In the last decades the world changed
dramatically. From a
global point of view three disruptive processes are on their way which
can be
called revolutionary: a political, a technological and an economic
revolution.
This
paper aims to give an overview when and how these movements started
what the
essence of these processes is and with which consequences we will have
to deal with
in the future.
Concerning the political revolution the year 1990 can be
characterized as a historical landmark because of two reasons: At
first, it
finished with orthodox communism as it was practiced primarily in the
former
Soviet Union. Secondly, this year created a new illusion which is
described at
its best by Francis Fukuyama in his book “The End of
History” (1990). The Western
form of a liberal representative democracy had overruled communism as
its most important
counterpart and it promised to stay forever as a political system when
combined
with a capitalistic market economy. That means in last consequence
“the end of
history”.
The paper shows how this illusive thinking has been demolished in the
last twenty years and in which way a new regime of political thinking,
the
“autocratic system” of political decision making,
is gaining relevance
worldwide in developed as well as in developing countries. Starting in
China
and spreading over to other countries in the second half of the last
century it
now even reached countries in Europe which after 1990 tried to install
a liberal
representative democracy with great empathy, for instance Russia,
Hungary, the
Czech Republic and recently also Poland.
The paper tries to grasp this process,
to find answers why the attractiveness of the democratic ideal is
fading away
in these days and to show which consequences this political
transformation
process might have for the global economy.
The last two decades of the 20 th century
set off a third great wave of technological invention and disruptive
innovation,
the “digital revolution”. Radical advances in
computing-, information- and communication-technology
may deliver a similar mixture of transformation as societies had
experienced in
the centuries before, getting acquainted to the steam engine,
electricity, the
telegraph and telephone for instance. The larger part of economists and
scientists today sticks to the opinion that this new technological
revolution
will change fundamentally essential characteristics of the three
pillars which constitute
a socio-economic system: the financial, the public and the real sector.
The paper
intends to show how each of these pillars are already affected by the
eruptive
development of digitalization and how this process may go on in the
future with
all its social, economic and institutional consequences.
If the 1990’s are
taken as a historical landmark for fundamental changes in the world,
one miraculous
development has to be stressed as most important: The economic
“catching up”
process of the developing world, especially in those emerging countries
called
the BRICS group consisting of Brazil, Russia, India, China and South
Africa. In
the last 20 years these nations’ growth has far outpaced that
of the US and the
EU, with China already having become the second largest economy in the
world.
The
paper will show how this growth phenomenon already changed
fundamentally the
structure of the world economy and which consequences can be expected
in the future,
if a country like China will be successful in combining elements of the
political and the technological revolution in its development strategy.
This
scenario and the economic system standing behind may be called
“state capitalism”
and it is thoroughly in conflict with what is named as
“entrepreneurial capitalism”,
concretized at its best in the US and its Silicon Valley.
If we go back to
Schumpeter, the Silicon Valley example can be pictured as a realistic
portrait of
what he had in mind in his 1912 book (The Theory of Economic
Development). Whereas
the Chinese kind of forming the country’s development process
and its innovation
culture seems to be more in accordance with the Schumpeter book of 1942
(Capitalism, Socialism and Democracy).
The paper will at the end shortly focus
on this interesting issue, which might be called a
“Schumpeterian Battle of Systems”,
namely “Entrepreneurial Capitalism” against
“State Capitalism”. Perhaps, this antagonism
might shape the development of the world economy in the coming decades
of the
21 st century more than any other event.
JEL: B52, O3, P10