CHAPTER 1 2/10/00 3:37 pm Page 1 1. Scenario no. 1: Triumphant Markets In his annual state-of-the-world speech to the United Nations General Assembly, the American President recently described the twenty-first century as a ‘triumph of trade over war’. This optimistic description fairly accurately summarizes the state of mind in the West at the start of the second decade of the twenty-first century. The industrialized countries have returned to full employment. World trade continues to grow in a spectacular fashion. Helped by technological innovation, productivity has revived, even in the sectors where traditionally it tended to stagnate. Above all, the economic ideas of the developed countries are dominating everywhere: most states in the world, apart from a few exceptions, have espoused the principles of free trade, and have used the last 15 years to disengage from economic life. Europe has followed suit, breaking with sometimes century-old traditions of extravagant social expenditure and strong public intervention. Thanks to the thorough reforms carried out since 2005 and the stability of the euro, it has in the space of a few years gone from wobbly competitiveness to a performance comparable to that of the United States. As for the social cataclysm predicted by some, it has not (yet?) happened. Inequality and exclusion have increased, but remain at tolerable levels, to judge by the absence of mass popular protest. The first signs that the European social market economy was running out of steam appeared fairly far back in the twentieth century, but it...
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