Table Speech

What Will Happen Next to the Global Jungle?

June 23, 2010

Ms. Noriko Hama
Doshisha Business School

1. What has happened so far?
“Global jungle” describes the harsh reality of the global economy surrounding us today. The following two factors led to the world we face today. Firstly, “we all became isolated.” We ended up in isolation in order to survive the harsh competition, thus pushing aside others and fighting over one’s footing in the global jungle. Secondly, “the theory of the insane became prevalent.” In the financial world, this theory of the insane impelled many investment banks to venture on risky operations to beat the others in speed and volume, eventually triggering the chaotic Lehman’s Shock and the consequent global depression.

2. What is going to happen?
I want to point out the following two scenarios of the possible future course. Firstly, a great war in the currency market, and secondly, the shift towards controlled economy will break out.

Today, each one of us fights a harsh battle in isolation, driven by the theory of the insane. In Japan, we must tackle serious deflation. History has proved that the “great war in the currency market” always emerged in the fatal phase of all times, as countries pursue “its own survival and victory, without caring for others.” In other words, countries try to win over the competition by devaluating one’s currency to boost exports and to curb imports.

The plight of today’s global jungle is often compared with the economic situation during the Great Depression in the 1930s. The severe economic and social turmoil in the USA and across Europe and consequential damage to major currencies – US dollars, British pounds and French francs – led directly to World War II.

China and the US both set out new policies that could be interpreted as hidden declarations of war in the currency markets. China let its Chinese yuan float, opening the door to participate in the currency war should other countries provoke it. The US announced its ambitious 5-year-export-doubling plan in the State of the Union Address made by President Obama this February, which is only attainable through very drastic weak-dollar-policy.

Major countries seek a competitive advantage from a depreciation of their own currencies but they recognize the inherent dangers if other countries do likewise as collective devaluations would debase currencies.

Now let me touch upon the second future scenario, “shift towards controlled economy.” As the saying goes, “A burnt child dreads fire.” I am afraid that the Lehman’s Shock has whipped up excessive fear against unregulated capitalism, thus leading to the opposite direction of re-regulating all and confining within a certain framework.

For example, restriction was imposed on short-selling in Germany recently. I think restriction, in itself, is fine, yet excessive interference through manipulated regulations can become dangerous. Countries in the euro zone seem to be shifting towards tightening regulations on their finances, even imposing penalties in cases of promises breached. What is alarming is that countries in severe conditions seem to be ready to take extreme steps to control their finances.

3. What should happen next?
Let me summarize what should happen next in the following two points.

Firstly, we should cast aside our egocentric values of “caring only for oneself” and switch to a totally different set of values of “caring for others.” In other words, we should refrain from “pursuing our own achievements aggressively to survive in the global jungle, which could lead to a great war in the currency markets.” Countries must seek ways for reciprocal relationships and try to see that domestic demand in one country will generate foreign demand in other countries. This is what I call the “theory of the sane.”

If I give you a concrete example from my professional field, universities throughout Japan today must survive in the highly competitive jungle. If we try to “care for others” among rival universities, what will happen? Universities can cooperate in inviting new students, which could benefit all in the end.

The second point on what should happen next is that the driving force propelling global jungle must switch from global capitalism to global civitas. Each one of us, as a global citizen, must become willing to “care for others.” Should we race ahead in the global jungle, we will all suffer in an eternal darkness. Enlightened citizens “caring for others” will bring the dawning of a new era.

Many of you might think such a total change in our way of thinking is “surely not” going to happen. Yet, many turning-point events in history have taught us that those “surely not” events did actually happen. The world is a continuous flow of “surely not” events, for better or for worse. I believe it is “surely possible” to realize a civil society where people “care for others.”