Obama, global crisis and a new beginning

OBAMA, GLOBAL CRISIS AND A NEW BEGINNING

K Vijayachandran

BARACK HUSSEIN OBAMA, will soon replace President George W Bush: His country was facing a manifold crisis and Obama won a landslide, riding on the one-word slogan of CHANGE.

First and foremost, it was a moral crisis, arising out of the policing role of US in the unipolar world of a post-Soviet era. CHANGE is the apt response to a moral crisis anytime, and Obama's voice reverberated with definite spiritual undertones, as he challenged Clinton in the primaries. His stature was growing up with every campaign dialogue, and his adversaries were no match to his bold innovations on the moral front. Campaign for the 44th Presidency was simply a new experience for the American people, a clear departure from the filthy politics they had tolerated for more than a century (see box: Walt Whitman and the Eighteenth Presidency).

Obama emerged as the ambassador of the great values and fine traditions of the New America, symbolised by the anti-slavery campaigns of Ab Lincoln in 1861 and then the Statue of Liberty, celebrating the first centenary of the declaration of independence and challenging the old world, right across the Atlantic. A black President in the White House will mark a new beginning in History, that was to be buried alive by Fukuyama & Co, barely two decades ago, at the demise of Soviet Union and the Socialist camp. In order to block his moral victory over those who got rich by trading in twenty-first century crusades, Obama was branded Socialist and a Muslim terrorist. But, despite the open support of Castro, and all other fighting leaders of Latin America, people of USA elected Obama with 52 % popular votes and more than two-thirds majority in electoral votes.

BOX: WALT WHITMAN AND

THE EIGHTEENTH PRESIDENCY

Walt Whitman, the great poet of nineteenth century America had composed a highly emotive twenty page campaign document for the eighteenth presidency in 1856. It reveals the depth of degeneration of American democracy, in less than hundred years of independence. The powerful campaign material of the great poet had little impact on that presidential campaign. But it had paved way for the victory of Abraham Lincoln, five years later in 1861 on his celebrated anti-slavery platform. Extracts given below are from the Seven Seas edition of 1956.

* Whence the delegates of the politicians? Whence the Buchanan and Fillmore conventions? Not from sturdy American freemen; not from industrious homes; not from thrifty farms; not from the ranks of fresh-bodied young men; not from among teachers, poets, savants, learned persons, beloved persons, temperate persons; not from among ship-builders, engineers, agriculturists, scythe-swingers, corn-hoers, not from the race of mechanics ...........

* Whence then do these nominating dictators of America year after year start out? From lawyers' offices, secret lodges, back-yards, bed-houses, and bar-rooms; from out of the custom-houses, marshals' offices, post-offices, and gambling hells; from the President's house, the jail, the venereal hospital, the station-house; from unnamed by-places where devilish disunion is hatched at midnight, from political hearses, and from the coffins inside........

* I would be much pleased to see some heroic, shrewed, fully-informed, healthy-bodied, middle-aged, beard faced, American blacksmith or boatman come down from the West across the Al-leghanies, and walk into the Presidency, dressed in a clean suit of working attire, and with the tan all over his face, breast, and arms; I would certainly vote for that sort of man, possessing the due requirements, before any other candidate. .......

These were record breaking majorities for the Presidency: Even more important was the large turnout of voters and the total rout of the party of President Bush. Long queues of voters were reported from all States, something unprecedented in US politics, usually looked down by working people and the middle classes. They rose up to make a moral choice, after a long long time in US history: They could hardly resist the call of conscience. They were responding to the conscience of humanity, of the vast majority of people living on planet earth. Obama could command respect from every country, from every nook and corner of our global village. It was a moral endorsement for global change, in the immediate context of a global financial crisis: A sort of economic, social and political crisis was knocking at the doors of every nation-state for long, demanding global solutions for the chaos created by the free market, dictated on by global speculative finance.

It may look a mere coincidence that, the Frankenstein of a bubble economy created by speculative finance broke up just on the eve of US elections. Signs of economic distress in US economy were visible even in 2007, much before the presidential primaries took off. However, even in the latest G-8 meet a few months ago, Bush & Co were re-assuring the world that, US economy as well as the global economy led by it was structurally sound, and the only problem was Islamic terror and a couple of rogue nations with nuclear ambitions. Policy makers in our own country, led by our present Prime Minister, were waiting for an invitation from USA to be its strategic partner and play Pakistan for a change. During his last visit to USA, Manmohan had even described George Bush as the most loved by the Indian people.

Manmohan, as we know, is a light weight in Indian politics: He and his Finance Minister are better known for their expertise in the professional management of our economy. However, the report card on our national economy, presented as part of the last Union budget, was altogether disappointing: Decline of per capita food production and consumption, farms starving of power and fertiliser, mass suicides among peasantry, Rs. 60,000 Crore write-off on agricultural loans, crisis on electricity and energy fronts, falling demand for white goods, slow down in all sectors of real economy other than construction, bulk of economic growth originating from communications, real estate and finance!

High-wage islands created by the opening up of national economy to imported goods and services had stopped expanding, IT bubbles were bursting, organised sector employment had marginally declined, Rupee was losing despite the massive inventory of dollars with the RBI, double digit inflation was on the gallop, trade gap was widening, and most state governments were bankrupt. It was clear that, the Indian program for reforms and restructuring has collapsed. However, the coffers of Central Government were full, thanks to the massive customs collections on the rapidly increasing imports, galloping service taxes and better performance of public sector organisations. And, India's Finance Minister had freed himself from all sorts of development obligations and public investments in real economy. Chidambaram, like his predecessors had all the money for the social sector and poverty alleviation programs, and for the leveraging of public-private participation in all sorts of fraudulent infrastructure projects. Sitting on a mountain of cash, they kept on asserting that, fundamentals of our national economy were sound and the Indian soil was the most suited for Foreign Investment Institutions (FII): These gentlemen were part and parcel of the bubble making business, and hand-in-glove with the global speculating community. The nonperforming Indian economy, claimed to be the sixth largest, have possibly made a disproportionately large contribution to the global crisis.

Every OECD country kept on asserting, that fundamentals of its national economy are sound, despite the fears of widespread dislocations due to global recession and protectionist policies remnicent of the last century: Numerous colonial wars and the two global wars were the inevitable consequences of the fundamental economic maladies of capitalism. There are sharp disagreements on the potential impact of the present crisis, as well as the economic, social, political and moral costs of the massive interventions made by governments, in order to preempt a total collapse of global finance. In common parlance, these simple write offs had meant, privatisation of profits and nationalisation of losses: Swindlers were granted anticipatory bailouts, even before registering the FIR!

The blame-game is on, in full swing within the ruling elites and the international fora, but basic facts needed for rational solutions are, reportedly, not forthcoming. However, it is generally agreed that, forces beyond the national governments had taken over the global economy under the free market regime, which was presided over by the IBRD-IMF-WTO combine. Bringing this combine under the democratic control of the UN body is the only rational solution: A sustainable and truly functional global financial system will be possible only under a system of global governance and widest possible democracy. The more powerful among the nation states refuse to go by the consensus views of humanity at large: They keep debating and bargaining on, how to minimise the consequent losses to their own national economies. It is likely to be the beginnings of another cold war among the more developed states, and the less organised ones are bound to play losers, and trail behind the stronger: A scene, not unfamiliar in global history.

Developed countries have thus declared individual bailout plans: Following their example, India has taken measures to release massive funds for easing up the liquidity problem in investment markets, aggravated by massive withdrawals by the FIIs. India had, reportedly, asked for global action at UN level and had even blamed the UN Secretary General for inaction. However, there was no follow-up initiative and India did not even send an official observer in the global consultations organised by the UN: Prabhat Patnaik, Vice Chairman of Kerala Planning Board, was invited to these consultations in his personal capacity.

Indian officials were active in the G-20 meet at Sao Polo on 8th and 9th November. G-20 consists of major industrial countries including India, China and a few other developing countries; European Union, IMF and World Bank are permanent special invitees. G-20 has made a consensus declaration on 10th November which reads: "The current financial crisis is largely a result of excessive risk taking and faulty risk management practices in financial markets, inconsistent macroeconomic policies, which gave rise to domestic and external imbalances , as well as deficiencies in financial regulation and supervision in some advanced countries." IBRD-IMF combine is proposed to be armed with more powerful regulatory teeth and there is the promise of making them a little more amenable to developing countries. President Bush has called a G-20 Summit on 15th November. Indian Prime Minister is participating in this Washington Summit, which is likely to endorse the official level consensus reached at Sao Polo: Obama advisors have declined to be associated with this Bush initiative.

China has, in the meanwhile, unilaterally declared a unique package, nearly a week ahead of the G-20 Summit. The program announced from Beijing on 8th November, is distinctly different from the bailout packages by OECD countries. They call it a stimulus package: An estimated 4 trillion yuan (470 billion US$) would be spent by the end of 2010 to finance ten programs, including affordable housing, rural infrastructure, transport, environment, technology innovation and, post-disaster construction. According to Chinese planners, the stimulus package will help the country to promote stable growth of the domestic and world economies.

This reminds us of Patnaik's prescriptions in the UN meet. He had called for direct fiscal action by governments across the world: "Control over cross-border capital flows is essential, for otherwise governments will continue to remain prisoners to the caprices of globally-mobile speculative finance capital. The sectors where government spending will go up will of course vary from country to country, but the general objective of such spending must be the reversal of the squeeze on the living standards of ordinary people everywhere in the world that has been a feature of the world economy in the last several years. ...in India, China and other third world countries, in addition to welfare state measures, larger government expenditure has to be oriented towards a substantial increase in agricultural, especially food grains, output." The stimulus package of China is far far beyond the prescriptions of Patnaik. And, India with its vast possibilities and resources in the public sector is waiting for the stimulus signal from G-20 Summit, possibly for the re-launch of the reforms under a new IBRD-IMF combine.

Patnaik has not envisaged any role for UNO even in this hour of acute global crisis, though he stresses the need for liberating cross-country finance flows from the stranglehold of financial speculators. He concluded his UN speech with the following words: ... the new paradigm must entail a foodgrain-led growth strategy, sustained through larger government spending towards this end, which simultaneously rids the world of both depression and financial and food crises. The trade and financial arrangements of the world economy have to be oriented towards achieving this rather than being made to conform to some a priori free market principles that have the effect of pushing the world economy into financial crises and slumps, and the peasantry and small producers of the world into destitution both during the booms and also, additionally, during the slumps." That has little to do with the Marxian dreams around a brave new world and the second industrial revolution, triggered by nano technologies!

Revolutions are nobody's monopoly! Obama is likely to dream a far more inspiring world view, though he continues to be a clean slate in terms of ideology, as commented on by Noam Chomsky. He is an international by birth, a non-intellectual type, who has has put on motion a great people and the most advanced nation-state of our times, under the one-word slogan of CHANGE! Despite the hard facts on money power and the Military Industrial Complex that rule over USA, Obama sounds far more genuine and convincing, than Gorbachev who had failed in his mission of an integrated inter-dependant world, based on the slogans of Perestroika and Glasnost.

12-11-2008