Tag Archives: Capitalism

The Myth of Micro Finance

Nirmalya Biswas, writing in Mainstream, explains the ‘micro finance’ model has been touted in recent years as a means of poverty ‘alleviation’ is in fact another means to exploit the poor. Neo- liberalism, the contemporary face of capitalism, tries to solve the problems it creates by the same factors that cause its crisis. On the one hand, there is a surplus of capital, on the other hand there is a surplus of the poor. Micro financing apparently tries to solve the problems of the poor but in reality is just another means of multiplying the return on capital.

Similar too is the recent interest expressed by the Tatas and others to create housing for the poor in Mumbai.

Micro Credit appears to be pro-poor in form but in content it is actually anti-poor to the core. The adverse clauses of the loan agreement are carefully kept hidden in a ‘sugar-coated’ loan package. The ‘ever-trusted’ media censors certain pertinent information in fear of full disclosure of the evils of Micro Credit. The penniless poor listens to no reason but gracefully accepts the loan offer to avail the ‘cash inflow’ and solve the present crisis temporarily. The taste of its bitterness becomes palpable only when the installments fall due.
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What is the People’s History of the World?

British writer Chris Harman, author of A People’s History of the World (2008) explains in an interview about why he wrote the book at the blog Grits & Roses

I wrote the book out of frustration at the fact that although there were many radical accounts of particular episodes and phases in history, mainly influenced by the insights of Marx and Engels, there was not over-reaching account. In the earlier part of the book the major influence was the Australian archaeologists of the first half of the 20th Century, Gordon Childe. But his account had to be updated to take into account new research by archaeologists and radical anthropologists like Richard Lee and Eleanor Leacock since his death in 1957. For the Roman period there was the writing of St Croix, for India the work of D D Kosambi, Irfan Habib and Romila Thapar, for the rise of slavery, Eric Williams and CLR James, for Britain that of Christopher Hill and Edward Thompson, for the French revolution Albert Soboul and Andre Guerin,…and so on.
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“I have found a flaw in free markets”. Wow

It is almost like live blogging as history is being made right in front of our eyes- today we have Allen Greenspan admitting that that he has finally found a flaw in the free- market system that he has believed to be working exceptionally well for the last 40 years.

It is one thing when the heathen criticize the neo- liberal assault, another when the gods themselves begin to doubt the divine.

Allen Greenspan: “I have found a flaw

“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 in the firms,” Mr. Greenspan said.

Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”
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Capitalism: A system built to fail

Professor, Richard Wolff of the University of Massachusetts explains in this superb lecture, why the financial crisis is the biggest crisis of capitalism in his, and our, lifetime. Listen till the end, because that is where the symphony’s crescendo is.

Click here to watch the video (38mins). Link via Lenin’s Tomb

[and WordPress- I hate you, for once, because I can't embed a google video in the post].

Read also Prof Wolff’s recent articles in MR.

Capitalism happens.  When and where it does, capitalism casts its own special shadow: a self-critique of capitalism’s basic flaws that says modern society can do better by establishing very different, post-capitalist economic systems.  This critical shadow rises up to terrify capitalism when — in crisis periods such as now — capitalism hits the fan.  Karl Marx poetically called that shadow the specter that haunts capitalism.

This one is on the so- called distinction between the main street and wall Street, or regulated and un- regulated capitalism. Capitalism is capitalism, in whatever form in comes. The main street leads to the Wall Street.

Capitalism has everywhere oscillated between private and public phases.  Private capitalism minimized government interventions and mostly kept state officials off boards of directors.  In capitalism’s public phases, governments intervened and sometimes replaced private with public members of boards of directors.  Crises of one phase often provoked transition to the other.

‘Bailouts': Socialism (and Capitalism) on its head

John Lanchester, writing in the LRB has one of the finest writings from the left on the financial crisis (no, unlike the fall of ‘socialism’, it is a mere crisis, not the ‘End of History’!). Lanchester also ends with the general pessimism on the left regarding the lack of a left alternative despite the optimism generated by the vindication of its theoretical criticism of capitalism in general and the neo- liberal led globalization in particular.

Perhaps, Francis Fukuyama was right and it indeed is the end of history.

The invention which made it possible for the lending to become so reckless was securitisation: the process by which loans were added together and sold on to other institutions as packages of debt. This had the effect of making the initial lender indifferent to whether or not the loan could be repaid – he’d already sold the debt to someone else, so he didn’t need to care. These packages of debt were then sold on and resold in the form of horrendously complex and sophisticated financial instruments, and it is these which are the basis of the global jamming-up of capital markets.

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Karl Polanyi’s The Great Transformation and the Wall Street Crisis

Dr Girish Mishra has a very informative piece on Karl Polanyi’s book The Great Transformation (1944). Polanyi’s name has figured in a quite a few places of late in light (or the shadow!) of the Wall Street financial crisis. As neo- liberalism recedes- its most articulate proponents now reduced to a tiny die- hard group of ostriches, it is pertinent to speculate on how things will shape now. Lessons from history may not provide recipes, but help in providing a perspective. The concluding words from the article indicate a much desired possibility, at least on the medium to long term.

A few excerpts:

The mission to create a totally self-regulating market economy is predicated on the assumption that both the human beings and natural environment are turned into pure commodities, that is, they are freely bought and sold.

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Wall Street Crisis and Das Capitalism

One week of the collapse of the New York investment banking network, and its ‘rescue’ by the US federal government speaks louder than any arguments against the “free market”. The stock market, considered the ideal mechanism in identifying winners and losers and thereby contribute to an efficient system in contrast to ostensibly inefficiently run government enterprises, has spoken loudly and clearly. An unbridled, or insufficiently bridled, system where companies run by teams of specialists and accountable to no none but a small base of investors has run amok with the bad bad governments bailing out investment banks in the heart of what Maxim Gorky once called The City of Yellow Devil. The devil has certainly reared its bloody head all over Wall Street last few days with a vengeance.

The $700 billion bailout by the US federal reserves is nearly twice the GDP of the apparently roaring economy of India! While investment banks are in the business of making money out of nowhere, these do have an impact on the real economy since industries depend on investments by what is ultimately speculative finance capital for sustenance and growth. The whole web of finance transactions is said to be so complicated that the bankers themselves have lost track of the sources and direction of transactions.
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