How a structural crisis is flipping the economic script and calling for the green transition in Serbia

Abstract

These days in the economy and society, along with well-known and highly elaborated internal structural imbalances created by economic neoliberalism and exacerbated by fault lines in reactive policies during serial crises, new disruptive forces related to external asymmetric shocks have been unleashed. Due to widening imbalances, the economy fell in a structural crisis (cascading crisis, rolling crisis or a confluence of crises). A high probability of the emergence of apocalyptic consequences warns us that the situation is extremely alarming. The global economy and the planet are in a serious trap of dying slowly but surely. Finding a systemic solution to rising imbalances is the imperative of our time. The so-called "green transition" is a big idea to mitigate the crisis and make a recovery. It is a way to annul the existing structural imbalances and misconceptions of reactive policies, as well as a platform for sustainable economic growth in balance with the limits of nature. This approach is particularly suitable for developing economies that aspire to catch up with the developed world through new industrialization. In this paper, we attempt to concentrate, among dozens of complex issues concerning the transition from an old to a new economic order, on those solutions pertaining to the economic system adjustments in line with the natural limits in a landlocked, small, open, and developing economy such as Serbia. The great majority of economics scholars have agreed upon the root causes of the crisis as well as the key assumptions regarding problem solutions. In defining our proposals, despite different angles, we intend to integrate the most effective elements of a widely accepted but outside-the-box view. No doubt, it is not certain for how long the current crisis will last. Some mitigation activities already exist. Unfortunately, it is not enough. To reverse the regression trend, four questions need to be answered. What is a global priority for action, and what to ignore? What would be a feasible and effective conceptual platform for the crisis mitigation and the subsequent revival and establishment of a sustainable and inclusive economy? How to coordinate transformative activities in the right direction at the local level? How to weight different instruments to finance the transition from a new normal to a better normal, particularly from the perspective of the mission of economic entities and performance measurement system? To answer the previous questions, the economic theory and public policy should first replace the nexus of neoliberal rules, particularly by making well-being a relevant tenet, not only selfinterest. That requires a paradigm change, in both microeconomics and macroeconomics, by adopting a new nexus of economic rules, capable of explaining the behavior of economic agents, sometimes irrational and inconsistent, but always under the impact of natural limits and "universal connectivity" as a dominant free good in the Fourth Industrial Revolution. The above requires the implementation of the circular model of growth and heterodox economic policy platform. To make the transition to a new system efficient, funding of this endeavor should be of paramount interest. Following the previous line of reasoning, the material is organized in six parts, besides Introduction and Conclusion. The Part 1 is dedicated to the necessity for a fully radical change to mitigate the structural crisis and to set up a new conceptual platform for sustainable and inclusive growth. The Part 2 is focused on the fault lines of the neoliberal economic policy platform, confirming that this platform cannot provide the conceptual base for economic policies during the system change. The Part 3 proposes the green transition as a solution to the aforementioned problems. To invigorate a greener economy, the Part 4 is suggesting the new ways of financing as a smart enough pivot. The Part 5 discusses the transition toward a greener economy as a challenging response to the current economic situation in Serbia. The Part 6 is focused on the necessity for the accreditation of the green transition program for Serbia.