Global Economic Balancing


We must admit that the economic model based on developing transnational markets has exhausted its potential. Macroeconomic postulates do not reflect the nature and dynamics of economic development. Commodity-money exchange effectiveness is declining. The multiplication coefficient has all but ceased to work. The funding developed countries dispense to poor countries to balance the global economic situation vanish in developing economies without providing any visible economic effect or resolving such problems as hunger, poverty, a lack of drinking water, pandemics etc. Therefore, the gap between the level of development of Golden Billion nations and that of the Third World is not finding closure.

History has shown us that Reaganomics has lead to crises in some national economies, international trade relations, the global economy, and, basically, capitalism itself. This is obvious but there are few people brave enough to cry out loud “The emperor has no clothes!”. It is time new models of capitalist relations were developed. However, before, we must try and activate existing resources to make a transition to the Sixth Techno-economic Paradigm and take decisions needed to keep afloat the global economic system. While still in the working condition, this system is already going. To do this, growth areas should be found to renovate consumer society.

In order to formulate these global economic growth areas, let us return to the history of the issue. Originally, globalisation primarily implied area specialisation and the development of transport logistics, which made it possible to deliver goods from any point to any point anywhere in the world. The question only was whose prices were more competitive. It had become clear by the 1970s that cost reduction was business task number one. Consumer pressure had reached such a level that products had to have a solid “pressure resistance capacity”, especially in terms of price, to reach the consumer. Reaching the consumer took a lot of effort. The producer had to find the right consumer for its product, identify sales channels, and set up customer service. Technological cooperation led to the phenomenon of irreducible price and the monopolisation of major markets to meet global pricing competition. Economy took the route of increasing production efficiency through:

  1. Reducing costs by maintaining stable quality and keeping losses at a low level;

  2. Reducing costs through better operation management and business optimisation;

  3. Reducing costs by introducing new technology (e.g., in energy and material efficiency);

  4. Reducing costs through international cooperation (transfer of production to underdeveloped countries and employing cheap immigrant labour);

  5. Developing area specialisation in terms of economic category and type of revenue.

This policy has led to several gridlocks:

  1. Complicated management standards: the need to buy expensive safety certificates has led to market monopolisation driving small business out of the high-tech sectors;

  2. Draining resources from the production to service sectors, which creates over-production crises;

  3. Provoking a technological boom: technological processes started to outpace social ones. Technologies were outdated and replaced faster than people eradicated the effects of applying them, which created huge household and industrial, including hazardous, waste landfills. The regeneration of the biota natural environment, including human environment, cannot cope with pollution, exposure to which often leads to irreparable consequences: we breath poison, eat genetically modified food, and drink “regenerated” water several times a day.

  4. Encouraging monopolisation in developed countries and corruption in developing ones; irresponsible natural resource management; constructing production facilities without required water purification facilities; producing oil without regard to leak-proof technology; industrial intoxication of the environment; and poor living conditions for the most part of humanity. Environmental and humanitarian disasters have no borders.

  5. Energy stratification of nations, with economically developed countries consuming considerably larger amounts of energy than underdeveloped ones. An information revolution creates the desire to close the gap; hence debt, terrorism and corruption. In the economy whose main value is unrestrained profit growth, energy has become a scarce resource. It is certain to be joined by water and food very soon.