Promises are the uniquely human way of ordering the future, making it predictable and reliable to the extent that this is humanly possible. Hanna Arendt
A trend of high expansion of financial assets, while economic growth remains limited and sporadic, has given way in the new millennium to widespread unemployment, income gaps and less welfare. The same policies that have obliterated social services and kept labour cheap have favoured global enterprises and financial deepening. Besides, the onset of the new millennium represents a new age of democracy where democracy allows for election to office but not to power. These questions reflect issues of current power, politics and economics.
Indeed, the current sovereign debt challenges have left newly elected leaders at the mercy of foreign creditors and capital flows. The introduction and the maintenance of the neo-liberal transformation of creditor nations by means of “good governance” have reflected a deep concern over getting ‘institutions’ right. Therefore, economic reforms and austerity programs means embracing an agenda that accepts that the economy must be guided by the private sector, even at the expense of the material well-being of the majority of citizens. It also involves reconfiguring politics to better facilitate these changes.
From an economics point of view, these trends suggest new questions because of their implications on market competition and financial instability. The global network of interactions between power-holders requires a new systemic approach to the problem of financial instability in contemporary capitalism since companies have potentially wide and indirect influence – for example through control or counter-party risk – on the evolution of the levels of investment, production and employment at the local levels. Indeed, the density of the interconnections between the financial and non-financial companies in the context of the control’s network backbone exposes the global economy to systemic risks. As the interest of private companies does not generally coincide with the interests of society as a whole, these risks need to be dealt with new anti-trust practices and new rules on cross-ownerships among corporations.
No more than ever, people in Europe, Asia, Africa, besides Americans of the North and South are sharing either prosperity or destitution. The pressures and perceptions of these troubled times do not only affect policy makers, but also govern academic discourse. The realities of globalization show that there is a new rationale for spreading not only economic (fiscal) discipline but also repressive political disciplining. In fact, new rationales, including the war on drugs and the war on terrorism have been already on the drawing board.
To the students in economics it would be useful to explore a pluralist intellectual path since the understanding of the current social and economic relations is not a simple one. In this attempt, they should be aware that the findings and answers depend not only on the questions asked, but also on the facts in dispute, the interests confronted and the promises broken.