Tackling Global Challenges: Using the Unlearnings Lens (with focus on financial crisis) Challenges of Globalisation: Beyond North – South Divide Vikas Nath, Coordinator: South Intellectual Platform South Centre: an Intergovernmental Policy Think Tank Geneva

President Benjamin W. Mkapa, Tanzania Chairman of South Centre Over 50 developing countries from Asia, Africa, Latin America are Members. Works for the larger Group of 77 and China (G-77) Countries. Origins from the Non – Aligned Movement followed by South Commission

« You mean, that your view of the world, your ideology, was not right, it was NOT working? » « Absolutely, precisely. You know that’s the precisely the reason I was shocked, because I have been going for 40 years or more with the very considerable evidence that it was working exceptionally well »

Alan GREENSPAN Honest Acknowledgment and Unlearning. Yet « hallowed » institutions in South and North do not « UNLEARN » fast enough, and dangerously become part of the problem instead of part of the solution.

IDEOLOGY ? Karl MANNHEIM ( ) Ideology and Utopia (1929) Relationship between sociology and social policy and the role of Intelligentsia IDEOLOGY = total system of thought Held by society’s ruling groups that obscure the real conditions and preserve status quo.

The Dominant « Weltanschauung » Kernel of Ruling Ideology Ideological structure of the thought is conditioned by Class-Structure of the society. Special Stratum of individuals whose capital is « Education » and develop their ideas to advance interests of different classes. Among those that serve the ruling class, they provide the knowledge that forms the kernel of the ruling ideology: « the dominant Weltanschauung » or the World Overview

There Exists another Stratum: The Transformation Thinkers who: ….. challenge the ruling orthodoxy ….. challenge the dominant paradigms … who liberate themselves and their constituencies from the obscurantist mindset

We are at a Crucial Juncture: one global crisis after other…. Financial, Food, Climate, Poverty Increase The Old World Order is weakening The New World Order has not fully formed « There is a danger of the old world resurrecting and interfering with the transformational processes of the present »

Global Financial Crisis: Through the « Unlearnings Lens » MARKETS = BUY and SELL (Demand and Supply) MARKETS OF TODAY ARE MORE COMPLEX: Anything coming to Markets is « Financialised »

Housing Markets Banks with Excessive « Liquidity » pressured buyers to OWN a house. Liquidity: Not Cash but « Fictitious Money » 1 USD in Bank was being « leveraged » upto 12 USD Credit

THE MISCHIEF 7-10 years ago: Banks used Houses as Collateral for giving out Loans. Last 7-10 years: Banks Collateralized the « Mortgaged Houses » themselves Bundled them with some AAA Stocks and sold them as new instruments « Collateral Debt Obligations (CDOs) By 2007, the value of CDOs issued was USD 2 Trillion.

THE CRASH Collapse of « Financialised » Markets State rushed to take « Control »

OUR FOOD IS FINANCIALISED Major Cereals are «packaged » into Tradeable Bonds for the « Futures Markets » Eg: Chicago Mercantile Exchange: Foodcrops which are not yet seeded let alone harvested are traded as Futures / Forward Contracts, solely based on speculation. 95% of trade is of fictitious nature: no property is owned but purely speculation.

UNLEARNINGS Capital Markets are « self-correcting » They are NOT (at least in the short-term) Demand and Supply Determine Price Priority is given to « Financialisation » over Production and Speculation determines price for key tradeable commodities.

Where does that lead to? Thomas KUHN: Structure of Scientific Revolution (1962) Science evolves through alternating « normal » and « revolutionary » phases. Normal Phase: Puzzle Solving- within familiar science or existing paradigm Revolutionary Phase: Thinking outside of familiar science or out of box thinking ……

…. PARADIGM SHIFT Transformation thinkers should NOT look for solutions within existing paradigms Not an easy path…… And starts with change in mindset and introducing new vocabulary in our development debates.

Financial Crisis: Barter System: Giving real value to goods not speculative value Food Crisis: Commoditisation or Peasantry/Agrarian Societies? Measure of Development: Wealth or Welfare? MDGs-defined or Self-defined? Aid Dependence or Aid Exit? Changing Global Governance? Voices or Votes?

THANK YOU KEEP UNLEARNING! Challenges of Globalisation: Beyond North – South Divide Vikas Nath, Coordinator: South Intellectual Platform South Centre: an Intergovernmental Policy Think Tank Geneva