================
Agence France Presse
Friday, July 28 12:50 PM SGT
Globalisation erases frontiers as boom hurtles on
PARIS, July 28 (AFP) -
Soft landing or crash landing? Even the longest boom has to end some time,
and the course of the world economy in the coming century will depend in
part on whether the present above-average rates of growth ease gradually
to lower levels or slump catastrophically into recession.
The problem for policy-makers is the ability of finance and technology to
ignore borders, now so sweeping that governments are increasingly
powerless to control the forces that guide their national economies.
A return to some form of international regulation of the world economy is
widely seen as necessary as a counter to corporate finance.
The key factors that will shape economic development over the coming
decades have already been identified.
They are continuing globalisation, leading to increased interdependence,
the transition to a knowledge-based highly-networked economy, ageing
populations in the industrialised countries allied to growing young
populations in most of the developing world, and a trend towards a
multi-polar world economy.
The level of economic well-being that the new century will bring will also
depend on the answers to such questions as: can the consequences of
galloping technological advance be contained? can lasting damage to the
environment be averted? can the world's political leaders avoid the
murderous conflicts that scarred the last century?
The present mood regarding globalisation is divided between hope and
apprehension, with the official optimism of governments and international
bodies offset by the mounting unease expressed by a motley coalition of
non-government organisations and grass-roots "anti-capitalist" movements
campaigning on such varied issues as third world debt relief or
organically modified foods.
For analysts such as Wolfgang Michalski, futures director at the
Organisation for Economic Cooperation and Development, the current
economic boom is likely to be sustained for several years yet.
"All the signs are positive," he told AFP. The US Federal Reserve Board,
he believed, is even now busily engineering a soft-landing.
While acknowledging that globalisation has brought increasing divergencies
in wealth, he stressed the importance of considering absolute levels:
"there has been an overall increase in living standards, even among the
poorest. The number of people in the developing world living on less than
one dollar a day is constantly falling."
However a new approach to international cooperation is necessary,
Michalski warned. "We do not yet have the kind of structures at the global
level that are needed to deal with global issues."
The risks entailed in giving free-market capitalism its head are vividly
described by writers such as John Gray and Edward Luttwak who -- both
arguing from the position of free-market supporters -- see trouble ahead.
Left unchecked, argues Gray, professor of European thought at the London
School of Economics and author of "False Dawn: The Delusions of Global
Capitalism", an unfettered free-market economy "could well destroy liberal
civilisation."
"A worldwide free market," he warns, "is no more self-regulating than the
national free markets of the past. ... Unless it is reformed radically,
the world economy risks falling apart in a replay ... of the trade wars,
competitive devaluations, economic collapses and political upheavals of
the 1930s."
Placing himself firmly in the camp of the pessimists, Gray believes that
the drive towards global free trade is so advanced that the process is
irreversible and the prospect now is for "deepening international
anarchy."
Luttwak, a senior fellow at the Centre for Strategic and International
Studies in Washington, is similarly disposed, predicting that what he
calls "turbo-capitalism" will create massive increases in poverty, crime
and unemployment, especially in the developing world, unless governments
find some way of checking its excesses.
He believes the state must change "either turbo-capitalism or its results
by redistributing income" in order that the economy serve the needs of
society rather than society serve the needs of the economy.
But for Luttwak too the option of a return to "controlled capitalism" has
been overtaken by the speed of events.
In the absence of coordination between US, European and Japanese economic
authorities, there is no way to prevent the machine careering ahead, with
disastrous likely results, he believes. "We have a global economy with no
global financial control mechanism, and therefore a crash is only a matter
of time."
Michalski by contrast believes "there is nothing inevitable about the
effects of globalisation. The issue is whether we can get our policies
right."
These would include the present macro-economic policy of low inflation and
solid public sector finances, reforming education (with a view to lifelong
learning permitting frequent changes of profession) and social support
systems, and introducing new initiatives at the level of global
governance.
By creating institutions that can manage the volatility of global
financial markets, the world can benefit from globalisation while broadly
controlling its negative effects, he said.
_________________________________________________________________
7/29/00
Nothing new here except who is saying it. John Gray and Edward Luttwak are not
exactly Marxist troublemakers. Lutwak is a right winger who was a superhawk
during the Reagan era. But he is honest. I am not familiar with Gray.
The failure of the New World Economic Order has always been inevitable. It is
just Laisez Faire Capitalism writ large. Capitalism has its own destruction
built in. Simply stated, it is the cause of wealth concentration into fewer and
fewer hands. The results are obvious. The controls of all the important
institutions of society pass into the hands of the rich. This in itself becomes
the mechanism for poverty, crime, social disintegration, social disorder,
revolt,
and dictatorship.
Capitalism is like fire. It has its usefulness, but left unregulated, it will
consume us all.
Joshua2
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