In recent years, Venezuela, Ecuador, and Bolivia have withdrawn from the ICSID Convention, all for similar reasons.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.

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.

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.

But Piketty advances such an argument without breaking completely with the architecture of neoclassical economics. His theory thus suffers from the same kind of internal incoherence and incompleteness as that of Keynes, whose break with neoclassical economics was also partial. Deeply concerned with issues of inequality, just as Keynes was with unemployment, Piketty demonstrates the empirical inapplicability over the course of capitalist development of the main conclusions of neoclassical marginal productivity theory. His work has thus served to highlight the near-complete unraveling of orthodox economics—even while staying analytically within the fold.28

This overall incoherence, as we shall see, ultimately overwhelms Piketty’s argument. He is unable to explain why capitalist economies tend to grow so slowly as to generate such a divergence between wealth and income (and between capital and labor). Hence, while his analysis sees slow growth or relative stagnation as endemic to this system, he neither explains this nor is concerned directly with it. Significantly, he replaces more traditional notions of capital as a social and physical phenomenon with one that equates it with all wealth.29

Nor does he address the relations of power—principally class power—that lie behind the inequality that he delineates. His analysis is confined largely to distribution rather than production. He neither follows nor (by his own admission) understands Marx, though at times clearly draws inspiration from him.31

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.

Parts of our economies, societies, and states in Europe are being stripped bare by an extreme form of predatory capitalism.[1] And this stripping can coexist with growth in much of our economies. The majority of workers and economic operations keep functioning, even if at reduced levels.

The unemployed who lose everything—jobs, homes, medical insurance—easily fall off the edge of what is defined as 'the economy' and counted as such. So do small shop and factory owners who lose everything and commit suicide. And so do the weakened and ill newly poor who can no longer access basic medical services. All are stripped from what gets measured as 'the economy.'

The reality at ground level is more akin to an economic version of ‘ethnic cleansing’ in which specific kinds of negatives are dealt with by simply eliminating them from view. Thus in early January 2013, the European Central Bank announced that Greece’s economy was on the path back to growth, and Moody’s upgraded Greek debt by a point; the country’s rating is still low, but such shifts matter to investors, always desperate to find destinations for their capital. It meant that Greece was again becoming safe territory, and largely meant the buying up at very cheap prices of what had been valuable parts of the national economy. We saw a similar process in South Korea and Thailand during the so-called Asian financial crisis.[2] Greece’s 30% of workers who had lost their jobs, countless broken firms and neighbourhoods were left out of the picture. This economic cleansing works, but it does so on the backs of all those who have been expelled.

There is one criticism of austerity politics that is both true and, simultaneously, flatly false: that it is ideological. This claim is ambiguous and needs to be unpacked.

Yet Labour’s cuts, though slower and a little less deep, would in any other circumstances be considered a scandal. During George Osborne’s emergency budget in 2010, the chancellor was able to remark that he had inherited from Labour plans for cuts averaging 19 per cent across all departments. (Osborne had ‘merely’ increased the planned cuts to an average of 25 per cent across all departments). This was why canny Labour right-wingers had urged colleagues to calm down the anti-cuts talk, knowing that a Labour government would implement similar policies.

But those dismissing austerity as ideological mean precisely that there is a purely technical, non-ideological means of crisis-resolution. In this sense, the criticism of austerity as ideological is obviously in bad faith. It simply says, ‘their cuts are stupid, ours are going to be super-clever’.

austerity dogma trumps – simultaneously – good economics, good domestic politics in the U.S. and the Ukraine, and U.S. national security.  That’s how insanely powerful the failed dogma of austerity has become.  The CEOs who run the banks that loan money to the Ukraine are more powerful than the Pentagon and our State Department.

The IMF claims to have limited its conditions to critical reforms agreed by recipient governments. However, the worrying findings of this research suggest that the IMF is going backwards – increasing the number of structural conditions that mandate policy changes per loan, and remaining heavily engaged in highly sensitive and political policy areas.

The biggest IMF facilities in terms of loan totals have the heaviest conditionality. This rise is driven by exceptionally high numbers of conditions in Cyprus, Greece and Jamaica, which together accounted for 87% of the total value of loans, with an average of 35 structural conditions per programme.

Almost all the countries were repeat borrowers from the IMF, suggesting that the IMF is propping up governments with unsustainable debt levels, not lending for temporary balance of payments problems – its true mandate.

The one big institutional difference this time around seems to be the role of the central banks, with the Federal Reserve of the United States playing a leading if not domineering role on the world stage. But ever since the inception of central banks (back in 1694 in the British case), their role has been to protect and bail out the bankers and not to take care of the well-being of the people.

But if everyone tries to live off rents and nobody invests in making anything, then plainly capitalism is headed towards a crisis of an entirely different sort.

What remains of the radical left now operates largely outside of any institutional or organised oppositional channels, in the hope that small-scale actions and local activism can ultimately add up to some kind of satisfactory macro alternative. This left, which strangely echoes a libertarian and even neoliberal ethic of anti-statism, is nurtured intellectually by thinkers such as Michel Foucault and all those who have reassembled postmodern fragmentations under the banner of a largely incomprehensible post-structuralism that favours identity politics and eschews class analysis.

So far, these demands have resulted in very modest agreements to change voting weights at the institution (and even these have not yet been ratified by the US). But we cannot help but conclude that IMF governance reform is now firmly on the agenda. Equally important, the current crisis has also marked a substantial curtailment in the geography of the institution's influence in the global south.

Just as the Asian crisis laid the groundwork for institutional developments that have deepened only in the current crisis, so do we expect the current crisis to catalyse further innovation along the lines already in place, and in directions not yet imagined, when the next period of instability emerges.

We should take note of what we see as the beginning of the end of the neoliberal approach to development. The process of discrediting that development model begins in the aftermath of the east Asian financial crisis of 1997–98.

If its effects are at best debatable and at worst laying the ground for the next round of financial crises, why has there been so much QE? It is because it has been the only weapon that the rich country governments have been willing to deploy in order to generate an economic recovery.

QE has become the weapon of choice by these governments because it is the only way in which recovery – however slow and anaemic – could be generated without changing the economic model that has served the rich and powerful so well in the past three decades.

This model is propelled by a continuous generation of asset bubbles, fuelled by complex and opaque financial instruments created by highly leveraged banks and other financial institutions. It is a system in which short-term financial profits take precedence over long-term investments in productive capabilities, and over the quality of life of employees. If the rich countries had tried to generate recovery through any other means than QE, they would have to seriously challenge this model.