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A common world currency alternative to dollar, for the development

of peoples of all countries and for common goods of Humanity


Frdric Boccara
Economist
Paris 13, University (Associate professor)
Economie & Politique, journal

0. Introduction
One of the major stakes of our times is to struggle for another globalization.
This is the orientation of our Marxist school, linked to struggles and social
movements, at national and also European level.
We are facing two things:
-

The financial globalization, dominated by US multinationals and the US


dollar, full of risks, inequalities, unemployment;

The demand for genuine radical alternative and proposals, with different
struggles but mainly protestation struggles

The demand for alternative and radical proposals can be mislead, in Europe,
towards
- either nationalism against all forms of internationalization, with the
illusion of a possible conciliation, class collaboration!, between capitalists and
workers at a national level
- either conservative reforms (low or high) for market and to sustain profits,
which lead to a failure and would fuel social despair.
The both positions have in common to not affront capital and its financial logic.
The stake hence is to struggle for another globalization, for the whole
Humanity, towards a socialist and communist direction.
1. TAFTA and TTIP international agreements Treaties projects
One challenge about another globalization is obviously the very recent wave of
new international global agreements, as TAFTA and TTIP (transatlantic
agreement on free trade area and transpacific trade and investment
partnership). It manifests the seeking for the dominant economy, USA, of
another stage of the globalization after the financial crisis, but in order to
persist, to enlarge and securing the same logic. Of course we have to refuse the
Investor-State arbitration principle putting MNEs at the same level than
States. We have also to denounce the possible alignment of norms on the
weakest norms. But we have also to promote alternative and not simply
limiting the same logic. We are not anti-globalization, we want another one.
As an alternative the mere principle of cooperation is good but far to be
enough. We need more specific principles for the cooperation, as cooperation
for developing common goods and cooperation for improving jobs and
mutual value added. But also we have to see as much capital criteria are in the

The 4th World Socialism Forum Beijing Chinese Academy of Social Sciences - 2013 October 30-31

heart of the agreements projects. The investments are the core of the
agreements (and it is in the title). More specifically, the core of the treaty is
investments and the income of the investor (i.e. profit1). The criterion of
judgment of the TAFTA treaty project is whether if the returns of investments
are secured for the (foreign) investors. It is said in a pseudo-neutral way. Said
with others words it means weather if the profits are secured for the owner of
capital. But the profits (return on investment for the owner) are not the whole
return of an investment, there is the whole value added, and also non valuable
elements. So a crucial point for an alternative could be elaborated from the
following principle: whether if the VA, the VA disposable for people and
territories, jobs and Common goods are improved or threatened.
The last important point of those Treaties is the transfers in value of all
resources. That refers to the need of a common world currency, and stable,
hence to dollar.
We can refer to the fundamental systemic triangle of the system, to understand
both its resistance and the way to transform it. Indeed we must act on the
three points of the triangle: powers, but also social aims and financial needs,
through a progressive change of the dominant criteria of the capitalist system.

Graphic1

Systemic Triangle
Powers

Efficiency Criteria

Social Goals

(Profitability vs Efficiency)

Financial and cultural Means

Concerning the angle financial means of the triangle, I will describe here a key
point for another globalization: the dollar and alternative to it. It is at the core
1

Investment means every kind of asset which is owned () by investors of one Party in the
territory of the other Party that has the characteristics of () the expectation of gain or
profit (article 1- 4-p, TAFTA draft of the 02/07/2013.

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The 4th World Socialism Forum Beijing Chinese Academy of Social Sciences - 2013 October 30-31

of the international economic system. It has to be noticed that it concerns also


the other angles of the triangle, for example the powers angle.
2. US dollar: situation and domination mechanisms
The hegemony of US dollar as the world common currency de facto goes hand
in hand with the hegemony of US financial capital and multinational companies
(MNCs). We need to understand it, we need to change it, we need specific
proposals, and there are still some existing elements in this direction, as the
recent creation of the new development bank (NDB) by the BRICS.
So I will present (1) the situation and mechanisms used by the dollar (2) Specific
radical proposals (3) Discussion on alternative progressive way and the new
development banks.

The domination of US dollar allows an enormous levy of US economy on the


other economies, at the service of financial capital and against social
development of all peoples all around the world, even in the USA itself.
It widens inequalities and reinforces them. It is a component of the world
financial crisis, and a key element of the next crisis which has already began, as
it seems, in Europe, threatening now even the emerging economies as India,
Brazil, Russia and possibly also China.
We need to understand the dollar hegemony. Some words to describe this
hegemony.
First, the domination of US dollar in the trade is well known. A huge part of
the world trade is done in dollar, and another part is invoiced in dollar. Hence
many economies depend on the evolution of the dollar exchange rate. And on
the other hand, merely by their trade they push the demand for dollar, helping
him to sustain its exchange rate.
But, secondly, as Marxs works and Marxists works shown, the power of
the money lies mainly in its power of financing, in its power to mobilize
production factors and to develop them. Capitalism can be viewed as a
monopoly of one class capitalist people on the money and its utilization; a
monopoly exerted through effective power and also cultural domination (the
famous ideological hegemony theorized by Gramsci).
The money acts as an advance before to produce, allowing the production to
exist financing nowadays the enormous needs of money advance for the
informational revolution (R&D, for example) and direcGng producGon: where
do we produce, what do we finance, what production-mix between workers
and material means.
That is the case for a currency like the dollar which is freely issued by US
Federal Reserve System, and which is accepted all around the world as a de
facto world common currency, but monopolized by a single class of a single
country: the financial milieux of the USA.
Third, money has also a power upon the results of the production: to
drawback value resulting from production, to transfer it, and attract it because
of the profit perspectives (from exchange rates variations, from financial
The Current situation and the Development Trend of World Socialism and Leftist Thoughts

The 4th World Socialism Forum Beijing Chinese Academy of Social Sciences - 2013 October 30-31

investments in the assets expressed in this money, or from real investments in


the companies of the territory of this money).
Indeed, the US economy attracts capitals from all countries around the
world.
Entering into the United States, we have Portfolio investments into the US
economy
-

Buying enterprise equities

Buying US Treasury bonds


And we have

A lot of deposits in dollars

Huge amount of borrowings and loans in dollars, from and towards USA.

All this finance US economy as a levy on the rest of the world, we could say a
tax, despite of US deficits and disequilibria. And it also sustains the dollar
exchange rates through the demand for it.
It finances informational spending and technological advance of the US
economy, particularly R&D expenditures, high skilled workers training and
wages, and technological investments. It is spent partly inside the US economy
either by MNCs spending, either by public entities (including military
expenditures).
It finances also outside, as counterpart, the world expansion of US-MNCs all
around the world, through net outflows of FDI from US. Hence it is spent partly
outside. And bout that point one can underline one thing: from foreign comes
dispersed capital (e.g. portfolio investment) so it has quasi no control power,
but it finances foreign direct investment abroad (exits from the USA) that
controls the other companies. Hence a lot of foreign capital exit to USA only to
finance and take profit, but is transformed to help US-multinational companies
(MNCs) to control the rest of the world companies It is a transformation from
finance by the rest of the world onto control on the rest of the world, through
giving some profit (essentially given by the State as income on treasury bonds).
So we have, as shown on the graph:
a) Net inflow of Portfolio investments and Deposits and Borrowings and Loans
(inflow of K, symbol = K+)
b) One part is internally used for developing informational and technological
US advance (including public expenditures, through the bying of US
treasury bonds, financing State budget deficit). (Internal uses of K+).
c) The other part is used to finance international domination of the world
through (i) the lasting of US trade-in-goods-deficit and (ii) the financing of
US MNCs expansion with a net outflow of FDI from the US. That is to say it
is used to purchase assets or real capital in foreign countries (foreign direct

The Current situation and the Development Trend of World Socialism and Leftist Thoughts

The 4th World Socialism Forum Beijing Chinese Academy of Social Sciences - 2013 October 30-31

investment) and to net purchase of goods from other countries. (outflows


of K, symbolized by K-; direct K- and K- to pay net Imports)2
d) Forth, this financial and technological domination of the world, by dollar
and multinational enterprises, allows drawing back from the world net
surplus, net positive inflow of profits to US economy and MNCs, under the
form of dividends and different payments of services as royalties etc. (K+)
Graphic 2

External Financing of USA


in % GDP

Balance

Financing: Capitals + Profits + Services


(inflows)

Purchasings: Investment outward (FDI) + Trade in goods deficit


(outflows)
K portfolio net imports + $BankNotes + Services income + Profits from investments
Trade in goods deficit + net FDI
Balance

Source: BEA (US bureau of economic analysis)

For example, in 2012:


a) US imported 593 $ billion of capitals from the rest of the world, of
which 507 portfolio investment net entrance. A large part of it financed
public deficit and hence public expenditures (of which the net flow of
new foreign purchasing of Treasury bonds was 313 $ billion).
b) And MNCs received 211 $ billion of dividends and 205 $ billion of net
services payments (royalties, patents, interests, etc.).
A total of 1 009 $ billion entrance
c) Net foreign direct investment outward was of - 158 $ billion (the
minus sign indicating a net outflow from US to abroad).
2

Of course, there are exports and imports of goods; but at the end a deficit of US external
trade in goods means that there are net imports.
The Current situation and the Development Trend of World Socialism and Leftist Thoughts

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d) The Net imports of good generates the trade-in-goods deficit of


742 $ billion.
This makes a total of a flow of 900 $ billion in 2012, financed by the world,
dominated by US MNCs power.
All that lets to internal uses a net balance of +109 $ billion (=1009-900).
*
As we see the dollar allows USA to impose a levy onto the rest of the world,
to the benefits of US economy and MNCs, and allows also financing it by
monetary creation (issuing of dollars).
Hence, the hegemony of the dollar is not only its hegemony in the trade in
goods payments and invoice, it also maybe above all in financing
deficits, foreign investment and attracting capitals from all the countries,
for financial domination and against the mastering by peoples. It is the
hegemony of monetary creation in dollar, merely by monetary issuing,
serving the aim of US MNCs, their economical, cultural, technological and
even military domination.
It acts against social development of each people, including US
people. It lies also on the fact that the dollar is the common world currency,
a reserve currency, held by a lot of countries, dominating world currency
reserves (66 % of official reserves of central banks are in dollars
banknotes or dollar assets see for example Golberg 2010).

2. Potentials for an alternative


But it can be challenged. There is a potential to challenge dollar
domination.
First, there has been a long process of alternatives and proposals engaged
since the crisis of the Bretton Woods system after 1971-73, when we
shifted from the gold-and-dollar standard to, de facto and explicitly, the
only-dollar standard.
In 1968, what can be the base of a new common world currency has been
created. It is the SDR (special drawing rights), a panel of different national
currencies, issued but the IMF, as a pure monetary creation.
At the general assembly of the IMF, almost each year, developing countries
claim for issuing an additional quantity of SDR. But USA refuses. There has
been only 3 issuing (allocations) of SDR: in 1971-72, in 1979-81 and the last
in 2009 during the financial crisis. That last allocation was 183 $ billion, but
the main part goes to the developed countries (44%), and first to USA,
because it is allocated according to the quota of shares held by each States
in the IMF, and not according to needs or to population.
We, French Communists and Marxists, have expressed rather early the idea
of challenging dollars domination as a de facto world currency, and of
developing against it the special drawing rights (SDR) as a really new world
common currency, with a profoundly transformed IMF (international
The Current situation and the Development Trend of World Socialism and Leftist Thoughts

The 4th World Socialism Forum Beijing Chinese Academy of Social Sciences - 2013 October 30-31

monetary fund). It was expressed by P. Boccara, in an international


conference at New Delhi3.
Recently, in 2008, we had discussions in France with Chinese economists of
the central bank. And we had the Chinese declaration of the China Central
Bank governor Zhu Xiaochuan before the G20 summit in April 2009 with
reference to SDR, claiming for a new common world currency.
It has been supported by Russia and Brazil, but the US Tresor secretary
stand against it.
We had also the very recent creation, in July 2014, of two new financial
institutions by emerging countries: a New Development Bank (NDB), based
in Shanghai, and a Common reserve fund (the latter is presented as
included in the NBD but it is indeed a second institution). Its objectives are
to mobilize resources for infrastructure and sustainable development
projects in BRICS and other emerging economies and developing countries
() for global growth and development (DNB, 2014).
We have also, nowadays, the development of Euro, as a reserve currency,
representing now some 24% of world currency reserves.
And we have changing objective monetary conditions and balance of power
with notably the high quantity of US Treasury bonds held by China central
Bank; and the development of foreign trade of China in Renminbi, instead
of dollar, especially with emerging and Latin America Countries.
Last, we have struggles all around the world against the domination of
banks and the logic of finance and speculation.
But what we lack is a clear view of the alternative and also first step or
experiments.
All those elements are elements that can help for challenging dollars
hegemony and in part pieces for an alternative.
After stating some principles, I will present the proposals of radical
transformation of international monetary system and comment further the
creation of the new financial institution by emerging countries; I mean the new
development bank named at its beginning the bank of the BRICS.
3. Principles
The main thing is the use, the utilization of the money. And for that: the
criteria of utilization of money. I mean for peoples versus profit!
It means not only aiming at replacing and challenging US dollar by another
currency but also reverse the criteria of financing and changing the
priorities: toward human development. It means money creation for more
and better Jobs and for developing Public services (including
infrastructures).
3

and published in the newspaper Patriot, New Delhi, under the title End to dollars rule
urged (August 14, 1983).
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4. Proposals
Now, I present our proposals for transforming the international monetary
system. They are linked to social and political struggles and proposed in
France by the French Communist Party as well as by other left side oriented
forces in France (the Left Front). They are also shared by the European left
party (ELP), which is a federation of different European national parties,
especially communists and their allies from Greece, Spain, Italy and
Germany. They are also elements of an alternative to the threatening of the
Transatlantic free trade area treaty (TAFTA treaty) and it could oppose to
the risk of the blowing out of a new and bigger over-accumulation at world
level.

The idea of the proposal:


-

SDRs (special drawing rights) should be enlarged;

SDRs would be oriented differently.

It needs a deep reform of the IMF: its democratization, changing of its aim and
its tools.
We need IMF democratization:
1. Voting powers must be changed and linked not only to the monetary
wealth of a country but also to the population weight of the country;
2. The USA de facto veto right must be suppressed. Now they have the power
to block any decision they want because of their voting power is 16,75%,
since the majority vote rule is fixed at 85%. So not any vote can reach the
majority without USA votes. They can block any decision.
We need changing the aims and tools of IMF.
SDR must be developed as alternative to dollar.
SDR is a currency based on a basket of different currencies, not only dollar,
and issued at an international level by an agreement between countries
within IMF as a monetary creation beyond the international reserves. So
1. SDR must be based on a larger panel of currencies
2. SDR must be issued more abundantly
3. SDR must be allocated with other rules: depending on the needs of the
countries and population size.

The Current situation and the Development Trend of World Socialism and Leftist Thoughts

The 4th World Socialism Forum Beijing Chinese Academy of Social Sciences - 2013 October 30-31

4. SDR must be used in another way, with other conditions. It is the core
of a genuine socialist, even communist alternative. Criteria are the core
against the present criteria which are based on profit rate. It is not a
technical thing, but a highly political one, because as we all know the
devil lays in details. The conditions new should be, that SDRs must be
given are:
a. To stimulate public services expansion, including social
protection, towards the development of world common goods
b. To stimulate jobs and production through another bank credit,
a credit in favor of investments if investment develops jobs
(more and better jobs).
It joins people struggles denunciating present conditionalities of the loans
of IMF, so-called aids and adjustment plans, or in Europe the struggles
against the present conditionalities puts on States by the so-called troika
(ECB, IMF, European Commission) to give (or even to lend) them money.
There are several analysis pointing the need to develop SDR as a common
currency, yet they do not see, or point out, the need for a new kind of
world currency (as representative of so conservative reforms, see for
example Aglietta, 2014).
This could be done through two means:
a - For public services and common development
The international issued money (new SDR) would be given to States at very low rate
(near to zero), to finance social protection (health care, unemployment allocation,
pension system, etc.); to finance public services; to develop world common goods
(from alimentation to education, technology, culture, ecology, etc.).
b - For employment and another production
A profoundly transformed IMF would re-finance central banks of the countries at
low interest rate, with the condition that they stimulate a selective credit directed
to efficient investment, that is to say investment which develops employment in
the firms: the more jobs and social conditions are increased and improved, the
lower the interest rate would be, until zero.
These are the aim, the global and general scheme for alternative.
Elements for the road
There are now also elements who can build a road, step by step, towards this
direction.
- In Europe, there is the proposal of a new Euro, by the European left party and
different national communist party or left wing oriented, amongst them Syriza in

The Current situation and the Development Trend of World Socialism and Leftist Thoughts

The 4th World Socialism Forum Beijing Chinese Academy of Social Sciences - 2013 October 30-31

Greece, PCF in France, Izquierda Unida in Spain and Die Linke in Germany, pointing
out the ECB responsibility and power.
- In Latin-America there is the BancoSur (South Bank) and the Sucre project.
- And there is the new financial institution created by emerging countries in last
July, in the 15-16 July summit at Fortaleza (Brazil).
Let me enter in detail for this last one initiative with possible very important
implications.
The National development bank of the BRICS
Five big emerging countries Brazil, Russia, India, South Africa and China decided
to create a new financial institution, named the Development Bank, with two
component, one being really a bank and the other being a common fund for reserve
currency. Indeed we have two distinct institutions in the same body: the bank and
the fund.
It is an extremely important initiative. It challenges Bretton-Woods institutions, as
IMF and World Bank, now dominated by USA. And it is also challenging the US
dollar as observers noticed immediatly4.
The Bank has an allocation of 100 billion $. The bank will not put constraints on
economic policy in counterpart of its loans, contrary to so-called structural
reforms claimed by IMF and World Bank in counterpart of their loans. It could
interest a broad set of countries, including for example Argentina facing to very
high pressure on its debt.
The aim would be to finance infrastructures in the countries.
In Parallel with its high alternative countents, there is some ambivalence
with two possible lines of development.
-On the one hand, it could push investment in infrastructures, reinforcing
interdependencies between emerging and developing countries, and cooperation
between their productive even capitalist firms. Hence it would challenge not
only western industrial domination but also its domination on financial and
monetary system.
So a major transformation of the globalization.
- But also, on the other hand, a more ambitious line of radical transformation could
be developed, in relation with social and political and ideological struggles in
emerging countries, in developing countries, and in European countries. It is that
the new bank can aim new financing for promoting and securing employment,
44

See for example Totten (2014) or OXFAM (2014), or UNCTAD (2014) or Zlotowski (quoted
in P. Boccara 2014), although if others have minimize the importance of the initiative (see
for example in the Washington post Desai and Vreeland (2014)

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together with developing public services and social protection (not only material
infrastructures).5
As said before, as an aim for a new and profoundly transformed IMF, the Bank
could aim to finance in priority:
1) Investment promoting more jobs, jobs with better conditions, securing
employment, by putting very low interest rates on loans directed to those
investments, until zero rate. The more they develop employment and
better social conditions, the lower would be the cost of credit.
2) In parallel, the bank could finance at low rate not only material and capital
infrastructure, which are of course necessary, but also and more and more
public services development in the line I stated before.
Generally speaking, the stakes are that all financing means and all monetary
creation should be progressively based on new, really new, efficiency criteria,
opposed to profit rate and capital accumulation.
The Over-accumulation crisis new explosion threatening now even BRICS
We can hence begin to give an answer to two challenges: (1) the coming of a
new and possible crisis of over-accumulation, which seems to be more worldwide and touch now also BRICS countries from outside and from inside of them,
(2) the unemployment and the urgent needs for public services all around the
world.

Conclusion
We can go, hence, in the direction of genuine common and public goods of
Humanity, from money to vital needs. I mean from food to ecology, from health
to culture and scientific knowledge, etc.
Yet there are a lot of ambivalences, twofold lines and opposed pressures,
from MNCs, from financial capital. There are contradictory visions. Even there
are possible rivalries, some countries or sectors aiming new dominations. But
there are also growing social and democratic genuine democratic needs,
and also needs of cooperation. That is to say needs of another globalization
against national selfishness, and against capital class egoism. Those needs can
unify social forces all around the world.
555

We can remark that other voices, for example OXFAM, have experssed also the need to a
braoder approach, pointe dit, as me, as challenge a real succeed of the Bank. But we ropose
here a more realistic aim (acting on the conditions of activity, not only the results as
poverty) and more specific means and operation modes (contrary again to simply adding
poverty , as OXFAM. It is obviously one of the main stakes. But if we stay at such a
general level and formulation World Bank and IMF also say that

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It seems utopia? of course. But it could be also a mobilizing utopia. We


must try it, facing to the high risks and also seeing the potentiality. We have to
speak of that together, to take common initiatives, to open thus new avenues.
As the great Mandela said: it seems always impossible until it is done!

Rfrences
AGLIETTA Michel, COUDERT Virginie (2014), Le dollar et le systme montaire
international, La dcouverte, collection Repres, 125 p.
BOCCARA Paul (2014), Les perspectives ambivalentes dune Banque et dun Fonds
des BRICS pour une autre construction de mondialisation , Economie et
Politique, n 720-721, p. 10-12.
BOCCARA Paul (2011), We must incriminate the basic rules of capitalism, p. 61-68,
in All the Same - All Being New. Basic rules of capitalism in a world of
change, Peter Herrmann editor, Europischer Hochschulverlag, Bremen,
198 p.
DESAI Raj, VREELAND Raymond (2014), What the new bank of BRICS is all about,
Washington Post, 17 July.
GOLDBERG Linda (2010), Is the International Role of the Dollar Changing ? ,
Current Issues, Federal Reserve Bank of New York, vol. 6, n 1, January, 7 p.
JOHN Lysa (2014), The BRICS development Bank Why the worlds newest global
bank must adopt a pro-poor agenda, OXFAM policy brief, 11 July, 28 p.
TOTTEN Jordan (2014), BRICS New development bank Threatens hegemony of US
Dollar, Forbes Opinion, 22 December, 5 p.
UNCTAD (2014), A BRICS development bank: A dream coming true?, Forbes
Opinion, S. GRIFFITH-JONES, UNCTAD Discussion Papers, March, n 215, 21 p.

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