The fast moving juggernaut of globalization, and of expanding free Market capitalism ended during October 2008. And the emergency actions by Western Governments, has illustrated a need to reinvent Capitalism, because the old system did not work. What economic models are current Governments looking at?
Old ideas for a new crisis probably describes the current psyche of our Economic leaders around the World, who have searched frantically to save a system that in reality created insolvent economies in both the USA, and Europe. So what models are these pre- October 2008 Leaders looking at, and will they succeed?.
Keynesian Economics is the order of the day in most Countries that face bankruptcy, and political change. The old system did not work, and during these first months of economic re- adjustments, the idea of Nationalizing insolvent Corporations, and creating public works projects has become popular again. An idea that "saved' democracies in the 1930's during the great depression.
But did Keynesian economics save Democracies in the 1930's?
It helped create employment, but even in the United States, after six years of the "New Deal," there was still officially over 15% of Americans collecting welfare. Only when the Second World War started did America become prosperous again.
During the 1930's, Fascism and Communism were the most successful economies, but both were flawed. Fascism depended on rebuilding the military, and taking the assets of the wealthy "Non- Germans and anti-fascists." It was based on wealth redistribution, a war economy, on cheap slave labor, and trade protectionism.
Communism, was based on the state owning everything, and turning an agricultural nation into an industrial nation. Although ordinary Russians did prosper, millions of Russians were punished for "political" and "economic" crimes, and were an unpaid labor force, cutting the economic costs of industrialization. Communist Russia, was in part a slave labor state, like Fascist Germany was.
Current Governments actually have no real economic models to look back on, and few economists and Political Leaders have any experience in dealing with an economic crisis on this scale. Our bankers are discredited, as they lead a banking system that was based on "bubble' economics, and still remain in charge of many of our nationalized banks.
We cannot go back to the developing World of cheap labor, producing for the cash poor but credit wealthy European, because that system collapsed in October 2008. So there is a need for our Governments, and economists to create a system, not based on saving private assets, but creating wealth in a sustainable way for this Century.
Perhaps the solution is to recognize this need, then work towards creating a new Society, instead of reinventing the old. A society that lives within its means, creates both sustainable employment, and wealth. Whilst the Governments, Economist, and Bankers of old, are replaced by new more able people who can find a better solution to the boom, and bust cycle of capitalism that exists today.
This is feasible, but has to be done in a way that focuses on a sustainable future for everyone, and reassessing the priorities and needs of people, ensuring as much fairness, as possible, whilst rebuilding a system that is in a dire need of reinventing itself.
What we need now are new ideas, new economic models, and even new leaders that inspire and can guide us through these changes, and then we can ride the storm of this crisis, and truly create a more sustainable, and better World for all.