Is the current global financial crisis simply an economic problem? Who knows? I can't possibly know but that doesn't stop me having an opinion.
I suggest that this is not an economic problem but a philosophic problem. Underlying western cultures is a philosophy that is underpinned by trying to harness the power of collective wisdom- democracy. In reality these democracies have evolved from monarchical systems and the legacy of this past, effects the present. We do not live in true democracies but in pseudo-democracies or elected aristocracies. These systems are still evolving from monarchic to democratic. If you like the job is not done yet, this is a work in progress.
Economic systems are characterised by cycles- growth and decline (boom and bust). In addition to short term cycles there are also medium term and long term cycles. My suspicion is that this current bust is part of a medium term cycle. A cycle that started after the second world war and was characterised by the empowerment of the masses in terms of wealth and social mobility. Part of this empowerment has been the lifting of state discipline (on individuals and corporations) and the freeing of individuals to make their own decisions on moral issues and life choices. Well most people have used this power quite effectively to varying degrees.
An expression of the success of this social experiment has been how effectively these societies perform from an economic perspective. This is a tangible perspective and is a lot easier to track than say something more ambiguous like 'well being'.
Well, in my opinion we are now quite frankly buggered. The experiment is leading to some very worrying effects including what looks like some degree of system failure. I suspect that judging the success of the human experience on economic growth markers is philosophical flawed. It implies that growth is the main objective. However I don't believe that growth is central to sytems, I believe evolution is.
I think here lies the common flaw in thinking. Economic growth is part of a wider Social Evolution. It is a phase in a bigger process, not the big process itself.
I suspect that growth phase in the west is slowing down and approaching an end. One order is in collapse so that another one can grow- like a metamorphosis. The nature of things to come will be the re-distribution of resources, closing of in-equality, responsible care for the environment, a renaissance of morality, a renaissance of wider co-operation, a growth in social conditions and an improvement in the overall quality of the human experience. I think democracy is taking a leap forward. All the pieces have evolved rapidly since the 2nd world war- popular culture (including popular leaders- celebrity),the Internet, intricatecommunication networks, pressure groups, talking shops, an open media, independent universities, a fragmented establishment, free markets, personal independence etc etc. Now it is time for those pieces to move into position. The end result- Another step closer to an Open Society, an Intelligent Democracy.
Of course, in reality no one person knows what the hell is happening or what is going to happen- that is the whole point of collective wisdom. So if this is not what is going on there are several other options, 1) This is just a blip and soon things will carry on as they were- unfair, destructive to our environment and in decline, 2) This is the end of human evolution and we are heading towards our annihilation or 3) I don't think there are other options- either we turn this round or we are going down.
Here is a suggestion. We all know that we live in a global economy, a global village. However there is no global government. In fact, what is emerging from this current economic crisis is the exposure of how the global economy is actually structured. We are learning where vital resources are when they start collapsing e.g Iceland.
This global economy has evolved from competition but the nature of competition is that it can gives rise to co-operation as this often proves more efficient than conflict. So far, this fledgling global market place has been rather aggressive but we are now seeing the inherent side effects of conflict or in this case economic warfare. If elements of a global economy are in conflict than the result will be an unstable system. Eventually this will lead to system failure- or systemic failure.
What I am suggesting is that what we are experiencing now is global systemic failure. It is the result of many decades of economic conflict. To resolve the problems generated from this will take a developing of co-operation ideas. In order for this to succeed, there must be some form of global economic management team. It could be the beginnings of a global government. This government will need to regulate the economy in such a way that it is constructive in order to reverse the destructive cycle that it appears to be in at the moment.
In short what I am saying that the solution to this emerging problem, is multi-lateral management and the formulation of economic models which are constructive and sustainable. Features of this new approach could be the closing of inequality, greater regulation, a wider democratic decision making system, the regulation of greed, improved education, increase opportunity and the responsible management of natural resources and the environment.
That all sounds like political sound bites and bullshit. However to make this real will involve (among many other characteristics) the lowering of house prices, the regulation of credit, the lowering of commodity and good prices, the capping of personal earnings of powerful earners, the increase in wages of everyone else, effective education (i.e. teaching people how the world really works), more effective police enforcement, greater control of benefit fraud and a government system which incorporates current pressure groups as part of government itself e.g. the RSPB, Liberty, Greenpeace etc etc
However such a transition is unlikely to be without problems. The road to this transition, which when contemplated has to be inevitable because things have to be sustainable, may be very bumpy. At some points it could actually get dangerous.
I read something that made me laugh yesterday. It was this talk about the Irish guaranteeing all deposits in Irish banks. Well, so much money is pouring into Irish banks- from overseas savers looking for a 'life boat', that if the process continues all the money in the world could end of in Ireland and therefore there would be no way that the Irish could possibly guarantee it. It becomes self defeating and then the Irish banks collapse because they cant deal with all the administration and the system breaks down. Ha ha. This gets better every day. It appears there is no escape. Problem with that is it will take me down too. It is like being a Noah who dies in the flood. Ha ha.
2nd page of the Independent today had a half page photo of London in the midst of a nuclear explosion. Other attempts this week by the media to retain a calm and rational response to this crisis included headlines such as, 'Blackest Monday' by the Sun and 'We are all going to Die' by the Sport and 'Britain's Babes have the biggest Boobs' by the Star. So basically good to see the country's media acting to discourage panic and confusion.:-)