William Tabb is Professor of Sociology and Economics at the City University of New York. This splendid book studies the globalisation debate, the post-1945 economic order, the international financial institutions, crises, finance, the big corporations, international trade and investment, the World Trade Organization, the conflict between markets and labour, and alternative strategies. He links politics and economics, and surveys the literature across economics, international relations and international political economy.



He observes that in the 1920s, "Deflation, pressure to increase exports, competitive devaluations, and growing protectionism were the product of the resultant crisis, not its cause." Europe's nations rebuilt after World War Two by protecting their industry and promoting home consumption, well before they formed the free-market EEC.



He writes, "Neoliberalism is widely understood by even many mainstream economists and policy wonks to have failed in terms of its announced goals. It has not brought more rapid economic growth, reduced poverty, or made economies more stable. In fact over the years of neoliberal hegemony, growth has slowed, poverty has increased, and economic and financial crises have plagued most countries of the world economy. The data on all of this are overwhelming. Neoliberalism has, however, succeeded as the project of the most internationalized fractions of capital. In its unannounced goal it has increased the dominance of transnational corporations, international financers, and sectors of local elites." As the International Monetary Fund had to admit, "The empirical evidence has not established a definitive proof that financial integration has enhanced growth for developing countries."



Tabb shows how freedom of capital movement aids illegal dealings and he describes `the extent of corruption and criminality in the system'. He explains, "The profits from moving illegally gotten gains, funds seeking to disguise their origins in graft and corruption, and in tax avoidance are major revenue sources for banks."



Financial liberalisation also misallocates resources because it promotes speculation. The $1.5 trillion daily turnover in foreign exchange in the 1990s (70 times the value of world trade) was mostly bets on interest rate movements and changes in the money supply; it was not financing trade or investment.



The international financial institutions `represent the interests of capital': the world's dominant capitalist classes use them to wield power over other nations. Tabb explains, "the interests of transnational capital and international finance guide the terms under which global state economic governance institutions are constructed, modified over time and used to define and enforce property rights." They are in no way democratic.



He concludes, "A deflationary tendency threatens the world as all countries compete to attract capital by reducing government spending and lowering labor costs." In response, countries need to increase their domestic demand by investing more and raising wages, and they must control currency movements and capital flows.