By Dr Jay Dubashi
The Arab spring is not confined to Arabs only. It is spreading to Western countries too. In America, thousands of young men and women, most of them without jobs, have been camping for the last few weeks in a park near Wall Street in New York and are threatening to occupy the Street, the very heart of world capitalism. In London across the Atlantic, they have surrounded St. Paul’s Cathedral and virtually closed it down, though St. Paul’s is a religious shrine, not a capitalist symbol. There is trouble in Rome too, and also in Athens, where the governments have already fallen. If the Arab spring has taken three victims so far, the Roman spring is not far behind.
Why is this happening? It is a question of too much debt, say some. But all countries have debt, including India and China, which are not affected. The Arab spring is not about debt; it is about democracy, or, rather lack of democracy. The Western spring is not about lack of democracy, but lack of money. Europe and America have had very little growth in the last few years and great deal of unemployment. Poverty has increased, and so has inequality. What we are seeing in Wall Street and London is a society at war with itself, essentially a society at the end of its tether. Debt is a symptom, not the cause.
All this talk about debt and bail-outs is only an attempt to hoodwink the people. They are being told that once the debt problem is settled, everything will be all right, as if it was a magic wand. The real reason for the unrest is entirely different.
The problem is political, not economic, though economic is part of it. Almost all countries involved are capitalist countries. They became rich by exploiting poorer countries like India and China. Most of them were also imperialist countries, with huge empires of their own. Britain, France and Germany used to have big empires, on some of which the Sun never set. For a hundred years, depending on where you start counting – from 1815 when Napoleon was defeated to the start of World War I – the British ruled the world, and so did many other smaller Western countries.
In 1918, at the end of World War I, which exhausted the British, America took over and virtually ruled the world, with the help of other Western nations. During the British supremacy, its currency, pound sterling, was the currency of the world. During the American century, the pound gave way to the dollar which has been the dominant international currency for nearly a hundred years. America ruled the world through the dollar, just as the British had done a century earlier through pound sterling. Under capitalism, currencies count more than how many square miles you occupy. It is your currency that rules the world, not your armies nor your atom bombs, for other countries can acquire armies as well as atom bombs – as Iran is about to do – but not always currencies.
This was the time when the American economy was the largest in the world, with a GDP of almost 25 per cent of global GDP. The US dollar was a powerful currency because the US economy was powerful. This is a simple equation. You rule the world through your currency. If it loses its lustre, you lost lustre too.
And this is precisely what is now happening. The US dollar is going the way of the British pound and has lost or is losing its lustre. There are too many dollars floating about as the US Federal Reserve continues to print currency notes to meet budget deficits, and the more dollars it prints, the weaker the dollar becomes, and so does the economy. The US actually surives on the wealth of other nations, mainly China, because it has lost the art of making money. The Americans have become lazy and are handing over their economy to outsiders. This is what the Zamindars in West Bengal used to do, while they roamed the fleshpots of Kolkota, and the Britishers ruled Bengal. Americans hardly make anything now; they are happy moving money from here to there – which is what Wall Street does – and live on commissions. Their investment banks are nothing but money moving, not money-making machines. And when you don’t make money, you grow poor, like the Zamindars of Bengal.
America used to finance its own wars – the real symbols of imperial power. Now it has to borrow money from others even for its day-to-day expenses. If China did not buy its treasury bonds, America would not know where to get money from. It does not produce enough wealth to maintain the kind of establishment it used to do. It is actually selling off many of its assets built up over the years. One of these days, it may have to sell off the White House too!
The Chinese economy is already No. 2 economy in the world and is expected to overtake the United States in ten years’ time, may be earlier. It is generally recognised that the country with the largest economy becomes automatically a country with the most powerful currency. This is why the British pound ruled the world when Britain ruled the world, and also why the US dollar followed the pound. The US dollar will eventually give way to the Chinese renminbi. The Euro, which was supposed to take over from the US, will now be No. 3 currency, and eventually No. 4 currency when India rises to No. 2 position, and the rupee displaces the US dollar.
And when that happens, nobody will take notice of Britain or France, or even Germany, which is precisely why the Euro, the European currency, is in trouble. These countries will still be there – just like Russia after the collapse of the Soviet Union – but they will be irrelevant. The problem is not therefore financial, but political— the problem of a rich family that becomes poor but does not know how to deal with poverty. For the last twenty-odd years, they have been trying to get round this problem by borrowing money, or printing it, but how long can you survive if you go on borrowing, if there is no income coming in?
Western countries should realise that their days are over and they have to get reconciled to the fact that they are not what they used to be, and they will always be in some crisis or another unless they learn to adjust themselves to the new circumstances. They may hold a thousand summits, and come up with a thousand “solutions” but they will not be able to escape their destinies, no matter how hard they try to do so!