ΜΕΤΑΦΡΑΣΗ ΕΚΠΟΜΠΗΣ
Ξεκινούμε από τα 30’’.
• The main issue that attracts permanently our interest in this country during the last six years is the economic crisis and how we can get out of it. There are great men and excellent minds in this country that are attempting with their work to address this issue and who are willing to share their thoughts with us, each one from his field of expertise. Of course we are talking about the Economy, and we have invited today a specialist on the issue, Mr Harris Topalides who is a writer and a Doctor of Philosophy in Economics. Mr Topalides welcome.
• Good day Mrs Anagnostidou and thank you for the invitation.
• Thank you for responding to our invitation. You have written a book titled ‘The global crisis of prosperity’. I notice an irony in the title when you are referring to prosperity. Is it so?
• No, there is no any irony at all. I just wanted to return to a meaningful notion of the term ‘standards of living’.
• I understand that elaborating in your research the methodology of System Dynamics and the principles of Economic Theory you come up with a conclusion that the dominant currently economic policy will drive finally to a dead end. This is how one can summarize the approach of your book to the problem. I want you to talk about this policy that aiming at the address of the emerged environmental, as the climate change and the elimination of non-renewable natural resources, it envisages the transition to a knowledge economy.
• Please allow me a more general introduction so that my answer might be better clarified. We are living in an era of great changes in both, our way of life and the structure of the Economy. This is something that all of us are realizing and even more in a global scale. The question arising is the following: Is this change explained by a mere change of policy mix or we have to do with something bigger? My answer is for the latter, that we are in front of something bigger. What exactly is this? It is about the change of the development model, the post-war industrial one. The course of economic development is transiting to new pattern. Why is this happening? This is happening because by the late 1970’s, a new set of environmental pressures emerged in the form of what we know today as the climate change and the gradual elimination of non-renewable natural resources. Their emergence required a new policy response. The type of this response that was adopted determines the strategic framework of the current economic policy worldwide. If I have the opportunity I can explain it in a few minutes.
• Of course. We are listening.
• The response which was adopted aimed at the address of these pressures namely, first, the climate change resulting by gas emissions from the production process that create the greenhouse effect and, second, the effect created by the accumulatively large consumption of non-renewable natural resources due to the continuous increase of the production output, up to the point that an elimination of their stock in the future may be envisaged. This policy response lies exclusively for their address on technology and this is the source of the problems we are facing today. Why? Because the new technology economizing environmental load requires for its launching even more capital funds than the previous labor saving one. For facilitating this vast increase of capital required in the economy, according to my opinion, the globalization of money and capital markets was launched, because it allowed this way the greater leverage of capital that is, the greater returns on capital, so that it can respond effectively to the new demand for the financing of new technology. However this kind of response harms badly the employment and threatens seriously the social cohesion. In his respect I elaborated System Dynamics in my research because, since the problem we are dealing with, is a change of unusually big scale with long term implications, as the most of us are realizing, we need research skills compatible with longer term considerations rather than the traditional ones employed by economic theory.
• So, which are those skills?
• I used the skills provided by System Dynamics. I can explain in brief. Dynamic Systems are systems of differential mathematical equations that represent real problems without a significant abstraction. Assuming that the system producing the course of economic development is functioning according to the theory of neoclassical economics that determine the dominant currently policies, System Dynamics allows us to examine in a preferred time horizon of 50, 100 or 150 years, if the course of development resulting by its operation keeps the standards of living high for the chosen horizon. What I indeed induce is that in a strategic time horizon the followed course of development is not sustainable. This is ought, first, to the major structural inefficiency characterizing the new development model in addressing the high density of the social pressures arising due to the fact that development is now much more dependent on capital∙ second, because the vast increase of capital inflow required in the economy, entails a continuous acceleration of the financing of technology that is, a continuous acceleration of the capital intensity of the production process. In the conditions of a self-regulated global market, this necessity leads inevitably to financial “bubbles” as one we saw in 2008 with the explosion of the global financial crisis, whose repercussions we are still suffering. For those two reasons we should aim at regulating the structure of the new development model so that the intensity of the social pressures arising, in the form of high unemployment and the soaring of income inequalities, is set under control. In order to accomplish this goal we may proceed as follows. To start with an inductive reasoning, the accomplishment of this goal implies that we are in a position to address the environmental pressures that motivate the type of current development policies with labor intensive policies also.
• What do you mean?
• The main problem nowadays is that we are trying to address environmental pressures exclusively with capital intensive policies (via technology). We can leave from that if we change our approach to economic growth. We should abandon the merely quantitative concept of growth, as a percentage of GDP, which has a short term orientation and which is the way we were addressing the problem successfully up to now. We have to proceed to a qualitative determination of growth adopting qualitative criteria for its measurement. We shouldn’t care from now on about how much does the economy grow as a percentage of GDP but if this growth is produced in such a way that the social and environmental sustainability of development is attained.
(Είμαστε στα 7’.47’’)
• You are referring to a more austere and equitable prosperity paradigm. Is it so?
• I argue that this should be our expectation for the future. I am saying that because if we have to transit to a new prosperity paradigm, a great change is required in our way of life and in our philosophy about life.
• This is very difficult to take place.
• It is very difficult indeed, but what we are living today it is very difficult too.
• I am not going to disagree on that. What kind of efforts should we undertake then? First we have to realize what is happening to us and which you are describing in economic terms and in a complex way I would say in your book. On the other hand which are the initiatives that should be undertaken first by policies, which are not appearing to have innocent intentions, and then by societies?
(είμαστε στα 8’39’’)
• Τhis is not an issue concerning innocent intentions or not. It is rather regarding an economic policy that deterministically has in its disposal certain means and instruments that correspond to the strategy of growth adopted. Politicians have to serve this policy if they want to afford economic growth and this is not a question of morally good or bad intentions. We cannot address the problem if we don’t change the way we are promoting growth and we are going to have the same economic policies from now on, independently of what political party is in the government as we have seen it recently in our country. I shall mention a good example on how we can achieve a smart growth as I have described it. Since 2000, a new financial market has emerged in Europe originated from the financial sector, where I come from, the market of Social Responsible Investments. This market is promoted by Eurosif – European Social Investment Forum that acts as an organization umbrella of the existing national corresponding Forums. Aiming programmatically at the address of sustainability through financial markets, Eurosif promotes in various segments of financial markets the responsible investments, which means first, they are friendly to environment by means of not producing any environmental load, second, they are creating new jobs and, third, they adopt a long term perspective in their profitability and efficiency. The shareholders of such investment vehicles are definitely interested in the long term viability of their capital investment rather than its short term returns. This is a new approach and I inform you that participants in this market are all the big players in financial markets as CITYBANK etc. The size of this market is still small compared to the main financial markets, but it is steadily growing. UN has also undertaken initiatives in this direction. The shift to such a kind of investments and their financing will, surely, take time. Greece is traditionally stepping back in respect to major European developments. However, it happens now to be at the peak of global crisis. This coincidence commands us Greeks to undertake at this instance the responsibility to act as pioneers adopting new approaches in facing our problems. I am quite sure that in a specific time horizon and as long as there will appear no light for exiting from the situation we are living today, we will start discussing alternative responses to the crisis that will be directly proportional to the magnitude of the challenges we are facing.
• Thank you. Mr Topalides is a Doctor of Philosophy in Economics. He has studied Mathematics in Aristotle University of Thessaloniki and holds two Master’s Degrees from the City University of New York, USA. In his professional career he served as a high ranked executive in the financial markets of Greece and other countries of South Eastern Europe, as an advisor to corporations and the Ministry of Development of Greece and, as a member of the Board of Directors in listed in Athens Stock Exchange and non-listed companies.
