In critical social situations, local or otherwise negligible events can attract global relevance and meaning. The beginning of the worldwide financial and economic crisis in 2008 was marked by a number of such events. Some of them made obvious the soaring level of interconnectedness and complexity of transnational economic, political, and cultural spaces. The intricacy of others exemplified the difficulties facing conceptual efforts to assign a precise diagnosis to the ongoing processes. Still, other events were designed as subterfuge, preventing the development of diagnoses corresponding to reality.

Some outcomes of these processes were due to the action or inaction, achievement or failure of influential individuals. In most cases, though, the events were the spontaneous outcome of aggregated activities of anonymous organizations. Both mechanisms of history-making challenge every effort to meaningfully interpret social dynamics because of the interplay of various factors that shape social structures and processes. The solution is to link the historical intuition to command of sociological knowledge. This linkage makes the precise diagnosis of historical situations and trends the basis for adequate prognostications and efficient practical action. Imperfect or false diagnoses and forecasting may prove the efficient coping with practical challenges to be difficult or impossible.

This type of skillful connection between adequate diagnosis of the historical situation, well-founded prognostication of future developments, and the preparation and application of strategy to cope with difficulties was very much needed with a view to the looming financial and economic crisis. Now, this makes the analysis of the efforts for coping with the critical situation particularly intriguing and important. Privileged by historical distance, one may wonder about the outlook on the global economy published by the International Monetary Fund (IMF) in October 2008. The IMF experts produced a brilliant example of a failed diagnosis and incorrect forecasting. The experts stressed the accumulation of economic uncertainty, but forecasted global economic growth at 3% for 2009. That year was expected to become the turning point toward global economic recovery (IMF 2008: 1). A few exceptions notwithstanding, 2009 did in fact become a critical year for the vast majority of national economies. The first assessment of the decline in global annual economic output by the IMF itself was—0.6% (IMF 2010: 2). The world economy sank into a deep recession. The diagnosis and forecasting made the previous autumn by outstanding economic experts was proved false by actual global processes.

One may interpret this development as the experts’ failure in their forecasting. This is a normal occurrence in science, as well as the applied sciences. It is a trivial matter that negative outcomes from the testing of scientific hypotheses are no less valuable than their verification. However, the falsehood of some diagnoses and prognostications can have far-reaching practical implications. Thus, there are scientific and practical grounds to specially question why the IMF experts failed. There is no evidence that they had intentionally prepared a misleading forecast in order to manipulate decision-makers and the public at large. More likely, the major reason was the neglect of available knowledge about the distorted balance of the volumes of exported goods and services and transborder financial flows. The pathologically speculative over-expansion of financial transactions was later recognized as the key factor negatively influencing all other economic balances worldwide. However, in the autumn of 2008, the long-term destructive effects of bubble-like financial transactions were still conceptually and empirically underestimated.

The situation is not so simple in some other cases of false diagnoses and prognostications that have been announced publicly. There is often strong empirical evidence that they were not necessarily guided by the intention to properly inform decision-makers and the public at large. One widely cited interview by the then US Secretary of the Treasury Henry Paulson is a case in point. The interview was delivered to the press the day after Lehman Brothers declared bankruptcy in September 2008. Referring to the event, Paulson stressed ‘the soundness and the resilience of our [American - NG] financial system’ (MarketWatch 2008). Two years later, a reader could learn from Paulson’s memoirs that on that day he had seen things in an entirely different way. He felt deeply frightened by the awareness that both the USA and global financial systems were on the brink of collapse (Paulson 2010).

European politicians used to repeat the same pattern of public statements meant to spread manipulative optimism. Ten days after Paulson’s interview, the then German Federal Minister of Finance Peer Steinbrück delivered a strategic speech before the Bundestag. He claimed that ‘the financial crisis is above all an American problem’, since the crisis had been caused by financial speculations in the USA (The Telegraph 2008). Later, it became known that at the time of his speech the governments of the most powerful economies were already positioning themselves for the first G20 summit, which was immediately forthcoming. The clearly formulated task of the summit was to handle the global financial and economic crisis (Bradford and Linn 2011).

Given the above evidence, one has to ask what the predominant reasons were for the disparity between statements made about the global situation and the reality of the historical autumn of 2008. Were the false diagnoses and prognostications mostly caused by difficulties faced by individual and collective actors in establishing the truth about complex and complicated global interconnectedness and processes? Or, was the disparity between prognostications and reality mostly caused by intentions to obfuscate the looming risks and to camouflage this subterfuge? A realistic assessment of the historical situation should recognize that both possibilities were at work. Various types of interconnectedness in the transnational economic and political space have reached the point where it was and it is difficult to disentangle causes and effects of globally relevant events and processes. Efforts to achieve this aim are made additionally difficult by the interests of powerful individuals, groups, organizations, and governments to hide available information as well as their own interests, intentions, and actions. As a result, individual and collective actors in the national and transnational social space face constraints as they attempt to cope with social over-complexities in cognitive and practical terms. It is getting more and more difficult to make the ongoing processes transparent despite the tremendous amount of available information, not to mention the sophisticated methods for collecting, processing, and using it.

The barrier of over-complexity might be the major explanation for the very rare efforts sociologists make to strictly analyze and publicly debate intentional or unintentional misrepresentations of global processes. This absence is not a flattering indicator for the cognitive maturity and social relevance of the discipline. Its value used to be recognized most highly for the attempts of leading sociologists to diagnose their times in critical situations of social change (Mannheim 1947; Beck 1986; Volkmann and Schimank 2007). There is an obvious need to approach the present-day overly complex national and transnational social spaces, as well as the multidimensional interplay of economic, political, and cultural factors, thereby developing and applying new conceptual tools. The task is not easy at all because of the confusing mixture of causes and effects in the ongoing social processes.

The first task at hand is the conceptual reduction of the over-complexity of national and transnational economic, political, and cultural processes. The greatest stumbling block is the difference between what is visible on the surface of events and what structurally underlies them. On the surface, the technological division of labor has globally reached striking diversity. Inventions and their technological applications have migrated over the globe. Production facilities continually move from one part of the world to another. Assembly lines receive supplies from hundreds of national and international subcontractors. The ground, water, and air transport infrastructure has followed the growing territorial diversification of production and trade (Narula 2014).

Taking a closer look at the progressing division of labor, one may discover a different picture, however. Below the surface of the increasing diversification of production, services, and financial transactions, tremendous concentration is taking place. First and foremost, this concerns the production of knowledge. It is globally organized like all other profitable industries. The sobering reality is that huge investments support groundbreaking research and development in only a few leading centers of knowledge production. The competition between these global centers is fierce. Only the best funded and most efficient companies in the field of research and development can afford to keep pace with the competition. Besides tremendous financial resources, successful research and development requires the long-term accumulation of human capital and experience along with sophisticated organizational management (Serapio and Hayashi 2004). Flourishing companies in the production and application of breakthrough knowledge reap immense profits since sophisticated legal regulations and institutional mechanisms for protection of intellectual property rights make the spread of cutting-edge knowledge difficult. Thus, social development has been moving and continues to move against the Enlightenment ideals envisaging knowledge as a common good. Newly acquired intellectual achievements in fundamental science and particularly in applied science are being privatized by only a handful of centers of knowledge production worldwide.

Patenting statistics impressively illustrate the concentration of knowledge production alongside shifts in the location of leading innovators. Recent changes have already had profound geopolitical consequences. It is telling that in 2014, among the 20 most active business applicants for patents, 12 were from Japan, China, and South Korea. From the rest, four companies were from the USA, two of them were from Germany, and Sweden and The Netherlands had one applicant each (WIPO 2015: 44). The data reveal a clear shift at the top of the division of the most highly qualified labor from North America and Western Europe to East Asia. It is impossible at present to identify the geopolitical or micro-social consequences of this shift in their entirety. Nevertheless, some consequences of the fundamental change in the technological and economic global leadership are clearly visible in the overwhelming presence of goods and services from East Asia in the national, regional, and global markets. The profound change came about in an evolutionary way following driving forces from below the surface of political and cultural events.

Worldwide financial flows have disconnected themselves from the international trade of goods and services in the same way, evolutionarily and hardly noticeably. Speculative chasing of hot money by investment banks, hedge funds, pension funds, and other major investors has accompanied the process. Financial speculation became the key factor to provoke financial turmoil in Asia, Russia, and Argentina. These national and regional financial crises have revealed a shift toward speculation on the toxic assets of financial derivatives. Their ‘value in exchange’ is peripherally related to their value of use in managing production and consumption. Few experts paid enough attention to the long-term consequences of this new speculative economic over-complexity until the implosion of the global financial system in 2008–2011. Few noticed that global economic growth before the crisis had mostly been driven by rapidly expanding financial transactions under the conditions of stagnant exchange of goods and services (Shiller 2012: 178f.). The volume of foreign direct investments grew more than tenfold between 1992 and 2007, mostly thanks to short-term speculative financial flows (World Bank Database 2012a). In a sharp contrast, the volume of exported goods and services rose by only 10% during the same period (World Bank Database 2012b).

Such disconnect between the stock market and the real economy became possible under conditions of triumphant economic deregulation. Since September 2008, panic-driven efforts at national, macro-regional, and global levels have aimed at establishing transparency of financial flows and at introducing relevant regulations. The short-term goal is to ameliorate the devastating effects of the global financial crisis, which immediately evolved into a global economic crisis. The long-term aim is to identify the symptoms of financial and economic crises in a timely manner, and to prevent them from becoming destructive on a scale as large as what happened in 2008 and 2009.

Although the need for regulation of global financial markets similar to the regulations of the WTO had already been recognized in the Tobin tax initiative, no serious efforts to introduce such regulation were made before the global crisis. The reluctance to do so was not the result of a lack of willpower and was not motivated by specific interests alone. The crisis brought the major problem to light: macro-regional (EU, NAFTA, ASEAN, MERCOSUR) and particularly global political integration have been dramatically lagging behind the high levels of technological and economic integration that have been achieved (Suter and Herkenrath 2012). The activities of the UN and related organizations dedicated to crisis management have turned out to be too limited, or have come too late if at all on many occasions. A global government seems to be the only viable alternative, but this is obviously out of reach at present. Fears that one global actor or several powerful countries might dominate the globe with executive authority, thus undermining the seemingly multipolar world, are too strong.

Given the absence of other organizational schemes which...