CHINA MUST help save the world economy, we need “new institutional architecture” and state intervention is back in fashion. These were the main themes that emerged at the beginning of president Nicolas Sarkozy’s two-day seminar entitled New World, New Capitalism: Values, Development, Regulation.
Former British prime minister Tony Blair opened the conference yesterday morning, calling the crisis “the most tricky intellectual challenge I have ever encountered”. It is “utterly crucial” that the US and Europe reach a new balance in their economic relationship with China, he said. “We must save more, China must spend more.”
German chancellor Angela Merkel said the world was destabilised by China’s €200 billion surplus and the US’s huge debt.
Former French prime minister Michel Rocard noted that total known debts are five to six times global gross national product. “It’s about purging,” he said.
Mr Blair deplored the fact that “we have mid-20th-century international institutions governing the world economy in the 21st century”. Bodies like the G8, in which China, India, Brazil, the Middle East and Africa are not represented, have become an absurdity, he said.
In the panel discussion on “values of new capitalism”, Mr Blair ducked a killer question from Financial Times editor Lionel Barber. During the 10 years he was in power, Mr Barber asked, when Mr Blair was urging Britain to “get filthy rich, as long as you pay taxes”, did the former prime minister never suspect that capitalism was becoming disconnected from democracy?
Dr Merkel hinted that the crisis was a vindication for Germany’s “social market economy with a social dimension” – which is ideologically at odds with Anglo-Saxon neoliberalism. It was the role of the EU, she suggested, “to make the voice of the social market economy heard in the international community”.
“My view is that this is not a crisis of capitalism per se, but the end of the Reagan-Thatcher model, which has been dominant for the last 30 years,” said Francis Fukuyama, professor of economics at Johns Hopkins University.
Dr Merkel noted that the crisis was forcing governments, including her own, to accrue substantial debts. She twice stressed that the West must stop “living beyond our means” and “spending more than we really have”.
Mr Sarkozy repeated one of his favourite themes of the past four months: a distinction between good, entrepreneurial capitalism and “irresponsible and immoral” financial capitalism based on speculation.
“We must moralise capitalism, not destroy it,” said the French leader. “We have got to find those responsible for hundreds of billions going up in smoke. The public demands this.”
While cautioning against protectionism or “the creation of a whole pile of regulations”, Mr Sarkozy said the rule of the state has been strengthened. “We are not trying to create state capitalism, just re-establish the balance.”
The seminar will not propose a solution to the world’s economic woes. “We will take decisions in London on April 2nd,” Mr Sarkozy promised. “It will be a turning point.”
