Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
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] 1 ECONOMY OF TOMORROW The Economy of Tomorrow New Challenges Contact: Marc Saxer, [email protected] 2 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 3 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 4 ECONOMY OF TOMORROW The perpetual crises of virtual capitalism Problem Quick fix Injection of virtual resources Problem Contact: Marc Saxer, [email protected] 5 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] 7 ECONOMY OF TOMORROW The situation in Asia is different, but challenges are converging WEST converging trajectories ASIA Contact: Marc Saxer, [email protected] 8 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] 9 ECONOMY OF TOMORROW The East Asian development model of the past decades Industrialization Export Low Wage Contact: Marc Saxer, [email protected] 10 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] 12 ECONOMY OF TOMORROW The Economy of Tomorrow Economic Solutions Contact: Marc Saxer, [email protected] 13 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] 14 ECONOMY OF TOMORROW The Economy of Tomorrow Growth Drivers Innovation Stability and Balance Inclusiveness Contact: Marc Saxer, [email protected] 15 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] 17 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] 18 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 19 Contact: Marc Saxer, [email protected] ECONOMY OF TOMORROW EoT Strategy: Compass, Coalition, Communication Contact: Marc Saxer, [email protected] 20 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] 21 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 22 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] 23 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 24