Modern democracies today are confronted with a deep crisis of confidence that three decades of poorly managed globalization and exaggerated faith in the efficiency of markets have contributed to. While markets may produce huge benefits, an all too orthodox belief in their merits has left behind a raft of challenges that now threaten to overwhelm our societies. These include inequality, climate change, financial instability, decaying infrastructure, and a backlash against globalization demonstrated by a widespread popular feeling of lost control over politics as well as individual destiny.
To solve this crisis and prevent populists from filling the vacuum, governments need more than just answers to specific policy challenges. If we are to restore the credibility of our democracies, a new narrative and policy framework is required that recognizes the limitations of markets, lays out a more innovative role for the state and broadens our view of what comprises economic success. To regain confidence in the future, people must believe that policy-makers are driven by a vision of society in which the fruits of economic activity are shared broadly and where people exercise real control.
Fighting climate change, reversing inequalities, building public infrastructure fit for the future and ending the crisis of globalization will require more than some technical adjustments. It will need a renewal of the principles that guide policy makers. For too long, they have been overly optimistic about the capacity of markets to solve our challenges. To promote such a new paradigm, this Forum will bring together innovative academics, policy makers and the broader public in Berlin and beyond.
"For decades, monetary policy has been treated as technical, not political. The pandemic has ended that illusion forever." writes Adam Tooze in Foreign Policy. Our update from the new paradigm community.
Climate change, dangerously high inequality, unstable financial markets and the looming crisis of globalization – all these challenges require fundamentally new answers — by Thomas Fricke and Simon Tilford.