A New Paradigm for the 21st Century

Atma Singh enjoying his conversation
with Dr Kaul Director Commonwealth Business Council



Magdalena Sieradzka with Monica Mohta
at the CII Reception at the Victoria and Albert Museum

I believe that a new paradigm for economics and politics is needed to make sense of the 21st century and enable clear economic and political leadership to be provided to the world.

My assessment is that the old Communist era economics are clearly dead. They died in the old Soviet Union and Warsaw Pact countries in the revolutions of 1989 and afterwards. At the same time, China stopped its reliance of these old Communist economic policies and embraced capitalism as its route to economic growth (in the 1980s).

In the West, there has been another process going on. There is a competing economics and politics. This is in the form of the neo-liberal Anglo-Saxon economics (led by the USA) as well as European social market economics (symbolised in the European Union project). The notions of 'The Project for an American Century' and the 'The European Century' project symbolised this.

At a political level , there has been a civilisational affinity theory that claimed that societies would be n perpetual conflict based on their civilisational differences (the so-called 'Clash of Civlisations' theory of S P Huntingdon). I think this civlisational theory did capture the new 'nationalism' based on civilisations as a component of a reaction against modern globalisation. However, it is not a forward-looking theory at all. It is a partial explanation.

My view is that a new paradigm can be constructed and must be constructed to guide economics and politics across the world.

This paradigm is based on a characterisation of the present reality of the world as well as a critique of the failings of the old paradigms.

The two main paradigms that have failed have been those based on a notion of a free-market liberalism and a modified form of keynesian demand-side economics. This is based on the growth theories in developed economies and societies (e.g. Europe, North America, Japan, Australasia, etc).

There are the theories attached to the emerging economies ( developing countries, former Communist economies). There is a major free market liberalisation and free trade component f the success of this policy. The critique of its limitations have been addressed by giving the free market "a human face". I have used the terms "ethical globalisation" and "humane capitalism" to describe this qualification of capitalism.

In terms of globalisation, the model offered by the religious reactionary and backward elements is bankrupt e.g. the Taliban economics and politics based on a form of very out-of-date "Islamic fundamentalism" (with women having no access to the education or labour market and entertainment such as TV, music, etc being seen as sinful). This is not remotely a way forward for the developing economies. Political compromise with this model is based on a weakness of confronting its violent activities and bowing under intense violence to its notional religious content.

There is a real debate about the content of modern Islamic societies with pro-Islamist politics as well as former 'secular nationalist' politics and modern globalisation politics. There is a pro-Western element and an anti-Western element of this political development. This is complex. However, a new political perspective has to be created even in this complex situation. At the moment, the USA suffered its worst political defeat in generations in Iraq. The dangers of the West being routed in the Middle East is real. The policy advice is so weak that it is just beyond belief.

There is a wider perspective of the politics of democracy in relation to the developing countries. For instance; there is a democratic governance alternative to corruption in Africa as a way to realising its economic potential put forward by Western policy-makers. However, China is the main player in Africa seeking to build Africa's infrastructure as a quid pro quo for access to its raw materials. ASEAN has also developed a democracy model although it has been problematic in enforcement of it in relation to Burma or even Thailand. Commonwealth of old British Empire countries has also adopted a democratic model for many years now - with successful applications of sanctions of suspension of membership.

The European Union has also used its membership as a way to create minimum human rights and democratic governance criteria. The democratic revolution in Soviet Union and Eastern Europe to overthrow Communism led to 'The End of History' proclamation. by Professor Fukuyama. As I have said, democracy may have won in Europe, but it definitely has not won in all of the developing world.

China as the world's second largest economy is not a democracy. So this is not some small issue. There is a pragmatic huge-level trade relationships with China. This is part of the new reality of the world. I believe it is not positive to turn a blind eye to the issue of the lack of democracy in China. Equally, it has to be a strategic perspective based on the viability of the strategy and policies derived from it. There are similar issues with Iran as a potential nuclear weapons nations in the Middle East - with a global attempt to contain this through the IAEA governance mechanisms as well as military threats to it. North Korea exists as a nuclear weapons state in the Far East peninsula bordering South Korea and Japan. It repeatedly threatens its neighbours with missile launches as exercises, etc. Venezuela is another threat in Latin America with its exercise in anti-USA rhetoric and rallying of anti-USA politics. There is a range of non-democratic/anti-democratic nations with different regime types - from Islamic states to Communist states to military dictatorships etc. There is mutual relationships too amongst these states in so far as they are anti-West.

Furthermore, democracy in the developing world is not always a stable political form. There is one factor above all: economic development is very weak. In other states, there is a big gap between the wealthy elites and the poor e.g. in the Middle East with very wealthy families (Sheikhs, Emirs, etc) and very poor populations. The poor are victims of non-democratic/anti-democratic politics. They are also attracted to destabilising 'insurrectionist' or 'anti-system' political mobilisations and movements. The gap between the dreams of the poor (increasing by access to global communications e.g. TVs) and their reality is causing serious instability. The demagogue has an easy day in many parts of the world. The racism of Europe and the arrogance of the USA does nothing to placate these feelings. The agenda of Europe and USA seems to be bereft of any serious strategy to eliminate global poverty. There is a lot of hot air, but there is no serious and viable perspective. The only agenda is for Europe and USA to protect its own position in this new situation - and fear of the rise of the emerging economies. The 'clash of civilisations' perspectives is based on the 'fear' factor. It is too easy a political model for Europe and USA. It is negative and ineffective.

Europe and USA have started going into serious economic crises. This is neither inevitable nor a figment of the imagination.

Firstly, there is a serious new development of 'emerging economies' on a global scale. This has a massive impact on the developed countries (Europe, North America, Japan, Australasia). There are many options in a strategy: choice of competing with the emerging economies at an economic level, using military force to gain access to critical resources, gaining preferential market access through economic pacts, using protectionism and nationalist politics and policies to restrict access to good and services and labour from the developing countries, etc. The strategy has not been effective because it is based on a weak and worn-out paradigm - with the West as the only serious economic and military player with its notion of superiority of its own development models and philosophical thinking using the laziest form of thinking. A new paradigm is needed to construct a new direction for the 21st century in which the merging economies are properly and adequately factored in at an economic and political and cultural (including civilisational model) level.

Secondly, the 'small state' theories have become very fashionable amongst the Anglo-Saxon capitalism (the Coalition government led by PM Cameron in UK and the Tea Party movement in USA). Taxation is viewed as an obstacle to economic growth and a morally corrupt weapon to rob taxpayers of their hard-earned money to be wasted on bureaucratic and unnecessary state projects. I believe this perspective is only tenable at a very partial level. It does not remotely offer a strategic view of the economic and political real trends in the world and solutions to the economic and political problems faced in the West.

Thirdly, European Union has faced its first serous crisis of existentialism. The model was based on economic growth leading to a strong internal market with rising living standards and social protection. However, the default crises (deficit crises) have made the model very weak. Instead of growth management and competition with the other major economic players (e.g. USA, Japan, China, India, etc), there is a crisis management situation seeking to maintain the system from financial collapse as well as social collapse. The Greece situation has been the worst, but Ireland, Spain, Portugal, etc. highlight the problems. There has been a major shock to the 'Euro-Zone'. So far, there has been no exit by any country out of the Euro-Zone, which would be a major calamity to the confidence of the system. This scenario is being contemplated in policy circles. Germany and France as drivers of the Euro-Zone are keeping the situation viable at the moment.

Europe has a second crisis of its mindset. This is a crisis of 'racism'. Racist politics are making headway in Europe. This is based on 'A Clash of Civilisations' perspective. Racism manifests itself as seeing non-Europeans as threats. Immigration is seen as a threat to its internal 'civilisational' make-up. There is also a debate raging about threats to its 'Christian' and 'Liberal' culture by 'Islamic extremism'. There is 'Islamic extremism' politics in major European countries (e.g. Islamic extremism from Turkey in Germany, Islamic extremism from Pakistan in the UK, Islamic extremism from Algeria in France, Islamic extremism from Indonesia in Holland, etc.). Europe is facing serious pressures by non-European immigration in addition to its increased legal space for immigration through the expansion of the European Union with new member states from Eastern Europe. This is a political crisis.

In addition, there is a crisis of conflict of identity - with pan-European identity and national identity. There are many factors in this. Globalisation has created new realities - of the need to create supra-national economic operational and legal structures (e.g. European market and union).

A new paradigm has to offer a moral perspective. This is justification of its ability to transform the global potential for better human lives and greater fulfillment of human potential. It has to be justified at a utilitarian level - in terms of effectiveness as a strategy for economic futures as well as politically able to command support in front of the electorate.