Crises are not new to the world economy, or to developing countries. Indeed, our current predicament is a convergence of at least three crises: in global finance, development, and environment. These areas are seemingly disparate but actually interact with each other in forceful ways to reflect major structural imbalances between finance and the real economy; between the higher income and developing economies; between the human economic system and the earth’s ecosystems. This blog seeks to contribute to a more open and global dialogue around these three crises: about how they interact, and how they can collectively be solved.
Though the global financial crisis is seen as having started between 2007 and 2008, the underlying processes have been in operation for much longer. The preceding boom was not only unsustainable, it deeply accentuated existing global inequities.
The excesses of finance in the higher income countries, which were enabled by inadequate regulation and supported by changes in fiscal and monetary policy, were one side of the coin. As well, the financial bubbles in the United States attracted savings from across the world, including from the poorest developing countries. In other words, in large part the South transferred wealth and opportunity to the North.
Because the world failed to put in place adequate mechanisms to prevent and mitigate financial crises after the crises of the 1990s, developing countries built up and sequestered massive foreign reserves as insurance policies against future crises. The cost of this approach was a limited capacity among developing nations to invest in the real economy.
Even during the boom, growth did not produce sustainable livelihoods across much of the globe. In much of the developing world, growth during the boom period was driven by export-oriented activities that generated relatively little employment or linkages to the broader economy, but added greatly to local and global forms of environmental degradation.
Old jobs across the globe were lost and the majority of new jobs were fragile or insecure and low-paying, even in the fastest-growing developing economies. The persistent agrarian crisis in the developing world hurt peasants and urban consumers alike and generated global food problems.
Government responses to the financial crisis may have saved the world economy from the brink of financial collapse, but they have not resolved these underlying problems. Bailouts have not been accompanied with preventive regulation. The food crisis persists and has even aggravated. Employment continues to be elusive and fragile.
Most of all, the attempt of policy makers across the world to return to “business as usual” is unlikely to work for long simply because of the ecological constraints upon future growth. These constraints are being expressed not only by climate change but also in the over-extraction of resources, toxic pollution, congestion, and numerous other environmental problems associated with the current type of boom and bust economic cycle we are currently in.
So why another blog? While there are a number of commendable blogs on various aspects of these three crises, this blog will examine all three crises and from a global and integrative perspective not often found in mainstream media outlets. In so doing we have assembled a truly global roster of economists and other social thinkers from across the world.
In this blog on the Triple Crises we aim to provide fresh analyses of long term forces, current processes, and future possibilities. Understanding the causes and effects of these multiple crises is of utmost importance. In addition to informing practical policies for immediate change, they also provide major opportunities for changed paradigms for re-organising economic and social life. Such change cannot emerge without concerted public discourse, which can translate into public action. Discussing and debating current policy can broaden the debate and play a role in bringing a more sensible approach to dealing with these crises. Looking critically at the past gives guidance for the present, and helps in thinking about and articulating an alternative future.
The TripleCrisis blog is co-chaired by Kevin P. Gallagher, Boston University professor and research associate at the Global Development and Environment Institute, Tufts University (GDAE); and Jayati Ghosh Nehru University professor and co-chair of the Economic Research Foundation. The blog will be administered by GDAE. GDAE’s Timothy A. Wise serves as the managing editor of TripleCrisisblog.