Professor Roberto Unger’s opening statement, “The world is bent under the yoke of a dictatorship of no alternatives” intrigued the crowd at CIGI’09. His provocative address captivated the audience.

The lack of diversity in the world today is the result of two powerful impulses at work, he said, are “the desire for socially inclusive growth and the struggle to affirm collective originality to develop distinct forms of life.” This lack of diversity is a partial cause of the crisis.

Mr. Unger argued that progressives have squandered the opportunity the economic crisis has presented to overthrow current policy directions; they have been unable to restructure the current international order; and they have failed to initiate strong national projects.

He suggested that responding to the crisis with adequate audacity and vision would be the first of three great levers with which to destabilize the present situation. The second would be to reconstruct the international economic and political arrangements. The third, and most important lever, would be to form strong national projects.

The present debate about the crisis suffers “a poverty of the ideas that animate it,” Mr. Unger explained.

There seems to be only one idea: “a shrunken and mummified Keynesianism providing the dim light by which we try to understand and to master the slump,” he said. In this light, three significant but shallow themes have dominated discussion: the rescue of the failed financial institutions; the need to regulate financial markets domestically and internationally; and the imperative of adopting expansionary monetary and fiscal policies.

Professor Unger described two kinds of progressives: a recalcitrant left that has no real alternative to a reliance on globalization and markets but slowing down progress, and a resigned or surrendered left that accepts without question the market economy and globalization in their present form, but proposes to humanize them via redistribution through tax and transfer. Mr. Unger suggested that the world needs a third, reconstructive left that proposes to reorganize the market economy in the service of greater inclusion and opportunity, and redirect the course of globalization.

According to Mr. Unger, greater inclusiveness and improved organization in the market can be achieved by: 1) overcoming structural inequalities and the tendency to live off borrowed money; 2) reshaping the relationship of finance to production; and 3) devising policies that link recovery and redistribution. The order established by the great powers after the Second World War has sought to create greater and greater uniformity that humanity, he said, rejects.

He pointed to the United States — past and present epicentre of the crisis — to illustrate his point.  The model of the market and mass consumption developed by the US after the Second World War requires the popularization of purchasing power, which in turn depends on a progressive redistribution of wealth and income. However, after the initial bout of redistribution,  the US witnessed in the late twentieth century a violent concentration of wealth and of income.

Americans reconcile this regressive redistribution with maintaining a market in mass consumption goods because of the steep dynamic of household indebtedness, which was made possible by the overvaluation of the housing stock as collateral. Mr. Unger explained that a pseudo-democratization of credit replaced the progressive redistribution of wealth and of income that failed to occur. America established, to its detriment, a credit democracy instead of a property-owning democracy.

The problem cannot be seen as one reconciling US flexibility and European social safety nets. Such reconciliation cannot be achieved. Inequality cannot be tackled except with changes in property regimes, he said.

”An alternative response to the crisis is unlikely unless it is accompanied by the reconstruction of international, political and economic arrangements,” Professor Unger argued.

The post-war political and economic order imposes an increasingly stringent blueprint on humanity which enforces, in the name of free trade and political security, a convergence to the same institutions and practices worldwide. He suggested that humanity naturally and necessarily rebels against this convergence.

Mr. Unger advocated four projects of liberation to go beyond the limits of the present predicament. First, provide an economic shield to national heresy, split the economic orthodoxy in half and reaffirm fiscal realism. Second, democratize the market economy and reshape it in the service of inclusion and opportunity, and in particular extend access to the advanced sectors of production and of learning. Third, revolutionize education in large, unequal and federal countries in order to reconcile local management of schools with national standards of investment and quality. It would make an experimentalist education — which stresses analysis, recognition of the early stages of learning, a dialectical approach, and cooperative practices — available to all. Finally, deepen democracy by creating institutions that attenuate the dependence of change on crisis.

“Great secular projects of emancipation, the liberal and socialist projects and the world popular romantic culture, have prepared humanity for the idea that it can be lifted up,” Mr. Unger said. The objective is not simply a marginal advance in equality, but the empowerment and greatness of the ordinary person.

“The transformative opportunity presented by the crisis, however, has already been largely wasted and in general there is a vicious circle, a paradox,” he explained. “We want institutions that would diminish the dependence of change on crises, but the induction of such institutions in turn seems to depend on crises.”

Professor Unger argued that we need to employ imagination in place of crisis to create change.

“Imagination, imagination, to the rescue,” he said.

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