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2008: first year of a brave new century

By Peter McMahon - posted Thursday, 26 February 2009


Historians like to mark the beginnings of new centuries not by a calendar date but by a pivotal year that changed everything. Thus, the 19th century began in 1815 with Waterloo and the creation of global hegemony by Britain, and the 20th began in 1914 as the 19th century world order collapsed into chaos.

2008 will go down as the year the new global system dominated by the US that emerged out of World War II came unstuck, and a new epoch began. It promises to be a period of confusion, uncertainty and great threat, but also perhaps one of real progress. Most significantly, 2008 was the year increasingly global scale industro-capitalism hit some serious limitations and all the associated institutions began to look shaky.

These limitations emerged both within global industro-capitalism and in the wider material environment. In some cases they were exacerbated by rank stupidity and egregious cupidity, but overall they were caused by the inherent logic of this particular way of organising a society. The internal limitations became obvious with the financial and then economic crisis that fully emerged in 2008, while the environmental limitations were manifest in the growing awareness of waste levels (some of which was causing climate change) and resource depletion, especially of fresh water and oil.

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Industro-capitalism is a social system that has always needed to grow. It has done this in three main ways: through technological advancement; through demographic expansion; and more recently, through expansion of credit. Technological advancement allowed more efficient exploitation of raw materials and labour. Demographic expansion brought new cheap labour and mass markets into the system. Credit expansion allowed growing consumption in the rich West despite the rise of non-Western economies.

The great technological advances of the 20th century were the spread of mass-produced internal-combustion powered vehicles around the world, the development of reliable jet-powered long distance travel, and the digital information technology revolution. The great demographic shifts occurred after World War II as more of the world’s people were brought into the industro-capitalist system as producers or consumers, a process known from the 1990s as globalisation. Credit expansion began properly in the 1960s but exploded in the late 1990s as new technology and financial deregulation unleashed new finance schemes.

Of course, all these innovations presented problems. New transport technologies consumed fossil fuels and generated waste at an ever faster rate. Globalisation eventually resulted in growing destabilisation in international relations. The credit boom was unsustainable and would ultimately result in an unprecedented crash.

Could these things have been better managed to avoid the crunch at this time? Perhaps, but not under the increasingly dominant ideological stance known as neo-liberalism (in Australia, economic rationalism) which professed total confidence in the power of markets to resolve all problems.

So we enter a period of transition. Although it is still early days, what can we say about the likely characteristics of the new century?

First, it will be dominated by material constraints, most notably in relation to energy use because of global warming and the depletion of readily obtained natural resources (especially fossil fuels and fresh water). How well and how soon governments manage a shift to a low-carbon economy is the biggest issue of the age. Overall wealth creation and distribution, job levels, inflation and interest rates will all be primarily determined by this matter.

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Second, if disaster is to avoided it will be an age of shared power at all levels. The systemic crisis that fully emerged in 2008 showed the obsolescence of some of our key institutions, from the global financial system to transnational corporations to government at all levels. All these arrangements need to be overhauled and transformed, and the core change will be to make boundaries more permeable, opening them up to much greater participation by outsiders (and dare we say it, greater democracy).

The global financial system is already being reformed by the governments that took over the debts of the main players, the global investment banks. Markets will be reined in and limited to those functions where they are truly efficient. Transnational corporations, who only grew larger in recent times despite the techno-organisational imperative to downsize, face inexorable change due to the pressures of new technology and fragmenting markets. Some are already changing, realising that investors, consumers and staff want a new approach - one that is greener and more amenable to basic human needs. Many of the largest firms have been put under the gun by the economic crisis, and those that do not heed the lesson will fail as a new, more flexible economy emerges.

Governments have been shifted back to centre stage as the market system has been undermined by the economic crisis, but they also need reformation. Humanity desperately needs a true global governmental system to make decisions on truly global problems. We have experienced an international system where one nation dominates an otherwise anarchic international disorder. The decline of the US, hastened by the incomparably ambitious but inept Bush administration, and the rise of new powers (especially in the old third World) present the opportunity to achieve a fundamental change in how the world is governed.

Building a viable global governmental system will be one of the great institutional challenges of the new century, and one of the hardest parts will be to ensure that such a system represents the apex of a layered structure. To achieve this, and make government more relevant to actual needs, government must become more democratic. For some time the Western form of government has been dominated by professional political elites whose main reference group has been big business. This has been in part due to the limitations of large hierarchical bureaucratic organisations, such as governments and large firms, but is has also been due to the utter failure of the mass-media to act as a genuine informer of voters. Reform of government cannot happen without transformation of the role and character of the mass-media.

Fortunately, the means are at hand to achieve these two goals. The arrival of increasingly capable, increasingly cheap and increasingly networked digital technologies presents us with the possibility of reorganising all our core socio-economic processes. We see the signs of the new politics in the web support for Barack Obama and the growing role of the blogosphere in shaping public debates, but its influence lies as far back as the fall of the Soviet Union as Russian leaders realised they could not match the American-led digital revolution. At the core is the growing availability of information, because the old adage is as true as ever: knowledge is power.

The new century is upon us, and like it not we are in for radical change. If we are smart we can see off the threats and build a better world. If not, it will be a time of great trial, and perhaps the last gasp of the civilisation that got going some one hundred centuries ago.

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About the Author

Dr Peter McMahon has worked in a number of jobs including in politics at local, state and federal level. He has also taught Australian studies, politics and political economy at university level, and until recently he taught sustainable development at Murdoch University. He has been published in various newspapers, journals and magazines in Australia and has written a short history of economic development and sustainability in Western Australia. His book Global Control: Information Technology and Globalisation was published in the UK in 2002. He is now an independent researcher and writer on issues related to global change.

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