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It is now time for Europe to draw upon more than a Thousand years of thinking and philosophy to come up with the solutions and win over the Euro-constituency with a new vision

eu flag2Wednesday, January 09, 2013 - At what stage could be located globalization in the absence of the two world wars? Globalization is a natural phenomenon or an anomaly? Great Depression (1929 – 1940) paved the way of the World War II? The current economic crisis creates the premises of a 3rd world deflagration?

Crisis: economic, social, political, international…..

The word crisis, so frequently used in the current language and brought to the banality, has no clear definition in terms of geolpolitical and international relations.

Historically, the twentieth century is considered the most violent in history, including two world wars and hundreds of crises with international implications, characterized by the appearance and disappearance of great empires and not least the development in an unprecedented way of technology; also, represents the century of establishment of new states, respectively new actors on the international scene, with new and specific interests and conceptions.

Natural question is whether mankind was able to manage these new challenges, in a limited time, all beeing unusual events which continue to challenge our ability to ensure current and future crisis management in geopolitical and geostrategical terms.

Also, we have to mention etymology of the word crisis, which comes from ancient Greek word, which derive from the verb krinein, meaning to judge, to decide. The Greek krisis - judgment, decision, turned into time, but essential etymology crisis lies in the notion of decision – therefore, no need to take a decision without a prior judgment.

We can define the management of international crisis - the process by which a state or an organization deals with a major event that threatens to harm their interests or the general public. Three elements are common to most definitions of crisis:

(a) a threat to the organization or one or more states,

(b) the element of surprise, and

(c) the probability of undesirable, if not drastically threatening occurances arising.

However one must look at the Chinese view of the word crisis. One one part crisis is uncertainty and danger, but on the other side crisis is also indeed an opportunity. And this is certainly with the current crisis the European Union is today - at the peak of a hill looking at an new opportunity to move on.

Great Depression: 1929 - 1940 

Through the existence of humanity upon this earth history has always repeated itself, only time, place, technology, and the form of crisis is different. The current economic crisis the world is facing is somewhat reminissent of the great depression.

After nearly a decade of optimism and prosperity, the United States was thrown into despair on Black Tuesday, October 29, 1929, the day the stock market crashed and the official beginning of the Great Depression. As stock prices plummeted with no hope of recovery, panic struck. Masses and masses of people tried to sell their stock, but no one was buying. The stock market, which had appeared to be the surest way to become rich, quickly became the path to bankruptcy.

The Great Depression of 1929 was an immense tragedy that placed millions of Americans out of work. This ironically led to the concept of the "welfare state" with Rooservelt's New Deal policies to reduce community suffering and accerate recovery. This was also the beginning of the Keynesian approach to economics where government intervention through fiscal policy was seen as a way of regulating the economy and shaping society. 

The change in the social and economic paradigms the world adopted as a result of the great Depression is a lesson for Europe today.

Economic crisis now 

Since 2007, nations around the world experienced a series of major economic and financial problems. The events began with the financial crisis of 2007–2008, considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in human consequences like evictions, foreclosures and prolonged unemployment. We now live in an age where a large proportion of a whole generation of Europe's youth may not have the opportunity to experience work and regular employment. The crisis  led to a downturn in economic activity leading to the 2008–2012 global recession and contributing to the European sovereign-debt crisis. This resulted in a failure of  a significant number of key businesses, decline in consumer confidence, savings, and a heavy drain upon individual wealth.

To some degree the events of 2007-08 are a deja vu of the great Depression. However this time we live within a post- Keynesian, influenced by Milton Friedman's monetarianism, of which its effectiveness has been weakened by massive worldwide debt. The crisis initially arose within the United States with a highly geared home mortgage market that depended upon a continually rising value of homes across the country. When the bubble burst there was not enough equity in most homes to cover the mrtgages and defaults resulted in banks yielding real losses, which couldnt be sustained on ledgers that had no real value anymore. This crisis in debt led to falling stock markets and a general crisis in consumer and business confidence which led to a massive downturn in demand, speading the pain around the world. 

As we have seen Europe suffered from a decline in consumer demand lowering general economic activity and lowering the tax base, resulting in a dramatic rise of public debt. With a unified currency in the Euro, a currency that all believed would form a protective economic barrier around the Eurozone, a weakness was exposed where individual countries could not manage their currencies exchange rates to stimulate economic activity and trim competitiveness in order to maintain finacial and economic wellbeing. This has resulted in returning to fiscal means, i.e., loans to prop up the unified economy under one currency, both financially and politically and expensive remedy. The economic experts of Europe need to sit down and re-model how the Euronomy really works and develop a new framework for economic management, to prevent this problem occurring again.

Like the Great Depression of 1929, there has been great cost throughout Europe socially with unemployment, a problem with deep psychological consequences that may well reverberate into the next gewneration of Europeans. This will be one of the results of the curent financial crisis that will affect living standards, quality of life, values, and even industrial innovation.

Reflections 

If the above two problems are tackled then the Eurozone will be much stronger for the crisis. However this needs a complete reorientation towards social-economy within a new paradigm for the century. And as this challenge is a difficult one that Euro politicans and bureaucrats would rather not face, the potential to build a stronger Europe from this crisis may be swept under the carpet.

It is now time for Europe to draw upon more than a Thousand years of thinking and philosophy to come up with the solutions and win over the Euro-constituency with a new vision. The potential of this economic crisis might be the catalyst of a new beginning, a re-affirmination of a new Europe relevent to the 21st Century. The EU is not an end in itself, but a means to a better society for all those within its boundaries, and this very issue needs to be re-assessed to move the EU to the next level. And this incidnetally is a must, not just a thought. There must be a re-assessement of the paradigm of being a unique and rich culture and economic community within a greater culture and economic community. Tackled right, this appreciation of diversity, rather than pressure for conformity may actually be one of the strengths the EU has actually been looking for in its Euro-community formula. This requires a re-assessment of the concept of identity. One can be proudly a citizen of a country and proud of the EU at the same time. The legilators must recognize this socially, culturally, legally, and economically. This may therefore require reconsideration of the divsion of powers within the union.

Partipatory democracies work better with a shared vision. The proponents of the EU over all these years have worked hard on building a participatory democracy that the whole world can be proud of, but just as a representitive democracy needed and educated population to perform well, a participatory democracy requires a shared vision. The vision of the destination must be shared whereas the road to take can be discussed.

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Written by Magdalena C. Butucea & Murray Hunter    

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