Towards an Understanding of the Contemporary State ofGlobal Economic and Social Policy- Preview

Global Economic and Social Policy GLOBAL GOVERNANCE SERIES

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Gold Mercury’s Global Governance Series is designed to offer an informative and invaluable insight into how our world works. The series is structured according to Gold Mercury’s Global Governance Model™ which identifies eight Global Governance challenge areas and a number of corresponding subareas. In each area we address where major policy discussion emanates from, who the key actors are, what developments and challenges we can expect the future to present and which actors are making a considerable contribution to finding global solutions to global challenges.

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  GOLD MERCURY INTERNATIONAL  Eight Global Governance Areas: Global Economic and Social Policy

Political philosophy has long exhibited a prominent influence on the governing economic structures and social paradigms of society; a relationship that has been a key driver of global change and development over the course of modern history.

Towards an Understanding of Contemporary Global Economic and Social Policy

From the 19th century monarchies of Europe to experiments with state socialism and the present financial crisis of capitalism, the governing state political consensus is a strong determinate of the philosophical values and economic structures that as a society we adopt. Within the United Kingdom two governing paradigms have dictated economic and social policy since 1945. State-sponsored Keynesianism extended from 1945 through the oil shocks of 1973 to its death in 1979. Since then neo-liberalism has predominated over a market society in which privatisation and individual autonomy have been the order of the day. Around the globe more embedded versions of capitalism have also taken root on the path to today’s hedge funds and derivatives. These have included close alliances with the state and massive government investment as demonstrated in Silicon Valley, where investment has largely gained momentum from venture capitalism and other sources of private equity capital, as well as highly socialised markets such as >

GOLD MERCURY INTERNATIONAL Eight Global Governance Areas: Global Economic and Social Policy

Switzerland in the 20th century. Strange hybrids of mercantilist communist capitalism have developed in China, alongside the tycoon-led models of Southeast Asia (Mulgan 2009: 34). Therefore whilst the past decade has witnessed global markets pulling China and India into their orbits, with multinational corporations in turn often commanding greater empires than nation states themselves, ultimately the lesson of capitalism The present financial crisis being today is perhaps that nothing is cast in stone. experienced marks yet another departure; The present financial crisis being experienced this time from the notion of the market marks yet another departure; this time from the notion of the market state that has been the dominant political state that has been the dominant political consensus of the past 30 years. A consensus of the past 30 years. A generation ago American social scientist Daniel Bell astutely outlined generation ago American social scientist the ‘cultural contradictions of capitalism’, arguing Daniel Bell astutely outlined the ‘cultural that capitalism would undermine the very legacy on contradictions of capitalism’, arguing which it rests – the eagerness to work hard, delay gratification and pass on legacies to future generations. that capitalism would undermine Similar arguments today present demography as the the very legacy on which it rests. growing threat to capitalism. The lavish consumption patterns of many modern societies have undermined the traditional incentives for people to have children, as evidenced by sharply falling birth rates across Europe and America. With an ever-ageing citizenry increasingly demanding more services from a shrinking pool of younger workers such demographic imbalances will soon threaten the generational contract on which any society depends.

The financial deficits being run by governments around the globe in tandem with collapsing savings rates are testament to the symptoms of a capitalism that has in many respects lost the ability to protect its own future (Mulgan 2009: 35). Individuals, business and financial institutions are now battling against deflationary >

  GOLD MERCURY INTERNATIONAL  Eight Global Governance Areas: Global Economic and Social Policy

Systems of financial regulation will have to guarantee greater transparency whilst accommodating new principal stakeholders from emerging countries such as India and Brazil, and new systems of collective welfare and civic engagement will be needed to address   the anomie and vulnerability of a faltering familial sphere.

pressures which have prompted consumers to stop spending and caused unemployment figures to soar.

If capitalism is once again to rediscover the moral drivers that are essential to vibrant and efficient markets, institutional innovation will have to check the whims of global capital in line with the growing pressures of demography, ecology and globalisation.

Systems of financial regulation will have to guarantee greater transparency whilst accommodating new principal stakeholders from emerging countries such as India and Brazil, and new systems of collective welfare and civic engagement will be needed to address the anomie and vulnerability of a faltering familial sphere.

Crises inevitably carry with them the possibility of change and the present financial recession is also an opportunity to re-imagine the very legacy of capitalism. This global briefing shall seek to identify the accommodations and revisions needed to ensure successful economic and social policy in the new century, in addition to the mechanisms of governance through which reform will be channelled.