The Fall of the Old Paradigms that Led to the Crisis
The current economic paradigm that led us into this crisis created—among other ills—a legal and moral foundation to exploit cheap labor, primarily in East Asia, and to over-consume our natural resources. That foundation has led to mutual dependence from which we can no longer escape. The U.S., for instance, has become a superpower of financial services and consumption. China, on the other hand, as well as India and other developing nations, have become the world’s factories. The global system is more connected than ever, and economists must build an economic paradigm that supports that mutual dependence.
Humanity has evolved from individualism, competitiveness, and manipulations into an interconnected global system that requires economists to devise a new paradigm that reflects it. This paradigm must take into consideration the fact that we are living in a global-integral system, and only when we understand its laws will we be able to properly establish the economic connections that will lead us to a life of happiness and balance.
Globalization is no longer a great discovery. It is a reality to which economists often refer in their statements and speeches. Economist Mark Vitner described the global interconnectedness in a rather palpable manner: “ It's like trying to unscramble scrambled eggs. It just can't be done that easily. I don't know if it can be done at all.” [114]
And yet, the solutions economists offer decision-makers still rely on tools from the obsolete paradigm of the world of separate entities. They suggest such steps as cutting interest rates, pouring funds into the system (euphemism for printing money), or reducing government expenses.
Perhaps such monetary and fiscal means could provide first aid, but they are completely ineffective when it comes to treating the roots of the crisis and securing a viable, solid, and sustainable economic system. These solutions fail because they miss the root of the crisis—the mismatch between the functioning of the current economic system and the required functioning within the global-integral system. The bailout programs of the 2008 financial crisis relied on the old theories and hence failed bitterly, leaving us to face an even more threatening version of that crisis just three years later.
By trying to address the new problems without understanding the laws by which the global-integral system operates, we are only aggravating the crisis. Moreover, the incongruity of economic systems with the current modus operandi of the world puts them in immediate danger of economic collapse, revolutions, and civil wars. The Arab Spring of 2011, now spilling into 2012, is an example of the dangers that economic pressures can pose. The clout of extremist and nationalistic elements and parties throughout the world is rising. The protests in Europe and the U.S. can lead to violence, undermine domestic peace, rattle the political systems within countries, and even increase the chance of a full-blown war.
Economists have the duty and the responsibility to acquire a thorough understanding of the laws of the new world economy. In it, laws reflect systems of human relations that are moving toward collaboration, synergy, solidarity, cohesion, and harmony. Only when economists grasp that new direction will they be able to develop proper models to describe the global-integral system and how it should work. This, in turn, will lead to establishing an entirely new economy.
[114] Associated Press, “Recession will likely be longest in postwar era,” MSNBC (March, 2009), http://www.msnbc.msn.com/id/29582828/wid/1/page/2/