Prophetic words on today’s economic and political trends

599px-The_Blue_MarbleThese words were written twenty years ago by distinguished Cambridge economist, the late Ajit Singh, and are somewhat prophetic on the evolution of the world economy and the causes of today’s political trends.

He compares the situation in the 1990s with the ‘Golden Age’ of capitalism during the 1950s and 60s, which saw rapid growth, low unemployment, and rising wages for the majority in many countries. He puts this down to broadly Keynesian interventionism by the state in cooperation with employers and trade unions. This was more effective in some countries than others. Nevertheless, he predicts that unless such conditions are restored, and the benefits of globalization are spread more widely through deliberate policy, the liberal international order will lose its legitimacy and prove unsustainable. I could argue with some of this, as I am not a fully convinced Keynesian, but the broad theme is telling. And so it goes…  

“…it is not that liberalization and globalization promote economic growth, but that rather faster growth of production and employment are essential for sustaining the new liberal economic order…the development debate is far from over and that there still exist alternative strategies for developing countries to follow…it will be suggested that liberalization and globalization have made the task of achieving fast long-term economic growth in developing as well as advanced countries more, rather than less difficult…

There exists today a palpable euphoria in international economic circles and among multilateral institutions concerning the benefits of liberalization and globalization…[this] is unwarranted by the evidence, and at a policy level it is dangerously misleading…

It is argued here that this poor performance…is directly linked to the intrinsic features of the new market-supremacist liberal economic order…the paradox is that faster growth may not follow from liberalization and globalization but it is nevertheless required to sustain the liberal economic order…

…the consolidation and survival of the liberal international economic order depends on whether or not nations and peoples are willing to take the ‘high road’ and bring about the institutional changes which are necessary for its achievement. The analysis…indicates that the freedom of the unruly financial markets will need to be curbed in order to sustain the liberal trading order.”

Ajit Singh (1997), ‘Liberalization and Globalization: An Unhealthy Euphoria’, in Michie, J. and Grieve-Smith, J.(eds), Employment and Economic Performance

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