Facing the Crisis: Stampedes and Solutions

In a crisis, each one strives to avoid its effects or pass them on to others. As in any stampede, he who does not manage to move to the side in time ends up being run over by the herd. How can we face this crisis in such a way as to mitigate its effects and come out of it in the best possible shape? This will depend on how the contextual circumstances (that we do not control) evolve, but also–and very specially–on the way we ourselves react: old problems persist that have undermined our potentiality, and new decisions wait to be made. This does fall within the orbit of our responsibility.
We are faced with a world crisis triggered by the mishap in the financial systems of central countries. Its effects are being felt everywhere, though in different ways. There is a pervasive economic slowdown and, in many cases, stagnation or recession. The major international players are analyzing defence lines and exit strategies; they may have a bearing on the course of events but cannot avoid them. They seek to coordinate their policies in such a way as to contain the first reaction, which was “every man for himself” or, more precisely, me for myself at the others’ expense. It remains to be seen whether such coordination can be sustained, and how emerging economies will react, particularly, emerging economic drivers such as China, India, Brazil and Mexico.

In a crisis, each one strives to avoid its effects or pass them on to others. As in any stampede, he who does not manage to move to the side in time ends up being run over by the herd. Those who are best positioned use their greater economic power, and their better information access, contacts, knowledge, to protect their interests more effectively. Some do that within the confines of legality, and others outside them. The majority knows that rather than helping the least empowered, individually forsaking each one’s own interest facilitates the predatory action of ravens and wolves; hence the importance of coming up with answers at policy and regulatory levels.

As time goes by, lessons appear that those well-advised actors, as well as fishers in troubled waters, are able to internalize. The rest, who are the majority, do not manage to unravel the logic of the crisis, take the blows, return to the herd of the gullible, and fall again in a consumerism that strips their days of any meaning. Ravens and wolves change their robes, purify their lineage, and give way to a new brood of unscrupulous climbers.

How can we face this crisis in such a way as to mitigate its effects and come out of it in the best possible shape? This will depend on how the contextual circumstances (that we do not control) evolve, but also–and very specially–on the way we ourselves react: old problems persist that have undermined our potentiality, and new decisions wait to be made. This does fall within the orbit of our responsibility.

Coming Together

In my opinion, the most critical factor to face the crisis is not economic but political and social: we need to join forces, to get together in order to tackle the challenges and work on the new opportunities successfully. We have worn ourselves out for too long with internal struggles, with antagonisms that drain energy and affect the agility to react. It makes no sense to demonize the opponent and address the other from the only truth that, of course, is our own. Political cannibalism does not enrich society; it impoverishes it.
We must stop this; mean-spirited actions are already an unbearable dead weight. Our piece of land will never be an orchard in the middle of the dessert; as we erode our neighbour’s farm, we fall together with him.

A unifying leadership is needed, one that is adroit enough to align interests and needs. He who does not know how, does not want or is unable to do it, should be punished at the ballot box. There is no more room for the all-or-nothing attitude; compromises are required in order to establish short and mid-term agreements that are transparent, trick-free, and contain safeguards to preserve goals in case course deviations occur should circumstances change. Frankness is expected, and a fair allocation of results is sought, without resorting to any form of cronyism or patronage. Political intermediation is useful to the extent that their interests as brokers do not affect the interests of the population as a whole. Cahoots aimed to behead some in order to give way to others are not good either; as though the replacement of individuals instead of ways of acting could work the miracle. Some politicians want to convince us that if their faction got to rule, things would be very different; but we have grown tired of realizing that mere face changes do not solve our problems.

We have the leaders we have, and with them –or in spite of them– we will have to move forward. In politics you cannot improvise, and ousting or neutralizing governments is a drawback, rather than a contribution. In point of fact, it is preferable to come up with a suboptimal but positive solution that may be implemented immediately, than with an eventually superior but uncertain one in terms of whether it will be ultimately likely to be implemented. Instead of the eternal attempt at neutralizing governments led by rivals, the focus should be placed on aligning transparent interests, needs, values, using the whole range of modalities to build sustainable multi-partisan agreements. Later on, there will be time to evaluate who really made sincere efforts for us to come together and worked solutions, and who, instead, concentrated on imposing their mean-spirited siren songs and false images.

Traveling Down One’s Own Path

The prevailing structures weaken with the crisis, and this might be beneficial. The lava melts foundations and we would be right not to rebuild that which provoked the destruction. Opportunities to develop solutions that are appropriate to our circumstances open up, instead of replicating formulae that were designed for other realities. With prudence and creativity, we can start building our own trajectory of sustainable development.

The homogenization of strategic thinking was disastrous for the countries of the South; it led us to import visions, agendas, solutions that do not correlate with our interests and uniqueness; it reduced the range of options and mutilated our creativity. It is imperative for us to fully recover the capacity to think and innovate. Those think tanks, those engines of analyses, assessments, recommendations –enshrined by strong interest groups- are merely one of various possible perspectives; they have the right to remain contributing their share but in no way to presume that they do so from “the truth”. Their points of view must be filtered by those of our analysts, thinkers, scientists, philosophers, spiritual leaders. This does not mean to turn our back on the world and return to the parochial, but rather to trust in our criteria more so that external opinions enrich, and not substitute, our interpretation and decision-making process.

This is even more pressing in the context of contemporary acceleration(1), where setting the course takes pre-eminence over the mere generation of power, when we need to design early alerts to detect deviations and unwanted effects, adopt more effective regulatory mechanisms, and choose leaders who are well experienced at steering at the pace required to accompany the rapid changes in circumstances.

Adjusting the Structure and the Way of Functioning:

The new course calls for a better distribution of efforts and their results. It is necessary to promote a self-sustainable virtuous dynamics: starting by adjusting our own way of functioning so as to generate transformations in the social and economic structure that may favour, in turn, a permanent improvement in the systemic functioning.

When we talk about adjusting the way in which we function, we mean taking measures and adopting policies with macro-impact, not just merely proposing special, high-profile but hardly significant programs. There is no room for the political cosmetics of changing something so that nothing changes. Even though there still are gullible individuals who can be deceived, the very social and economic dynamics ends up being inexorable; the crisis speaks for itself.

The direction taken is a cornerstone of the development process… when chosen with wisdom and the aid of a good ethical compass. A course agreed upon by consensus combines interests, needs and values in time; if well conceived, it is a convergence and driving factor for the conglomerate of forces that make up a society. Other cornerstones are knowledge (based on education, on scientific and technological research, on fostering innovation and creativity) and entrepreneurial capacity, which should be advocated as one of the most treasured social assets. Being involved in the development of these cornerstones is a responsibility, not a source of privileges.

Where to Start from

To address the effects of the crisis there are quick impact measures that, while improving our way of functioning, may strengthen our economic and social structure. They not only boost recovery but are also capable of reorienting without halting our productive process.

It is necessary to be on the alert, as every time a crisis occurs the siren songs urge us to relapse on what is already known, as though there were no time or space for new solutions capable of containing the negative effects, transforming us. Today’s reality brings along the good and the not-so-good; it is very valuable as experience. But it will be necessary to separate the wheat from the chaff and give way to better structures that may guarantee the chosen course.

In essence, it is a matter of mobilizing our full realization capacity; taking advantage of our entire productive potential, both the active one and the one that up to today has been sterilized. It is indispensable that the bottom of the social and productive pyramid be mobilized through the adoption of macro-economic measures, meso-economic initiatives, and direct-support actions such as, among others, inclusive business developers, socially and environmentally responsible investor networks, and small production investment funds; all within the strategic context of boosting productive chains in order to maximize value added, develop regional economies and prioritize education, science and technology.

Inequality and Critical Income Distribution

Much is being said about the financial origin of the crisis, and quite less about the array of other structural reasons that made the implosion possible. One of the most important ones is the growing concentration of income taking place within each economy as well as at the level of the international economic system as a whole. Income concentration generates markets oversaturated with conspicuous consumption next to impoverished markets unable to meet their basic needs. In contexts where the supply of goods and services does not cease to grow and the strongly concentrated demand cannot accompany such growth in supply, serious bottlenecks occur. To be able to continue functioning without introducing changes, the economic system responds with short-term pump-fuelling solutions: on the one hand, it strives to expand demand by causing debtors to over-borrow rather than providing them with better income (an intrinsic contradiction of the concentration process); on the other hand, it seeks to recycle resources from surplus sectors by channelling them into financial placements that are ever more dissociated from a real economy that is unable to grow organically as a result of the concentration process. The financial system leads this game from which it draws juicy results. Yet, at the same time, it gets stuck there as it makes it possible for consumers who are not income-backed to over-borrow, and recycles surpluses resulting from the concentration process into speculative placements.(2)

Even when this is a critical dimension, we must be aware of the fact that by merely finding a solution to the increasing concentration of wealth and income, we would not manage to untie all the knots that block our development; in fact, there are other crucial variables, such as environmental preservation, technological and productivity development, entrepreneurial spirit, management efficiency, communities’ social capital, that impact strongly on the course of events; ignoring them also brings about systemic imbalances. It is, however, undeniable that inequality has acquired such magnitude worldwide that today it is one of the major threats to the viability of contemporary development. The income distribution “factor” is thus not only associated to the values of justice and respect for the human condition but also to the very stability and sustainability of our functioning as a nation. Abating the concentration process, and its consequences in terms of inequality and poverty, becomes not just a necessary but also an indispensable, though not sufficient, condition to improve the social and economic structure and secure a better systemic functioning.

In the best former president Clinton’s style, today the message to those who navigate across the superficiality of processes might be “it is the concentration process, stupid”.

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Notes: (1) See Leading in [the Vertigo of Contemporary Acceleration->http://opinionsur.org.ar/Leading-in-the-Vertigo-of], in the October 2008 issue of Opinion Sur (2) For an in-depth analysis of this topic, see [Coming out of the crisis toward a better systemic functioning->http://opinionsur.org.ar/Coming-out-of-the-crisis-towards-a], in the October 2008 issue of Opinion Sur.

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