Why G20 summits have become an R & R break for overworked heads of govts

Since the Pittsburgh summit in 2009, G20 Summits have achieved what all such talk shops do - almost nothing

This article is prompted by two simultaneous but independent events. One is the editorial view of this newspaper on what India should do when it assumes the rotational presidency of the G20 in 2023.

The other is a question by my good friend and former editor of the Hindu Business Line, D Sampath Kumar. He possesses extraordinary financial acumen and asked me whether neoliberalism is nothing but "financial feudalism".

Read: The focus of India's G20 agenda

Now, it so happens that between 2010 and 2013, I had the good fortune to cover four G20 Summits in Toronto, Cannes, Seoul and Los Cabos. Those were the early days of the G20, and there was still some enthusiasm for the summits and optimism about the outcomes.

However, it had become clear by 2011 that these summits were going nowhere, mainly because the original aim of the US and the UK had been achieved after the Pittsburgh summit in 2009. You only have to read the operative parts of the declarations there and at London to see the Anglo-Saxon game.

The objective of the US and the UK was to get the other 18 — of whom 15 didn't really matter — to go along with the financial stabilisation policies being proposed by them in the aftermath of the 2008 meltdown. Once that objective had been achieved, they quickly lost interest. Since then, G20 Summits have achieved what all such talk shops do — almost nothing.

Of course, as befits the self-serving goals of any bureaucracy — the G20 quickly developed one — a great deal of gloss has been put on lofty things like a new financial architecture, achieving the UN's sustainable development goals and climate change cooperative action.

But it's all no more than a good soufflé. There is almost nothing to bite on or into. This is primarily because, in contrast to the limited agenda of the London and Pittsburgh summits, the subsequent agendas are so vast as to be practically meaningless.

There is another grievance that I have. The big question that the economists of the G20 ecosystem have refused to engage with is Sampath Kumar's "financial feudalism".

Feudalism, as we all know, was a socio-political arrangement wherein the landowner offered protection to his serfs in return for their work and a promise to fight for him.

The system worked as long as the two sides cooperated, which they did because both gained from it, even though the gains were unevenly distributed. After all, livelihood and security are irresistible to anyone without much of either.

But thanks to a series of social and political reforms from the end of the 18th century till the middle of the 20th, that compact gradually broke down. As a result, the economic part of it, namely the generation of financial surpluses, also disappeared.

The resulting financial stresses were made up by deficit financing, especially after the breakdown of the Bretton Woods system in 1971. And that's the main reason finance has gradually replaced land, and financial feudalism has become the order of the day.

The truth is that modern finance's beneficiaries are mainly the US and the UK. They are least willing to put a new "financial architecture" in place because that would significantly reduce their power and influence.

But they are not the only ones to blame. The others want only the remaining 19 to join whatever good fight is to be joined. It's a classic case of an n-person non-cooperative game. No one sees any benefit to themselves in cooperating with one or more of the others. That's also why the US and the UK get what they want when collaborating, just like the old feudal lords.

Hence, G20 summits have become an R & R break for overworked heads of government. Only the host head has to work away throughout the summit.