Didn’t we have enough of all wrong economic prognoses? Every year we hear that the crisis will end next year, but things seem to be rather worsening than getting better. So many miscounts suggest that there is something basic that is not taken into account and causes errors. To understand what is happening, we have to make out what the crisis is and how the wrong prognoses are made.
“Crisis” is not only a fashionable term
The word “crisis” has become fashionable in recent years. Some describe it as an economic catastrophe, others – as the new conditions of our lives. The crisis actually has its mechanisms and can be explained easily: there are big discrepancies between the income and the expenses of the population of the Earth. Expanses are bigger than income and economic mechanisms that used to make this be in favor of the West no more work. Incomes and consumption will continue falling. We will have to come to terms with one fact – changing our car every three years and changing our cell phones every season will not be possible. At least not for the majority of people.
Where modern-day economists’ wrong presumptions come from?
The pioneer of the study of modern-day economy was Adam Smith (1723-1790). According to him, the basis of economy had three components: labor division, free market and private enterprise. Explaining labor division, Smith stated that in a closed system it would not happen endlessly and eventually would lead to crisis. It was Karl Marx that suggested that such a crisis will lead to the end of capitalism. So if we follow simple logic, we see that world economy has become such a closed system that can no more expand – and the crisis is visible.
Such a statement was not in favor of the rich and maybe that is why nowadays economists seem to have neglected this logical explanation, taken the part about private enterprise and try to explain that an endless economic growth is possible. How on earth could a closed system grow endlessly?
So we are seeing that the economic order that used to dominate for several centuries is coming to an end. The year 2012 did not mark the end of the world but our epoch is marking the end of the world as we used to know it.