OECD Forum 2012: New Approaches to Economic and Societal Challenges
The Great Recession was due to the unravelling of a number of tensions in the system. These tensions, and the imbalances that provoked them, were not reduced thanks to any government policy, but built up until they exploded into a systemic shock that plunged the world into a recession and would have destroyed the financial system if states hadn’t pumped trillions of dollars into the economy.
These tensions have not disappeared, and in the years to come could be aggravated by a number of factors including global warming, population ageing and competition for natural resources. At the same time, many citizens have lost faith in their government’s ability to react to economic and social challenges, partly because nobody seems to understand what’s happening, and thus be able to control or significantly influence the events.
This is a legitimate concern in a world characterised by complexity, composed of multiple systems (the environment, economy, politics and society) with interactions, feedback, nonlinearities, singularities, tipping points…
Policy makers need to convince citizens that things are not out of control, but also acknowledge that the correct controls have not necessarily been designed or applied. We need to rethink the kind of society we want and reexamine the economic models and other tools we use to create it.