The Wall Street crisis has given rise to several questions about the credibility of the Market theory that several of us were afraid to raise all these years, notwithstanding a gut feeling that the world was hurtling down deep into the abyss of greed and over-consumption. Glitter, glamour of the capitalist economy and fear of the US military power prevented most of the lesser mortals against committing that heresy. But no longer so. Wall Street collapse has indeed let some fresh breeze into Fleet Streets around the world.
President Bush’s huge $700 bailout to the biggies of the American finance has denuded the world capitalism of much of its halo. One is still not sure if the downhill path has already begun for the champions of the Market economy. But straws in the wind point to a definite dent in the image. Hype is melting. Sadder reality of the ‘economy being disguised politics’ is becoming evident with all its avaricious contours.
Irony could not have been starker. The very institutions of the world finance that pointed finger at millions of farmers being provided subsidies in the Third World, are not cribbing about US Government treasuries bailing out banks owned by private individuals. More poignantly, the massive government bailout is neither challengeable in a court of law, nor reviewable. How does the world’s most robust democracy stonewall disturbing queries of such colossal financial misdemeanour?
But the crisis has wider dimensions beyond the borders of economy. Market worship was not novel. Capitalism had been around for over last two centuries. But the insane primacy it received in recent years was relatively new. Among other things, it reflected the ever-growing corporate links of the media. Links that spurred them to mislead the public for their own profit. How come the watchful pink fraternity of the financial media was clueless about the impending bank failures, foreclosures and bankruptcies? How come the credibility of the ‘AAA’ rating by credit rating agencies lapped up by the free media? Is it not true that several of those companies bought that rating by bribing them?
There are other aspects too that speak up about the sinister nexuses that bind the American corporate giants with military industrial complexes, media, bureaucracy, and PR and accountancy firms. How could the top executives of the five biggies lined their pockets with $3 billion in bonuses even while transferring the risks to the investors and depositors and presiding over their collapse? How come a country that was not finding a few million of dollars for overhauling the education system found 700 billion dollars for the bailout?
The more interesting part is that none of the presidential candidate is able to question the war spending, or bailout packages to the private banks? Neo-con candidate McCain’s pandering to the capitalist lobby is understandable. But why should democrat nominee Barack Obama ducks the issue? Clearly, they know from where their support comes, they know who can pull plug on their prospects, who can put paid to their hopes to the White House? With capitalism, America’s financial move also endangers democracy. Isn’t it?
Course correction is indeed the need of the hour. To say that market can regulate itself has now been proved wrong. Market too needs checks, surveillance and regulation. Otherwise it can fall prey to machinations from powers that be, from hoarders, from profiteers and in US case from accountants, rating agencies, media.
A Market motivated by the corporate greed cannot claim itself to be the guarantor of public good, hence the need for Government regulation which has to ensure the conditions on which market depends and social efficiency continues. It has to limit the freedom of action for the corporate, reduce the corporate profits if it is warranted, increase the prices of the consumer goods if they consume more natural resources and subsidise the producers of essential goods. To play this role, the governments should have a role in the market, must have a jurisdiction over the economy within borders of its territory. For such jurisdiction, the economic boundaries must coincide with political boundaries. If not, governments become impotent and democracy becomes a façade. Herein lies the challenge for us, in India.