The financial crisis that collapsed Asian economies in mid-1997 and then bounced around the world was a distant sideshow to most Americans until it reached Wall Street. One year later, when Russia defaulted and Brazil was engulfed by the investor panic, US financial markets plunged too, and some major American banks and brokerages were at risk (as a result of lending billions to such magical schemes as Long-Term Capital Management, the wildly overleveraged hedge fund that went bust). The Federal Reserve rushed to the fire, supervised a forgiving bailout for Long-Term Capital and swiftly cut interest rates three times to restore confidence. The giddy boom resumed, but the US establishment was rattled. Led by the President, important voices from financial and academic circles began to talk earnestly about the need to reform the global financial system. "A new international financial architecture," they called it.

Nothing has been reformed. Three years after the turmoil and destruction began, the world's unstable financial system remains unchanged and, therefore, still vulnerable to all the excesses of unregulated capitalism that nearly brought it down. Another savage crisis is very likely to occur, somewhere or another, and millions of innocent bystanders will, once again, find themselves wiped out by the blind force of global finance, with its reckless, manic appetite for greater returns. For instance, because global flows of capital are now freed of any moderating controls by national governments, they can surge into a promising "emerging market" like Mexico or Indonesia, overwhelm it with easy money lent short-term for quick profits, then rush out overnight, collapsing the currency and economy. Major speculators, meanwhile, operating from unregulated offshore banking centers, gang up to attack vulnerable currencies from Britain to Malaysia and reap enormous windfalls by forcing them into costly, often exaggerated devaluations. An embattled country like Brazil is compelled to seek the protection of the International Monetary Fund, which will demand an austerity policy to restore the confidence of global investors (the very people whose panicky flight triggered the crisis). These and other destabilizing features of the free-market "architecture" are among the problems that have not been fixed. When another crisis does occur (perhaps closer to home), it will confirm the dereliction of the "responsibles."

So the burden of reform devolves to others--those diverse voices around the world who are uniting now in a movement to challenge the corporate-capitalist version of globalization. These active citizens, of course, have very little power to change things themselves, except their intelligence and spirit, plus an ability to arouse the broader public. This new international movement understands that the maladies of global finance go deeper than recurring crises and the danger of a total breakdown. For decades, the poorer countries have lived with harsh dictation from global capital about what economic plans their governments may or may not pursue in behalf of citizens, with brutal discipline if they stray. The cheerleaders describe this as globalization's "golden straitjacket"--follow our orders, and we will make you rich (someday)--but people in most societies are learning that the consequences for humanity are often quite leaden. Some people do get rich, of course, or gain wage incomes. But as millions learned in Southeast Asia, their escape from poverty was a temporary thing, hostage to the anxieties of distant investors who are oblivious to their individual efforts and aspirations.

The financial realm constitutes the commanding citadel of the global system--the benefactor that provides essential capital, the enforcer that disciplines multinational corporations as well as nations. Its imperious attitudes and amoral operating assumptions are embedded in every aspect of globalization and implicated in every complaint, from inhumane working conditions to environmental wreckage, from the erosion of national sovereignty to the gross and growing inequalities. Reforming global finance is, likewise, the most formidable challenge, since many people who can grasp the immorality of exploited labor or wanton destruction of nature are intimidated by the dense abstractions of high finance.

An essential starting point is to remember that this out-of-control global financial system is a man-made artifact, a political regime devised over many years by interested parties to serve their ends. Nothing in nature or, for that matter, in economics requires the rest of us to accept a system that is so unjust and mindlessly destructive. What follows is intended to help people think more clearly about the possibilities for reform (two previous articles, on January 31 and April 10, focused on rules to impose social-moral values on globalization and the deep economic imbalances in production and trade that drive the "race to the bottom"). Some plausible, immediate steps will be described that could impose more order and equity on global finance, also a grander vision of how the world's divergent economic interests might someday come together in a new institutional relationship that disarms the overbearing power of capital while it also reconciles tensions between rich and poor countries. We begin, however, on the narrow ground where the elite debate is located because some of its "solutions" may actually make things worse, especially for poorer countries.

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