As we get closer to the G20 summit in April, it is worth remembering another London conference that took place in rather similar circumstances.
In 1933, representatives of all the leading nations met in London to find a coordinated way out of the Great Depression engulfing the world economy. H.G. Wells' description of the ill-fated conference, especially of Roosevelt and his entourage makes for remarkable reading in light of some of the parallels:
[For] some months at least before and after his election as American President and the holding of the London Conference there was again a whispering hope in the world that a real “Man” had arisen, who would see simply and clearly, who would speak plainly to all mankind and liberate the world from the dire obsessions and ineptitudes under which it suffered and to which it seemed magically enslaved. ...
Drawing wisdom from Wilson’s personal failure, [Roosevelt] did not come to London and expose himself and his conversation to too close a scrutiny. He preferred to deal with the fluctuating crises in London from his yacht, Amberjack II, in Nantucket Harbour, through intermittent messages and through more or less completely authorized intermediaries.
Everywhere as the Conference drew near men were enquiring about this possible new leader for them. “Is this at last the Messiah we seek, or shall we look for another?” Every bookshop in Europe proffered his newly published book of utterances, Looking Forward, to gauge what manner of mind they had to deal with. It proved rather disconcerting reading for their anxious minds. Plainly the man was firm, honest and amiable, as the frontispiece portrait with its clear frank eyes and large resolute face showed, but the text of the book was a politician’s text, saturated indeed with good will, seasoned with much vague modernity, but vague and wanting in intellectual grip. “He’s good,” they said, “but is this good enough?”
President Obama will be there in person, of course, not aboard the presidential yacht. So count this one in his favor. Next, read what Wells has to say about Roosevelt's advisors.
Nevertheless hope fought a stout fight. There was no other personality visible who even promised to exorcize the spell that lay upon the economic life of the race. It was Roosevelt’s Conference or nothing. And in spite of that disappointing book there remained some sound reasons for hope. In particular the President, it was asserted, had a “Brain Trust”. A number of indisputably able and modern-minded men were his associates, such men as Professors Tugwell, Moley and Dickinson, men whose later work played a significant part in that reconstruction of legal and political method which was America’s particular contribution to Modern State ideas. This “last hope of mankind”, it was credibly reported, called these intimates by their Christian names and they called him “Guv’nor.” He was said to have the modesty and greatness to defer to their studied and matured opinions. Observers, still hopeful, felt that if he listened to these advisors things might not go so badly after all. He was at any rate one point better than the European politicians and heads of States who listened only to bankers and big-business men.
But was he listening? Did he grasp the threefold nature of the problem in hand? He understood, it seemed, the need for monetary inflation to reduce the burthen of debt and over-capitalization; he was apparently alive to the need for a progressive expansion of public employment; and so far he was sound. ... But was he sound upon the necessity that these measures should be world-wide or practically world-wide? He made some unexpected changes of attitude in these respects. Were these changes inconstancies or were they tactical manoeuvres veiling a profoundly consistent and resolute purpose? Was it wise to be tactical when all the world was in need of plain speech and simple directive ideas? His treatment took on a disconcertingly various quality. He listened, it seemed, to his advisors; but was he not also listening to everybody?
As it turned out, Roosevelt had little hope or use for the London conference, as he did not want to be diverted from his own national plan of recovery, based on getting off gold and reflating the economy. With Roosevelt not on board (literally and figuratively), the conference collapsed.
The problem with the London conference then was that its agenda focused on an outdated goal--restoring the rules of the classical gold standard--when the world economy required massive monetary reflation. Will the April London summit face a similar problem of irrelevance?
There are two things that can make a real difference to the world economy in the short run: (a) coordinated fiscal stimulus, and (b) massive increase in credit or liquidity facilities for the developing nations. European obstinacy has taken off the table the first of these. And it is not at all clear that the second is being pushed hard enough by any of the rich countries (although the US proposal on the enlargement of the IMF is considerably more generous than what the Europeans have offered so far).
What will a future H.G. Wells say of the London summit?