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Table of contents

A. Introduction: The sources and the forms of globalization

B. Great Surges in economic development:
Recurrence and uniqueness

C. The ruthless role of the great financial bubbles

D. Recession, Turning Point and institutional recomposition

E. Post -neo-liberal globalization:
Some thoughts for conceiving a North-South positive-sum game

 

 

Summary

The financial frenzy of the 1990s represents a recurrent phenomenon that has taken place with each technological revolution, about two decades after its irruption. The 'exuberant 1990s' during the present Age of Information and Telecommunications are, in that sense, equivalent to the 'roaring twenties' for the Age of Oil, Automobiles and Mass Production. These are in turn equivalent to the episodes of 'canal mania' in the 1790s, half way through the 'First Industrial Revolution', and 'railway mania' in the 1840s, during the Age of Steam and Railways. The Asian crisis in 1997, amidst the present process of globalization, is very similar in nature to the 'Baring crisis' collapse in Argentina in 1890, which took place in the first surge of economic globalization with the Age of Steel and Heavy Engineering. This relative regularity in the phases of diffusion, marking the otherwise unique processes of propagation and social assimilation of each technological revolution, can help understand the underlying structural tensions that led to the collapse of the NASDAQ bubble. They can also shed light on the causes of the ensuing recession, which has plunged the world in uncertainty and given vent to the desperation of the excluded, through different forms of violence and migratory pressures.
Historically, the first two or three decades of diffusion of each technological revolution have widened the gap between the new and the old, the strong and the weak, the rich and the poor, the center and the periphery. That first Installation Period of each techno-economic paradigm is led by finance capital, in alliance with the new technological entrepreneurs, whose industries gradually become the new engines of growth, in an intense process of Schumpeterian 'creative destruction'. The period ends with the collapse of the financial bubble and a stubborn recession marked by the premature saturation of the markets of the emerging industries. This is the Turning Point, during which policies to regulate finance, promote production, improve income distribution and expand markets need to be established. The socio-political and economic decisions taken at this time shape the nature of the following Deployment Period of that techno-economic paradigm and the manner in which society will take advantage of and distribute the potential benefits of that technological revolution.
That is the moment faced by the world today. The most recent historical parallel for the present period is the 1930s. Unleashing a period of synergy like the post-war 'golden age' of the 1950s, characterized by the spread of the Welfare State, or like the Victorian boom in the 1850s in England, will require a significant redesign of the institutions of financial regulation, at both the global and the national level. It will also require policies capable of shifting the emphasis from 'making money' in finance to generating real wealth in production and thereby expanding demand.
Given that the information revolution emphasizes intangible value and is based on the use of the 'invisible' Internet as the main infrastructure for transferring such value, the space within which the economic game is played and regulated will necessarily be global. Consequently, effective growth in production and expansion of demand will also need to be global and to involve the relaunching of world development. On both sides of the widened North-South divide, the traditional notions of national space need serious rethinking. This implies not only recognizing the impotence of the old State-managed and subsidized economy, behind tariff barriers, but -and perhaps more importantly, at this stage- abandoning the notion that globalization must be neo-liberal. The task of reconceptualizing globalization, away from the simple free movement of finance and trade and towards a production-centered, pro-growth and pro-development process, is on the agenda for all economic, social and political agents. Such a globalization process could be a successful positive-sum strategy for those who want the world to move in a progressive direction in the decades to come, as well as for those searching effective ways to overcome the recessive trends in the advanced countries.