For a group of people supposedly craving the return of great power politics, the leaders at the G7 meeting in Biarritz looked remarkably crap at it.
There was romance – Melania’s swoon over Justin Trudeau; there was comedy – Johnson and Trump on the stairs. And there was even drama, when the Iranian foreign minister arrived unannounced by ministerial jet. But there was very little substance. And that’s not surprising given the eviscerated state of the global system the G7 exists to administer.
In Charlevoix last year, with Trudeau hosting, the communique ran to 4,000 words and 28 bullet points. It began with a pledge to uphold “shared values of freedom, democracy, the rule of law and respect for human rights and our commitment to promote a rules-based international order”.
The Biarritz communique, by contrast, runs to only 276 words, most of which are subtextual admissions of defeat. It contains no commitment to freedom, democracy or the rules-based order, and could not – because that order is visibly disintegrating beneath their feet.
It commits not to “free” trade but to “open and fair” trade. It asks finance ministers to “monitor the state” of the world economy – pledging no collaborative efforts to stave off the approaching recession. It wants to “overhaul” the World Trade Organisation to police intellectual property better – the same WTO that Trump has paralysed by refusing to appoint judges.
On Iran, Libya, Ukraine and Hong Kong – the four global flashpoints uppermost in the leaders’ minds – there were words and nothing more: no clear outcomes can be envisaged, because the world order has become not just unmanageable but unpredictable. Will China send armoured vehicles into the streets of Hong Kong? It’s 50:50. Will the West’s chosen Libyan warlords win? Absent military intervention who knows? Is the Iran peace deal recoverable? It depends how many E numbers are in Trump’s morning cheeseburger. Can the frontline in the Ukraine conflict be stabilised? There’ll be a summit in a few weeks’ time at which the answer is no.
As to the overarching question facing humanity – can we avert climate catastrophe? – there is not a single overt mention. The G7, then, has degenerated into a kind of Love Island for the elite. And that’s a historically lawful outcome of the forces acting on them.
When the organisation was first set up – in Paris in 1975 – the capitalist half of the world economy was in crisis. The Bretton Woods agreement had just collapsed, the oil shock had produced simultaneous recession and inflation, and the working class of the developed world was winning the class war.
Over the next 15 years, face-to-face, the G7 leaders managed the rise of neoliberalism, the fall of Soviet communism and the marketisation of China. Their finance ministers produced the Plaza and Louvre accords, through which the US forced Germany and Japan to take on global economic responsibility. As globalisation took off, they created the G8+5 – including Brazil, China, India, Mexico and South Africa. And once neoliberalism entered its phase of financial crisis and expeditionary warfare, the G8 became a forum for crisis management – until the Ukraine crisis forced Russia’s ejection in 2014.
So the G7’s fate mirrors the rise and demise of neoliberal globalisation. Three out of the seven member states currently have governments dedicated to a new form of right-wing economics: protectionism and deregulation combined with climate science denial and a war on economic migration.
I call it “Thatcherism in one country” – and it’s rational given the future shape of the world economy. Over the past 30 years, global growth has been sustained by three main drivers: a rising population, the catch-up of poor countries with rich ones, and productivity (this last mainly boosted by rising debt rather than education and technology).
But Bank of England economists predict that these old drivers of growth are waning. Productivity growth has already petered out, and catch-up effects will not be strong enough to replace it, and population growth is also slowing. As a result, it is rational to expect global economic growth to halve between 2005 and 2055.
And as it does, the conventional means of managing the world economy – through currency pegs and co-ordinated central bank interest rate cuts – lose their effect. This is the message of the new paper from former Treasury secretary Larry Summers and US economist Anna Stansbury.
Despite adding $72trn to the global debt pile since the 2008 crisis, and cutting interest rates so deep that $16trn of that debt is paying less than zero, growth is low and declining. For Summers, this confirms the so-called “secular stagnation” problem – suggesting a “fundamental lack of aggregate demand” for which the solution is increased government spending and even higher borrowing.
However, policy formation by major powers no longer takes place in the sterile atmosphere of the economics think tank. It’s become inflamed with inter-state rivalries and is being conducted by fractured national elites, just as it was in the 1930s.
Trump’s trade war on China is designed to turn the US into a mid-20th century utopia based on white, male, manual work and a revived superpower status for the US. Trump plans to borrow, spend, tariff and money-print his way to a second term, regardless of what it does to the US debt pile or the stability of the world system. Johnson plans to wreck the British economy, disrupting 30 years of trade and collaboration with Europe, in order to make the UK into a comprador-led colony of Trump’s America. And it doesn’t stop there.
Looking back on the first eight months of 2019 it feels like the elite of every country is increasingly out of control: Macron is still at war with the gilets jaunes; the Chinese Communist Party is spewing out lies on Twitter, a service banned under its own jurisdiction but still useful enough to slander the Hong Kong protesters; Modi’s troops have locked down Kashmir; Bolsanaro’s fascist supporters are burning the Amazon; Netanyahu’s Israel is lashing out wildly at Iranian-backed groups from Syria to the Gulf. So the G7 summit’s absurd photoshoots and catwalk sessions were nicely symbolic of its irrelevance.
We are in an interregnum in which Trump will answer economic downturn with increasing racist rhetoric and the delegitimisation of the Democratic Party, in which Xi Jinping will prepare a noose for the democratic protest movement in Hong Kong, and in which Johnson will try to shut down British democracy in order to take yet another chunk out of the multilateral order.
What emerges from this will not be any kind of world order – but a system of controlled rivalries, in which you are free to shoot, jail and torture your own intellectuals and protesters but not to sell telecoms equipment to a rival economy. Like Birmingham under the Peaky Blinders, only with no police force. As for the formal architecture of the world order – the World Bank, OECD, IMF and United Nations – you could see on the faces of its highly-paid bureaucrats the flickering realisation of their increasing irrelevance.
China and Russia, of course, the key players in the new disorder, were not even there. But that doesn’t matter. To see the G7 paralysed and ineffective like this prompts the question: did we just witness a key moment in the end of the multilateral order?
Unlike some on the left, I don’t applaud this slow catastrophe. As Keynes warned the left in the 1930s – don’t call for the end of the global order until you’ve seen what’s going to replace it. And unlike in the 1930s, we face the challenge of climate change – which only a global order can solve.
But you have to recognise facts. The time for co-ordinated fiscal stimulus is now – but the world’s leaders seem interested only in Vogueing their way from conference to conference, parading their selfishness and paralysis. The time for tough peace negotiations – from Ukraine to Syria to the Gulf – is also now, but instead we are going to get proxy war.
I never believed Gordon Brown and Barack Obama’s rhetoric about defending the world order during the crisis years of 2008-11, but at least they bothered with the formalities. I think the Biarritz G7, for all its absurdities, was a serious moment: it probably signalled the point of no return.