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Andrés Arauz served as Minister of Knowledge and Human Talent of Ecuador in the government of Rafael Correa and is the former Central Bank General Director. He was a presidential candidate in the 2021 elections.  Arauz is a founding member of the Dollarization Observatory and a former board member of the nascent Bank of the South. He is currently based in Mexico City where he obtained his PhD at the National Autonomous University (UNAM), Mexico. 

This week, Srećko Horvat, a member of the Progressive International’s Cabinet, catches up with Arauz on technological hierarchy, hyperfinancialized globalization, and decolonizing economics of the Global South. 

Srećko: What is the biggest misunderstanding among progressive forces about the global economy?

Andrés: There are many, but the enormous cognitive power associated with hegemonic Big Tech and Big Media conglomerates, which induce climate-threatening consumerism, is a blind spot. I am not just referring to advertising, I am referring to the imposition of capitalism as an ideology. What are progressive forces doing about content? Why are progressives only focused on the regulation of media and education concerning identities, but not on capitalism? Why are they allowing the capitalist forces to capture our subjectivity? Shouldn't it be worrying that the next wave of consolidations could be between Big Tech and Big Pharma to find profits over our bodily sensations, and those of our minds?

Another blind spot is the fact that contemporary capitalism is bio-ignorant. And I mean bio in the very etymological sense of ‘life’. For capital and its ideological constructs, there is no such thing as life, whether it's human or the lives of other species. In the context of the climate emergency, progressive forces are still operating within the paradigms of bio-ignorant capitalism. Concretely speaking, there is no effort to apply the rules of a finite planet Earth to the global economy. How can the petrodollar continue to be a pillar of the money system in a climate-emergency world? Why can the monetary hegemon import fossil fuels with a monetary keystroke without equivalent material exchange? Abstract capital lives in accounting, yet progressive forces have not seriously challenged how accounting – both business and macroeconomics – is constructed. It is not about patching GDP to get a ‘green GDP’ number or parallel ESG (environmental, social, governance) merit points. It is about seriously questioning why Chevron polluting the rainforest does not automatically show up in that corporation’s bottom line. If a business can only profit based on infinite-planet rules, instead of on the laws of nature, then it should not be a profitable business. It is imperative to deprivatize accounting standards (IASB) from the neocolonial financialized Big Four and turn the standards into a public good steered by the UN. In terms of macroeconomic accounting, I advocate replacing GDP with the UN's System of Environmental-Economic Accounting, which, at least, tries to build a coherent nexus between human economic activity with money and land, water, energy, minerals, biodiversity, air/gas, and ecosystemic services. 

I also think progressive forces do not realize the degree of extreme concentration and hierarchization of our global economy. Progressives complain about inequality, but it is not just about the rich getting richer. It is the gross dynamics of money and power at the top. Hyperfinancialization of the global economy makes it so that those at the top of the hierarchy can weaponize the financial system's embedded surveillance and destroy a country. International and domestic democratic regulation over capitalists' concentration of wealth and power has failed, and the best demonstration of that is the extent of opaque offshore wealth. Conventional economic analysis is skewed by old mercantilist ‘wealth of nations’ metrics such as exports and imports or GDP. Neoliberal hyperfinancialized globalization should be analysed in terms of financial and technological hierarchies, by clearly identifying the power structures at the top and the power transmission mechanisms throughout the hierarchies. Most progressives still prioritize battling for the redistribution of money (tax and spending) but reject fighting for the control of the creation of money (central bank governance).

Srećko: What do you think is changing in the global economy? How would you describe the current conjuncture – where we are, where we are going?

Andrés: First, let me begin with what is NOT changing. The global economy is not changing in terms of what is required for a climate transition. It is not changing in terms of financialization. It is not changing in terms of the voracity of transnational companies or the speed of technological transformation of society. What we are feeling – and what is changing – is the emergence of a new technological hierarchy led by China. This technological hierarchy is being expressed in terms of industrial capacity, military might, scale and specialized demand of natural resources, and abstract big tech and surveillance models, including finance and payments. As this hierarchical power consolidates and seeks to exert control over its not-yet-hierarchical supply chains and distribution channels, it competes with established US-led hierarchies. As the China-led hierarchy outgrows its domestic scale, confrontation is inevitable. The global economy is shaped by this. I do not dare to predict whether this means war.

There is no foreseeable third-way alternative in terms of technological hierarchy. The US sets the standard for military technologies, which cascade into industrial and commercial applications throughout the NATO sphere, including most of Europe and its areas of influence. Only certain second-tier powers have attempted to develop home-grown or interoperable technological standards for their military, but with very limited capacity to expand further into industrial or commercial applications. A scientific-technological big push by the Global South for its own technological hierarchy is the responsible internationalist and progressive path forward. 

Srećko: Many people speak about ‘decolonisation’. What would this mean for the economy?

Andrés: Decolonisation is doing away with colonially-engineered dependency. This means organizing at the level of the Global South to simultaneously terminate all of the neocolonial ‘reciprocal’ investment treaties, that grant impunity to Big Business. Decolonisation means coordinated rebellion against the hierarchical and colonially arranged money system that grants hard-currency liquidity only to those aligned to the monetary hegemon. Close geopolitical allies of the US get unlimited dollar access via Federal Reserve swaps while the rest of the Global South gets credit rating agency discipline and IMF (International Monetary Fund) austerity. It also means overcoming colonial money systems in Africa like the Franc CFA. True decolonisation means overcoming intra-regional spats to build lasting regional unity and integration among the peoples of the Global South along with pan-Africanism, Latin Americanism, ASEAN (Association of Southeast Asian Nations), and the spirit of Bandung. Decolonisation means coordinated cultural and political action to seek degrees of economic development and sovereignty for the true fulfillment of economic and social rights. 

Srećko: Many people talk about the need for internationalism, but there is not much imagination about what kind of new institutions we should be building to deliver it. What do you think are two or three new institutions that will be necessary to build the sovereign, socialist, democratic world we seek?

Andrés: We need the debtors' cartel: an association of indebted countries that cannot continue to handle austerity as collective punishment. The debtors' association should coordinate the collective default of their bonds to trigger a global debt conference (à la London 1953) and transformation of the international monetary system with a revamped SDR (Special Drawing Right turned Sustainable Development Right) connected to regional monies. The resulting system should be a network of regional synthetic-currency units (in addition to national currencies) with regional payment systems and coordinated endogenous monetary expansion for development. In the case of South America, it means adopting Lula’s proposal for a South American Central Bank with its unit of account – the Sur – an intra-regional settlement system and a regional interbank payments area. It should be accompanied by the Bank of the South, as the financing engine of the investments for the five regional sovereignties: food, energy/infrastructure, health, knowledge, and natural resource industrialization.

We need the minerals cartel: an association of mainly African and South American countries whose exports are priced by colonially constructed and financialized commodity bourses in London or Chicago. The association should not only agree on setting the quantities and prices of minerals to improve their terms of trade, but it should agree on a scientific, technological, and climate-emergency-conscious industrial appropriation agenda for their minerals. In synthesis, it means that transnational companies that are processing the minerals abandon their colonial business models and set up high-value-added industries in developing countries and transfer their knowledge and technology to engineers from local communities. This would be a start for the scientific-technological third-way hierarchy pushed by the Global South.

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