Fighting Finance from Below

At the onset of the Third World debt crisis in the 1980s, many
economic justice activists were afraid to engage on the issue because
they felt it was just too complicated. Then, in the 1990s, the hot
issue was trade. And again, many people thought, "I'll never understand
the World Trade Organization." But eventually, in both of these cases,
large numbers of people bit the bullet and learned enough to have a
voice in these debates. And they built strong movements for debt and
trade justice that continue today.

Now the issue of the day is finance. And once again, many people are
intimidated by the complexity of the issue. Without a doubt, we need
more activist education around the world on the workings of financial
markets. At the same time, it's remarkable to see how much progress has
been made by global civil society groups since the crash of 2008.

In the United States, labor unions and consumer groups joined forces to make positive steps toward
reining in Wall Street's worst excesses. Given the intense opposition
of the industry lobby, it's no surprise that the bill enacted in July
didn't go nearly far enough to transform the financial system to serve
the needs of people and the planet. This was only round one of a longer
fight. Some next steps will be to build international links to make sure
the positive elements in the U.S. financial reforms are not undermined
by a lack of regulation in other countries. Groups are also working
across borders to tackle some issues not dealt with in the U.S.
legislation. These include key civil society demands for a financial
speculation tax and against commodity index funds.

Controlling Speculation

The financial speculation tax was high on the agenda at an International Peoples Conference
held parallel to the G-20 summit a few weeks ago in Seoul, South Korea.
Before the conference, activists had organized a global civil society statement
in support of financial speculation taxes that was endorsed by 183
organizations from 42 countries. The proposal is to place a small levy
on each trade of stocks, derivatives, currency, and other financial
instruments as a way to generate revenues for jobs and other domestic
and international needs. Such taxes could also discourage the
short-term financial speculation that has little social value but poses
high risks to the economy.

Korean labor and other social movements organized a rally with 40,000
people during the G-20 summit. Banners calling for financial
transactions taxes were a clear sign of how the issue has been both
popularized and internationalized.

Although the G-20 leaders were too bogged down by disputes over
currencies to make progress on financial taxes, 2011 might prove to be a
breakthrough year. French President Nicolas Sarkozy will host the next
leaders' summit in November 2011 and has vowed to make the tax a top
issue on the agenda. A broad coalition of French activist groups has
already issued an international "call to mobilization" for the G-20 in France.

Addressing Commodities

Global activists are also coming together to push for an end to
excessive speculation in commodities markets. Although a complicated
issue, commodity trading also affects everyone in direct and personal
ways through the price of food and gas.

In 2008, the United States had the highest food inflation rates
since 1980. In many of the world's poorest countries, food price spikes
sparked rioting. Speculation alone did not cause rising food prices,
but excessive speculation in the commodity futures markets dramatically
exacerbated the volatility of world food prices.

The U.S. financial reform bill made some progress in increasing the
transparency of derivatives markets, and U.S. and European activists are
working together to help win similar changes in EU laws. But the U.S.
reforms did not address the problem of commodity indexes. A surge of investments in these funds by pension funds and endowments is a factor in price volatility.

A coalition of family farm, faith-based, and anti-hunger groups,
along with business associations, has initiated a campaign to persuade
investors to pull out of commodity index funds. Their first target:
CALSTRS, the California teachers' retirement system, which had been
considering shifting $2.5 billion of its portfolio into commodities.

In response to the divestment campaign, the CALSTRS board decided on November 4 to invest no more than $150 million in commodities for 18 months, while further studying the potential problems.

Next steps for the coalition will be to develop university campaigns
for students and teachers to pressure their endowments to divest from
commodities, and to work with civil society in other countries to
pressure their own financial institutions.

Further Fights

Despite the increase in global activism around financial issues, no
single network pulls everyone together around a comprehensive agenda.
Nevertheless, campaigns like those on financial speculation taxes and
commodity index funds have proved useful tools for basic financial
education. People who care deeply about reducing hunger and creating
jobs have dived into dense subjects such as financial clearing and
settlement processes and swap hedging. It has been re-assuring to remind
ourselves that the so-called "experts" clearly don't understand how all
this stuff works either. Remember when the International Monetary Fund
adjusted its global economic forecast - upward -- in the late summer of
2008?

This educational foundation will produce dividends not just in the
campaigns of today but in years to come. It's not just a question of
transparency and equity. Thanks to the work of global civic activists,
we might even prevent the next economic crash.