oobiout of the box insight

Insight

: Personal Action Test Bed

Premise: a convergence of crises

A convergence of civilizational crises has placed all nations and peoples in palpable and immediate jeopardy of security and sustainability. Many have observed that humankind is now in its 11

hour. Only a few of the crises within this convergence:a.

Limitations of global energy resources which not only limit socio-economic sustainability, but also increasetensions within and between states. b.

Degradation of the earth’s ecosystems to the point that recovery may be at risk.c.

Food and water shortages have already ignited civil unrest and cross-border tensions throughout variousregions. OECD markets are not immune to these shortages.d.

Since the end of the Cold War, the hybrid of Keynesian and Friedman economic models which most OECDstates employ in varying degrees can no longer maintain aggregate demand. This is primarily due to overallgovernment and military-industrial employment spending reductions. Consequently, because consumermarkets are erratic and vulnerable to energy limitations, etc., neither the corporate sector nor the consumersector possess the capacity to intentionally maintain aggregate demand. Without aggregate demand beingmaintained, socio-economic destabilization results.e.

Naturally globalizing markets often meet resistance from artificial borders. This consistently reinforcesdependency upon national economies which do not respond efficiently to global energy limitations,environmental and other social concerns, as well as fundamental market inefficiencies.f.

Growing liquidity imbalances between rich and poor exacerbated by supply imbalances of daily necessitiessuch as food, water, and energy not only limit socio-economic sustainability, but also increase tensions within and between states.g.

Nation-state failures are continuing to threaten fundamental world order systems. It has become clear thatconventional hard and soft power tools are no longer effective in maintaining nation-state viability throughout a substantial portion of the world. It is also clear that some form of ‘economic critical mass’ is aprerequisite of nation-state stability and sustainability (rather than conventional views that politicalauthority and democracy are prerequisites).h.

As a consequence of nation-state failures, global gray market activity continues to grow to nearly 40% of global GDP. Gray markets exacerbate all above tensions and severely cripple any attempt to reform marketand governance systems.2.

Because the convergence of multiple crises places all civilization into palpable and immediate jeopardy,conventional methods of political action have yet to be effective in impacting the radical changes necessary toresolve the above crises. If the 11

hour is indeed upon us all, then a radical and rapid response (a globalMarshall Plan) is now required. This insight paper outlines the reasoning of such a radical and rapid response.Due to the complex and convergent nature of the challenges, this paper addresses changes to fundamentaleconomic and governance systems.

Insight: Personal Action Test Bed

oobiout of the box insight

Objective: radical yet rational transformation

The above crises, when viewed in their convergent state, reveal common linkages to fundamental civilizationalsystems that appear no longer effective in maintaining world order. In particular, institutionalized market economicsand social governance systems appear to not have evolved in parallel to the changing nature of human society as a whole. Further, conventional forms of social activism and political policy appear, at best, to have only a limitedimpact upon individual segments of crises—and cannot be expected to bring about the coordinated changesnecessary. As uncomfortable, even naïve, as it may seem, global economic theories as well as social governancesystems will require radical—yet rational and actionable—transformation.1.

Keynesian-Friedman models of economic systems are rapidly becoming incapable of sustainability andrequire new alternatives. Further, as technology and markets evolve, labor as an imperative commodity willcontinue to diminish and be replaced by innovation, creating near labor-less economies (these evolutionsare already increasing tensions within and between states). Based on a lifetime of original research and anine-year on-the-ground case study of the economic development outcomes of nation-building projects,

anew global economic model based on the precepts of a ‘self-restraining capitalism’

theory

is hereinpresented.2.

Geopolitical objectives of balancing power between states now appear incapable of facilitating globaleconomic interdependency, thus maintaining world order, and require new alternatives. Further,representative democratic systems now appear incapable of effectively managing complex social andeconomic relationships on a ‘local-to-global’ scale. However, even with the meteoric rise of individualismand self-organizing collaborative communities empowered by second-generation Internet technologies,much of global societies lack the training for an effective utilization of self-governance and direct democraticapplications to take root. A

global personal response network

objective is herein presented.3.

global Marshall Plan type outline

is herein presented to rapidly implement the global economicinterdependency model and global personal responsibility network on a

test bed

basis.

Converging shifts in economics & sovereignty

A world order based on the politics of geography has for three and a half centuries provided dominion andsovereignty to be held exclusively by nation-states and the rulers of those states. But nation-state sovereignty is now being challenged by the convergence of various factors which impact a viral and tangible socio-economicdestabilization on a global scale:

•

The end of the Cold War diminished the rationale and sustainability of military-industrial based andgovernment stimulus reliant economies, and re-exposed what J.M. Keynes had first observed post World War I: the long-term weakness of capitalism was that consumer-driven economies were vulnerable tounstable consumer demands. In parallel, Keynes observed that post war economic reconstruction was not amatter of poverty reduction, but rather of job creation. Consequently, Keynes argued the role of government was to maintain long-term aggregate demand and jump-start the creation of new jobs. Sincethe 1960s, even though Friedman introduced ‘free market’ and monetarism applications, and Mundell-Laffer introduced supply-side economics, a substantial majority of the U.S. and OECD Cold War eraeconomies and employment strategies remained stabilized by the key ingredients of maintaining aggregatedemand: military-industrial economic growth and various government stimulus programs. The maxim of the West during the Cold War:

“War is good for the economy”

. The reductions of military budgets resultingfrom the end of the Cold War, however, diminished the ability of the military-industrial based economies toeffectively maintain aggregate demand. Without aggregate demand being intentionally maintained, anumber of destabilizing social, economic, and political influences were exposed—some intentionally, someunintentionally, and some even unconsciously. Obviously, the aspect of aggregate demand is only a singleexample of the larger weaknesses of capitalism as observed by Keynes. His other views of the challenges

Insight: Personal Action Test Bed

oobiout of the box insight

between production, money, and labor as well as liquidity leakages, etc., are vital to understanding the shiftsnow occurring in global economic markets and are addressed later in this paper.

•

What have conventionally been viewed as geopolitical ‘power states’ (generally, OECD states), these powerstates previously influenced and maintained the larger elements of international relations and world orderthrough a subtle mix of hard and soft power tools—soft power tools primarily being the economicinfluences of multilateral IFIs and specific nation-building exercises. However, as a consequence of the postCold War cessation of the maintenance of aggregate demand and the further decentralizing aspects of themodern rise of the SME role in economic markets, multilateral IFIs and nation-building have proven largely ineffective as soft power tools. In short, without effective soft power tools to work in concert with hardpower tools, OECD states will experience increasing difficulty in maintaining world order. Two practicalexamples of this soft power inefficiency: (a) recent market expansion activity by the Chinese and Russianshave often resulted in cross-border investments and lending programs that purposefully circumvent theBretton Woods institutions (and their various governance policies); and (b) the Bretton Woods institutionspossess little to no involvement in the global mass movement of capital relating to private philanthropy and workers’ remittances. According to the

Index of Global Philanthropy 2008

Private giving and investment now accounts for over 75 percent of donor countries’ entire economicdealings with developing nations;-

Official Development Assistance (ODA) is a minority shareholder in the growth and development of poor countries;-

In the U.S., private philanthropy, along with remittances, to developing nations constitutes four andone-half times official aid abroad.

•

As a consequence of the growing ineffectiveness (and privatization) of soft power tools originally designedto assist in the maintaining of world order, an ever growing list of nation-states are vulnerable tofundamental economic failure, rampant corruption, and adverse influences from external states. Of particular concern, in socio-economically weak states, gray market economies have virtually replacedlegitimate markets. These economically weak states are not only threats to their own internal security, they are direct threats to regional and even global security. In modern, post Cold War terms, it could be arguedthat international relations and world order are no longer objectives which can be facilitated or coerced by power states. Rather, it can be ultimately observed that civilizations arise and decay as a direct consequenceof their essential economic—not political—relevance to the larger world.

•

If government or military-industry sectors no longer maintain aggregate demand—then, who or what is toundertake the responsibility of maintaining aggregate demand so as to provide some form of stable footingfor socio-economic sustainability?

•

In recent years, major transnational corporations grow increasingly dependent upon average consumers todefine what specifically to innovate and produce—yet these consumers’ demands are often unpredictableand erratic, whereas military-industrial budgets were generally long-term and stabilizing. A recent exampleof this re-exposed weakness to consumer-driven capitalism is visibly witnessed in the now-occurring shiftfrom large and SUV vehicle sales to smaller energy-efficient vehicle sales throughout North America—andthis abrupt shifting reverberates throughout the entire automotive manufacturing industry, causing plantclosures and employee reductions.

•

As sudden shifts in general consumer demands consistently occur, these shifts also impact and are impacted by natural resource demands and environmental security pressures. With the parallel expansion of environmental awareness, corporate social responsibilit y obligations, and corporate stock ownership by average citizens, it is becoming increasingly difficult to define how ethical decisions are debated andimplemented. Friedman famously remarked that corporations were ‘artificial citizens’. In a modernconsumer-driven economy, where the laborer-consumer is also often a shareholder, it could be argued thatcorporations are increasingly becoming ‘tangible and ethical extensions of citizens’.