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