Volume 44, Number 173,
April-June 2013
The Importance of Suitable Ideas
on Development and Globalization
Aldo Ferrer
Scope of the Crises

In the 1930s, the governments of the largest economies adhered to a policy of “every country for itself.” They abandoned the gold pattern and the multilateral commerce and payment regime, closed their markets and ceased payments or restructured their debts. Simultaneously, the orthodox paradigm was replaced by proposals from Keynes and the responsibility of public policy was to manage markets and sustain production and employment

. Currently, though, the world order has not collapsed, nor will it do so, presumably, despite the size and duration of the imbalances in economic and social deterioration. This is due to three main reasons. First, because in advanced economies of the North Atlantic, even given the hegemony of the neoliberal regime, the State maintains high participation in the formation of aggregate demand and is willing to rescue those financial entities that are “too big to fail.” This is a paradox by which neoliberalism survives precisely due to the role of its public enemy number one: the State.

The second reason is the extent of interdependence among the largest economies in the world, including large emerging nations in Asia, which was not the case in 1930. Today, a policy of “every country for itself” would be inconceivable. All of the major players in the global order want to prevent its collapse.

The third is the distribution of power. In the 1930s, the old industrial economies of the North Atlantic represented two-thirds of the global economy and were the organizing center of the system. Currently, China and other emerging Asian nations and countries from the rest of the world have gained relative weight in the global system. They represent nearly 50% of global GDP, and have the highest growth and rate of change. Consequently, the problems of the old center do not control the overall system, and their inability to organize the global order is being replaced by the relative autonomy of the national States of emerging economies.

In summary, the current crisis has a safety net, due to the presence of the State, interdependence and the distribution of power, which is preventing the collapse and total disruption of the system and contributes to the survival of neoliberalism and the neoliberal State in the North Atlantic and in peripheral countries in the rest of the world.

Multinational Interests

Globalization is currently much deeper than in the 1930s. In the old industrial economies, foreign commerce, financial activities and foreign investment from their largest corporations have a much higher relative weight than in the past. The accumulation process and distribution of wealth and income are closely linked to multinational chains of value and financial speculation. This process is taking place in a framework of revolution for information technology and communication, which make up a system with a global reach. In this context, multinational interests have gained decisive influence within societies and the policies set by the old industrial economies, sustaining the neoliberal paradigm and configuring the neoliberal State.

Consequently, in the realm of ideas, the fundamentalist vision of globalization prevails, saying that the most important events occur in the multinational sphere and that the nation-states have seen their powers to manage markets highly limited. As such, because only supranational global measures can be effective, such as actions by the G-20, and there is no global governance, it could be said that decisive power rests in the markets.

From the end of the 1970s, deregulation and limited public policies, meant to transmit a “friendly message” to the private sector, have delegated management of the system to the markets. When the crisis broke out at the end of the decade, the State embarked on a massive effort to rescue the financial system. Currently, the response to the consequences of the crisis is adjustment and austerity. This is how a neoliberal State behaves.

The overall circumstances described – the differing scopes of the crises in the 1930s and today and the greater relative influence of multinational interests in the modern economy – explain the extraordinary survival of neoliberalism.

In this framework, our countries must consolidate their national densities and places in the world, depending on our own resources with competitiveness and solid macroeconomic balances, approaching the world from our own perspectives and interests. In developing countries like ours, these are necessary conditions to prevent the contagion of neoliberalism and the neoliberal State, exercise the right to development and decide our own destinies in the context of globalization.

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Published in Mexico, 2012-2018 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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