Beyond the international crisis: economy, politics, and culture.

• Author: Cardoso, Fernando Henrique

THE CRISIS WE APE FACING today is the culmination of a process of changes that have been occurring over the last 40 years. The primary change was a technological revolution that was a decisive factor in the collapse of the Soviet system and in the accelerating pace of globalization.

First in the United States and later in Europe and Japan, new technologies changed not only the economy but also society itself. The process was different in the socialist countries where bureaucratic rigidity limited innovation to the military arena.

Technology for instant communication led to electronic platforms that have been essential to the expansion of financial capital at a global scale.

It is useful to remember that capitalism has always been expansionary. In its current form, economic and financial globalization has spread market capitalism all over the world. The prodigious development of China is the most advanced stage of this ongoing process of expansion.

During the first years of the millennium, wealth and world trade grew in what appeared to be an irreversible trend whose benefits would extend gradually to many, if not all, countries. In developing countries, a kind of "social democracy for the poor" was being designed with social safety nets and direct monetary transfers meant to help large groups of excluded people obtain the basic conditions necessary for a better life.

If the technological revolution was the engine of globalization, then financial capital was the engine of wealth creation. New technologies permitted the generation of increasingly complex and obscure financial products and intensified the idea of limitless prosperity.

The roots of the 2008 crisis lie In the fact that this expansion occurred without minimum standards for regulation and transparency. The crisis, in and of itself, is not a new or surprising fact. Crises have always been present in the history of capitalism.

Each time that financial capital expands beyond a certain limit, there is a rupture. Suddenly, those who have debts can no longer pay them, and this leads to a chain reaction that affects the entire system.

As in the past, the core problem underlying the current crisis is the gap between financial assets and real assets. This particular crisis has spread faster and wider than others because of the magnitude of that gap and the level of interdependence of the world economy.

The self-destruction of market fundamentalism is the greatest failure in the history of...