Fall of the
Berlin Wall, the End of the Cold War, the Collapse of communism, all symbols of
the victory of Western ideology, led by the United States, were to bring new
economic prosperity to the West. But this did not happen: the EU’s share
of the world measured by GDP decreased from 1977 to 2019 by 9.8 pp (percent
points), and US, Japan 4.2 pp and 4.1 pp, respectively. The West (EU, USA,
Japan) lost its economic primacy: in 1977 it accounted for 66.1% of the world,
and in 2019 it accounted for 48.0%. If someone were to ignore these huge
economic changes, attributing them to globalization, it just confirmed that in
the global competition this model has collapsed.
Covid-19 outbreak and health crisis, which soon transformed
in an economic, financial and social crisis, brought although it not caused dramatic events that will
irreversibly affect the shaping of the new economic and social system, of which
the following stand out in particular:
The Covid-19 vaccine is and to be available for all
residents of each country free of charge regardless their
social, national social or other status. That happened never before.
Workers are brought to the global level by Covid-19 (capital
was before). Workers are affected by Covid-19 in all economies and they are now
the globally factor.
Profit will be no longer the only goal due to
achieving the social responsibility goals, environmentally and climate change by
micro level or enterprises (companies) and public requirement including health
care like Covid-19.
Performance measurement on macro level should be
different, as Covid-19 provided evidence a number of activity
sections within non-financial sector couldn’t achieve any GDP without
active role of health system.
There were wrong and inappropriate politics in the last
decaades hence a number of scientists and great thinkers already alarmed with warnings,
as Anne Case and Angus Deaton concluded “American capitalism is not serving
most Americans”, due to “two-thirds of the population – are dying younger and
struggling physically, economically, and socially” (Deaths of Despair and
Future of Capitalism). Paul Krugman recently summarised: „the 2020 was the year
These changes could lead to conclusion as the Schumpeter’s
self- destruction capitalism, but he exclaimed, “‘inevitably’ creates
conditions in which it will not be able to live and which strongly point to
socialism as its heir apparent.” In any case it should looking for a new
A huge number of thinkers are looking how to save the system
– as Keynes did it in 1930s – but that would be same as search together for a
new system in order to avoid revolution. The claim to save system, from the West perspective, is based the huge
shifts that happened in last decades or so as follows:
Neoliberalism as an ideology and economics
theoretically and empirically failed. The very virulence of neoliberal
anti-socialism meant that it represented the drive to a complete
market-privatization of social life and that is one of the sources of conflict.
State was changed – the state too became subject to the
financialization policy, shifting its overall role to protecting the value of
money. In the crisis labeled Great recession (2008), almost all big banks and
corporations were bailed out, but the population was not.
Externalities of this capitalism system exceed any
future economic benefits. It should emphasize that from the last two decades and further the
externalities of this irrational system, such as the costs of war, the
depletion of natural resources, the waste of human lives, and the disruption of
the planetary environment, now far exceed any future economic benefits that
capitalism offers to society as a whole.
West blamed communism for its failures until about 30 years
ago, but now couldn’t do it what opened bad sides of the system, which is also
the cause of the current situation.
Great concern about future is recently issued by Roberto
Savio from Other News (Italy) in article he explained it: “The Second Cold War
Due to the fact that West as greatest economic, military and
political power failed, as it is explained, and it could lead to collapse it is
necessary to find out how to save the system. This is one of the searching as a
part of broadly study search.
There are assessments by great philosophers, economists and
other intellectuals who suggested that the main cause of this situation and who
threaten to collapse are (i) unsustainable relationship of labor and capital,
(ii) others believe that new technology imposes new relationships because
previous relationships are outdated, and (iii) others that the cause is a
prevailing ideology and worldview.
The changes, which are very boldly called the emergence of a
new civilization, are the result of the emergence of a new world, whose main
feature is the integration of matter (body), mind (consciousness) and spirit
and the integration of physiosphere (matter), biosphere (life) and noosphere
(mind). These integrations will lead to a new pattern of thought, culture,
behavior of new social relations and institutions. At the same time, human
consciousness is expected to be above egocentrism and ethnocentrism, in fact at
the level of universal cosmocentrism. It should be added that this process has
already begun and is taking place under the same influence of new technologies,
such as robotics, artistic intelligence and automation.
Taking into account that
economic system is the very important part of a society here is conclusion and
suggestion that the system could be saved by Modern monetary theory
Modern Monetary Theory (MMT) has been on the table of
economic discussion for at last two decades, but it has recently moved to the heart
of interest such as of US, EU, UK, Australia and elsewhere.
The shift in interest pre-dates the COVID-19 crisis, but the
virus has given MMT a huge boost. Governments around the globe have been quick
to dramatically expand their budgets in response to the crisis, with deficits
of 10 per cent of GDP becoming routine.
Current economic data and trends raised question whether it led
to huge crisis or collapse.
From the economic and financial perspective MMT is a main
part of theory in Keynes’s monetary tradition, which includes eminent thinkers worldwide
and it describes how “modern” governments and central banks actually work.
In this circumstances MMT argues that economic and financial
situation facing any national government with a sovereign currency is entirely
different from that faced by a household, a firm, or a government that does not
issue a sovereign currency. Therefore, MMT provide assurance that sovereign
currency issuer: (a) does not face a “budget constraint”; (b) cannot “run out
of money”; (c) can always meet its obligations by paying in its own currency
and (d) can set the interest rate on any obligations it issues.
MMT also provide assurance in the world, which is changing
in fundamental ways, because and the actions to be taken in the near future
will be critical to lay the groundwork for a sustainable, secure, and
MMT is part of post-Keynesian economics aiming full
employment. In addition guarantee jobs is
also based on MMT.
MMT is the best way resolving economic and financial issues
related to the Covid-19 and environmental and climate changes on global and
MMT is solid basis, especially if implement globally, for
resolve to set aside the hatreds that have undermined global cooperation, and
join forces to overcome the inequality, poverty, exclusion, and environmental
destruction that threatens the world.
MMT is the best way to build a future based on UN’s peace,
human rights, and sustainable development.
More details on MMT characteristics and capabilities
including its implementation in EU and in one large EU member like Italy and
smaller like Croatia will be explained in one of the next contributions.
*Tihomir Domazet, Academic
Council Member, and Full university professor, University for Peace
ECPD established by UN (e-mail: email@example.com)
This was one of the topics prepared for the International Conference on 100th
anniversary of the Faculty of Economics & Business, University of Zagreb,