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Walden Bello, Paper Dragons: China and the Next Crash

Zed, 2019; 319pp; £18.99

ImageWritings on economics often fly off into realms of obscurity. The contents of the pink pages of the Financial Times zoom over my head on their way to the horizon, leaving me feeling powerless. Yet a decently written text can mentally untangle those invisible links that we’re told tie the world together.

Good writers help us make more sense out of current events, enabling us to respond more effectively for the benefit of the 99%.

This is a book devoted to targeting the false promises of our global economic system and its continued malfunctioning. Yet it's no small irony that Filipino economist Walden Bello entirely mis-sells it: you will learn very little about China in its 278 pages.

With barely a thematic spine to unify his points, Bello’s ideas are presented scattergun-style. Writers shouldn’t let the complexities of finance and global economics stop them from feeding difficult ideas to the reader in bite-sized form.

Bello’s opacity is no small oversight. Readers may just end up feeling inferior or stupid, intimidated by the wide variety of financial intricacies he outlines.

In a text struggling under the weight of obscure detail, there is no attempt to present this information using either symbolism or storytelling. Yet some key writers have managed to stay with us, despite the intervening years.

For example, Marx still has something to tell us, because he effectively _sold_ his concepts to the reader. Along with other captivating authors (Chomsky, Kaletsky, Graeber) he cared deeply about how an idea was presented.

Writers should strive to remember that no idea is too complex to be understood by the general reader. Any concept can be re-ordered, and thereby re-imagined. Perhaps the dearth of accessible writers on economics may be because its unsexy status is enough to scare away the poets?

One topic that receives serious attention from Bello is shadow banking: ‘a network of financial intermediaries whose activities and products are outside the formal governmental regulated banking system… [not] reflected on the regular balance sheets of the country’s financial institutions’. Unsurprisingly, shadow banking is inherently unstable and can lead to crashes. It is also a massively expanding phenomenon.

Bello also presents a dilemma for reformers: should they become involved in any system of finance where capital is divorced from production? Is it ever right to make money from money for green ends? As for China, the book fills you with apprehension about quite how fragile the global financial system is.

Wading through Paper Dragons, it would be easy to lose sight of the boundless stupidity of the global financial system, its criminally-dysfunctional state.

The lessons we've heard before are as clear as day. Since Reagan and Thatcher, financial markets have been transformed into casinos, with rampant gambling and astronomically high salaries.

Short-termism is the order of the day. The banks that were 'too big to fail' knew that the normal rules did not apply to them as the government would bail them out if necessary, using public money to do so.

After the 2008 crisis, opportunities for significant reforms were not taken. Bello therefore proposes that we now put the genie back in the bottle, with a return to regulation, a closing of tax havens and an emphasis on co-operative enterprise. He remains convinced that it's not one financial crisis that awaits us, but many, as long as neoliberalism continues as it is.

Just under 400 years ago, Francis Bacon wrote: ‘Money is a poor master, but a good servant.’ As long as it rules over us, we’ll never escape the risk of more crashes. Those who have least to do with it, who are least privileged, are of course those who feel the damage it causes the most.

Topics: Economics