ECONOMIC CRISIS MAY HASTEN ESSENTIAL TRANSFORMATIONS

By Mark Sommer and - - Reprint | | Print |

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ARCATA, CALIFORNIA, Oct 22 2008 (IPS) - The current financial market collapse represents an unparalleled opportunity to rethink and restructure a uniquely American model of capitalism that in recent decades has become increasingly unsustainable and inequitable as it has proliferated worldwide, writes Mark Sommer, host of A World of Possibilities, an award-winning, internationally-syndicated radio programme. In this article, Sommer writes that now as never before we need fresh ideas and approaches, new ways of organizing our work, our production processes, our energy generation and consumption patterns, the entire way we do business with one another. We are about to experience a systemic transformation of both global economics and culture. Whether the outcome will prove positive or negative will depend on whether we approach the future with fear or confidence. If, seized by panic, we fight for more than our share of finite and diminishing resources, the economy we create will be riven by chronic instability, inequity, and conflict. If, on the other hand, we take this defining moment as a challenge rather than solely a threat, we can transform it into a singular opportunity to reassert balance, equity, and sustainability as the organizing principles of a new global economy.

The stock market will undoubtedly continue to gyrate as investors vainly seek solid ground. But George Bush notwithstanding, the fundamentals are not in fact sound. This is not just a housing bust or a credit crunch. It is an unparalleled crisis of confidence in US economic leadership and, to some degree, in the entire global economy. Investors have lost faith that the system in which they’ve invested their lives and savings is stable or safe.

For a relative few, the fact that the American economic model is collapsing is hardly surprising. Like canaries in the mine they’ve been predicting collapse since the last great swoon, the 1970s. Their timing turned out to be wrong but their trend-lines may well have been right. The cumulative US debt (governmental, corporate, and personal), the trade and budget deficits, the widening chasm between rich and poor and destruction of a stabilizing middle class, the disinvestment in education, healthcare, and infrastructure in the world’s leading economy — all these trends assure that downward pressures will not reverse anytime soon. Call it recession or depression, what’s coming is likely to be longer and deeper than any of us is ready to admit.

There are actually two major elections this fall, one linked to the other. The presidential contest will turn on whether voters believe current policies can sustain their future or must fundamentally change. Then investors in the global economy, influenced in part by the election results, will vote with their investments in American dollars whether they believe the world’s largest economy can remain the world’s financial superpower — or whether, as New York Times economist David Leonhart asks, “2008 will come to be seen as the first year of a distinctly non-American century.”

And yet this crisis of confidence also represents an unparalleled opportunity to rethink and restructure a uniquely American model of capitalism that in recent decades has become increasingly unsustainable and inequitable as it has proliferated worldwide. In high times, few other than those left behind question the wisdom of a system that relentlessly exploits both labour and natural resources. But now that it’s imploding, many more are starting to question its basic assumptions and looking for more equitable and sustainable ways to organize the global economy.

Historians of the Great Depression say that for all the hardship, it was also a time of unparalleled social innovation. Driven by necessity, experiments of all kinds proliferated as individuals and institutions sought new solutions. Now as never before we need fresh ideas and approaches, new ways of organizing our work, our production processes, our energy generation and consumption patterns, the entire way we do business with one another. We need to re-instill shared values into an economy and culture that have long known only share values.

As the global economy slows, along with the inescapable hardship will come essential shifts that we’ve desperately needed to make but simply haven’t made while the choice was purely voluntary. With global warming, reducing our energy consumption has become imperative. Yet till now we’ve shown no sign of heeding the alarms. Now, without the cash to consume our energy demand is plummeting. Oil prices are falling still faster than they rose.

A prolonged global downturn will dramatically reduce global trade and travel, easing our burden on the climate while spurring more rapid innovation and investment in cleaner, more efficient energy technologies. Democracies’ dangerous dependence on authoritarian petro-states may be reduced by falling demand, though competition for dwindling resources could lead to new threats to the environment and democratic norms worldwide.

A second silver lining is the return to localism. With shipping increasingly expensive, the fledgling movement to grow and buy locally will gain momentum. We will see farmers markets, truck farms, and other local commerce revive and grow. Some manufacturing may even return closer to home, though this could prove more challenging. Reducing chronic trade deficits could reduce one problem but create another since China and other exporting nations depend on US imports to fuel their economies. Finding the right balance will not be easy.

Along with more localized economies we will see a relocalisation of culture — neighbours coming to know each other, families taking more time together. During the Depression parents spent less money but more time with their children. We may become a “less is more” conservation culture, learning to savour rather than devour.

We are about to experience a systemic transformation of both global economics and culture. Whether the outcome will prove positive or negative will crucially depend on whether we approach the future more with fear or confidence. If, seized by panic, we fight for more than our share of finite and diminishing resources, the economy we create will be riven by chronic instability, inequity, and conflict. If, on the other hand, we take this defining moment as a challenge rather than solely a threat, we can transform it into a singular opportunity to reassert balance, equity, and sustainability as the organizing principles of a new global economy.

Social stability and economic vitality both require a broad distribution of resources. Only by giving everyone purchasing power and a stake in the system can we provide a sturdy foundation for sustainable growth. Sustainability requires support for all that nature and the efforts each of us contribute to our common life. Creating an economic system that preserves our common wealth and prevents its theft for private gain is the challenge and charge of these times. (END/COPYRIGHT IPS)