vision of a globalized world which benefits all. The GPF will take place in the European Parliament and will be opened by Bill Clinton. It will feature debates and discussions on the issues of global governance, trade, financial markets, decent work, migration and climate change, all aimed at coordinating global answers to what are global crises. It shows that the world's progressives are serious about making a solidaristic social model a reality for all.

In ancient Greek drama, the word "krisis" refers to the pivot on which the plot turns, the point at which its resolution, the moment of death or triumph, is decided. How will our crises be resolved? The systemic failings brought to light by the economic crisis offer us a once-in-a-lifetime opportunity to make a proactive new start on all fronts. Now is the time to ensure that this pivotal moment is not wasted. Now is the time for change.

Mr. Rasmussen is president of the Party of European Socialists and a former prime minister of Denmark (1993-2001).

By POUL NYRUP RASMUSSEN - For the Wall Street Journal

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