Answering five questions.

1. If Robert Zoellick himself warned, days ago, that the dollar is set to be eclipsed, so why Gulf countries, such as Qatar or Saudi Arabia or UAE, insist on using American dollars in their oil trading, denying what the prominent Robert Fisk wrote in the independent, yesterday, about replacing the dollar with a basket of currencies, in trading oil?
2. In your opinion what is the perfect shape, for a new international economic order, that may include china and India, and others?
3. What it takes to rebalance the global economy?
4. How effect can the IMF be as rebalancing referee?
5. Will there be a change in global dealings with some currencies?
Khalil Harb

Money is a measure of value that facilitates exchange. Minting coins and, later, printing paper money has always been a prerogative closely supervised by the state (Scotland seems to be the only exception, where private banks issue notes). Bearing the monarch’s effigy, or the republic’s emblems, money symbolises the power of state. A power that stops at the border, beyond which another power and another currency take over. A legal tender exists within the frontiers of a nation. But goods, services, commodities, merchants, entrepreneurs and labour cross these frontiers continually, and at each crossing value has to be reassessed. Exchange rates vary constantly according to supply, demand and speculation, as well as for political and diplomatic reasons. Not knowing to-morrow’s value is a great inconvenience.

The US dollar’s supremacy dates back to the end of the Second World War In 1945, America was the only major industrial nation not to have suffered war damages. A year earlier, the gold standard established at Bretton Woods had been a face saving operation for Great Britain and France. It was of little consequence as, for the following fifteen or so years, the US was the only nation able to produce industrial goods for the world market. And the US dollar became the world’s currency as a consequence of this monopoly.

By the mid-1960s, Japan and Europe had rebuilt their capacities, had settled their colonial pasts (neo-colonialism) and were back in the competition for all the new markets. But their currencies were still weak and dollar dependent. The US trade balance remained largely positive, and America was still the world’s creditor. However, when crude oil prices were multiplied in the 1970s, the balance was upset and America became the world’s debtor. According to Michael Hudson (http://www.counterpunch.org/shaefer04232003.html) this was when the US government decided to pay its commercial deficits with Treasury bonds. A practise it has maintained ever since.

Saudi Arabia, Japan, Germany and more recently China, have accepted large quantities of US Treasury paper to balance the growing US trade deficit. Hudson says that Saudi Arabia did it under pressure. And this could be true for all of America’s creditors. Whatever may be, once a nation accepts another nation’s money (T-bonds are a promise to pay), it must continue doing so. If at some point it demands another form of payment, the money form will be devalued to its own disadvantage, as it is in possession of a lot of paper labelled in that other nation’s currency. If Japan stops buying US Treasury bonds and China stops accumulating US dollar reserves, the dollar will plummet and both creditors will lose out on the Dollars they are holding.

A global market needs a global currency. The US dollar has filled this function for over sixty years. During the first half of this period, America had a trade surplus and was the world’s creditor. During the second half, America had a trade deficit and was the world’s debtor. Concomitant to the trade deficit, the US was running a budget deficit and was selling it abroad. And the two deficits conveniently balanced out. On both the interior and the exterior markets, the US was thriving on ever increasing quantities of credit. The problem facing America to-day is that it is importing les and thereby reducing its trade deficit, while its budget deficit has been hugely multiplied. The flow of credit has stalled, the dollar is at the cliff’s edge and the world is holding its breath, waiting to see the result of quantitative easing. That is, the central bank buys old Treasury bonds from private banks, who in turn buy the new bonds being issued. This is in fact “printing” money to pay for government deficits, and is usually considered the symptom of a failed state.

The US dollar has far outreached its function as a global currency. This can be blamed on the Cold War and the superpower politics of imperialism. However, empires cannot be reformed, they can only decline or fall, which seems to be the future of America’s financial tool, the mighty dollar. Can it be saved from collapse by bolstering it up with a mixed bag of other currencies? Could the IMF or OPEC offer an alternative currency? Can the euro…? None of this seems likely, as the quantities of money concerned are too vast. The dollar stands alone, and alone it will fall or decline. And a new world currency will replace it. The dollar imposed its primacy because of America’s trade surplus. And, except that there will be several players, this will probably be the criterion again. So that following the adage, he who pays the piper calls the tune.

The gardener's spirit.

Humanity seems bent on disrupting the planet’s stability, to the point of threatening the existence of many living species. This possibility, which may already be beyond recall, is a consequence of science, technology and the original human notion that nature can be modified. For most life forms on Earth, the only preoccupations are food and reproduction. Though birds, some insects and a variety of mammals build and burrow, very early on human kind went a step farther with tools and clothes, and the cooking fire. Artefacts are unnatural, an offence to creation and a challenge to the gods. So Prometheus was severely punished, and the serpent of Paradise must forever slither. But the power to create, to imagine and to make, had become a human faculty. The world could be transformed and visions could become reality.

Adam and Eve acquired knowledge and were expelled from the animal Eden. They learned to cloth themselves and to cultivate the earth. Cain and Able specialised, a farmer and a herdsman. They fought and, notwithstanding the Bible’s constant preference for meat offerings, agriculture was victorious. This led to the building of towns. Later, the sons of Lamech learned herding but not husbandry, music and metallurgy. In the more complex Greek cosmology, this was when Prometheus intervened. The fire he stole was not that of the hearth, nor even that of the potter’s oven, it was the heat of Hephaestus’ furnace. The Olympian black-smith had been cheated and avenged himself by forging unbreakable chains for the thief.

Bronze and steel transformed the production process and the rules of war. But their discovery supposed a certain perception of the material world. Natural gold and, more rarely, copper are found as nuggets in river beds. However, most copper, tin to make hard bronze and iron must be extracted from an ore. Heat transforms matter. It makes food more digestible, it hardens and glazes pottery, it turns stone into steel. Heat and fire were seen as a cosmic force on a footing with earth, sea and wind, while in hot climates the omnipresent sun dominated all. And, though other metals were extracted from their ores (as late as the 17^th century, alchemists were still hoping to find gold ore), so things remained for a few thousand years.

Knowledge is good and bad. It produces and destroys, saves and kills, makes things possible and impossible. Hunter-gatherers are nomadic because they follow the game and the seasonal plants. Having no reserves, they must find fresh food all the year round. Living this way supposes a precise knowledge of considerable trackless expanses, of meteorological and topographical particularities, of animals and plants, of magic ritual and the interpretation of dreams. Primitive societies master their environment and are subjected to it. Their world is awesome and beautiful, generous and demanding. It exists of itself. About ten thousand years ago humanity split in two. Some learnt to domesticate a variety of animals for food and portage. Others learnt to grow selected plants. At the start, this was probably an either/or situation, following the herd or staying with the gardens. The herdsmen are well documented, and their remnants still roam around East Africa, Arabia, Lapland, Siberia and Mongolia. The gardeners left only fragments that are difficult to put together, and Malinowski’s Trobrianders gave just a glimpse of what may have been.

In hunter-gatherer societies, men usually do the hunting and women the gathering. With the domestication of animals and plants, the herdsmen adopted a patrilineal succession, and the gardeners may have had a matrilineal transmission. Herds have alpha males, whereas most plants are both male and female. There is no duelling for sex in the vegetable kingdom. So the herdsmen roamed the steppes in search of fresh pastures, and the gardeners built, planted and reaped in the fertile river plains. Two separate worlds, two incompatible cultures and, when they met, the alpha males must have been irresistible.

Knowledge of the world had divided and joined again. But the reunion did not restore the balance. It installed a series of dominations. Adults dominate the young, man dominates woman, men dominate one another, and all humans dominate nature. The gardener’s acquired knowhow was subjected to the herdsman’s animal certainty. And knowledge became the tool of power. In the animal world, power is limited to the food chain and to reproduction. Human power expresses itself as wealth. The herdsman’s wealth was his herd, his wives, children and servants, and the personal belongings that could be carried. In the bountiful garden plains, wealth was multiplied by abundant manpower to build palaces and temples, and to cover with gold the ultimate source of power, be he king or god, or king-god.

History is the tale of power using knowledge for its own magnification. The pen’s might is the sword’s servant. With the advent of writing, the transmission of knowledge was split into public and esoteric, the official version and the word of mouth. The ancient oral traditions did not survive the onslaught, so the world was according to Plato and Aristotle, Livy and Virgil. The Iliad, the Odyssey, and the Pentateuch were “written” at about the same time, 6^th/5^th century BC. Pisistratos commissioned the edition of Homer’s poems, and Ezra organised the publication of the five books of Moses. These were two powerful men who knew the importance of hearts and minds. And for one tale transcribed, how many fell into oblivion? However the oral tradition lingered on in domains where apprenticeship was linked to a particular practise, such as herbal medicine.

In Antiquity, books were scrolls made of papyrus. The fall of Rome and the rise of Islam put and end to that. (McLuhan considers that the extensive harvesting of papyrus in Egypt had overstretched the resources, and that the ensuing scarcity of writing material was instrumental in Rome’s decline.) And for close to a thousand years, books were made of leather pages bound together in a cover. (Parchment was invented, or at least developed in Pergamum as a response to an interruption of papyrus exports from Egypt). Publishing became a long and arduous process, books were rare and the destruction of libraries by Gothic and Norman invaders made them rarer still. Books had replaced the oral form of transmission, and books had been burnt. In Western Europe, the Dark Ages were a time of abysmal ignorance, where the rule of might was absolute. And it was a slow climb to enlightenment. In the East, Greek libraries had survived. And their books began to trickle westwards when crusaders entered Antioch or Seville. But the real novelties, algebra, alchemy, paper and the printing press, came from Asia via Bagdad. (Movable type was a western application facilitated by the Greek and Latin alphabets).

Gutenberg’s invention was of inestimable importance. It not only made possible the diffusion of the written word on an unprecedented scale, but it was also the premise, almost the prototype, of mass production. Printing circulated ideas at an ever increasing speed. Old writings were confronted with medieval society, and soon new ideas were being expressed in the vernacular instead of Greek and Latin. And the Old and New Testaments were confronted with the medieval Church. Reformation and Renaissance were the first outcome. Then came the scientific and technological revolutions of Enlightenment. Humanity climbed out of Plato’s camera obscura to scrutinise the real world. And it was found to be very big and very small, and very material. Cosmic and telluric forces, or meteorological events, were not the work of whimsical gods. Dreams and visions were not the demonstrations of an ethereal soul. Newton’s gravity was not deified, though it pervades and governs the universe, and is still not fully understood.

Science and technology are mutually dependant. Theory needs practise to test itself, and practise needs theory to develop itself. Optics, chemistry, thermodynamics, electricity, et cetera, once it was started the process took up speed and raced away. By the late 19^th century, steel machines burning coal were everywhere, and Nietzsche could announce that the gods were dead, that humans were condemned to decide their destinies without celestial guidance. This left a gaping hole. If going to church to worship the gods was not the specie’s raison d’être, then what was? Under oriental influence, Nietzsche’s quest was a personal affair, awakening was an individual task. Others extolled human destiny in terms of class, nation and race. For many, wealth and parenthood made sense of an empty existence. And heaven and hell were lived on earth, not in some increasingly unlikely after-life.

The 20^th century was a paroxysm of power. Atoms were split, fused and combined at will. Living matter was modified at molecular level. Rivers were dammed, land was covered in concrete and mountains were raised to the ground. The seas were emptied of fish and tropical forests were cut down. By mid-century the specious questions concerning human destiny had been settled. Wealth became the only point of life, wealth at any price, wealth and the power it buys. Humanity embarked on a wild race for more, and the world’s diverse materiality was reduced to money. When the gods die of disbelief, the realm of matter is epitomised as gold.

The ancient gardeners knew that increasing their patch meant encroaching on their neighbour’s, because the fertile river valley was a limited space, whereas the early herdsmen moved in a boundless emptiness. For ages humans have lived like herdsmen, taking and moving on to pastures new. In the past there has always been more to take, more raw materials to exploit. This no longer seems to be the case, and the planet appears as no more than a garden with precise boundaries. Unfortunately the gardener’s spirit is shrouded in the far distant past, and may be impossible to revive.