March 9, 2009
Back in October 2008 I wrote a brief article about “global society in limbo” referring to what a lot see as the severest “economic crisis” of our time*. In it I suggested that confidence in the economic system can only be reestablished if a holistic assessment of the problem is shown, the real economic and social consequences are stated but related to the solid wealth foundations that already exist expressed in non-monetary terms and the opportunities offered to move to more viable arrangements in the functioning of the economy. Public consent to this assessment is the most important negotiating tool in the hands of the authorities attempting to tame a financial sector gone wild. Timid attempts were made in this area but I believe not enough.
From causes of the crisis a few were indicated but one is of particular importance. It might be purposeful to question: With all these gigantic losses of wealth to the taxpayer, investors, banks and other financial institutions employees, who are the ones that benefit? We are talking about a significant pool of wealth and its frightening negotiating power on future arrangements of the financial and perhaps other sectors or even political processes. Assuming there have been intentional distortions of the system that have caused the crisis, people behind this will fight to preserve their gains.
Well, a few months down the road, deeper in the crisis and the majority of the media are still refusing to focus on what is becoming clearer. There is indeed a real and not imaginary powerful minority that has benefited and is negotiating hard to maintain its gains. It is hidden deep underneath the so called “private investor” that is described in a fashion that confuses the small and well meant investor with this specific minority. The latter emanates decisive influence and is holding the key of confidence building in the economy as it is bargaining hard with leading governments, particularly in the US. Its position is still very strong judging from the trend in the concessions given to them with taxpayer’s wealth in various countries. When they decide to come back in the financial markets and invest the miracle of recovery will occur and I guess very fast.
This situation carries potentially sinister implications thus the title of my comments “Pan Metron”. A few thousand years ago a Greek philosopher studying the behavior of systems understood that their best chances for survival depended on their ability to function in moderation. He realized that all its elements had to maximize their benefits to a limit that does not endanger the viability of the system. Introduce change without causing a collapse of the structure because if that happens the survival of these elements that caused the collapse is not guaranteed either. Since then we have seen so many occasions in history where violation of such a concept in democratic social systems has led to their collapse followed by brutal social organization models, usually short-lived but very destructive. Some historian- economists call them instruments of wealth destruction to allow a new cycle of capitalist growth. We need go no further than the periods leading to the two recent world wars to see it.
We are in such a period again and I thought all parties involved in the process of averting collapse should tune on the real threats. Many renowned economists have passed the threshold of their science, talk of these threats to society and call for drastic measures that will temporarily dent liberal economic principles. All of these threats are grave. The face of unemployment, foreclosure, lack of health care and many others is real and not economic statistics. In a context of these realities an individual manipulated by politicians, indoctrinated by the media and subservient to the rules of the capitalist model for a lifetime might overnight become a very different animal for the survival of his family.
Governments should stop looking at the public as manipulating mass. Crucially, knowledge density is changing very rapidly in society, particularly the young. Their understanding and desire for direct political participation became very evident in recent US elections. Consequently governments should be more attune to expectations of the public as the economic crisis deepens and react quickly in meeting such expectations. Otherwise other forces would take this role putting democracy at risk.
Civil society, with its immeasurable influence on the public, needs to raise its knowledge on the complexities of social functioning. They must proceed with care in campaigns for action thus avoiding risks of structural collapse.
Professionals in the financial sector must go beyond mea culpa. They must come out in public and present clear ideas of progress for the sector that will restore its traditional functioning and mitigate public suspicion on their role to this point.
More importantly, the minority of large investors at the centre of this turmoil need to realize the risks they are taking for themselves when they over-bargain acting as individuals and as a group. On the outset as long as a variation of capitalism operates in society it will be important to recognize this group and its positive role as a result of human nature and social behavior. Stretching their demands beyond the limits of structural collapse of our social order however is putting them at a much greater risk than they imagine. They can only thrive in a context of a developed democratic society. In any other model they should stop nursing hopes of survival in liberty. They should look at 20th century history in Europe for this.
K. P. Vlahodimos
*See article in www.optir.net
Author : optir