Capitalism is dead and the biggest impediment the West faces is the broadly held misconception that they are still operating in a capitalist system.
At a time when EU leaders continue to rule out bailout plans while rejecting protectionism as a response to the economic crisis, China is busy promoting the Asian Infrastructure Investment Bank (AIIB) as an alternative for developing nations - and one less dominated by the United States.
For years, the World Bank has been the go-to lender for developing countries, and that’s just the way the US likes it, since it has plurality in voting on its institutions. But now the buzzword is China, precisely its Asian version of World Bank, and it sounds promising.
The US has been fighting against the rising power of AIIB, trying to convince everybody to shun the competing financial system. But it’s not working, even in Europe, where its traditional ally Britain has announced it is on board! In a blow to Washington, other EU members such as France, Germany, and Italy are all coming along as well. It’s a sign US diplomacy has failed as Australia is joining the bank too.
There are many reasons why “China’s World Bank” is very much a thing:
The European leaders promised many times to extend a helping hand to any EU country needing help but stopped short of agreeing on any region-wide package to help them cope with the turmoil.
The crisis has hit Eastern and Central Europe particularly hard because their economies depend on a steady stream of credit from Western sources that has all but dried up. Many governments that were once head over heels for joining the Eurozone are also concerned about the specter of protectionism looming over the continent.
The global economic meltdown has caused many bank failures, bankruptcies, plant closings and foreclosures, and will soon leave millions more unemployed. Another perilous consequence has only recently made its appearance: Increased civil unrest, ethnic strife, and “homegrown” terrorism.
People have lost confidence in the ability of Western markets and governments to solve the crisis. They have erupted into violent protests or assaulted others they deem responsible for their plight, including government officials, plant managers, landlords, immigrants, and ethnic minorities.
Violent episodes occur in many places across the globe as well, where the middle class has been forcibly relegated to the ranks of the poor. Many cities continue to witness violent protests over rising unemployment, ethnic tensions, and falling wages that remain orderly. These upheavals are likely to remain localized in nature. It is entirely possible, however, that, as the economic crisis worsens, some might turn into far more intense and long-lasting events.
For now though, American and European stimulus plans are technical steps in the right direction. But they remain technical fixes aimed at pumping up demand and getting people spending. In fact, the plans to rescue the banks (the main culprits) are no plans at all; only an apparent set of contradictory principles: an ideological one not to nationalize and a political one not to subsidize too obviously!
Put in simple words, it’s the end of capitalism, as we know it. It’s a sticky situation for the West to find a safe way forward, let alone help other apathetic and lethargic nations cope with the turmoil.
The rising popularity of China’s credit-based AIIB is to be understood in these terms. It’s a sense of relief, at least the only safe way forward, in which many believe that the concentration of capital and stratification of wealth won’t lead to systematic fraud, class-consciousness, and exploitation.