Of economy and environment

Posted by I'm the penguin | Posted in | Posted on Tuesday, October 05, 2010

So, like, there's some poor people in the world.
Okay, more like a lot.
Like... almost half of it.

But anyway, because of economy and a simple principle of scarcity, there have always been people who have less, then came along economic systems like feudalism, monarchy, neoclassic, neoliberalism, and such ideas, which made inequity clear and very visible.

That being stated.
In time, after the second world war, the entire world changed. In every way possible, but let's focus on the economy: countries were bankrrupt. So, in order to help with the crisis the (new) UN made two organizations dedicated to avoid huge crisis like the great depression again, those were the World Bank (WB) and the International Monetary Fund (IMF).

The WB would help countries in their monetary policies and economic structures to make sure they were not going towards a depression or else that would cause the world some trouble (like wars, famine and such). The IMF was design as a "savings" account to lend money to those countries who needed it to recover from crisis or to have economic supremacy.
Sounds like a good idea right?

It was. Back in the 60s-70s the IMF was run by a league of humanitarian economists who were widely aware of the social costs of economic decisions, and so they acted upon that, and helped. (please notice how I'm being biased and only depicting this period as good so the turning point is dramatic, for straight facts consult further) But then the 80s kicked in with the neoliberalist fervor, and Reagan and Tatcher. And so the IMF was changed and filled with neoliberalists.

What happened? Well first of all, their main goal was to open all markets in the world, and those who were not free, make them so, however the cost. Now, let's remember that a free market doesn't always mean free and happy people, actually it meant the opposite for many countries. The previously communist countries were "forced" into open and liberal economies. It worked for east Asia, because they made it their own way. But for Russia, who was advised by the international organisms... well, it didn't went all that good.

Soon, the IMF became an international "bully" of the open market, forcing developing countries into them. How?
Developping countries needed money, the IMF and the WB had money. But you wouldn't see a penny from the IMF without having to follow every single of its instructions into an open market. Worst part of it was that no structural bases were made to assure safety nets for these countries, they were just thrown into the competition against the gigants (US and Europe), obviously the national industry could not compete against the international markets, which made them poor.

The last blow was the "hypocrecy" with which rich countries acted, because not only had they a greater infrastructure, but they still had subsides for their national markets, making it impossible for the developping countries to export or compete in that "open" market.

These actions made poor countries poorer and rich richer.
Just to make it clear.

In such terms of globalization what are the odds of ever reaching equity? Do we have a system to back us up?

Sadly, the answer is: not really.

Neoliberalism is a system based on a neoclassic system of economy, this means that economy is seen as a closed cycle. Labor market produces for industries and gets paid, Industries produce for the product market and gets paid by consumers, consumers are the base of the labor market. In this perfect scenario there are no limits for economic growth and expansion.
Infinite wealth, what could go wrong?

Just the tiny fact that these conditions don't see that it is not a closed cycle, they disregard the intake of resources from nature, the overexploitation. Neither they see the outtake of wastes and emissions into the environment that affects the resource source as well.

This system is completely over viewing the social and environmental costs, in a world with finite resources and where economy is USED to SERVE society to manage resources.

Anyway, I'd love to give a killer conclusion, but truth is that this is not an essay, but a purge of what I've been reading lately. Hence the lack of idea organization, don't think I've became so bad at wtirtnnig.

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