Ismail Serageldin


Solidarity and the New World Order

 13/11/1998 | 40th Anniversary of Misereo, Aachen, Germany




I am honored to be with you today, to celebrate the 40th anniversary of Misereor, to celebrate the spirit of generosity and of commitment that characterizes the best of the human spirit. It is the spirit that should guide us as we deal with the challenges of the new millennium.


Much has been done much to make the world a better place for all. In the last forty years the developing countries have doubled school enrollments, halved infant mortality and adult illiteracy, and extended life expectancy at birth by an amazing twenty years. But despite that, much, so much, remains to be done.


Consider the paradox of our times. We live in a world of plenty, of dazzling scientific advances and technological breakthroughs. Yet, our times are marred by conflict, violence, economic uncertainty and tragic poverty. A sense of insecurity pervades even the most affluent societies. Nations are looking inward, and the rich turn their backs on the poor.


Globalization on the eve of the millennium:


Globalization grows, fueled by the integration of the world economies, a revolution in telecommunications and the non-stop activities of capital markets that transact over 1.3 trillion dollars a day -- enough to buy and sell the whole GDP of the USA in a week!


Yet, along with wealth, it brings an alarming rise in inequality between and within countries.


The top 20% of the world population consumes 83% of the world’s income, while the remaining 80% live on 17%, and the bottom 20% live on 1.4%. These gaps have been growing. A generation ago, that top 20% was 30 times as rich as the bottom 20%. Today they are 60 times as rich. Yet they will not give 0.3% of their income for the poorer 80% of humanity!


But globalization is also found in the increasing assertion of the universality of human rights, including women’s rights and children’s rights. It is found in the environmental movement, which reminds all humans that they are stewards of this earth. It is found in the emerging international civil society.


We must harness the emerging universal values of our common humanity, and create a coalition of the caring.


We must recognize that the private sector -- important as it is -- will not take care of public goods, and that the public must remain engaged to deal with market failures and public goods.


We must change the calculus of our economics and finance, to internalize the full social and environmental cost of our decisions.


We must rectify our national accounts that count a forest standing as zero and give it a positive value only if it is chopped down.


We must be concerned with nurturing natural capital and building human and social capital as much as we are about growth.


We must not forget the weak and the vulnerable in this increasingly competitive world..


We must change the paradigm of development , so that it is people centered and gender conscious, so that it takes the long view and is governed by the values of equity, justice and inclusion. A paradigm that returns human dignity to the center of our concerns, and that promotes environmentally friendly and socially responsible investments.


All these actions are possible. But these actions will not come about by themselves. We must fight for them against the prevailing apathy and lack of caring.


The New Abolitionists:


To this task, we must bring not just knowledge and discipline, but also a sense of moral outrage. Yes, moral outrage.


It is inconceivable that there should be some 800 million persons going hungry in a world that can provide for that most basic of all human needs. In the last century, some people looked at the condition of slavery and said that it was monstrous and unconscionable. That it must be abolished. They were known as the abolitionists. They did not argue from economic self interest, but from moral outrage.


Today the condition of hunger in a world of plenty is equally monstrous and unconscionable and must be abolished. We must become the "new abolitionists". We must, with the same zeal and moral outrage, attack the complacency that would turn a blind eye to this silent holocaust which claims some 40,000 hunger-related deaths every day.


Lessons from the past:


"...exploitation of the world market [has] given a cosmopolitan character to production and consumption in every country. To the great chagrin of reactionaries, it has drawn from under the feet of industry the national ground on which it stood. All old-fashioned industries have been destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilized nations....In place of old wants, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations."


Contemporary as they sound, these words do not come from the present. They are from Karl Marx’s The Communist Manifesto of 1848. The pangs we are feeling today are remarkably similar to those felt in the industrial revolution 150 years ago. The question before us is whether we have learned from that experience to design a more humane way of dealing with the inevitable wrenching that accompanies such processes.


To avoid repeating the problems of the industrial revolution, we must harness the emerging universal values of our common humanity, and create a coalition of the caring.


We cannot turn our backs on the poor and the destitute.


We cannot allow the benefits of science and technology to flow to fulfil the wants of the fortunate few rather than deal with the needs of the many.


We cannot allow the continued desecration of the environment in the name of profit, for we are all the stewards of the earth. For we did not inherit this earth from our parents. We borrowed it from our children.


The Role of the World Bank:


And what can the World Bank do to help bring about this shift in the paradigm? How can it, as an inter-governmental organization deal with the issues of concern here?


The Bank can play an important role in helping redefine the paradigm. Our visionary president, Mr. James D. Wolfensohn, spoke to the annual meetings of the Bank and the IMF last year about the "challenge of inclusion". That he addressed this to the ministers of finance and central bank governors of the World is indicative of the direction that the Bank is taking. He also dared to attack head-on the "cancer of corruption", challenging the north as well as the south to address it forcefully. For sadly, there are some in the north who support the corrupt practices of their firms, provided it is done in the third world, outside of their borders.


The Bank has also addressed the problem of the heavy debt burden on the poorest countries. It was the Bank that called for the creation of the Special Facility for the Heavily Indebted Poor Countries (HIPC). It is to handle in an effective and orderly fashion the reduction of the crushing debt burden on the poorest, while ensuring the continuing access of the countries concerned to credit and capital flows. It exists, it is slow, and to make it go faster and further, we need the support of all the rich countries.


The Bank has put and continues to put poverty reduction at the heart of its policies. Sometimes this may not be obvious to many. Thus if we seem to be more concerned with how the macro framework develops in Indonesia, rather than with the specific support of specific actions in certain hard hit communities, that is not because of lack of caring about the poor. Rather, it is because there is a huge mass of people just above the poverty line, maybe some 60 million persons, who are vulnerable to the manner in which the inevitable wrenching adjustment is made. The manner in which the adjustment is done can spell the difference between 20 million and 40 million persons falling again below the poverty line. That is why we must be involved in this debate.


In this year’s annual meeting speech, Mr. Wolfensohn, emphasized the other crisis, the human crisis, that accompanies the financial crisis, and clearly staked out the bank’s position on these issues. These actions would be an essential complement to help sound government policy and grass-roots actions by many here in this room, and by many similarly motivated colleagues around the world.


Preparedness at the country level:


But more, can the Bank help the developing countries cope with the challenges of globalization? With the vagaries and volatility of the markets?


To respond to shocks and make effective use of new opportunities, governments must have effective action in some key areas:


First, credible macro-management of the economy. The preeminent role of government in setting and maintaining the proper macro-economic fundamentals is essential for any effective growth, as well for a well-functioning competitive economy. The costs of inflation and over regulation tend to be felt above all by the poor. But credibility requires more than technical merit. It requires good governance, which involves respect for human rights and commitment to transparency, accountability, institutional pluralism, participation and the rule of law.


Second, flexible institutions. The one common denominator of the global knowledge driven economy of the new millennium is the pace of change itself. The successful, competitive economies of the future, those that will be creating jobs and prosperity for their people, will be the marked by the flexibility of their institutions. Institutions capable to recognize and interact with the emerging market opportunities halfway around the globe, or the new technologies, such as the Internet, or satellite mapping and telecommunications, that make the obsolescence of what we invested in an ongoing fact of life.


Third, facilitate the flow of knowledge and information. The world is awash in more information than ever before, and governments that try to regulate that flow will be putting their enterprises at a distinct competitive disadvantage. The future will require more access to open communications and information at a speed that will defy our current thinking and that will exceed most of what we can today imagine.


Fourth, investment in human and social capital. with so much emphasis being paid to the concerns of promoting economic growth an protecting the environment, we must reaffirm the essential role of human and social capital. The future is going to be a knowledge based society, and that will require enormous and continuously upgraded skills. This means that education and health and nutrition of persons are a primary competitive asset as well as being the best investment that societies can make. From both equity and economy, it is essential. But equally important is to strive to build up the shared values, the legitimacy of the institutions of mediation in a society, for that is the essential glue that holds societies together and allows them to function.

 Fifth: recognize the role and value of the civil society


Free markets and competitive markets:


Now let me turn to the concept of "free markets".


I would like to ban the word "free markets" from our lexicon, because it has been misinterpreted in so many quarters. What we really mean is "competitive markets". If Wall Street represents the quintessential "free market" let me remind you that it is one of the most severely regulated. You have to file certain types of audited financial data. If a person acquires more than 5% of the equity of a company it has to be publicly acknowledged. Insider trading is criminalized and prosecuted. Anti-trust laws to prevent monopoly are in place, and are enforced.


All competitive markets require an effective state apparatus behind them: property rights, binding contracts and effective judiciary to name but a few. A totally "free market" is an invitation to predators, as we saw in the crooked "pyramid" schemes that wiped out the savings of so many and almost caused a civil war in Albania not too long ago.


Yet, the international capital markets are more similar to those of Albania at the time of the pyramid schemes than they are to Wall street today. To change that will require greater discipline from all countries, and a voluntary relinquishing of some of their sovereignty in the interest of all.


There are many people, myself included, who believe that the presence of hunger amidst plenty, and other social problems are NOT a necessary price to pay for the robustness of the economy. Many of us believe that the ruthless allocative efficiency of the market must be tempered by a caring and nurturing society. We want, in keeping with the words often addressed to jurists, to "go forth unto the world and fashion those wise constraints that make people free".


Conclusions: A vision:


So where does all this leave us?


It leaves us at the doorstep of a new paradigm for the new millennium. A new way of working that will allow us all to live our faiths, in a spirit of solidarity and a commitment to justice and equity. It will seek to create an alliance, a coalition of the caring. To build a new partnership between the public and the private, the formal and the informal, the international, the regional the national and the local, the for-profit and the voluntary sectors, true partnerships to change the world for the better. Partnerships where each does what they can do best, and where the whole of our efforts is more than the sum of the parts.


This is the vision of development in the new millennium...


A vision that is people-centered and gender-conscious. That seeks equity for all and empowerment of the weak and the vulnerable everywhere - so that they may be the producers of their own welfare and bounty, not the recipients of charity or beneficiaries of aid.


A vision that places short-term actions within the long-term framework.


A vision that is environmentally sustainable, that will leave the future generations as much if not more than what we found ourselves..


A vision where humanity’s greatness is measured by the quality of the lives of our poorest citizens not by the size of our armies or the scale of our buildings..


It can be done…


Let us be guided by the counsel of Maragaret Mead and ..."Never doubt that a small group of thoughtful committed citizens can change the world; indeed it is the only thing that ever has".


In the brief time that I have been speaking:

  • $18 billion was traded;
  • 4,000 people were added to the world’s population;
  • 600 people died of hunger related causes; and
  • 1,000 hectares of forest were lost.

The time is for actions, not words.


So, let us go forth together. Let us dedicate ourselves to work together, to think of the unborn, remember the forgotten, give hope to the forlorn, and reach out to the unreached, include the excluded and by wise actions today lay the foundation for better tomorrows.


Thank you.



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