The Monfort Plan (Wiley Finance, April 2010) presents the new architecture of a redefined capitalism. This summary piece introduces the five year action plan and explains why a new architecture may be needed in today’s environment.
Today’s capitalism is based on a vintage architecture that dates back to the 1940s and the American effort to pull the world away from Nazi Germany and Soviet communism. It was then when the four institutions of this old architecture were designed: the World Bank, the International Monetary Fund, the United Nations and the GATT. The old architecture designed by the Bretton Woods elites served a purpose: it contributed to the economic resurgence of Western Europe and brought peace to a continent that had fought wars for centuries.
Subsequent to the design of the new architecture the Truman Administration proposed and implemented the Marshall Plan, the plan for the economic recovery of 17 countries in Western Europe. The plan enabled the vision of Jean Monnet to come up with a European Community of Coal and Steel, the parent of the European Union. These were times of courage and vision. The great changes of the 1940s and 1950s were precipitated by the devastation of the two World Wars and the economic collapse of the Great Depression. The environment set the basis for thirty years of phenomenal economic growth on both sides of the Atlantic.
The second half of the twentieth century had two flavours that modeled the world's geo-political pattern of both Hemispheres: the cold war and the emergence of neoclassical economics fathered by Milton Friedman and Alan Greenspan and implemented by Ronald Reagan and Margaret Thatcher. Neoclassical economics brought about an increasing mathematical sophistication where economic sub-fields such as financial economics prospered thanks to the work of gifted mathematicians such as Merton, Black or Scholes. Monodimensional utility functions prioritized profit maximization over other variables such as human dignity or environmental sustainability. Academia was captured in the allure of models. Our economic policy-makers were constrained by mathematical models that worked on paper.
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