The Internationalism

Internationalism No. 33, November 2021 Page 6 Can a good recovery do damage? The answer is: yes, sometimes it can, if it triggers major imbalances. The capitalist mode of production is a source of imbalances, inequalities and asymmetries. This time, the imbalance is largely due to the states which have concocted an unexpectedly strong recovery, pulled along by private consumption, with their stimuli, subsidies, relief, tax cuts and zero-rate credits. According to The Economist , the stimuli handed out by governments during the pandemic amounted to about $10,400 billion in the world, equal to one eighth of the 2020 gross world product in current dollars. According to the April IMF Fiscal Monitor , governments, additional expenditure and lost revenue in the advanced economies were equal to 16% of the sum of their GDPs, in the face of losses which, in the final balance sheets, amounted to 4.5% of it. A good part of this went on governmen...

On August 15 th , 1971 (50 years ago) US President Richard Nixon declared that the ‘gold window’ was closed. The era of the convertibility of the dollar to gold was over, and the system that had been agreed upon by the victors of the war at Bretton Woods in 1944 collapsed: the regime of fixed but subject to periodical reviews exchange rates had lasted a quarter of a century. Jeffrey Garten, Bill Clinton’s former Undersecretary of Commerce for International Trade and managing director of the Blackstone Group and Lehman Brothers, is now a historian who has written about Nixon’s decision. He recalls that the turnaround came at a time when the amount of dollars in circulation in the world was four times the amount of gold held in reserve, inflation was rising, Washington was withdrawing troops from Vietnam, and Nixon, the month before, had announced his visit to Beijing, a historic event. In 1959, the economist Robert Triffin had explained to Congress that there were absurdities assoc...

Recovery from the pandemic crisis — writes the IMF in April’s World Economic Outlook — is increasingly visible due to three factors: first, hundreds of millions of people are being vaccinated; second, companies and employees have somewhat adapted to the healthcare disaster; and finally governments especially the American have pledged massive government — extra fiscal support. Governmental fiscal interventions have reached $16,000 billion worldwide, have averted collapse of the economy that would have been three times worse, blocking the 2020 recession at a 3.3% drop, and have pushed the recovery rate to 6% in 2021. The overall recovery will be the outcome of a series of divergent recoveries . Only the United States, with a 6.4% growth rate, will exceed the GDP level predicted before the pandemic. The disparity regards healthcare first of all. High-income countries, representing 16% of global population, have already bought up half of the vaccine doses. The real estate, financial and ...