English
Languages which use their own words for to express the notion of "crisis", are seldom found in Europe, but Hungarian is one such rare language, which expresses the notion of "crisis" through the strange word "válság", for which I was unable to find an etymology.
It is however noticeable that "válság", sounds similar and has a similar meaning, to that of the Romanian word "valmasag", which means "disorder, chaos".
If this closeness between the Hungarian word for "crisis" and the Romanian word for "chaos" is true, then this Romanian-Hungarian linguistic space will contribute a suggestion which is extremely valuable from a theoretical point of view, to help establish the nature of the crisis from the perspective of the Chaos Theory, based on the laws of entropy.
When we approach the crisis through the Chaos Theory, we can agree that the progressive organization of systems involves expulsion from the system, disorganization, (the "valmasag"), in a progressing process, which is similar to the pace at which the organizing is taking place.
Thus, the internal structuring, leads to the destructuring of what is located outside the system, just like in order to have a clean house, the trashcan outside must always be full.
From this point of view, globalization becomes at least an imprudence, if not a fatal mistake.
Because a planet which has a global unified structure, with a world banking authority, as Pope Benedict the 16th unexpectedly and strangely recommended this week, would have no place left to throw out the trash into.
Today at least, the European Union has somewhere else to go, for instance from the BRICS countries with emerging economies, but if they had already been part of such a world union, then the system would have been forced to keep its "disorganized parts" inside its own structure because there would no longer be an outside area to expel them to.
This process of accumulating disorganization inside the system, leads to the self destruction of the structure and the larger the number of measures which are intended to affect the system, the larger the volume of disorganization, of chaos, which would accumulate within the system itself, since there is no more room outside it.
And the structural destruction will be even deeper.
I think that from the abstract perspective of the Chaos theory, this can be called a cause of the paradoxical behavior of the European Union, as a system currently in crisis.
I think that this is the main reason why, regardless of which piece of the system one attempts to fix - whether it"s unemployment, taxation, austerity, interest rates, borrowings- bizarrely, the reaction of the system as a whole, worsens its state.
The system is simply so big, that it naturally runs the risk of running out of space to expand to and of cannibalizing itself, to say nothing about the fact that it shut out everything that wasn"t part of it, and of the absence of the vicinity which the United States could have provided to it, if they hadn"t been the source of disorganization itself.
In political terms, this abstract game of entropy can be translated through the notion of "hegemony within an alliance", because authoritarianism would remain the only barrier between the system and chaos, maintaining the integrity of the structure.
Pope Benedict the 16th has many excuses for his bizarre profane intervention in support of the world unicentrism; for instance, such a mistake is facilitated by the fact that the Catholic Church projects its structure on the financial and political sectors.
In turn, the Nobel prize winners, even though they are not all catholic, are providing similar recommendations.
In this respect, the case of the 2006 Economy Nobel prize winner Edmund S. Phelps, is suggestive: he admits that the phenomenon of the crisis has made him to reconsider the unyieldingness of his stance on the intervention of the state in the market and he admits that there are parts of the market which are insufficiently regulated.
Phelps' defensiveness suggests that the need to increase the regulatory and oversight role of the central authority, an idea, which, taken to the extreme, leads to the same idea of unicentrism, launched by Pope Benedict the 16th.
Phelps" honesty and moderation are admirable, his observation is judicious, but it can not be applied in an efficient manner.
Because in the education of regulators, the idea of a balance between the development of the market and the level of regulation is considered absolutely obvious, but, even though it does not seem like it, the point of equilibrium can not be calculated by any mathematical model, because it has a continuous, unpredictable evolution, because the ingeniousness of the market participants can not be predicted to a sufficient degree by a central authority.
Otherwise, it couldn"t even be called "ingeniousness" anymore, and the markets would be simply a walk in the park.
A fixed point of equilibrium is something that can only be found in science fiction.
Even sci-fi writer H. G. Wells (1866 -1946) knew the evolution of the armor theory, compared to the evolution of the shell, and he knew that the armor would always lag behind the improvements of the shell, just like market regulators always lag behind the ingeniousness of market participants.
Another Nobel Prize Winner, that of 2010, Christopher A. Pissarides, after being seriously wrong in saying that the existence of the Euro would not be endangered by the crisis, came back with a recommendation along the same lines as that made by Phelps: "The individual countries in the Eurozone need to give up some of their sovereign authority, to maintain a stable Euro", referring to the need for fiscal harmonization under a central European authority.
Just eight days ago, Pissarides" Nobel prize winning colleague, Dale Mortensen, went even further, in a statement made in Taipei, expressing the idea discussed by Perng Fai-nan, the governor of the Central Bank of China and Taiwan, that that the European Union needs a finance minister.
It all seems logical.
Rationally it would seem that there is no other solution.
All the men who were awarded the Nobel prize over the last few years support the idea of monocentric decisions and market oversight. As an aside, I am not clear on whether Americans Thomas J. Sargent and Christopher A. Sims - this year"s award winners (they received the award some a short while ago, on October 11th) - are joining this band, when they claim that the resolution of the European crisis would be to federalize the markets, according to the American model.
Under these circumstances, when the planet"s notabilities are recommending unicentrism, is it any wonder that political leaders such as Angela Merkel and Nicolas Sarkozy are proposing a "European economic government"?
This consensus of the most awarded economics experts, validates the idea of centralized oversight and partial waiving of the national sovereignty, to an even greater extent than now.
And I do not have the competence to argue against it, even though I confess that I do not like this solution at all.
I do however, call attention to the fact that among the winners of the Economics Nobel prize, we also find a woman - just one - American Elinor Ostrom, who received an award in 2009, for "the analysis of the economic governance of communities", studying how people interact with ecosystems, in order to maintain the productivity of natural resources over the long term.
Even though she never uttered any explicit opinions on the crisis and the solutions to it, her studies on the management of the irrigation systems in Nepal and on the management of grazing grounds practiced by African locals presents a surprising relevance when it comes to the subject of the crisis.
Elinor Ostrom warns against the inability of a global government to resolve the issues of coordinating the collective action against the environmental destruction.
On one hand, the inability comes from the complexity of the issues, and on the other hand, from the diversity of the agents involved in the action.
In opposition to the monocentric approach, Elinor Ostrom proposes a polycentric approach, where management decisions are made as closely as possible to the location of the events and by the players involved in the actions.
"What we have disregarded, is what the citizens can do by themselves and the importance of the real involvement of the people themselves, in contrast with simply having someone in Washington who is drawing up a rule", Elinor Ostrom said two years ago.
Starting from this perspective of the Nobel prize winner, we can easily notice that in fact, it is completely unreasonable at all to have leaders who are unable to balance the budgets of their own countries, (including Nicolas Sarkozy and Angela Merkel), to assume that they would somehow succeed in doing that on a continental level.
What can we even say about the efficiency of the central coordination on a planetary scale?
Whereas, until now, unicentrism seemed like the only solution, from the angle of Elinor Ostrom it becomes arguable to say the least, and for us, those who have already experienced "democratic centralism", it is dubious at best.
At this point, I will venture suggesting a different approach to the issues of the crisis, by combining the chaos theory and the conclusions of the study made by Elinor Ostrom.
Such a conjunction suggests that we should treat the banking system, the capital markets and the fiscal/budgetary system as if they were part of an ecosystem.
Do the financial-banking systems lacking have less joints, layers and structures than ecosystems?
I would imagine not.
Are they less sensitive to pests, and more resistant to exogenous factors?
Does the fiscal/budget system require less attention and care?
I for one think that, on the contrary, financial-banking systems require a degree of competence which may be just as high, but with a superior level of abstraction, than the one involved in maintaining the productivity of the natural resources of the grazing grounds in Africa.
So, if due to its complexity, the management of grazing grounds in Africa can only be efficiently performed by the locals, not by "someone in Washington drawing up a rule", like Ostrom says, then I do not think that the efficient management of the banking and fiscal/budget ecosystem can be performed efficiently, in any other manner than through polycentric principles.
And in my opinion, what I said above is even applicable on a national level, not just on a global or continental level.
Euro
Dolar SUA
Franc elveţian
Liră sterlină
Gram de aur
