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THE NEW ECONOMY: Human Capitalism?

THE NEW ECONOMY: Human Capitalism?. Klas Eklund IUCISD, Istanbul June 22, 2001. WHAT IS THE NEW ECONOMY?. New technology and globalisation Sounder macro policies Economies work better, old relations are stretched - but “old” theories can still be used

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THE NEW ECONOMY: Human Capitalism?

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  1. THE NEW ECONOMY:Human Capitalism? Klas Eklund IUCISD, Istanbul June 22, 2001

  2. WHAT IS THE NEW ECONOMY? • New technology and globalisation • Sounder macro policies • Economies work better, old relations are stretched - • but “old” theories can still be used • The new economy is not only IT, certainly not dot.coms • Even though stock market bubble burst the underlying changes remain

  3. IT - AN INDUSTRIAL REVOLUTION • The third, after steam and electrical/ internal combustion engines • Great effects when the new technology conquers more sectors. Decades before fully ripened • No idea of future effects or where they will come • The IT sector in a narrow sense is not very important

  4. GLOBALISATION • Trade expansion, tariff reduction, direct investments • Free capital flows, international capital market • New technology changes trade-off between quality and quantity Result: Stiffer competition, faster productivity growth, larger markets, higher speed, cultural integration - and less room for national economic policy

  5. “THE GOLDEN STRAITJACKET” • Low inflation policy, more independent central banks • Stricter fiscal policies: Rules and targets • Deregulation • International co-operation and rules • Straighten up and join the club - or pay a price to stay outside!

  6. STRUCTURES CONVERGE • Collapse of the planned economies • Problems of the “Scandinavian model” • Problems of the “Asian model” • Successes of the “Anglo-Saxon model” • Mobile tax bases imply pressure of convergence of taxes - capital, labour, consumption • One major currency in Europe. Long-term trend toward fewer currencies?

  7. MACRO EFFECTS • Higher growth... • New technique, developmental blocks, clusters of innovations • Investment and capital rationalisation • Higher productivity - at last • …without high inflation • Transparency & stiffer competition • Empowered consumers • Lower transaction & distribution costs • Difficult question: What is permanent and what is transitory?

  8. THERE WILL BE PAIN • Gains: Productivity, growth, benefits to consumers • But: Old structures threatened • Creative destruction • Regional, sector-wise and individual effects • New gulfs and inequalities - which old-fashioned redistribution policies cannot handle • Unemployment effects depend on flexibility of labour market • Bubbles and crashes will follow • Risk of political backlash?

  9. UNDEMOCRATIC? • Globalisation opens closed societies, unseats dictators! • Helps women’s liberation • More narrow room for stabilisation policy • Restrictions are not new • But they work faster now • Globalisation does not prohibit national politicians from making decisions • but costs become more visible • the political tool-box becomes less efficient • The alternative? That politicians have the right/power to set all prices and rates? • What is the market: An external force - or all of us?

  10. “HUMAN CAPITALISM”? • New economy threatens old structures • Human capital rules • The new economy is meritocratic • Anti-racist, anti-clerical, anti-chauvinist! • Human capital rules first through competence • then through ownership • Old class structures and gulfs change character • Traditional labour/capital division still exists and spreads to new countries • but becomes less important in the ”core” countries and in leading industries

  11. NEW POLITICS • Communication is swifter • Easier to find each other • Lower costs • Politics changes shape • Flatter organisations also in politics? • Speed! • Virtual and global debates • Electronic polling - and voting? • Traditional media loses some power • Public sector efficiency enhanced • Better information • Lower costs

  12. PROBLEMS • The digital divide • But must new media be available to all before anybody is allowed to use them? • Don’t let the god become enemy of the best • A new class society? “Netocracy”? • Subgroups instead of open discussion? • Too rapid communication - no room for thought? • A high frequency reality cannot only have a low frequency political system

  13. CHALLENGES • Old parties, structures and activities are threatened • they must renew policies and methods • But this is not a threat to democracy - rather a chance to develop democracy! • The real problems • Medialisation • Stale parties and meetings • Unattractive to young people can partly be addressed by IT

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