A new world order

The real question to ask about the global financial crisis is not only of “ its effect affect the poor, but whether large economies could realize that the philosophy of laizzez-faire is no longer relevant, and that the market should be controlled more.” No doubt, this crisis is very serious and will persist for the next couple of years. As a result of laizzez-faire, the inequality among countries has increased . Some economists are already entertaining the idea that the economies should be guided and not be left with its own devices as previously believed. The laizzez-fare doctrine, meaning “to leave alone” in French, is a policy from the belief that an economy functions most efficiently without any interference from government. My thoughts cannot resist to contemplate the significance of this event to established economic models and theories applied at large. My thoughts are heavy, but I am afraid we are entering into a new era, a period where new ideas to run the world’s economy would challenge the old thoughts that could lead to a “new world order.” I am not an Illuminati believer, an ancient clandestine brotherhood of scientists who believed that the new world order founded on pure science would soon dominate the earth, replacing mythical beliefs of many religions. What I am saying is, that the global financial crisis has proved that the capitalist thought of free market is simply not true. The crisis has challenged the fundamental principle that guided the current world economic system succinctly described by the capitalist advocate Adam Smith that “government is bad and market is good.” It challenged leading theories of development about how countries should develop such as of Walter Rostow whose stages of development ends with the “age of high mass consumption” and that “mobilization of savings and investments” are necessity for development. The current global financial crisis effectively upturned those models. The savings and investments by many countries that they thought could accelerate their economies are now considered “toxic assets.” It melted like ice and what are left are almost worthless investment papers to remind them of how much have they lost. Moreover, beneficiaries of these supposed rich economies are now consuming less – as shown by the decline of oil demand despite near to the ground price. Exporting countries are already starting to feel the pinch of lower demand of products. Affected companies are putting their faith to the most unlikely source, the government. They need bail-out, and bail-out means that “the government should intervene,” buy their useless and toxic assets. They need the government’s money, and let the taxpayers swallow those “poisons!” It is like asking the people swallow the poison or the whole economy would collapse. It means, that they are pleading for governments to buy significant shares of their businesses. A far-fetched idea before now becoming valid – that governments soon will be present in boardrooms of most companies that dominate the world’s economy, the market.

Before this crisis could end, my thoughts would resist other possibilities except that governments would indubitably lay a strong hand on their economies to the extent of setting mechanisms that would effectively control the market. Easy access to cheap financial capital would soon become history. Call for more control would be the heaviest pressure to political leaderships whose people are to eager to see blood of those “guilty” of this financial mess. There will be a race among nations to establish safety nets that could seal the market instead of opening up. This is not all about pessimism, but this is about facts, this is about countries trying to preserve themselves from the laizzez-faire principles adopted in the marketplace. This is about a new way how nations would deal with each other soon, a “new world order.” For comments, email to: roldanalex@yahoo.com

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