Transcript Decent Capitalism as a starting point

ECONOMY OF TOMORROW
The Economy of Tomorrow
1. Why is a new development path necessary?
New economic, ecological, social challenges
The end of successful development models
2. How could a sustainable development model look like?
The EoT model for socially just, sustainable and
green dynamic growth
3. How to create the political will for a shift onto a new
development path?
Weak progressive actors/ flawed governance
Building political leverage for the struggle against the
status quo
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
The Economy of Tomorrow
New Challenges
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
CHALLENGES: The Great Crisis of the West
Euro Crisis/ Sovereign debt cisis
Crisis of casino capitalism
Crisis of shareholder capitalism
Failure of neoliberalism
Flawed neoclassical theory
of efficient markets
Limits to extractive growth
The crisis of the nation state
Crisis of representative democracy
Contact: Marc Saxer, [email protected]
Metaphysical Black Hole
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ECONOMY OF TOMORROW
Virtual growth and crises in the West (Example US)
Moderate
Inflation
State
debt
Mass
Runaway
inflation
Nixon abandons
Gold Standard/
End of Bretton Woods
1973
unemployment
Quantitative
easing
Private
debt
Public
debt
crisis
Lack of
consumption
demand
Fed raises
interest rates to
squeeze out Inflation
Clinton cuts
deficit spending
1981
1993
Contact: Marc Saxer, [email protected]
Over leveraging
Subprime/
financial
crisis
Fed buys
foreign debt
2001
2008
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ECONOMY OF TOMORROW
The perpetual crises of virtual capitalism
Problem
Quick fix
Injection of
virtual resources
Problem
Contact: Marc Saxer, [email protected]
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GLOBAL CHALLENGE: Financial capitalism is unstable
Misallocation
of Capital
(Financial)
Weak Risk
Market
Management
Liberalization
Excessive Leverage
Lack of Investment
in Productivity
Wrong Incentive
and Innovation
Structures
Downsizing
the State
Large Currency Reserves
Pro-Cyclical Policies
Supply Side
Lack of Income-
Income Inequality
Driven Consumption
Economics
NEO- LIBERAL
Instability of
LACK OF
IDEOLOGY
Financial Capitalism
AGGREGATE DEMAND
Market
Debt Driven
Concentration
Regulation
Consumption
Blocked
Export Driven
Demand
Cuts in
Imbalances
Public Goods
Austerity
CRISES
Speculative
Bubbles
Instability
ECONOMY OF TOMORROW
All modern institutions– state, market and democracy–
are based on the Enlightenment Ideal of Rational Man
Efficient Markets
autonomous
decisionmaker
universally
informed
State Bureaucracy
Representative
Democracy
maximises
interest
rational
choice
Technocracy
Well informed
voter
Social
contract
Incremental
optimization
Planning,
Future
scenarios
Common
Good
Scientific
Progress
Metaphysical Roots of modern Institutions are flawed
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
The situation in Asia is different,
but challenges are converging
WEST
converging
trajectories
ASIA
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
Additional CHALLENGES for developing/
emerging economies
Japan, Korea,
Singapore, Korea,
Hong Kong
Post-Industrial Economy
India
Moving up the value chain
- high-tech industries
- Services
Thailand
Malaysia
Indonesia
Vietnam
Bangladesh
Pakistan
Industrialization
Extractive Growth :
- Exploitation of natural resources
- Exploitation of labor (rural => urban productivity)
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
The East Asian development model of the past decades
Industrialization
Export
Low Wage
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
The end of the East Asian development path
Finite Resources/ Energy security
Third Industrial Revolution/
New global division of labor
Climate Change/
Natural Disasters
Industrialization
Japanese
Tsunami
China’s
Bubbles
Export
Low Wage
Vulnerability
to external
shocks
Financial Crisis
Influx of “hot
money”/
Currency volatility
Looming
Global Recession
= Lack of external
demand
Contact: Marc Saxer, [email protected]
AEC: Low Wage
competition
Income
Disparity
=
Social Divide
and Political
Conflict
Middle Income Trap
=
Need to boost
productivity
ECONOMY OF TOMORROW
Extractive growth: Infinitve growth in a finite world?
social limits
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
The Economy of Tomorrow
Economic Solutions
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
The Economy of Tomorrow Development Model
MacroEconomic
Guidance
Public Long-term Restructuring
Goods Strategies
Balanced
Accounts
Stable
Financial
Markets
STABILITY
Steady Demand
Consumer Government Investment Net
Spending Spending
Exports
Inclusive
Institutions
BALANCE
INCLUSIVENESS
Productivity
DYNAMISM
Innovation
Dynamic Supply
Human
Capital
Resource
Efficiency
Technological
Innovation
Competitiveness
Income
Equality
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
The Economy of Tomorrow Growth Drivers
Innovation
Stability
and
Balance
Inclusiveness
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
What strategic aims for the state/ private sector?
Resource efficiency
Green Innovation
Investment in
Renewable Energies
Green Dynamic
Growth
Productivity
Stable financial
markets
Sustainable
Growth
Socially Just Growth
Fiscal
sustainability
Stable natural
environment
Stable social
environment
Global trade
balances
Contact: Marc Saxer, [email protected]
Fair Income
Use of all talent
ECONOMY OF TOMORROW
The Economy of Tomorrow
Political Solutions
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
If we know what should be done…
… why is it then not being happening?
„Populism“ debate shows that it is impossible to talk
about economic development without politics.
“Change” is not the automatic result of facts and figures.
„Change“ can only be the outcome of a political struggle.
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
Shifting the development path
can only be the result of a political struggle
Status quo Coalition
Traditional
Development
model
Exclusive Society
with privileges
for the elites
Good Society
with
Rainbow Coalition
full capabilities
Socially Just,
Sustainable and
Green Dynamic
Development Model
for all
Progressive Change Coalition
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Contact: Marc Saxer, [email protected]
ECONOMY OF TOMORROW
EoT Strategy: Compass, Coalition, Communication
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
Economic problems are not primarily
economic, but political problems
The ideas of economists and political philosophers, both
when they are right and when they are wrong, are more
powerful than is commonly understood. Indeed the world is
ruled by little else. Practical men, who believe themselves to
be quite exempt from any intellectual influence, are usually
the slaves of some defunct economist. Madmen in authority,
who hear voices in the air, are distilling their frenzy from some
academic scribbler of a few years back. I am sure that the
power of vested interests is vastly exaggerated compared with
the gradual encroachment of ideas.
John Maynard Keynes,
The General Theory of Employment, Interest and Money (1935)
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
Politics is less about solutions
but about the definition of the problem
Definition of the problem
…
determines the political outcome
Discourse 1
Facts




Financial Crisis
Bank Bailouts
Recession
Collapsing Tax
Revenue
Sovereign Debt at the
periphery exploded
because of bailouts and
devaluation at the center
Policy
Regulate (financial)
markets
Discourse 2
Sovereign Debt exploded
due to oversized social
welfare costs and state
mismanagement
Contact: Marc Saxer, [email protected]
slash (welfare)
state
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ECONOMY OF TOMORROW
STRATEGY: Channeling the political process
Normative Vision:
Good Society with Full Capabilities for All
Method:
Method:
Leveling the political playing field
Development Model
by discourse steering
gives orientation and
guidance
(compass )
Method:
Building rainbow coalitions
to create political leverage
Contact: Marc Saxer, [email protected]
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ECONOMY OF TOMORROW
EoT serves as a compass and benchmark
GOVERNANCE
TOOLS
To Achieve
¨ Collective Bargaining
¨ Minimum Wages/Wage Policy
¨ Short Term Employment
¨ Vocational Training
¨ Lifelong Learning Programs
¨ Decent Work
STRATEGIC
AIMS
To Fire Up

Income Equality

Inclusive Institutions

Public Goods
(Education, Health,
Social Security)
¨ Financial Market
Regulation
¨ International Monetary
Regime
¨ Capital Controls
¨ Administrative Capacity
(Oversight and Control)
¨ Curbing of speculation
¨ Market introduction
schemes
¨ Setting Incentives for
¨ Standard Setting
¨ Emission Trading
¨ R&D in (green)
technologies
¨ Anti-cyclical macroeconomic guidance
¨ Long-term investment
& management
strategies
To drive GROWTH To Produce
COMPASS
¨Fair Income For All
(consumption demand)
¨ Include all Talent
(innovation & labor
productivity)
¨ Stable financial markets
(capital productivity)
¨ Balanced Trade
(balanced current accounts)
¨ Balanced Budgets
(fiscal sustainability)
¨Stable natural and social
environment
¨
Productivity and
Innovation
GROWTH
ENGINES
(Green) Innovation
¨
“Greening the Old
Economy”
(resource efficiency)
¨ De-Coupling
Contact: Marc Saxer, [email protected]
NORMATIV
E VISION
Socially
Just
Growth
Sustainable
Growth
GOOD
SOCIETY
with
FULL
CAPABILITIES
FOR ALL
Green
Dynamic
Growth
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