There comes a tide in the affairs of men,” Shakespeare cautioned. Tsunami warnings are now ringing about the global economy. The global financial system is under stress. Economic growth is stumbling. Confidence in governments is decreasing everywhere. Multilateral institutions like the WTO (World Trade Organization) and IMF (International Monetary Fund), created to promote global integration and stability, are ineffective. Communism was declared dead with the fall of the Berlin Wall. Now, there is less faith in the concept of the free market, even amongst Western economists. Why has liberal, free market capitalism, the victor of the Cold War of ideologies, also stumbled?
The confluence of three mega trends has increased mistrust in capitalist institutions. The first is the triumphal and arrogant advance of liberal capitalist ideas of economic management led by the US, which grew after the ideological opposition to them collapsed 20 years ago with the unravelling of socialist regimes behind the Iron Curtain.
The Indian economy’s boat also rose with this tide when government controls on industry were dismantled in 1991. With this advance of capitalism, CEOs of multinational companies became the chiefs of the world, whose court assembled in Davos in January each year, and to which heads of government flocked for attention. Thomas Friedman described this mega trend as the flattening of the world by the spread of global finance, global corporations, global brands and global ideas (mostly American), aided by the Internet.
The explosion of access to information through the Internet and social media, proliferation of mobile phones, and 24x7 news media, is the second mega trend. Like a rising tide that cares not whose boat it lifts, technology enables all ideas to spread. Not only the advertisements of global brands, but also voices of protest against them. Not only do 21st century communication technologies enable security forces to snoop, they also equip terrorists to co-ordinate, and non-violent protestors to organise. The Jasmine Revolutions in Arab countries and Anna Hazare’s campaign against corruption in India were accelerated by ubiquitous communication technologies.
The third mega trend is the deepening recognition of human rights: The equal rights of women and men, of all races, and of all people whether rich or poor. The concept of rights is expanding too: From political rights to vote, to social rights for respect and equal treatment, and onto fundamental rights to education, health, and equal opportunity, which people are charging their governments to ensure. The concern for human rights, which grew larger in the latter half of the 20th century, has expanded and become deeper in the opening decade of the 21st century with the proliferation of civil society advocacy groups enabled by the reach of communication technologies.
Rules We Choose to Live By
Institutional Solutions: The Missing Middles
(This story appears in the 18 November, 2011 issue of Forbes India. To visit our Archives, click here.)
A very well written and analyzed article. Just want to add: "bad rules drive out good ones" - if we leave it to the "jungle law" of an unregulated so-called 'free market'. Hence, the need to establish institutions that will monitor each other. This is a fundamental humanitarian issue and not a left vs. right issue. Does a society want millions of low paid and unemployed, with their children having little hope of making it in life? To be sure, such a society will also have high crime rates, which means that that society will end up hiring a larger police force and higher spending on fighting criminals. The end result? Such a society will be highly criminalized despite ending up with a large police force. Or, do we want a society where people feel closer to each other economically and socially? A society that has all the incentives of hard work and enterprise but without the criminalizing influences and without having to maintain a large police force fighting to prevent gang wars (like Japan)? The choice is ours to make. Those who swear by Jesus and God should ask themselves this simple question: If we want to build heaven on earth, do we want to see the kind of wide gaps in incomes and opportunities in our society that we have fostered for centuries through sheer callousness, foolishness, and arrogance?
on Nov 29, 2011