G20: Welcome to the Multi-Polar World

The run-up to the G20 meeting has
been interesting and colourful. President Lula da Silva of Brazil
declared that "this crisis was caused by the irrational behaviour of
white people with blue eyes, who before the crisis appeared to know
everything and now demonstrate that they know nothing". His full
remarks made it clear that he was not promoting biological race
theories, but calling attention to the injustice that the vast majority
of the world - people who happen to be both poor and non-white - should
suffer for the greed and stupidity of a few.

China also let loose with an uncharacteristic broadside against the United States,
basically saying: we (the Chinese) have gotten our act together and are
mobilising massive resources internally to counter the downturn. Now
how about you clowns who made this mess step up to the plate, before we
take more losses on your stinking Treasury bonds? It was worded
somewhat less rudely, but still a stunning departure from the "hide
brilliance, cherish obscurity" motto that has guided Chinese foreign

This is what happens when you change the composition of
the Ad Hoc Committee to Run the World (the G7), and the media spotlight
wanders over to some of those previously excluded. The change was meant
to be symbolic, but even symbolic changes can shift the debate, as new
actors find themselves in the middle of an international forum where
they can try to show some leadership.

Welcome to the
multi-polar world. It's not here yet, but the direction is clear.
President Obama will discover this week that as much as he is loved and
respected around the world, he can't reverse the declining influence of
Washington that his predecessor clumsily accelerated.

leadership is taking an immediate hit because it was at the forefront
in creating the current world recession. It's hard to believe that
Nicolas Sarkozy won the presidency of France barely two years ago by
promising to make French capitalism more like the American brand. The
idea that the "American model" was superior in economic terms has been
promoted for years by the European press even though the statistical evidence has always been weak
or non-existent (eg France has a productivity level about the same as
the United States). But from now on, these ideas will be a much harder

Still, the debate surrounding the G20 meeting is missing
quite a bit on the economic issues. The problem of asset bubbles did
not even make it into the G20's draft communique.
Yet the housing bubble in the United States was the primary cause of
its deep recession, and contributed enormously to the financial crisis
- including through the over-leveraging of financial institutions and
the toxic assets and derivatives that they spread around the world.

is also the second recession in six years in the US - which comprises a
quarter of the world's economy - that was caused by the bursting of an
asset bubble (the 2001 recession was caused by the bursting of the
stock market bubble). Housing bubbles in Spain, the UK, Ireland and
other countries also contributed to their severe recessions this time
around. How to prevent asset bubbles from reaching dangerous
proportions - which is actually much easier than the other forms of
regulation being discussed - should be a major item on the agenda.

it is the economic issues of the developing world that are most
obscured and neglected. For most developing countries, the current
economic crisis is a more acute form of what they have experienced for
most of the last three decades - commonly known outside the United
States as the era of neoliberalism. Since 1980, there has been a sharp slowdown in economic growth in the vast majority of low- and middle-income countries.

would be expected during a long period of reduced economic growth,
there was also reduced progress in the areas of life expectancy, infant
and child mortality and other social indicators. This slowdown in
economic growth, and its accompanying negative effects, are not
attributable to "diminishing returns" - in other words, it is far
beyond what would be expected from the natural course of individual
countries facing reduced growth potential at a higher stage of

A likely explanation for this massive economic
failure is that it had something to do with the neoliberal economic
policy reforms that were introduced since the 1980s: the abandonment of
development strategies, the introduction of much more restrictive
monetary and fiscal policies, an indiscriminate opening to
international trade and capital flows, and of course the de-regulation
and excesses of the financial sector - including its excessive
political influence - that the world is now forced to recognise as
harmful. It is noteworthy that China - which has had the fastest
growing economy in world history over the last 30 years - has mostly
avoided these neoliberal reforms, even as it moved away from central
planning and began a period of export-led growth.

A serious
discussion of what has caused this long-term development failure is
long overdue, but still not forthcoming. On the contrary, the draft G20
communique reaffirms the importance of completing the current Doha
round of the World Trade Organisation (WTO), a set of rules that is so
tilted against developing countries that it would not stand a chance of
being approved by the legislatures of many WTO member countries today.
Ironically, the WTO's Financial Services Agreement
seeks to establish rules that would make it more difficult for
countries to undertake the financial regulations that this crisis has
so painfully demonstrated are needed. There is no talk of reforming the
WTO - only moving "forward".

The same is true for the International Monetary Fund,
which just a decade ago was Washington's main avenue of influence in
developing countries. The collapse of the IMF's creditors' cartel in
middle-income countries, in which many governments could not get credit
from other sources without first agreeing to IMF conditions, was one of
the most important changes in the international financial system since
the breakdown of the Bretton Woods system in 1973. The US Treasury
department, with help from Europe and Japan, seeks to revive their lost
power in a time of crisis by tripling the IMF's resources to $750bn and
making the fund the arbiter of conditionality for loans to countries
hard hit by the crisis.

But regardless of how much money is
added to the IMF coffers, the clock will not be so easily rolled back.
Nor will the G20 move us forward to a new financial architecture, as
some had hoped. It took a Great Depression and a World War to get us
the Bretton Woods agreement of 1944. Fortunately we have not had either
of these yet. And the leaders of the rich countries today are far more
steeped in neoliberal ideology than the architects of Bretton Woods. In
economics, as in the physical sciences during the Middle Ages, a
significant amount of knowledge has been lost since the time of John
Maynard Keynes.

For now, at least, the most important economic
reforms will take place more quietly and without the fanfare of the
G20. China's decision this week to provide $10.2bn dollars in a
currency swap arrangement with Argentina is an unprecedented (in this
hemisphere) and prime example. The creditors' cartel that forced
Argentina to accept disastrous conditions from the IMF a decade ago is
no longer operative there. That is progress, and there will be much
more in the coming years, as national governments seek alternatives to
failed policies, and co-operate with each other outside the structure
of unreformed neoliberal institutions.

Join Us: News for people demanding a better world

Common Dreams is powered by optimists who believe in the power of informed and engaged citizens to ignite and enact change to make the world a better place.

We're hundreds of thousands strong, but every single supporter makes the difference.

Your contribution supports this bold media model—free, independent, and dedicated to reporting the facts every day. Stand with us in the fight for economic equality, social justice, human rights, and a more sustainable future. As a people-powered nonprofit news outlet, we cover the issues the corporate media never will. Join with us today!

© 2023 The Guardian