We started this course talking about how industrialization, institutions, ideology, culture, politics, and technology all interplay to form an economic system. If nothing else, I hope you have learned in this course that economic systems are complicated. There are no simple little categories.
Each nation’s economic system is different because each nation has travelled a different path in culture, technology, industrialization, institutions, and politics.
In this the last unit of the course that introduces new material, I want to open your thinking to what the future may hold. I don’t have a crystal ball myself, but I’ll take a stab at a list of things that may prove very profound in changing our economic system. You may want to think about what you see will be the next “big” changes. I see a lot of change on the horizon.. Among the trends, new developments, and internal contradictions that I see as driving future change in economic systems are the following. In this list, I’ve highlighted four trends at which we will take a closer look in Unit 7. The two items in green type were discussed in a previous unit.
Technology & Industrialization Changes
- Emergence of “nano-” technologies and production methods – will this strengthen the power of the “first world”, or will the emerging markets take the lead? How will it change our living standards (how much resource is needed to support consumption)?
- Emergence of genetic engineering – Will life spans lengthen? How will we support longer lives? Will they be worth living? Will one company (Monsanto) control all the world’s agricultural seed supply through it’s patents?
- Open Source Production– Will crowd-production and open-source production revolutionize the production of other goods, or will it stay confined to software?
Sustainability, Environment, Integration, Institutions
- Global Warming – How will the issue play out? Will the forecasts prove right, and if so, how will we handle the consequences? Will they prove wrong and what would be the consequences? What institutions will emerge as we attempt to deal with “global warming”?
- Environmental Damage – What happens as China and India attempt to raise their consumption to U.S. levels? How do we stop environmental damage? Since so much of environmental issues are truly cross-border, how will be deal with them?
- Resource sustainability– How do we raise living standards for the other 80% of the world? We don’t have the resources to produce 6 times as much stuff if we use the same methods we have used in the industrialized countries. How do we deal with it?
Politics, Institutions, and Culture
- Rising Income Inequality – In the industrialized nations (especially the U.S.), the last 30 years have seen rising income inequality and flat-growth in real income for the middle class. How long can this continue? What will cause a change? Will we see a return to new-feudal age?
- Happiness, Income and What’s the Goal– New research indicates that rising incomes and rising consumption don’t always lead to greater happiness. Our dominant economic systems are based on the assumption that more stuff is always better. Our goal has always been ‘more toys’. What happens if that goal changes?
- Corporate Concentration– Globalization, free-market systems, and deregulation have led to increasing corporate concentration. Corporations are bigger, more multi-national, and more powerful than ever before. At the same time they often face less competition. What are the consequences? Will this trend lead to monopolization of each part of life by some 1 or 2 corporations? When corporations are truly trans-national can one country even break up a monopoly company?
- Banking and finance– Globalization and deregulated financial markets have produced gargantuan banks that span most countries and borders. Financial capital flows around the world in nano-seconds based on rumor, news, and speculation. Undoubtedly a few get rich this way, but as we say all to painfully in September 2008, a banking crisis can have global impacts. In the space of just weeks, defaults on home mortgages in the US led to the demise of certain US banks which spread the crisis world-wide and led to the collapse of 3 of 4 banks in Iceland, ultimately reducing Iceland’s GDP by 30%. How do we prevent another world-wide crisis? Or is it inevitable?
These are just my thoughts. I’m sure you have your own. We don’t time to look at each of these issues in detail. But, I have selected some short videos and readings on few of these topics. The issues I’ve highlighted above all have more information on the following pages. Most of the additional information is in the form of short videos.