 60 minutes, if that's okay with everybody. I really apologize if people have to leave at four, but as asked in the chat already, the recordings will be put up as soon as possible. I expect someone this week, end of this week, or next week, and then you can watch the remaining question time. So welcome everybody to today's seminar on the limits of neoliberalism and how states respond to the crisis. We've had an overwhelming amount of people interested in hearing today's session, probably due to our star speaker, Kostas Lepavitzas. Welcome. So if our seminar capacity is exhausted, we will try and provide a Facebook live stream and then also make the recording available afterwards. My name is Kylo Kovriger and I've finished my master's degree at SOAS. I'm an active member of the Rethinking Economics Society Network and the Open Economics Forum, and I currently work as an economist for the research network, rebuilding macroeconomics at the National Institute for Social and Economic Research. I'm very delighted to have this session today with Kostas. Kostas Lepavitzas, who's a professor of economics at SOAS. He's a former member of parliament, for sure. He's in the Hellenic parliament and remains an activist, engaging in the political struggle around the creation of public financial institutions, facilitating a green transition and altering the social and political balance in favor of working people. Do check out his books and especially follow his recent publications on the website of the European Research Network on Social and Economic Policy, the Jack for Bean, as the link was already published or shared here in the chat and also in the Red Pepper magazine. This workshop series over the past weeks and the following weeks has been organized, co-organized by the Open Economics Forum and the Economics Department at SOAS, and I'm very thankful for organizing and putting these events together. The Open Economics Forum is embedded in the Rethinking Economics Network in the UK, in Europe and all over the world, and wherever you are, from wherever you're streaming in now, check out your local or national Rethinking branch and networks. I'm sure they have amazing events on as well. So with this series, we're trying to shed light on current transformation of the economic theory, policymaking and the political struggle caused by the coronavirus, and just a quick note on today's housekeeping. And we, Costas, is going to speak for around 25 minutes now, and I invite everybody to write their question during his talk into the chat. So all the participants are mutant, so you can't ask questions, but please write them down. And even when you write them down in the next 40 or 20 minutes, we'll collect these questions and then we pose them to Costas and get a discussion going after his talk. So on this note, please, Costas, let me hand over to you for the next 25 minutes. Thank you very much. Thank you. Thank you. I'm very sorry about the delay, but we'll try and make up for it. Now, I want to do a number of things on the coronavirus crisis. I want to practice the substance of it. I want to tell you what the impact is on developed countries and on developing countries. And I want to look at some options for policy as it is actually being engaged in at the moment and as it ought to be in my view. Now, let's get on with the analysis of the crisis in the first place. It is, of course, commonplace to say that this is unprecedented. It's an unprecedented crisis, and indeed it is. It is completely unprecedented because to a large extent, it has come from an external shock. It is global. And of course, it has hit the weakening economy. Let me take these things one at a time. The structural thing I want to say, which should be familiar to all of you who have studied it so as already close to us, is that the reality of the world economy since 2007-2009 is that mature countries, advanced countries, have been going through a period of, in a sense, stagnant financialization. Financialization has not proceeded powerfully since 2009. It's been on a plateau in the metropolitan countries. But it has accelerated in developing countries. The combination of these two characteristics of the last 10 years matters greatly for what's happening at the moment, given the coronavirus shock. So let me be a little bit more particular about it to exemplify the point. If you look at mature countries, the United States, the European Union, Japan, and so on, and I'll have occasion to say more about them as we move along, then you can clearly see that growth during the last 10 years has been at its weakest for decades. There's no question that capital accumulation has been very weak, very weak indeed. Second point, you can see that profitability of productive capital has been falling since about 2014, and he has been generally weak anyway. Profitability of financial capital, particularly banks, has been nowhere near as dynamic as it was in the previous decade. Third point on developed countries, productivity growth, which of course is the driver of capitalist accumulation, has been appalling. It's been the weakest for a very long time in the United Kingdom. For instance, it's been weakest for decades, but it's similarly weak in the United States and elsewhere. Fourth point, inequality has been as pronounced as ever and has become worse during the last 10 years. Now, that is what's been happening in mature countries. In effect, we haven't had any structural change since the great crisis of 2007-2009. What we've had is the state intervening, rescuing, financialized and neoliberal capitalism from the great crisis of 2007-2009, but not changing things structurally and not changing things in any kind of profound way. The result has been weak accumulation and lack of dynamism for finance in mature countries. At the same time, in developing countries, financialization has proceeded at pace. The characteristic of the last 10 years has been rapid and dynamic financialization in several middle-income countries. That matters greatly for what's going to happen now that COVID has hit, as I will explain in a minute. Now, this complex set of factors can be seen from the perspective of finance too if we look at debt. I say that because a lot of breathless stuff is being spoken about when it comes to debt, that this is the biggest volume of debt ever, that debt has been increasing enormously and so on. Actually, the picture is much more complex than that. If you look at mature countries, if you look at the United States, if you look at other parts of Europe and so on, it's not a picture of advancing debt across the board. Household debt, which was characteristic of the period up to the great crisis, has actually declined as a proportion of GDP and declined significantly. Bank to bank debt, in other words, the debt that is created among financial institutions, which is a strong element of neoliberal financialization, has also fallen during the last 10 years, reflecting, as I said, the indifferent performance of finance. Enterprise debt, on the other hand, has increased and that is a source of weakness and not only has it increased, but some very, very dangerous types of debt have increased among enterprises, non-financial enterprises, and I will discuss these in a minute. The real star performer when it comes to debt, however, in mature countries the last 10 years has been state debt. It is the state that has been borrowing very strongly to rescue the financialized neoliberal capitalism that led to the great crisis 2007-2009. States are already very heavily indebted and that creates a major complication to how they're going to deal with the current crisis. Now, in developing countries, on the other hand, especially emerging markets or middle-income countries, the trajectory has been quite different if one puts China in debt. The great new volume of debt in the last 10 years has been in China. China has been leading the dance, both in terms of its enterprises and more generally. That is what has driven the great increase in global debt. However, in several other middle-income countries, debt has also increased in complex ways, often to do with advancing domestic financialization and that matters again greatly for developing countries will be hit by coronavirus. It's already emerging. Now, summing it all up, I think what we've got is a continuation of neoliberal financialized capitalism during the last 10 years on a weaker basis, but spreading across the world and relying increasingly on the state. The state which has made such a powerful appearance the last few months is not new to neoliberal financialized capitalism. It's always been there and the last 10 years has been very, very powerful, very, very important in ways that have hinted it. Now, the time is short, so I've got to move faster than that. Let me tell you what the nature of the shock is then, the nature of this crisis. How to approach it? Because, as I said before, it's unique. I'm pressing it harder than a lot of people are saying that. I think one way to, a good way to approach it is to look at Keynes' analysis of how to pay for the war. It's a famous little book that John Maynard Keynes wrote in 1940 discussing how to deal with the Second World War, which you could think of as a huge shock. You could think of the war as a shock, and people do talk of coronavirus as a kind of war, so it's not an unreadable analogy. Obviously, it's not a war in the same, in the sense of the Second World War. It's not a firing war, but you can think of it in those terms. Keynes' argument, we don't have to go into the details of it, was basically structured in terms of what would happen to aggregate demand and aggregate supply. In a war, obviously, you need to increase military production, and that means that you go to direct resources away from peace production towards military production. You go to organize, reorganize employment directly towards military production, compress peace time production, and you also have to adjust demand as a result, because, of course, you're going to produce fewer goods for peace time consumption. So Keynes' problem was of this type. Well, we can think of the coronavirus shock in a similar way, and it is a way that allows us to think of what ought to happen to confront it, because the coronavirus crisis is in the first instance a shock to the supply side. Unlike a war, it's actually a shock to the supply side, because supply chains collapse, are broken up, because enterprises stop functioning. So supply freezes up. It's not actually a redirection of supply towards war, of course, towards war needs, but it's a freezing up of supply, and actually it's a reallocation of supply as there is up. Supply resources will have to be reallocated. How? It depends also on what happens to demand, because demand also receives a shock in the case of coronavirus, and it has received a shock because people have been put on furlough in the UK, or stopped working, their incomes have declined, unemployment has increased, supply has contracted, and that has actually impacted on demand, demand has contracted, and it has actually impacted on supply again. So you have a combination of frozen and reallocated supply and contracting demand. It's a unique shock that you get, which leads to a huge recession. In the case of developing countries, things look a little different, because the shock of the virus has not been as great as for developed countries by and large, but they will suffer the impact of trade. As the supply chains have been disarticulated and trade is contracted, the blow to developing countries has been very great, coming from trade, fundamentally from trade, and to that you must add more elements, which is not directly connected to coronavirus, but happen together with it, which is of course the oil crisis. The oil collapse, oil price collapse, which has hit a number of developing countries, very hard oil producers, but also lessened the burden temporarily for oil importers among developing countries. So it's a complex shock, both on demand and on supply, aggregate demand and supply, which is leading to a massive recession, including in developing countries. The figures that they once seized by the IMF and so on are unprecedented. 9 percent contraction, 10 percent contraction for key advanced countries. These are phenomenal figures. Anyway, I'll come back to that. That much about the really common shock. There's also been a financial shock, and we've got to look at the financial shock in a little bit more detail. Three elements of it are worth mentioning here, of the financial shock. The first is of course the collapse of stock exchange prices and the collapse of financial prices associated with financial markets in general. I said originally that financialization has been marking time since the Great Christ, and that is broadly speaking true, but there's been a localized bubble in the stock market. The financial asset prices increased dramatically the last 10 years, mostly because money became very cheap, and that led to overblown financial prices across a range of markets, and bonds, and these naturally collapsed, as we all know, when the crisis hit and the nature of the shock became clear. That's the first point. Second point, and in this sense more standard for capitalist crisis, is that the short-term markets, liquidity markets, also froze. Short-term liquidity markets froze because it's typical of this crisis. People became very scared of holding their wealth in assets, and they wanted to hold cash, so you had a generalized move towards cash. You observed that in commercial paper markets and in treasury built markets, and there a number of games that speculated it had been playing for a while, became very apparent as well, arbitrage between short-term markets and spot markets and futures markets. So tightening of the short-term liquidity markets also took place. The third point I want to stress is what's been happening to developing countries, and there we've had the dramatic reversal of capital flows, that's the third financial impact. Traumatic reversal of capital flows, portfolio flows basically buying bonds and buying other financial assets in developing countries have collapsed. The reversal of capital flows to developing countries since late January is of the order of 100 billion according to the IMF. It's unprecedented in size and in rapidity. Now, that obviously creates massive problems with developing countries and also puts financialization in developing countries in its proper light, and I want to say a couple of words about that. Those of you who are associated with source, who studied the source, will recognize immediately what we're talking about, but the others will also see the point very soon. During the last two decades, particularly the last decade, developing countries have financialized and financialized significantly, and that has to do with opening up to the global markets, to the international financial markets. During the last 10 years, this has taken a very strong form in the sense that domestic markets for finance have emerged. There is something called the original sin for developing countries taking part in global financial markets, and that means that their inability to borrow in their own currency, if you're Indian, you cannot borrow in Rupees, if you're South African, you cannot borrow in RAND and so on, the inability to borrow in your own currency opens you up and exposes you to risk because you're borrowing in dollars in the global markets, and that has been an element of the weakness of these subordinates, capitalist countries, historically. And that has been a dimension of early financialization. During the last 10 years, we've witnessed a kind of reversal of that. As these middle-income countries financialized and large markets emerged, domestic markets emerged in South Africa, and in Turkey and in other countries, domestic capitalists were able to borrow by issuing financial assets in their own currency and foreigners would buy them. So we had capital flows coming in from abroad buying developing country assets denominated in the developing country currency. It is precisely these that have reversed now. It is these assets that have reversed. These flows that have reversed right now, and it is very interesting to observe. It shows that the subordinate position of middle income countries, their exposure to the global markets has not actually been dealt with by the advancing financialization of the last 10 years. Their weakness has not gone away. The original has not gone away. What has actually happened is that by allowing foreigners to lend to them in their own domestic currency, in Rupees, in Rand, and in whatever else it is, foreigners took on the risk themselves. And as soon as the crisis hit, the coronavirus crisis hit, then foreigners stopped lending because it still is very risky to lend to Indians in Rupees if the rupee is going to fall. It still is very risky to lend to South Africans in Rand if the Rand is going to fall. So capital reverse. Capital then flew back and emerging markets at the moment, developing countries at the moment, find themselves in an incredible position. It is the perfect storm. Trade is collapsing. The shock of the virus domestically is unknown but substantial and financially they are confronted with the perfect stock, the perfect shock. Now what to do and how to deal with it. We've got to start with what the state is doing. The state is fundamental to financializations, fundamental to neoliberalism has always been. The state is taking a number of steps in dealing with this already. It's done so in developed countries and it's beginning to do it in developing countries too although the options in developing countries are far fewer. What he has done in developed countries is of course in the first instance to support enterprises, support capital. I say this because a lot of people get confused. They think that the state might actually go against neoliberalism now and neoliberalism might collapse of its own accord. He will do nothing of the sort. He will just reorganize the way it works. The state then has provided significant support to enterprises and we've seen it in terms of loans, tax deferrals, social security payment deferrals and so on. Interestingly enough the state has also provided support for employment, support for wage labor because it has appreciated that unemployment could become phenomenal. So the support for employment is unprecedented, it has to be said. Effectively the state has nationalized the wage bill of large private capitalists in a number of countries. Nothing like that has happened before. You can see very clearly in the UK with the practice of furlough but you can see it elsewhere too. One point I want to stress here and perhaps we can discuss it in questions subsequently is that I'm generalizing about the state. However there are also major differences between how the state has done this in the USA, in China, in Europe and elsewhere. It's not the same. Intervention you see but it's not the same. Each state intervenes in their own country depending on circumstances on political arrangements and on the domestic political economy. That hasn't gone away. So the Chinese state has intervened quite differently from the US state and we can bring that up in question and answer session. Nonetheless states have intervened across the board. States have also intervened in finance of course and that has been another crucial part of intervention and they've intervened in finance in three ways all of which are fundamental to neoliberal financialized capitalism and show the continuity of it. First states have brought interest rates down to zero. This continues to be zero interest rate capitalism. It's an unprecedented period in the history of capitalism with interest rates being driven down to zero. That has gone together with the abundant provision of liquidity to financial institutions in the first place to the economy generally. What allows the state to do that today is its command over money. The role of the state in contemporary capitalism is particularly crucial because of course it commands money. It commands the creation of the main means of payment. The state has never given that away and that shows you how neoliberal financialized capitalism works because there is no competition in the issue of money. There's absolute fit, absolute monopoly. The state has that monopoly and that gives it tremendous power and it can drive interest rates down to zero and it can provide liquidity as and when it is necessary by capital and for capital and he has done that again in this crisis indicating that very little has changed in terms of how it relates to crisis. The third thing is the state has to do with the international interventions. As developing countries found themselves under pressure for reasons that I've explained, particular middle income countries faced with the capital outflows were at the point of a major crisis. That appeared in the form of dollar shortage. It became very clear that key countries in the developing world were faced with dollar shortage. That is something we've seen before in previous crisis. We saw it in this one too and the answer to it was very similar to that of previous crisis too. It took the form of dollar swaps. The Federal Reserve intervened and eased the crisis by allowing these middle income countries to access dollars indicating that in this respect too very little has changed. The global answer to the immediate financial crisis has been as before the Federal Reserve providing liquidity, the Federal Reserve resolving the crisis through the dollar. In other words, reasserting the global power of the dollar, the role of the dollar as world money. So the state has been crucial to dealing with the crisis so far and I think it will be crucial to dealing with the crisis in the time to come because of course the time to come will be very difficult. The crisis has only just begun. There will be a recession as I've already indicated for reasons that I've explained. There will be a recession. The recession will be severe. It will happen in the developed countries and it will hit the developing countries too. The main points of weakness for this recession to emerge are of course the non-financial enterprises which are very heavily indebted, several of them and that's a point of weakness, demand and supply are in trouble. The banks which are always weak when the real economy goes into weakness, they are not initially weak. This is not a problem that started with banks but banks will bear the burden of it as things unfold. Households in developing countries are likely to prove weak to the unfolding recession because they've got a lot of debt and crucially at the last point the state which is already heavily indebted will find the recession very difficult as it confronts the pressures, particularly in Europe. So the points of weakness are not the same. Enterprises in the United States mostly and in other part of countries, banks in the United States and other parts of developed countries possibly households and banks in developing countries, state in developed countries will be key areas of weakness as the recession unfolds and it assumes great magnitude as well probability will. What to do then? I want to finish with that. What to do? In some ways it's obvious. It's obvious and states are already doing it. The crucial point the crucial point of stress here is that the intervention hinges on the state but it must not only hinge on the state on the central state because if it does hinge on that then what we're going to get is reaffirmed in neoliberalism and reaffirmed financialization and that would possibly be even worse than before because of what we witnessed the last few weeks and previously has been an exercise in state in post authoritarianism and states don't forget that. So there are issues of democracy as well as economic recovery. That must not be left to the central state. We must have independent action and independent activity in this by communities, by association organizations, by forms of organizing from below in order to create a different economy as we're dealing with the shock. Now in terms of what needs to be done it's clear demand must be supported in the first place. Demand is contracting must be supported. That means supporting people's income and protecting employment in the first instance. That is paramount. In this context I would argue strongly for reconsidering the role of universal basic income. I've always been very skeptical about universal basic income, very critical of it as an idea for a variety of reasons which we don't have to rehearse right now but given the magnitude of the shock and given the compression of demand and given what's been happening in Europe and elsewhere in the United States, millions of people have gone on to the unemployment list the last few weeks. The time has come to consider the idea of universal basic income seriously as an anti-corona virus measure. It would be a cheaper and a fair way of supporting demand and supporting people's income and protecting employment. It will give some breathing space while the worst of the crisis upon us and it will give societies options to consider how they're going to reorganize employment and labor subsequently. Point number two in terms of what should happen is of course intervention in supply, in the sphere of supply. It isn't just demand, supply must be supported. Supply means basically supporting the recreating the disarticulated supply chains and that means supporting key areas of production and key areas of the sphere of circulation but not simply by giving private capital breathing space, supporting these key areas by intervening and demanding public management, the public ownership. Rescue in Virgin Airlines is not really something that should happen automatically. Protecting big business is not something that should happen automatically. Something has to be given in exchange that means public management, the public ownership of key resources. Associated with that is of course a change in the rules and practices of state aid. State aid needs to be used far more creatively and actively and this holds particularly for Europe where state aid regulations have been throttling performance of the European productive sector for a long time. These have been lifted, they have to be used actively and they have to be used actively by local communities. That is one key way in which local communities begin to intervene in reorganizing the supply side to rebalance the economy. Still in the same area will be evidently a massive programme of public investment on the supply side. Europe in particular needs a massive programme of public investment so does the United States. The infrastructure of both Europe and the United States is falling behind and their ability to intervene in the new technologies is appalling so public investment is also necessary here. In other words the intervention in the sphere of supply must change the balance between the private and the public in favour of public in the time ahead. Last here is of course transform the financial markets. I've said a lot about developing countries. I've said a lot about the short emerging markets. The current sudden stop unfolding in front of us and the perfect storm facing middle-income countries. That is yet more evidence of the continuing reliance of dependence of developing countries on the global financial system which works against them. Time and again. Developing countries have to rely on global capital flows. The end result is that they face a crisis and it takes a different form every time but here where something has to happen at long last about the global financial system, something to protect systematically developing countries and that something is clear. It's not as if we don't know what it is. They have to be capital controls and they have to be a system of stabilizing exchange rates preferably within a flexible band to give domestic policy some flexibility. The point I want to finish is this. Now how to pay for all this? What about the canes and how to pay for the war? I want to finish with that. How to pay for all this? It is clear that the state will have to borrow. State borrowing will increase. It's just impossible to deal with it otherwise at the moment. State borrowing will increase but the borrowing that the state will make if the policies that have outlined is essentially a down payment on future returns. It's not as if the state is borrowing to fight a war. The state is borrowing to get the machine going, the productive engine going and to transform it. So it is borrowing that could pay for itself. There are plenty of ways in which this can happen and it is inevitable. That must be accompanied by a transformation of the tax regime and the tax system whereby at long last those who are wealthy and those who got highest incomes should make a contribution to what society needs to pay. There should be a change of tax with a significant tax incidence on the rich and the wealthiest in the country. There should be a rebalancing of it of taxation and therefore intervention in the sphere of inequality. These are the minimum amendments. No doubt a lot more will happen as we move along. It's a moving target. No doubt we will discuss it again but this is how it seems to me in these early days. These are what the tasks that we've got in front of us. The more we discuss them from perspective of alternative economics the better for all of us. Thank you. Wonderful. So now we have roughly 20 minutes left for questions and there have been many. So thank you so much for the brilliant questions coming in. Cost us. So I think we have a lot of questions coming in specifically for emerging markets and also obviously about the EU but I would like to start with a more conceptual question of your piece in the Jacobine magazine and also your talk now started very much with the idea that the nation state has already or has always been kind of incremental to even like a neoliberal financialized capitalism and then you went on to say how the shock is a demand and a supply shock and also a financial shock and I think like one question that was raised in the comments but that I'm also really intrigued by is how exactly do we conceptually understand the connection between the financial markets at the moment and the development in the real economy hence demand and supply given the fact that the financial markets at least like their surprises neither in the Ducks nor the the FTSE no the SNA index have really dropped significantly right so like most of the stock markets are either not decreasing as much or recovering over the past four weeks so what do we see here do we see a financial market and financial traders who just don't see a great recession coming or do we do they think that the supply chains are going to be restored in the next three or four months and it's just going on like usual what exactly is the dynamic happening here I want to make two points on that first of all this is a very different crisis to the crisis of 2007 2009 and I say this because a lot of people thought that we would see a repeat or that this is a crisis that is to do with the overexpansion of finance in the previous period and then the collapse of it it's not it that's not what's happening right that's not what we're living through although there's no doubt that the stock market in a number of countries has become overblown and therefore it fell dramatically for a few weeks that's not where the the roots of the crisis lie that's the first point I want to make and it's important to understand because finance had not been having a party in the previous 10 years unlike the previous crisis as for the recovery of the financial markets which is a clear point that they are actually they've become more stable the last two three weeks the reason is clear money is free money has become free again money has become free there are washed with liquidity once again the state is effectively issued an implicit guarantee to these institutions and that is stabilized prices because what would you do with it the money doesn't cost you would buy financial assets that basically was happening there is no I can't see anything else deeper than that you could even see it in terms of who they're lending money to and on what terms it isn't simply bonds and shares and so on that they're buying when you look at sovereign debt which is another large market finance when you look at sovereign debt even countries like Greece the last little while they've been able to borrow very low interest rates two people think that Greece will grow rapidly if they believe that they're idiots I don't believe that they do believe that particularly what's happening is that money money has become abundant free and that that stabilizes markets now is this a way to run capitalism it isn't but that's what financialization is all about that's that's what we mean by kind of very peculiar uh social and economic arrangement that surrounds us and will not go away by itself the state does what the state has always done in these crises it provides liquidity drives rates of interest that rate of interest down and stabilizes financial markets it's not going to come from that it's not going to change dramatically from that side I can't hear you still now wonderful um great so now let me pose um some questions on emerging markets so there have been some on on financing but let's start with the supply chains so there've been two questions regarding supply change and the resulting change of the global manufacturing structure one is um do you think that will the joint supply and demand truck and developed countries correlated with the relative rapid recovery in the chinese economy in tail shift to closer trade and investment relations between countries of the global south and the second one would be um given the fact that a lot of developed countries kind of um pose a very strong emphasis on uh reassuring like bringing back industries of of key production or sectors is that going to change global um production and supply chains first of all I would I would enjoy caution when it comes to china people are too too willing and too ready to believe that china is coming back and coming back rapidly and and it's bouncing back that's not what the evidence shows the chinese economy um will go through very slow growth in the coming period and you will face sustained problems many of which we have to do with its international position and its ability to export the export market of china will um will contract in all probability as we move along and that will impact the domestic economy so china will not come back in the same way as before plus china's got a tremendous problem of debt which has to be dealt with of course china's got other strengths which have to do with state operated enterprises and the role of the state operating differently but the weakness must not be underestimated now will the supply chains across the world be altered as a result of this it is very difficult to tell I think more important than coronavirus here is will be the um what was happening to oil prices the collapse of oil prices um will transform the allocation of resources and productive capacity across the world in ways which were unprecedented before a lot of oil producers in the united states will be driven out of business a lot of um several oil producing developing countries will find will have great difficulties already iran is on the door of the imf um so that will affect production and costs across the development world now will it change the internationalization production which is basically what you're asking me will it change the way international enterprises have operated the last 20 30 years by itself I don't think so I don't think they will do that I don't think that without a change of policy at the top it's a change of institutional and policy measures at the top it will happen automatically I don't believe that it will do so I think that everything points to a continuation of what we've got so far but weaker so we shall see thank you um given the fact that you talked about global balance of power my now opposed to question which was exactly on that how global power or how the global balance of power would change I hope your question was answered if not please send us another um more in-depth question if you have more okay let's move on to financing in in emerging markets and we've got a couple really good questions here one is the obligation like what obligation does the international community has it's um the turn I mean the increasing negative growth rates and defaults in emerging countries maybe you can comment there um on the recent reports from the IMF and the um the support of kind of financing schemes that they've just put out for a couple of sub-Saharan African countries the second one would be um is there a need uh no uh does I can't hear you Carla Carla sorry hello sorry can you hear me you went you you went new for a bit okay sorry so the first one is on um the IMF and what what's the need or what's the obligation of the international community the second one is um is there the need for that jubilee for developing nations in order to enable these countries to spend more on healthcare and fiscal stimulus to deal with the with the like with the economic crisis and um I think the last one is also interesting on no there are two more one on how do we deal with countries who are subject to um embargoes so for example the IMF denied a five billion loan to Venezuela but maybe like the the question also applies to Iran and the last one is on um the dollar swap lines by defense and um you know while there was a great intervention to a lot of countries brazil was the only one um receiving swap lines who who was not a high income country and do you think these swap lines should be extended to other countries okay I need at least an hour to do all that but I'll tell you I'll tell you I'll tell you what broadly what I believe ought to be happening the way the system the way it stands at the moment is dysfunctional for reasons that we've discussed and we're witnessing the dysfunctionality very evidently again in terms of the reversal of capital flows that we're observing collapse of portfolio plans if that's not evidence of dysfunctionality I don't know what is 100 billion um contraction since January in two months now um the system is dysfunctional logic says that the new system must be put in place which is more functional for the needs of developing countries but we've known this for three decades every time there's a global crisis the same thing comes up the international financial architecture doesn't work we need to do something about it we need to intervene on this occasion what does logic say logic says the IMF should issue sdrs it should issue sdrs abundantly and the needs of developing countries should be the liquidity needs should be met through sdrs logic says that there should be indeed a debt moratorium a debt jubilee call it what you like and a debt and a debt restructuring for poor countries logic says that middle income countries should be given help to deal with problems of um the original sin that I mentioned before the reversal you know original sin reduction which I mentioned previously logic says that too logic also says that there should be controls over capital flows because when you take a very theoretical position on this what benefit to free capital flows offer to these countries if you get the crisis every 10 years um will it happen I don't think so I don't think so I don't see why it should happen now if it didn't happen in 2007 2009 if it didn't happen up in the asian crisis and all the evidence that we've seen so far points to an absence of this the resolution of the liquidity problem for middle income country so far has been through dollar soar in other words uh a decisive intervention by the united states to defend the role of the dollar as the key currency across the world what more evidence does one want will there be a system of capital control I don't think so I doubt severely that there will be any of these changes I think that what is going to happen will be the usual make it up as you go along patch it up here fix it there and hope for the best the difference this time is that of course middle income countries will come to realize that domestic financialization the way they the way they underwent it the last 10 years is no solution to the answers they will probably have to rebuild their reserves I suspect that they will rebuild their reserves um which they allow to decline the last 10 years I suspect they will rebuild them and that will mean more costs more costs for developing countries that's basically a cost on on on growth and a cost a cost on development that will be forced to keep large amounts of money um uh basically idle um or even financing the united states uh in the current period in other words I'm not optimistic uh about uh a rebalance ago um for developing development finance in the current period okay thank you so we have 10 minutes left let's turn to the EU maybe um keep your comment brief um while there are a couple of existential questions about the EU um one saying it seems that the EU is once again struggling to come up with a unified response to the crisis will there be a sovereign debt crisis similar to the great financial crisis or do you believe that the ECB will take more proactive role in the crisis management that kind of um goes together with um is it time for the EU to finish off with a single currency um yeah maybe do those two um quickly and then we turn to more specific european policies let me start with a single currency the single currency my favorite topic the last few years but the single currency is I mean if anyone needed more proof that the single currency offers nothing to europe this is it I mean here we are here we are in the midst of another crisis and the talk by commentators and others is how to save the europe like it is as if i mean europe has created an institution such that every time a crisis happens it must be preoccupied with saving that institution why I mean what does it offer to europe I mean what exactly is the benefit to europe from this thing um which needs reorganizing our economic policies in order to save it it was supposed to provide europe with strength it was supposed to facilitate convergence and it was supposed to make european economy stronger it appears that it makes them weaker because they have to intervene at every difficult turn to save it so that much about the euro I don't think the euro offers anything to europe and it is actually hindrance it is a hindrance to dealing with the crisis because obviously its regulations would be precluded now and stop the number of member states from taking the action they need and if you look at what is up the first action by a number of european institutions european union institutions has been to lift the constraints that the euro imposes the first one is to lift the stability and growth fact it's it's not functionalism countries are not under stability and growth fact and the second thing that they did was to lift the state aid regulations in other words the euro works without the central institutional framework you make it up as you go along what kind of currency this is you tell me so that much about the euro which is manifestly a failure and it's manifestly hampering activity and hampering action the action of the state instead of facilitating it and promoting growth and convergence in europe let's come to the ECB now which is by far the most important institution here the ECB quite clearly doesn't function like a normal central bank but we've known that for a long time it's not functioning like a normal central bank because you was not set up like a normal central bank and yet its interventions themselves indicate how the euro has become more lax the ECB threw a bit of a wobble to start with but actually intervened and intervened and made good and decided what it made nearly one trillion dollars about 850 billion euros altogether available as liquidity by doing that it is basically rescued the euro that's what the action was it rescued the euro and it rescued the big banks of france and germany that were exposed to cross border lending the ECB then has intervened to rescue the euro but its intervention is not comparable to that of a federal reserve all it's done is to ensure that the thing will continue without a collapse the last thing i want to say on this is the actions of the euro group not the ECB itself but the euro group the governments themselves because that is also telling in terms of how the european union works if you compare to the actions of the commission or the euro group to those of the US government the british government which is not in the european union anymore or even individual member states of the european union such as the german government if you compare their actions to those of the nation states they're just not comparison the german state has done a lot to support its domestic capital and to support the domestic economy within the confines that are or the framework that i mentioned previously and it's much much more than the european union itself has done indicating the point that i that you mentioned earlier it is the nation state that is dictating the terms it is the nation state that is dictating the terms of confronting the crisis not the european union not not the institutions of the european union their own intervention has been small weak decisive more fit and really and that's how it's likely to continue one last point on this politically what's most remarkable in this is that countries like Italy or like Greece or like Spain which rely on which have been hit hard by the coronavirus crisis and could have appreciated some kind of central EU help and they're not receiving it certainly not receiving it on terms that are truly helpful i reluctant again to make the obvious point that this is not in our interests that this is not helping us with the possible exception of Italy so what's this space when it comes to Italy maybe the political the political repercussions of this weakness of EU reaction will begin to appear in Italy and then we will see other phenomena emerging in the near term okay um i've announced a blog of questions regarding the uk itself for which you have two minutes to answer um so i think it kind of goes back to you know the the imposed terms of that will kind of or might come out of this crisis could you um talk a little about about the implications of nationalizing the wage bill for the capitalist um you know structure that we see in the uk and also um further than just nationalizing wage bills what are the long-term economic recovery strategies that we might see or that we might want to push for two minutes the uk government has taken some very important steps with regard to wages and with regard to supporting enterprises more generally he won't necessarily act to change the balance between capital and labor in the interests of labor that's not that's not what's going to happen if you leave it to the governments what it has done is it's been forced upon it in order to forestall a gigantic crisis that's basically what they've done i think it is incumbent on uk um political parties and grassroots organizations and communities to push the government now because it's opened the door the fact that is nationalized he has nationalized the fact that he has actually intervened in the in the profit and loss accounts of enterprises dramatically opens the door and allows us to argue for the necessary steps that must happen in order to restructure the uk economy in the way that obviously needs destruction we need a massive program of public investment right now that's perfectly obvious we need a system i would argue again of universal income to support the poor and to support those whose employment will become very precarious and very unstable in the period to come we need um public ownership public um um management of the key areas of the economy including transport uh and so on which are a part if you live in this country we need intervention in housing uh on a public basis in confronting it we need also to use state aid facilities such as Preston has done for a long time and other local authorities have done in creative ways to support and strengthen local communities um the the the flood gates have been opened right we need to push for that um all that is there and it can be taken advantage of all these options are available to us and they will restrict the limit neoliberalism and financialization nothing will happen by itself if you if you expect the government to do it you will be sadly disappointed the government will support big business will provide money where it needs to it will tax people who it has to and it will try and maintain the the structures of power and economic benefit um the way they are as they've always done um so nothing nothing like that will happen automatically what needs to happen is obvious um let's have a debate about this i mean great yeah let's have another discussion on um the community organizing and pushes that we have to um before i will pose the last question to you and give you the chance to wrap up in two sentences i would like to thank everybody for staying in longer over time i'm time i'm really sorry for the day in the beginning and i'm really sorry that people had to um drop out during the session i also want to highlight that next week on the 4th of may we will have another um event with a title will coronavirus mean the end of austerity the macroeconomics of the cobit 19 crisis with um joe mitchell and raza rehmann from soas and um uwe bristol so tune in again so cast us we will have two sentences um to wrap up the session for you and the last question is when can we go to the pub again um i don't particularly want to wrap up the um the the session with any big statements i think much of what happens will depend on how obviously the virus um behaves much will depend on public health public health is the primary thing here we must make sure that there is no second uh uh wave of this thing uh so going to the pub might have to wait a little bit um but under in all circumstances what we've got to bear in mind that this is an unprecedented crisis with profound economic social and political implications and when we do go back to the pub we should be discussing precisely this and what action we should be taking to change these things thank you so much day safer stay safe everybody and see you next week bye bye now bye thank you