Former West Bengal Finance Minister Com Ashok Mithra's Review on Com N.M.S's Book

Its greed and miscalculations have pushed the U.S. into the greatest economic crisis since the Great Depression

Ashok Mitra 

The author of the book under review is not an economist, nor a financial analyst of any particular genre. He has rich experience in the trade union movement and has been in the forefront of the battle the insurance employees waged against the intrusion of global financial capital in India's insurance business. It has been a losing battle, but it enabled him to get a perception of how international finance capital functions and what its impact has been in recent decades both in the United States and across the continents. 

The book has 27 essays, published earlier in Business World. Apart from some overlapping in themes, one often finds analytical rigour getting outstripped by a certain lyricism in presentation, which is accompanied by a laziness to quote hard data.

Sundaram's forte is the sincerity of his convictions. And his description of the predatory nature of finance capital in country after country, as well as in sector after sector within a country, cannot be said to deviate from objective reality. Concentrate only on the happenings over the past two decades, and you will find that the role of international finance capital has been synonymous with crisis. It cannot but stoke crisis because it is organically structured that way. 

It has worked long and hard for ushering in a global system where it can roam freely from country to country in search of higher and higher profit, and it must acquire that profit pronto, right at this instant. This instinctively prompts finance capital to go for speculative, rather than productive, ventures. 

Ideal circumstances

In the United States and the affluent countries of West Europe, with their economies soaring to new technological heights, output per-unit-of-investment is greater than elsewhere. As long as income distribution remains unchanged, the aggregate demand too tends to level off as a result, and the lure of speculation increases manifold. The circumstances are ideal for finance capital. 

Another streak in the behaviour of finance capital is that it carries no morality baggage. It would opt for shady, even criminal, operations if only they would boost the rate of return on a bundle of capital. Finance capital has debilitated the American economy from which it originally derived its strength. 

In West Europe, its tyranny threatens to reduce to dire privation quite a few countries abutting the Mediterranean. India's economy is putty clay in the hands of foreign institutional investors who have established total command over stock exchanges and are now capable enough to ruin the impressive industrial base the country has built. 

Its destructive power notwithstanding, a debate can be joined though; is finance capital itself fragile yet? Its greed and miscalculations have pushed the U.S. into the greatest economic crisis since the Great Depression. 

In the 1930s, Franklin Delano Roosevelt initiated extensive public works to create income and employment opportunities and went in for huge deficit financing to foot the bill on them.

Political clout

In contrast, in the latest crisis, finance capital used its political clout and compelled Barack Obama to announce a phased programme for rendering budget deficits. A number of major banks and corporate entities went bankrupt, thanks to its skulduggery. That, however, did not stop the banks and corporate bosses, who preside over global finances, from pocketing their bonus. 

Whatever limited financial resources the state allotted for economic recovery have been largely appropriated by these entities for their own benefit instead of being used for ameliorating the difficult living conditions of the middle and working classes.

After destroying several national economies, finance capital continues to exude its ferocious strength. But one never knows. If its excessive avarice leads to stagnation, or worse, of the American economy and contributes to widespread social destabilisation in West Europe, things could change dramatically. If American capitalism itself loses its credibility, the dollar is bound to forfeit its worth as reserve currency. It could then be swansong for international finance capital.

Another factor that merits consideration is that finance capital reigns because there is, at the moment, no countervailing power to challenge its audacity. 

As one scans the global horizon, it is a fair possibility that, maybe 20 years hence, China would acquire enough economic and military prowess to get the better of global finance capital. There is however a proviso: China must extricate itself from export dependence on the U.S.

Sundaram's book prompts such stray thoughts and is to be welcomed.