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Issues For Twenty First Century Economics And Economic Policy
Dr.Akmal Hussain
Dated: Special Edition: 1st January 2000

Twenty-first Century Economics

Today as we stand amidst the global economic and ecological crisis, it is evident that twentieth century mainstream economics needs to be transcended by a new economics for the twenty first century. This economics would contribute to achieving a new relationship between human beings, nature and growth. Such a relationship would be sought in a world where nations struggle to achieve a decentralized democracy within states, local communities are empowered, and global cooperation is undertaken to preserve the ecology of our planet, to maintain peace and to overcome poverty.

Human Community as the Focus

The focus of economics must shift from mere resource allocation and higher GNP as the end product. Economics will need to focus on the problems of fulfillment of the human potential, within the context of culture, social organization and environmental conservation. The emphasis would therefore shift away from short term profit maximization at the micro level and value indices of GNP at the macro level. Instead the new performance criteria would be the quality of life within an inter-generational perspective. What is needed is a wide ranging measure that takes account of specific features of the quality of life and the mechanisms of change. For example, how many more people have been provided with clean drinking water, what is the state of housing, transport and education, what new forms of production organization and cultural norms have emerged that unleash the creative possibilities of the individual and which enable control by the local community over its economic, social and ecological environment?

Interlocking Crises and the need for New Finance Concepts

The new economics must come to grips at the global level with the interlocking crises of economy and ecology. Mechanisms of finance, production and distribution must be found, which can enable nation states to achieve a selective delinking from the current centralized processes of finance and accumulation. At the same time forms of international finance must be developed that ease the capital constraint of Third Wold countries without locking them into a crippling debt trap. The debt write off scheme for HIPCS (Highly Indebted Poor Countries), devised by the advanced industrial countries is a recognition of market failure for such countries. Yet the scheme itself only provides in effect a one time grant. It addresses neither the structure of international finance and capital flows, nor the economic structure of developing countries, which reproduces the problem of intolerable debt burdens. International financial relations must reflect our awareness that the systematic transfer of non-renewable resources from the Third World to the First World and the endemic poverty crisis will have adverse repercussions at a global level for the preservation of peace and ecology.

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