Global Neo-Keynesianism

This is kind of a long read but I thought it was interesting.

Quote :

Toward a New Exterior Logic: Global Neo-Keynesianism (An Integral Political Economy)
If we take the principles of Integral Politics seriously, we must strive to preserve and promote the deepest development for the greatest number of beings. In practice, this means that we need to find ways to balance economic and political development through a globalized polity, so that future economic processes do not lead to even greater economic polarization. Historically, this particular imbalance is nothing new, as economic integration has frequently advanced more rapidly than political integration. In the following I roughly outline a progression of economy polity relations that provides an idea as to what the next stage of our politico-economic organization might be.

With the emergence of capitalism and the explanation of its functioning that Adam Smith first provided, one can say that there was a phase in which the economy was primarily national andthe polity was not supposed to intervene much in the economy. The polity was thus practically non-existent as far as the economy was concerned (except to enforce contracts perhaps). Thiswas the phase of classical liberalism, of the basically unregulated national economy, whichbegan in Western Europe around 1800 and lasted until the 1930s (most economies were, of course, only an approximation of this description—in reality all economies were mixed, with the balance tending to favor the market). This phase ended as a result of its own instability, as exemplified by the Great Depression. The next phase was classical Keynesianism, which, in accordance with the principles outlined by Maynard Keynes, gave a significant role to the national polity in guiding the national economy (along with some limited international controls, which made national controls possible). This phase lasted until the early 1970s, which is when Keynesianism collapsed due to its inability to manage the contradictions between the demands of the business sector and the general population. The practical result was the increasing indebtedness of the Western welfare states (and also eventually a debt crisis for the Third World). The increase in world trade began to create increasing pressure to bring about a new system of politico-economic management, as companies chose the most favorable locations for investment, whether those were within or outside of the polity which regulated them. Thus, the late 1970s thus represent the beginning of a global regime of economic neo-liberalism that was accompanied by the persistence of national politics and the ideology of neo-liberalism, as represented by Margaret Thatcher and Ronald Reagan. This is basically the phase and type of globalization we are still experiencing.

The next phase will in all likelihood be a catching-up of the polity to the same global level at which the economy is already operating. In other words, because international neo-liberalism is unsustainable, due to the increasing polarization and environmental destruction it produces, we can expect to see a new phase in the near future, that of global neo-Keynesianism, when the polity becomes global too and can re-)regulate the global economy. An example of this process is the European Union, which is currently introducing a stronger regional (Europe-wide) polity, precisely so that it can better deal with its region-wide economic, social, and ecological problems.

Many prominent economists have already floated proposals for creating a global neo-Keynesian political economy, such as former World Bank chief economist Joseph Stiglitz, Harvard development economist Jeffrey Sachs, economic Nobel laureate James Tobin, and global financier George Soros. Their proposals range from introducing a global tax on currency speculation (the Tobin Tax) to the creation of a global central bank to international capital controls. The primary objective of these proposals is generally to dismantle the current regime of “beggar thy neighbor” in which countries compete to offer the best investment opportunities for free-floating capital by dismantling all national restrictions or controls on investment (ranging, from environmental to labor to human rights regulations). Most importantly, global neo-Keynesian controls can also contribute to a reversal of global economic polarization.

We should be under no illusions, however, that global neo-Keynesianism is an end-point in our politico-economic development. It too will sooner or later suffer from similar internal contradictions that national Keynesianism suffered, and we, as a global society, will then have to look for a new systemic logic. However, until then, global neo-Keynesianism is the most likely alternative.

http://holons-news.com/free/Integral_Politics_AQAL_Vol1_No2_Wilpert.pdf