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Genoa is a name associated with the emergence of capitalism in Europe six centuries ago. Genoa may also now become a symbol of the crisis of corporate-driven globalisation.

The siege that thousands of protesters are planning to mount on the Group of Eight's annual summit in that historic city today has become emblematic of the global state of siege that now surrounds the key institutions of the global economy.

The confrontation between the G-8 and mass protesters comes at a time when the unity of the Group is severely strained. Multilateralism is supposed to be the essence of the G-8, yet under the administration of George W Bush, the United States, which is the primus inter pares of the body, has embarked on a unilateralist course that has brought it to loggerheads with other members on the issues of climate change, missile defense, and reconciliation between the two Koreas.

The reputation of the G-8 is also at a low point in the developing world, which has always regarded it with great suspicion. When it emerged in the 1970's to loosely coordinate the macroeconomic policies of the advanced capitalist countries, what was then the Group of Seven was regarded as an attempt to create system of global governance that would bypass the structures of the United Nations.

Third World resentment deepened in the 1980's, when the G-7 became a forum for promoting the Reagan-Thatcher free-market ideology that took the shape of IMF-imposed 'structural adjustment' in the South.

IMF unreformed

With the end of the Cold War, the G-7 became George Bush senior's pulpit to promote the 'New World Order', which developing countries regarded as a more virulent phase of western hegemony, one that was no longer restrained by Soviet power.

In the last few years, under the ideological leadership of Bill Clinton and Tony Blair, the organisation tried to take on a more liberal and activist image, incorporating ex-socialist Russia, promising debt relief for Third World countries, and discussing proposals for a new 'international financial architecture' that would regulate destabilising global capital flows.

These initiatives have, for the most part, proved disappointing, with little in the way of concrete action. The most prominent reform initiative, the G-8's plan to lighten the servicing of the external debt of the 41 highly indebted poor countries (HIPC), has actually delivered a debt reduction of only US$ 1 billion since it began in 1996 - or a reduction of their debt servicing by only three percent in the past five years!

When it comes to the question of the international financial architecture, serious discussion of controls on speculative capital like the Tobin tax has been avoided.

An unreformed International Monetary Fund (IMF) continues to be at the centre of the 'firefighting system'. A preemptive, pre-crisis credit line at the IMF (which no country wants to avail of) and a toothless Financial Stability Forum - where there is little developing country participation - appear to be the only 'innovations' to emerge from the Asian, Russian, and Brazilian financial crises of the last three years.

Reform of the decision-making structures of the multilateral institutions that serve as the key rule-setting and global management institutions of contemporary capitalism was also supposed to be spearheaded by the G-8.

Feudal practises

Yet, talk about democratising the World Trade Organisation (WTO) has vanished, with Director General Mike Moore saying that the non-transparent 'consensus'' system that triggered the developing country revolt in Seattle in December 1998 is 'non-negotiable'.

And with respect to the IMF and the World Bank, there is no longer any discussion about diluting the voting shares of the US and European Union in favour of greater voting power for the developing countries, much less of doing away with the feudal practices of always having a European head the Fund and an American to lead the Bank.

The G-8 came into existence to coordinate the macroeconomic policies of the rich countries in order to prevent the Scylla of inflation on the one hand and the Charybdis of stagnation on the other.

However, in the last few years, efforts to synchronise fiscal and monetary initiatives have proved elusive, and what modicum of cooperation was achieved has failed to bring Japan out of a decade -long recession or prevent the onset of a new global recession.

The reason that the economic slowdown seems to be immune to orthodox fiscal and monetary mechanisms, even when coordinated across borders, is that structural imbalances have been building up for some time.

The boom of the early and mid-nineties resulted in a burst of global investment activity that led to tremendous overcapacity all around. The indicators are stark. The US computer industry's capacity has been rising at 40 percent annually, far above projected increases in demand. The world auto industry is now selling just 74 per cent of the 70.1 million cars it builds each year.

So much investment took place in global telecommunications infrastructure that traffic carried over fibre-optic networks is reported to be only 2.5 percent of capacity.

Global protest

Seen in retrospect, profits stopped growing in 1997, leading firms to a wave of mergers, the main purpose of which was the elimination of competition. The most prominent of these were the Daimler Benz-Chrysler-Mitsubishi union, the Renault takeover of Nissan, the Mobil-Exxon merger, the BP-Amoco-Arco deal, and the blockbuster 'Star Alliance' in the airline industry.

Another avenue that was taken to avoid the crunch of profitability in industry was to push investment to speculative activity. Thus emerged the Wall Street-Silicon Valley complex that drove the US economy and the global economy in the nineties.

This 'New Economy' seemed for a time to defy the laws of economics, with Internet stars such as Amazon.com registering an explosive and seemingly permanent rise in stock values even as they continued to operate at a loss.

But all talk about the emergence of a New Economy vanished when the law of gravity caught up with the speculative sector in late 1990's, resulting in the wiping out of US$ 4.6 trillion in investor wealth in Wall Street, a sum that, as Business Week pointed out, was half of the US Gross Domestic Product and four times the wealth wiped out in the 1987 crash.

Dealing with the deepening structural crisis of the global economy would be challenge enough to the G-8. What makes the current conjuncture so volatile from the point of view of the elites of the North is that this structural crisis is intersecting with the unravelling of legitimacy of the system of global capitalism.

In the last two years, the accumulated resentments at the poverty, inequality, and environmental degradation generated by corporate-driven globalisation have exploded in a rolling wave of global protest that seems to gather momentum from one demonstration to the next.

Seattle, Washington, DC, Chiang Mai, Melbourne, Prague, Davos, Porto Alegre, Quebec, Gothenburg - all have been sites of fierce struggle that testify to the fact that, as economist C Fred Bergsten, an prominent partisan of globalisation, has observed, 'the anti-globalisation forces are now in the ascendancy'.

Panic signs

Genoa is the next stop in the anti-globalisation express. To contain the anti-globalisation shock troops that are now on the road headed for Genoa, nervous Italian authorities are deploying 20,000 police and troops, backed up by 15 helicopters, four aircraft, and seven naval boats.

In a sign of panic, the government has announced that it will close Genoa's airport between July 18 and 22 and seal off 'red zones' in the inner city that will kept free of demonstrators.

Undaunted, protest organisers say they will bring 200,000 people to Genoa and that they will definitely breach the red zones. They may yet make Genoa the most dramatic example of the mass 'withdrawal of consent' that is shaking the system of global capitalism to the core.

WALDEN BELLO is executive director of the Bangkok-based Focus on the Global South, a policy analysis and advocacy institute, and professor of sociology and public administration at the University of the Philippines. The above article was first written for the Inter-Press Service (IPS).