G20 summit: whose fightback starts here?

Submitted by martin on 6 April, 2009 - 11:05 Author: Editorial

Any working-class person who looked to the capitalist world leaders for protection against the economic and social catastrophe that looms before us all will be disappointed. The G20 economic summit in London on 2 April was a triumph for the spin-doctors rather than the economists.

Even Tory papers were full of praise: "The fightback starts here", said the Daily Telegraph. The Daily Mail had the same headline as the Guardian: "Brown's New World Order".

El Mundo, in Spain, hailed a "global Marshall Plan", a new version of the huge US aid package of 1948-52 which (together with the Korean war boom) pulled ravaged Western Europe out of economic collapse. The Independent, after a front-page headline "Obama hails the new world order", had an inside article headlined: "This was the Bretton Woods of our times", referring back to the July 1944 conference which set up an international financial and trade framework which helped to serve huge capitalist expansion in the 1950s and 60s.

The Philadelphia Inquirer saw a "turning point at summit". The Los Angeles Times gushed: "G20 summit surprises".

Even newspapers that were highly sceptical, or downright derisive, about the summit on their inside pages, such as the Financial Times, were laudatory on their front pages. (FT: "G20 leaders hail crisis fightback").

Bretton Woods was very different. It was an intense 22-day conference. Despite the presence of representatives of 42 other governments, the essential business was argument between Britain's Maynard Keynes - the greatest economist of his era, and one who had clear ideas for reconstruction developed over a decade of pioneering theoretical work - and representatives of the US government, which at that juncture had both the power and the will (galvanised by 15 years of horrific world turmoil) to reshape things radically.

The London summit on 2 April was essentially a photo-opportunity where world leaders jetted in to put their signatures to a bland communique which had been sorted out by their officials in advance.

As Chris Giles pointed out in the Financial Times, almost all the reputed $1.1 trillion of new credit was a "repackaging" of plans already decided before the summit. "While the inflation of relatively small and old commitments into an enormous number does not render the summit a failure, the desire to produce large headline numbers as the main result of the gathering suggests the divisions and spats on other issues were considerable".

At the very best, the $1.1 trillion figure is more of the same. On the stupendous scale of the financial crisis - the Asian Development Bank recently estimated total losses in financial markets so far at $50 trillion - and even by the scale of what the US, UK, and other governments have done so far, it is also a fairly small amount more.

The IMF's resources are to be tripled. This was mostly agreed well before the summit. But in any case it doesn't touch the problem that the huge expansion of financial markets, the huge pyramiding of debt, over the last twenty years or so, long ago dwarfed the IMF. The IMF would have to be a hundred times bigger, not three times bigger, to be a decisive force in the crisis.

The summit's decisions included no big aid package for the "emerging" economies, in Eastern Europe for example, devastated by the shrinkage of global credit, and not even a hint of a comprehensive reshaping of the world economic order.

The official communique from the summit was much shorter but also blander than the one from the previous such summit, in Washington in November 2008. Like that summit, it talked about more and better regulation of financial markets - who doesn't, these days? - but without specifics.

The Washington summit had a vaguely-worded promise to move all trading of credit default swaps to take place through regulated exchanges (same sort of thing as stock exchanges) rather than direct private deals, but that has disappeared.

The "hardest" content in the communique was, as in Washington, a commitment against protectionism. To be sure, every capitalist government wants every other capitalist government to keep its borders open for trade and investment. The question is whether they can hold the line.

The Washington summit committed the participating governments to avoid all protectionist measures for the next 12 months. In the following five months, 17 out of the 20 governments broke that commitment. All the breaches have been relatively minor, so far; but all the London summit did was to "reaffirm the commitment made in Washington" (without comment on the fact that it had already been broken) and "extend this pledge to the end of 2010".

The Washington summit also committed itself - unrealistically, but it committed itself - to completing the Doha round of world tariff-reduction negotiations by the end of 2008. That commitment has simply been dropped, without comment.

It is not absolutely impossible that the financial turmoil will start to settle down in the coming months. But if it does, the London summit will not have had much to do with it. And even if the financial turmoil does settle down, the snowballing into trade, production, and jobs of the implosion of credit has a long way to go yet.

We can have no faith in the sort of "fightback" trumpeted by the Daily Telegraph. But the sort of fightback represented by the Visteon workers' occupations - that indeed starts here.

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