Rather than discuss more on the problems of the current economic crisis and what caused it, I have attempted here to explore some solutions. These might not be the only alternatives. But the current crisis may just force the movement in such a direction of change. What was once a wise choice might now become the only choice in many instances.
Not Consumption but Capacity Creation---------------------- Unfortunately, the economist are mostly thinking in terms of consumption i.e. by bailing out financial institutions and kick starting credit flow, they reason, people will be back in the markets buying things as before and all would be fine soon. A slightly longer term thinking revolve around creating a more integrated financial system in the market so as to enable a more transparent and faster flow of money across the world markets. These measures they argue would restore confidence in the financial markets and bring back the global economy onto the growth path.
One thing that is not given enough attention is that unprecedented levels of consumption had stretched the material supply beyond sustainability. That's why all commodities and assets were at an absurdly high level before the world economy crashed. One wonders if the government released inflation figures truly reflected the stress on peoples income as a result. That this stress was sought to be compensated by access to cheap and easy credit only compounded the problem.
Increasing money supply by way of increasing credit supply is only a demand side intervention that does not address the real issue of a supply side constraints. In a country like India for example with nearly 400 million working age people, if the salaries rise rapidly (especially for only a few segments like professional services, financial services and IT), it is more so because there is lack of supply of trained people, which in turn is a result of the lack of capacity of our education system. So what we need is not more credit supply to these businesses that are rapidly eroding their profitability, but a greater supply of trained manpower.
What is true about the Indian education system is also true about the manufacturing world wide. For example manufacturing must discover more efficient uses of material (maybe using Nano technologies), substitutions for material use (using software) and new designs that are more efficient, durable, reusable and sustainable. Or else high commodity prices will threaten its very existence.
Not Repair Work but Restructuring--------------------- Over the last many decades humans have become too accustomed to quick fix solutions and that is why the debate doesn't go beyond, interest rate cuts and bailout packages. These are all lazy approaches.
An economy driven by consumption (more) itself is the problem. The financial crisis is just a symptom. And while we must realise that there are material limits to consumption that can only be stretched through improving material efficiency and reuse in things we make, the more important things is to realise that there are limits to our consumption imposed by time and attention. And that we just wouldn't have enough time or attention to consume all that we can buy with our money.
It won't be enough if this restructuring only goes to the extent of reworking the use of things material. Perhaps we need to move from where the society values owning and enjoyment of the goods that the world has to offer, towards pursuit of learning, creating, leisure, contemplation and common good. Only then can we hope to spread material benefits more widely. The true long term solution therefore lies in building new capabilities and in redesigning the values on which our society is based.
There has to be compression of a lot of activities that are doing no good to our life and to life on earth. So also there is much work to be done. The economy can go on for years around regenerating our forests and bringing back to life our rivers and lakes, bringing up children to each realise there special talents, building bridges amongst communities, nursing the world back to health, making our planet safer, inventing new ways to use material more optimally, in learning better ways to live together.
If only we are willing to expand our vision.
Not More but Excellence----------------------- A life time spend in pursuit of excellence is far richer than one that is spent on keeping up with the Jonneses, where every time you catch-up with one there is another one to catch-up with. It is time we realise that we have to wake-up and move forward on our journey to take life forward, in pursuit of individual and collective excellence - measured, not in terms of our possessions but in terms of our capacities and capabilities, measured by the quality of our action and thinking and not the quantity of our acquisitions.
We need to move to a future in which parents pride themselves on the goodness of the deeds of their children and the contribution they make to the society than on the size of the multinational businesses their children work for or the salaries they get.
Not Systemic Problems but Greed(is the problem)---------------------------- I was watching a discussion on the BBC on the current financial crisis where the audience was quizzing board members and executives of very large financial institutions accusing them of being lax and self serving in the discharge of their duties as board members and executives. Unfortunately the panelists defended themselves by citing it as a systemic failure of the financial markets arising out of inherent complexities, one in which they were helpless and of which they were clueless. The truth is that while financial systems around the world are in need of a restructuring (because of the sheer size they have assumed), it really is greed, irresponsibility, lack of vision and plain stupidity that have got the better of these capitalists.
Not China but Independent Thinking----------------------- The failure of American financial institutions doesnt automatically qualify the Chinese model. The current regime in China is demonic. Their aggressive pursuit of economic success is doing little good to the world. I believe we (Indians and the world at large) have very little to learn from them. What is needed is independent thinking rather than getting caught up in the illusions(Maya) that is spun by the world's financial institutions or the Chinese government.
Not Financial Markets but Culture-------------------- Not rejuvenation of financial markets but a cultural renaissance is required. Clearly the lifestyle of the west cannot be lived by all on the planet without threatening our very existence. The breakdown of the financial system is only one in the series of warning that follows the phenomena of global warming, terrorism etc. hinting at the possibility of much worse to come if we don't change our ways. I believe that changes by way of redefining of lifestyles can contribute the most to correcting this imbalance. One in which, nourishment of the soul is more sought than the pleasure of the senses.
For a person living in the Dark Ages, nothing must have seemed wrong till the 'rebirth' of classical values. Perhaps the world is about to see such a change. We will in all probability look back in time from a future standpoint and wonder how we allowed ourselves to be carried so far out in our material pursuit. I imagine a new economy that is built around a dynamic culture not a decaying one. Here is where India can take leadership position. Not for the sake of leadership but leadership with the purpose to recreate the world for the better.
Not Individualism but Community living--------------------------- The high ideals of liberty and individual freedom have been flogged to dead end where it has manifested itself in greater and greater separation amongst individuals. The communities themselves decaying for lack of dynamism have been easy targets for anything that promised freedom from it. So individualism became fashionable and then a marketable commodity driving consumerism to ever higher levels.
Communism has failed. Consumerism is failing too. Perhaps the answer lies somewhere in between where voluntary Communities drive the economy forward, creating shared resources for the common good.
Voluntary communities are coming together to pursue common good while at the same time allowing individual freedom. When Tarun Bharat Sangh works to re-hydrate hundreds of villages in Rajasthan through voluntary community service you are seeing investment in collective generative capacity. When citizens in Europe volunteer to bring in cycles to create cleaner cities, what you are witnessing is purposeful community action. When people at SSY get together to build an Ashram for learning and meditation, you are witnessing Community Economics. When people at AOL resolve to plant millions of trees you are seeing community action in pursuit of a common good. Perhaps the best example of community living is India itself which sustains a large population using much less resource - much of which is owed to the existence of various different communities that act as support systems for the individual. There is economics involved in all this. This change is not going to come in a hurry there are too many people hopeless stuck in the current systems. And it is not going to be easy to bring about the new order without working out many many conflicting interests and ideas. But that the change in happening in this direction is clearly visible.
Though, it might be a while before these communities that exist as islands today proliferate more rapidly to cover most of the landscape of our societies.
Not Financial Freedom but Freedom from Fear----------------------- Much of the western and westernised world, suffer from the desire to be free from having to work for a living, hoping to put enough money away into a retirement fund that gives then a guaranteed return so they don't have to work any more. They call it financial freedom. The financial crash has highlighted the limits of this idea. It is time we recognise that - Wealth without Work is only an illusion. Many years ago a Mahatama (Gandhi) had warned us of the seven things that can destroy us - Wealth Without Work, Pleasure Without Conscience, Knowledge Without Character, Commerce (Business) Without Morality (Ethics), Science Without Humanity; Religion Without Sacrifice; Politics Without Principle - we must urgently pay heed to it if we are to truly free ourselves.
Not Economits but Leaders------------- Perhaps leaders like Obama (or perhaps like Nitish Kumar et. al.) and not economists can make a difference. What the world needs now is clear thinking and honest leadership to lead the change the world needs. That kind of leadership is needed not just at the head of governments but at all levels of all human enterprises. Perhaps the time for the Economists to define the course of the economy has reached its end (at least for the moment).
Not Politicians but Teachers------------ Only a teacher, a seer can show the way. Only a sadguru can build in us the capacity to change. Only a sadguru can instill in us the correct purpose. For, it is the Guru who symbolises the living, dynamic knowledge of a society. In fact any one who speaks of this knowledge is a Guru. Only a Guru (or the chosen one) can tell us that we are caught in yesterdays decaying ideas.
Perhaps the ideas on which our economy and society rests has been overused. Maybe it has outlived its use. Maybe in our pursuit of growth we have gone too far away from the seed, from the universal principals, from the truths and therefore we suffer. Who else other than a Guru can bring us back to the center.