Progressive policies after the financial crisis

Olaf Cramme and Elena Jurado

It is difficult to assess at this juncture the consequences of the current global financial crisis, both in relation to our economies, and in consideration of broader political dynamics. However, there are three phenomena in this regard. First, the crisis demonstrates the stark reality of global interdependence in the XXI century. The idea that economic growth particularly in emerging markets - has been "decoupled" from the American economy has proved wrong. The reality is that no country was immune from the crisis as global financial system and so inadequately regulated.

Secondly, the crisis has highlighted the frailty of the globalization process. The growing credit crunch has precipitated a dramatic decline in international trade, with important effects on the economy of the major exporting countries, mainly China, Germany and Japan. With the desire to avoid overly risky operations to emerging markets, banks are limited today to invest in their own economies. The industry bailout policies of European and North-American threatening the progress made during the last decades in the liberalization of international trade. In fact, is already talking about the beginning of a process of de-globalization.

Third, neo-liberal faith in "laissez-faire" principle and guide the organization of markets has been severely shaken. The crisis has revealed the limitations of market liberalization. Markets by themselves can not ensure the public interest. In a similar way to the radical ideology of the late 70s, we are currently witnessing the demolition of the political foundations of neoliberalism and the end of its intellectual hegemony in the West.

These phenomena have important implications for the progressive political project. First of all force governments and politicians to rebuild a progressive international economic and financial order in a time when the political trend is to look inward and find national solutions alone.

It is noteworthy that both countries developed and developing face this same challenge. Globalization must remain the fundamental framework for progressive politics otherwise we might see threatened progress to date, including the creation of unprecedented wealth indices, which have enabled millions of people around the world to overcome poverty. At the same time and faced with a decline of faith in the unregulated market, progressives have to fill the ideological vacuum with urgency, because if not there is a risk of being made by populist politicians.

But different societies interpret "the end of neo-liberal hegemony" differently, depending on the ideas and experiences of pre-existing market that each one of them. This results in very different perspectives on the reforms necessary to do, including the feasibility and impact of incentive plans, benefits and limitations of increased international financial regulation, and policies designed to correct economic imbalances international.

In summary, the challenges that we face a great opportunity opened to the progressive ideas, but at the same time pose some risks. First, the strength of modern social policy has always been to recognize the new realities that emerge in society and simultaneously comply with them. Moreover, the "progressive moment" call for a thorough review of the center-left political views, in recognition not only of the urgency and gravity of the crisis, but also the complex relationship between the pursuit of social justice the need for economic dynamism and sustainable development in a global economy. If the center-left fails to present a credible alternative that is truly useful for most people, you run the risk of political irrelevance, while aggravating the current crisis.

The intellectual challenge we face therefore covers two dimensions: Internationally, the task will be to establish a system of cooperation, regulation and intervention more equitable and sustainable to meet the diverse needs of industrialized countries, those who are developing, and finally the least developed, and the development of a global society exposed to common risks. Domestically, the task is to rethink the modern role has to have the State in achieving a more stable economy that combines economic dynamism and growth with better distribution of wealth and opportunities. Addressing this challenge will require a critical discussion but with vision on the issues and options for the Network reforma.Policy Ideas Handbook.

Tags: Policy Network , Progressive Governance

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