Market Interference in the international arena - PART 3 ISOEconomics / Isokratic Econommics
On the other hand, we see the international markets interfering in national economies, by injecting vast amounts of money through the IMF.. Absolutely necessary for the benefit of both the sick and the healthy, if the disease is to be stopped reaching the healthy.
Writing off massive national debts of struggling economies, by a co-ordinated action of the advanced economies, again is a form of market interference; However this is a healthy intervention. A preventative interference, preventing the collapse of these struggling economies, which otherwise would have lead to inevitable catastrophic results of both humanitarian and an economic nature, to the rest of the world. The secret here is prevent those other interventionist policies which have driven the struggling economies to the near distraction point.
In the USA nowadays, the government, through market interference, is examining whether to break up Microsoft, for it is claimed that Microsoft has abused it’s monopoly power. Another healthy market interference, with preventative and protectionist character, preventing monopolistic abuse and protecting the consumer from being abused, if indeed the case is proved so; For not everything that shines is gold.
In fact we know that on at least four occasions the international financial situation would have collapsed without the intervention of the monetary authorities; 1982, 1987, 1994, and 1997. Even so, international controls remain quite inadequate and lack the global substance required.
The international financial institutions and the national monetary authorities at times of crisis co-operate fully. However, there is no international central bank, no international regulatory authority to compare with the institutions that exist on a national level. The introduction of such institutions and regulations will not be easy, of course. It is widely accepted that both money and credit are connected with national sovereignty and national advantage. It does not have to be like this though.
Unfortunately, within the present system, nations are not easily willing to co-operate; simply because they believe that some kind of international regulations, are seem to compromise their sovereignty, which need not be. It need not be so, if we have a global system in place, like Isokratia, which will lead and enable Iso –Economics in a global scale, for the benefit of all around the globe. Such a move we see now in the EEC where with the introduction of the euro and the European central bank they are slowly but surely succeeding to set such policies I propose in a regional level within the E community. This can be an example to imitate and expand to a global level.
For instance, the role and factions of IMF can be changed to meet the new global requirements. The IMF factions as it stands presently, its primary mission is to preserve the international banking system, not the global financial market. The IMF and its present formation, lacks the sufficient resources to act as the global monetary stabilising force.
Lack of global regulatory bodies to regulate the financial markets, matched with the present inadequate multi-currency system, in a global economy, will continue to bring about financial shocks, to both, the central and peripheral levels. The fluctuation of the exchange rates, between the three or four major currencies, against each other, can only cause more and more complications. Changes in interest rates and exchange rates, import financial shocks.
We only have to look at the international debt crisis of 1982, which was precipitated by a drastic rise in the USA interest rates. The Asian crisis of 1997, was touched off by a rise in the US dollar. The intra-European currency crisis of 1992, was caused by similar exchange rates fluctuations, between Germany and the rest of Europe. By nature, such disturbances in the global capitalist system and financial markets, tend to have this proportionately larger effect, at the periphery than at the centre.