With economic crashes and ecological calamities so prevalent in 2011, concluding with a do-little November G20 meeting in Cannes and a do-nothing December climate summit in Durban, January has opened with intense fear of eurozone deterioration. In this uncertain context loom the two most potent forces shaping the period ahead: China’s capital accumulation process and class struggle.
Because of the country’s uneven and combined development, within an extraordinary boom we can see the beginnings of a potentially world-scale bust, plus prodigious socioeconomic battles from below alongside brutal attacks on the environment such as coal-fired power and the Three Gorges Dam (notwithstanding exceptional ‘green economy’ advances).
It has become increasingly common to suggest that on top of the European debacle and the sluggish recovery in the United States, China might be on the verge of a collapse, and with it the last bastion of economic growth in the world economy would also be gone. Not only the center is stagnant, but also the periphery of the global economy is very fragile. But the probability of a Chinese slowdown is greatly exaggerated.
Paul Krugman, who has been correct about the need for fiscal expansion in the United States, and about the European Central Bank (ECB) mismanagement of the Greek crisis, for example, has suggested that China is in the middle of a housing bubble that can burst at any time (see also Jayati Ghosh and C. P. Chandrasekhar here for a similar, but broader view of the dangers in 2012). This view insinuates that growth in China is fundamentally dependent on domestic demand, but that the sources of the expansion are fragile. It, further, suggests that China now looks very similar to the US before the Lehman Brothers crisis in September 2008.
There is a palpable sense of gloom and impending doom in most discussions of the world economy today. Even before, several economists had argued that the excessive optimism about ”V shaped recovery” that was being used to describe the economic revival in 2010 was premature and misplaced, especially as none of the fundamental contradictions of global capitalism that led to the previous crisis had been adequately addressed. But they were once again written off as Cassandras by the financial media, which desperately sought sources of ”good news” and future engines of growth particularly among the emerging markets.
Now even the most stalwart establishment voices are expressing growing concern and pessimism. Oliver Blanchard, Chief Economist at the IMF, has issued what must be an unprecedentedly sombre and even dismal statement at the close of the year, noting that recovery is at a standstill in the advanced economies and recognising that 2012 may face even worse economic conditions than 2008. Read the rest of this entry »
Gillian Tett (“Fears of worse to come fuel debate over capital controls”, December 16) highlights the new and important Bank of England paper on capital flows and financial crises that argues how cross-border capital flows continue to plague the world economy and will continue to do so in alarming ways to 2050. The Bank rightly argues for cross-border regulation and co-ordination on capital flows – traditionally referred to as capital controls.
Triple Crisis blogger Patrick Bond was recently interviewed by the Real News Network on why market-based mechanisms combating climate change, like carbon markets and the Green Climate Fund, are failing.
This week Triple Crisis is giving its regular contributors a week off and featuring some great re-posts of their recent columns and commentaries. Original content will return in 2012.
In 1992, when the world met to discuss an agreement on climate change, equity was a simple concept: sharing the global commons—the atmosphere in this case—equally among all. It did not provoke much anxiety, for there were no real claimants. However, this does not mean the concept was readily accepted. A small group of industrialised countries had burnt fossil fuels for 100 years and built up enormous wealth. This club had to decide what to do to cut emissions, and it claimed all countries were equally responsible for the problem. In 1991, just as the climate convention was being finalised, a report, released by an influential Washington think tank, broke the news that its analysis showed India, China and other developing countries were equally responsible for greenhouse gases. Anil Agarwal and I rebutted this and brought in the issue of equitable access to the global commons. We also showed, beyond doubt, that the industrialised countries were singularly responsible for the increased greenhouse gases.
The World Trade Organisation’s Ministerial Conference was held in a calm and relaxed atmosphere in Geneva last week.
Past WTO ministerials had been tension-filled, with some Ministers (usually from developed countries) often aided by the Secretariat, trying to push for mandates to launch talks on new rules or treaties, and Ministers of developing countries resisting.
The decisions would be made by a small group of 20, usually selected by the Secretariat or the host Minister, and there would then be great tension to as to whether the whole membership would agree to what the small group of 20 had decided. Sometimes the small group could not agree among themselves.
Thus, WTO ministerial, or more recently “mini-Ministerials” of 30 or so members, could end in induced success or inglorious failures, with the failures exceeding the successes.
Looking back now that the dust has settled, South Africa’s COP17 presidency appears disastrous. This was confirmed not only by Durban’s delayed, diplomatically-decrepit denouement, but by plummeting carbon markets in the days immediately following the conference’s ignoble end last Sunday.
Of course it is tempting to ignore the stench of failure and declare Durban “an outstanding success,” as did South African environment minister Edna Molewa. “We have significantly strengthened the international adaptation agenda,” she explained about the near-empty Green Climate Fund. “The design of the fund includes innovative mechanisms for bringing private sector and market mechanisms into play to increase the potential flow of funding into climate change responses.”
Following the conclusion of the UN Climate Change Conference of COP 17 & CMP 7 in Durban, South Africa, and as part of our Spotlight Durban series, Triple Crisis recommends the following analyses on the package of decisions adopted at Durban and what they mean for the Kyoto Protocol and the 2020 successor agreement.