The politicians, bureaucrats and technocrats who participated in the G20 meetings of the past about a week have departed. We therefore have time to reflect on the relationships between individual brushstrokes of the G20 and what they mean in the big picture.
I should dispense early with easy reasoning that we have reached a turning point in history. We’re mere chroniclers documenting events around us; history will be written in the future. Yet, we can try to make sense of some of it.
Beliefs, values and ideas matter. Never mind my personal and intellectual reservations; this year’s Nobel prize in economics was awarded to three Schumpeterian thinkers: Philippe Aghion, Peter Howitt and Joel Mokyr. I share Mokyr’s belief that social change and transformation — he refers to “economic change” — rely as heavily on beliefs and values as on ideas. I don’t share the belief that economics can and should explain everything.
Regarding the G20 leadership changing from South Africa to the US next year, in a more global historical arc South Africa’s leadership carries heavy symbolic and political weight. This weight cannot be sustained though without relying on the presence and power of the Global South, putatively led by the Brics bloc.
The US leadership is guaranteed only due to its continued military might. The postwar liberal international order has been kept in place by the US willingness to be the lender of last resort, a large domestic market and an attendant military power.
The power of the US military is the only one of those constitutive elements of postwar stability that remains in place relatively unchallenged, or so it seems. The US has shown repeatedly that not only does it still have military power, but also that it is willing to use it. With minimal success, usually, but with maximal destruction.
Schumpeter provides evidence of US weaknesses. I’m not going with the “collapse” theory; it’s too soon to tell. In Schumpeterian terms, the success of capitalism in the US has led to deindustrialisation, rising inequality, a decline of the middle class with attendant instability, a flight of intellectuals and elite capture. Remember all those criticisms about Soviet communism, especially rule by a narrow elite.
At the base of this Schumpeterian explanation is his idea of “creative destruction”, which he believed necessarily led to innovation and renewal. Except the advances in science and technology (AI in particular), have left most people in the US (and the world, for that matter) scrambling to find a place in society.
I first noticed rising resistance during the Barack Obama presidency. Donald Trump, in turn, presented himself as the antiglobalist who would tame runaway technological and uncontrollable global political economic forces, or at least bring it all back under control and “Make America Great Again”.
Handing the baton of G20 leadership to the US may be a little too late for Washington’s role as provider of hegemonic stability. Abroad, use of the dollar in international exchange is being challenged. Domestically, the country has seen increases in the prices of consumer goods, education and healthcare, increased reliance on food stamps, a crisis in agriculture (increased operational costs, market volatility and an overall decline in trade surplus), and a decline in manufacturing and employment, which accelerated with the rise of China in the late 1990s. The debates about “affordability” in the US have as much to do with Trump’s tariff wars as they have to do with a longer-run loss of buying power since about 2000.
The G20 was created in 1999, with significant intellectual contribution by South Africa, mainly in response to recurrent financial, economic, banking and currency crises over the preceding about 25 years. The G20’s record may have turned out to be relatively successful if it were not for the US banking crisis of 2007/08.
• 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.
Read all the latest G20 news, plus expert views on what South Africa’s leadership of this critical forum means when it comes to shaping global policies and advocating for Africa’s interests on the international stage, on our G20 page.
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