Globalisation, Economic Policies and Crisis Feride Aksu Tan覺k 襤zmir, 11 July 2014
This lecture will try to give… A general framework of Crisis of Capitalism Law of value Relations of production and distribution Determinants of health The ways of how crisis effect health Globalization and historical background of neoliberal policies IMF and “structural adjustment packages” WB and “Poverty Reduction Strategies” WTO and “GATS, TRIPS agreements”
Homo sapiens
Homo faber
Homo consumens
Is it a Financial Crisis or Production Crisis? • • • • • •
Let’s remember the “law of value” c+v+s=W c: capital v: variable capital - labor s: surplus W: value of the product
s v demand
Capitalist Production Mechanization
Less need for labor
Unemployment Inadequate consumer demand
technological level
wages
surplus value
Inadequate consumer demand
Rate of profit is higher in financial sector rather than the production sector
Kondratiev Wave Waves of capitalism • Expansion • Stagnation and • Recession
What are the Determinants of Life? Relations of production
Property relations Relations of distribution
Relations of Production • constitutes the economic structure of society • the real foundation • on which arises a legal and political superstructure • to which correspond definite forms of social consciousness
Relations of Distribution of Income and Products • determined by property relations • reproducing the relations of production, • the mode of production of capital reproduces the relations of distribution corresponding to it
Superstructure • • • •
Education Culture Law Health
What is Health? Physical, mental, social wellbeing The ability of • collective production and equal distribution of the needs • protection of biological and mental integrity of human beings • socialization in an organized society
The Determinants of Health • Main determinants – Relation of production – Relation of distribution
• Intermediate determinants – Economical – Political – Social – Environmental factors
The Crisis of Capitalism Effects Health in 2 Ways 1. need for labor a. Unemployment b. of wages c. poverty
2. of public investment and spendings – Transfer of public funds to capitalists – of the coverage of social insurance – of the coverage of health package – of the prices of medicines
Intermediate determinants and the health results in the structural crisis of capitalism Unemployment of wages poverty
Food consumption Hunger Deprivation of the life conditions
of the coverage of social insurance of the coverage of health package Out of pocket payments of the prices of medicines
Infant Mortality Rate Low Birth Weight Malnutrition Depression Suicide Alcohol and cigarette consumption Communicable diseases Epidemics Complications of chronicle diseases
‘Globalisation’
1. Global village – communications, travel and transport – health concerns: communicable disease, tobacco, etc
2. Global economic integration – trading relationships – money flows – ownership and control
3. Global regime of economic governance – economic, political and military power
Globalisation as a regime of economic and political governance • 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
Bretton Woods Conference (1944)
• World Bank (1944) • IMF (1947)
• General Agreement on Tarrifs and Trade
World Bank (1944) • Liberalization of trade • Deregulation of banking system • Privatization of public enterprises • Tax reform • Privatization of agriculture
World Bank • “The World Bank promotes – long-term economic development and – poverty reduction”
• “It provides technical and financial support to help countries reform particular sectors or implement specific projects.” For example, building schools and health centres, providing water and electricity, fighting disease, and protecting the environment.
The different divisions of the World bank One group - Five agencies • IBRD (The International Bank For Reconstruction and Development): provides loans and development assistance to middle-income countries
• IDA (International Development Agency):
Interest free loans and grants to poorest countries
• IFC (International Finance Corporation):
Financing private sector investments and technical assistance to governments and business
• MIGA (Multilateral Investment Guarantee Agency): Provides guarantees to foreign investors – also technical assistance to help developing countries promote investment
• ICSID (International Centre for the Settlement of Investment Disputes)
International Monetary Foundation (1947)
“Improving the international trade” – Opening the borders to powerful monopols – Giving up the principles of Social State
• Starting in early 1980s, IMF, WB and regional development banks required the application of Structural Adjustment Programs (SAPs) as loan conditions. – SAP: program for reforming an entire sector or economic structure of a country.
• During the 1980s, more than 70 developing countries apply SAPs designed by the IFIs on the pretext of reducing or avoiding indebtedness. • During the 1990s, most of former centrally-planned economies apply SAPs recommended by IFIs, claimed to be necessary steps for building a market economy.
Structural Adjustment Programs (SAPs) Conditions for getting new loans or for obtaining lower interest rates on existing loans • Cutting social expenditures • Focusing economic output on direct export and resource extraction • Devaluation of currencies, • Trade liberalization • Increasing the stability of investment with the opening of domestic stock markets • Balancing budgets • Removing price controls and state subsidies • Privatization • Enhancing the rights of foreign investors vis-a-vis national laws, • Improving governance and fighting corruption
Declared Philosophy • Reduction of role of the state will lead to countries attracting more private investment into the economy. • The liberalisation of trade and investment will reduce prices, increase productivity and stimulate economic growth.
• Reduction of labour costs will increase job creation, and reduce unemployment and poverty!
The Reality… • The IFIs have not succeeded in preventing an increase of poverty and inequality. • In general, there has been slower growth and more inequality after the introduction of SAPs in the 1980s. • During the 1990s, the number of people living in extreme poverty has increased in all regions except Asia. • In most developing/transition countries, real wages have fallen.
Impact of structural adjustment on health Widening of inequalities Reduced purchasing power for the poor (increased prices, withdrawal of subsidies, freezing of wages) Downsizing of public sector User pays in health care 28
Joint initiatives • The IMF and World Bank have jointly launched two major initiatives to help poor countries. In 1996, the IMF and the World Bank introduced the Heavily Indebted poor Countries (HIPC) initiative – “reduce the external debt burdens of the most heavily indebted poor countries”. • In 1999, the IMF and the World Bank initiated the Poverty Reduction Strategy Paper (PRSP) approach – “a country-led strategy for linking national policies, donor support, and the development outcomes needed to reduce poverty in low-income countries”.
Poverty Reduction Strategy Papers • Documents required by IMF and WB before a country can be considered for debt relief within the Heavily Indebted Poor Countries (HIPC) initiative • PRSPs are also required before low-income countries can receive aid from most major donors and lenders • SAPs reinvented • Country governments required to devise their own SAPs • IMF funding is still contingent on neo-liberal ‘reforms’ (the Washington Consensus) 30
Washington Concencus • Fiscal policy discipline • Redirection of public spending from subsidies toward primary education, primary health care and infrastructure investment • Tax reform • Interest rates • Competitive exchange rates • Trade liberalization • Foreign direct investment • Privatization of state enterprises • Deregulation of financial institutions • Legal security for property rights
‘Investing in Health’ (WB, 1993) • Response to criticism of impact of SAPs on health • Reconciling structural adjustment with health improvement? – health improvement despite poverty – proceeding with SAPs regardless
Health Packages based on Cost Effectiveness 1. Limited coverage: a health package can/should not cover everything 2. Content should be prioritized: what should be covered? Evaluation of Cost-Effectiveness → DALY / Burden of Disease
World Bank, 1993
3928,92
4000
Public health Child Health
3500
Mother and Child Health
3000
STD
2500
Cancer
2003,93
Diabetes and Hypertension
2000 1500
999 $
1000 500
100 $
Oral health
1121,25
Mental health Cost less than 500 $
601,05 254,07 221,49 87,36
208,21
0 temel hizmet paketleri Packages
Detailed package COLD and LRSI Osteoarthritis Most common 20 diseases
According to World Bank • 100 $ is cost effective • 250-999 $ is middle level cost effective Investing in Health 1993, National Burden of Disease & Cost efficiency Survey, 2004
$
7000 6141 6000 5000 4000
4054
3000 2000 1000
1529 891
581 576 474 419
340
trachea, bronchus, lung ovaria colon, rectum breast melanoma prostate stomach bladder servix
0 National Burden of Disease & Cost efficiency Survey, 2004
Depression Who should decide Where should the patient be treated? $
2500
2182,28 2000 primary care 1500 hospital care 1000
500 135,13 0 depression National Burden of Disease & Cost efficiency Survey, 2004
The needs of patients Clinical independence Cost efficiency Minimum health package
World Trade Organization
• • • • •
1995, Geneva International, Multilateral organization Organizing the global trade 30 agreements 150 member states
Agreements particularly relevant to health •GATS •TRIPs
GATS General Agreement on Trade in Services
The treaty was created to extend the multilateral trading system to service sector • Health care • Education Any services won’t be excluded
“public services available for economic benefit !”
The Principles of GATS …”you don’t have to include all services to GATS. You can have exceptions. You can exclude some services which are strategic for you.” …”Although you have included service areas to GATS, you can say that foreigner doctors, teachers etc. Can not work in my country.” But… • The country which signed the agreement can not return from the decision (stand still) • Every five years there must be a restructuring (built-in) • The exceptions based on the sector can take maximum ten years!
GATS and Commercialization… • Eventhough the services are given by the public sector – Should be sold with market prices – Employment should be similar to private sector • • • •
Flexible According to quality norms Performance based Insecure
Commercialization of public sector
TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights)
Products without trademark and patent will not have a share form world trade
What is Patent? TRIPS • Provides to the producer right of monopoly of producing and selling the vaccines and drugs for 20 years • In addition prohibits the others from using, selling, importing the product • This means millions of preventable diseases and deaths for underdeveloped countries • 2005 – all the vaccines are covered by patent protection
Patent Coverage
Number of patents granted per year for each country
Š Copyright 2006 SASI Group (University of Sheffield) and Mark Newman (University of Michigan), www.worldmapper.org
In the above image, the proportion of the world's patents granted per year is represented for each nation by its size on the map. The number of patents granted by a nation per year may have no relationship to the creativity of people living in that nation. Note that regions of the world where many innovative people live are under-represented in patenting.
Struggle for Access to Vaccines and Drugs
• HIV Pandemics in Africa and Latin America • The struggle for the production of antiretrovirals – South Arfica – Brazil
• Flexibility of TRIPS
DOHA Declaration (November 2001) Agreement can and should be interpreted and implemented in a manner supportive of WTO members' right to protect public health and, in particular, to promote access to medicines for all. Flexibilities of TRIPS is possible in following conditions • If there is an epidemic of HIV/AIDS, tuberculosis, malaria • If the national laws allow Flexibilities of TRIPS is possible till 2016
Brazil
• Compulsory licences issued for generic equivalents of antiretrovirals • Free care for all HIV+ people, AIDS-related deaths halved in four years, spread of the HIV reduced • Savings of half a billion dollars by producing the generic equivalent of the patented drugs, saved $422 million in hospitalisation costs. • Brazil taken to a WTO dispute panel by US over its patent legislation but not the issuing of compulsory licences 49
South Africa
• 1996 South Africa passes a new law for the procurement of medicines; sourcing brand name drugs internationally through cheapest supplier • 1998 39 drug makers sued South Africa arguing that the law contravened international trade agreements • 2001 Medicins Sans Frontiers petition against the lawsuit collects 250,000 signatures • 2001 companies withdraw their lawsuit and agreed to pay the government's legal costs 50
The Indian Pharmaceutical Industry • Huge manufacturing capacity, large generic sector • Exports to 150 developing countries • Half of drugs used to treat AIDS in developing countries come from India – Cipla offered to sell (to MSF) a three-drug cocktail for AIDS treatment at $US350 per year (compared with $10,000 to $12,000 a year in western markets)
• ‘The pharmacy of the developing world’ is covered by TRIPS
Transatlantic Trade & Investment Partnership (TTIP) Between EU & USA ; to remove regulatory ‘barriers’ of our most prized social standards and environmental regulations such as
labour rights food safety rules regulations on the use of toxic chemicals digital privacy laws new banking safeguards introduced to prevent a repeat of the 2008 financial crisis
To create new markets by opening up public services and government procurement contracts to competition from transnational corporations, to introduce a further wave of privatization in health and education
Neoliberal Theory
ďƒ˜Benefit of society is related to market mobility ďƒ˜All human activities should be in the domain of the market Harvey, 2007
Neoliberal Reforms!
• All the regulations protecting the working class against the economic power of capital have been purged Boratav, 2011
Another World is Possible! • How to struggle against?