The second dimension of the crisis is its interconnected nature. The world is not flat; it is more like a rapidly contracting fishbowl. Globalization explains why the thrashing of a small fish like Greece, which represents 2.3 percent of Europe’s economic output, has threatened to drown the Continent. It also explains the plight of a goose farmer I got to know in a remote, mountainous part of Anhui Province. Before the crisis, the down from a single goose could be sold for about 13 yuan (about $2), but after the crisis the same amount of down sold for less than 7 yuan. The farmer’s son, a migrant worker, was laid off from a factory, after numerous orders from overseas were canceled.

In the 1970s and 1980s, countries like China and India began to reform their economies, while information technology revolutionized production and marketing. But the global boom that resulted, with fast growth and low inflation, cannot be reproduced. The world economy has not found a new source of momentum since the Internet bubble burst in 2000. Instead, financial institutions, governments and consumers tried to achieve prosperity through reckless lending and borrowing (much of it for housing). Now rising labor and resource costs, growing inflation pressure and large sovereign debts have made fiscal and monetary policy less effective.

What can be done? First, we cannot expect neoliberalism — privatization, deregulation, free trade — to revive growth. The credit paradox is only narrowly a financial crisis — it is a crisis of faith, one that summons us to turn away from a capital-centered economy to a human-centered one. Capital cannot be expected to be self-policing. To prevent it from mortgaging humanity’s future, governments must reject laissez-faire attitudes. The “visible hand” of government is needed to manage the markets, revamp regulatory systems and bridle reckless behavior. Governments should encourage businesses to invest in the “real” economy — to promote technological innovation and job creation rather than speculation and profiteering.

Second, the world’s largest economies — the United States, China, the European Union — must improve coordination on macroeconomic policies, as well as regulation and trade, and resist the temptation of protectionism.

Third, balance must be restored: between the financial sector and the real economy; between domestic and overseas demand; between developed and developing countries. China has moved to encourage domestic consumption instead of relying solely on exports.