Category: Global economics

Reforming global finance: Don’t leave it to the economists!

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By Kamran Mofid

The chairman of Britain’s Financial Services Authority argues that in the decades before the collapse of Western financial markets in 2007, too many economists were practicing a wrong-headed kind of economics. Their obsession with designing intricate mathematical models pushed moral, ethical and practical considerations too far into the background. It is high time for that to change.

In a short article in “The Globalist” Lord Turner discusses some of these issues. Due to its significance to our understanding of what has gone wrong, I have reprinted it below for your keen interest.

Before you begin to read Lord Turner’s wise words, I want to share something coming from my heart with you. It saddens me that when about 15 years ago, I began to say very similar things to what Lord Turner is saying now, my so-called fellow academic colleagues accused me of having gone mad. They told me, if I carry on like this, talking about ethics, morality, philosophy, theology, spirituality, love, sympathy, empathy, trust, sustainability, love for Mother Earth and the common good, I better consider leaving the economics profession and perhaps become a priest or social worker, or joining the Salvation Army.Read More »

The politics of the economic crisis – class warfare

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By Johan Galtung

From Jondal, Norway

Writes Eduardo Porter on The New York Times:

“Perhaps the most surprising aspect of the Libor scandal is how familiar it seems. Sure, for some of the world’s leading banks to try to manipulate one of the most important interest rates in contemporary finance is clearly egregious. But is that worse than packaging billions of dollars worth of dubious mortgages into a bond and having it stamped with a Triple-A rating to sell to some dupe down the road while betting against it? Or how about forging documents on an industrial scale to foreclose fraudulently on countless homeowners?”

A useful summary of the situation as of today. But, a summary of what? What is this?

We have been through many answers starting with credit squeeze, then a real estate bubble that burst, toxic assets, credit swaps, hedge funds, derivatives – bets with the money of other people, yours and mine – all finance and banking. A psychologism was added at an early stage; greed. Read More »

A stronger ‘political Europe’ might save a stumbling ‘economic Europe’

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By Richard Falk

It was only a few years ago that Europe was being praised as the savior of world order, and heralded as the hope for the future of world order. Books with such titles as The European Superpower and Why Europe Will Run the 21st Century were widely read. They celebrated the realities of a European post-colonial recovery, even a new type of ascendancy, results that were welcomed by many who hoped for a more peaceful and equitable world.

I shared much of this enthusiasm, believing that the European Union was a bold and generally progressive experiment in regionalism that was better suited to our era of intensifying globalization than a state-centric world of sovereign territorial communities habituated to the dynamics of warfare. Read More »

UN Alliance of Civilizations, Istanbul Partners Forum

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By Richard Falk

The UN Alliance of Civilization (AOC) was initiated by Kofi Annan in 2005 while he was Secretary General of the UN with the joint sponsorship of Turkey and Spain, with its principal center of operations in Istanbul. It was formed under the dark skies that existed after the 9/11 attacks, and seeks to provide an alternative narrative to that of inter-civilizational war, that starkly negative scenario of Islam versus the West associated with the inflammatory views of Bernard Lewis and Samuel Huntington that continues to provide fuel for Islamophobia that burns ever more brightly in Europe and North America.

It was several years since I had heard as many references to Huntington’s ‘clash of civilizations’ thesis as I did during the discussions and presentations at the Istanbul Forum, which was opened by speeches made by Recep Tayyip Erdogan, the Prime Minister of Turkey, and Ban Ki Moon, the current UN Secretary General.

The primary rationale for the AOC is to provide a ‘platform’ for inter-civilizational dialogue that explores differences among civilizations, but seeks to promote mutual undertstanding and respect, even affection and celebration. Read More »

A law of the sea?

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By Jonathan Power

Last week as we watched Mitt Romney win the right to challenge Barack Obama in November’s general election the last thing that most people were thinking about were sea and oceans. Yet the last Republican president, George W. Bush, at this point in the electoral cycle announced that, if elected, he would move to ratify the UN’s Law of the Sea. He never did. But also last week Secretary of State Hillary Clinton flanked by the senior brass from the military announced that this Administration was immediately going to push Congress to vote for the long delayed ratification of the treaty.

All the road blocks of the last thirty years since President Reagan decided to torpedo the treaty have been removed and Congress is poised to give the White House the green light on ratification. Read More »

Neither capitalism nor socialism: Eclecticism & Peace Economics!

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By Johan Galtung

Thinking aloud: we need all good ideas to combat our double economic crisis: the increasing misery crisis at the bottom, now also in rich countries in the West, and the increasing system crisis, also striking those countries; but both are all over.

So the following are notes for an epilogue to a forthcoming book, Peace Economics, about how to overcome the flagrant structural violence in the misery crisis, and the threat of direct violence, not only terrorism and state terrorism, but a major world war to get the West out of the system – like the Second World War lifted them out of the Great Depression.Read More »

Rational conflict resolution: What stands in the way?*

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By Johan Galtung

We are facing six conflicts, four current, one past and one future are shaping our present reality. Conflict is a relation of incompatibility between parties; not an attribute of one party. It spells danger of violence and opportunity to create new realities.

Thus, to understand the shoa the narratives of unspeakable German atrocity and infinite Jewish suffering are indispensable. But so are the narratives of German-Jewish relations, Germans to others, Jews to others. Failure to do so blocks rationality: if conflict is in the relation, then the solution is in a new relation. This is not blaming the victim. What matters most is changing the relation. Are we able?Read More »

Third World poverty is falling fast

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By Jonathan Power

We all know the clichés: Is the glass half full or half empty? Is the light in the tunnel the train coming towards you? But this time the new World Bank figures for the decrease in Third World poverty are absolutely clear. The glass is filling up. The train is not going to crash into us. The doomsayers from Malthus in 1798 to Ehrlich’s “The Population Bomb” to the Club of Rome to some of the activists at World Trade meetings and to the UN’s Food and Agriculture Organisation which in a quite recent mistake it now admits to, reported that the number of hungry people soared from 875 million in 2005 to one billion in 2009, have been proved to be wrong.Read More »

The politics and benefits of equality

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By Johan Galtung

US politics has for a long time, since the 1970s, been the politics of inequality. Not only have the indicators of inequality, like the ratio in average income between the top and the bottom 20%, or the salary ratio between a CEO and the average employee in a corporation, increased (from 50 to 1100). But the top 10 or 1 or 0.1 percent, has acquired wealth so far unheard of. And the bottom 90, or 99 or 99.1 percent see the average family income in real terms decreasing; for the lowest down below the poverty line, way down into misery like worrying about where the next meal comes from (from the soup kitchen for very many).Read More »

Choosing a president for the World Bank: West centrism prevails over global democracy

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By Richard Falk

This post is a revised version of a text that appeared a few days ago in Al Jazeera English, and seeks to use the selection of an American as the new President of the World Bank both to expose the fraudulent claim of a merit-based selection process and to insist indirectly that the future peace and justice of the world requires a more democratic and legitimate structure of global governance that reflects the post-colonial rise of the non-West, a rise that is not reflected in antiquated structures that persist despite changed conditions.

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The unsurprising announcement that the Board of the World Bank had voted in favor of the American candidate, Jim Yong Kim, presents an opportune moment to reflect upon the soft power structures that shape global public policy in the early 21st Century inside the UN system and beyond.

It is necessary to draw a distinction between Mr. Kim’s substantive qualifications and the procedure by which he was selected. Substantively, although lacking in either financial or diplomatic experience, Dr. Kim is in certain respects an interesting choice because of his lifelong dedication to improving the health of the very poor in the global South, as well as his training in medicine and PhD in anthropology.

He has had extensive relevant experience on the ground, and in working with NGOs (he co-founded the widely admired Partners in Health) and in institutional settings (for some years he directed the HIV/AIDs program for the World Health Organization) and has been president of Dartmouth University for the past three years, although stirring controversy during his brief period of administrative tenure. It may be still wondered whether Dr. Kim understands sufficiently the economic dimensions of World Bank policy to enjoy the respect of the professional staff, and might have been more appropriately chosen to head an enhanced program of the Bank devoted to health and poverty.

Overall, still, the substantive case for the appointment is relatively strong, although the two opposing candidates, both former finance ministers of developing countries, certainly had equally impressive substantive résumés and ethical profiles, and were plausible choices for this position.

The procedural criticisms of the appointment process are far more serious…Read More »