Pt. 2 What Needs To Be Done To Fix The Global Economy
Patrick Bond: For a recovery to occur, national governments must assert economy sovereignty
JAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I’m Jaisal Noor in Baltimore.
We’re continuing our discussion with Patrick Bond. He is the director of the Centre for Civil Society and a professor at the University of KwaZulu-Natal in South Africa. His books include Looting Africa and Against Global Apartheid.
Thank you so much for being with us again, Patrick.
PATRICK BOND, DIRECTOR, CENTRE FOR CIVIL SOCIETY: Thanks. Great to be with you.
NOOR: So, Patrick, we’ve been discussing the economic crises in the BRICS countries, including currency inflation and growing inequities and inequalities in those countries. But China seems to be the one country that continues to prosper. What are the lessons of China? And what else can be done to help address these growing economic problems across the world?
BOND: Yes. Well, the Chinese economy is anticipated to hit about seven and a half percent. And the secret there is to not write down dead loans, to keep the game in play and the fiction of a lot of the credit system intact by printing money and having strong exchange controls to prevent the Chinese currency, the renminbi, from being speculated upon at a time when, with real estate problems in very uneven ways bedeviling the country, the government is still pouring quite a lot of money into infrastructure to keep things going. So it’s partly a more inward-oriented focus.
But at the same time, as Jim O’Neill, the Goldman Sachs chair who said 12 years ago that Brazil, Russia, India, China will be the building bricks of the 21st-century capitalism, he has just said last month in a Wall Street Journal interview that he really only would anticipate the C of those four still maintaining the momentum to become a genuine power basis for world capitalism this century.
And that’s very interesting, because the G20 certainly hasn’t yet come to grips with the fact that China does deserve a great deal more power. And in our G20 countersummit, the post-globalization initiative in Moscow and in St. Petersburg held during the G20, and in my talks also last week when I was in Shanghai with academics, I really got a sense that the strategy of BRICS to gang together might not hold up. There may be too many contradictions.
What then could be done is probably some of the Keynesian strategies to protect economies from this financial turbulence and those [incompr.] first and foremost reimposition of exchange controls. Now, that sounds drastic for capitalist economies to begin to prevent people from moving big sums of money, especially corporations and banks, but in fact some countries have begun to do that. And the ones that explored it, say, Malaysia in 1998 or the Ecuadorians, the Venezuelans more recently, they’ve had good success in encouraging local growth and becoming less volatile in world economic terms.
And I think the delinking of finance is going to be the big campaign. Many of these campaigns at the moment are, for example, for a financial transactions tax and hot-money prohibitions. But I think it’s really going to be when strong national governments reassert their financial sovereignty, put on exchange controls, and at that point control their interest rates, their inflows and outflows of currencies, as well as goods, that we can begin to see a recovery from the sort of maniacal globalization run by bankers that’s doing so much damage.
NOOR: And talk more about the challenges that remain for that to happen, because you’re talking about governments taking power back from corporations and banks, as you just mentioned. And they’re increasingly becoming increasingly, obviously, more politically powerful and have–they’re only increasing their influence around the world.
BOND: Well, that’s right. And occasionally there’s a breakthrough in which a smallish country–let’s take Argentina. Two thousand one, ’02 they defaulted on their debt and found ways to repay only part of it, or Ecuador defaulting on its foreign debt. A large part of it they had declared as illegitimate, as odious debt. And those would be the kinds of inspiring examples where individual countries can band together.
What the Venezuelan president, the late Hugo Chávez, realized then was that you had to do that in collaboration. He had a network, ALBA, but also the idea of a Bank of the South, which in July did formally launch. They have about $9 billion in capital, so that’s a good start. And hopefully, if the Brazilians are cooperative (they haven’t been entirely), a different kind of development finance can get off the ground that’s much more ecologically and socially sensitive, rather than the kind of megaprojects that we can anticipate the new BRICS Development Bank, as well as the old Bretton Woods institutions, the World Bank and its allies across the Third World, to continue.
And I think that would be where very active civil society, particularly the environmentalists, indigenous people, community groups, to some extent trade unionists and feminists, have been watch-dogging and often protesting to prevent some of the worst projects from happening. On the environmental front, for example, even the very coal-addicted World Bank has had to make some recent concessions, with their president Jim Yong Kim announcing that they would try to have fewer coal-fired power plants in their portfolio.
So this is very slow progress when huge environmental problems like climate change and huge social inequalities and terrible financial turbulence continue. And that means if the BRICS have been a failure, if indeed current trends continue, they’ll have to redouble efforts in civil society to try to find national governments that can break with the system, and then link those up and give them this North-South and South-South solidarity that’ll be required to sustain this.
NOOR: Patrick Bond, thank you so much for joining us.
BOND: Great to be with you again, Jaisal. Thanks.
NOOR: That wraps up part two of our conversation. Go to TheRealNews.com for the full extended interview. Thank you so much for joining us.
DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.