Prof. Milan Zeleny, of Fordham University in New York, is being vindicated in his theory of Transformation (see also http://en.wikipedia.org/wiki/Transformation_in_Economics), explaining why current „crisis“ is not a product of the business cycle, but an L-shaped transformation to a new normal, a unidirectional and irreversible shift towards new economic regime, quite similar to the agriculture→industry transformation of the Industrial Revolution.
Zeleny, No. 1 Czech economist in terms of the Hirsch Index of publication and citation, has warned about the ongoing transformation since 1979, when he observed the accelerating shift towards self-service (outsourcing to customer) as a precursor and harbinger of the gathering forces of the new, post-services transformation.
Larry Summers, in his Nov. 8 speech at the IMF, stated that the U.S. is now “stuck in secular stagnation” – a slump that is not a product of the business cycle but more-or-less permanent condition. Summers recently withdrew from consideration to run the Federal Reserve, although eminently qualified as past Treasury secretary, president of Harvard and director of Obama´s NEC. Summers stated that: “conventional macroeconomic thinking leaves us in a very serious problem”. The conventional wisdom has failed – the medicine that once worked isn´t working anymore.
Of course, the notion of “secular stagnation” is similar to Adam Smith´s notion of “the stationary state” when a formerly wealthy country has ceased to grow. Also Schumpeter´s “creative destruction” postulates such long-term qualitative change. So called Great Recession is just a symptom of the underlying “Great Transformation”, characterized by Great Deformation and Great Degeneration as well, Zeleny said. The question is: What are the causes of economic transformation?
Zeleny´s theory, fully supported by empirical data, postulates the sequential exhaustion of employment opportunities and potential in the four sectors: agriculture, industry, services and government (including unemployment and welfare). These four sectors cannot generate more employment because of their productivity growth rates, self service and high technology acceleration. There is no “fifth sector” in human economic endeavor. Therefore a Great Transformation is taking place, characterized by deglobalization and relocalization of economic activities. Advanced economies (Japan, USA, EU) are increasingly incapable of producing full employment without financial bubbles or massive stimulus, brought forth by misdiagnosed state interventions.
Prof. Zeleny has made two of his popular articles, “Crisis or Transformation? Where the jobs are…“ and „The economy is an organism, not a machine“,available for illustration.
A selection of Zeleny´s research papers on the topic of transformation:
- "The Self-Service Society: A New Scenario of the Future," Planning Review, 7(1979) 3, pp. 3-7, 37-38.
- "Towards a Self-Service Society," Human Systems Management, 1(1980) 1, pp. 1-3.
- "Socio-Economic Foundations of a Self-Service Society," in: Progress in Cybernetics and Systems Research, vol. 10, Hemisphere Publishing, Washington, D.C., 1982, pp. 127-132.
- "Self-Service Trends in the Society," in: Applied Systems and Cybernetics, Vol. 3, edited by G. E. Lasker, Pergamon Press, Elmsford, N.Y., 1981, pp. 1405-1411.
- "Self-Service Aspects of Health Maintenance: Assessment of Current Trends," Human Systems Management, 2(1981) 4, pp. 259-267. (With M. Kochen)
- "The Grand Reversal: On the Corso and Ricorso of Human Way of Life," World Futures, 27(1989), pp. 131-151.
- "Structural Recession in the U.S.A.," Human Systems Management, 11(1992)1, pp. 1-4.
- "Work and Leisure," in: IEBM Handbook on Human Resources Management, Thomson, London, 1997, pp. 333-339.
- "Industrial Districts of Italy: Local-Network Economies in a Global-Market Web," Human Systems Management, 18(1999)2, pp. 65-68.
- Human Systems Management: Integrating Knowledge, Management and Systems, World Scientific, 2nd Printing 2008.
- “Machine/Organism Dichotomy of Free-Market Economics: Crisis or Transformation?” Human Systems Management, 29(2010)4, pp. 191-204.
- “Genesis of the Worldwide Crisis,” in: Atlas of Transformation, JRP Ringier, Zurich, 2010.
- “Crisis or Transformation: On the corso and ricorso of human systems,” Human Systems Management, 31(2012)1, pp. 49-63.
