Global economy at a turning point : 

Keywords for emerging new order “cooperation, reflection, responsibility”

As it greets the year 2012, the global village is acutely aware that it is standing at a turning point for political and economic paradigms. The global financial crisis that erupted in late 2008 has developed into a crisis for the US and European economies, threatening even the historical experiment of the European Union. The economic growth of China and India, the increasingly evident exhaustion of natural resources, and weather disasters stemming from global warming have raised serious questions about the sustainability of humankind. Rapid urbanization has resulted in more than half the world's population living in cities today, and an exponential rise in the elderly population has highlighted the necessity of taking a different approach in social policies for jobs and welfare services.


But it remains unclear just what the new idea and order, the new paradigm for the future, will be. The values and principles by which the new paradigm organizes economies and societies depend on the questioning and practice of those of us living here today. The keyword that has emerged from recent efforts to determine such a principle is "cooperation." Korean and overseas experts who took part in the 2011 Asia Future Forum at Seoul's Lotte Hotel on Nov. 15 and 16 predicted the next five years would be a period of "crisis and chaos," and presented "cooperation," "reflection," and "responsibility" as keywords for providing a light as we make our way through that darkness.


Various studies in behavioral economics and sociobiology have shown that humans are not merely selfish and competitive, and that they also have strong characteristics of reciprocity and cooperation. People try to do good even when it is not in their immediate interest, and punish acts of injustice even when doing so creates a loss for themselves. This characteristic may be evidence of altruism, but it may also be strategy. Relationships in which everyone looks after everyone else create both a sense of stability and the intangible social capital of trust. This trust, in turn, reduces the costs of transactions, including those incurred in the seeking of information, and increases economic effects compared to when everything is left to the market (exchange). Noteworthy examples can be found in countries like Sweden, Norway, Finland, and Denmark where this kind of cooperation has become firmly entrenched through social norms, laws, and institutions, creating advanced societies through a virtuous cycle of growth and welfare.


Economies of cooperation and reciprocity were relegated to secondary status during the era when the market or the state represented the zeitgeist. But over the past century or so, the effectiveness and limits of both market and state have become clear, and the value of such economies has been newly highlighted as a third principle for addressing these areas. The recent development of digital media technology has also become a powerful driving force in the spread of cooperative economies. Many examples have emerged showing that the kind of reciprocity found in online communities can be more effective and lasting than profit-seeking and marketability. Wikipedia, an open product of collective brainpower, has emerged to overtake the Encyclopedia Britannica, while the open source project of Linux now accounts for 20% of server operating systems worldwide.


For economies of cooperation and reciprocity to function well, it is import to design inducements, rewards, punishments, norms, and institutions effectively so that their constituents abandon "selfish games" in favor of "cooperative games." The selfish games that represent the norms of the market are unsuited to resolving problems like the prisoner's dilemma, the tragedy of the commons, or negative externalities. The actions of Wall Street financiers who make off with bonuses regardless of whether the financial system fails are an example of this, as is the lack of international cooperation to reduce greenhouse gases despite the rapid progression of global warming. Still, not everything can be left to countries, where information is lacking and perfect regulation is an impossibility.


In this sense, the rise of the social economy as a framework for institutionalizing "cooperative games" is worthy of note. If the market takes charge of efficiency (exchange of equivalents) and the state is responsible for equality (redistribution), then the social economy is expected to fill in the gaps left by the market and state through unity and reciprocity. This accounts for the interest that is focusing on concrete instances of social economies such as cooperatives, social enterprises, non-profit organizations, and mutual companies. Internationally, it also represents a way for frameworks like the local community to move beyond competition between countries, promoting mutual welfare through the institutionalization of cooperation games in areas like trade, the environment, risk, resources, and energy.

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