Western World needs a dose of Cicero

Western World is currently in social turmoil. Countless anti-government protests in Greece, substantive increase in unemployment and stagnated economic growth. It is evident the material wealth and prosperity the West had obtained during the last several decades, has evaporated. Yet, more importantly, the West and, especially the Eurozone, have forgotten how to live a virtuous life without material goods. Marcus Tullius Cicero (106 – 43 B.C.) was a Roman philosopher, orator and statesman of the Roman period. Although some argue Cicero was not an exceptional thinker, he was influential in introducing the Romans to the dominant schools of Greek philosophy. One of his philosophical contributions was Stoicism. One argues the Western World should examine Cicero’s stoicism and inject some of his teachings upon both the individual and state to remediate the West’s current social and economic system.

Cicero argued that philosophy and rhetoric are interdependent and necessary for the improvement of human life and society. With the decline of oratory, Cicero wanted to enhance Roman philosophy on the grounds that Romans needed to be able to philosophise without resorting to the Greeks, and to this end he sought to provide them with a kind of philosophical encyclopaedia. He hoped to make every department of philosophy accessible in Latin; Cicero says ‘what greater or better service, could I offer my country than teaching and instructing the young’. With regards to modern day society, it is evident that the individual and the state must revert back to fundamental philosophies concerning political ideology and morality to improve human life and society. This is because there is an inherent tendency for humans to act selfishly and think about their own ‘ego’. This has cost the Western world a ‘Second Great Depression’ akin, if not worse, to ‘The Great Depression’ in the 1930s. A stoic moral framework will promote spiritual actualisation through duty and thus, allow individuals to attain virtue. Stoicism promotes spiritual needs, not material needs. It is easier to sustain spiritual needs than material needs. Greater the fulfilment of spiritual needs, the closer people are to a more moral and well-off life. It follows that it would be more sustainable to formulate policies which increase spiritual welfare and not, economic growth. If an absolute criterion of what constitutes as spiritual needs can be created and has minimal overlaps with material needs, this framework is practical and thus, applicable. Therefore, the state should employ Cicero’s stoic framework by which individuals ought to follow in order to improve their own life.

Cicero came into the Scepticism school of Hellenistic Philosophy. He was renowned to be an Academic sceptic “who asserts nothing but refutes arguments of others”. Cicero employed Stoic teachings, particularly when discussing politics and ethics. Stoicism as Cicero understood held that gods existed and loved human beings. Human beings were all meant to follow natural law, which arises from reason. Both during and after a person’s life, the gods rewarded or punished human beings, according to their conduct in life. The gods had also provided human beings with the gift of reason. This starkly contrasts to Epicurean hedonism, which Cicero despised, on the grounds that the theory is incoherent and morally subversive and hedonists have unbridled passion which are devoid of a sense of virtue and duty. Given this innate characteristic, stoicism should be imposed by the state to improve individual character and morality.

A dosage of Cicero’s philosophy would improve the political ideas which modern western governments believe. Cicero argued true law was reason, good is always good and bad is always bad; all which were part of traditional Roman values. Cicero argued high moral standards could only be sustained with a great deal of determination and self-discipline. He wanted these principles to continually be applied to the Roman Republic. This is because, drawing from his work, “On Duties”, the corruption of moral values in Rome has gone too far, hoping such the people need to be aware of the loss of true Roman values in that period he was writing in. Furthermore, he felt corrupt leadership that took away the rights of citizens and their purpose to promote virtuous, altruistic actions to Rome for duty’s sake, not for hedonistic consequences. With regards to current society, current politicians have abused their power and have conducted policies to maximize their political ‘point tally’. Cicero urged the Roman elite to adopt stoic ethical teachings and so, should current modern society on the grounds of minimising corruption for a more well off society.

In the work, “On the Republic”, Cicero challenged the utopian slant of Greek political theory established by Plato’s Republic. He argued that the best constitution, which was attainable, was largely found out in Rome, where a unique combination of “monarchy, aristocracy and democracy formed a mixed constitution“- this, in turn, would provide an allegedly stable and just government. Furthermore, he defined the ‘Republic’ (res publica) as “a people’s affair” (res populi) and a people as a community “united by consensus about right and by mutual interest”. Cicero criticised all other constitutions for breaching the people’s rights and interests and argued that no political system is legitimate unless it distributes legal rights equally to all, according to merit and wealth. In other words, one must remove the aristocracy and inequality which modern Western Capitalism has produced. Therefore, the state should promote policies which promote equality, meritocracy and welfare. Individuals must learn there is a limit to their wants and thus, embrace the notion of ‘enough’ with their pursuits in life. This asks the question as to how people can realise the limit of their satisfaction? If and only if this policy is implemented, virtuous life can be achieved within sustainable and ethical means; however this is an entirely different question. Cicero, if alive in these times, would argue individuals must accept any hardships, through loss in disposable income or job loss, and repress their despair and ‘keep going’ in this current economic climate. This would lessen the economic and social demands individuals have upon themselves and on the state. As consequence, if the premises of stoic philosophy holds, when government’s macroeconomic objectives i.e low unemployment, are not achieved, public disappointments will not turn into the violent protests against current governments, which are very evident in Greece and Spain. In short, individuals of the Western World must adopted a stoic-orientated deontological approach to survive, on welfare grounds, and maintain virtuosity in such difficult times.

In the final analysis, Cicero seems to devote most of his life in articulating his ideas behind his lifelong goals of a stoic democracy. In order to progress from the current western predicament, western politicians must harmonise agent’s competing interests to a just and stable society and provide a thorough stoic framework. In other words, stoic teachings should be injected, upon both the individual and state, to replenish this Western socioeconomic system.

Contributed by Wafiq Islam

The Tragedy of the Commons: The Philosopher’s view

‘Tragedy of the commons’ is a socio-economic dilemma in which “independent economic agents receive benefits from a subtractable resource that is endangered by their aggregate use” (Herschel Elliot). To explain this definition further, ‘independent’ means that agents have no collective agreement governing the use of the commons (resources). ‘Subtractable’ suggests the gain in benefits can be depleted by its overuse, and in the worst scenario, the source of these benefits itself can be destroyed. Although each agent might consider the actions of other agents, they have no agreed system for sharing use of the commons beyond “mutual tolerance of mutual use”. By saying the resource is threatened by their aggregate use denotes it is not threatened by each individual act of taking from the commons because no individual is exploiting the commons at an unsustainable rate. In other words, individual acts are harmless, but acts, in aggregate, are harmful. The philosopher is concerned with ethical issues of this dilemma such as environmental ethics, moral accountability, egoistic versus altruistic nature of humans and moral obligation.

Firstly, one must understand why this dilemma is called ‘Tragedy of the Commons’. Imagine a pasture open to all herdsman. Assuming each herdsman is rational, he will try to keep as many cattle as possible on the pasture. In other words, he will graze and sell one extra cattle until its marginal benefit has reached zero. However, there comes the day when the inherent logic of the commons generates a tragedy. To explain further, each herdsman seeks to maximise his utility or, in this case, his grazed cattle. The tragedy is each man is locked into a system that compels him to increase his acts, without limit, in a finite world. This is self defeating for all agents because of individuals pursuing their own best interest, whilst failing to actualise their collective interest, in a society that allegedly believes in the freedom of the commons. Does this suggest freedom in the commons brings ruin to all? In conclusion, this dilemma is a tragedy because the depletion of resources is a self-conflicted event which satisfies the individual’s utility, in the short term, but dissatisfies the collective interest of commons preservation and minimal negative externality effects on society, in the long term.

One of the ethical issues concerning the ‘tragedy of the commons’ is environmental ethics. This discipline analyses the moral relationship of human beings to, including the value and moral status of, the environment and its non-human contents. In relation to the tragedy of the commons, the immediate problem faced by the public, as a result of the dilemma, is the overuse of the commons. To put this into modern context, this problem could be the overgrazing of public lands, the overuse of public forests and parks or the depletion of fish populations in the ocean. From these empirical observations, it is apparent a strong environmental ethical code is needed to preserve the resources and maintain sustainable economic activity. For instance, there needs to be a code in which individuals and companies are restricted from using a river as a common dumping ground for sewage and from polluting the air. But who formulates this code; from a small group of intellectuals, the government or the people? Whoever it is, are we not basing our ethical code on a group’s subjectivity? Furthermore, can this criterion be universalised without contradiction? Clearly there are more questions than answers. Another question we must ask is whether the use of commons is of instrumental value or intrinsic value to society (meaning “non-instrumental value”)? The former is the value of things as means to further some ends whereas the latter is the value of things as ends in themselves, regardless of whether they are too useful as means to other ends. For instance, a wild plant may have instrumental value because it provides ingredients for some medicine. But if the plant also has some value in itself, independently of its prospects for furthering some other ends, then the plant also has intrinsic value. Because the ‘intrinsically valuable’ is that which is good as an end in itself, it conforms that something’s possession of intrinsic value creates direct moral duty on the part of moral agents to protect it or at least refrain from damaging it. If we accept this line of argument, it follows that humans have no moral duty to end the tragedy of commons, if the use of commons is of instrumental value? Which draws to my original question, is the use of commons of instrumental value or intrinsic value to society? In conclusion, the tragedy of commons is an environmental ethicist issue because users of the commons, together, are depleting resources which have environmental ramifications.

The next ethical issue is moral accountability. The tragedy of commons demonstrates a lack of responsibility from any user to prevent the depletion of the commons. So does accountability come from within the users or government intervention? Lack of such is exemplified by the free-rider problem. If and when a cooperative scheme, to avoid commons problems, is implemented, not adhering to it would be a result of free riding – an effort to enjoy the benefits of others’ sacrifices while avoiding one’s own fair share of them. So is free riding immoral? Furthermore, the problem of externalities signifies the complications of moral accountability. Is compensation, in either monetary or spiritual terms, to those who suffer from external costs appropriately paid by those who were responsible for such? Some argue, like Charles Frankel, that responsibility is the product of definite social arrangements. Does that suggest it is society’s moral responsibility to protect the resources? If so, is it morally justified to do so in the expense of agents’ economic objectives? In short, the tragedy of the commons shows there is a lack of moral accountability by users of commons to formulate a system to preserve society’s natural resources.

This leads us to one of moral philosophy’s biggest debates; ethical egoism versus altruism. As seen, the ‘tragedy of the commons’ originates from self interested, egoistic agents who act on their own objectives. This could be seen as ethical egoism; a belief that one ought to do what is in one’s own self-interest which may incidentally be detrimental to others, beneficial to others, or neutral in its effect. It is a stark contrast to altruism that argues moral decisions should be based upon the interests or well-being of others rather than on self-interest. Ethicists who support egoism have argued that altruism is disparaging to the individual, no altruistic obligation exists, and that all of our actions are based upon self-interest. This leads to ultimate question, “Do individuals have a moral obligation to help or serve others, or the greater good of humanity?” On one hand, ethical egoism is inherent in human nature because our genes, allegedly, are biologically programmed to act for ourselves and assume a ‘zero-sum’ mentality of the social environment, resulting in survival of the fittest race. Scientists, however, argue altruism could arise from mechanisms that produce “reciprocal altruism”, similar to “tit for tat” view, whereby an organism purposely acts to temporarily reduce its “fitness” while increasing another organism’s fitness, with the expectation that the other organism will act in a similar manner at a later time. Could “reciprocal altruism” be applied to resolve the tragedy of the commons dilemma? Could some agents reduce temporarily their use of the commons, expecting the other agents to do so similarly at a later date? This seems stronger than the limitations imposed by the concept of “inclusive fitness,” which proposed that organisms help out others, to the extent that they increase the probability of passing shared genes to the next generation. Yet we must consider the magnitude of external factors upon our moral faculties. In short, tragedy of commons demonstrates the lack of altruism in society from the pursuit of egoistic economic objectives.

Finally, the philosopher must ask, “Do users of the commons, individually, have a moral obligation to society’s interests?” It could be argued that users of the commons is morally obliged to reduce his use of the commons only on the grounds of the actions of others, which, in aggregate, damage the commons, and only his restraint will prevent a wrong and harmful consequences. Yet, if no individual contribution produces harm, which is a consequence of the universality of many particular actions, how can the individual prevent the harm caused by unilateral action? To explain further, if an independent action has no reasonable expectation of success, then even though society cannot rationally universalise the use of the commons at unsustainable levels, no agent has a direct moral obligation to restrict their use of the commons to sustainable levels by independent action. Does it not follow that collective, coordinated action faces no similar difficulty and thus, has a greater chance of protecting the commons which, in turn, suggests the user’s moral obligation is to work for and adhere to a collective system to protect the commons? Surely, one is committing ‘strawman’ fallacy? Furthermore, if society were to accept this argument, is each user willing and able to meet such an obligation? Can such a ‘protect-the-commons’ system be formulated on coherent, non contradictory grounds? Referring back to the original question, trying to logically demonstrate users have direct obligation to society’s interests is problematic and this question of moral obligation creates more problems than it solves.

In the final analysis, the “Tragedy of the Commons” exhibits an apriori ethical system constructed on human-centred, moral principles cannot prevent the depletion of commons, which is a constant threat. If continual ‘commons’ depletion constantly continues to transpire, it eventually causes the collapse of the ecosystems which support civilization. These observations indicate the need for a universal, moral criterion to reduce agents’ moral deficits on environmental degradation and so, preserve resources to sustainable levels. However, if such is not done rigorously, unintended consequences will arise, from moral loopholes, which may result in society arbitrarily deciding that unlimited use of air is no longer morally acceptable.

Contributed by Wafiq Islam

Dan Shapiro: Five Core Concerns of Negotiation

“Human beings are born negotiators”, says Dan Shapiro, director of Harvard’s International Negotiation Program. Throughout their lives, humans are constantly putting their views across and trying to convince others to agree with it. In this video, Dan Shapiro identifies and elaborates on five core concerns of negotiation which are emotional fundamentals that drive both individual and organisational cooperation.

Contributed by Wafiq Islam

An investigation and comparison of the Bhutanese and Aristotelian models of Happiness and their suitability to replace the GDP model as a measurement of economic development

(Clich here) An investigation and comparison of the Bhutanese and Aristotelian models of Happiness and their suitability to replace the GDP model as a measurement of economic development

During the last three decades, ‘happiness’ has become an increasingly researched indicator of economic development. Bhutan, one most significant advocates of this research, introduced a Gross National Happiness Index in an attempt to measure economic development. However, there are several problems with the term ‘happiness’. For example, what is ‘happiness’? How is ‘happiness’ measured? How can we achieve ‘happiness’? These questions of happiness create plentiful problems, making it one of society’s most convoluted issues. By examining and comparing the modern day ‘Gross National Happiness’ indicator of Bhutan with the Pre-Socratic view of ‘Eudemonia’, which allegedly infers the meaning of happiness, through Aristotle’s ‘Virtue Ethics’, this paper will ultimately ask whether these two ‘Happiness’ models are adequate replacements for the current materialistic Gross Domestic Product model as an indicator of economic development. Both the Bhutanese and Aristotelian models agree ‘Happiness’ is the most significant goal for humanity yet both have different methods of achieving and measuring this feeling.

Contributed by Wafiq Islam

Can Behavioural Economics solve particular social and economic problems?

(Click here) Can Behavioural Economics solve particular social and economic problems?

Behavioural Economics is an increasingly researched discipline because it incorporates elements from psychology to explain why people make seemingly irrational decisions. It aims to undercut the ‘homo economicus’ assumption, that human beings make rational choices in their own interest, to reveal how people really are. This paper will look at three current social and economic problems and examine how Behavioural Economics can resolve them.

Contributed by Wafiq Islam

Brazil still face same old problems

On 26th December 2011, Brazil overtook the UK as the world’s sixth largest economy, according to an economic research group, Centre for Economics and Business Research. The country’s strong economic growth and high interest rates make it an attractive destination for foreign investors. Furthermore, Brazil’s large capital inflows over the past year have contributed to the rapid appreciation of its currency and led the government to raise taxes on some foreign investments. Although, at face value, the Brazilian economy seems unstoppable, there are some old notable problems; weak transport, poverty, high taxes and crime.

Brazil’s economic growth last year was enough to see it overtake the UK as the world’s sixth-largest economy, according to Centre for Economics and Business Research. This was not due to financial innovation or state capitalisation but simply an exploitation of its vast domestic labour potential – being a population of 195 million – which has helped to protect the economy from any global economic storms. Despite being six times smaller than China’s 1.3 billion population, Brazilians have much higher purchasing power. This is because Brazil’s exports accounts for 13%-14% of its economy, whereas China is 40%. While exports are important for Brazil, and it wants to increase them, it is not dependent upon them. Mr Itzaina, boss of an engine-maker Rolls-Royce, said “God blessed Brazil with huge amounts of natural resources”. Brazil always had minerals, fresh water and recently, discovered huge reserves of oil and gas, attracting more foreign money as the world’s natural resources slowly run out. With substantial oil and gas reserves continuing to be discovered off Brazil’s coast, the country is now the world’s ninth largest oil producer, and the government ultimately aims to enter the top five. However, Brazil must resolve certain issues.

Firstly, they lack a public transport network in the busiest capital, Rio de Janiero. The city has just one underground train line for its 6.1 million population. As a result, traffic jams are a serious problem on the city’s roads, and travelling around by bus or taxi is time consuming. In order to build a successful economy, the ‘hub’ of the country’s most concentrated economic activity must improve its transport, considering the 2014 World Cup and Rio being home to the 2016 summer Olympics. Instead of digging new underground lines, the city is creating a Bus Rapid Transport (BRT) scheme with four new dedicated bus lines. Around $1.4 billion is invested in BRT, which is 10% of the cost of building a new underground network of the same length. Building a BRT system is much swifter than building more underground lines and hopes to open first stages in July or August of next year. It would seem the benefits outweigh the financial costs.

Secondly, it must resolve its poverty issues. Brazil is continuing to work with the federal government to build hundreds of new houses for the country’s poor, under a nationwide scheme called My Home, My Life. The aim is not to force people out of Rio’s many favelas (shanty towns). The council’s efforts come as the police, backed by marines, continue to force out drug gangs and take control of favelas. The substantial economic growth in the global economy over the past decade has created many additional jobs in Brazil, pulling people out of poverty without the government having to intervene. Hence it is vital for Brazil that economic woes in the Europe do not result in Brazilians, who have become middle class, falling back down again. In short, it seems poverty in Brazil has reduced but the rate of poverty reduction is partly dependent on global economic outlook.

Another main weakness is the country’s “extremely complex tax system” with more than 60 different types of taxes. When it comes to food and consumer goods, the level of VAT varies widely, from 17% for tomatoes, up to 50% for an iPod. This reduces consumer disposable income who will be less able to maximise their utility. In the long run, consumer confidence will decrease as they are less willing to spend. In short, the tax system must be simplified and improved to improve economic welfare despite it hasn’t deterred firms from coming to Brazil.

Brazil, however, is most notable for its high crime rate. Brazil’s crime rate remains high in most urban centres, including the cities of Rio de Janeiro and Sao Paulo, and is also growing in rural areas within those states. Brazil’s murder rate is more than four times higher than that of the United States, and rates for other crimes are similarly high. Brazil has seen a recent increase in reported cases of rape. Firms will ultimately be discouraged to set up business or factories due to safety fears. Its high crime rate will force the government to invest in more security such as the National Security Force and BOPE. Whether the country has the fiscal manoeuvre to facilitate such costs is uncertain.

Brazil, like any country, has its own problems but has already taken steps to minimise those problems. Brazil’s production possibilities will increase because it has discovered new resources and has increased the efficiency of using these resources to produce consumer goods. In the long run, this will increase Brazil’s GDP and thus, boost economic growth. Furthermore, it will decrease the unemployment rate, meaning more people will be taken out of poverty, reducing the incentive to turn to crime, and thus, will lead Brazil closer to Pareto optimisation of social welfare. Brazil is very well placed for the future if and only if, it can resolve its same old recurring problems.

Contributed by Wafiq Islam

New Economic World Order

As Western Capitalist Cruises risk sinking into the depths of the ocean, Eastern Neo- Capitalist Vessels safely sail in pursuit of a eudemonic prosperity. Over the last 18 months, the world has witnessed the Eurozone drown in a debt crisis, worsened by slower economic growth, and America, the world’s largest economy, overwhelmed by unmanageable debt levels complied with diverging political solutions. In stark contrast, China and India’s economic growth has rapidly increased, underlining their major share of demand in the global market. Other Asian economies are gathering momentum, Latin America has been rejuvenated from its ‘lost half-decade’ and Africa has finally convinced others of its potential to become an economic force, albeit in the long run, providing heavy foreign investment. The dynamics of a new economic order is taking shape, which involves a titanic tussle between the old western masters and the emerging world’s apprentices, amidst this financial storm.

Before the 2007-2008 financial crisis, the West have been smug and righteous in their ‘lecturing’ to the East on the importance of political stability, sustainable development and strong macro-economic management strategy to reach the Epicurean riches the West were enjoying. From the governance of multilateral organisations to the innovation of financial service products, the global infrastructure was seen to favour western interests. There were numerous attempts by emerging economies to change this, but, unsurprisingly, those attempts were rejected.

How times have changed. The unprecedented leverage, massive debt creation, and credit freezes punished the West’s arrogance for not compromising with the emerging economies. Financial excesses become the rule rather than the exception, facilitated by financial innovation, the ignorance of lending standards and lack of prudential regulation. Suddenly, “rich” western economies were running large deficits and, in some cases, tipping from net creditor status to net indebtedness, while “poor” countries were running surpluses and accumulating large stocks of external assets, including financial claims on western economies. This fueled large global imbalances and thus, triggered a financial crisis that has rattled this open economic system.

The root of the financial crisis lied in America. Their overconfidence in the housing bubble and ignorance to notice the flaws in the securitisation of sub-prime mortgaging nearly caused the country to lose $5 trillion dollars had the Federal Reserve not taken action. Four years later, after numerous bailouts, stimulus packages and calls for social optimism, pessimism and lower standards of living transcend all American minds. Americans are unhappy, and becoming more so, about their country’s prospects and politicians’ efforts to improve them. This malaise of policy decision making partly reflects the sluggishness of the recovery. However, in recent months, unemployment has been falling, share prices are close to a three-year high, house prices are still in the low and the price of petrol has soared to levels not seen since the summer of 2008. Nevertheless, a recent poll, done by the Economist, suggests that Americans have long term worries: stagnating living standards and a dark future in an economy slow to create jobs, saddled with big government deficits and faced with substantial economic and political threat from China. Tellingly, a majority now regard China, not America, as the world’s leading economy.

Western Europe, mainly the Eurozone, also suffered deeply in the recent financial crisis. Eurozone seems likely to disintegrate unless it can resolve the current debt crisis and prevent the implosion of the single currency. Fears of insolvencies amongst PIGS, especially Greece, have created political and social tensions. Somehow the Eurozone must allow Italy and Spain to receive bailouts financed by the European Central Bank with a structural and fiscal compromise.  By doing such, confidence should return to European markets. Higher confidence means financial markets are willing to lend to Eurozone governments and banks who, in turn, start lending more which increases business confidence to invest and obtain profit maximisation and consumer confidence to spend and reach optimal utility. As a result, Europe would then suffer only a light recession, but recover, and slowly but painfully grows its way out of its debt problems. However, Western Europe faces its toughest challenge yet; to revitalise a somewhat sluggish growth, whilst operating under tight austerity cuts, high unemployment and multiplying debt concerns.

China is the biggest winner following the Financial Crash of 2008. China’s GDP Annual Growth rate, on average, is 10%. Despite the year-on-year rise of 8.9 percent was the slowest since mid-2009, China’s fourth-quarter growth figures was still slightly stronger than economists had predicted. China’s centrally directed industrial policy in which the government places huge amounts of capital and labour in certain enterprises has been a huge success. The backbone of China’s economic growth is mainly built cheap labour. However, as China’s wealth and GDP per capita (currently $4,400 compared to the U.S.’s $47,000) continues to increase, labour costs will soon cease to be cheap compared to the labour forces in India, Turkey and across Southeast Asia because the workforce will demand higher wages to keep up with inflationary pressure. If China can carefully manage their economy for future generations, China’s can maximise its own potential for more prosperity and influence on the global economy. However, China’s dependency on State Capitalism works on the grounds that there is political stability. However, if that were to stop, China‘s economy would be in disarray and have serious consequences for the rest of the world.

India’s economic rise is due to the existence of highly influential shadow sectors, private provided infrastructure and family dominant firms providing a strong economic scaffolding to India’s economy. Recently, economic activity rose far more than expected in December, alleviating fears that the economy was unraveling. Yet gross domestic product growth has slowed dramatically and is likely to worsen in the current quarter. Furthermore, India’s deep rooted political problems including corruption scandals and bribes has increased the social and external costs for India, increasing the gap for social optimum equilibrium.

Other Asian economies are also profiting. Singapore, another emerging market, saw their non-oil exports surged 16.4 percent in December 2010, more than four times the consensus forecast in a Reuter’s poll. But economists still think this city-state is slipping into at least a brief recession. However, emerging economies in South Asia face a common theme of corruption and bribery within political parties. They must ensure a reduction in poverty, wage inequality, favouritism to certain enterprises and ensure stable growth is maintained. Or else they face social unrest, inefficient enterprises and an overheating economy.

Latin America has vastly improved compared to 1990s in which it suffered incredulous political elections, self destroying foreign exchange system and restless social uproar. Even during this current global economic slowdown, the improved macroeconomic management has fortified Latin America’s economic resilience. However, that is not enough to keep them on the upward curve. Indeed, Latin America has had sound  practices in monetary policy – for example, inflation targeting with flexible exchange rates – with clear benefits. However, in order for Latin America to avoid another ‘lost-half’ decade, its fiscal policy needs to loosen up, such as relaxing industry taxation, and decrease deforestation to provide sustainable growth. This should not be at the expense of prudent fiscal management which helped some Latin American economies weather the crisis.

What about Africa? Africa is 15% of the world’s population but accounts for only 1% of global manufacturing and 1% of global inward investment. However, with scarcity of global resources, Africa will be the next growth centre of the global economy in the coming decades. China has already demonstrated their quick thinking and initiative by heavily investing in countries such as Zambia. If Africa is to have any chance of challenging the economic superpowers and enrich its current deprived living standards, Africa must commit to higher investment in infrastructure, enhance labour’s skill set and attract low-cost manufacturing plants which are looking to re-locate from Asia. As Jakaya Kikwete, president of Tanzania said Africa is ‘starting from very low levels of development’. However, rapid progress can be made: sticking to economic reform programmes, investment in education, transforming agriculture from a position where people ‘live from hand to mouth’, developing infrastructure, boosting manufacturing and integrating both regionally and internationally. Yet it will be a long time that Africa moves away from poverty to prosperity, givien the current state of corruption, crime and political uncertainty in the continent.

This is the year when the whole world ceases, according to Mayans. It is also the year in which politics and economics come under scrutiny when they stand up to these difficult challenges. Western cruises and Eastern vessels are traveling in opposite directions. This could be the year which decides the shift in global power; a new economic order is on the horizon.

Contributed by Wafiq Islam

Lecture Review: Bottom Up Politics; an agency centred approach to Globalisation

‘Bottom Up Politics: an agency centred approach to Globalisation’ lecture explored the political implications of giving power to ordinary people in an era when the nation-state has lost its dominance as a political actor.

The lecture was ultimately the launch of the book “Bottom up Politics: an agency centred approach to Globalisation”. The writing out of agency from the study of globalisation resulted in its portrayal as an uncontrollable, unstoppable and unchangeable force. Ordinary people have been conceptualised as victims or beneficiaries. Alternatively, grassroots activism has been portrayed as an unproblematic force for ‘good’. Inspired by the work of Mary Kaldor on global civil society and new wars, the authors explore complex, counterintuitive and even unintended forms and consequences of bottom-up politics as the state loses its dominance as a political actor in the global era. Leading theorists such as Albrow, Falk, Held, Rothschild and Sassen, together with young scholars, demonstrate the importance of an overriding agency to our understanding of globalisation. They offer a critical evaluation of bottom-up politics from a variety of disciplines, including those of sociology, law, economics, history and politics.

Our first speaker of the lecture was Marlies Glasius; a Professor of Citizens Involvement in War Zones and Post-Conflict Zones at the Faculty of Social Sciences and a Visiting Fellow at the LSE Human Security and Civil Society Research Unit. After her appraisal of Mary Kaldor, she started off with an elaboration using an intellectual approach in protesting against global governance without the need of pluralistic violence, which has been visible in the Arab Spring uprisings. She forwarded an alternative of non-institutional action on political inputs, whilst upholding the values of courage and determination to fight for a long term, sustainable socioeconomic and civil society that embraces democratisation- is that not the primary purpose of these protests? This intellectual approach is similar to recent demonstrations of the ‘Occupy’ group because these movements are peaceful and are aware of the common knowledge of government’s failings, and are trying to enforce decisiveness on these issues, in a time of uncertainty.

Next to speak is Helmut Anheier, a professor of sociology at the Hertie School of Governance, Berlin. Helmut’s main point of discussion is how civil society can prevent a financial crisis, similar to 2007-2008, occurring again. The problem is that society has an institutional void when dealing with financial organisations. To fill this void, he argues a creation of an independent non-profit agency which synthesises popular forms of protests, backed up financial autonomy of expertise, to formulate long terms and sustainable investment projects, free of profit motive and corruption. This will help position global finance in a state of ‘adaptive coping’ in which any financial threat, being an insolvency or natural disaster on agriculture, can be swiftly eradicated. However, to become the state of ‘adaptive coping’, everyone must make a concentrated effort, not by governments or regulators, but by popular sentiments and incentives to establish a new infrastructure to deal with financial institutions that prevent excessive costs economic moves, risking billions of dollars and economic stability. In short, there must be an agency to regulate global finance in the manner in which Greenpeace works with Shell.

Our third speaker is Professor Mient Jan Faber, an Emeritus at the Free Universit, Amsterdam and visiting professor at the University of Houston. Mient takes the lecture from finance to politics and war- another issue which these demonstrations are protesting about. He discusses the methodology of protecting civilians in conflicted areas; is it possible to protect the people without getting rid of the enemy? Recent affairs in Libya, for example, would suggest no, especially with Colonel Gaddafi’s death. Continuing the recent Arab uprisings, he explains they are signals of desire for foreign intervention from the insecure civilians, forced into inhabiting self-built securitised communities, because law and order is no longer enforced. But is war the only way to protect people? If society were to retaliate, this would cause further attacks from those enemies. So should international bodies should make the first move and destroy the enemies before harming the civilians. Would that not be breach of Human rights and Just War Theory? How many must die before a serious counter-response is made?

Finally, the lecture star lecture, Mary Kaldor, the professor of Global Governance and director of the Civil Society and Human Security Research Unit, LSE. There was a resounding reception for a woman who has fought for hard human security and strong welfare. After her thanks and acknowledgement of her colleagues, she discussed about globalisation and the several challenges to the status quo and the difference of macro-management strategies that it has caused. Mary Kaldor points out that civil society is facilitating a transformation from individual, robotic thoughts to public persons with deep-rooted values. For example, in Europe, there is seemingly a unifying process on a war against terror in which sub terrain politics in European capitals is becoming more visible. In short, cooperative political engagement is crucial in keeping a stable society.

In conclusion, this lecture brings up an apparent point in society; people are evolving and their minds are starting to doubt the customs set in this country, especially in a time of uncertainty and lack of real leadership. Public protests are a frustration for their absence of prosperous comforts as supposed to their desire to cause chaotic order. It is clear the people have had enough of  the current political enfranchisement. Grass activism is on the rise.

Contributed by Wafiq Islam

US Debt Deadline Closing In

As the 23rd of November 2011 approaches, ongoing discussion on reducing the US deficit has reached a ‘stand-off’. However, the members of a Joint Select Committee – a group of six Democrats and six Republicans drawn equally from the House of Representatives and the Senate Republican – are confident of reaching a deal. Republican Patrick Toomey quotes, “the clock is running out, but it hasn’t run out yet” and Democrat James Clyburn seconds that, saying he was hopeful a deal could be struck.

The committee must find $1.5tn (£930bn) in savings over 10 years. But members are split: Republicans are reluctant to raise taxes unless Democrats agree to reduce social powers. President Barack Obama plans to cut the US deficit by more than $3tn (£1.9tn) in the next decade. His proposals – unveiled in September – include an overhaul of the tax codes that would raise $1 trillion. If a reduction deficit package fails to occur, harder and more immediate cuts will instantly be imposed in ways that will not adhere to both parties’ likings.

Even if politicians could agree on the cuts, $1.5 trillion is insufficient. America’s deficits could be nearly $12 trillion, which will build up on the current net national debt of approximately $10 trillion. Even if the economy continues a normal rate of growth, the debt burden will still increase, and thus another deal will have to be struck later on. Therefore, the urgency of devising a deficit-reduction package that is big enough to instil confidence in investors that America’s long-term problem is being tackled. In short, this will allow a much needed stimulus into the economy.

If the committee fails to issue a resolution a series of spending cuts will occur, split evenly between defence and domestic programmes dear to Republicans and Democrats respectively. Polls have indicated most Americans see a mixed policy of tax increases on the rich accompanied by some spending cuts as the best way to cut the US budget deficit.

Firstly, the Democrats would have to yield their social entitlements such as their programmes of Social Security (pensions), Medicare (health care for the elderly) and Medicaid (health care for the poor). It speculated that the pensionable age needs to rise and too that of benefits. But the far more major problem is health entitlements, and the Democrats, having only just conducted a massive health-care reform on the cusp of Republican opposition, are deeply reluctant to do anything that might reopen that deal.

The other problem is taxes. It is illogical to believe a deficit reduction can be achieved without any rise in tax revenues. Republicans object to tax rises but are not absolute on this. But the tax code is relatively ambiguous: it sides with the politically favoured and suffers from economic engineering on the part of officials. However, a radical tax reform could allow for lower tax rates and yet increase tax receipts at the same time.

In recent years, many of America’s hardest decisions — including welfare reform and previous rounds of budget cuts — have been taken at times when its political situation has been precarious. The US owes more than $14tn in debt and runs an annual budget deficit of more than $1.4tn. The super-committee, set up in August, must submit its plan to both houses of Congress for a marginal vote by the end of the year – perhaps America’s most defining hour.

Contributed by Wafiq Islam

India’s Neo-Capitalist Venture

Whilst Western Capitalism has been heavily attacked on its austerity measures, political indecision and heavy burdened debt problems, India’s rise has shown some glimmer of reassurance that Capitalism is not all but gone. The venture may not adhere to the conventional capitalist American model or China’s state-capitalist economy. Nevertheless, their 2nd quarterly GDP growth rate of 8.20% – their weakest over the six quarters, yet better than expected – shows that entrepreneurial spirit of risk taking factors, coupled with shrewd innovation, can reap the rewards that Westerns had so long ago had. Despite this Epicurean economic success, their success has drawn costs which highlight their underlying Aristotelian welfare failures, such as huge inequality divides and poverty. Hence, Milton Friedman’s phrase, “There is no such thing as Free Lunch”.

The main positive outcome of India’s venture is economic growth which is driven by three factors. First is the private, informal, sector which employs the majority of Indians, which have “value added”, creating Indian capitalism at its most concentrated. In 2007, a government survey of almost 200,000 services firms, formal and informal, concluded that the top 0.2% of them accounted for almost 40% of output, and firms in commercial hubs of Mumbai and Bangalore collectively accounted for about half of output. The willingness to take on informal labour incentivises labour itself to work hard and provide for their family. An industrious labour tends to increase productivity, and thus increase firms’ profit.

Secondly, about 70% of the stock market’s value sits in the BSE 100 index of the largest firms, the smallest of which is worth just under $1 billion. These firms have a return on equity that has declined in recent years but remains solidly in its firm mid-adolescence, making Indian firms more profitable than many of their Asian counterparts. In addition, debt levels are low and growth has been solid, with profits rising since 2001 to $64 billion.

The final factor is ownership. Until 1991, when liberalisation began, Indian businesses that had not been nationalised were family affairs that survived in micro-management. Firms responded by branching out into any activity where they could find space to innovate, while facing little competition in their main businesses. Many firms benefited from close links with the Congress Party, which formed India’s first post-independence government and still dominates the ruling coalition today. By the time the economic crisis hit liberalisation in 1991, though, most businesses were mainly exasperated.

The pattern of ownership in the second period, between liberalisation in 1991 and 2003, was far more unstable, as traditional family groups were exposed to fierce domestic and foreign competition, and the prices of everything from machinery to India’s currency were freed up. Of the largest 20 listed on the stockmarket in 1990, only five remain in a recognisable form in the top 20 private firms today, ranked by market value. The big textiles firms that dominated the scene in 1990 diminished over the next decade and some of the renowned families behind them such as the Mafatlals dropped from the upper ranks of capitalist clans. Indian businesses, in their first decade of freedom, acted like Shiva to destroy, and acted like Brahma to create. Indeed, as the economy took off in 2003, economists thought that the oligarchic form of capitalism might be wiped out altogether and perhaps even be replaced by an American-esque freewheeling approach.

To conclude on India’s organisation of firms, there is a logical thinking underneath. It makes sense for businesses to spread out because the Indian state is still weak. Infrastructure is so insufficient that even private firms must often build their own. Courts are slow and sometimes corrupt, so contracts are hard to enforce and banks and businesspeople are inclined to stick with firms they trust. Established well renowned business houses can use their power to expand into new areas, sometimes at the expense of newcomers. Fewer new firms have broken into the big league since 2003 and those that have done so have tended to be good at persuading the politicians.

Yet India has its problems. The 31st October 2011 marked the first Formula One Grand Prix held in India – an image in striking contrast to one where calves rest upon untended rubbish heaps, lying near to distasteful £300 million racetrack, itself fringed by a 60-acre golf and spa resort. Consider these two perspectives: on one hand, a perception of redemption is being driven by this grand prix as a source of public self-confidence, of restoring public faith in Indian efficiency with an ‘on-time, on-budget’ showpiece just one year after Delhi’s chaotic Commonwealth Games. On the other hand, India’s poverty is not going away: it is unanswered and still remains a pressing issue in India. To extrapolate this further, one could say that India’s hunger and focus to build a self righteous image has made it ignorant to such humanitarian matters.

Poverty, as noted, is a big issue. In 2010, 20% of inhabitants in rural areas and 22% of inhabitants in urban areas lived below the poverty line. With population growth up to 1.2 billion, however, it is proving increasingly difficult to reduce the number of poor at a rapid pace. So despite India bringing down its poverty rate, more than 300 million people remained in poverty. However, Indian Planning Commission recently recommended placing India’s poverty line at 32 rupees (65c/40p) a day. Tushar Vashisht and Matthew Cherian conducted an experiment on living on this minimum amount. According to 26-year-olds, the plan would have damaging long-term effects for poorer people. Such a daily budget would lead to malnutrition in terms weight loss, fatigue and skewed blood sugar levels. Adding to that, the commission’s calculations overlooked mobile costs as well as not adjusting it to inflation. Hence, this plan is flawed and must be rectified before empowered.

In the final analysis, India’s Neo-Capitalist Venture is innovative and rewarding. For instance, the existence of major shadow sectors, private-provided infrastructure and family dominant firms certainly provided a strong scaffolding of India’s plc. It is evident that India is building a westernised image of prosperity with subtle spices of Indian values. However, outside its scaffolding a large pile of unsolved social problems has built up. For example, loose regulation has led to a series of corruption scandals, overlooking poverty has questioned India’s spending policy and increasingly wider inequality has made the poorest of the population stare into false hope. Nevertheless, India’s style has given hope and belief that Capitalism, unlike Soviet Socialism, will not break down without some resistance.

Contributed by Wafiq Islam