The democratic deficit in economic policymaking is one of the great challenges of our times

This is an old post but I am afraid it's still valid today. I hope it won't be valid anymore in another 8 or 9 years when I hope to be 77 or 78 years old or young depending on your perspective. By the way, why is this democratic deficit in econmic policy making so obstinate?

Wednesday, December 3, 2008

The credit crisis and the crisis of capitalism

The credit crisis is a sign of deep problems of the capitalist world. But these deep problems are hardly considered by mainstream economists and policymakers trying to solve the crisis. Both groups tend to limit their scope and view. They see the resolution of the credit crisis mainly in terms of improved regulation and, possibly, some minor changes in the global monetary and financial system.

However, this is not the best way to find a long-lasting solution. Even though earlier crises were solved in the same way and even though the capitalist system has proven to be able to adapt itself to new circumstances, a broader approach is needed.

"Capitalism" and "capitalist" societies show different varieties. Capitalism in Germany is different from that in France, and capitalism in the US is different from that in China. The US is often seen as a "pure" or neoliberal capitalist society, but it has many governmental business-supporting institutions and mechanisms. Private companies are grateful for these mechanisms and have no problem in asking for government support, neither yesterday nor today. On the contrary, commercial banks and other companies have asked for massive government support and still continue to do so. And both the US government and European governments have been willing to provide the hundreds of billions of dollars private companies asked for.

The above illustrates two serious problems with the current steering of capitalist economies. First, there is a lack of vision in the policies pursued so far and envisaged tomorrow. Second, there is a lack of ideas and institutional mechanisms to make the economic policymaking more democratic.

The resolution of the credit crisis still lies in the hands of a very limited group of economists and policymakers. The rest of the world is merely bystander – hoping for the best.

"Dreaming" about ways to tackle the democratic deficit in economic policymaking is not a childish hope (see my post of November 27). It is an ideal politicians and citizens around the world should energetically defend. Addressing the democratic deficit in economic policymaking is one of the great challenges of our times. Citizens and politicians should take this challenge much more seriously.

Posted by jan joost teunissen at 3:21 AM 2 comments: