In My View

Irrelevant exertions

Four-fifths of the world population was not represented in Washington last week (15 November). Yet, 85 per cent of the global wealth was controlled by those who were present in the city that is popularly considered the power capital of the world. This enormous unrepresented population does not care about the fulminations on the International Monetary Fund (IMF) or the World Bank (WB). They do not care about the countercyclical measures the managers of the world economy adopted to beat the current downturn in their coffers. These five billion people (2006) are outside of the ‘market’ realm.

Economic cycles hold very little meaning when you are surviving on less than $ 2 a day. Financial derivatives and credit swaps remain beyond your pale when you remain off the charts of all credit managers of the world. Still, India’s Prime Minister, Manmohan Singh feels, “Economic performance in almost all developing countries has improved. In the process, attitudes towards globalization have begun to change and people all over the world have come to appreciate the enormous benefits that can be derived from global economic integration.” This is what he had said last week at Washington in the meeting of the well heeled.

Predictably, the meeting said nothing new. It iterated such deep seated homilies like, “We recognize that these reforms will only be successful if grounded in a commitment to free market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems.” In other words, it continued to extend the illusion that the market is inclusivist and thus all pervasive.

So what did this meeting propose as actions that could reverse the adverse fall-out of the current crisis? Leaders of the 20 most powerful nations of the world who could decide on matters of life and death, war and peace behaved as if they were fund managers of a mythical Wall Street firm that had under its aegis the resources of the world. So they talked about, “Strengthening Transparency and Accountability;” “Enhancing Sound Regulation;” and, “Promoting Integrity in Financial Markets.” In the process, they let it be known to all who cared that all this while they were sleeping on the job.

If transparency needed to strengthened in the financial markets, or regulation of the market needed to strengthened and integrity promoted, what were the leaders doing all this while? And if they had allowed this situation to come to such a pass without all these being undertaken in the financial markets all this while, should they be not held accountable for their acts of commission and omission?

The reason they flailed their arms so irrelevantly last week was because they did not want address the core issues. One of the most important core issues is whether Capitalism has only worked as a system of accumulation for a few, and failed to cater to the needs of the most. The rich men’s clubs this system of human development has spawned have become so anti-democratic and incestuous that they stopped noting even the warning signs of their own imminent collapse.

The most important philosophical entreaty of current times emerging from the West, that ‘greed is good’ has shown that the inherent predatory nature of the powerful, when not disciplined in time, can devour the very hand that feeds it. In effect, this thus nullifies the philosophical underpinning of contemporary Western societies.

This is not a moral issue. It is an issue that has shown how vacuous the overriding commitment of Capitalism for efficiency of allocation and accumulation truly is. This is an issue that can no longer be addressed by a countercultural argument based on the failures of the Soviet system of socialism. In any case, the success of the capitalist phase of Chinese socialism’s work-in-progress (it has raised roughly 300 million people above the poverty line in one single generation) has long overtaken the communist excesses of the Russian regime, as an attributive character of Marxian thought.

Marx’s words of 1875, “From each according to his ability, to each according to his needs,” do not call for a fundamental sublimation of human nature as supposedly ‘greed’ fosters. But on the contrary, it points at a higher purpose of life where the economic production system does not consume all of human endeavour in a cyclical process of consumption.

The egalitarianism this thus gives birth to is not conditioned by the managerial abilities of the political leadership. But instead it becomes the bedrock of human belief where the striving for better life transcends the limits of material wealth and opens the vista for higher aesthetics.

But it also has to be said that the world cannot prosper in any way under any system, be it Capitalism or Socialism, when four-fifths of its population have to encounter the dehumanising influence of poverty on a daily basis. From that perspective alone last week’s meeting is of no relevance to world as we know it.

Pinaki Bhattacharya, currently located in Kolkata, is a Special Correspondent with the Mathrubhumi, Kerala. He writes on Strategic Security issues. He can be contacted at pinaki63@dataone.in

Small business credit woes

In My View

Perfecting homilies

The fallen god visited his sepulchre for the final time before his entombment. And he told his baying audience a few unvarnished truths about how he thought the world should have worked. Only the gulf between his belief and the reality yawned, as the people tumbled out while their make-believe financial edifices crumbled.
Former US Federal Reserve chairman, Alan Greenspan told an American Senate hearing that he was "shocked" to discover his bedrock belief that financial firms could police themselves turned out to be "flawed."
"I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity," Greenspan gulped, "(Its) a flaw in the model ... that defines how the world works."

Not entirely unconnected are the reports that the works of Karl Marx have picked up sale as out-of-work corporate executives pick up their between-jobs reading. But clearly Greenspan would not have given Marxist tomes a pride of place in his sumptuous library – he might even have known that financialisation of capital had occurred after Marx had died.

But there were Marx’s followers – people like Rudolf Hilferding, Nikolai Bukharin or even Lenin – who analysed the phenomena with equal dexterity. But then in Greenspan’s little diary, those were names, which could not be associated with American history, for they symbolised the carefully inculcated paranoia of the American people about ‘socialism.’

At least, Greenspan could have read ‘Marxism-made-easy’ Alvin Toffler, the futurist. Talking about economic production and distribution getting increasingly dispersed, Toffler had argued in his book Powershift that centralisation of financial power was inimical to the interests of economic progress. He had thus opined, “One thing seems clear. When the battle to reshape global finances reaches its climax in the decades ahead, many of the greatest ‘powers that be’ will be overthrown.”

That brings us to a potential footnote in human history: the meeting on 15 November scheduled to be held in New York ostensibly amongst the likes of George W Bush, Nicholas Sarkozy and Manmohan Singh. The failing verbiage of the overbought American media institutions is still gamely trying to describe the purpose of this meeting in such ostentatious terms as “restructuring of global financial institutions,” etc. Does anyone have any illusions about the fact that any of these Western nations are in a position to dictate ‘prudential norms’ of running, anything?

So, the real game in town would be the attempt of the Western leaders to sit on the likes of Manmohan Singh to make them smoothen greater inflow of finance capital into their economies in some form or the other. It could take the form of higher purchases US government treasury bills, or more indirect injection by opting for Western corporates to undertake internationally funded projects in developing economies.

There would also be a talk about increased centralisation of financial power; all in the name of greater regulation. The attempt would be to appropriate the remaining financial assets into the hands of the Western powers so that they can first rebuild their destroyed institutions, and then farm out financial largesse according to their revised set of rules. It would be the return of the IMF and the World Bank and their smaller private potentates in all their glory.

Yet, there is the little matter of Alvin Toffler and his cognitariate challenging the might of big capital. They would need a more decentralised sources of finance; finance that is geared towards not manufacturing junk bonds and other derivatives, but creating real wealth.

The need of the time is microisation of capital; not its macroisation. And that need was not vitiated by the small creditors of America but by those who enjoyed multi-million dollar bonuses in Wall Street. They are the ones who created the utterly false bonds that they traded on the basis of presumptive values. They called it competition.

As Giovanni Arrighi points out Hilferding made an error in understanding the future of finance capital to remain confined in the hands state monopoly capitalists – as was in the case of Germany. Or, the USA today, for that matter with billions of dollars of people’s wealth being funneled into privately owned companies only to help their promoters survive. Only, the Americans call this ‘socialism,’ trying to mislead the people by harking back to the Soviet Union’s ways.

On the contrary, never before in the past have they had to ‘socialise’ the costs of capitalism at such a large scale. The US and global capital had avoided crisis all this while by inventing the joint stock company, which in the name of enhancing shareholder value had actually institutionalised a marriage of power between the elite which ran the state and the elite which ran the publicly held companies. Will this neat compact break?

The institutional Left does not appear to be providing an answer. In India, the communist parties seem to have given up the battle after patting themselves in the back – rightly so – for acting as trustees of the people by not allowing the state to let the financial institutions have a free run. But they have bigger role to play – to articulate a powerful alternative vision. Will they step up to the plate?

Pinaki Bhattacharya, currently located in Kolkata, is a Special Correspondent with the Mathrubhumi, Kerala. He writes on Strategic Security issues. He can be contacted at pinaki63@dataone.in