Macroshift in World Development: Progress Through Overcoming the Crises of Transition

The global economic crisis is just one more testimony to the cardinal changes fomenting in the world order. They touch on the economic sphere, which is entering a stage of transition to new forms of regulation and the resulting technological structure. No less symptomatic are the fomenting shifts in social structure – and the rise of new models of it – the globalization of production and culture, a different configuration of international relations and the interaction of world civilizations.

The singly polar world, in which the U.S. appeared hegemonic, is giving way to a multi-polar one demanding equality, an accounting of interests and consensus among a wide range of countries. America’s political prestige has tarnished. The pole of political attraction is moving from West to East, where China and India, the most populous nations on the planet, are displaying record growth rates. The formation of a common Eurasian area is emerging as a future geopolitical reality.

The global crisis has revealed the flaws of contemporary capitalism, in many ways formed from the mold of neoliberalism’s ideological canons professed and propagated by America. Its defects have been thoroughly exposed not just in the realm of finances, monetary credit and currency turnover, which is particularly apparent, and not just in production and trade, but also in the functioning of Western democracy. Engendered by social injustice, street protests in the U.S. (“Occupy Wall Street”), England and other Western countries, and revolutions in Tunis, Egypt, Libya, Syria, and Yemen against authoritarian, pseudo-democratic regimes have roused the populations of neighboring Islamic countries and characterized the changes taking place. More and more symptoms of society’s spiritual and moral crisis are accumulating in various countries of the globe, in developed countries as well as in developing and transitional ones. This calls into question the suitability of the globally predominant ideology and political practice to meet the challenges of the 21st century.

According to the American philosopher Ervin Laszlo, social evolution on our planet has reached a critical phase of “macroshift.” It is accompanied by social and cultural discord and even chaos when political regimes prove impotent in the face of imminent changes and dissatisfaction seizes the majority of the population, which finds itself at the mercy of stagnant views and values. On the other hand, many politicians, academics and civilians at large are taking up the search for ways to overcome the destructive aspects of macroshift and respond to the challenges of the new era.

We hear calls for reconsidering the predominant neoliberal theory from Nobel economics laureates Joseph Stiglitz (2001) and Paul Krugman (2008). Thus, Krugman remarks that most macroeconomics of the past 30 years have been “spectacularly useless at best, and positively harmful at worst.” In his most recent book, Stiglitz perceives the sources of the global crisis in the rampant deregulation which fueled market fundamentalism and Wall Street. He establishes the groundlessness of academic scholarship and the fundamental flaws in the American model of capitalism. In the opinion of the famous American economist, of course, similar views are not shared by all analysts in the West and are subject to doubt on the part of a whole array of authors and reviewers. But they testify to a nascent revolution in thinking. “Market fundamentalist laissez-faire of the last 20 years has dramatically failed the test,” reads an UNCTAD report entitled “The Global Economic Crisis: Systemic Failures and Multilateral Remedies.”

The authoritative organ of liberal ideology, the journal “The Economist,” printed a special report entitled “When Fortune Frowned,” in which it admitted to the changes in the world capitalist system. It says, in part: “Predicting the consequences of an unfinished crisis is perilous. But it is already clear that, even in the absence of a calamity, the direction of globalization will change. For the past two decades, the growing integration of the world economy has coincided with the intellectual ascent of the Anglo-Saxon brand of free-market capitalism…. Global integration, in large part, has been about the triumph of markets over governments…. [T]he balance between state and market is changing in areas other than finance.” “Wall Street,” it writes elsewhere in the issue, “is at the centre of the mess, so America’s stature and intellectual authority has plunged… More than a new capitalism, the world needs a new multilateralism,” the report concludes. That same journal, in its Janu 2010 edition, explains its view: “The world is seeing the rise of a new economic hybrid—what might be termed ‘state capitalism.’” The most impressive example of this, according to the journal, is the Chinese model. Ian Bremmer addresses just that in his book “The End of the Free Market: Who Wins the War between States and Corporations?” And Stefan Halper even calls his work “Beijing Consensus: How China’s Authoritarian Model Will Dominate the Twenty-First Century.” Both authors note that many countries from Latin America to the Middle East are inclined to imitate China.

China, of course, is working out its own brand of development, calling it a “socialist harmonious society.” And that model is called on to combine civilized market relations with social justice based on state regulation.

In one of his most recent publications, “The Ideological Crisis of Western Capitalism,” Joseph Stiglitz writes of his hope that “the financial crisis would teach Americans (and others) a lesson about the need for greater equality, stronger regulation, and a better balance between the market and government. Alas, that has not been the case. On the contrary, a resurgence of right-wing economics, driven, as always, by ideology and special interests, once again threatens the global economy – or at least the economies of Europe and America, where these ideas continue to flourish.”

Europeans, first and foremost Scandinavians, have long practiced a model of the welfare state or of socially-oriented market economics, as in Germany. One can assume that the advocates of the Anglo-Saxon model (the U.S. and U.K.) prefer to limit themselves to a partial correction of the current system, while Europeans continue the search for a new paradigm.

Nonetheless, social protests in the U.S. (“Occupy Wall Street”), England and other European countries have put the issue of capitalism’s systemic crisis back on the agenda. “The Financial Times” published a series of articles in January 2012 under the common heading “Capitalism in crisis: The code that forms a bar to harmony.” The journal writes, “Greedy bankers, overpaid executives, anemic growth, stubbornly high unemployment – these are just a few of the things that have lately driven protesters on to the streets and caused the wider public in the developed world to become disgruntled about capitalism.”

In January 2012, “The Economist” returned to the theme of state capitalism as a promising model of evolution for developing countries, pointing to China’s experience—while cautioning the West against overvaluing governmental economic regulation.

It is impossible to say that Russia’s intellectual elite and leading politicians are up to the challenges of the postindustrial era and of the internal crisis resulting from the ultraliberal reformist ideology. The constitutional norm defining Russia as a social state is not concrete and remains just a good intention far from being expressed in practice, and authorities ignore the academic community’s ideas on the subject. Society lacks reference points for understanding developments and receives no answer to the most important questions: What kind of democracy will be implemented in our country? What kind of socio-economic structure will result from the reforms underway in our country? And what will it give the people? The lack of a clear perspective and confidence in the future cannot help but show up in the tempers of the citizenry and the business climate of our country. And if a world-recognized authority like Joseph Stiglitz is absorbed in meditations on a “Third Way between today’s global capitalism and yesterday’s discredited socialism,” then it should bother our country’s specialists even less to attend to analogous reflections. The lack of an adequate ideology and policy has become one of the main obstacles on the path to Russian revival.

More and more responsibilities for averting and surmounting failures of market mechanisms are being laid on governments all over the world these days. In Russia, the solution to a whole range of urgent problems requires the special involvement of the government. Among the most pressing of them: overcoming our dangerous inequality of wealth, ending ruinous inflation, halting widespread capital flight and brain drain, eliminating rampant crime and corruption and reducing joblessness. To that one should add the protection of citizens’ interests, rights and freedoms, guaranteeing the country’s security, of course, and maintaining civic peace and order. In that regard it is instructive to consider the finding of the IMF report “World Socio-Economic Outlook: Remodelling the World Development,” which states, “The main lesson of post-communist transformation certainly lies in the fact that state institutions are of crucial importance. A market not supported by a strong state leads to the replacement of an irresponsible state authority with unregulated private enrichment, causing, thus, economic and social decline.”

Unfortunately, beginning in the early 1990s, the architects of Russian reform pulled the government out of the economy and tolerated no dissent on the matter. As a result, the linchpin of transformation, the government mechanism of control and maintenance of order, has proved dysfunctional, incompetent, consumed by corruption and deprived of an “immune” system to cleanse it of defects and safeguard against gross errors. Restoring its health is an obvious necessity. More so since it has functioned as private business in Russia and for the most part has been compromised by an unquenchable thirst for profit, social irresponsibility, amorality and neglect of national interests and the rule of law, which frequently merges with criminal elements.

The psychological depression of a significant portion of the population, the visible absence of social justice, the lack of perspective for the future, increasingly frequent catastrophes and disasters, and growing international conflicts and terrorist acts – all of which are registered by sociological surveys – serve to neutralize the constructive energy of a people. Irritation, malice and destructive energy are accumulating in the populace. It concerns not only the indigent layers of society, but also even the middle class, entrepreneurs and those aspiring to engage in production. People expect from the authorities a self-critical acknowledgement of responsibility for mistakes made, an understanding of the urgency of the situation and the submission of proposed measures for consolidating society around its new missions and goals.