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Good reasons for optimism today
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The world will see a more adequately prepared conference on the world economy in London than its historical counterpart amid the despair of 1933.

Despite previous reports about the difficulties of working with each other, the Group of 20 (G20) financial policy-makers demonstrated some "spirit of cooperation" by agreeing on a set of common tasks that can accommodate various nations' policy preferences relatively coherently.

The meeting of finance ministers and central bank governors last week was to pave the way for the G20 summit scheduled for April 2.

In their communique, officials pledged to take whatever action is necessary "until growth is restored".

A number of recommendations are proposed for G20 leaders, from heightened regulatory oversight to reform of the International Monetary Fund (IMF), and other international financial institutions.

China and its partners in the so-called BRIC group (Brazil, Russia, and India) have been pushing for reform of the IMF and the World Bank, as they contribute larger amounts to those organizations' financial reserves.

In light of the financiers meeting, one can expect the forthcoming London summit to complete and ratify some documents useful to the world in future. But why, in contrast to the failed London conference between the two world wars, does globalization this time seem likely to survive?

Why the newfound "spirit of cooperation" when we're living on the same Earth as back in the 1930s - although more crowded and polluted, the same greed and herding mentality among people, and the same cynicism about politicians and economists?

It seems the shadow of major war is gone, and the world is no longer divided so sharply between the winners and losers of trade, or between out-and-out pro-market and anti-market ideologies.

Even without concrete numbers or requirements emerging from the coming summit, a shared cultural resilience is working to prevent any single country from just walking away from a global framework and closing to the rest of the world.

In reality, our kind of globalization is already somewhat different from the way British economist John Maynard Keynes described it early last century, in which "the inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth ... he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world."

Of course, the faceless Londoner didn't care in the least where his tea came from. China, India, and Ceylon were just alphabet soups to bankers back in that day - just there to make life more comfortable.

Few enjoying that lifestyle cared how, half way around the globe, millions of cottage workshops were being crushed by large volumes of cheap industrial products from the West. As Asia's women, with their traditional textile and needlework, were no longer able to add much to household revenue, their husbands and sons sought extra money by carrying tea boxes onto ships.

That was why the Londoner's world was fragile and destined to collapse, even though he had assumed it was near perfect. He represented just a narrowly defined, self-contented small center of a global system.

Today, trade provides the lifeline to all major countries and the G20 represents more than 80 percent of the world's economy.

Now a more equal system exists in which descendents of coolies are providing much of the driving power for the world's economic growth.

At the same time, no country, or small group of countries, can easily dominate the world market by setting its prices, even if they own some unique supplies.

With this in mind, a stronger confidence should exist nowadays than the Keynesian Londoner could have had in the limited global system of his time.

E-mail: younuo@chinadaily.com.cn

(China Daily March 16, 2009)

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