The asymmetry between economic and social effects

Inclusive Economy19 Nov 2009Rolph van der Hoeven

‘Social and political dimensions of the global crisis: Implications for developing countries’. Under this title, the United Nations Research Institute for Social Development (UNRISD) organized an international conference in Geneva on 12-13 November 2009. The conference results will be soon available on the UNRISD website, but here are a few random and personal impressions in anticipation.

In the first session, Jomo Kwame Sundaram, the articulate assistant general of the UN, sketched a realistic picture of the current crisis. Several others did the same. One of the points elaborated upon was the asymmetry between economic and social effects of the crisis. While indicators at Wall Street are, for the moment, on ‘green for go’, the social indicators are not. Indicators of the social effects of the crisis point to a slower reversal than financial indicators. Some indicators even show irreversibility – for example, years of education lost, a lack of work experience.

While some conference participants indicated that the Keynesian response saved the world from a crisis, as in the 1930’s, others saw this as strengthening the current capitalist system. Enormous amounts of public money were spent on keeping the banking system afloat and the financial system working. This in itself was necessary, but puts pressure on future development aid budgets and social spending. Also, it has already made many politicians, even from the left, argue for a ‘business-as-usual’ approach to national and international governance.

The ‘triple T’ condition (timely, targeted, and temporary), under which assistance during the crisis was provided, also pointed in that direction. It was argued that the social outfall of the crisis called for long-term general increases and a shift in social spending.

Failing this, several participants argued that capital will come out stronger from this crisis, while labour will be woken if no special measures are taken. There was no firm consensus about how to counter this. Most participants were pessimistic and predicted a ‘muddling through’. Others were more optimistic, however, indicating that public opinion and popular pressure is pushing politicians to be more cognizant of distribution and employment concerns, and act accordingly.

The conference was ably managed by the UNRISD team under the new leadership of Sarah Cook. She has recently taken over the helm from Thandika Mkandawire, who completed two dynamic periods at UNRISD and who has since become the first holder of the Mandela Chair at the London School of Economics.