Rethinking the Global Economy
As the 21st Century unfolds, humanity is faced with a stark reality. Following the world stock market crash in 2008, people everywhere are questioning the unbridled greed, selfishness and competition that has driven the dominant economic model for decades. The old obsession with protecting national interests, the drive to maximise profits at all costs, and the materialistic pursuit of economic growth has failed to benefit the world’s poor and led to catastrophic consequences for planet earth.
The incidence of hunger is more widespread than ever before in human history, surpassing 1 billion people in 2009 despite the record harvests of food being reaped in recent years. At least 1.4 billion people live in extreme poverty, a number equivalent to more than four times the population of the United States. One out of every five people does not have access to clean drinking water. More than a billion people lack access to basic health care services, while over a billion people – the majority of them women – lack a basic education. Every week, more than 115,000 people move into a slum somewhere in Africa, Asia or Latin America. Every day, around 50,000 people die needlessly as a result of being denied the essentials of life.
In the face of these immense challenges, international aid has proven largely ineffective, inadequate, and incapable of enabling governments to secure the basic needs of all citizens. Developed countries were cutting back on foreign aid commitments even before the economic downturn, while the agreed aid target of 0.7 percent of rich countries’ GDP has never been met since it was first conceived 40 years ago. The Millennium Development Goals of merely halving the incidence of hunger and extreme poverty, even if reached by 2015, will still leave hundreds of millions of people in a state of undernourishment and deprivation. When several trillion dollars was rapidly summoned to bail out failed banks in late 2008, it became impossible to understand why the governments of rich nations could not afford a fraction of this sum to ‘bail out’ the world’s poor.
The enduring gap between rich and poor, both within and between countries, is a crisis that lies at the heart of our political and economic problems. For decades, 20 percent of the world population have controlled 80 percent of the economy and resources. By 2008, more than half of the world’s assets were owned by the richest 2 percent of adults, while the bottom half of the world adult population owned only 1 percent of wealth. The vast discrepancies in living standards between the Global North and South, which provides no basis for a stable and secure future, can only be redressed through a more equitable distribution of resources at the international level. This will require more inclusive structures of global governance and a new economic framework that goes far beyond existing development efforts to reduce poverty, decrease poor country debt and provide overseas aid.
In both the richest and poorest nations, commercialisation has infiltrated every aspect of life and compromised spiritual, ethical and moral values. The globalised consumer culture holds no higher aspiration than the accumulation of material wealth, even though studies have shown that rising income fails to significantly increase an individual’s well-being once a minimum standard of living is secured. The organisation of society as a competitive struggle for social position through wealth and acquisition has led to rampant individualism and the consequences of crime, disaffection and the disintegration of family and community ties. Yet governments continue to measure success in terms of economic growth, pursuing ever-greater levels of GDP – regardless of the harmful social consequences of a consumption-driven economy.
Although the crises we face are interlinked and multidimensional, the G20 and other rich nations offer no vision of change towards a more sustainable world. The old formula, based on deregulation, privatisation, and the liberalisation of trade and finance, was unmasked by the economic crisis and shown to be incapable of promoting lasting human development. Multilateral institutions like the World Bank and International Monetary Fund have failed the world’s poor, and the myth that economic growth will eventually benefit all has long been shattered. As we also know, endless growth is unsustainable on a planet with finite resources. This impasse is further compounded by ecological degradation and climate change – the side-effects of economic ‘progress’ that disproportionately affect the poorest people who are least to blame for causing these multiple crises.
Humanity’s ability to effectively address these interrelated crises requires governments to accept certain fundamental understandings that are instrumental to securing our common future. Firstly, that humankind is part of an extended family that shares the same basic needs and rights, and this must be adequately reflected in the structures and institutions of global governance. And secondly, that many basic assumptions about human nature that inform the thrust of economic decision making – particularly in industrialied nations – are long outdated and fundamentally flawed. The creation of an inclusive economic framework that reflects our global interdependence requires policymakers to move beyond the belief that human beings are competitive and individualistic, and to instead accept humanity’s innate propensity to cooperate and share. This more holistic understanding of our relationship to each other and the planet transcends nations and cultures, and builds on ethics and values common to faith groups around the world. It also reflects the strong sense of solidarity and internationalism which lies at the heart of the global justice movement.
The first true political expression of our global unity was embodied in the establishment of the United Nations in 1945. Since then, international laws have been devised to help govern relationships between nations and uphold human rights. Cross-border issues such as climate change, global poverty and conflict are uniting world public opinion and compelling governments to cooperate and plan for our collective future. The globalisation of knowledge and cultures, and the ease with which we can communicate and travel around the world, has further served to unite diverse people in distant countries.
But the fact of our global unity is still not sufficiently expressed in our political and economic structures. The international community has yet to ensure that basic human needs, such as access to staple food, clean water and primary healthcare, are universally secured. This cannot be achieved until nations cooperate more effectively, share their natural and economic resources, and ensure that global governance mechanisms reflect and directly support our common needs and rights. At present, the main institutions that govern the global economy are failing to work on behalf of humanity as a whole. In particular, the major bodies that uphold the Bretton Woods mandate (the World Bank, International Monetary Fund and World Trade Organisation) are all widely criticised for being undemocratic and furthering the interests of large corporations and rich countries.
A more inclusive international framework urgently needs to be established through the United Nations (UN) and its agencies. Although in need of being significantly strengthened and renewed, the UN is the only multilateral governmental agency with the necessary experience and resources to coordinate the process of restructuring the world economy. The UN Charter and Universal Declaration of Human Rights have been adopted by all member states and embody some of the highest ideals expressed by humanity. If the UN is rendered more democratic and entrusted with more authority, it would be in a position to foster the growing sense of community between nations and harmonise global economic relationships.
Establishing more inclusive structures of global governance will only remedy one aspect of a complex system. Another key transformation that must take place is in our understanding and practice of ‘economics’ so that government policies can become closely aligned with urgent humanitarian and ecological needs.
The economic principles that have fashioned the world’s existing global governance framework – particularly in relation to international trade and finance – can be traced back to the moral philosophy of Enlightenment thinkers during the emergence of industrial society in Britain. Drawing on the ideas of these early theorists, mainstream economists have assumed that human beings are inherently selfish, competitive, acquisitive and individualistic. Such notions about human nature are now firmly established as the principles upon which modern economies are built, and have been used to justify the proliferation of free markets as the best way to organise societies.
Particularly since the 1980’s, these basic economic assumptions have increasingly dominated public policy and pushed aside ethical considerations in the pursuit of efficiency, short-term growth and profit maximisation. But the ‘neoliberal’ ideology that institutionalised greed and self-interest was fundamentally discredited by the collapse of banks and a world stock market crash in 2008. As a consequence, the global financial crisis reinvigorated a long-standing debate about the importance of morality and ethics in relation to the market economy.
At the same time, recent experiments by evolutionary biologists and neuro-cognitive scientists have demonstrated that human beings are biologically predisposed to cooperate and share. Without this evolutionary advantage, we may not have survived as a species. Anthropological findings have long supported this view of human nature with case studies revealing that sharing and gifting often formed the basis of economic life in traditional societies, leading individuals to prioritise their social relationships above all other concerns. As a whole, these findings challenge many of the core assumptions of classical economic theory – in particular the firmly held belief that people in any society will always act competitively to maximise their economic interests.
If humanity is to survive the formidable challenges that define our generation – including climate change, diminishing fossil fuels and global conflict – it is necessary to forge new ethical understandings that embrace our collective values and global interdependence. We urgently need a new paradigm for human advancement, beginning with a fundamental reordering of world priorities: an immediate end to hunger, the securing of universal basic needs, and a rapid safeguarding of the environment and atmosphere. No longer can national self-interest, international competition and excessive commercialisation form the foundation of our global economic framework.
The crucial first step towards creating an inclusive world system requires overhauling our outdated assumptions about human nature, reconnecting our public life with fundamental values, and rethinking the role of markets in achieving the common good. In line with what we now know about human behaviour and psychology, integrating the principle of sharing into our economic system would reflect our global unity and have far-reaching implications for how we distribute and consume the planet’s wealth and resources. Sharing the world’s resources more equitably can allow us to build a more sustainable, cooperative and inclusive global economy – one that reflects and supports what it really means to be human.
Rajesh Makwana is the director of Share The World’s Resources and can be contacted at rajesh(at)stwr.org.
Adam Parsons is the editor at Share The World’s Resources and can be contacted at adam(at)stwr.org.
This work is published under a Creative Commons License.