The political drive to decouple African countries from the global political economy seems to have lost its force over the past few years. However, two recent tendencies suggest a decoupling may be somewhere in our collective future.
We have US President Donald Trump in effect seeking to sever ties with “globalists” as part of an attack on liberal international institutions such as the IMF. And then there are mutterings about the formation of an Asian Monetary Fund, decoupled as it would be from single-power dominance.
The African political drive to decouple was spurred by the failure of globalisation, with its promises that linking discrete (national) economies into a global whole would raise living standards, reduce poverty, create mass employment and make countries more equal.
In most respects globalisation has failed African states, but mainly because of the constellation of power in the world. I am not entirely convinced that globalisation is a bad thing; only that corporate and finance-led globalisation was deleterious for the conservation of humanity, of nature and the absence of protective legislation, restrictive associations and other instruments of intervention to better serve humanity.
In general, the belief that globalisation would result in overall prosperity was utopian — rather Pollyannaish, as some of us have argued since the 1990s. This belief has deeper roots in the liberal international utopianism of Woodrow Wilson in the interwar period, which failed horribly with the resumption of war among the Europeans and the collapse of the League of Nations. It was given new life during the early 1980s and led for the next two decades, until at least the global crisis of 2008, to a dictatorship of the economists.
About that constellation of power: there were 13 dollar billionaires in the US in 1980, and there are now 902, with 516 in China and 205 in India. There is genuine concern over the continued supremacy of the dollar, the US as lender of last resort, and the Washington-Wall Street Axis as the world’s leading international financial centre.
Washington’s partners are becoming sceptical about the safety of the dollar, and central banks are diversifying their reserves to include nontraditional currencies of stable, well-managed economies — the fragmentation previously explained in this column. However, for now, and until we reach that distant event horizon, the dollar remains deeply embedded in the global political economy and global finance.
In this context enter suggestions (notably among members of the Association of Southeast Asian Nations, and China) of an Asian Monetary Fund to serve East and Southeast Asia with a reserve currency that should ideally not be abused or manipulated by a single country.
What holds this idea together is that the currency would ideally be controlled by independent central banks that enjoy credibility, and be embedded in political systems that are stable, with sound macroeconomic conditions.
While we are nowhere near that distant horizon where the dollar falls into a black hole in the face of Trump’s antiglobalism, European spending in preparation for “war with Russia by 2030” — as the head of France’s armed forces, Gen Thierry Burkhard, said last week — and currency diversification, we have to at least consider what may follow when the Washington-Wall Street Axis of financial control of global finance ends.
• Lagardien, an external examiner at the Nelson Mandela School of Public Governance, has worked in the office of the chief economist of the World Bank as well as the secretariat of the National Planning Commission.
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