MUST CAPITALISM BE RESTRUCTURE ?

Published on January 26, 2009

The Atlantic-Ural College

It seems to me that there are two pitfalls which should be avoided in this reasoning:

• the first being the belief that we will emerge from this crisis in one or two years as it is only a cyclical period of adjustment;
• the second being the idea of a “reformed economy,” which would give us the possibility to radically change the economy and carry on to a new, radiant tomorrow.

The first point of view is no longer widely spread, I’m afraid that the second, on the other hand, is in full bloom. It would be seriously dangerous to tell the many victims of this crisis that all of their problems can be solved by quickly applying radical new rules in hopes of achieving a new, more “humane,” economy.

If we are truly interested in finding a solution, we must direct our attention to the definition of capitalism itself. We should be told less about the end of this system and more about its reformation. Since the 1980’s, finance has taken the reins of the economy and virtualized operations (i.e. derivative markets). The true economy though is not virtual, it is real, and it is the value of labor. I produce and I sell a good that exists: this is the moral sense of capitalism.

It is not the vocation of the financier to run the system on his own, it is on the activities of entrepreneurs that everything depends. Banks should return to their founding objectives: to serve industry! That is the only reform we can expect from our economy. One cannot expect capitalism to erase social inequality or reform the health system, that is not its role and never will be. That duty belongs to the state and to politicians.

This does not mean that we should not think about adaptations that could be made to the system, to future stakes, and to the modern world. I believe that there is a necessity for the return of the state/or states as regulators under certain circumstances that remain to be defined. May be the establishment of “New Ideals” in Europe, as in the United States could be an answer. What is sure, is the absolute necessity, current and future, to manage the consequences of the crisis. In effect, the failure of reflationary policies will serve as arguments to policies that promote rapid solutions which are always disastrous. From protectionism to nationalism they will drive us towards a result which we must now avoid. For example, if Europe fails in its reflationary policies, as Europe can only face this challenge as a whole as no state can do it alone for lack of means, we can only imagine the kind of arguments that would be provided for promoters of certain radical ideas. The result could be the end of the European Union. On the other hand, this may be a chance for the European Union, if it succeeds in protecting our societies through its decisions, to rise as a new important actor, primarily for its citizens but also for the rest of the world. The sum of the tools needed to face future issues and problems could only be put together by nations and/or groups of nations. May be through this unexpected consequence of the crisis we will see the emergence of a true international community.

After the necessary return of the state and politicians in the economy, we must now analyze what the structural possibilities are for our economies to better understand the changes. These begin with the requirement to increase investments in the research sector to benefit researchers. Primarily, a company needs a product to sell which is the result of a process of research and development. There can be no innovative, solid, and lucrative companies without high quality research. Tomorrows products are in our laboratories (which is favorable) or in the laboratories of our competitors (which is less favorable). There lie our future profits and thus our future employment. That is what will also oblige us to invest in new technology. The transformation of the automobile industry, which will undergo a crisis similar to that of the steel industry in the 70’s and 80’s, will only advance through the application of the following: clean cars, with lower consumption rates and /or built entirely from recycled materials, as well as being crammed with innovative navigation technology.

Efforts in the renewable energy domain also create wealth and employment. The use of new forms of energy (solar, biomass, geothermic…) in real-estate development, require new types of industry and thus provide employment. Environmental issues are already forcing us to change our lifestyles which will require us to create companies in the near future to satisfy the demand for new materials, new energies, and for new forms of consumption.

Another issue must be considered so as to adapt ourselves to the new situation: the role of new actors as possible sources of ideas, complimentary to the functions of the state. Through instruments such as the internet, which has indeed lead to the globalization of information, democracy as we know it is in metamorphosis. Citizens or groups of citizens, through associations as well as NGO’s and foundations, must and will participate in the resolution of this crisis, especially when it enters its social phase. To our societies, this may prove to be a formidable democratic renewal and the debates that will follow will bring about change in the way states themselves govern. Here, with the sum of these new actors and with the state, there will be a great debate of ideas where the appropriate place of morality and ethics in the economy and in capitalism will be able to be approached.

This crisis can be an opportunity for Europe. In effect, if this occurs, through a visible cohesion of its member states, Europe will find the echo of its citizens more than favorable. The EU will begin a new chapter in its history where, united and interdependent, strengthened by a large democratic area with a renewed economy, it will be able to face future challenges and crises and in a multi-polar world, make its voice and propositions heard.

Olivier VEDRINE