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Mainstream, VOL XLIX, No 45, October 29, 2011

Time to beat Swords into Ploughshares

Saturday 5 November 2011, by Uttam Sen

The striking aspect of the European financial crisis on the heels of the American was corroboration that the asymmetry which had erupted in the First World War was being played back. To some the causality of the periodic rises and falls of the global financial architecture is confined to tentative insights on cycles provided by the Russian economist, Nikolai Kondratiev (later a victim of the Stalinist purges). But the occurrence has remained a legacy of the liberal capitalist world inherited by the West from the 19th century. An economic system in which the means of production are privately owned and operated for profit in usually competitive markets was of course not the only facet; the revolution in the arts, sciences and technology, and intellectual endeavour accom-panied by a high premium on ethics and resultant peace and tranquillity were the other notable complements. If on the negative side the moment of rectitude gave way to the savagery for economic dominance in the chronological breakdown of Eric Hobsbawm’s thesis1 it also marked the constructive beginning of the round till the 1970s when mankind acquired unprece-dented material prosperity (the Golden Age).

A century that witnessed the erosion of European global domination (the Age of Empire) by a third of its population gave way to the broadening of the new civilisational equation to people inhabiting a sixth of the world’s surface (initiated by the upheavals in Russia and China). The figure would widen considerably with the inclusion of India, though economically and politically too pluralistic to be part of a closed or definitive classification. Till the sixties, the model of agrarian-led growth in the Soviet Union and China and its potential for acquiring the cherished equivalence with capitalism, set side by side with a sort of multiplier effect in Latin America and Africa, was recognised by Western political leaders themselves. Subse-quently, political liberalisation unfolded ideolo-gical excesses that were met by the distinctive dispositions of the respective countries. Coming full circle to the libertarian premise of universal equality, growth and freedom of choice could signify rewarding convergence rather than reversed hegemony, for example, US plants being manufactured in China, the Chinese surplus stimulating Latin American infrastructural development, or Indian investment lighting African industrialisation. In a world of paradoxes, the dissolution of socialism in the Soviet Union, its neighbourhood and China translated systemic taxonomy into a one-way street of capitalism and China (into) the workshop of the inhabitants of the earth.2 But a certain separation and clarification of political elements that began in the 1980s also led to two disastrous decades at the end of the past century (the Age of Catastrophe!).

IF the otherwise predictable collapse of the demand and supply equilibrium occurred because prosperity became not only an individual but the global outcome of elitism, in which welfare and success did not percolate downwards, choice was restricted and the “excluded” were too impoverished to create the demand, the reason for the impermanence of the booms also becomes intelligible. The chickens are coming home to roost in capitalism’s growing crisis. There are fewer havens of discovery and success that can see it through hard times as before, the hitherto captive markets of the developing world themselves rising as generators, sometimes of industries exported to them, the emerging salience of reality also being a function of the information and debate that are being reached to practically every doorstep. (Communi-cation can also have a cynical effect, for example, Mr Jimmy Carter’s belief that public support for Budget cuts that will reduce social sector spending and increase unemployment sprang from opinion created by influential media, spearheaded by the conservative Fox television channel.) With the earlier props gone viz. the colonial sources of raw material and markets and post-War Keynesian demand management, confusion has been worse confounded by the political compromise in the US on Budget cuts, now being repeated in Europe.

Little wonder that the 2009 Nobel Prize laureate in political economy, Elinor Ostrom, plights her word for bottom-up “commons” management for a shared prosperity and for production and consumption supported and nurtured by networks and communities. Alongside, history (in danger of being ignored by a generation that revels in the present) has unfurled the transience of quick-fix permutations and combinations through which past crises were circumvented and the consequences thereof. For example, the blackballing of Germany after World War 1, arguably disciplined by the rest for seeking economic hegemony, gave a boost to Fascism on the crest of national indignation against palpable discrimination: a voice like that of John Maynard Keynes for a more balanced deal to the vanquished at Versailles falling by the wayside. (The modern Islamic case has an eerie correspondence with the German nightmare, both representation and prosecution of which appear to carry the proverbially frustrated curse.)

The later obsession of the ascendant Nazis for technology and modernisation in conjunction with an aggressive racist exclusionary nationa-lism took not only Germany but the world to the brink of disaster. The British were severely dented by the First World War, and the French virtually “bled to death”; the Soviet Union emerged as one of two superpowers after the Second World War but not without severe setbacks to its planning agenda. Only the USA prospered from both wars. But the iron that had entered the soul in conflict fought to the finish for total economic supremacy manifested itself in the breach of libertarian principles rather than their observance, for example, the continued denial of choice to the disadvantaged. The Soviet Union was at the receiving end from the time Vladimir Lenin’s terms for foreign investment were rejected by the West and the creation of nation-states after the First World War that blew up in the disastrous nineties (fairly poignantly, a “pro-Russian party” is heading popular outrage against “austerity” in one of the Baltic states carved out in that manner, namely, Latvia). Yet the apparently viable incongruity of the Capitalist-Communist entente against Nazism ensured the fall of Hitler and probably saved Europe from a Fascist conflagration. Presently though, many are discerning its return in Right-wing outbursts against state and society across Europe.

There is a cavalier touch in the disavowal of an agency the world witnessed in its “Golden Years”, namely, “the demand from the Soviet Union and centrally-planned economies, with which the capitalist world traded, contributed to the stability of post-War capitalism by providing it with a steady and growing market uninfluenced by the vicissitudes of the capitalist world”.3 The erstwhile Soviet Union had played a hand even in negation as the European recovery programmes sought to counteract either the mischief (the Soviet Union initially being perceived, not without provocation by some Comintern radicals, as saboteurs of the world system) or the appeal of an alternative for the working classes. Its own blemishes were echoed in the oft-quoted Chinese accusation of “social imperialism” (socialist in words, imperialist in deeds) at the height of the Sino-Soviet rift, demonstrating how deep the canker had sunk. There were no such inhibitions in latter-day Western laissez-faire when the demands of the market overruled everything else, including the plight of the Les Miserables. The ostensible irony lies in contemporary Chinese economic self-assuredness, with its funds covering a part of the US deficit, and continued purchases of capital goods from the West along with Russia, India and Brazil who have helped stage a partial global recovery. The world is too transparent today for anyone to contemplate with equanimity any grouping or system complete of its nature or kind without risking the pitfalls of the past. Chinese designs of neo-mercantilism are frowned upon even by the Left. But the unprecedented rescue of main-stream capitalism from outside (post-2007-08) can “prove to be a harbinger of times yet to come”,4 arguably a significant comment. Even more so the sequel that the recovery has been most pronounced in China and India where capital controls are “substantially in place”, to a greater extent in China than in India.

Europe’s deepening predicament that threatens to spread from the periphery to the centre of the Continent (from Iceland, Latvia and Greece to Italy, Spain and France), will probably have to address the common man and his entitlements again: the subjects glossed over by the triumphant bourgeoisie of the 19th century whose capitalist edifice is now in peril because neither the European “commons” and later a world that opened up with other non-European horizons, were tended to. Germany eventually converted technologies and military capabilities into civilian applications and attained its position of Europe’s (financial) leader. Whether that can double into support for a more proactive intervention on behalf of Europe’s overall progress, only the future will tell. However, the global compulsions for adjusting to objective, non-militarist options to include production and consumption supported and nurtured by networks and communities transcending national frontiers are growing stronger by the day.

In the plain text rendered into latter-day Economics:5 “as Greece and others face crises, the medicine du jour is simply timeworn austerity packages and privatisation, which will merely leave the countries that embrace them poorer and more vulnerable. This medicine failed in East Asia, Latin America, and elsewhere, and it will fail in Europe this time around, too. Indeed, it has already failed in Ireland, Latvia, and Greece.

“There is an alternative: an economic-growth strategy supported by the European Union and the International Monetary Fund. Growth would restore confidence that Greece could repay its debts, causing interest rates to fall and leaving more fiscal room for further growth-enhancing investments. Growth itself increases tax revenues and reduces the need for social expen-ditures, such as unemployment benefits. And the confidence that this engenders leads to still further growth.”

GREECE’S ferment is symptomatic not only of the European but the global condition. The average Greek is livid that people are unemployed and unable to make ends meet because the government has squandered money while the rich got richer. Whether out of insecurity and fear or the impulse to seize the moment, the preoccupation of getting rich quick is universally detectable. Official apologists do no think the sky has fallen in yet: with a little help the debt to Euro banks (to them not particularly awesome in the wider European context) can be met and “banksters” dismissed from the future scheme of things. Everyone does not have the tipster’s facility for prediction, but the chances are that the Greek Government will be bailed out on the condition of austerity. The common man will get a double whammy for his pains, of even lower social security, fewer jobs and higher prices in addition to his current travails. But the powers that be will be looking to thwart the debt contagion from scattering by putting the financial screws on the only way they know.

The decisive point is that the definition of growth is changing, from the accretion of income to the enhancement of human capabilities that can produce a multiplier effect. Yet centres of financial power are by nature conservative and have always discouraged the process, even in the face of odds that appear to be growing grimmer. The transparency of the public sphere is becoming sharper (fairly symbolically, Julian Assange is seen addressing people), the transatlantic public protests are increasing in size and stridency and alternative engines of growth (perhaps not always in the creative sense of the term) are presenting themselves, sometimes from the ashes of the past. The aggregation of these developments does not augur an entirely supine relapse to the status quo ante of political and economic thinking and practice. In Globalisation and its Discontents a constructive critic like Stiglitz has laid forth the confidential nature of the IMF’s internal confabulations and its inclination to stretch facts to fit pre-determined conclusions, which he considered remediable and necessary given the irreversibility of globalization and the Fund’s undeniable resources. The refrain is not just for change and innovation but the assimilation of human resources. The pristine ethics that informed revolutionary creativity in thinking could still be invoked by proceeding to the logical conclusions.


1. See Eric Hobsbawm, The Age of Extremes, First Vintage Books Edition, New York, 1996.

2. See Prabhat Patnaik, ‘Capitalism’s Crisis’, Frontline, September 9, 2011.

3. Ibid., Patnaik.

4. See Aijaz Ahmad, ‘The Political War’, Frontline, September 9, 2011.

5. Joseph Stiglitz, ‘The Ideological Crisis of Western Capitalism’, Social Europe Journal, July 12, 2011.

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