Crises and Opportunities: A Manifesto for Change

3. Employment: An Urgent Priority
Nowhere is the need for new values and new theory more apparent than with regard to the growing problem of unemployment. Broadly defined, employment and jobs encompass all forms of meaningful, remunerative work – formal and informal, full and part-time, whether engaged by others or self-employed. Similarly, unemployment, underemployment and marginal subsistence activities encompass all forms in which precious and perishable human resources in both developing and economically advanced countries remain idle or underutilized for want of opportunities for gainful work. Human resources are a perishable commodity, which degenerate rapidly when left unutilized. Underutilization of human resources represents a huge social cost and poses a serious threat to peace and social stability, nationally and globally. It is only by addressing this issue promptly and effectively that we can hope to attract public attention to the serious environmental issues confronting humanity.

While the consequences of financial instability are more visibly reflected in the media and urgently debated by politicians, and while the consequences of climate change may be far more catastrophic to humanity and life on earth, rising levels of unemployment pose the greatest near term danger to the welfare of humanity and the stability of global society. According to ILO, more than 200 million people are unemployed globally, including 75 million youth. This figure grossly underestimates the real level of unemployment and underemployment which probably exceeds one billion or a third of the global workforce. Official figures for youth unemployment range between 20% and 30% in most OECD countries and are over 50% in Greece and Spain. These figures will continue to rise as deficit reduction strategies cause economic contraction in many countries. Over the next decade, the working-age population of G20 countries will increase by 440 million. In order to generate global full employment, the world would need to create 600 million new jobs within a decade.

Recent trends tell us this is improbable. A pessimistic mindset tells us it is impossible. Yet, the evidence of history contradicts these conclusions. We must reject the false notion that full employment is not feasible. The past sixty years have been the period of the most rapid population growth in world history. During this period 4.2 billion people were added to world population, a growth of 164%. Yet, during the same period total global employment increased by 175% and average levels of unemployment remained relatively constant. The gloom and doom are real to our minds, but they are not an inevitable reality. At present, there is no coherent theory of employment that adequately explains this remarkable achievement. Thus, new theory is essential.

A permanent solution to the global employment challenge demands a radical change in ideas and values. We must recognize that people — human capital — are the most precious of all resources which must be preserved and enhanced at all cost. People are not only the source of all the ideas, products, technologies and discoveries that have directed human development; they also constitute the ultimate purpose of that development. A human-centered theory of economics must place people first, while fully recognizing that humanity forms an integral part of the natural system.

Employment occupies a unique role in a market economic system. As the right to vote is the principal means by which people exercise their political rights in democracy, employment is the principal means by which people exercise economic rights in a democratic market economy. Employment is the economic equivalent of the right to vote. People can survive without voting, but not without a means for their sustenance. The right to employment must be constitutionally safeguarded. As Indian Prime Minister Indira Gandhi told during the first conference on Environment and Development in 1972, poverty is the worst form of pollution. And poverty is inextricably linked to the absence of remunerative employment opportunities. Moreover, employment is also essential for social stability. The unemployed are the main source of new recruits for social unrest, organized crime, fundamentalist groups and terrorism.

Recognizing the urgent need to address the global employment challenge, ample means are available to accelerate job growth once we are willing to challenge and reject outmoded assumptions and policies. Policies must be reversed which tax employment and subsidize unemployment needs, incentivize blind adoption of labor-saving technologies and energy-intensive processes, and subsidize fossil fuel and water extraction by wrong pricing. Banning speculation can redirect trillions of dollars into job-creating investments in the real economy. Raising the mandatory minimum level of education globally is a wise investment to upgrade the quality of human resources, while creating new jobs in education and reducing the flow of youth into the workforce. Revising the system of higher education to combine education and work over an extended period and drastically revising curriculum to enhance the quality and relevance of education are also essential measures. These and many other initiatives illustrate the fact that full employment is an achievable goal provided we are committed to achieving it.

4. Rights, Social Equity & Fairness
Economic progress for all was a basic tenet of the post-war decades. But over the past quarter century, we find an increasing proportion of income and wealth being concentrated among a smaller and smaller proportion of the population. The top 20% of the world’s population possessed 33 times more income than the poorest 20% in 1970, 45 times more in 1980, and 74 times more in 1997. The financial assets held by the top 0.1% of humanity are equivalent to the entire world’s GDP. The level of inequality is rising in two out of every three countries. This trend is clearly unsustainable and contrary to all rational conceptions of justice and social equity. Where is the rationality or even the efficiency in such a grotesquely lopsided arrangement? What sort of a society are we heading for?

At the same time, rising social aspirations fueled by education and the media are increasing the demands and raising the frustration level of those who are left out, creating a structural weakness in the very foundations of social stability. Changes in average income levels tell us little. The tail ends tell the story. A $1000 increment in income for the wealthy becomes a further stimulus to speculation, while a similar increment for the poor translates into real economic growth and job growth. As a difference in voltage propels the flow of electrons through a wire, differences in level of achievement can serve as a positive impetus to social development; but beyond an optimal level, the widening gap between rich and poor becomes a growing source of alienation, social unrest, fundamentalism and violence, acting like a short circuit that sparks a conflagration. The insatiable quest for unlimited acquisition and ludicrous indulgence in extravagant consumption cannot be allowed to endanger the future generations of humanity and the well-being of our planet. We must learn how to balance the constructive role of inequality as a motive power for progress with the growing demand of the aspiring masses for a fair share in the benefits of technological development and in the use of the global commons.

Those who clamor that higher taxes for the rich rob the competent of the just rewards for their superior capacity and hard work overlook the completely arbitrary norms by which society presently allocates the profits of enterprise. No achievement stands on its own strength. Every further advance in technology and enterprise is based on a foundation of past discoveries, inventions and innovations built up over decades or centuries. This cumulative knowledge rightly belongs to all humanity, like the global commons on which we all live. It is right that the distribution of rewards is proportionate to the real relative contribution. Our values must evolve to keep pace with the enormous power unleashed by humanity’s cumulative achievements. Greater power for accomplishment brings with it greater responsibility to disseminate the fruits of that power wisely and fairly.

5. Institutions
We need also to examine the s­ocial institutions by which ideas and values are translated into actions for human accomplishment. Institutions are the means by which society organizes itself. Institutions are the channels by which human energies are directed by ideas and values to achieve goals. Institutions include not only the formal and visible organizations we utilize for defense, education, production, social welfare and enjoyment. They also encompass a wide array of intangible and invisible arrangements – customs, laws, rules, systems and habitual ways of life – that determine how activities are carried out, coordinated and integrated with one another. Society may best be conceived as a richly woven fabric of interrelationships linking people, places, activities, organizations, sectors and nations with one another in space and time. Over millennia, this fabric has evolved very gradually, one thread at a time, layer upon layer, physically, socially, mentally and culturally. Taken in totality, they represent the collective know-how of society, the technology of social organization. The history of technology reveals a virtually unlimited progression of discoveries and developments, each becoming the foundation and bedrock for constructing higher level capabilities. So too, the technology of social organization has the potential for unlimited innovation and development.

Central among these institutions are property and property rights which date back to Roman times and have failed to keep pace with the radical evolution in social values, technology and resource consumption over the past half century. New concepts and forms of ownership are needed that protect communal and global ownership of resources, spatially and over time, while simultaneously ensuring that returns are shared in an efficient and fair manner reflecting the nature of ownership.

Society is an integrated organization of human activities, which does not respect the arbitrary divisions and boundary lines imposed by our minds or theories. Finance and employment are subsets of economics; economics is a subset of society, and society exists and thrives in harmonious relationship with nature. The efficacy of any social organization depends on its capacity to release and channel human energy for productive purposes. That is only possible when sufficient freedom and opportunity are provided to all members of society to help them develop and express their innate potential within a structured framework that harmonizes private self-interest with public good. Freedom for initiative and regulation to ensure cooperation and fairness go hand in hand. A century ago, capitalism acquired a social conscience to meet the perceived threat of socialism and arrived at a balance between public and private good that resulted in unprecedented prosperity in OECD countries. The collapse of communism symbolized by the fall of the Berlin Wall in 1989 coincided with a resurgence of neo-liberal conceptions that have become a root cause of the current crises. New theory must restore the balance that optimizes the welfare and economic security of all, while giving scope for the creative contributions of each. There is a need to develop a whole range of hybrid goods which, like insurance, serve simultaneously the interests of both the private citizen and society-at-large.

If economics is off-mark, then the institutions it has spawned, supported and protected must also be placed under scrutiny. We have already noted that the divorce between finance and economy is a notable characteristic of the current crisis, one which has severely eroded public trust in our economic institutions. Urgent efforts are needed to reverse the trust deficit arising from the functioning of markets, particularly in the financial sector. The philosophy enshrined in the Washington consensus has promoted unfettered and unregulated markets, at a time when the public good component of economic activities has never been larger or more obvious. Our inquiry needs to examine the options for new institutions and new rules that can better reflect the public good nature of economics, as well as provide the longer term protection of those assets humanity will need to rely upon for generations to come.

6. Governance
New institutions will, in turn, require more enlightened and effective forms of governance, new rules to play by and public policy systems that are far more credible than they are today. At the national level, we cannot build a stable foundation for the future based on nominally democratic institutions that serve the vested special interests of the elite. That is plutocracy, not democracy. At the international level, the failure of the United Nations system to deliver in many areas exposes the inherent insufficiency of a nation-centric system dominated by a few privileged, powerful nations in the name of democracy, at the expense of other nations and the global community. These failures compel us to think through new paradigms, new alliances and new modes of securing the legitimate rights of nations, individuals and collective humanity.

The issue of democratic governance is complicated by several factors. First is the ideological confusion between freedom and the unfettered pursuit of self-interest, which regards all forms of regulation as an infringement on democratic rights. In both politics and economy, freedom can only exist when safeguards are in place to protect the whole society against the misuse of power, all forms of power – monetary and social power as much as political and military power, the power of the majority as well as that of an elite minority. Second is the tendency of parliamentary democracies to address the narrow, short-term, self-interested concerns of voters at the expense of wider, longer term issues. Democracies will have to find ways to more fairly represent the interests of future generations. Third is the challenge of instituting a democratic system of global governance, when nations that most loudly proclaim their commitment to democracy at the national level have serious misgivings about extending the same principles to the global level, as illustrated by the resistance of the five permanent members of the UN Security Council to democratize the UN’s most powerful organ. Fourth is the recognition that national governments represent only one of the groups of actors that make up the global community. Even in so-called democracies, national governments are often more representative of money power than the real interests of their own citizens. Therefore, the evolution of global governance will need to find ways to represent the interests of other important constituencies. These challenges can and must be overcome in order to fully address the common problems facing humanity.

The process of globalization has reached a critical juncture. All of the crises referred to in this paper are essentially global in nature and cannot be effectively addressed by each nation in isolation from the rest. This is obviously true of the financial and ecological crises, but it is also true of the crisis in employment which is increasingly subject to factors beyond control by national governments. Today’s multidimensional crisis is a result of the fact that global society has expanded far more rapidly than the institutions required to govern it. Today’s financial and economic crisis is not a repeat of the national level crisis of the 1930s, but rather a playing out of a similar scenario at the global level.

Yet, we still cling to outmoded concepts and models which are increasingly irrelevant, such as a narrow interpretation of sovereignty founded on the right of nation-states to self-determination, disregarding the equally legitimate rights of lateral communities made possible by technological advances and of the global human community that is so rapidly coalescing. A strictly state-centric system of governance is no longer viable in a world with so many legitimate voices and cross-currents of relationship. These changes necessitate evolution of new systems for global governance and new principles of global public policy.

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