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it is a bit geographically challenging to describe it as the development bank of the ‘South,’ given that Russia is one of the founding members; the largest founding member is entirely north of the Tropic of Cancer except for a tiny sliver (China); and a third was entirely north of the Equator the last time I checked a world map (India).

Many predict or at least hope that the new lending institution will improve the access of middle and low-income countries to financing for infrastructure.

 If the BRICS bank can operate less bureaucratically than the World Bank, that would be a substantial gain in itself.

why is it necessary for countries to borrow to build, for example a new airport? The problem is never ‘money.’  Any government of a country that has its own currency can borrow from the central bank (this would not apply to the 14 members of the West and Central African currency zones). Only one reason comes to mind about borrowing from abroad: that the project may require substantial imports of materials. Thus, the purpose of the borrowing is to obtain US dollars, yen, renminbi, etc.  

is this Gang of Five likely to shift international lending in a more humane and flexible direction as Oxfam hopes?  We should note that the voting proposal for the BRICS bank follows the IMF/World Bank model – money votes with shares, reflecting each government's financial contribution. The largest voting share goes to China, whose record on investments in Africa is nothing short of appalling (see my discussion of Chinese capital in Zambia).

Much better than a project bank for the ‘South’ would be an institution providing long-term loans in foreign currencies. This would have several major advantages over the BRICS bank as envisaged. First, the loans could be made on the basis of a judgment about the ability of the government to repay, not a narrow assessment of a specific project. This rather difficult judgment is the de facto basis of all loan repayment – can the country's export sectors generate the foreign exchange to service the debt? Second, the borrowing country's external debt would increase by the foreign currency component of the project; the rest would be financed domestically. This arrangement would be in line with the famous advice of John Maynard Keynes in 1933, ‘let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national’ (emphasis added). 

The suspicion uppermost in my mind is that the purpose of the BRICS bank, as a project funding bank, is to link the finance offered, to the construction firms and materials suppliers located in the BRICS themselves. Certainly, the Chinese Government is notorious for doing this (see 'China insists on "tied aid" in Africa').

In 1982 the IMF lent Mexico $4 billion, which went straight back out of the country to pay western banks - a perfect mirror of what is happening with so-called bail-outs to Greece and other Eurozone countries today.

Former Colombian Finance Minister Jose Antonio Ocampo calls the bail-out responses "an excellent way to deal with the US banking crisis, and an awful way to deal with the Latin American debt crisis".

Then as now, bailout money was used to repay reckless banks, whilst austerity has served only to shrink economies and increase the relative size of the debt.

The future of Europe’s economy, indeed the world economy, will be decided by a battle between the financial masters on the one side, and the peoples of the most indebted states in Europe on the other - Greece first. We either retake control of our economy from the banks, or we deepen an economic experiment which has had an incalculable cost in terms of the lives and livelihoods of millions of people.

Before discussing its limits, I will summarize Professor Stiglitz’s response to the problem he calls “market failure.” Professor Stiglitz attributes “market failure” to “lack of transparency.” He has several recommendations on how to check market failure. The first is that government needs to bridge the gap between social returns and private returns, both to encourage socially necessary investment as in agriculture and to discourage socially undesirable investment as in real estate speculation. Second, the government may set up specialized development banks. In support, he cites the negative example of America’s private banks and their “dismal performance” alongside the positive example of Brazil’s development bank, a bank twice the size of the World Bank, and its “extraordinary success” in leading that country’s economic transformation. Finally, Professor Stiglitz cautions against liberalizing financial and capital markets as advised by the Washington Consensus.

I am not an economist, but I have been forced to learn its basics to defend myself in the academy and the world. Like you, I live in a world where policy discourse has been dominated – I should say colonized – by economists whose vision is limited to the economy. Professor Stiglitz derides this as “free market fundamentalism” and I agree with him. Like fundamentalist generals who think that the conduct, outcome and consequence of war is determined by what happens on the battlefield, the thought of fundamentalist economists not only revolves around the market but is also limited by it. Just as war is too important an activity to be left to generals, the material welfare of peoples is also too important to be left to economists alone.

The Eurozone was created as a single currency for Europe but without constituting Europe as a democratic polity. The result was that monetary policy was formulated outside the framework of democracy. The states in Europe have done to their own people what the Washington Consensus did to African peoples in the 1980s. Unelected governments rule Europe; the EU ruling phalanx is not accountable to anyone.

Here is my point: The antidote to the market was never the state but democracy. Not the state but a democratic political order has contained the worst fallout from capitalism over the last few centuries. The real custodian of a democratic order was never the state but society. The question we are facing today is not just that of market failure but of an all-round political failure: the financialization of capitalism is leading to the collapse of the democratic order. The problem was best defined by the Occupy Wall Street movement in the US: it is the 99% against the 1%.

It would be a shame if this audience is to walk away from Professor Stiglitz’s lecture with a message that the problem is just one of “market failure” and the solution is a robust state that regulates markets and provides development finance. Is the lesson of the Structural Adjustment era simply that we need strong states to defend ourselves from the Washington Consensus? Or does the experience of the SAP era also raise a second question: What happens if developing countries are forced to push open their markets before they have stable, democratic institutions to protect their citizens? Should we be surprised that the result is something worse than crony capitalism, worse than private corruption, whereby those in the state use their positions to privatize social resources and stifle societal opposition?

Conventional, so-called “neo-classical” economics pays little or no attention to monetary dynamics, treating money as just a “veil” over the activity of utility-maximizing individual “agents”. And, as hard as this is for non-economists to believe, the models which these ‘mainstream’ economists make do not even try to account for money, banking or debt.

What needs to be said is this: Keynesian economics worked before, and the improved version – now generally called “post-Keynesian” – will work again, to deliver what the market-fundamentalism of the past three decades has patently and persistently failed to deliver *anywhere in the world*. Namely – a prosperity which is shared by everyone. The principal purpose of Modern Monetary Theory is to explain, in detail, why this this worked in the past and how it can be made to work again.

We need an open forum — a global assembly, as it were — to consider where capital is, where it might be going and what should be done about it. I hope that this brief book will contribute something to the debate.

something different in the way of investigative methods and mental conceptions is plainly needed in these barren intellectual times if we are to escape the current hiatus in economic thinking, policies and politics. After all, the economic engine of capitalism is plainly in much difficulty. It lurches between just spluttering along and threatening to grind to a halt or exploding episodically hither and thither without warning. Signs of danger abound at every turn in the midst of prospects of a plentiful life for everyone somewhere down the road. Nobody seems to have a coherent understanding of how, let alone why, capitalism is so troubled.

Half of Spain’s unemployed no longer receive benefits, while 33 of the 35 biggest companies avoid tax through subsidiaries in tax havens (6). Half a million children have been plunged into poverty since 2009, but the wealth of Spain’s super-rich has increased by 67% since Rajoy came to power (7). To avoid the wrath of a fractious population, last December’s “citizen security” law outlawed everything that made the 2011 mobilisation possible, including meetings in public places and distributing leaflets.

Spain’s situation may be risky. It makes the far right, Iglesias has pointed out, “as happy as a fish in water” (8). Yet the Spanish left has an advantage over its French counterpart: a large fringe element of the nationalist far right is formally integrated into the PP, which makes it difficult for them to push an anti-system platform, unlike France’s Front National, which has only ever run local councils.

“To be specific,” Lago said, “we don’t talk about capitalism. We defend the idea of economic democracy.” Nor is the left-right dichotomy discussed: “The divide,” Iglesias has said, “now separates those, like us, who defend democracy ... and those who are on the side of the elites, the banks, the markets. There are people at the bottom and people at the top ... an elite and the majority.”

People looked at them like they were from another planet, and my students went home discouraged ... That’s what the enemy is expecting us to do: use words no one understands, remain a minority, fall back on our traditional symbols. And they know that as long as we do that, we pose no threat to them.”

Shaped by Gramscian thought, Podemos leaders believe that the political struggle should not be limited to overthrowing existing social and economic structures, but should also be against the hegemony that legitimises the domination of the powerful in the eyes of those they dominate. In this cultural area, the enemy imposes its codes, language and narrative. And one tool stands out for its ability to shape “common sense” — television.

“There’s nothing extremist about Podemos’s programme” (10), Iglesias has said: a constituent assembly on coming to power, tax reforms, debt restructuring, opposition to raising the retirement age to 67, the introduction of a 35-hour week (40 at present), a referendum on the monarchy, a kick-start for industry, the recovery of powers ceded to Brussels, self-determination for Spanish regions. Foreseeing an alliance with similar movements in southern Europe (Syriza in Greece, which has come to power in the 25 January election), Podemos’s plans do threaten financial powers, what Iglesias calls “German Europe” and “the caste”.

And those powers are already baring their teeth. A piece by journalist Salvador Sostres in El Mundo in December compared Iglesias to the former Romanian leader Nicolae Ceauşescu, and claimed he had only one idea: “to make the blood of the poorest flow, to the very last drop.” A PP politician was even more direct:  “Someone should put a bullet in the back of his head.”

There are increasing efforts with global value chains, and a stronger mandate to work on their governance, so as to address unfair distribution of gains across the chain and the resulting detrimental impacts on employment conditions and inclusive growth .

Shockingly, developed countries even opposed inclusion of the issue of policy space. What is policy space? By this we mean that developing countries must be free from imposed international strictures and rules that go against their development needs.

After this conference, no country from the EU, nor the US or other developed countries, can claim to be in favor of developing countries’ escaping the debt treadmill.

Unfortunately, the rich countries’ club of the OECD has thus far dominated international discussions on taxation, which leave out developing countries and their development concerns. On taxation, UNCTAD 14 sadly became yet another example of how determined rich countries are to ensure the exclusion of developing countries, not just from decision making on tax matters, but also from the possibility of getting independent advice on how to stop the enormous losses of money they suffer from illicit financial flows,