Global currency trading has exploded in scale and volume over the last 20 years as speculation dwarfed cross-border purchases of goods and services following the introduction of floating exchange rate systems. Investors play the markets, profiting from minute-to-minute, hourly or daily fluctuations in prices around the world. Big banks such as Citigroup, Deutsche Bank, Chase Manhattan, Warburg Dillon Read, Goldman Sachs and about 20 others dominate these markets.
They deal with capital from investment and pension funds gathered from the savings of hundreds of millions of people in the developed world. It is reckoned that financial centres in the US, UK, Japan, Singapore, Switzerland, Hong Kong and Germany account for 80 per cent of the business - The sums involved are huge, with latest estimates that some $1.5 trillion being traded daily. Cross-border purchasing of goods and services accounts for a mere 2 per cent of this total (it was 80 per cent in 1975); a further 18 per cent involves relatively long-term trading to hedge or guarantee against future exchange rate fluctuations. That leaves the great majority of funds - 80 per cent - devoted to exchange rate speculation.
The removal of capital controls by OECD countries in the 1980s and 1990s eliminated many of the official restrictions on speculative activity. This was accompanied by an ideological assault on such barriers, and the emergence of the so-called Washington Consensus, which J.K. Galbraith dubs the Apostles' Creed of globalisation.
In summary, it is an expression of faith that markets are efficient, that the poor and the rich have no conflicting interests, that privatisation, deregulation and open capital markets promote economic development, that governments should balance budgets, fight inflation and do almost nothing else.
In December 1997 an editorial in the French monthly, Le Monde Diplomatique, took sharp issue with that consensus. Entitled "Disarming The Markets", it argued that "the globalisation of investment capital is causing universal insecurity. It makes a mockery of national boundaries and diminishes the power of states to uphold democracy and guarantee the wealth and prosperity of their peoples".
It described the International Monetary Fund, the World Bank, the Organisation for Economic Co-operation and Development and the World Trade Organisation as a "separate supranational state with its own administrative apparatus, its own spheres of influence, its own means of action."
The editorial did not stop at denunciation, however. Arguing that the power to levy taxes on unearned income is a sine qua non of democracy, which is undermined by absolute freedom of movement for capital, it supported the Tobin Tax on speculative exchange transactions. It called for a new world-wide non-governmental organisation to be set up to campaign for it - Action for a Tobin Tax to Assist the Citizen (Attac).
The journal's editors were astonished at the popular reaction to their call. Granted, it is an influential publication, with a circulation of 285,000 and a reputation for critical analysis of international affairs, predominantly from a left-wing point of view. Attac, founded two years ago at a conference attended by trade unions, international development organisations, newspapers and individual citizens, now has a rapidly growing membership of 25,000 in hundreds of branches throughout France.
There are also groups in Germany, Austria, Belgium, Spain, Greece, Italy, Luxembourg, Norway, the Netherlands, the UK, Sweden and Switzerland - and in Ireland. There are many sympathetic groups in North and South America.
Such networks careered on to the world stage at the Seattle WTO summit last December, where their demonstrations and protests against the neoliberal model of globalisation disrupted the conference proceedings and alerted many to alternative approaches.
The president of Attac and director-general of Le Monde Diplomatique, Mr Bernard Cassen, explained on a visit to Dublin this week that the organisation has struck a real chord in France and elsewhere, as the harmful consequences of globalisation are felt and the alternative possibilities are more widely appreciated by growing numbers of citizens and organisations.
Mr Cassen sees the campaign for the Tobin Tax not as a panacea but a practical and symbolic means of taking back the initiative from pure market forces and asserting the values of solidarity. Attac is a movement of popular education, more a process than a specific goal. He insists the movement is in favour of a new type of internationalism.
The Tobin Tax was proposed by the Nobel prize-winning Yale economist, James Tobin, in 1978 as a measure to minimise strong and irregular currency fluctuations. It would be levied on all speculative currency transactions at a rate of 0.1-0.25 per cent. At the latter end of that range, it could raise $300 billion per annum.
That should be compared with United Nations estimates that the cost of wiping out the worst forms of poverty and environmental destruction would be $225 billion per year (and with the current UN annual budget of $12 billion). Major questions of how to allocate and spend such proceeds are therefore posed for its advocates.
That this is not only an academic exercise is made clear by growing political support internationally for the idea of the Tobin Tax. The Canadian and Finnish parliaments have voted in favour of it; the European Parliament recently voted 225-229 against studying concrete conditions for its introduction.
According to Mr Cassen, the French Finance Minister, Mr Laurent Fabius, is sympathetic, knowing that his party will need the votes of its supporters if it is to win the next election. Many international development organisations support the idea, which has attracted considerable expert and academic backing.
In Ireland Attac has attracted support from Labour Party, Green and individual members of other political parties, and from NGO and development activists.
It is, of course, opposed by many finance ministries and ministers (including Mr McCreevy), most IMF and WTO representatives and the international banks who benefit most from currency speculation. It would require close international orchestration. But the idea of global or regional transnational taxation is taking off, as was clear from the discussion this week at the EU summit in Feira on a withholding tax.
Fiscal degradation is affecting many EU member-states because of the operation of tax havens and banking secrecy. The Tobin Tax should be seen as a real symbol of a growing interest in the idea expressed in its campaign slogan - "It is simply a question of taking back, together, the future of our world".
pgillespie@irish-times.ie www.attac.org/ireland
