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Globalisation and
health
David Legge
IPHU (September 2008)
Purpose
• To explore the links between population
health and ‘globalisation’ (understood
as a global regime of economic
governance)
• To draw some implications for policymaking and for strategy for health
activists
‘Globalisation’
• Global village
– communications, travel and transport
– health concerns: communicable disease,
tobacco, etc
• Global economic integration
– trading relationships
– money flows
– ownership and control
• Global regime of governance
– economic, political and military power
Globalisation as a particular
configuration of economic
activity
• Changing patterns of production and
trade, financial flows and investment,
wealth accumulation and income flows
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global markets, global sourcing
foreign direct investment
role of transnational corporations
increasing size and power of the financial sector
changing patterns of production and
employment
Globalisation as a regime of
economic (and political) governance
• Formal regulatory structures:
multilateral institutions and agreements
(UN, WHO, IMF, WB, WTO)
• Empires, big powers and nation-states
• Transnational corporations (and peak
bodies)
• Constituencies and social movements
• Information, knowledges and
discourses
Formal regulatory structures: multilateral
institutions and agreements
• Bretton Woods Institutions
– IMF, WB and WTO
• United Nations system
– EcoSoc, UNCTAD and UNDP on the economic side
– WHO, UNAIDS, UNICEF on the health side
• ‘Public private partnerships’ in health
– GFATM, GAVI
• Various conventions and agreements
– WTO agreements
– declarations on economic, political, cultural and social
rights
– Kyoto Agreement
– International Health Regulations
– Framework Convention on Tobacco Control
Empires, big powers and
nation-states
• Governing the regulatory structures
– WTO negotiations
– regional FTAs and BITs
• Occasional direct disciplinary action
– trade sanctions
– covert destabilisation
– armed intervention
• ‘Development assistance’ including
funding and advice
Transnational corporations
(and peak bodies)
• Growing in size, increasing number,
carrying increasing proportion of global
trade
• Global reach; national sponsorship
– transnational but with domestic roots
– leverage also with other governments
– communication media (WEF, media,
markets)
• Cases
– big pharma and IPRs
– water privatisation
Constituencies and social
movements
• Beyond the empire, the nation-states, the
international institutions and the transnationals
• More diffused opinion hard to map but still
influential
– commonalities, identities, alliances and
solidarities
– nationality, ethnicity, class, caste, religion,
language and race
• Features
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rise of global middle class
fundamentalism (and the decline of modernity)
social movements, eg environmental, womens,
solidarity movements, eg Jubilee
NGOs and CBOs
Information, knowledges and
discourses
• Global power of
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information, eg health statistics
research and analysis, eg DALYs
discourses, eg comprehensive PHC, cost-effectiveness
ideologies, eg neoliberalism, fundamentalisms
• The information organizations
– academic and research centres (eg Harvard SPH)
– discussion fora (eg DAC of OECD)
– media (eg reports, press coverage, etc)
• Cases
– role of the WB in promoting ‘cost-effective packages of
health interventions’
– role of NGO websites in informing campaigns against big
pharma
Method
• Review the changing dynamics and
regulatory strategies regarding the global
economy since WWII
• Review some key reports, episodes, phases
and struggles in global health in the context
of changing strategies of economic
regulation
• Trace some of the interplay between health
issues and the wider debates and struggles
regarding economic regulation
• Pull some themes from this review which
might inform policy making and the
practice of public health practitioners
Framing the analysis:
an economic history
• 1945-1975: the ‘long boom’
(and trickle down)
• 1975-85: stagflation
• 1975 onwards
– looming threat of ‘overproduction’ (post Fordist crisis)
and
– rise of neoliberalism
The long boom (1945-1975)
• The post-WW2 environment
– need for reconstruction (huge demand)
– increasing productivity (motor vehicles and
cheap oil)
• The boom
– capital and labour brought together to make
things and services that people need and are
able to pay for
– increasing productivity (associated with new
technology) frees up labour to make new things
and to recycle wages as consumption (hence
more profit, investment and sales)
– some ‘trickle down’ to the poor (associated with
Keynesian policies) and to the Third World
(benefiting from trade opportunities associated
with rapid growth)
1975-85 - Stagflation and the failure
of Keynesianism
• Recession (cyclical slowdown on top of structural overproduction)
– growing imbalance between productive capacity and market
demand;
– emergence of ‘jobless growth’; weakening role of employment in
recycling wages as consumption
• Emerging inflation
– Keynesian counter-cyclical policies deployed to contain the slow
down; ineffective (because slow down structural, not cyclical) but
contribute to inflation because increase money supply and inflation
without boosting employment and local business but at the cost of
budget deficits and inflation
– goods and services for the Vietnam war sourced from outside the
USA paid for in dollars (because of the international status of the
dollar) flood the world with dollars (increase of global money supply)
lead to inflation and depreciation of the dollar (leads to rejection of
glold standard in 1972)
– increasing price pressures as different players seek to defend against
price increases fought out through various forms of monopoly power
(oil with OPEC, labour with strong unions, brand names and
protected technologies)
Ascendancy of monetarism
• Monetarism defeats Keynesianism
• Monetarism argues for sole reliance on
interest rates to control the business cycle
• and argues for‘fight inflation first’ (because
of the costs to business of uncertainty)
• but increased interest rates used to control
inflation further slows the economy at a time
when it was already in recession
The Debt Trap
• The trap set
– 1973: OPEC price rise; oil producers flush with
cash; deposited in banks
– Banks send salesmen around the world lending
money at low and negative interest rates
(negative after taking inflation into account)
• lending to corporations (but with government
guarantee) in South America
• lending direct to governments in Africa
• The trap sprung
– 1980: interest rates escalate (peaking at 17% in
the US in 1981) at a time of recession, imposing
repayment and servicing burdens that many
poor countries could not carry
– the 1980s as ‘the lost decade’
From 1980 to the present
• Two parallel dynamics
– the continuing dynamic of the
long boom (eg China and India)
– the continuing threat of postFordist crisis (jobless growth,
structural over-production)
• Further contingencies
– climate change
– peak oil
The threat of ‘over-production’
(and ‘post-Fordist’ crisis)
• Where expanding (capital intensive) productive
capacity (with stagnating employment growth)
exceeds ‘demand’ owing to
– saturated (‘mature’) markets and/or
– markets with real needs but limited purchasing capacity
• ‘Compensatory’ mechanisms which exacerbate
the damage from ‘over-production’
– understood in the corporate world in terms of reduced
profitability
– understood in the policy world as falling growth rates
– eliciting a range of corporate strategies and policy
responses
– many of which exacerbate the risk of crisis
Reduced profitability:
compensatory corporate strategies
• New markets, new products and better
marketing (incl commodification of family and
community)
• Externalise costs (including to labour and to the
environment)
• Increase market power (and capacity to
increase prices)
• Consolidate production and increase market
share through mergers and acquisitions*
• Reduce wages (union busting, relocation)*
• Replace well paid labour with technology*
• *These strategies will further reduce demand
(reduce the role of employment in recycling
wages into consumption)
Slowing growth: compensatory
policy responses
• Outsource and privatise public sector service
provision (new market opportunities)
• Deregulate environmental controls (converting
natural capital into recurrent revenue)
• Force TW countries to open their markets and
economies (under the slogan of free trade and open
markets)
• Cut taxes (in particular, reduce corporate and
executive tax burden) to compete for new
investment*
• Labour market deregulation (union busting) to reduce
labour costs*
• Force repayment of debt from TW countries*
• *These strategies further reduce demand
Corporate and policy
responses
• Exacerbate the over-hang of productive
capacity over effective demand
• Postpone the crisis for the rich world (and
rich classes)
• Other unintended adverse consequences
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destabilise global environment
increase unemployment and inequality
weaken family and community
decay social infrastructure
transfer value from South to North
two worlds stratification (unified global
bourgeoisie but fragmented global proletariat)
So what prevents the crisis from
engulfing the economy globally?
• The situation is already critical for millions of poorer people (in rich
and poor countries)
– trading regime which enforces the flow of value from poor to rich
countries
– policy regime enforces the divide between those who participate in the
new global economy and those who are excluded
– for these groups the crisis has already arrived
• However, continued growth globally (albeit slower) is supported
through
– growth in China and India
– commodification of family, community, government functions (including
health care)
– unsustainable exploitation of environmental ‘services’
– intensified transfer of value from periphery to centre (from South to North)
– growing role of debt in sustaining demand (recycling capital as
consumption)
– global support for US consumption (supporting an over-valued dollar)
Capital recycled as
consumption through debt
• Profits and savings redirected as loans:
– corporate rationalisation (in particular mergers and
acquisitions) financed through corporate debt
– household consumption supported through increasing debt
(recycling profit and savings as consumption)
• Increasing size, wealth, turnover and power of the
financial sector (banks, insurance, etc):
– slowing growth so business redirects profit into financial
sector (as portfolio investment and speculation) rather than
into new direct investment
– new financial derivatives increase risky lending and
speculation
– bidding up of asset values on borrowed or non-existent
money (asset bubbles) feeds consumption expenditure
(wealth effect)
– privatisation of pensions (superannuation) redirects billions
from tax into savings held by private financial institutions
(lent on for asset speculation and consumption)
Global support for US
consumption
• US trade deficit
– imports exceed exports
– US traders need to buy more foreign currency than they earn
– ‘should’ lead to fall in value of dollar making US exports
cheaper and imports more expensive
• But China, OPEC and other corporations and
countries lend to the US (by buying US govt bonds)
have
– kept the price of USD high
– kept US consumption spending high (and inflation low)
– kept the global economy ticking over
• Up until the ‘sub prime mortgage’ crisis; what now?
Implications of ‘sub-prime
mortgage crisis’
• Extensive use of doubtful collateral (securitised
debt) to support borrowing revealed
• Credit squeeze: banks withhold credit because of
exposure
• Asset bubbles pricked; widespread loss of ‘wealth’;
likelihood of recession
• Foreign holders of US Govt bonds sell off or stop
buying (buy oil futures instead)
• Value of USD falls
• Threat of global recession because of significance
of US market to exporters globally
Continuing transfer of value
from periphery to centre (S  N)
• Debt repayment
– role of IMF (and SAP / PRSP) as the enforcer
• Borrowing (high interest) while generating
surplus (low interest)
• One sided trade liberalisation
– free trade in manufactured goods
– protectionism for IP and agriculture
• including escalating tariffs
– barriers to free trade in people
• Brain drain
• Declining terms of trade
– commodities vs manufactures
Free trade - the key to
growth and development?
• ‘Free trade’ - a catch-all slogan obscuring
countries’ and corporations’ manoevering
for advantage
• Regulatory framework defining ‘free trade’
discriminates in favour of the rich North
• Globalised free trade risks exacerbating the
crisis of overproduction
• Protectionism, can have important benefits
as well as drawbacks
Alternative strategies of global
economic management
• (Really) free trade?
• Global Keynesianism
(UNCTAD)?
• National self-sufficiency and
regional (south south) trade
(Amin)?
Recap: exploring the links between
health development and globalisation
• Purpose
– to explore the links between global health
and the prevailing regime of global
economic governance (‘globalisation’)
• Method
– review some key episodes in global health
policies since WW2 against the
– changing dynamics and pressures arising
in the sphere of economic regulation
– interpreted in the light of the account
presented of the global economy since
WW2
Bretton Woods to AIDS/HIV (1944-85)
• 1944: Bretton Woods (IMF, WB, GATT)
• 1950s: Health development policy: DDT, doctors and
hospitals, population control
• 1955: Bandung Conference and birth of the Non-Aligned
Movement (more confident TW voice)
• 1964: UNCTAD 1 (and G77) leads to call for New International
Economic Order in May 1974
• 1973: First OPEC price rise
• 1977: last case of small pox
• 1978: Alma-Ata Declaration (PHC, reference to NIEO)
• 1975-80: Onset of stagflation, end of the long boom,
emergence of monetarism
• 1981: escalating interest rates, debt trap sprung
• 1981: ‘Selective PHC’ (the response to Alma-Ata)
• mid 1980s onwards: IMF develops and imposes SAPs
• mid to late 1980s: rise of AIDS/HIV
• 1987: ‘Adjustment with a Human Face’
Break up of Soviet Union to Seattle
(1985 - 2000)
• 1989: Break up of the Soviet Union
• 1991: USTR attacks Thai administration over
pharmaceuticals policies
• 1992: WHO: ‘Health Dimensions of Economic Reform’
• 1993: WB: ‘Investing in Health’ (virtuous cycle story, SAPs
can be compatible with health development, new
interventionism)
• 1995: WTO established
• 1995-98: OECD drive for MAI (note role of NGOs and
internet; but continuing push in WTO under ‘Singapore
issues’)
• 1997: Sth African parallel import legislation passed,
challenged (challenge defeated April 2001, note role of
MSF and other NGOs and internet)
• 1999: PRSPs implemented (new and improved SAPs)
• 1999: WTO in Seattle: outrageous process; dramatic
protests
• Dec 2000: People’s Health Assembly and People’s Health
Charter
Treatment Action Campaign to
Hong Kong (2000-08)
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April 2001: Defeat of big pharma in South Africa (note role of TAC, MSF and
global social movements)
April 2001: Norway Conference (WHO accepts differential pricing)
June 2001: CMH Report (warning about health and stability; virtuous cycle
story repeated, ‘CTC model’ and scaled up interventionism; reliance on
increased aid (and GFATM) and PRSPs)
Sept 2001: 9/11
Nov 2001: Doha and the Statement on Public Health (especially Para 6 and
compulsory licensing; note rearguard action by US)
Oct 2002: Bristol Myers Squib defeated in Thai DDI case
Mar 2003: Invasion of Iraq (US unilateralism; widespread opposition; limits to
US power apparent)
Oct 2003: Negotiations for US Thai FTA commence (at risk: compulsory
licensing, data access, extended IPRs)
Nov 2003: Cancun: G21+China stands up to G7; deadlock over agriculture
and ‘Singapore issues’; US moves to focus on bilateral and regional FTAs
Nov 2003: Miami FTAA-lite (US knocked back by Latin America)
Jan 2004: IMF report critical of US twin deficits
July 2004: Framework for Doha Round adopted
Dec 2005: Hong Kong Ministerial
Feb 2008: Sub-Prime Crisis breaks
Sept 2008: Report of WHO Commission on Social Determinants
Against TNA: outcomes not
inevitable
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Delegitimation of SAPs
Jubilee 2000 and the Drop the Debt campaigns
MAI-non!
Doha 01 - TRIPS and access
Cancun 03 – advancing the demand for
agricultural reform and resisting the Singapore issues
Miami 04 – resistance to US ambitions for a FTAA
Arenas of struggle: global regulators
Delegitimation and the role of (globalised) popular
movements
Another World is Possible!
Emergence of the PHM
*TNA – “There is no alternative” (attributed to M Thatcher)
Issues which link health policy
with global economic regime
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SAPs and nutrition
TRIPS and access to drugs
GATS and the building of comprehensive PHC
Health and fair trade (with special and
differential treatment)
• AoA and small farmers’ loss of livelihood (and
health consequences)
• Policy reports (such as CMH) which deny (by
obscuring) the disease burden created by the
prevailing regime of economic governance
Another world is possible!
Another US is necessary
• We have
– reviewed the interplay of economics and health at
the global level over the past 60 years
– interpreted the interplay of health and economics
in relation to a particular story about the global
economy over this time
– drawn some conclusions about strategy for global
health activists
• Key conclusions
– recognise, celebrate, learn from and work with
popular movements for health and economic
justice
– keep global economic in/justice at the centre of
health needs and health policy discussion