Now that the cracks caused by the earthquake that struck the global economy last year have been papered over to the satistfaction of most casual observers, and with stock markets forging ahead (fuelled by the quantitatively eased money that cannot be found for the public sector), the more interesting consequences of the financial crisis are beginning to unwind.
The most potentially momentous is the threat to the hegemonic position of the dollar in world capitalism. Way back at the G20 in April - when our attention was successfully diverted by the trivial tittle-tattle about bankers' bonuses - the Chinese kept their eye on the ball. They joined the Russians in proposing a new neutral international currency to replace the dollar. This call was repeated yesterday by a UN panel - was it a coincidence that this happened on the same day that news leaked about secret deals between the oil states, the Chinese, Russia, France and Japan to end the rule of the petro-dollar by trading petroleum for a basket of currencies? And from a UK perspective, notice which of the 'leading world economies' is missing from this list.
The embarrassing visit by Hilary Clinton to Beijing in February, where she effectively begged the Chinese to continue buying US debt, indicated the desperate position of the US economy - and polity. With quantitative easing on a grand scale being the only thing keeping the once-mighty dollar afloat its credibility as the foundational currency for the world economic system is utterly undermined. If China ends the rather one-sided deal by which it acquires pointless bits of paper in exchange for massive quantities of consumer goods, the financial crisis will return with a vengence and the US economy will be sucked down into the whirlpool of its own debt.
But are the Chinese seriously proposing the Yuan as a viable alternative? Can the currency of a state capitalist economy play the role of currency of first preference in the global economy? China is now selling its own debt in Yuan rather than dollars and because their currency is backed up by real economic power it should prove popular with investors. But the Yuan is not subject to even the limited influence of speculative movement by international capital. It is non-convertible and still politically controlled by the Chinese Communist Party. It is this control that has enabled China to expand so successfully, because it never faced the risk of having its currency picked off by global capital if it looked too threatening, as happened with the once fierce Asian tigers and the Russian rouble in the late 1990s.
So what is China's game? What does it plan to do with the power its people have won for their state through their hard manual work over the past 30 years? For the sake of humanity let us hope that they plan to use this power as political leverage over the US at Copenhagen. The US needs to be helped to manage its way down from the position of bloated, gun-toting pariah that controlling the world's hegemonic currency has left it in. If the US offers a serious movement on carbon reductions in December, perhaps the rest of the world can allow it a graceful descent, rather than the catastrophic demise which China could precipitate at any moment if it were to flood the market with US Treasuries, or refuse to buy more.
The asset bubble that led to last year's financial crisis began way back in 1971, when Nixon reneged on the Bretton Woods deal. The supreme economic dominance that the US has enjoyed since then was won by foul means, not fair ones. The people of the world and the planet itself have borne the cost in wars the US should not have been able to afford to fight and a lifestyle that was never earned from its own work or resources. But secret deals between the leaders of a small number of powerful nations is no way forward for a peaceful and stable world. We need to repeat the call for a global financial structure to be negotiated democratically, not fought out between Washington's Dogs of War and the dinosaurs of the Chinese Communist Party.