# = pounds sterling
HM Treasury News Release
209/98 15 December 1998
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REDISCOVERING PUBLIC PURPOSE IN THE GLOBAL ECONOMY
Attached is the text of the lecture that the Chancellor of the
Exchequer, Gordon Brown, will deliver this evening at the
Kennedy School, Harvard University.
Tomorrow the Chancellor will be in Washington where he will
meet:
US Treasury Secretary - Robert Rubin;
Chairman of the Federal Reserve - Alan Greenspan;
Managing Director of the IMF - Michel Camdessus; and, on
Thursday,
President of the World Bank - Jim Wolfensohn.
The Chancellor is visiting the United States at the end of the
UK Presidency of the G7 to press forward the major reforms
needed to strengthen the international financial system.
Media enquiries:
Charles Keseru - 0171 270 5188
Charlie Whelan - 0468 003425 (in the US)
CHANCELLOR OF THE EXCHEQUER'S LECTURE AT THE KENNEDY SCHOOL,
HARVARD UNIVERSITY ON 15TH DECEMBER 1998
"REDISCOVERING PUBLIC PURPOSE IN THE GLOBAL ECONOMY"
INTRODUCTION
THERE CAN BE NO MORE APPROPRIATE COUNTRY TO DISCUSS THE
CHALLENGES FACING THE NEW GLOBAL ECONOMY THAN THE UNITED STATES
OF AMERICA: THE PRE-EMINENT ARCHITECT OF THE POST-WAR GLOBAL
SYSTEM.
THERE CAN BE NO FORUM MORE APPROPRIATE THAN THE KENNEDY SCHOOL,
NAMED AFTER THE PRESIDENT, WHO ON JULY 4th MORE THAN A THIRD OF A
CENTURY AGO, MATCHED THE DECLARATION OF INDEPENDENCE OF 1776 WITH
A NEW DECLARATION OF ECONOMIC INTERDEPENDENCE FOR OUR TIME.
AND THERE CAN BE NO MORE APPROPRIATE INSTITUTION THAN HARVARD
WHERE 50 YEARS AGO, THE MARSHALL PLAN, THE MOST AMBITIOUS
MULTI-NATIONAL EFFORT FOR ECONOMIC RECONSTRUCTION THE WORLD HAS
SEEN, WAS FIRST LAUNCHED.
MORE THAN HALF A CENTURY AGO, LEADERS WHO WERE STILL ENGAGED IN
WAR TOOK THE TIME TO PREPARE FOR PEACE. IN A BREATHTAKING LEAP
INTO A NEW ERA, THE WORLD CREATED NOT JUST NEW INTERNATIONAL
INSTITUTIONS - THE IMF, THE WORLD BANK, THE GATT AS WELL AS THE
UN - AND A WHOLE SET OF NEW RULES FOR A NEW INTERNATIONAL
ECONOMY, BUT GAVE EXPRESSION TO A NEW PUBLIC PURPOSE BASED ON
HIGH IDEALS.
A GENERATION OF LEADERS WHO HAD KNOWN THE GREATEST OF DEPRESSIONS
AND THE GREATEST OF WARS KNEW ALSO THAT JUST AS PEACE COULD NOT
BE PRESERVED IN ISOLATION, PROSPERITY COULD NOT BE MAXIMIZED IN
ISOLATION.
WHAT THEY DID FOR THEIR DAY AND GENERATION WAS SO DRAMATIC THAT
DEAN ACHESON SPOKE OF THAT PERIOD AS AKIN TO BEING PRESENT AT THE
CREATION.
ONE OF THE SIGNAL EVENTS WAS THE BRETTON WOODS CONFERENCE - AND I
ASK MYSELF WHY IT WAS HELD NOT IN WASHINGTON, OR NEW YORK, OR
BOSTON, BUT IN THE WHITE MOUNTAINS OF NEW HAMPSHIRE. IN FACT THE
LOCATION WAS THE PRICE THE ROOSEVELT ADMINISTRATION HAD TO PAY TO
PERSUADE A NEW HAMPSHIRE SENATOR TO ABANDON ISOLATIONISM. AS TIP
O'NEILL USED TO SAY, "ALL POLITICS IS LOCAL" ... EVEN GLOBAL
POLITICS. IF MASSACHUSETTS AND NOT NEW HAMPSHIRE HAD THREATENED
TO BE ISOLATIONIST WE MIGHT BE TALKING TODAY OF THE CAMBRIDGE
AGREEMENT. NOTHING COULD MORE VIVIDLY SHOW THE PRACTICAL NATURE
OF THE VISIONARIES WHO CREATED THE NEW WORLD THAN THEIR CHOICE OF
BRETTON WOODS.
BUT AS PRACTICAL AS IT WAS, BRETTON WOODS ALSO DEFINED A NEW
PUBLIC PURPOSE CHARACTERISED BY HIGH IDEALS. THE CONFERENCE WAS
ABOUT MORE THAN EXCHANGE RATES, THE MECHANICS OF FINANCIAL
ARRANGEMENTS OR EVEN NEW INSTITUTIONS. AS THE AMERICAN SECRETARY
OF THE TREASURY SAID AT THE VERY START OF THE OPENING SESSION:
"PROSPERITY HAS NO FIXED LIMITS IT IS NOT A FINITE SUBSTANCE
TO BE DIMINISHED BY DIVISION. ON THE CONTRARY THE MORE OF IT
THAT OTHER NATIONS ENJOY THE MORE EACH NATION WILL HAVE FOR
ITSELF.
"PROSPERITY LIKE PEACE IS INDIVISIBLE. WE CANNOT AFFORD TO
HAVE IT SCATTERED HERE OR THERE AMONGST THE FORTUNATE OR
ENJOY IT AT THE EXPENSE OF OTHERS....."
IN SHORT, PROSPERITY TO BE SUSTAINED HAD TO BE SHARED.
PRACTICALITY AND MORALITY WENT HAND IN HAND.
GEORGE MARSHALL REAFFIRMED THIS IN HIS OWN HISTORIC SPEECH HERE
AT HARVARD. WE MUST FIGHT AGAINST "HUNGER, POVERTY, DESPERATION
AND CHAOS", HE INSISTED, TO SECURE "THE REVIVAL OF A WORKING
ECONOMY IN THE WORLD [THAT WOULD] PERMIT THE EMERGENCE OF
POLITICAL AND SOCIAL CONDITIONS IN WHICH FREE INSTITUTIONS CAN
EXIST".
SO THE POST-WAR ARRANGEMENTS WERE FOUNDED ON THE BELIEF THAT
PUBLIC ACTION ON A NEW AND WIDER STAGE COULD ADVANCE A NEW AND
WORLDWIDE PUBLIC PURPOSE OF HIGH IDEALS ROOTED IN SOCIAL JUSTICE:
TO ACHIEVE PROSPERITY FOR ALL BY EACH CO-OPERATING WITH EVERY
OTHER: NEW INTERNATIONAL RULES OF THE GAME THAT INVOLVED A
COMMITMENT TO HIGH LEVELS OF GROWTH AND EMPLOYMENT. IN SHORT,
THE JOB OF EVERY ECONOMY WAS TO CREATE JOBS FOR ALL.
THE FOUNDERS OF BRETTON WOODS RESOLVED THAT THE FAILED POLICIES
OF LAISSEZ-FAIRE WHICH RESULTED IN VAST INEQUITIES AND RECURRING
DEPRESSION FROM THE 1870S TO THE 1930S WOULD NOT BE REPEATED.
UNTRAMMELLED, UNREGULATED MARKET FORCES HAD BROUGHT GREAT
INSTABILITY AND EVEN GREATER INJUSTICE. IN THE POST-WAR ERA
GOVERNMENTS HAD TO WORK COLLECTIVELY IF THEY WERE TO ACHIEVE
EITHER JUSTICE OR STABILITY.
THE INITIATIVES AND INSTITUTIONS OF THAT ERA WERE SHAPED TO THE
CONDITIONS OF THE TIME - A WORLD ECONOMY OF PROTECTED NATIONAL
MARKETS, LIMITED CAPITAL FLOWS, AND FIXED EXCHANGE RATES. AND
FOR NEARLY THIRTY YEARS THE SYSTEM WORKED, FOR HUNDREDS OF
MILLIONS WHO ENJOYED UNPARALLELED PROSPERITY BRETTON WOODS TOOK
US A LONG WAY. YET EVEN IN THE 70S WITH HUNDREDS OF MILLIONS
STILL IN POVERTY WE HAD STILL A LONG WAY TO GO.
IN THE FIRST HISTORIC PHASE OF INTERNATIONAL ECONOMIC MANAGEMENT,
NATION STATES SPOKE UNTO NATION STATES, WITH AN UNPRECEDENTED
DEGREE OF CO-OPERATION BETWEEN SEPARATED AND STILL LARGELY
INSULATED ECONOMIES. THE INTERNATIONAL RULES OF THE GAME THEN
LARGELY CONSISTED OF OPEN CURRENT ACCOUNTS, FIXED EXCHANGE RATES
AND CLOSED CAPITAL ACCOUNTS AND OF COLLECTIVE SUPPORT WHEN
COUNTRIES RAN INTO BALANCE OF PAYMENTS PROBLEMS.
BUT OVER THE NEXT GENERATION, THAT NEW WORLD, TOO, BECAME OLD, AS
THE EXISTING ORDER OF NATION STATES AND COLLECTIVE INTERNATIONAL
ACTION WAS INCREASINGLY BYPASSED BY THE GROWTH AND EVENTUALLY THE
SHEER FORCE OF INTERNATIONAL FINANCIAL FLOWS, SUCCESSIVELY ENDING
DOLLAR CONVERTIBILITY INTO GOLD, THE FIXED EXCHANGE RATE SYSTEM,
AND POST-WAR KEYNESIAN CERTAINTIES, BRINGING IN ITS WAKE AN
OUTBREAK OF INFLATION AND THEN STAGFLATION THAT SPREAD ACROSS THE
WESTERN WORLD.
THE 1980S SAW A NEW CONSENSUS EMERGE, ESSENTIALLY AN ATTEMPT TO
RETURN TO LAISSEZ-FAIRE. IT FOCUSSED NOT ON WHAT GOVERNMENTS
SHOULD DO, BUT ON WHAT GOVERNMENTS SHOULD NOT DO, EMPHASISING
PRIVATE PURSUITS ALMOST TO THE EXCLUSION OF PUBLIC PURPOSE.
ENLIGHTENED SELF-INTEREST GAVE WAY TO SHEER SELF-INTEREST.
INSTEAD OF RISING TO THE CHALLENGE OF APPLYING THE HIGH IDEALS OF
THE POST WAR WORLD TO A NEW WORLD, INSTEAD OF AIMING FOR HIGH
LEVELS OF EMPLOYMENT AND PROSPERITY FOR ALL, SIGHTS WERE LOWERED,
THE VISION WAS NARROWED. THE NEW RIGHT CONSENSUS FOCUSSED ALMOST
ENTIRELY ON INFLATION AND MINIMAL GOVERNMENT.
OF COURSE IT WAS AND IS RIGHT TO SAY THAT INFLATION IS COSTLY,
AND ONCE OUT OF CONTROL, IT IS EVEN MORE COSTLY TO REVERSE.
MACROECONOMIC STABILITY, BASED ON LOW INFLATION AND SOUND PUBLIC
FINANCES, IS AN ABSOLUTE PRECONDITION OF ECONOMIC SUCCESS.
INDEED THERE IS A NEW PREMIUM ON ECONOMIC STABILITY IN THE GLOBAL
ECONOMY. A NATION STATE RELYING ON INVESTMENT FLOWS FROM ROUND
THE WORLD - AND ALSO VULNERABLE TO THEM - NOW KNOWS THAT
RETRIBUTION FOR GETTING THINGS WRONG IS SWIFT AND TERRIBLE.
THE 1980s CONSENSUS DID UNDERSTAND THE IMPORTANCE OF LIBERALIZING
ECONOMIES FROM EXCESSIVE REGULATION AND BAD GOVERNMENT. BUT THEY
CONFUSED MEANS WITH ENDS AND SAID IN EFFECT THAT INFLATION ALONE,
NOT JOBS AND GROWTH ALSO, WERE EXCLUSIVE CONCERNS. AND THEY SAID
THAT ALL GOVERNMENT WAS BAD: THAT GOVERNMENT CAN'T MAKE A
DIFFERENCE, AT LEAST A POSITIVE ONE, IN JOBS AND GROWTH, AND THAT
GLOBAL MARKETS HAVE TO BE LEFT ENTIRELY TO MARKET DOGMAS, WHICH
HAVE NO PLACE FOR THE PUBLIC PURSUIT OF HIGH IDEALS. BUT THIS
1980s CONSENSUS FAILED EVEN IN ITS OWN STATED PURPOSE - BRINGING
THE LARGEST FISCAL DEFICIT IN AMERICAN HISTORY AND REDUCING
BRITAIN TO INFLATIONARY BOOM-AND- BUST.
AND BY 1997, AN INCREASINGLY TURBULENT AND INADEQUATELY
SUPERVISED INTERNATIONAL FINANCIAL SYSTEM THREATENED TO CREATE
BOOM AND BUST ON A GLOBAL SCALE. NOW BOTH OF THE BRETTON WOODS
OBJECTIVES - NOT ONLY PROSPERITY FOR ALL BUT STABILITY FOR ALL -
WERE AT RISK. THE POST-WAR HOPE FOR AN INDIVISIBLE PROSPERITY
WAS REPLACED BY THE SUDDEN FEAR OF INDIVISIBLE INSTABILITY. THE
1980s CONSENSUS COULD NOT ENDURE.
AS THE DOWNTURN IN ASIA REVERBERATED AROUND THE GLOBE, PRESIDENT
CLINTON SAID THAT 'THE WORLD FACES PERHAPS ITS MOST SERIOUS
CRISIS IN HALF A CENTURY'.
IN RECENT MONTHS AS INTEREST RATES HAVE COME DOWN, AND THE G7
GROUP OF LEADING INDUSTRIALISED NATIONS HAVE SET A TIMETABLE FOR
REFORM, FINANCIAL MARKETS HAVE BECOME LESS UNSTABLE.
BUT THIS IS NO TIME FOR COMPLACENCY. WE MUST RECOGNISE HOW FAR
WE HAVE COME - IN PURPOSE AS WELL AS TIME - FROM 1945 AND HOW,
WITHOUT PUBLIC PURPOSE IN THIS NEW GLOBAL ECONOMY, ONE SET OF
EVENTS IN ONE CONTINENT COULD INFLICT SO MUCH DAMAGE ON SO MANY
PEOPLE.
THIS YEAR WE HAVE EXPERIENCED EVENTS THAT WERE UNTHINKABLE JUST
TWO OR THREE YEARS AGO: FREE ENTERPRISE HONG KONG TAKING
PUBLICLY OWNED STAKES IN ALL ITS PRIVATE COMPANIES; JAPAN
NATIONALISING ITS BANKS; RUSSIA GOING INTO DEFAULT; IN AMERICA
THE MOUNTING OF ONE OF THE BIGGEST EVER EMERGENCY REFINANCINGS
NOT FOR A BANK, BUT FOR A HEDGE FUND; MOST DAMAGING OF ALL, THE
BIGGEST GROWTH ECONOMIES OF THE LAST DECADE IN EAST ASIA
SUFFERING LARGER CONTRACTIONS IN OUTPUT EVEN THAN EXPERIENCED IN
THE GREAT DEPRESSION OF THE 1930S.
THE POLITICAL DIMENSION AS GEORGE MARSHALL FORESAW, IS EQUALLY
FAR-REACHING: IN ONLY ONE YEAR, REVOLUTION IN INDONESIA; CIVIL
STRIFE IN MALAYSIA; THE LOSS OF AUTHORITY IN RUSSIA; AND AS
UNEMPLOYMENT RISES, UNREST IN SOUTH AMERICA, TYPIFIED BY THE
OUTCOME OF LAST WEEK'S VENEZUELAN ELECTION. IT IS A SIGN OF THE
TIMES THAT ONLY ONE OF THE ASIAN FINANCE MINISTERS I MET WITH IN
BANGKOK LAST SEPTEMBER IS STILL IN OFFICE TODAY.
THE ULTIMATE PRICE OF ALL THIS IS PROFOUND HUMAN SUFFERING. IN
KOREA UNEMPLOYMENT HAS TREBLED IN ONE YEAR;.IN INDONESIA TEN
YEARS OF GROWTH HAVE BEEN WIPED OUT; AND IN THE ASIAN CRISIS
COUNTRIES AS A WHOLE THE NUMBER OF PEOPLE IN POVERTY IS SET TO
DOUBLE BY 2000. WE CAN'T SIMPLY DECLARE WHENEVER THE STOCK
MARKET BOUNCES BACK THAT THE CRISIS IS OVER AND WE CAN RETURN TO
THE STATUS QUO. WE MUST ACT - BOTH BECAUSE IT IS IN OUR
SELF-INTEREST - TO SAFEGUARD OUR OWN PROSPECTS AND PROSPERITY -
AND BECAUSE IT IS RIGHT.
SO NOW THE RESPONSIBILITY FALLS ON THIS GENERATION TO BE PRESENT
AT A NEW CREATION - OF NEW RULES THAT BREAK WITH THE PAST AND
BOTH EFFECTIVELY AND FAIRLY MEET THE DEMANDS OF THE NEW GLOBAL
ECONOMY. WE MUST REJECT THE FALSE CHOICE BETWEEN CLINGING TO
LAISSEZ FAIRE AND RETREATING TO 1930S PROTECTIONISM OR THE
TIGHTLY-CONTROLLED, RESTRICTED CAPITAL MARKETS OF THE 1940S. WE
MUST MEET THE NEW CHALLENGE BUT WE MUST REMEMBER THAT WHILE TIMES
AND CIRCUMSTANCES CHANGE, IDEALS ENDURE.
OUR AIM MUST BE AN INTERNATIONAL FINANCIAL SYSTEM FOR THE TWENTY
FIRST CENTURY THAT RECOGNISES THE NEW REALITIES - OPEN NOT
SHELTERED ECONOMIES, INTERNATIONAL NOT NATIONAL CAPITAL MARKETS,
GLOBAL NOT LOCAL COMPETITION. IT MUST BE ONE THAT CAPTURES THE
FULL BENEFITS OF GLOBAL MARKETS AND CAPITAL FLOWS, MINIMISES THE
RISK OF DISRUPTION, MAXIMISES OPPORTUNITY FOR ALL AND LIFTS UP
THE MOST VULNERABLE, IN SHORT, THE RESTORATION IN THE
INTERNATIONAL ECONOMY OF PUBLIC PURPOSE AND HIGH IDEALS.
OUR PREDECESSORS DID THIS FOR THE POST-WAR WORLD OF DISTINCT
NATIONAL ECONOMIES DRAWING CLOSER TOGETHER. NOW WE MUST DO IT
FOR THE POST-NATIONAL ECONOMY - WHERE ECONOMICALLY NO NATION IS
AN ISLAND.
THE CONSENSUS OF THE 1980S WITH ITS NARROW FOCUS ON INFLATION,
PRIVATISATION AND DEREGULATION MUST EVOLVE INTO A NEW 1990S
CONSENSUS WITH A NEW AND BROADER EMPHASIS ON COMPETITION,
SUPERVISION AND THE RIGHT CONDITIONS FOR GROWTH AND EMPLOYMENT.
BEFORE I DESCRIBE THE SPECIFIC REFORMS WE NEED, LET ME BE CLEAR
THAT THIS NEW PUBLIC PURPOSE WILL REQUIRE PUBLIC ENDEAVOUR.
IN THE INTERNATIONAL ECONOMY THE ERA OF ABSENTEE GOVERNMENT IS
OVER.
WE NEED THAT MIDDLE WAY BETWEEN GOVERNMENT DOING EVERYTHING AND
GOVERNMENT DOING NOTHING.
IT WAS HERE IN YOUR COUNTRY THAT FRANKLIN ROOSEVELT IN THE 30S
FOUND A THIRD WAY FOR A NATIONAL ECONOMY - SECURING THE BENEFITS
OF THE MARKET WHILE TAMING ITS EXCESSES.
AND I BELIEVE THAT THE THIRD WAY INITIATED AND DEVELOPED BY TONY
BLAIR HAS PROFOUND RELEVANCE FOR THE CHALLENGE WE NOW CONFRONT ON
THE GLOBAL STAGE. THE ISSUE IS NOT ONE OF EITHER MARKETS OR
GOVERNMENT, BUT HOW MARKETS AND GOVERNMENT CAN BEST WORK
TOGETHER. AND THE WAY FORWARD FOR THE NEW GLOBAL ECONOMY IS NOT
TO RETREAT FROM GLOBALISATION - INTO EITHER PROTECTIONISM OR OLD
NATIONAL CONTROLS - OR TO RETREAT INTO A FAILED LAISSEZ FAIRE.
IT IS TO ENSURE GLOBAL MARKETS CAN WORK IN THE PUBLIC INTEREST.
AND TRANSPARENCY IN POLICY-MAKING IS ONE WAY TO DEVELOP THE
INFORMED AND EDUCATED MARKETS WE NEED.
IN A WORLD WHERE THE NEW FRONTIER IS NO FRONTIERS, WE MUST
REDISCOVER THE PUBLIC PURPOSE AND HIGH IDEALS OF 1945 WITH FOUR
MAJOR REFORMS THAT ADD UP TO A TRANSFORMATION OF THE
INTERNATIONAL FINANCIAL SYSTEM - A NEW ECONOMIC CONSTITUTION FOR
THE NEW GLOBAL ECONOMY.
NEW RULES OF THE GAME FOR THE GLOBAL ECONOMY
FIRST, INTERNATIONALLY AGREED CODES OF CONDUCT FOR TRANSPARENCY
AND PROPER PROCEDURES THAT ENSURE EDUCATED MARKETS. THESE WOULD
COVER MONETARY, FINANCIAL AND FISCAL POLICY AND CORPORATE
GOVERNANCE AND WOULD BE APPLIED BY ALL COUNTRIES, RICH AND POOR,
AS A CONDITION FOR PARTICIPATION IN THE INTERNATIONAL FINANCIAL
SYSTEM.
RECALL THAT THE FIRST CONSTITUTIONAL SETTLEMENT OF THE WORLD
ECONOMY IN 1945 WAS NOT SIMPLY ABOUT INSTITUTIONS BUT ABOUT RULES
OF THE GAME. AND WE MUST NOW RETURN THE INTERNATIONAL FINANCIAL
SYSTEM TO THIS IDEA OF RULES OF THE GAME. WHILE THE FOUNDERS OF
BRETTON WOODS DEVISED RULES FOR A WORLD OF LIMITED CAPITAL FLOWS,
WE MUST DEVISE NEW RULES FOR A WORLD OF GLOBAL CAPITAL FLOWS.
BUT OUR GUIDING PRINCIPLE REMAINS THE SAME - THE PROMOTION OF
GLOBAL ECONOMIC STABILITY AND INTERNATIONAL COOPERATION TO
PROMOTE GROWTH AND EMPLOYMENT.
THE CODES WILL REQUIRE ACCURATE REPORTING TO THE INTERNATIONAL
COMMUNITY, BY EACH NATIONAL ECONOMY, OF ALL RELEVANT INFORMATION
- FOR EXAMPLE THE SIZE OF A BUDGET DEFICIT, THE STATE OF BANK
RESERVES AND THE LEVEL OF CURRENCY LIABILITIES.
AND THE CODES WILL REQUIRE NOT ONLY THIS FLOW OF INFORMATION BUT
THE ADHERENCE TO SPECIFIC TIMETABLES AND PROPER STANDARDS FOR
TRANSPARENCY AND DISCLOSURE.
THE NEW DISCIPLINES INVOLVE BOTH THE PRIVATE AND THE PUBLIC
SECTOR. WE NEED NEW STANDARDS OF CORPORATE GOVERNANCE -
INCLUDING AN INTERNATIONAL STANDARD OF BEST PRACTICE FOR
FINANCIAL INSTITUTIONS AND THEIR REGULATORS.
WE USED TO THINK THAT ALL THAT INDUSTRIALISING COUNTRIES REQUIRED
WAS RAW MATERIALS, GOOD COMMUNICATIONS, A SUPPLY OF LABOUR AND
THE FUNDS AND ABILITY TO TAP COMMERCIAL INVENTIONS. BUT WE NOW
KNOW THAT ALL NATIONS ALSO REQUIRE A SOUND ROBUST FINANCIAL
SYSTEM: NO NATION CAN AFFORD - AND THE INTERNATIONAL COMMUNITY
CANNOT CONDONE - NATIONAL FINANCIAL SYSTEMS THAT ARE RECKLESS,
DISORDERED AND DISHONEST. LACK OF TRANSPARENCY ANYWHERE CAN
CREATE LACK OF CREDIBILITY EVERYWHERE.
BY REQUIRING EXPOSURE OF DETERIORATING CONDITIONS, THE CODES
WOULD PREVENT THE TEMPTATION FOR COUNTRIES TO DELIBERATELY MASK
PROBLEMS, WHICH IS WHAT HAPPENED IN THAILAND AND KOREA WITH
CONSEQUENCES FELT ACROSS ASIA AND THEN THE WORLD.
AND WE SHOULD NOT BE SO COMPLACENT AS TO ASSUME THAT CODES OF
CONDUCT ARE NEEDED ONLY IN OTHER COUNTRIES AND NOT OUR OWN.
GIVEN THAT THE MOST RECENT THREAT TO GLOBAL STABILITY CAME FROM
LACK OF TRANSPARENCY IN HEDGE FUNDS IN BOTH THE UNITED STATES AND
BRITAIN, WE NEED TOUGHER STANDARDS AND REQUIREMENTS FOR
DISCLOSURE ALL ROUND.
THE CODES I PROPOSE WILL MEAN RADICAL CHANGES IN THE WAY
GOVERNMENTS AND FINANCIAL MARKETS OPERATE.
THESE NEW RULES OF THE GAME ARE NOT INCIDENTAL TO THE FINANCIAL
ARCHITECTURE FOR THE NEW GLOBAL ECONOMY: THEY ARE THE FINANCIAL
ARCHITECTURE FOR THE NEW GLOBAL ECONOMY. THEY REQUIRE COUNTRIES
TO PURSUE SELF DISCIPLINE WITH THE PROSPECT, IF THEY DO NOT, OF
IMPOSED DISCIPLINE. SO THE RIGHT TO PARTICIPATE FULLY IN THE
SYSTEM SHOULD THUS BE CONDITIONAL ON MEETING EXPLICIT
RESPONSIBILITIES. IN THIS WAY THE CODES WILL REDUCE THE RISK OF
FUTURE FAILURES. AND IF FAILURES DO OCCUR, A STRONGER FINANCIAL
SYSTEM WILL BE BETTER ABLE TO DEAL WITH THEM.
THE CODES ARE AS RELEVANT FOR UNDERDEVELOPED AFRICA AS THEY ARE
FOR INDUSTRIALISING ASIA AND LATIN AMERICA AND INDUSTRIALISED
AMERICA AND EUROPE. THEY HELP US TO LAY DOWN A ROUTE MAP FOR
SEQUENCING CAPITAL ACCOUNT LIBERALISATION. BY MAKING SURE THAT
ECONOMIC FACTS CAN'T BE MANIPULATED AND UNDERLYING PROBLEMS CAN'T
BE HIDDEN, CITIZENS WILL KNOW THEIR COUNTRY'S REAL PROBLEMS AND
PROSPECTS, THE CODES WILL DETER CORRUPTION, RESTORE PUBLIC
CONFIDENCE AND BUILD PUBLIC SUPPORT FOR THE SOMETIMES PAINFUL
REFORMS THAT ARE ESSENTIAL TO LONG-TERM ECONOMIC GROWTH AND
PROSPERITY. AND THIS IS CRITICAL FOR INVESTOR CONFIDENCE IN THE
WAKE OF THE ASIAN CRISIS. WITHOUT TRANSPARENCY AND THE PROPER
PROCEDURES THAT THE CODES OF CONDUCT WILL REQUIRE, INVESTORS MAY
NOT REINVEST ON THE LONG TERM SCALE THAT IS NECESSARY FOR JOBS,
GROWTH AND SOCIAL PROGRESS.
NATIONAL GOVERNMENTS SHOULD NOT PICK AND MIX WHICH STANDARDS THEY
CHOOSE TO MEET AND WHICH STANDARDS THEY CHOOSE TO IGNORE. SO
PROPER IMPLEMENTATION OF THE CODES SHOULD BE A CONDITION OF ANY
IMF AND WORLD BANK SUPPORT. IN THE GLOBAL ECONOMY NATIONAL
GOVERNMENTS HAVE RIGHTS BUT THEY ALSO HAVE RESPONSIBILITIES THEY
MUST MEET.
GLOBAL FINANCIAL REGULATION
AND BECAUSE TODAY'S FINANCIAL MARKETS ARE GLOBAL, WE NEED NOT
ONLY PROPER NATIONAL SUPERVISION BUT ALSO A SECOND FUNDAMENTAL
REFORM - GLOBAL FINANCIAL REGULATION. THAT IS WHY BRITAIN HAS
PROPOSED BRINGING TOGETHER THE IMF, THE WORLD BANK AND KEY
REGULATORY AUTHORITIES: A NEW PERMANENT STANDING COMMITTEE FOR
GLOBAL FINANCIAL REGULATION CHARGED WITH DELIVERING THE GLOBAL
OBJECTIVE OF A STABLE FINANCIAL SYSTEM.
THE G7 HAVE NOW AGREED ON THE URGENT NEED FOR THIS KIND OF
COORDINATION, AND WE ARE GRATEFUL TO THE PRESIDENT OF THE
BUNDESBANK, HANS TIETMEYER, WHO HAS UNDERTAKEN THE CRITICAL TASK
OF PREPARING DETAILED RECOMMENDATIONS.
I SEE THE STANDING COMMITTEE NOT AS AN ADDITIONAL INSTITUTION BUT
AS PROCESS OF MONITORING DEVELOPMENTS IN GLOBAL FINANCE, ENSURING
THAT NECESSARY WORLDWIDE STANDARDS ARE PUT IN PLACE, AND
PROVIDING TIMELY SURVEILLANCE OF FINANCIAL CONDITIONS AND
INTERNATIONAL CAPITAL FLOWS.
THE STANDING COMMITTEE'S WORK WOULD MAKE CO-OPERATION BETWEEN
INTERNATIONAL INSTITUTIONS AND NATIONAL REGULATORS A FACT OF
INTERNATIONAL ECONOMIC LIFE. IN SHORT, THE STANDING COMMITTEE
WOULD BE THE WORLD'S EARLY WARNING SYSTEM FOR REGIONAL AND GLOBAL
ECONOMIC RISK.
GLOBAL CRISIS PREVENTION AND RESOLUTION
OUR AIM MUST BE CRISIS PREVENTION WHERE POSSIBLE CRISIS
RESOLUTION WHERE NECESSARY.
SO IN PLACE OF THE OLD APPROACH WHEREBY CRISIS-TRIGGERED
INTERVENTION, WE NEED, THIRDLY, A MODERN MECHANISM ,ROOTED IN
TRANSPARENCY AND RELIABLE SURVEILLANCE, AND BUILT ON PUBLIC AND
PRIVATE SECTORS BOTH ACCEPTING THEIR RESPONSIBILITIES, WHICH CAN
IDENTIFY POTENTIAL PROBLEMS AT A STAGE WHERE PREVENTATIVE ACTION
CAN BE EFFECTIVE.
THE MECHANISM THEY AGREED IN 1945 FOR CRISIS PREVENTION DEALT
WITH IMBALANCES IN CURRENT ACCOUNT FLOWS IN A WORLD OF RESTRICTED
CAPITAL FLOWS AND FIXED EXCHANGE RATES: TO TACKLE PUBLIC SECTOR
DEFICITS AND BALANCE OF PAYMENTS CRISES, IT OFFERED TEMPORARY
FINANCIAL SUPPORT OR PERMANENT EXCHANGE RATE ADJUSTMENT.
THE NEW MECHANISM FOR CRISIS PREVENTION MUST DEAL WITH IMBALANCES
AS A RESULT OF GLOBAL CAPITAL FLOWS.
WE NEED A PROCESS OF ACTIVE AND TRANSPARENT SURVEILLANCE THAT IS
A MATTER OF COURSE FOR ALL COUNTRIES, OPERATING IN NORMAL TIMES,
ALL THE TIME : NOT ONE TRIGGERED ONLY BY THE WARNING SIGNS OR
ONSET OF CRISIS IN A PARTICULAR REGION OR COUNTRY.
AND ALL MAIN PARTICIPANTS, PUBLIC AND PRIVATE, MUST ACCEPT THEIR
RESPONSIBILITIES.
SO EMERGING MARKET ECONOMIES IN PARTICULAR MUST NOT ONLY BE
TRANSPARENT IN THEIR ACTIVITIES: THEY MUST NOW ALSO FORGE REGULAR
CONTACTS AND LASTING RELATIONSHIPS WITH THEIR PRIVATE INVESTORS.
AN OPEN AND HONEST DIALOGUE, IN WHICH INVESTORS CAN ASK HARD
QUESTIONS AND THEN ADVISE, WILL MAKE IT MORE DIFFICULT TO COVER
UP BAD NEWS, AND MAKE IT EASIER TO ASSESS WHAT POLICIES WILL
INCREASE OR REDUCE MARKET CONFIDENCE, THUS MAKING IT MORE LIKELY
THAT WE CAN PREVENT TODAY'S PROBLEMS FROM DEEPENING INTO
TOMORROW'S CRISIS.
THE SHORT-HAND PHRASE FOR THESE CREDITOR-TO-COUNTRY ARRANGEMENTS
IS COUNTRY CLUBS, BUT THESE ARE NOT EXCLUSIVE CLUBS, OLD BOY
NETWORKS, AN INFORMAL MEANS OF DEFENDING PRIVILEGE. THESE ARE
MODERN INVESTOR NETWORKS THAT CAN BRING REAL BENEFITS IN RETURN
FOR REAL RESPONSIBILITIES: NETWORKS THAT EVERY COUNTRY SHOULD
FORM AND EVERY CREDITOR SHOULD JOIN.
TO MAKE THESE WORK THERE SHOULD, BE A NEW PRESUMPTION ACROSS THE
BOARD, IN FAVOUR OF THE RELEASE OF INFORMATION WHEREVER POSSIBLE.
THE G7 HAVE PROPOSED GREATER OPENNESS FROM THE WORLD BANK, THE
IMF AND OTHER INTERNATIONAL FINANCIAL INSTITUTIONS. THEIR
MONITORING TELLS THEM MUCH OF WHAT IS HAPPENING IN EVERY NATIONAL
ECONOMY. CLEARLY IN EXCEPTIONAL CASES SOME POLICY DISCUSSIONS
WILL HAVE TO BE KEPT CONFIDENTIAL BUT I STRONGLY SUPPORT THE
PUBLICATION OF THE IMF'S COUNTRY SURVEILLANCE REPORTS UNDER
ARTICLE IV. THE CASE FOR AN EXCEPTION MUST BE MADE AND
JUSTIFIED, WHILE OPENNESS SHOULD BE THE NORM.
PUT SIMPLY WE SHOULD ESTABLISH AN INTERNATIONAL RIGHT TO KNOW
THAT IS NOT OCCASIONAL OR VOLUNTARY BUT ONGOING AND MANDATORY.
THIS WILL WORK BEST IF THE IMF AND OTHER INTERNATIONAL
INSTITUTIONS ARE MORE OPEN ABOUT THEMSELVES. THEY SHOULD DO MORE
TO EXPLAIN THEIR PRACTICES AND PROCEDURES TO THE PUBLIC. AND
THEY TOO SHOULD JOIN IN A NEW PARTNERSHIP WITH THE PRIVATE SECTOR
- ONGOING DISCUSSIONS ABOUT BROADER AND MORE SYSTEMIC ISSUES
FACING THE WORLD ECONOMY.
WITH A RIGHT TO A GREATER FLOW OF INFORMATION COMES GREATER
PRIVATE SECTOR RESPONSIBILITY. WE NEED A SYSTEM OF
DEBTOR-CREDITOR AGREEMENTS - CRISIS RESOLUTION PROCEDURES SIGNED
UP TO IN NORMAL TIMES WITH PRIVATE SECTOR RESPONSIBILITY CLAUSES,
SUCH AS AGREEMENT ON COLLECTIVE REPRESENTATION AND MAJORITY
VOTING WHEN CREDITOR DECISIONS ARE BEING MADE. WHEN TROUBLE HITS
AN ECONOMY, THE PRIVATE SECTOR MUST BE PREPARED TO DO MORE THAN
SIMPLY PULL MONEY OUT AND ACCELERATE THE PANIC. ON AN AD-HOC
BASIS INVESTORS DID THE OPPOSITE IN KOREA AND BRAZIL AND THEIR
DECISIONS WERE ESSENTIAL IN HALTING THE FLIGHT OF CAPITAL.
WITH THESE THREE CHANGES - TRANSPARENCY, ENHANCED SURVEILLANCE
AND INVESTOR NETWORKS WE CAN ESTABLISH A MARKEDLY LOWER THRESHOLD
FOR EFFECTIVE RESPONSE THAN THE OLD AD-HOC CRISIS-TRIGGERED
SYSTEM.
DETAILED DISCUSSION SHOULD NOW TAKE PLACE ON THE RIGHT
MECHANISMS FOR PRIVATE SECTOR INVOLVEMENT IN CRISIS RESOLUTION.
OF COURSE MORE INFORMATION AND MORE PARTICIPATION MUST NOT BECOME
A LICENCE FOR RECKLESS INVESTMENT OR INSIDER DEALING INSTEAD, BY
UNIVERSALISING RELIABLE INFORMATION AND CREATING ORDERLY
CONSULTATION PROCEDURES OPEN TO ALL, WE CAN MINIMISE THE RISKS
ARISING FROM INSIDER INFORMATION ON THE ONE HAND AND MORAL HAZARD
ON THE OTHER.
IN THE NEW FRAMEWORK IT SHOULD BE THE DUTY OF THE PUBLIC SECTOR
TO INFORM, THE DUTY OF THE INTERNATIONAL FINANCIAL INSTITUTIONS
TO MONITOR AND THE DUTY OF THE PRIVATE SECTOR TO ENGAGE.
AND BECAUSE OF THE NEW DISCIPLINES WE PROPOSE THE PUBLIC SECTOR
CAN NOW JUSTIFY A SYSTEM OF MUTUAL FINANCIAL SUPPORT, ASSISTANCE
TO COUNTRIES PURSUING SOUND POLICIES AND TO CONTAIN THE SPREAD OF
FINANCIAL CONTAGION.
IN THE LAST FEW WEEKS THE INTERNATIONAL COMMUNITY HAS PROPOSED A
TEMPORARY PREVENTATIVE FACILITY, WITH SHORT-TERM LINES OF CREDIT
FOR SOUND ECONOMIES THAT ARE THE VICTIMS OF CONTAGION. ONCE
TRANSPARENCY, SURVEILLANCE AND AGREED PRIVATE SECTOR
RESPONSIBILITY CLAUSES ARE EMBEDDED IN THE NEW SYSTEM OF CRISIS
PREVENTION, THIS FACILITY SHOULD BE MADE PERMANENT, AND BE
PROPERLY FUNDED.
OF COURSE COUNTRIES THAT DO NOT FOLLOW THESE PROCEDURES OR ACT ON
ADVICE CANNOT EXPECT THAT THEY AND THEIR PRIVATE SECTORS WILL
SECURE CRISIS SUPPORT, THE MORAL HAZARD WOULD BE TO GUARANTEE
SUCH SUPPORT INDEPENDENT OF WHETHER THEY DO THE RIGHT THINGS.
WITH THE REFORMS WE PROPOSE, WE HAVE A REAL OPPORTUNITY TO MOVE
THE EMPHASIS OF INTERNATIONAL FINANCIAL GOVERNANCE FROM ONE OF
CRISIS RESOLUTION TO ONE OF CRISIS PREVENTION AND CRISIS
CONTAINMENT.
A GLOBAL SOCIAL CODE
THERE IS A FOURTH REFORM: WE PROPOSE A CODE OF GLOBAL BEST
PRACTICE IN SOCIAL POLICY WHICH WILL APPLY FOR EVERY COUNTRY,
WILL SET MINIMUM STANDARDS AND WILL ENSURE THAT WHEN THE IMF AND
WORLD BANK HELP A COUNTRY IN TROUBLE THE AGREED PROGRAMME OF
REFORM WILL PRESERVE INVESTMENT IN THE SOCIAL, EDUCATION AND
EMPLOYMENT PROGRAMMES WHICH ARE ESSENTIAL FOR GROWTH. THIS
SHOULD BE AN INDISPENSABLE GOAL FOR GOVERNMENT IN THE NEW GLOBAL
ECONOMY: NOT GUARANTEEING THAT NOTHING WILL CHANGE, BUT EQUIPPING
PEOPLE TO TURN CHANGE INTO NEW OPPORTUNITY.
INTERNATIONAL ECONOMICS IS NOT JUST ABOUT NUMBERS IN A LEDGER,
BUT ABOUT THE LIVES OF PEOPLE. FOR TOO LONG IT HAS BEEN ASSUMED
THAT THE COST OF CRISES WILL INEVITABLY BE PAID BY PUTTING MORE
BURDENS ON THE POOR - BY CUTTING HEALTH, EDUCATION AND BASIC
SOCIAL SERVICES.
THIS IS WRONG IN THE SHORT TERM AND IT WILL NOT WORK IN THE LONG
TERM BECAUSE IT ERODES BOTH THE ECONOMIC AND THE POLITICAL
FOUNDATIONS OF A SOCIETY. FOR REASONS OF SELF-INTEREST AS WELL
AS CONSCIENCE, WE CANNOT ACCEPT A WORLDWIDE REGIME OF THE
WELL-OFF IN THE CASTLE, AND THE VAST MAJORITY AT THE GATE.
CREATING NATIONAL SUPPORT FOR NEEDED REFORM DEPENDS ON SHARING
GAINS, AND HELPING THOSE WHO ARE HURT BY ECONOMIC CRISES. AS
JIM WOLFENSOHN, PRESIDENT OF THE WORLD BANK, HAS SO VIVIDLY PUT
IT "SOCIAL AND ECONOMIC ISSUES ARE INSEPARABLE, THEY ARE LIKE
BREATHING IN AND OUT".
IN THEIR OCTOBER STATEMENT THE G7 RECOGNISED THE URGENT NEED FOR
A CODE FOR GOOD SOCIAL PRACTICE AND ASKED THE WORLD BANK TO WORK
COUNTRIES AND WITH THE UNITED NATIONS AND OTHERS TO DEVELOP THE
PRINCIPLES AND PROVISIONS OF SUCH A CODE.
THIS IS AN HISTORIC OPPORTUNITY TO REALISE THE ENDURING PUBLIC
PURPOSE, THE HIGH IDEALS OF 1945. AND WE SHOULD NOT SEE THIS CODE
IN NARROW TERMS AS MERELY CREATING SOCIAL SAFETY NETS. WE SHOULD
SEE IT AS CREATING OPPORTUNITIES FOR ALL BY INVESTING MORE NOT
LESS IN EDUCATION, EMPLOYMENT AND VITAL PUBLIC SERVICES.
THE WAY FORWARD IS NOT LEAVING PEOPLE DEFENCELESS - AND
TOLERATING A CULTURE OF POVERTY; NOT REPEATING PAST MISTAKES
WHICH HAVE CREATED A CULTURE OF DEPENDENCY; IT IS EQUIPPING
PEOPLE TO COPE WITH CHANGE, THROUGH A NEW CULTURE OF OPPORTUNITY.
THE FIRST BUILDING BLOCK IS, OF COURSE, MINIMUM SOCIAL PROVISION
SUCH AS SAFE WATER SUPPLIES; UNIVERSALLY AVAILABLE VACCINATIONS
AND BASIC HEALTH CARE; AND IN EVERY SOCIETY- UNIVERSAL ACCESS TO
SCHOOLING FOR GIRLS AS WELL AS BOYS.
THE SECOND BUILDING BLOCK IS THE CHANCE TO WORK AND THE ASSURANCE
THAT WORK WILL PAY, A COMMITMENT THAT WE MUST, STAGE BY STAGE,
YEAR BY YEAR, FULFILL IN DEVELOPING COUNTRIES AS WELL AS
DEVELOPED ONES. THE CODE WOULD SET OUT BEST PRACTICE THAT CAN
HELP PEOPLE FIND AND REMAIN IN PAID EMPLOYMENT: PROGRAMMES TO
MOVE THEM FROM POVERTY OR WELFARE TO WORK; LIFE-TIME LEARNING SO
THAT PEOPLE CAN MOVE THEMSELVES UP A LADDER OF OPPORTUNITY; AND
PENSION SYSTEMS THAT MEAN A LIFETIME OF WORK WILL BE FOLLOWED BY
A DECENT RETIREMENT.
WE SHOULD FORGE NEW PARTNERSHIPS BETWEEN THE PUBLIC AND PRIVATE
SECTORS - AND THE NGOS. BUT OF COURSE THE EXISTENCE OF A
PROGRAMME TODAY SHOULD NEVER BE THE EXCUSE FOR ITS PERPETUATION
TOMORROW. AND THE REFORMS THE IMF AND OTHER INTERNATIONAL
AUTHORITIES REQUIRE MUST BE CONSISTENT WITH THE SOCIAL PRINCIPLES
AND MAKE A VIRTUE OF PRESERVING NECESSARY SOCIAL INVESTMENT.
FOR THE POOREST HIGHLY INDEBTED COUNTRIES OF THE WORLD WE MUST
CREATE A VIRTUOUS CIRCLE OF DEBT RELIEF, POVERTY REDUCTION AND
ECONOMIC DEVELOPMENT. WE SHOULD NEVER LEAVE COUNTRIES WITH AN
IMPOSSIBLE CHOICE BETWEEN PAYING OR DEFAULTING ON UNSUSTAINABLE
LEVELS OF DEBT. IMMOVABLE MOUNTAINS OF DEBT RUN UP IN THE 1980S
HAVE BECOME IMPASSABLE BARRIERS TO PROGRESS FOR POOR COUNTRIES IN
THE 1990S. IT SHOULD NOW BE OUR AMBITION THAT EVERY HIGHLY
INDEBTED POOR COUNTRY WILL BE IN THE PROCESS OF DEBT RELIEF BY
THE MILLENNIUM.
AND FOR COUNTRIES LIKE HURRICANE-HIT NICARAGUA AND HONDURAS,
WEIGHED DOWN BY THE BURDEN OF DEBT AND DEVASTATION, IT IS RIGHT
TO CREATE A NEW WORLD BANK TRUST FUND - NOW WITH OVER 130 MILLION
DOLLARS PLEDGED - TO ALLEVIATE THEIR DEBT PAYMENTS. IT IS ALSO
RIGHT TO DEVISE THE NEW POST-DISASTER FACILITY THAT WILL GIVE
FASTER RELIEF FROM DEBT, TO ALL COUNTRIES IN THIS POSITION. I
BELIEVE 1999 MUST BRING A NEW URGENCY TO RELIEVING THIRD WORLD
DEBT.
CONCLUSION
SO WHAT WE MUST TOGETHER CREATE IS A NEW ECONOMIC CONSTITUTION
FOR A GLOBAL ECONOMY, BORN OUT OF NEW REALITIES, ,GROUNDED IN NEW
RIGHTS AND RESPONSIBILITIES, ENSHRINED IN CODES OF CONDUCT THAT
ARE AGREED NATIONALLY AND APPLIED INTERNATIONALLY, REDISCOVERING
PUBLIC PURPOSE IN THE INTERNATIONAL ECONOMY AND BRINGING TO LIFE
AGAIN THE HIGH IDEALS OF 1945.
WE NEED TO BUILD QUICKLY, NOT DEBATE INDEFINITELY.
AGREEMENT ON THE CODES OF CONDUCT SHOULD BE REACHED AT THE
IMF MEETINGS IN APRIL.
A NEW SYSTEM OF GLOBAL FINANCIAL REGULATION SHOULD BE IN
PLACE BY THE SUMMER.
THE NEW MECHANISM FOR CRISIS PREVENTION AND CRISIS
RESOLUTION SHOULD BE AGREED IN PRINCIPLE THIS SUMMER AND THE
DETAIL SHOULD BE THE SUBJECT OF INTENSIVE DISCUSSIONS
BETWEEN THE PRIVATE SECTOR AND NATIONAL AND INTERNATIONAL
INSTITUTIONS TO REACH AGREEMENT BY THE END OF 1999.
- AND THE CODE FOR BEST PRACTICE IN SOCIAL POLICY SOCIAL CODE
SHOULD BE AGREED AT THE NEXT WORLD BANK MEETINGS IN THE
SPRING.
THIS IS A PROGRAMME OF REFORM FOR OUR GENERATION. IT IS MORE
THAN SIMPLY A COLLECTION OF PROPOSALS. IT RESTS ON A MODERN
VISION OF GOVERNMENT, DOING THE RIGHT THING, BUT NOT EVERYTHING;
OF MARKETS WORKING, BUT NOT ALWAYS PERFECTLY; OF PRINCIPLES OF
ECONOMIC AND SOCIAL JUSTICE THAT REFLECT OUR BEST VALUES AND
ULTIMATELY DETERMINE WORLD STABILITY AND GROWTH.
THIS PROJECT IS INDIVISIBLE; EACH ELEMENT IS ESSENTIAL TO THE
SUCCESS OF THE WHOLE. AND ALL OF IT IS BUILT ON THE
UNDERSTANDING THAT INCREASINGLY WE ARE PART OF BOTH ONE GLOBAL
ECONOMY AND ONE MORAL UNIVERSE. NOW MORE THAN EVER, IN THE
PHRASE OF THE SCOTTISH AUTHOR, WILLIAM MCILVANNEY, WE MUST
UNDERSTAND THAT ''THE ECONOMY SHOULD BE THERE TO SERVE THE
PEOPLE, NOT THE PEOPLE TO SERVE THE ECONOMY."
OURS IS AN AGE OF GREAT CHALLENGES BUT ALSO GREAT POSSIBILITIES.
WHAT FRANKLIN ROOSEVELT SAID TO THE CITIZENS OF HIS NATION IN
1933 IS NOW POWERFULLY RELEVANT TO THE CITIZENS AND GOVERNMENTS
OF ALL NATIONS.
IF I READ THE TEMPER OF OUR PEOPLE CORRECTLY WE NOW REALISE - AS
WE HAVE NEVE REALISED BEFORE - OUR INTERDEPENDENCE ON EACH OTHER,
THAT WE MUST BE WILLING TO SACRIFICE FOR THE GOOD OF A COMMON
DISCIPLINE - BECAUSE WITHOUT SUCH DISCIPLINE NO PROGRESS IS MADE.
TODAY I BELIEVE THAT WE IN OUR GENERATION HAVE THE VISION, THE
VALUES AND THE WILL - AS THE GENERATION WHICH PRECEDED US - TO
MAKE THE WORLD ECONOMY ANEW; THE PUBLIC PURPOSE AND HIGH IDEALS
TO MAKE A BETTER WORLD ECONOMY IN EVERY SENSE OF THAT WORD.