Why is it necessary to build a new balanced economic model without ideological prejudices?

Extract

The answer to the question is: because the two ideologies that have dominated the world, capitalism and communism, have failed.

Index

1. Introduction
2. What might be the bases of the new balanced economic model?
3. Dogmatism is the main obstacle
4. The policy of health a good example
5. Something similar occur in the financial sector
6. Theory and practice
7. The government control on the economies is a reality
8. Also in Europe
9. Consequences of the neoliberal policy
10. Conclusions

1. Introduction

The financial crisis in the United States of the year 2008 and the current economic crisis in the Euro zone have demonstrated the weakness of capitalism; something similar happened regarding communism which disappeared in the Soviet Union since 1989 after a long period of economic fails.

The first movement of rebellion appeared at the Puerta del Sol in Madrid, Spain, in the year 2010; the movement did stay recurrently in other cities of Spain. In the rest of Europe, Iceland, Greece, Portugal, Spain and Italy the social protests have been intense, also in the most privileged economic nations like Germany, France and Belgium.  In the year 2011 in the United States emerged the social movement Occupy Wall Street which has realized a hard critique on the economic system. They assure to be 99 per cent of population while the richest are only 1 per cent. The same than in Europe the protests have occurred in several cities of the United States. But the wave has reached Asia and the Middle East in one unsuspected country, Israel, where people is requesting also a fair economic system.  

The world economic reality demonstrates a truth: that it is necessary to build a new balanced economic model without ideological prejudices. So far, none ideology has solved the principal economic problems of the world: poverty and destruction of nature and environment.

2. What might be the bases of the new balanced, eclectic, economic model?

The first thing is to discard dogmatism in economic issues. The new eclectic world economic model must be a result of a political international consensus on the essential themes to ensure the humanity survival and should include the following issues:

-          To recognize that overpopulation is the more severe problem that humanity faces.

-          The highest population growth rate in the developing countries and the migrations toward the developed economies is creating the main problem of the present and one unsustainable trend for the future.

-          Consequence of the overpopulation is the damage to nature and environment.  

-          The free market cannot be a sacred concept.

-          The control of state on the economic activities cannot be a sacred concept.

-          Free market and control of state on the economic activities are, both, necessary in all the economies.

-          The combination between free market and control of the state on the economic activities is the synthesis that might create a global wellbeing.

-          The governments should make their most efforts to reach the Millennium Goals especially in economics, health, environment and education.

3. Dogmatism is the main obstacle

Recently I read a comment attributed to a former Major of one of the most important cities of the world, who assured that the free market policies are the only way to reach progress. The problem is that this is the opinion of many leaders, especially in the United States. However, the facts demonstrate that this concept is not truth. Important economists have recognized that the neoliberal policies followed in the last years by many countries has been not successful.

Hitherto, the free market policies in the United States have not been able to guarantee the wellbeing of the most citizens of that nation. In the United States exists millions of poor people, a high rate of unemployment and sub employment and the social situation is not the best; for example, the poor citizens that are not covered by a private health insurance do not have possibilities to attend its health.

The economic and social injustice is not a phenomenon that takes place only in the capitalist societies. The phenomenon occurs also in the communist nations, like the Former Soviet Union and in the other communist countries in a degree more intense.  The reason is because in the democratic capitalist nations the people have the possibility of expressing their aspirations but in the communist nations no. In the democratic capitalist nations the workers have the right to strike, but in the communist nations no. That is a very significant difference between the two regimes.

4. The policy of health a good example

In contrast with the United States, other capitalist nations like England, Spain, Italy and the Nordic societies have social systems of health that cover the entire population. This is a policy proper of the socialist’s regimes but that, however, is applied by democratic and capitalist nations like the mentioned. This means that a good socialist policy may be applied by the democratic and capitalist societies and vice versa, that capitalist policies may be applied by socialist or communist societies. China is a good example of this assertion. China is formally a communist regime but they apply policies of free market. Some years ago that was unthinkable for the dogmatic communist leaders but the evolution of the system led to this new economic posture. The moral is that dogmatism concepts have been over-passed by the reality.

5. Something similar occur in the financial sector

The defenders of the free market policies assure that must have a complete freedom to set the interest rates. For example, in the 90s years the International Monetary Fund, IMF, and the World Bank forced to the Latin American countries to eliminate any kind of controls on the interest rates, as a part of the programs of economic adjusts of those years, but that policy is not applied in the United States, the main capitalist nation, where the government set the interest rates. In this case it is clear the contradiction between theory and practice. The control of the interest’s rates by the government of the United States put in evidence that the interest rates control is employed the same by capitalist governments than by communist or socialist regimes.

6. Theory and practice

There is a big difference between theory and practice. The facts previously explained demonstrate that the orthodox capitalist, communist and socialist theories are not applied in rigid form. The communist orthodoxy was developed by the Soviets leaders and the Chinese leader Mao Tse Tung. The orthodox communism practice was the cause of the communism end in the Soviet Union in the year 1989. On the contrary, in the Western countries the capitalist leaders have not applied the capitalist orthodoxy radically and therefore capitalism has survived. The best proof of this assertion is the New Deal developed by the President Franklyn D. Roosevelt to solve the Great Depression of the 30s years. The communist government remains currently in China because the Chinese leaders do not apply the communist orthodoxy since the economic point of view.

7. The government control on the economies is a reality

In all the political regimes, capitalist, communist and socialist the governments exert a control on the economy, in ones countries more in other less; that is the truth. The governments assume the most important economic issues. For example, they decide the regime of property: what is public or private property. The governments set the monetary, fiscal and financial policy; the commercial policy: what can be or not exported or imported; the minimum wage and the policy of employment; the agricultural and industrial policy, the control of prices, the control of quality of goods and services, in other words, in the real world the governments of the most advanced capitalist nations control the most important economic activities. The exception has occurred in the last years as a consequence of the creation of the Euro Zone because the national governments have resigned to its sovereign capacity to issue money to create a common currency, the euro.

In general, the problem is that some leaders of the most advanced capitalist nations have a double discourse:  in its economic internal policy they do not allow the free market practices without restrictions but, on the contrary, they apply all kind of controls like the mentioned in the previous paragraphs; however, in its foreign discourse they defend the free market policies without restrictions. It is, then, a contradictory and not sincere attitude.  

8. Also in Europe

In the last years, the neoliberal policy has been imposed also to the nations of Western Europe:  Iceland, Portugal, Spain, Italy and Greece. Those countries have been forced to privatize many of their public services and public enterprises and to reduce the public spending in essential activities like health and education.

9. Consequences of the neoliberal policy

The consequences have been recession and unemployment. It means more poverty, social and political instability. So far the political regimes in those countries have survived but the big question is until where the population would resist that policy. The historic experience shows that the depression of the 20^th and 30^th years was the main cause of the apparition of dictators like Benito Mussolini, Adolf Hitler and the II World War.

10. Conclusions

-          Capitalism and communism has failed, therefore it is necessary to build a new eclectic, balanced economic model without ideological prejudices.

-          Dogmatic concepts of one and other ideologies, capitalism and communism, should be reviewed according to the new reality of the world.

-          Communism, definitively, is the ideology of the backwardness and the poverty.

-          Capitalism has good and bad things; the worse is the egoism, the unlimited wish of wealth.

-          The democratic socialism recognizes the paper of the state and the paper of the market.

-          Only a dialectic synthesis between the best of capitalism and the best of the democratic socialism may be the road to one best and fair world.