The global economy is now a great source of power, and with power comes responsibility. The solution to the financial crisis lies thus in the same division of power that we have in politics.
Thanks to our globalized state of affairs, there is an inter-dependence on a scale that has never been experienced before. And while we have had the means to destroy our planets with nuclear bombs for a good couple of decades, it is only recently that we have reached a level of inter-dependence to destroy our civilization through economics. Global economics has thus become not only a financial institution but a definite source of power. And not just any source of power. We are talking about global, supreme power. Control the global economy and you control the world.
Ironically enough, when it comes to power, most everybody (at least in a western setting) would agree with the axiom that absolute power corrupts absolutely. And so, for most of us it is only natural that we follow the notion of division of power developed by the ancient Greeks and then adopted to our current notion of democracy by Montesquieu during the Renaissance. But in terms of economics we are stuck in this notion that an unregulated free market is the road to salvation.
This is not that surprising considering that this idea defeated its enemy; the controlled market economy of the Soviet Union. So as the winning side it now can claim its spoils of war. However, the cost of a free and unregulated market, in the inter-dependent global economy, is simply too much. While I believe that such a market will indeed strive towards a balance and ultimately regulate itself, humanity can no longer afford to deal with the scale tipping back and forth. We just experienced a global economic meltdown that may still throw the global economy and civilization as we know it into total chaos. The simple truth is that we can no longer survive the unprecedented tips of the economic scale anymore.
I find it very ironic that the propagators of ultra-capitalism had to reach for a socialist solution to clean up their mess, but ultimately that is where the solution lies. Like I said before, the global economy is a source of global-power. And as such it attracts power-hungry and greedy people. Thus, the only way to limit these people from reaching absolute power is by setting up mechanisms that will make it impossible for them to reach it.
A completely controlled economy will of course fail the same way that a completely de-regulated economy will. This because it gives greedy people access to complete control. Actually it does so more directly…
So the solution lies in the golden middle path. Just like the trait of struggling for growth can be a good thing, if this is reflected in a financial market that is ever struggling to reach a sustainable growth, then it can be a good thing. But we need introduce the fact that greedy people will try to exploit this to their own benefits into the equation. Thus we need to create a system, just as we have in our political system, that puts a limit on how much power one person or organization can control. And this can only be done through socialist interventions. Laws and regulations and of course accountability. Because the most upsetting thing with the current economic crisis is that the people responsible of getting us into the mess are still sitting in the same positions thinking of the next way that they can make more money instead of thinking of living of bread and water in jail.
The trick will of course as always be to strike the right balance between sustainable and inspiring growth and regulations that create power divisions in the economic forces to thus create boundries that block unsustainable growth.