September 10th, 1998

Making it work

Economics & Politics

The much-trumpeted triumph of global capitalism has been looking tarnished in recent weeks. Here Jeffrey Sachs offers a new way forward

THE collapse of the emerging markets and its ricochet effect on advanced economies may not be the end of globalisation. But it is certainly the end of an era. Since the miraculously peaceful fall of communism, Washington has aspired to stage-manage the transition to global capitalism. America, in concert with Europe and Japan, would ensure security and arrange deals on world trade and regional stability; the International Monetary Fund would do the financial plumbing, to connect Russia, Africa, Latin America and South Asia, back to the world economy.

This approach is rapidly collapsing. In the short term, there is now a crying need for globally co-ordinated interest-rate cuts to shore it up. But in the longer term, if the current crisis is used creatively, a sounder basis for globalisation is required. If neither of these things is done, we may be entering a highly dangerous new period of confusion and confrontation.

Read the full article at The Economist.


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