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For a Progressive Response to the Global Financial Crisis: SI Commission on Global Financial Issues meeting in New York

31 March 2009

Message to the London G-20 Summit from the Socialist International Commission on Global Financial Issues, New York, 31 March 2009
Today’s global crisis has revealed the enormous inadequacies and fallacies upon which our financial system is based.
The extent of the system’s failure is such that we cannot continue living in a world where the inequality gap keeps widening, our environment is dramatically deteriorating and where the financial world is driven by speculative and unbridled practices. All leading to unsustainable bubbles and the spectre of rising poverty, the weakening of social protection and increasing unemployment as well as permanent insecurity for the vast majority of people around the world.
Growing inequality in our societies is at once a moral, economic, and political failure resulting in low aggregate demand, high debt for hundreds of millions, and a desperate sense of powerlessness for our citizens – pointing to the capture of our democratic processes by powerful special interests.
From this crisis must come a new set of rules to govern our world; our citizens must not be subservient to the market. We must guarantee that markets serve our people’s needs.
We cannot allow profits to be privatised while losses are socialised. The brunt of this crisis must not be borne by its innocent victims around the world.
While huge sums of the public’s money are invested to save banks, the emerging markets are contracting, unemployment is rising and developing countries are being starved of credit and development funds, we must act decisively to ensure that global recovery favours the poor and the most vulnerable. We must ensure that capital markets work to create jobs, achieve social cohesion and a sustainable green economy.
Attaining those priorities requires democratic reform of old and the creation of new governance institutions at the global, regional and local level.
We call on the G-20 to focus on providing liquidity to the real economy, by supporting new lending (if need be, by direct public sector lending that bypasses the current financial sector blockages) and by offering support for renegotiation of existing loans.
We also call for public policies worldwide on job creation, job maintenance, and the provision of decent incomes for all who seek work.
We insist that massive new investments be made in high-return energy-saving activities as well as in education and other means of expanding human capital.
We emphasise the need for increasing global aggregate demand by making sure developing countries are not left behind.
We underscore the imperative to expand social insurance worldwide, and strengthen it against future downturns. We need to guarantee that social cohesion be our priority both through and beyond this crisis.
We demand that global leaders act now to restructure, re-regulate, and reform the global financial system, by setting new standards governing financial activities by function, establishing mandatory new standards for transparency and timeliness, decoupling managerial rewards from short term performance but attaching it to long-term stakeholder benefits, as well as chartering a new World Finance Organisation that will set global standards, globalise enforcement, and close tax havens.
The challenge of the 21st century is to align the global economic system with the values and principles of a democratic and fair society. We are not looking to reformulate the old institutions but to create a new system which will guarantee a shared prosperity and well-being for all people.
The G-20 framework to deal with the current financial crisis is a step forward in the search for coordinated global responses by the international community. We should all aim now to engage other nations as well in a broader context, in a spirit of inclusiveness, in the pursuit of the common solutions that we all seek.