Opinion Sur
Who take part in the making of decisions to come out of the crisis; what are the prevailing ideas on approaches and measures; which ones will be finally adopted?Who take part in the making of decisions to come out of the crisis; what are the prevailing ideas on approaches and measures; which ones will be finally adopted?
Participants in the decision-making process
Ultimately, the representatives of national governments are the ones who make the key decisions to come out of the crisis, depending on the political weight that each country carries within the international commonwealth. Countries carrying the greatest weight are grouped in the so-called G-20 (now 22); they account for 80% of the world’s GDP and the world trade, and two-thirds of the global population. The pressures of countless players having different degrees of influence converge on their leaders.
It is clear that the policies that led to the crisis benefited the financial sector of central countries and emerging economies: they accumulated huge economic power and great political influence. For instance, up until 1982 the benefits of the financial sector in the US were similar to those of the other industrial sectors; then they started growing until becoming, in 2007, 85 % higher than the rest of the industry. During that period, changes in those policies were resisted by the financial sector with the support of mainstream think tanks and the media related to those interests. Crowning that influence, Wall Street investment bankers came to conduct from the Department of the Treasury and the Federal Reserve in Washington, DC, the national economic policy
Although affected by the crisis they helped generate, big financial groups still preserve a high level of influence as, should they collapse they would drag along many other companies and families in their fall. Other important economic sectors that have been less damaged by the crisis, such as communications, health, food, or that play a strategic role, such as armaments and energy industry, oil and gas in particular, also maintain a great capacity to exert influence on the shaping of new global policies. Although there are certain organizations that struggle for people’s interests, the average citizen, ordinary taxpayers do not have any other formal representative than their government. Should governments turn away from them, the great majorities (hundreds of millions of people) would not have who to defend their interests and needs at the negotiating table. The new architecture of the international economic system and the new policies that will guide its way of functioning will be very much influenced by those who end up seating at the drawing board.
The crisis generated a certain shift in terms of decision-making from the economic to the political ground, which makes new room for considering other approaches and measures. Yet, if such room is not duly taken advantage of, we will end up reproducing, with only cosmetic changes, the processes that resulted in this huge global crisis.
Prevailing ideas about approaches and measures
Even though there are new ideas and perspectives, mainstream think- tanks continue to carry greater weight due to their position in the most important communication nodes; hence, and not necessarily due to the merit of their analyses and argumentations, they are paid more heed than other engines of strategic thinking.
One of the driving ideas that mainstream think-tanks proclaim is the immediate need to bail out the existing financial system. They act on the urgency that the situation indeed imposes, and elude discussing a thorough transformation of the structure and way of functioning of financial intermediation. The backbone of the proposals consists in “recovering” the solvency and credibility of financial institutions, ridding them of the so-called toxic assets; “re-establishing” credit without affecting the corporate structure, nor ensuring that two-thirds of the world population have full credit access, nor obliterating the criminal nonsense of tax havens, nor securing an effective monitoring of all financial products, hedge funds included.
Another key idea is that of expanding global demand by pumping government funds into the market. This would be attained by (i) offering public sector financed credit lines, in order to substitute the declining propensity to lend of institutions that have been so severely hit by the crisis, and (ii) generating activities via ambitious plans in social and productive infrastructure. Once again, the devil is in the small print and its tail may only be noticed when these measures are disaggregated and studied in detail.
Ideas striving to be considered
One of the main notions that are striving to be considered in the present agenda is the critical role inequity played –socially and among countries- in generating the crisis. Inequity was the result of a specific growth pattern that derived in concentrated (and concentrating) accumulation of wealth, income, savings and investment. There are other ways to grow that lead to much more balanced and de-concentrated accumulation, promoting a better distribution of wealth, income, savings and investment, with significant effects on what is produced, who produces it, how it is produced, when it is produced, as well as what, who, how and where it is consumed. The coming out of the crisis is a golden opportunity to change the production and consumption pattern, so that clean production that does not harm the environment may be encouraged, that consumerism may be replaced by responsible consumption, and that scientific and technological development may be accordingly oriented. As public funding and regulations are so preponderant in this phase, the capacity to adjust the systemic course has increased considerably.
There also exist serious doubts about the proposed financial bailout, in the sense that it might constitute a subtle way of ensuring the survival of the financial class that profited limitlessly and with few regulations until the crisis burst. To prevent this from happening, a bailout based on other grounds is propounded, whereby a restructuring of the financial system may be ensured. A restructuring that would induce another course, subject to a more effective regulatory framework but without affecting, however, the dynamics and innovation required to keep up with constantly changing circumstances. This might lead to a dismembering of huge financial entities that had concentrated large market shares and attained enormous economic and political power. The “cleansing” of toxic assets and the establishment of new regulatory standards provide each country’s financial authority with powerful instruments to create a new effective and vigorous financial system.
A more appropriate decision-making structure
The international crisis puts to the test the decision-making structure existing in the world. There are large global decisions that need to be considered, and there are also other multiple decisions at the national and local levels. The whole decision-making system is under strain, even if the same is not clearly structured. Structures originated in past international junctures are being used to give way to new structures that may best adjust to the enormous changes that occurred in recent decades. As always, it is necessary to change as we go along, with prudence, without arbitrariness, and weighing all legitimate interests at stake. Leaps in the dark do not help; instead, they cause a regression in the improvement processes.
The current systemic functioning is based on what today exists but adjusting the course and achieving a better way of functioning will be the result of projecting and organizing new structures, whose viability will depend upon how well the present correlation of international forces may install its vision, needs, values and interests.
