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ECONOMY OF TOMORROW. The Economy of Tomorrow . Why is a new development path necessary? New economic, ecological, social challenges The end of successful development models - PowerPoint PPT Presentation
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The Economy of Tomorrow
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, marc@fes-thailand.org
2
The Economy of Tomorrow
ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org
New Challenges
3
CHALLENGES: The Great Crisis of the West ECONOMY OF TOMORROW
Crisis of casino capitalism
Euro Crisis/ Sovereign debt cisis
Crisis of shareholder capitalism
Flawed neoclassical theory of efficient markets
Limits to extractive growth
Failure of neoliberalism
Metaphysical Black HoleContact: Marc Saxer, marc@fes-thailand.org
The crisis of the nation state
Crisis of representative democracy
Virtual growth and crises in the West (Example US)
ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org
4
Fed raises interest rates to squeeze out Inflation
Clinton cuts deficit spending
Fed buys foreign debt
ModerateInflation
State debt
Private debt
Mass unemployment
Runaway inflation
Public debt crisis
Lack of consumptiondemand
Over -leveraging
Subprime/financial crisis
1973 1981 2001 20081993
Nixon abandons Gold Standard/ End of Bretton Woods
Quantitative easing
The perpetual crises of virtual capitalism ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org
5
Problem
Quick fixInjection of virtual resources
Problem
GLOBAL CHALLENGE: Financial capitalism is unstable
NEO- LIBERAL
IDEOLOGY
(Financial)
Market
Liberalization
Downsizing
the State
Supply Side
Economics
Misallocation
of Capital
Weak Risk
Management
Wrong Incentive
Structures
Pro-Cyclical Policies
Income Inequality
CRISES
Export Driven
Demand Speculative
Bubbles
Excessive Leverage
Lack of Investment
in Productivity
and Innovation
Large Currency Reserves
Lack of Income-
Driven Consumption
Instability
Instability of
Financial Capitalism
Debt Driven
Consumption
LACK OF
AGGREGATE DEMAND
Cuts in
Public GoodsAusterity
ImbalancesPolicy
responses
Polic
y re
spon
ses
Market
ConcentrationRegulation
Blocked
All modern institutions– state, market and democracy– are based on the Enlightenment Ideal of Rational Man
ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org7
“Rationality allows progress to a better future”“The emergence of Man
from his self-imposed
chains”
Metaphysical Roots of modern Institutions are flawed
Good Governance
Efficient Markets State BureaucracyRational Being
Homo economicusautonomous decision-
maker
universally informed rational
choice
Representative Democracy
Planning, Future
scenarios Scientific Progress
maximises interest Well informed
voter
Incremental optimization
Common Good
Social contract
Technocracy
The situation in Asia is different, but challenges are converging
ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org8
WEST
ASIA
converging trajectories
9
Additional CHALLENGES for developing/ emerging economies
ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org
Industrialization
Post-Industrial Economy
Extractive Growth :- Exploitation of natural resources- Exploitation of labor (rural => urban productivity)
Moving up the value chain- high-tech industries- Services
Japan, Korea, Singapore, Korea, Hong Kong
India
Thailand Malaysia
Indonesia Vietnam BangladeshPakistan
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The East Asian development model of the past decades
Industrialization
Export Low Wage
ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org
The end of the East Asian development path
Industrialization
Export Low Wage
Third Industrial Revolution/New global division of labor
Finite Resources/ Energy security
Climate Change/ Natural Disasters
Influx of “hot money”/
Currency volatility
China’s Bubbles
Japanese Tsunami
Vulnerabilityto external
shocks
LoomingGlobal Recession= Lack of external
demandMiddle Income Trap
=Need to boost
productivity
Income Disparity
= Social Divideand Political
Conflict
AEC: Low Wage competition
Financial Crisis
ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org
Extractive growth: Infinitve growth in a finite world?
ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org12
ecological limitseconomic limits
politi
cal l
imits
social limits
fiscal
fiscal limits
13
The Economy of Tomorrow
ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org
Economic Solutions
14
The Economy of Tomorrow Development Model ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org
INCL
USI
VEN
ESS
Macro- Public Long-term RestructuringEconomic Goods Strategies Guidance
Balanced Stable Accounts Financial
Markets
Productivity Innovation
Dynamic Supply
Human Resource TechnologicalCapital Efficiency Innovation
Competitiveness
Inclusive IncomeInstitutions Equality
Consumer Government Investment NetSpending Spending Exports
Steady Demand
STABILITY
BALA
NCE
DYNAMISM
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The Economy of Tomorrow Growth Drivers
InclusivenessStability
and Balance
Innovation
ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org
What strategic aims for the state/ private sector?
Green Innovation
Resource efficiency
Productivity
Global trade balances
Stable financial markets
Fiscal sustainability
Use of all talent
Fair Income
Stable natural environment
ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org
Green Dynamic Growth
Sustainable Growth
Socially Just Growth
Stable social environment
Investment in Renewable Energies
17
The Economy of Tomorrow
ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org
Political Solutions
18
If we know what should be done…
… why is it then not being happening?
ECONOMY OF TOMORROW
„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, marc@fes-thailand.org
19
Status quo Coalition
Socially Just, Sustainable and Green Dynamic Development Model
Traditional Development model
Good Society
with
full capabilities for all
Exclusive Society with privileges for the elites
Progressive Change Coalition
Rainbow Coalition
Shifting the development path can only be the result of a political struggle
ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org
EoT Strategy: Compass, Coalition, Communication ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org 20
21
Economic problems are not primarily economic, but political problems
ECONOMY OF TOMORROW
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, marc@fes-thailand.org
Politics is less about solutions but about the definition of the problem
ECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org22
Facts
Financial Crisis Bank Bailouts Recession Collapsing Tax
Revenue
Sovereign Debt at the periphery exploded because of bailouts and devaluation at the center
Discourse 1
Discourse 2
Sovereign Debt exploded due to oversized social welfare costs and state mismanagement
Regulate (financial) markets
slash (welfare) state
Definition of the problem … determines the political outcome
Policy
STRATEGY: Channeling the political process
ECONOMY OF TOMORROW
Method:
Leveling the political playing field
by discourse steering
Method:
Development Model
gives orientation and
guidance
(compass )
Normative Vision:
Good Society with Full Capabilities for All
Method:
Building rainbow coalitionsto create political leverage
Contact: Marc Saxer, marc@fes-thailand.org 23
24
EoT serves as a compass and benchmarkECONOMY OF TOMORROW
Contact: Marc Saxer, marc@fes-thailand.org
GROWTH ENGINES
STRATEGIC AIMS
Socially
Just
Growth
Sustainable
Growth
Green
Dynamic
Growth
GOODSOCIETY
withFULL
CAPABILITIESFOR ALL
¨ Collective Bargaining¨ Minimum Wages/Wage Policy¨ Short Term Employment¨ Vocational Training¨ Lifelong Learning Programs¨ Decent Work
¨Fair Income For All(consumption demand)
¨ Include all Talent
(innovation & labor productivity)
¨ Financial Market Regulation
¨ International Monetary Regime
¨ Capital Controls¨ Administrative Capacity (Oversight and Control)
¨ Curbing of speculation
¨ Anti-cyclical macro-economic guidance
¨ Market introduction schemes
¨ Standard Setting
¨ Emission Trading
¨ R&D in (green) technologies
¨ Setting Incentives for
Productivity and Innovation
¨ Long-term investment & management strategies
¨ De-Coupling
¨ (Green) Innovation
¨ “Greening the Old Economy”
(resource efficiency)
GOVERNANCE TOOLS
To Achieve To Fire Up To drive GROWTH COMPASS
To Produce
NORMATIVE VISION
¨ Income Equality ¨ Inclusive Institutions ¨ Public Goods
(Education, Health, Social Security)
¨ Stable financial markets (capital productivity) ¨ Balanced Trade (balanced current accounts) ¨ Balanced Budgets (fiscal sustainability) ¨Stable natural and social
environment
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