In East Asia the crisis has reversed 30 years of strong economic growth . And the contagion has been spreading to Australia, to Russia, to parts of Western Europe and the Americas. Some experts blame the crisis on poorly supervised financial systems, on unhedged loans sunk in bubble investments and on crony capitalism. I tend to agree with those who trace it to the essential volatility of financial markets, which is being compounded by the revolution in the information and communications technologies. Price of progress But greater even than the fickleness of capital markets is the volatility of free-ranging capitalism.
Capitalism is relentlessly inventive.
It defines itself by its technological virtuosity. Capitalism works by constantly displacing old ideas with new and better ideas, products and methods. Today's changes in technology and the globalisation of production are accelerating, driven by powerful new inventions. While these changes may benefit an economy as a whole, they can harm its more vulnerable sectors. And that is what the enhanced mobility of capital and the productive processes is doing to low-skilled workers in the rich and poor countries.