The New Economic Theory—Global Integration

Thus far, the economic theory has managed to characterize the behavior of economic units on the level of particular units, as well as on the general level. However, the theory worked only as long as units could be looked at as particular elements. This created a natural division into segments of economic research, such as “labor economics,” which seeks to understand the dynamics of the labor market, or “macroeconomics,” which deals with the performance, structure, behavior, and decision-making of the economy as a whole. That division sufficiently explained the connections among the economic units and the dependence among them within the market of each specific country, including cases of closed markets or trade relations among different countries.

However, economics did not succeed in integrating these study units into a single, solid piece that ties all the units into one, as required in the global and connected world. The inability to connect the systems into one is the primary challenge of economics today. The disconnect makes them incongruent with the laws of integration that are manifesting in today’s interconnected world.

Today, the economic and financial units operate in a single global environment. They are tied to each other by necessity and depend on each other in ever-tightening connections. It is an evolutionary process that has now reached a critical point because the tools in the hands of economists are no longer effective. They were developed and perfected in a world entirely different from that of today.

Previously, one could explain how connections among economic and financial units were formed. It was possible to express the connection among distinct elements in a quantifiable manner. Now an integrative law operates throughout the world, taking into account all the possible connections. Matching the current economic and social systems to that law will necessarily lead to a world that aspires to balance and harmony precisely because it regards all the possible connections. Conversely, incongruity with that law will be experienced as an escalating crisis.