In the s, consulting on the political economy of development in numerous countries for global institutions enabled me to see that our models of global development needed to be reformulated. Civil wars, drug cartel wars, trade wars, military aggression, ethnic cleansing, and other man-made catastrophes have brought about massive flows of refugees and internally displaced populations. It contributed to the retreat from democracy in the developing world and to rising populist hostility to notions of free trade and globalization. My confidence in the linkage between economic and political development had already been shaken by a decade of intense and often fruitless work in the area of global governance and institution building.
This is the background that needs to be evaluated, as it has been the source of hollow optimism for the direction of change. What effects have contemporary economic shifts had on global development models? In the second half of the twentieth century, in the wake of World War II, social scientists began to tweak development models built and based on the economic trajectory of the West. Their hope was to use these models as guides for policy and forecasting.
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Their hope was also to make economic growth and institution building seem manageable and understandable worldwide. There was every reason for optimism: from the late s, those models were close approximations to Western reality. The United States and its European and Asian allies were enjoying stable economic growth. There was no depression on the horizon and no war between global powers who were waging the Cold War by proxies.
Advances in technology were bringing about higher wages, social mobility, and better health and quality of life. They held that the processes of change—often referred to as modernization—would produce rising incomes, improved health, economic openness and cooperation, along with greater pluralism and tolerance. The upheaval of the first two decades of the twenty-first century has shocked social scientists in great part because they continue to update their development models, still hoping to portray a world of converging ideals.
But their models are failing in the real world to predict important patterns in the development of the global economy. In truth, they worked best for closed systems near or at equilibrium. The convergence that modernization would produce worldwide has been predicated on the belief that the global system in which it would occur was also edging toward some state of equilibrium. The race is on for an underlying intellectual framework that will help us to understand the change processes we are experiencing and to conduct policy analysis amidst greater uncertainty.
It is now clear that this relationship between economics and political liberalism is not straightforward. Prosperity appears alongside nationalism and intolerance.
It coexists with religious violence. It can be found coincident with nuclear proliferation and heightened risk of war. It thrives in authoritarian states as readily as full-fledged democracies. Meanwhile, convergence seems well out of reach, over some ever-shifting horizon. What becomes clear is that global societies are not part of a single, overarching, convergent social order that can be fine-tuned and managed with equilibrium models. Instead, global societies are, as they have always been, parts of open, adaptive, complex systems. Not only are their dynamics less predictable than we are comfortable acknowledging, but they are subject to large cyclic swings and cascades of change.
Yet once we start to recognize that global society is a complex adaptive system, we must begin to consider the dynamics to which such systems are prone. This also raises a fundamental question upon which future inquiry will rest: Is change best conceived in terms of mechanical or organic processes?
In some quarters there is hope that big data will save us, but to use it effectively requires valid conceptual frameworks for interpreting patterns in the data. Meanwhile, we live in a world in which political leaders insist on narratives to justify the policies they advocate. This often entails a pretense of knowledge that is unsupported by scientific evidence. College students are anxious about what profession to choose; investors are not sure about what projects will yield economic returns and scholars are unsure about which paradigms will resolve the uncertainties we are facing.
People are living more in the present and clinging to familiar identities based on an imagined past.
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But this is an unproductive reaction to the challenges we face. My hope is that a complex systems approach to global-political economy will contribute a more realistic treatment of uncertainty and thereby support productive policymaking. I fear that the aspiration that all countries should try to adopt the same model of globalization may, in fact, carry its own seeds of destruction. A world economy that is in sync can only reduce volatility for a limited period and synchronized growth may very well lead to synchronized market failure.
As national economies become increasingly integrated, the failures of one economy can surge like an avalanche across the system. I propose that a little chaos today caused by a diversity of experiments may diffuse pressures that can cause a massive eruption later. This happened in when the failure in US mortgage-backed securities spread with amplifying consequences. Yet during that downturn, China—whose economy was disconnected from global norms and calibrated to a different setting—was able to sustain its partners.
Similarly, India was less affected by the crisis of because it had fewer linkages with international financial markets, but it also had fewer trading partners.
Governance and the Asian Miracle Economies
Is there a point at which extensive global economic integration can lessen the effects of the first episode of contagion? Is it possible that pluralism of liberalism will discover the next generation of economic opportunities, with different countries experimenting with a diversity of constitutional, religious, and economic arrangements?
The idea is similar to what occurs in a diversified investment portfolio, though on a much greater scale. The impact of initial failure in one economy, the theory goes, could be mitigated by diversification among the portfolios of different sectors and actors, reducing their sensitivity to a failure of any particular link.
This adversely reduces the potential gains from innovation and risk-taking more generally. If a sweet-spot exists we still do not know where it is. In your experience of the global market, can local peculiarities be preserved or will liberal values subsume the unique cultural voices of individual countries?
In my experience path dependency and sensitivity to initial conditions can preserve local peculiarities. The recognition that the acquired beliefs of local culture, community, and institutions are the filters through which people frame essential issues and solve problems is one way to understand the impact of the global market on local cultures. Evolutionary social psychology illustrates the ways that people solve their problems by drawing on their own cultures. It also instructs us as to why it is so difficult to transfer strategies, norms, or institutions across cultures.
A population is more likely to refer to its own cultural history and traditions—and to reinforce its differences by doing so—before accepting a solution from other populations. This leads me to conclusions that differ from the postulates of microeconomics. For example, competition in a global market of many players will promote convergence toward a single set of optimized goods. Also, growth occurs as more efficient social technologies, institutions, regulations, or firms supplant variations that are less efficient at providing the market, e.
I disagree with the notion that deviations from best practice would be eliminated by competition; leading all firms, industries, and societies toward the same endpoint. Evidence is accumulating that as connections in the growing global economy become denser, variation is increasing.
The Key to the Asian Miracle: Making Shared Growth Credible
Global growth creates opportunities for horizontal alliances among developing country partners that can enable a proliferation of diverse coexistent behaviors. In fact, as discussed in the previous question, resilience is enhanced through variation—not convergence to an optimal model. As each nation uses its own traits to secure a niche for itself, it creates evolutionary space for others to find new strategies for their own survival.
Thus, as the size of the global market increases, novelty will arise via resource competition among many different cultures and this will drive the world economy toward greater specialization and variation. This will create new capabilities that in turn introduce new strategic options for the renewal, replenishment and transformation of different cultural voices.
This is another way of saying that local diversity will increase and will contribute to the possibility of novel reactions leading to further increased diversity. This also means that the momentum of global growth is not going to move all countries in the same direction. In your book Dynamics among Nations , you mention the interdisciplinary nature of complex integrated systems.
Making Shared Growth Credible
How important is it to cross disciplinary boundaries in order to understand an interdependent global society? As mentioned, the great advances in economic theory have generally been associated with the application of equilibrium models derived from mechanical physics.
However, in a world of ever-increasing interdependency, we should not expect a return to a definite equilibrium. We must shift our attention away from the microscopic levels of particular agents—either individuals, groups, nations or policy interventions—and toward their dynamic interactions. Networks of global interdependence can be structured in many different ways.
New forms of interdependency will also mean new forms of risk that are not readily discernable or amenable to top-down solutions. My approach is to seek theories, analytics, and methods, within the foundational sciences, that grasp human and societal behaviors. Details Collect From YY Order a copy Copyright or permission restrictions may apply.
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