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This event raises several political questions for progressives: what type of ‘bank’ do the BRICS leaders propose; why is it needed; are these the appropriate leaders to organise and control the new institution; and is it something progressives should view favourably?

An international ‘development’ bank is a non-profit, cross-country, public sector institution that makes loans to governments for long-term projects, either directly productive ones (e.g., a hydro-electric dam) or supportive of productive activities (e.g., roads and highways).  A development bank's sine qua non lies in offering loans at more favourable terms than private banks.

For example, in place of a requirement that US$ 200 million to Zambia be used to build a hydro-electric damn, conditions would require the government to privatize public enterprises, savagely cut government employment, and drastically slash public spending.

Contrary to rumour, the Brazil-Russia-India-China-South Africa alliance confirmed it would avoid challenging the unfair, chaotic world financial system at the Fortaleza summit on July 15.

During the 1997–98 Asian financial crisis, when middle-income countries were hard hit by big capital outflows, there was an effort by China, Japan, Taiwan and other countries to put together an Asian Monetary Fund to offer balance of payments support. Washington vetoed the idea, insisting that all assistance had to go through the International Monetary Fund. The result was a mess, including an unnecessarily deep regional recession, as the IMF failed to act as a lender of last resort and then attached all kinds of harmful and unnecessary conditions to its lending.

Western media coverage of these developments has been mostly dismissive, but that primarily reflects the concerns of Washington and its allies. They have had unchallenged sway over the decision-making institutions of global financial governance for 70 years, and the last thing they want to see is competition. But competition is exactly what the world needs here.

Just look at Ukraine, where the economy is shrinking by 5 percent this year and the IMF is imposing austerity that will prolong and possibly deepen the recession.

What is new about this phase of capitalism? Its global interconnectedness, driven in part by new technologies, and the dominance of a new kind of finance capitalism mean that, while a crisis of this system has effects everywhere, these effects are uneven. So far the Bric countries seem relatively unscathed, while the impact of economic devastation has spread from Asia and Africa into Europe.

The breakdown of old forms of social solidarity is accompanied by the dramatic growth of inequality and a widening gap between those who run the system or are well paid as its agents, and the working poor, unemployed, under-employed or unwell.

Neoliberalism's victory has depended on the boldness and ambition of global capital, on its confidence that it can now govern not just the economy but the whole of social life. On the back of a revamped liberal political and economic theory, its champions have constructed a vision and a new common sense that have permeated society. Market forces have begun to model institutional life and press deeply into our private lives, as well as dominating political discourse. They have shaped a popular culture that extols celebrity and success and promotes values of private gain and possessive individualism. They have thoroughly undermined the redistributive egalitarian consensus that underpinned the welfare state, with painful consequences for socially vulnerable groups such as women, old people, the young and ethnic minorities.

Consider what is happening in the most dynamic countries of developing Asia, where the increase in bank lending has been most evident since 2008. It turns out that a large part of the expansion in domestic credit has actually been directed to households, for consumption purposes. And the businesses that have gained from that (such as construction and real estate as well as some consumer durables) are the ones that have been disproportionately getting bank loans for their own productive activity.

The result has been an explosion in heavily leveraged consumption as well as in residential real estate activity,. And the impact has been most strongly felt in the housing market. So house prices increased rapidly between 2007 and 2011 – by around 70 per cent in China and Hong Kong China, and by 30-50 per cent in Taiwan China and Malaysia. Even economies where wage incomes barely increased, like South Korea, witnessed big increases in house prices.

There have been even larger increases in household debt than corporate debt in most of Asia – for automobiles, for student debt, for credit cards purchases, for other consumption based on EMIs.

Most of these problems can be traced to the country’s dysfunctional exchange rate system. Yet polls show that a vast majority of the public—in some recent polls as much as 80 percent—does not want a devaluation that could fix this system. And it appears to be this pressure from the electorate—not from special interests—that is preventing the changes necessary to restore economic health.

the dollar shortage is a result of the government giving away most of the dollars that it gets from oil revenue at a fraction of their value.

Of course, Argentina was facing other problems that Venezuela does not have, including a deep depression and the world’s largest public debt default. But the “managed float” exchange rate policy was a vital part of its very successful recovery, which began just three months after the devaluation.

As those spread, what began as protests over insecurity were overshadowed by cryptic calls for La Salida—The Exit—spearheaded by radical sectors of the opposition that have long been involved in efforts to oust the government, constitutionally or otherwise. In response, the government of Nicolás Maduro, whose leadership after edging a narrow victory last April remains unsteady amid worsening social and economic conditions, responded aggressively against what it saw as an attempt at destabilization at a time of fragility in the heart of the Bolivarian Revolution. 

a weak government confronting major social and economic crises that even officials and supporters acknowledge. Fifty six percent inflation, worsening shortages, a sinking currency, and insecurity rates that are by all accounts severe—even if the precise figures are a matter of debate—have plagued Nicolás Maduro’s fledging administration. Accounts of course vary on their depth and causes. Opponents blame mismanagement, corruption, and too great an emphasis on social spending over investments in the productive apparatus. Government officials point to speculation, hoarding, and currency manipulation—part of a broader program of economic warfare by saboteurs at home and abroad. Analysts have instead drawn attention to the distortions of a mixed socialist and capitalist economy where, despite strategic expropriations and increased social spending by the state, most industry and business remains in private sector hands.

But it would be a mistake to see the latest unrest as another blip in a now-longstanding pattern of tense stalemate punctuated by periods of violent upheaval. Instead, two intersecting elements should raise alarms about Venezuela’s near-term political future.    The first is a weak government confronting major social and economic crises that even officials and supporters acknowledge. Fifty six percent inflation, worsening shortages, a sinking currency, and insecurity rates that are by all accounts severe—even if the precise figures are a matter of debate—have plagued Nicolás Maduro’s fledging administration. Accounts of course vary on their depth and causes. Opponents blame mismanagement, corruption, and too great an emphasis on social spending over investments in the productive apparatus. Government officials point to speculation, hoarding, and currency manipulation—part of a broader program of economic warfare by saboteurs at home and abroad. Analysts have instead drawn attention to the distortions of a mixed socialist and capitalist economy where, despite strategic expropriations and increased social spending by the state, most industry and business remains in private sector hands.

In recent years, Venezuela, Ecuador, and Bolivia have withdrawn from the ICSID Convention, all for similar reasons. These governments cling to the quaint notion that their societies’ resources ought to belong to the people who live there, and they view the ICSID as a way to grease the skids for the continued pillaging of said resources (which is usually accompanied, of course, by environmental degradation).

In any case, a withdrawal from the ICSID is not a shield from claims by private interests, and states like Venezuela and Ecuador are still staring at billions of dollars in potential compensatory payments stemming from a number of cases over the last decade. States cannot simply ignore these judgments, as it would be viewed like a sovereign default, with all the economic risk that entails.

As a recent McClatchy piece on a high-profile dispute between Oceana Gold Corp. and the government of El Salvador put it, “international investment laws are empowering corporations to act against foreign governments that curtail their future profits, “ and the ICSID is the vehicle these corporations are using to ensure that these profits are not threatened.