[DEBATE] : (Fwd) G20-in-SA critique by Shawn Hattingh

[Patrick Bond]

The G20: The new ruling aristocracy of the world?


By Shawn Hattingh


Introduction


On the 17th and 18th of November 2007, the finance ministers and reserve 
bank governors of the G20 countries, along with leading International 
Monetary Fund (IMF) and World Bank officials, will be gathering in the 
seaside village of Kleinmond, South Africai. During this meeting - which 
will be hosted by the current Chair of the G20, our own Trevor Manual - 
the most powerful economic ministers and politicians will be surrounded 
by symbols of opulence – a golf course, five star accommodation, a 
beautiful conference centre, body guards, limousines, cavalcades and sea 
views. They will swop smiles and handshakes for the press – who like the 
court jesters of old will sing these global capitalist elites’ praises. 
They will also tell us that these politicians have come to Kleinmond to 
create a better world for us. The biggest joke of all is that they will 
expect us to believe this lie. Of course, if you look past the 
superficial pomp, glitz and sheer propaganda that will be part of the 
Kleinmond gathering, you will find that a better world is not being 
created for us; a better world is being created for the global elite and 
their transnational companies to our detriment. The G20 only cares about 
economic growth for the richest companies on earth; they really don’t 
care about us – we are inconsequential to them until we rise up in 
protest. Indeed, at the meeting in Kleinmond the G20 will be formulating 
plans to further exploit the workers and poor of the world to produce 
more wealth for transnational companies and their greedy capitalist owners.


The G20’s composition and agenda


The G20 comprises of the 20 biggest economies in the world, in the form 
of the US, the UK, Germany, France, Italy, Canada, Russia, Japan, South 
Africa, China, Brazil, Australia, Argentina, India, Indonesia, Mexico, 
Saudi Arabia, South Korea, and Turkey. Together these countries account 
for 90% of the world gross productii and over 80% of world tradeiii. 
Added to this, with their combined voting power in the IMF and World 
Bank, these countries completely dominate these institutionsiv. Indeed, 
the President of the World Bank and Managing Director of the IMF are 
required to attend all the G20 meetings.


The G20 was established by the G8 in 1999 in the wake of the Asian 
economic crisisv. At the time of the Asian financial crisis some of the 
largest economies in the South came under speculative attack, which 
neo-liberal policies such as financial liberalisation had created the 
space for. When the crisis initially broke, billions of dollars were 
wiped out in a matter of hours and it threatened to spread to the 
countries of the North. Indeed, the Asian economic crisis shocked the 
most powerful countries and economic institutions, such as the IMF and 
World Bank, to their core. It actually endangered the entire neo-liberal 
global project that had been formulated to supposedly overcome the 
crisis that capitalism had first began to experience in the 1970s, which 
was and is based on the problem of an over-accumulation of capital. To 
shore up the neo-liberal system, the giants of the G8 led by the United 
States, realised that they needed to further draw in the biggest 
countries of the South, such as South Africa, India, China, and Brazil 
into the global financial governance system. The G20 was one attempt to 
do this, and in effect rescue the global neo-liberal agenda, which had 
and has been so favourable to the interests of transnational companies.


The G20’s self stated purpose is to meet annually to discuss policies 
that will promote continuous high economic growth for transnational 
corporations across the world, whilst at the same time attempting to 
limit any possible financial crisis that may pose a threat to high 
economic growth. To do this, the G20 has opted to promote neo-liberal 
globalisation even furthervi.


The most important document that has been produced so far by the G20 is 
the Accord for Sustained Growth. It outlines the policies that the G20 
countries aim to promote in order to create an environment in which the 
largest companies in the world can maintain high growth. One of the most 
important pillars of the G20’s Accord for Sustained Growth is financial 
liberalisation. As such, the G20 has called for countries across the 
world to further open up their economies to capital flows. The goal of 
this is to increasingly allow companies to move money in and out of any 
economy in the world. Thus, the G20 wants to entrench an environment 
where corporations can look for countries and areas of investment that 
offer the highest rates of returnvii. This includes allowing companies 
to buy assets in any country and speculate on any stock market in the 
world. Of course, financial liberalisation has already spawned 
speculation on currencies and stock markets on an unprecedented scale, 
which in turn has created financial volatility and increased the 
likelihood of another financial crisis. Due to the fact that the G20 
believes in financial liberalisation, their answer to this increased 
financial volatility is not for countries to impose financial controls 
to stop speculation; but rather for countries to build up their currency 
reserves and strengthen their capital marketsviii. In this way, the G20 
countries, including South Africa, believe that countries could use 
these reserves to defend their currencies and stock markets when they 
are attacked by speculators. In order to do this, it means that 
countries have to divert money away from social spending. Thus, the G20 
countries believe that speculation should be allowed to continue, and 
its negatives effects, such as currency and stock market crashes, should 
be borne by the poor, who will lose further social services so that vast 
reserves can be built up to defend currencies and stock markets when the 
corporate speculators descend on them.


Through the Accord on Sustainable Growth, the G20 has also called for 
all countries to advance the privatisation of state owned assets and 
public servicesix. This creates further investment opportunities for 
transnational corporations, who can now swoop into the countries of the 
South and buy up the ex-state owned assets that offer the best 
possibilities for future profiteering. In fact, under South Africa’s 
chairmanship, the G20 has been pushing countries to privatise state 
assets at an increasingly rapid rate in order to use the money received 
from this to service debts to the IMF, World Bank and private Northern 
banksx. Considering that much of the debt owed by the South is 
illegitimate, this call for the countries of the South to sell their 
public assets to pay the IMF, World Bank and Northern private banks is 
especially sickening. It will translate into a situation where people 
across the globe will lose the few remaining social services that they 
still have so that the Northern private banks can grow richer.


The G20 countries have also sought to assist the largest transnational 
corporations increase their profits in a variety of other ways. The G20 
has promoted policies to create a flexible labour market on a global 
scalexi. In other words, the G20 are promoting policies that strip 
workers of their few remaining rights so that corporations can pay them 
less and less and thereby drive up their profit rates. Along with this, 
the G20 has implemented policies that are aimed at protecting the 
intellectual property rights (IRPs) of corporations, including patents 
on medicinesxii. In doing so, the message being sent by the majority of 
the G20 countries is that the interests of transnational corporations 
are more important than people’s lives.


Through the Accord for Sustained Growth, the G20 countries have also 
committed themselves to implementing and furthering trade 
liberalisation. Indeed, all of the G20 countries are firm believers in 
free trade because it is the transnational companies that are based 
within their territories that benefit from free trade regionally and 
globally. For this reason, the G20 countries have used the G20 meetings 
as a forum to discuss how they could collectively kick start the stalled 
WTO negotiationsxiii. In fact, the G20 countries are the driving force 
within the WTO: they are the ones that have driven the entire WTO 
process through the exclusive green room meetings in which they 
participate to the exclusion of smaller countries of the South.


At the Kleinmond meeting, the G20 will also be discussing the 
possibility of implementing a number of reforms within the World Bank 
and the IMF. However, the reforms that have been suggested by the G20 
countries are only superficial. The largest countries of the South 
involved in the G20, such as South Africa, Brazil, China and India, want 
to reform the World Bank and IMF in order to receive greater voting 
rights for themselves within these institutions. They have, however, not 
called for equal voting rights for all countries in IMF and World Bank, 
which is significant. In effect, this means that South Africa, Brazil, 
China and India are still willing to deny larger voting rights for 
smaller nations within the IMF and World Bank. It, therefore, appears as 
if these G20 countries wish to use the G20 to push for greater voting 
rights for themselves in the IMF and World Bank so that they can join 
the older imperial powers in using these institutions to promote the 
expansionary agendas of their own capitalist elitexiv. Certainly the 
reforms that are proposed by the G20 countries regarding the IMF and 
World Bank have not extended to questioning the neo-liberal policies 
these institutions have forced upon poorer nations of the South. This is 
because all of the G20 countries are firm believers in neo-liberal 
economics. In fact, the G20 countries have openly stated that as part of 
the proposed IMF and World Bank “reform” process, the control that these 
institutions have over smaller countries’ economies should be 
strengthenedxv. This would entail the further imposition of neo-liberal 
economic policies on smaller countries. It is telling that the G20 
countries, especially South Africa, India, and Brazil wish to extend the 
powers and reach of the IMF and World Bank at the very moment that these 
institutions have lost much of their power and credibility in the 
Southxvi. Indeed, the IMF and World Bank, and the neo-liberal agenda 
that they push, are being openly challenged by countries such as 
Venezuela, Cuba, Bolivia and Ecuador. The defence that G20 countries, 
such as South Africa and Brazil, have mounted on behalf of the IMF and 
World Bank clearly demonstrates that these countries are far more 
aligned with the older imperial powers than they are to progressive 
countries, such as Venezuela and Ecuador.

The consequences of the policies pushed by the G20


The consequences of the neo-liberal policies that have, and are, being 
pushed by the G20 countries are familiar: the rich are getting richer 
and the poor are getting poorer. While most of the G20 countries are now 
richer than ever under neo-liberal globalisation; as many as 80 other 
countries are now poorer than they were in the 1970sxvii. Although trade 
has increased under the global neo-liberal ‘free’ trade regime it has 
only been an elite who have benefited. The portion of exports from the 
poorest countries has declined markedly. In fact, the poorest 48 
countries now only account for 0.4% of global exports. This is because 
the industries in these countries have been destroyed by imports 
flooding in under the banner of ‘free’ trade. All of this translates 
into a world of growing inequality: a world where the richest 400 
people, the new global capitalist aristocracy, now have more money than 
the poorest 3 billion people combinedxviii.


While companies have made massive profits due to neo-liberal policies 
that are promoted by the G20 countries; the people of the world have 
suffered. Due to privatisation, billions of people have lost all access 
to social services, such as education, water, sanitation and healthcare. 
This is because in most countries, these services are now being sold by 
private companies as commodities: if you can’t afford to pay for such 
services, you don’t get them! The macabre result: over 1 billion people 
have lost access to clean drinking water; 2.6 billion people lack basic 
sanitation; over 1 billion people are illiterate; 820 million people 
suffer from malnutrition; over 1 billion people lack access to any form 
of healthcarexix; and 30 000 children die every day from povertyxx. This 
takes place in a world where the amount of money spent by American and 
European companies on entertainment each year could give every person in 
the world access to enough food, proper healthcare, basic education and 
clean waterxxi.


The reasons why the G20 emerged


Of course, the event that led to the formation of the G20 was the Asian 
financial crisis. However, the actual reasons why the G20 was formed are 
more systemic and relate to the steady decline of US imperial power and 
the growing breakdown of US hegemony – the Asian crisis was simply the 
catalyst for the formation of the G20, not the reason why it was formed.


Since the early 1970s, and the beginning of the global capitalist 
crisis, the US’s global economic dominance and hegemony has been on the 
declinexxii. In 1950, the US supplied 50% of the world’s gross product; 
by 2003 this had dropped to 20%. In 1950, 60% of all manufactured goods 
were produced in the US, today only 20% of manufactured goods derive 
from the US. Non-US companies now dominate most of the industries in the 
world. For example, 9 of the 10 largest electronics companies in the 
world are non-US companies; 8 of the 10 largest car manufacturing 
companies are non-US corporations; 7 of the 10 largest oil companies are 
non-US; and 19 out of the 25 largest banks are also non-Americanxxiii. 
Since 2002, the US has also been paying out more to foreign investors 
than it has received from its investments abroad. This, along with 
declining exports, has seen its current account deficit balloonxxiv.


As early as the mid-1970s, US state and capital realised that their 
global position was declining and that they were losing market share and 
economic power to other imperial countries, such as France, Germany, the 
United Kingdom and Japan. Certain sections of US capital realised that 
the growing importance of countries such as Japan and Germany, along 
with decline of the US, could spark inter-imperial rivalry on a global 
scale, which would be detrimental to the capitalist system as a whole. 
Some of the most important sections of the US capitalist class were and 
are firm believers that the largest capitalists across the globe have a 
common interest in ensuring that there is a stable global environment 
that favours capital accumulation; even though they may compete with one 
another as individual capitalistsxxv. Thus, these influential US 
capitalists believed and believe that the most powerful capitalist 
states should work together to create a global environment that favours 
the interests of the most powerful corporations in the world. The 
influence that this section of US capital exerted over the US state, led 
to the US forming the G7xxvi in 1978xxvii. The formation of the G7 was 
aimed at persuading Western Europe and Japan that the US was willing to 
work with other capitalist powers to create a global environment that 
would favour the interests of all of the most powerful capitalists. On 
this basis, and through the G7, a collective imperialism was formed, 
which was headed up by the US, but included other lesser imperial powers 
like the United Kingdom, France, Germany, Italy, Canada, and Japanxxviii.


By the 1990s a number of countries in the South had also begun to emerge 
as regional imperialists. For example, since the 1990s, sections of 
Brazilian capital, with the assistance of the Brazilian state, have been 
rapidly expanding into other Latin American countries. In East Asia, 
China has emerged as a major player and now looks set to rival the US 
globally. Similarly, South Africa has emerged as a regional imperialist 
in Africa. The South African state has been working hand in glove with 
South African corporations to assist them to expand into other African 
countries. This has seen South Africa becoming the largest foreign 
direct investor in Africaxxix. With countries such as South Africa, 
Brazil, India, Australia, and China emerging as regional powerhouses, 
the US was faced with a further devolution of its power in the regions 
where these countries were and are acting as imperialist powers. Again 
the US, indicated to these countries that US would be willing to 
co-operate with them. In doing so, the US co-opted South Africa, Brazil, 
and India into the collective imperial system that it had created with 
other lesser imperial powers like the UK, Germany and France etc. It did 
this in a number of ways. For example, South Africa, China, Brazil and 
India were welcomed into the inner circles of the World Economic Forum. 
The World Economic Forum has been one of the central institutions 
through which capitalists and leaders from the South have been inducted 
into the emerging global capitalist aristocracy. Along with this, 
regional emerging imperialists, such as South Africa, were drawn into 
the centres of power in the WTO, IMF and World Bank. Similarly, the G20 
was established to entice the emerging regional imperial powers into the 
global collective imperial system. The aim of this was to ensure global 
stability so that a climate which favours capital accumulation globally 
could be assured. Of course, the new regional imperial powers like South 
Africa have not joined as equal partners; they are lesser partners in 
the global collective imperial system. This can be seen by the fact that 
the G20 is not yet a highly formal structure like the G8.


Despite acting as a collective globally, through such institutions as 
the G20, each of the powers involved in the collective imperial system 
has its specific region of the world in which it operates as the 
prominent imperialist power to further its own capitalist entities 
interests. For example, the US’s main strategic imperialist spheres are 
Latin America, the Middle East, parts of Africa and parts of Asia; while 
Britain’s imperialist ambitions are mainly restricted to some of its 
ex-coloniesxxx. Similarly, South Africa’s imperialist sphere covers much 
of sub-Saharan Africa. As a result, where two or more imperial powers 
interests clash in a certain region or country, they will compete in 
that region or country, even though globally they will remain aligned 
through institutions such as the G20 and the World Economic Forum. 
Hence, although not in conflict with the US or Britain globally, in 
certain areas in Africa South Africa, Britain and the US’ interests do 
clash. This, however, does not preclude South Africa, Britain and the US 
from working together in other areas of Africa where they have common 
interests.


Within the collective imperial system, the various countries 
continuously jostle to increase their powerbases. Specifically, under 
George Bush Jr, the US has acted unilaterally on a number of occasions 
to strengthen its leadership position within the global collective 
imperial system. It has targeted strategically located countries such as 
Iraq, Iran, North Korea and Zimbabwe through military actions and 
sanctions. Such actions were not just directed at these countries, they 
were actually warnings to the regional and global imperial powers 
located close to these countries, or with interests in these 
countriesxxxi, such as the EU, Russia, China and South Africa. For 
example, the US invasion of Iraq was aimed at seizing oil interests in 
Iraq for US companies to the detriment of European oil companies. Added 
to this, the military attack on Iraq was also meant as a veiled warning 
to the European powers not to openly challenge the US’s leadership role 
in the global imperial systemxxxii. Such action by the US has even 
extended into a bid to gain global dominance as the sole imperial power. 
However, because of its declining economic and political power the US 
has failed dismally in these actions. It has become bogged down in a war 
in Iraq, which it is losing. It has also failed to intimidate North 
Korea into submission, and thereby undermine China’s powerxxxiii. 
Similarly it has also failed to get rid of the ZANU-PF in Zimbabwe, 
which was aimed at curbing South Africa’s imperial influence and power 
in sub-Saharan Africa. By undertaking these actions, and failing to 
reach its goals, the US has found itself in a serious crisis. Due to 
these failures its leadership position in the global collective imperial 
system has been further erodedxxxiv. As a result of the costly wars it 
is waging, the US is now borrowing at an unprecedented rate: its debt 
now stands at over $ 9 trillionxxxv. Most of this debt is owed to 
countries such as China, Russia, India, Brazil, and South Africa. If the 
dollar continues to weaken, there is a real danger for the US that these 
countries will withdraw the money that they have invested in US bonds. 
If this happens, the US economy will be in severe crisis and may even 
experience an economic meltdown, which will have knock on effects globally.


At this point the US is at a crossroads. It can try and maintain its 
leadership position through military might, abandon initiatives such as 
the G8, G20 and World Economic Forum, and attack the emerging regional 
and global imperial powers military and/or economically. This is an 
unlikely option. Iraq has proved that despite all of its high tech 
weapons the US is militarily over-stretched. It could not fight wars on 
multiple fronts like the British Empire of old. Added to this, a global 
imperial war - along with the trade barriers that would accompany it - 
are not in the interests of the biggest US transnational companies. The 
largest transnational companies, and their global capitalist owners, 
want a global neo-liberal free trade regime. They need such a global 
free trade regime to function as truly transnational companies and 
maximise their profits. The other option that the US has - to deal with 
its declining power - is to further broaden and strengthen the global 
collective imperial system. This would perhaps involve replacing the G8 
with the G20 and granting the reforms in the IMF and World Bank that 
have been demanded by China, South Africa, India and Brazil. This would, 
however, also further undermine the US’s power, but it would further 
bind the global elite in the G20, and their project, together. Such an 
option is actually favoured by some sections of the US capitalist elite, 
and seems the most likely path the US will follow.


Even if the G20’s power is increased, and the global collective imperial 
system is strengthened, there are no guarantees that capitalism will not 
experience a massive crisis in the future. Neo-liberalism has created a 
form of capitalism that is volatile, highly unstable and susceptible to 
crises. Added to this, capitalism has created an unprecedented 
environmental crisis.


Conclusion


The meeting of the G20 in Kleinmond, is a meeting of the global elite. 
Despite the rivalries between the countries involved, they have proven 
and continue to prove a willingness to work together to force 
neo-liberal economic policies on the people of the planet. The aim of 
such policies is to maximise the profits of the largest transnational 
corporations in the world. Like the US, the people of the world also 
face a choice. We can sit by and watch the G20 - along with the other 
forums that the collective imperial powers use - push through 
neo-liberal policies, or we can join together and resist. We can join 
hands with the movements that have emerged across the world, like the 
Zapatistas, to struggle against neo-liberal capitalism and the 
collective global imperial system. We can also join with the countries 
–like Venezuela and Ecuador - that have used the decline of the US to 
embark upon a path away from capitalism. The choice is ours – we can 
choose to struggle to make another world possible or we can sit in 
silence and let the likes of Trevor Manuel and his allies in the G20 do 
what they want.


NOTES

i 
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ii Sunday, R. G20 mobilisation in Melbourne. 29th January 2006. 
www.foe.org.au

iii Katzenellenbogen, J. SA’s finance eyes price stability in the G20. 
Business Day 22 November 2006.

iv www.demoncracyandjustice.org

v Sohn, I. 2005. Asian financial cooperation: the problem of legitimacy 
in global financial governance. Global Governance 11:487-504.

vi Hamed, O. What’s wrong with the G20’s neo-liberal agenda? 
www.justfocus.org.nz/?p=268

vii G20. 2005. G20 Accord for Sustainable Growth: Stability, Competition 
and Empowerment – Mobilisng Forces for Satisfactory Long-Term Growth. 
China: The G20

viiiwww.demoncracyandjustice.org

ix G20. 2005. G20 Accord for Sustainable Growth: Stability, Competition 
and Empowerment – Mobilisng Forces for Satisfactory Long-Term Growth. 
China: The G20

x South African National Treasury. 2007. G20 work programme for 2007: 
South Africa: National Treasury.

xi Itis, T. What would it take to make poverty history? 
www.stwr.net/content/view/1295/37/

xii Hamed, O. What’s wrong with the G20’s neo-liberal agenda?

xiii www.demoncracyandjustice.org

xiv Sunday, R. G20 mobilisation in Melbourne. 29th January 2006. 
www.foe.org.au

xv G20. 2005. G20 Accord for Sustainable Growth: Stability, Competition 
and Empowerment – Mobilisng Forces for Satisfactory Long-Term Growth. 
China: The G20.

xvi Itis, T. What would it take to make poverty history? 
www.stwr.net/content/view/1295/37/

xvii www.worldsocialism.org/articles/from_third_world_to.php

xviii www.globalissues.org/TradeRelated/Facts.asp

xix www.globalissues.org/TradeRelated/Facts.asp

xx www.unicef.org/pon00/immu1.htm

xxi www.globalissues.org/TradeRelated/Facts.

xxii Wallerstein, I. 2003. US weakness and the struggle for hegemony. 
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xxiii Du Boff, R. 2003. US hegemony: continuing decline, enduring 
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xxiv Du Boff, R. 2003. US hegemony: continuing decline, enduring danger. 
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xxv Wallerstein, I. 2003. US weakness and the struggle for hegemony. 
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xxvi The G7 became the G8 when Russia was invited into the exclusive 
club on the collapse of the Soviet Union.

xxvii Bradford, C. 2006. Global economic governance at a crossroads: 
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xxviii Amin, S. 2006. Beyond US Hegemony? Assessing the Prospects for a 
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xxix Hattingh, S. 2006. South Africa in Africa: Another Scramble for 
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xxx Amin, S. 2006. Beyond US Hegemony? Assessing the Prospects for a 
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xxxi Wallerstein, I. 2003. US weakness and the struggle for hegemony. 
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xxxii Hardt, A. & Negri, A. 2006. Multitude. Penguin Book: United Kingdom

xxxiii Wallerstein, I. 2003. US weakness and the struggle for hegemony. 
Monthly Review. Volume 55, Number 3.

xxxiv Hardt, A. & Negri, A. 2006. Multitude. Penguin Book: United Kingdom

xxxv news.yahoo.ca/s/capress/071107/business/us_national_debt