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THE NEW ECONOMY:
Human Capitalism?
Klas Eklund
IUCISD, Istanbul
June 22, 2001
WHAT IS THE
NEW ECONOMY?
• New technology and globalisation
• Sounder macro policies
• Economies work better, old relations are
stretched • but “old” theories can still be used
• The new economy is not only IT, certainly
not dot.coms
• Even though stock market bubble burst
the underlying changes remain
IT - AN INDUSTRIAL
REVOLUTION
• The third, after steam and electrical/
internal combustion engines
• Great effects when the new technology
conquers more sectors. Decades before
fully ripened
• No idea of future effects or where they will
come
• The IT sector in a narrow sense is not very
important
GLOBALISATION
• Trade expansion, tariff reduction, direct
investments
• Free capital flows, international capital
market
• New technology changes trade-off between
quality and quantity
Result: Stiffer competition, faster
productivity growth, larger markets,
higher speed, cultural integration - and
less room for national economic policy
“THE GOLDEN
STRAITJACKET”
• Low inflation policy, more independent
central banks
• Stricter fiscal policies: Rules and
targets
• Deregulation
• International co-operation and rules
• Straighten up and join the club - or pay
a price to stay outside!
STRUCTURES CONVERGE
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Collapse of the planned economies
Problems of the “Scandinavian model”
Problems of the “Asian model”
Successes of the “Anglo-Saxon model”
Mobile tax bases imply pressure of
convergence of taxes - capital, labour,
consumption
• One major currency in Europe. Long-term
trend toward fewer currencies?
MACRO EFFECTS
• Higher growth...
– New technique, developmental blocks, clusters of
innovations
– Investment and capital rationalisation
– Higher productivity - at last
• …without high inflation
– Transparency & stiffer competition
– Empowered consumers
– Lower transaction & distribution costs
• Difficult question: What is permanent and
what is transitory?
THERE WILL BE PAIN
• Gains: Productivity, growth, benefits to
consumers
• But: Old structures threatened
– Creative destruction
– Regional, sector-wise and individual effects
– New gulfs and inequalities - which old-fashioned
redistribution policies cannot handle
• Unemployment effects depend on
flexibility of labour market
• Bubbles and crashes will follow
• Risk of political backlash?
UNDEMOCRATIC?
• Globalisation opens closed societies, unseats
dictators!
• Helps women’s liberation
• More narrow room for stabilisation policy
– Restrictions are not new
– But they work faster now
• Globalisation does not prohibit national politicians
from making decisions
– but costs become more visible
– the political tool-box becomes less efficient
• The alternative? That politicians have the
right/power to set all prices and rates?
• What is the market: An external force - or all of us?
“HUMAN CAPITALISM”?
• New economy threatens old structures
• Human capital rules
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The new economy is meritocratic
Anti-racist, anti-clerical, anti-chauvinist!
Human capital rules first through competence
then through ownership
• Old class structures and gulfs change
character
– Traditional labour/capital division still exists
and spreads to new countries
– but becomes less important in the ”core”
countries and in leading industries
NEW POLITICS
• Communication is swifter
– Easier to find each other
– Lower costs
• Politics changes shape
–
–
–
–
–
Flatter organisations also in politics?
Speed!
Virtual and global debates
Electronic polling - and voting?
Traditional media loses some power
• Public sector efficiency enhanced
– Better information
– Lower costs
PROBLEMS
• The digital divide
– But must new media be available to all
before anybody is allowed to use them?
– Don’t let the god become enemy of the best
• A new class society? “Netocracy”?
• Subgroups instead of open discussion?
• Too rapid communication - no room for
thought?
– A high frequency reality cannot only have a
low frequency political system
CHALLENGES
• Old parties, structures and activities
are threatened
– they must renew policies and methods
• But this is not a threat to democracy
- rather a chance to develop
democracy!
• The real problems
– Medialisation
– Stale parties and meetings
– Unattractive to young people
can partly be addressed by IT