Angel Gurría is secretary-general of the Organisation for Economic Cooperation and Development. The views expressed are his own.

The global economy is facing its worst crisis in decades. Solving it and ensuring it does not happen again demand new initiatives.

Our latest Economic Outlook sees some two-thirds of OECD countries languishing in a recession this year, with demand contracting and unemployment soaring by at least 8 million by 2010. The crisis is affecting families and communities across the planet. The situation could worsen and we’ll issue updated forecast numbers in March.

For now, the financial system remains paralysed, starving the economy of oxygen. The OECD is working with the world’s governments and other organisations to end the crisis and get our economies moving again. Restoring strength, confidence and growth is the priority, though we must also begin shaping the world economy of tomorrow.

What kind of world will that be? A return to business-as-usual is not an option, yet we need healthy financial markets for our prosperity and development.

However, massive systemic policy and market failures underlie this crisis, and we will need new ideas and some fundamental changes to our models if they are to be corrected.

President Nicolas Sarkozy of France recently remarked that solving the crisis is not about embracing some new ideology, but about being pragmatic in a situation we have not known before. Last week, U.S. President Barack Obama’s inaugural speech echoed this by saying that the question today is not whether government is too big or too small, but whether it works. We could not agree more with both leaders.

Evidently, unfettered financial markets do not work. Worse, their excesses can damage our welfare and future, and their failure can cost the public purse billions to put right.

And though government is in the driver’s seat now, we also know the limits of the state when it comes to running the economy, and the damaging results of excessive intervention on growth and progress, as the hard lessons of history testify.

Clearly, what must work is a healthy balance between markets and governments. We are entering a new global age and will need new rules of the game to secure future growth and welfare. That means devising better policies, better regulations and better frameworks that enable businesses to flourish along new lines while safeguarding long-term public interests.

The OECD Strategic Response, whose details are online and being distributed at Davos, reflects this “creative pragmatism” by tackling regulatory and policy failures comprehensively. The focus is on finance, competition and governance, including their interactions, as well as how to achieve sustainable growth. To be sure, economic fundamentals must be upheld, such as keeping markets open to competition, trade and investment, operating sound fiscal policies, and assuring education and fair social protection. But major new thinking is required too.

Moreoever, as we work to find solutions, we must give fresh impetus to tackling climate change and poverty as well, because these are also systemic threats to our economies. In fact, the crisis provides us all with the chance to take action now, and it is encouraging to see so many businesses and governments placing “green” investment at the heart of their strategies.

In short, we must do all we can to make the global economy stronger by revitalising it, more trustworthy by making it cleaner, and fairer by sharing the benefits of prosperity and opportunity. This in essence is what the OECD does and what we will continue to do.

LINKS

See the OECD’s special “crisis response” web pages at www.oecd.org/crisisresponse

Click here for the OECD Strategic Response.

See also www.oecdobserver.org/financialcrisis

For speeches and articles by OECD Secretary-General Angel Gurría, see also www.oecd.org/speeches,  www.oecd.org/secretarygeneral and www.oecdobserver.org/angelgurria

OECD is the Organisation for Economic Co-operation and Development