Tibor Palánkai: Welcome! The Actuality of the Development Economics. Some suggestions for the Discussion

I warmly welcome the initiative of the Committee of Development Studies of HAS on discussing on the „New World” of Post-COVID 19 Crisis. I share the views that something new has to be created, a restart similar to what happened following the World Wars.

Palánkai Tibor - iASK - Felsőbbfokú Tanulmányok Intézete, Kőszeg
source: iask.hu

As a starting point, it is important to stress that the crisis is not just a cyclical one, but it is rather structural. In many respects, it is not new, but some problems came into the surface, and are demonstrated in a dramatic way. It means that the crisis affects all the elements of the socio-economic formation. The structural crisis would call for strategies, projects and policy measures.

There are several issues, which have to be addressed:

  1. In terms of techno-structures, the new energy revolution and the role of the sciences should be mentioned.
  2. We would need a new energy revolution. The last one was, more than a century ago, the electricity, which transformed all the technologies and the everyday life. But it was a secondary revolution, as it was based on the traditional hydrocarbon sources. All energy sources have to meet 4 basic requirements, they should be cheap, clean, abundant and securely available. None of the present energy resources (hydrocarbon and nuclear) meets them, and they are growingly failing to meet them. The post-hydrocarbon (alternative) sources would transform the whole techno-structure and would on a great extent respond to the challenges of protection of the environment. For this, the intellectual- scientific and the financial-technical potentials are available, what is missing that are the determination and the readiness for cooperation.
  3. The knowledge is not only a production factor, but it is growingly used as a weapon. We are in the middle of an information war and it is no exaggeration to call it a World War. It is about fake news, manipulations, flourishing of fake-sciences, interventions into internal (elections) and external relations, cyber war etc. The responses should have been complex, they both call for intensification of real scientific discussions and communications, and also education. People learn a lot about Newton or Mendelev, but less about social-economic problems. The general intellectual level in social sciences is rather on the Earth is flat, and it is a disaster if it is the case with leading politicians.
  4. In terms of regulatory structures, new models of socio-economic relations and management are needed. The general framework could be the social market economy. In this respect, the Lisbon Treaty pledges to “competitive social market economy”, which I think should be extended, and real efforts should be made for its implementations. My proposal is “democratic, competitive eco-social market economy”. All this means that the market is the basic mechanism of coordination and regulation. But according to the liberal and even to early neoliberal theories markets should be ethical, regulated and sensible to social and ecological problems. That is a rejection of corruption and oligopolistic behaviours and it assumes intervention for normal operation of market mechanisms (competition), and for reduction of the social and ecological damages. These principles were broken by the ultra-liberalism of 1990s (Washington Consensus or shock therapies) and it leads to disastrous social consequences (former SU) and to birth illiberalism. The adjective “competitive” refers to the need of for meeting global market challenges. So far the efforts to implement this model have been largely missing both on national and EU levels.
  5. As the crisis is structural one more is needed than just pumping money into the economy. In fact, it can be even dangerous as it would aggravate the indebtedness problems. The indebtedness on a large extent is debt cumulation and it is about the debt which never will be paid back. The solutions of debt problems have budgetary, credit and capital (bonds) market dimensions. Addressing these issues would be of strategic importance.
  6. The crisis raises the question of the future of global and regional (inter-state) integrations. As relations are damaged that hurts important socio-economic structures.  Beyond contractual and institutional relations, the most damaging is the injury of real-economic structures. Real integration in this sense means the high intensity of relations, interconnectedness and interdependence. All these are sources of the present level of efficiencies and welfare, based on extended global allocation of resources and cost optimisation. Any damage of relations means losses in this respect, reduction of competitiveness and suboptimal performance. The process of down grading relations and nationalistic isolation should be stopped. The road ahead is a return to an intensification of integration. The EU should play a special strategic role.

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