A just world economic order

Influential Russian economist speaks of global realities

Apr 19, 2022

I have referred in various articles to the emerging pluripolar world order, which is being forged by China and the Third World nations constructing socialism. The project has ideological and political roots in the Non-Aligned Movement, which was established as an organization of governments in Belgrade in 1961. The formation of the Non-Aligned Movement was based in the 1955 Bandung conference, which had affirmed the principles of Third World unity in opposition to European colonialism and Western imperialism; and the need to break the core-peripheral economic relation imposed by the colonial process, and to establish economic cooperation as the basis of international relations. The project was founded by African and Asian leaders in the process of decolonization, who were giants of the era; it was backed by Tito of Yugoslavia, and it included the participation of the Cuban Revolutionary Government. The culminating moment of its classic period was the passage by the UN General Assembly in 1974 of the proposal for a New International Economic Order, documenting the persistent demand of Third World governments for an economic order that respected the true sovereignty of nations and that did not deny the most important human right, namely, the right to socioeconomic development.

In the 1980s and 1990s, the leadership of the Non-Aligned Movement was highjacked by representatives of the “Asian Tigers,” whose accommodationist strategy cast aside the vision of Third World sovereignty. But in the twenty-first century, the Non-Aligned Movement has retaken the voice of its classic period. The renewal was evident in the 2006 Summit in Havana, in which Cuba assumed the presidency of the Movement for the second time, when the representatives of the governments of the Third World took the podium to denounce, one by one, the structures and policies of a world order that promoted global inequality and the marginalization of countries in development. The Declaration of Havana, endorsed unanimously by the 118 member states, called for a more just world order constructed on a foundation of respect for the sovereignty of nations and the principle of non-interference affairs of states.

The first two decades of the twenty-first century also saw the emergence of a new political reality in Latin America, in which Venezuela, Bolivia, Nicaragua, and Ecuador joined Cuba in proclaiming an intention to construct socialism, and in which said nations were joined by Brazil, Argentina, Uruguay, and Honduras in the forging of Latin American and Caribbean unity and integration. Its culminating moment was the Second Summit of the Community of Latin American and Caribbean States (CELAC), held in 2014 in Havana, in which all 33 governments of the American continents, except for the United States and Canada, declared their rejection of a U.S.-directed integration, which was most clearly expressed by the failed U.S. proposal for a Free Trade Area of the Americas. In 2014, the governments of Latin America and the Caribbean affirmed their commitment to forge an integration based on solidarity and cooperation, seeking sustainable and productive development, in harmony with nature.

In concurrence with these ideological and political developments in the Third World, China was economically growing on the basis of economic planning and state-directed investment in production. Chinese economic growth was not so much an ascent in the capitalist world-economy as it was a reformulation of the norms of trade, seeking economic development on the basis of mutually beneficial relations. Chinse foreign policy found common economic and ideological ground with the Latin American anti-imperialist discourse, which China was able to put into practice on the basis of the strength of its technologically advanced and rapidly growing economy.

Coinciding with these developments in the Third World plus China, the decadence of the United States became increasingly evident. U.S. economic decline has been unfolding since 1980, when it began to give priority to investment in financial speculation, because of its short-term profitability; thereby reducing investments in old and new forms of industry, undermining the long-term productivity of the nation’s economy. With its economy in decline and its influence falling, the USA could no longer maintain its structural advantages, particularly in conjunction with the renewal of the ideological clarity of the Third World and the rise of China to support an alternative world order.

In the context of the decadence of the USA, the rise of China, and the renewal of the Third World, Russia casts its lot with the emerging alternative world order, re-establishing a role for itself on the global stage with an anti-imperialist agenda in cooperation with China and the Third World.

Sergey Glazyev, Russian Minister of Integration and Macroeconomics of the Eurasian Economic Union

Sergey Glazyev is one of the most influential economists in the world. He is member of the Russian Academy of Sciences, and he was an adviser to the Russian government from 2012 to 2019. Since 2019, he has been the Russian Minister of Integration and Macroeconomics of the Eurasian Economic Union (EAEU). He has recently put forth a new geoeconomics paradigm that has generated much debate in Russian business journals.

Glazyev’s proposal provides theoretical and practical support for the emerging pluripolar world order. It identifies practical strategies for moving forward with the pluripolar project based on the development of a currency that would function as an alternative to the U.S. dollar as well as through the development of an alternative internet platform that would sidestep U.S. control of content in the communications industry. He maintains that several key nations working together currently possess the technical capacity for these important steps.

Glazyev recently was interviewed by the digital magazine The Saker. He maintained that the period of American unipolar hegemony is coming to an end. He observes:

The vertical hierarchical structures characteristic of the imperial world economy turned out to be too rigid to ensure continuous innovation processes and lost their comparative effectiveness in ensuring the growth of the world economy. On the periphery of the empire, a new world economic order has been formed, which is based on flexible management models and an organization of network production, where the state functions as an integrator uniting the interests of various social groups around the goal of raising public welfare. The most impressive example of such a comprehensive economic structure is China, which for more than 30 years has outpaced the growth rate of the US economy by three times. China has already overtaken the United States in terms of production, exports of high-tech goods and growth rates. . .. If we look at growth rates after 1995, we see that the Chinese economy has grown 10 times, while the US economy has grown only 15 percent.

The spectacular growth of China relative to the United States is not difficult to understand, Glazyev maintains. In the United States and Europe, funds were used for financial speculation and to cover budget deficits. But China invested a great amount of money in the growth and development of new technologies. China, he noted, has an efficient management system that is focused on the real sector of the economy. And China’s banking system is state-owned, enabling it to direct cash flows to expand production and develop new technologies.

Glazyev recalls that the British empire collapsed like a house of cards following World War II, because the two victorious powers, the USSR and the USA, did not need an empire. Today something similar will occur. We will see the emergence of a new world economic order with Southeast Asia as the leader in world economic development, because the world economy does not need U.S. transnational corporations nor the U.S. dollar.

In fact, the U.S. dollar is no longer a reliable currency, which became clear when the U.S. government seized the foreign exchange reserves of Iran, Afghanistan, Venezuela, and now Russia. Because of this uncertainty, countries will no longer want to use the U.S. dollar for foreign exchange reserves.

Alternatives to the U.S. dollar are already beginning to emerge. Leading Asian countries have begun trading with national currencies. In addition, “A new payment system based on modern digital technologies such as blockchain is being developed all over the world; with this technology banks lose importance. Classic capitalism based on private banking is fading away.”

With this development, the foundation for the restoration of international law will be established. Having attained control of their banking and commercial systems, nations will be sovereign and will be able to establish their national priorities. This makes possible cooperation, because sovereign states can arrive to agreement on mutually beneficial trade. National priorities will be respected, and states will have the space to protect their internal markets as they deem necessary. There will be incentive for joint investments to improve the wellbeing of peoples.

In addition to abandoning the dollar in the financial sector, the nations constructing an alternative world order have to cooperate in the development of an alternative information technologies. “It is necessary to isolate our information space from U.S. oligopolies,” so that socialist-inspired ideologies will predominate, ideologies that have space for market competition, but in the context of attending to the wellbeing of all; ideologies in which competition among states is understood in the context of the need for humanity to develop a world-system characterized by cooperation. In control of their economic and financial systems, and in control of the dissemination of understanding and information, “the countries of the new world economic order will be able to ensure high rates of economic development.”

China is leading the way, because China’s economy is advancing, and because China has a “mixture of socialist ideology, national interests, market competition.” In addition to China, key nations constructing the alternative world order include India, Japan, Korea, and Vietnam, because Asia will be leading economic development, and because these nations have developed market economies that to some extant are constrained by public and social interests. But other countries in the world will be cooperating, especially those with socialist or socialist-inspired ideologies; and also including Iran.

The American power elite “cannot accept that they will no longer be leaders of the world.” So the United States turns to war, but it is a different conception of war, utilizing methods different from those of the twentieth century. Glazyev sees five combat fronts: financial sanctions; commercial blockades and sanctions; communicational and ideological manipulation; biological warfare, for which the United States has developed a network of biological laboratories; and military threats and interventions.

Seeking to block the emerging world order, Western politicians, intellectuals, and businesspersons are attempting to form a new order with a single world government, with economic and financial domination by the large corporations, and shaped by a post-humanist ideology. This emerging world government views the territories of the nations of the world as fulfilling functions in exploitation for profit. Whereas Hitler wanted to establish a world government on the basis of an inhuman ideology, the technocratic oligarchs of today want to forge a world government on the basis of a post-humanist ideology, which is fundamentally opposed to the traditional as well as modern aspirations of humanity.

A proposal for a new international currency

Glazyev reported that ten years ago, he and a group of academics presented a report, “Toward Sustainable Growth through a Just World Economic Order,” at the Astana Economic Forum. It proposed a transition to a new world financial and monetary system through the creation of “a world accounting currency.” The proposal aroused much interest among academics, but none of the states were interested in implementing the proposal. Now however, in light of the current situation, states will be looking to quickly create new methods for making payments.

Glazyev notes that fifteen years ago he thought of the proposal as a way of reforming the IMF. But now it is clear that a new monetary financial system will have to be built without the West.

The idea is to create a multi-currency system based on national currencies, which could include the ruble, the yuan, and the rupee. All the participating countries would have the right to include their national currency in the international basket of currencies. An index, a weighted average of national currencies, would be developed. In addition, commodities would be included as part of the index, some twenty products, including gold, oil, metals, grains, and water.

In a subsequent interview in The Cradle, Glazyev reiterates that “by freezing Russian foreign exchange reserves in custody accounts of Western central banks, US, EU and UK financial regulators undermined the status of the dollar, euro and pound as reserve global currencies. This step considerably accelerated the ongoing dismantling of the dollar-based world economic order.” We are at the point of “the imminent disintegration of the dollar-based global economic system, a system that laid the foundation for US global dominance.”

He reiterates the importance of the People’s Republic of China in the next stage of development, because the Chinese system “combines centralized strategic planning and market economy; and it combines state control of the monetary infrastructure and entrepreneurship.”

Glazyev envisions a transition from “the current dollar-centric global financial system” to a new system “based on a consensus of the countries joining the new world economic order.” He sees the transition as having three stages. First, the use of national currencies in bilateral currency swaps, a phase that is almost over. Secondly, the use of new pricing mechanisms that do not take the dollar into account. And finally, “the creation of a new digital payment currency founded through an international agreement based on the principles of transparency, fairness, goodwill and efficiency,” using something like the monetary unit that his academic group has proposed.

Glazyev indicated that the initiation of the new financial system only needs the announcement of an agreement at a regular meeting of BRICS or SCO, and his group is presently working on this possibility. (SCO, or the Shanghai Cooperation Organization, is an Asian alliance that includes China, Russia, India, among others.)

The new currency, Glazyev notes, would be used exclusively for cross-border payments. Participating countries would use their national currencies for credit, for financing domestic investment and domestic industry, and for reserves.

Thematic Index

Conclusion

We could be in a moment of historic change, in which the U.S. unconventional war against Russia in Ukraine makes more evident the impossibility of the continuation of a unipolar world, thereby provoking the taking of decisive steps in the definitive founding of a pluripolar world, with China, Russia, India, Vietnam, Iran, Cuba, Venezuela, Nicaragua, and Bolivia playing leading roles. If Glazyev is correct, the resources for taking these steps are in their hands.

Those of us who are intellectuals in the West must do our best to explain the dynamics of this possible transition to our peoples, who are confused by the propaganda role of the Western media in support of U.S. unconventional war against all nations that seek a sovereign world. If a world of cooperation, peace, and prosperity is established by the socialist and socialist-inspired peoples, the governments and peoples of the West ultimately will participate in and contribute to that better, more just world.

Knowledge, ideology, and real socialism in our times

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