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| Alternative Information & Development Centre (AIDC) a progressive activist think tank that focuses on the multi-dimensional crisis. AIDC sees the necessity of integrating both the ecological and economic dimensions of the crisis into its programmes. It does this from the perspective of developing alternatives that ensure planetary sustainability and social, economic and environmental justice. |
| Will the G20 save the world? | by Peter Wahl | | Print | |
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The financial crisis, which is haunting the industrialised countries – with heavy effects on the entire world – served as a catalyst for the emergence of the G20 as the ‘premier forum for economic cooperation’, as the G20 defined themselves in their mandate. But the roots of the new body lie deeper than the present crisis. The G20 reflect fundamental changes in the global balance of power: the role of emerging markets - in particular China, Brazil, India and a resurrecting Russia – is steadily increasing, whereas the position of the West is relatively weakened. Already today China is a super power. The unilateral dominance of the US after the end of the Cold War was, in historic terms, only a short summer. The world is developing towards a multi-polar system. End of the tunnel not in sight The crisis, which had started as a crash of the global financial system, has now become a crisis of public finance of the Northern countries. At the same time, we are witnessing the surfacing of a financial crisis. Dozens of banks in the EU are threatened by default – with unforeseeable domino effect – while governments make desperate attempts to rescue them. In the meantime, all indicators point at gloomy perspectives for the global economy in the coming years. The crisis management of the EU has been nothing more than muddling through. No substantial solution has been processed. Governments have been driven by the financial markets all the time. This highlights another dimension of the crisis: the erosion of democracy by the dictatorship of the markets. The end of the tunnel is not yet in sight. And darkness will prevail as long as breaking the dominance of finance over politics remains a taboo. This crisis is not only a banking crisis. It is a systemic crisis. The entire system of finance-led capitalism – or, as Keynes would have called it, casino capitalism – is at stake. The neoliberal paradigm, which has been preached to the world in the last three decades, is bankrupt. As the UN Conference on Trade and Development (UNCTAD) has put it: ‘Nothing short of closing down the big casino will provide a lasting solution.’ G20 – rapid slowdown after a promising start To be fair, the first G20 summits were rather promising, in particular the one in Pittsburgh, in 2009. The first steps of the crisis management were to a certain extent successful, because, unlike during the Great Depression in 1929, there was a concerted anti-cyclical reaction, which used two basic instruments:
The G20 also contributed to building a consensus for a stimulus response to the crisis (rather than the standard neoliberal one of cutting public expenditure) and showed that multilateral cooperation can make a difference. Unfortunately, once the worst had been prevented, the illusion emerged that the crisis was over and the world could return to normal. The proposal of the Pittsburgh summit for financial reforms contained a large package of reform steps, which went in the right direction, such as:
The main problem is that the reforms remain from the beginning far below what is required by the dramatic situation. It is like stopping a big fire with water buckets. The proposals are limited to re-establishing financial stability. Of course, financial stability is a public good and deserves support also from civil society. But stability is not enough. The dominance of speculation and the rule of finance over the real economy must be broken. The limits of efficiency It has been said very often that the G20 has a democratic deficit. In fact, it excludes 174 non-member countries and further deepens the marginalisation of the UN – a marginalisation legitimised by the support and presence of the emerging countries. The exclusion of 174 countries is justified with the claim that involving all 194 countries would be ‘inefficient’. So much for democracy! However, if small is efficient, the bi-polar system of the Cold War with its two main actors would have been highly efficient. Obviously, the configuration of interests is more important than the sheer number of actors. With this perspective, we realise that there are considerable differences and conflicts of interests among the G20 members, such as:
Most emerging countries will be aware of the contradictions inside the G20, and it seems as if some of them develop a strategy of their own. Thus, the so-called BRICS states (Brazil, Russia, India, China, South Africa) try to organise themselves in a separate platform. This process is at the very beginning, and it is not yet clear where it will lead. In terms of power politics, on the one hand it could be an attempt to create a power centre outside the G20, which then might be used to influence the G20 more efficiently. On the other hand, the differences and the heterogeneity of interests among the BRICS are also considerable. All these are new developments and it is difficult to predict their outcome. But behind the background of a heterogeneous and conflictive configuration in the G20, the expectations around the capacity of the institution to deliver substantial solutions should not be too high. What remains is an old – and adapted – truth: No G20 will save us from misery. We must do that ourselves! Peter Wahl is director of the department for Financial Regulation of the German NGO WEED (World Economy, Ecology and Development) and founder of Attac Germany.
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