Part 1: In which era are we living?

The change of the era

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Written by Editors

The information technology revolution is a much more profound turning point in world history than the preceding industrial revolutions. The IT revolution and the globalisation sped up by it have caused irreversible changes in our economic and technical basis as well as interactions between states and individuals.

Industrial revolutions divided societies into two opposing classes, with the middle class dissolving. Conversely, the IT revolution has increased the number of small enterprises and brought about development of new social middle layers. A new kind of start-up culture has arisen; the market economy has expanded into new areas.

In the following, we discuss the change of the era. First, we look at it from the perspective of the world economy, then from the perspective of nation-states. The reason for this order is that it is precisely the economic globalisation that has brought new challenges to the whole world. Our focus, however, is on democratic countries, because, in our opinion, democracy and the rule of law are the only possible starting points.

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The state of the world economy

The most significant politico-economic consequence of the IT revolution and globalisation is that speculative financial capital has gained a leading position in the world economy. Back in the 1950s and 1960s, industrial capital still ruled over financial capital. Banks were nationally owned, and they financed the national economy.

Today banks operate globally, and the biggest of them concentrate on speculation instead of financing the real economy. In recent years, the financial sector has grown much faster than the real economy.

Banks do not know their balances. Therefore, we can rightly ask if banking in today’s world is, as such, on an illegal basis.

For major international banks, it is almost impossible to know if they are financially sound or not. It is difficult to estimate the value of various investment products or even the value of government bonds. A given value is also likely to change quickly according to the economic or political situation.

In short: Banks do not know their balances, and supervisory authorities are as ignorant. Therefore, we can rightly ask if banking in today’s world is, as such, on an illegal basis.

Speculative financial capital has gained a grip on the political leadership of many countries. Whenever there is a financial crisis, the banks are rescued. Governments have been forced to take the risk-taking of the biggest speculators upon themselves.

It is true that also in more stable democracies, speculative financial capital compromises the rule of law. On the other hand, speculative financial capital depends on the rule of law to function and realise its profits.

Ever since the financial crisis of 2008, the world economy has increasingly relied on the unorthodox monetary politics of central banks: zero-interest rates, buying of sovereign bonds, aid to banks, and so on. Investors have profited more than the real economy. The situation has not changed during the pandemic. Exceptional circumstances have become the “new normal” in the world economy. Nobody knows for sure how this “new normal” works in the long term.

Neoliberalism has been the dominant trend in economics and economic policy since the 1980s. But now the time of its dominance seems to be over. There are growing demands that global social and ecological problems should be taken into account in economic thinking, economic policy, as well as in banking and business.

Democracy in a crisis

After the Second World War, imperialistic states based on a democratic market economy responded to the challenge set by the socialist world order and the national labour movement: the principle of legality grew stronger, civil rights increased, and social security improved. All this resulted in an unprecedented rise in the standard of living.

Democratic market economy and the rule of law are prerequisites for social reforms. Democracy, it is widely acknowledged, is in crisis.  Firstly, it is a crisis of legality. [1] Secondly, it is a crisis of political debate. Both are underpinned by the profound changes in the structures of society.

Government should be set up so that no man need be afraid of another.”

The legality crisis

Globalisation, accelerated by the information technology revolution, has set totally new challenges to traditional democracies.

After the cold war, it was widely believed that liberal democracy had won for good. The rule of law, as a necessary part of a democratic form of government, was disregarded. This was clearly seen in the speed with which privatisation was carried out in the former Soviet Union and the countries in its sphere of influence, with the help of western advisors, at a time when legislation was still taking its baby steps and when there was no guarantee for the rule of law.

The European Union, in its present form, was also founded according to this trend: the rule of law was detached from the EU Treaties and other legislation as a separate “value”. The Treaties did not provide for encompassing judicial review of the actions of EU authorities. The EU officials lack criminal accountability in cases where they violate the Treaties. In the context of the EU’s eastward enlargement, there was no investigation on the actual implementation of the rule of law in the candidate countries. [2] This was the case, even though the rule of law was one of the conditions set by the EU, not only for membership, but also for the beginning of membership negotiations. Consequently, the EU has few tools to deal with its “illiberal” members today.

The influence of speculative financial capital is clearly seen in the crisis of legality in the USA. A glaring example of this – and probably the one that angered people the most – is the fact that none of the bank executives who caused the financial crisis in 2008 were prosecuted.

Citizens’ trust in the US political system has downright collapsed. The whole society, including the media, legal system, and even actions taken against the pandemic, has become polarised and politicised. The changing of the president is not enough to solve the legality crisis; profound changes in the system of government are needed.

The democratic system has not been able to rise to the challenge issued by the speculative financial capital. This has increased dissatisfaction with democracy. Various kinds of demagogic and even openly fascist movements have gained popularity in constitutional states. There are fewer and fewer genuinely democratic countries.

However, history has shown that the model of liberal democracy is capable of renewing itself. It is still the ideal of enlightened people and protest movements in totalitarian countries.

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Crisis of the social debate

Freedom of opinion is the foundation of all human rights – and a guarantee for their preservation.

The United Nations declaration of human rights says:

Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.” [3]

Unfounded labelling of public figures is to deny them their freedom of opinion. They are prevented from “expressing their opinion without interference” and from “imparting information”. At the same time, the general public is prevented from “seeking and receiving” information through all sources.

Internet and social media have given individuals entirely new ways to influence the social debate. However, social media has also brought about new forms of persecution, hate speech and smear campaigns.

Unfounded labelling of public figures is to deny them their freedom of opinion.

Widespread conspiracy theories weaken our trust in institutions and threaten social stability. The latest example of the danger of these theories was seen in January 2021 in the United States. As disinformation and bald-faced lies became part of the mainstream, they finally led to a violent attack on the US Congress. The threat of violence against legislators, law-abiding election officials, and representatives of media is still very real, and not just in the US.

Hostile foreign disinformation campaigns also hurt national sovereignty.

Problems concerning debate-culture and knowledge are a new kind of challenge as well to individuals and communities as to states and international organisations. Reform of the education system is essential for the saving of democracy.

Cultural globalisation

Economic and political globalisation began in the 1980s. Cultural globalisation, however, had already begun after the second world war, especially in the western countries and spread from there all over the planet, in different forms over time and place.

Joan Baez ja Bob Dylan.
Joan Baez and Bob Dylan in the 1960's. PHOTO: Pixabay.

Cultural globalisation included many different types of phenomena, e.g., existentialism in philosophy; black roots music and civil rights movement in the United States; rock culture since the 1950s; and hippies and feminists in the 1960s and 1970s. All these movements were part of a new cultural awakening. The significance of these phenomena is in no way diminished by the fact that intuitive movements, especially during times of big changes, can cause many kinds of unwanted side-effects.

The new cultural movement was especially concerned with lifestyle issues, existential problems, and awareness. In this respect, its influence prevails. If we want to create a philosophy of history that can meet the challenges of our times, we need to study the questions put forward by the western lifestyle and culture rebellions as an important part of the overall view.

Basic communities, social alienation, and identity politics

The IT revolution and economic globalisation have caused radical changes also in our communities. Some basic level social structures (e.g., neighbourhoods, work communities, extended families and, increasingly, nuclear families) are coming apart. This is a general trend that naturally varies from one area to another.

In developed industrial countries, alienation has become the most important and entirely new kind of social problem. [4]

Economic misery in countries with a high standard of living is very different from what it was, for example, during the first industrial revolution. But the higher standard of living and better social security have not necessarily resulted in better mental well-being. Fundamental questions of humanity, human relations and lifestyles are also important to people with an adequate standard of living.

Identity politics have lately replaced traditional ideological dividing lines: political groups are formed around race, sex, ethnicity, sexuality, etc. Defending the rights of minorities is, of course, part of a functioning democracy. At the same time, though, identity politics has added to the natural human spirit of “us against them”. This results from the impasse of ideas inherited from the past era and the disintegration of basic social structures.

Thanks to the internet, it is now possible to create new kinds of communities and networks. However, this is just a possibility. The Internet has also provided a platform of networking for different types of violent marginal groups. No technological application alone can solve the basic problems of human existence.

In today’s world, democracy cannot be defended with traditional politics alone. It is necessary to build, consciously, new kinds of human communities. Whatever their form and shape, they can only be founded on an open and honest social debate and study, encompassing the whole path of humanity.

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[1] The contradiction between the principle of legality and the tendency to lawlessness has been the most important conflict during the history of the democratic market economy. In these times, that conflict has escalated even further.

[2] We have made a thorough study on the membership negotiations with Estonia. The EU Commission’s country report ignored many judicial scandals connected with privatisation. The legality of the judgments was not investigated. The same pattern was followed for all the other new member countries. Thus, it was by pure luck or coincidence which countries improved and which reverted in terms of the rule of law.

[3] Article 19 of the UN Universal Declaration of Human Rights.

[4] We use the term “alienation” here as a descriptive, not an exact concept.

OUR VIEW: Humanity first! Towards an ethical civilization.


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1 Comment

  • The state of the world economy article needs at least one refinement. The article states that the time of neoliberal dominance is over.

    However, neoliberalism has features that are likely to remain permanent. One is the creative financing channels for companies. The second is the principle of accountability and, in connection with the previous one, the principle that companies must have the right to dismiss workers who are not needed.

    In order to work, the principles require workers the right to organize, employment protection and adequate social security.

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