Are We on the Brink of a Major Crisis?
The Butterfly Effect: A Term in Chaos Theory
The Butterfly Effect is a term used in Chaos Theory. It describes how small variations can influence vast and complex systems. Chaos Theory applies to processes in meteorology, mathematics, physics, quantum physics, and, according to some theorists, even economics. In theoretical terms, chaos does not mean disorder, as in colloquial language, but rather deviations from a precisely defined behavioral pattern due to negligible changes occurring at the beginning of a process. Is globalization pushing the world to the brink of chaos, where any change in any part of the world could affect our lives? Is the Butterfly Effect at work?
The coronavirus pandemic has once again proven that the world is a “global village.” Eight billion people move across the planet more dynamically than ever before. Processes occurring thousands of kilometers away can have consequences on our lives. How will we live in the future? What are the challenges, and what are the threats to humanity? Where is the solution? Some of today’s most prominent thinkers are trying to answer these questions
The Free Market: The Essence of Capitalism
Economically, today’s world is divided into countries with capitalist systems and those without. Some thinkers argue that a capitalist society is one of future prosperity, while others believe capitalism is on the verge of collapse. The future of capitalism, as a global economic system, is tied to the shape of our collective future. For capitalism, the market is the pivot around which the entire societal system revolves. But how can a market governed by the laws of supply and demand serve as a secure foundation for an entire social system? This question has been addressed by many thinkers throughout the history of economics, sociology, and philosophy.
Jeremy Bentham, a British philosopher and legal reformer, developed the moral and philosophical system of utilitarianism, based on the idea that human beings are rational, self-interested creatures striving for maximum benefit. These moral principles were adopted by the famous economist Adam Smith. Smith’s fundamental idea is that an individual acting in their rational self-interest within a free economy leads to the overall welfare of all. This idea forms the foundation of market economies, demonstrating how the seemingly chaotic market system has internal logic and adheres to the so-called “invisible hand of the market.”
For someone to earn money in their self-interest, they must, due to competition, offer others something they value as an appropriate exchange for their labor, thereby unintentionally and unwillingly promoting their interests. “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest,” writes Adam Smith in The Wealth of Nations. Following these ideas, Bentham and Smith promoted the free market and laissez-faire economy, functioning solely under market laws. In the context of their time (the 18th century), these were revolutionary ideas. Opposing the free market at the time was a system of privileges and monopolies, which only granted advantages to select market participants close to the monarchy. However, Smith did not foresee all the flaws of capitalism: industrial production, large-scale exploitation, economic crises, and world war
Interventionism: A Product of Crisis
After these events, another great economist attempted to redefine market relationships at the beginning of the 20th century. John Maynard Keynes, an economist whose radical ideas profoundly influenced modern economics and political theory, is remembered for advocating interventionist policies, where governments use fiscal and monetary measures to mitigate the effects of economic recessions, depressions, and booms.
Adam Smith and even John Keynes considered markets within individual states. However, what happens in the global market, where no single country’s laws can limit the self-interest of individuals? Does this mean that, in today’s globally chaotic world, the law of the strongest prevails?
Mismanagement of Globalization: Joseph Stiglitz
Nobelovac, ekonomista Džozef Štiglic svoje naučno stvaralaštvo je zasnovao na ekonomiji informacija, a širi društveni angažman na kritici politike Međunarodnog monetarnog fonda i Svetske banke. On je pristalica teze o lošem upravljanju globalizacijom. U svom delu Protivrečnosti globalizacije pisao je o nezadovoljstvu procesima globalizacije u mnogim zemljama u razvoju koje je posmatrao s položaja glavnog ekonomiste Svetske banke. Reč je o delu sveta koji obuhvata 85% svetske populacije i koji ostvaruje 39% svetskog dohotka. Opisujući globalnu sliku sveta Štiglic kaže da osmorica superbogataša imaju koliko i 3,5 milijarde ljudi na planeti. Prema Štiglicu problem nije isključivo u nejednakosti koja postoji na vrhu i na dnu socijalne lestvice, već u tome što velikim delovima populacije ne ide kako treba, uključujući tu i srednju klasu u Sjedinjenim Državama, koja je najviše orijentisana ka slobodnom tržištu. Loše upravljanje globalizacijom, po Štiglicu, ne znači da negativni efekti globalizacije proističu toliko od samog procesa globalizacije, koliko od loše vođenih politika. On smatra da su i postojeća pravila globalizacije delimično odgovorna za povećanje nejednakosti, ali i da je ovakva globalizacija doprinela ekspanziji svetske privrede i stvaranju svetske srednje klase. Samo u Kini više od 800 miliona ljudi je izašlo iz zone siromaštva i postalo srednja klasa. Kao argumente u prilog globalizaciji Štiglic navodi i uspeh u borbi protiv zaraznih bolesti, povećan prosečan životni vek u zemljama u razvoju, podizanje svesti o potrebi zaštite ozonskog omotača i uređenje vladavine prava, koja je svakako bolja od „zakona džungle“. Ipak, on smatra da je, bez obzira na pozitivne pokazatelje, glavni pravac globalizacije izrazito negativan u ekonomskom, socijalnom i moralnom smislu.
Do Modern Capitalism and Globalization Have an Alternative?
A famous Greek economist, Yanis Varoufakis, proposed an alternative when he argued that capitalist economies are tied to labor markets: “For an economy to be resilient to crises, there must be a labor market. This is something socialism cannot afford. Why? Once working hours acquire a rental price, the market mechanism (competition) relentlessly drives it downward, commodifying every aspect of the business process and devaluing labor.”
Can an advanced economy function without a labor market? Of course, it can, Varoufakis asserts: “One employee, one company share—one vote, which I call corporate syndicalism. The idea of amending corporate law to turn every employee into an equal, though not equally paid, partner is as radically unimaginable today as universal suffrage was in the 19th century.”
In his theory, people would receive two types of income: one from dividends and another from earnings in the corporate syndical company. In such a society, neither income is taxed, as there would be no income or sales tax. Instead, the budget would be funded by two types of taxes: a 5% levy on the total revenue of corporate-syndical firms and a tax on income from renting land, which would be wholly owned by the community. To use the land for private, time-limited purposes, one would pay a tax.
In this society, central banks would provide free accounts for all citizens, rendering private banks obsolete.
However, until one of these theories proves its effectiveness in practice, the world remains in a form of controlled chaos, where many players set their own rules.
Edward Lorenz was the first to conduct experiments related to chaos. In 1961, he used a numerical model to rerun a weather forecast. Instead of the original value of 0.56127, he entered 0.506, thinking he would get a similar result. However, the computer produced an outcome that was nowhere near the original. It was determined that even factors previously considered insignificant could influence the weather that, weeks later, might affect the other side of the world. The metaphor used for these seemingly insignificant factors is “the flapping of a butterfly’s wings,” which is why this phenomenon is known as “the Butterfly Effect.”
Joseph Stiglitz – *Globalization and Its Discontents*: Milorad Vukašinović.