The global financial crisis that struck in October 2008 and stunned the world economy was caused by a disjoint between material assets and financial capital, said Fernando Henrique Cardoso, former president of Brazil (1995-2003), speaking as the Henry E. and Nancy Horton Bartels World Affairs Fellowship lecturer in Call Auditorium April 7.
Cardoso is a renowned political scientist, sociologist and politician, a member of the Clinton Global Initiative and the World Resources Institute, former minister of finance in Brazil and the recipient of the Prince of Asturias Award for International Cooperation. In his talk, "Beyond the Global Financial Crisis: Politics, Economics and Culture," he said the important questions to ask are: "Why did the warnings [of the crisis] go unheeded? And why did the worst-case scenario not materialize?"
Because, the global economy is like a casino, he said, warnings of the crisis were ignored because "speculation is a key element of capitalism. Seeing some players win encourages others to imitate the same risks, and the casino mentality continues until the bubble has burst."
A proponent of increased financial regulation, he noted that such developing nations as China, India and Brazil were able to escape the worst of the crisis because of their strict banking regulations. Because the crisis was not as profound as it could have been, he said, it is not a death knell for free-market capitalism.
"It appears that we must repair the current system, not replace it with something else, but the repair has not happened yet," he said.
Despite the uncertainties brought about by the international recession, "we are on the threshold of a new renaissance," he said, with globalization being the agent of this new change, largely fueled by advances in communication technology.
"The revolutions that change our society are no longer political, but technological. The information sciences and communications … enhance the power of individuals to think, act and decide by themselves, making people more independent but more interconnected," he said.
Technology and globalization will allow for a great transfer of ideas and entrepreneurship "rivaled only to the Renaissance that brought us out of the Dark Ages."
Cardoso noted that in a multicultural world with developing nations acquiring more power, there is no single vision of the future. He called for "the death of utopia" as a political goal, suggesting instead that "we recognize our common human values not in some indeterminate future, but now."
While on campus, Cardoso also spoke to two undergraduate classes. His visit was organized by the Mario Einaudi Center for International Studies.
Jordan Walters '11 is a student writer intern.