When the 19 heads of state and a representative of the European Union met in Pittsburgh in September and declared that from now on it would be the G20 and not the G8 that would be responsible for managing global capitalism they were merely recognising the unavoidable. If global economic cooperation was to be effective at all in the changed circumstances of the last two or more decades, the presence at the table of countries like Brazil, China, India and South Africa was imperative. The need for such cooperation was driven home by developments since the Asian financial crisis of 1997-98, when it became clear that leaving markets unregulated and market players alone in a more economically integrated world would only precipitate crises of global proportions. Not surprisingly the G20 was born in 1999, even though the G8 nations and the IMF they controlled were principally responsible for designing the response to the 1997 crisis to the detriment of growth, stability and welfare in the developing world.

The crisis that erupted a decade later in 2007 was different in at least two senses. First, it originated and affected more adversely the US, UK and the EU. And, second, underlying this crisis are global imbalances that partly resulted from the effort of the developing countries to insure themselves against a 1997-type affliction or a post-1997-type correction. Those imbalances, reflected in the use of foreign exchange surpluses accumulating with developing countries to finance deficits in the US, made it impossible for the G8 countries to resolve the crisis by themselves.

Once nations outside the G8 had to be brought into the collegiums managing global capitalism, the choice of the G20 as a forum recommended itself. Besides the fact that it already existed and did not require any new selection of members, there were three features of the grouping that made it the forum of choice to manage the new situation even from the point of view of the US, UK and the EU. The first was that putting the G20 at the centre of the global economic architecture did not constitute a radical restructuring of that edifice, but merely an expansion of the G8, even though, as widely recognised, countries like Canada and Italy had no reason to be included in a selective grouping of self-styled global managers. The second was that having the European Union (represented by its rotating Council presidency) as a member along with individual European countries like France, Germany and Italy helps mollify other European aspirants. Third, by having the Presidents of the IMF and the World Bank as ex-officio invitees, without prior completion of the much needed restructuring of their unrepresentative management, ensures that the agencies that would be chosen to implement decisions on global economic management would be entities controlled by the US, UK and EU. It has been widely noted that an IMF that had lost its relevance before the current crisis, has won itself a new lease of life and substantial influence after the London G20 summit, even though it still advocates the same policies that drove it to near-irrelevance. Finally, it is noteworthy that the restriction of membership from West Asia to Saudi Arabia (excluding Iran) and the exclusion of a country like Venezuela from Latin America (when Argentina, Brazil and Mexico are at the table), keeps out countries from these regions which the US would be uncomfortable with.

In sum, if expansion of the club responsible for managing global capitalism was unavoidable, the G20 reflects the combination which would be preferred by the leading powers, taking account of the reality that excluding China and Russia would have robbed the G20 of all significance. Thus, the fact that the last three summits in which the G20 was revived and given new stature were held at Washington, London and Pittsburgh respectively is perhaps of more than symbolic value.

In fact, the economic architecture that has the G20 at its centre though seemingly more democratic than the one that had the G8 seeking to manage global affairs is top-down in nature in two senses. It has a few developing country members who claim to speak on behalf of the developing countries as a whole, though they are clearly engaged in seeking symbolic equality with the developed (through permanent membership in the United Nations Security Council or special exemption from the guidelines of the Nuclear Suppliers' Group, for example). Further, the G20 as a group cannot fundamentally challenge the increasingly anachronistic leadership role of the G8 in general and the United States in particular when it comes to redesigning capitalism. It is to conceal these features that support for the G20 is canvassed on the grounds that it includes countries accounting for 85 per cent of world GDP and two-thirds of the world's population, while underplaying the fact that the grouping includes only 19 of the United Nations' 192 members.

The argument in favour of a more selective club is of course the fact that it facilitates reasonable discussion and debate and aids decision making. But the correctness and effectiveness of those decisions from the point of view of the global community depends on the extent to which these members represent the combined or common interests of that community. Since the current members of the G20 were not elected to their self-assumed roles, there is reason to believe that their membership and participation is driven by their own self-interest. This could be of three kinds. Countries could feel that their voice in global affairs does not reflect their weight in the global economy. Countries could feel that they are so involved in global trade and capital flows that global developments affect them substantially, though they have little or no role in influencing those developments. And countries, could feel that their participation in global decision making is a part of a competitive strategy to benefit from global economic development and enhance their position within the global economy. If it is the last two of these three objectives that makes a country accept membership of the G20, then it would not be seeking to represent others but attempting to advance its own interests. With the whole of Africa, excepting for South Africa, excluded, for example, this can hardly deliver any economic justice globally. In the event, the G20 would not serve as a platform to manage global capitalism through consensus, but merely as an arrangement that wins legitimacy for a minor modification of the existing international economic architecture despite its failure on many fronts.

This is the direction in which the world seems to be moving. Consider what has been achieved at the end of the third summit of the G20 held over a period of less than a year, other than for its elevation to the role of global economic manager. There was agreement that it is as yet too early to roll back the fiscal stimulus that helped stall the economic decline and begin a slow recovery. There were statements against protectionism, but no concessions such as withdrawal of the punitive measures adopted by the US against imports of tyres and steel pipes from China. There was little concrete progress on restructuring the financial architecture other than for many pious declarations promising to push ahead with and some much-needed reforms of the international financial system. The oft-repeated verbal commitment to institute limited banking reform, in the form of ‘improved' capital adequacy standards and regulation of derivatives trading, was combined with a concession to popular sentiment with references to bonuses of bank managers and the need to avoid excessive risk taking. Actual financial reform was focused on ''old agendas'' like winning US agreement to Basel II standards, generating consensus over a crackdown on tax havens, and reducing bank leverage. In terms of global economic supervision, while continuing with another name the existing (and as yet ineffective) practice of IMF surveillance, the summit has promised to redress the power imbalance in global management by transferring at least 5 per cent of the shares in the IMF and at least 3 per cent of the vote share in the World Bank from over-represented nations to emerging economies. The US would, of course, retain enough shares to exercise a veto in the IMF. As for the global poor, an already existing World Bank-led programme to promote food security in the world's poorest countries was endorsed to signal a concern for those excluded from the G20 club. And a diversionary reference to an inadequately discussed initiative on phasing out fossil fuel subsidies was made. There is much more in the lengthy Communiqu, but nothing that constitutes a fundamentally new thrust. These might reflect diplomatic success, but is nothing when it comes out of a third summit to frame a cooperative response to the worst economic crisis the world has seen after the Great Depression.

In practice, contentious issues like trade and climate change were largely or completely sidestepped and financial system reform was touched very lightly. This points to the fact that the transition from G8 to G20 tutelage over the world economy has done little other than slightly modifying and strengthening the pre-existing global order, while increasing the money spent on marketing the new framework. There are deep structural reasons for this. Increased integration through trade has made developing countries more dependent on exports and heavily dependent on markets in the developed countries, especially the US. Financial liberalisation in a context where the dollar was the world's reserve currency has meant that much of the world's financial wealth is accumulated in dollar denominated assets. And confidence in the dollar sustained not by America's competitiveness but by its role as the watchdog of world capitalism makes it the preferred target of any flight to safety. It is, therefore, in the interest of most elites and governments0 to cooperate with the US in the name of finding a solution to the problems confronting global capitalism. But finding a solution does not guarantee its implementation. For the moment, what the US seems to have managed is to initiate a process that would limit Europe's influence while creating space at the hegemon's table for a few ''emerging'' economies.