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I have to take some extreme leaps of logic to tackle this issue. I hope you don’t fall behind, but remain entertained as usual in spite of the brevity that limits this write-up.
As RPK says, the doctor must diagnose the illness correctly before a life-saving prescription can be applied. For my extreme leap of logic, I need to take a very high helicopter view that encompasses human history and maybe its future as well before suggesting a life-saving survival strategy to tackle the global financial crisis in the Malaysian context. The idea is to identify correctly what the malady is that confronts us. Therefore the global financial crisis has to be properly understood. Man’s development has gone through a number of clearly identifiable stages. Most people accept this view of the phases of human development. Starting with tribal society, man went through slave, feudal, capitalist, monopoly capitalist and finally arrives at super monopoly economics. This is a Marxian view, but aversions aside, it is still the most consistent and systematically studied and hence widely accepted. I also agree with the view that each region of the world has its own particular development that only roughly approximates the development model above that is best represented in its ideal form by the west i.e. things start to be come more and more bastardized the further one moves away from the west. Marxian theory identifies the internal causes that result in the collapse of a particular system. In capitalism’s case, it was a combination of the birth of the proletariat as well as the endless yet increasingly destructive cycle of booms and busts that characterize capitalism. This is only partly true as borne out by events in the recent past. The proletariat tried very hard to overthrow capitalism as well as monopoly capitalism, and indeed they came very close, but to date they have not yet fully succeeded. Not only has monopoly capitalism become more powerful, it has grown into super monopoly capitalism. However the other aspects of the character of capitalism remain faithfully true. Booms and busts are a regular feature in spite of the socialist tinge of state or govt. economic planning as well as interference on behalf of capitalism. The current global financial crisis is not only a regular feature of capitalism but because we are now in the era of super monopoly capitalism, it is a global crisis instead of being limited to countries or regions. And it is caused by an over-production within the super monopoly capitalist economic system. One of the inherent purposes of capitalism is the concentration of capital. The different stages of capitalism are characterized by the ways in which capital is concentrated. In early capitalism it is characterized within the production facilities of the artisan’s workshop and later still, by the industrialist’s factories. But as factories and enterprises grew, so did money, until it reached a point where money made more money without any production. This is super monopoly capitalism. Through derivatives, hedge funds, money market, etc, money was being concentrated to an incredible degree until governments themselves became just a link in the chain within the money making process. Budgetary economic planning, foreign policy, the mass media, the military, the IMF, etc… all these became part of super monopoly capitalism. Money was being sucked out of the rest of the world through unfair trade agreements, financial manipulations and monopoly power in almost all fields of human activity, including science and the arts. The monopoly capitalists became supermen. This can be partly seen by an attitude that they cannot shake off in spite of the deepening crisis. They give themselves billion dollar bonuses even as they go hat in hand to beg for subsidies from public funds and hard earned taxes of ordinary people who are even now suffering unemployment, bankruptcies and other hardships. The hard fact remains that money that earns money without production cannot be pushed to extreme limits without causing a collapse. Money that earns money which is then re-invested in production makes sense, but when derivatives and hedge finds become so big that they overpower everything else, production just cannot keep up. Money thus cannot be re-invested fruitfully. Instead it is used for consumption and to pay fat bonuses. This is what the US suffers from. Part of the strategy of over-concentration of money in the US is to spend it on the military to use as weapons and other expendables such as collateral damage. In this way, the US becomes even more powerful and money as well as recalcitrant people are kept manageable (if not overdone or so they hope). Here I need to take a step backward to history. The proletariat did not succeed in overthrowing the capitalists because they did not become an economic power in their own right. They best they could hope for was to take over the reins of power within a rich, well developed and civilized capitalist society. This was not what happened when the capitalist overthrew the feudal power. The capitalists were already an economic power challenging feudal economic power. In fact capitalist economic power was on the ascendancy while feudal economic power was unable to cope with the demands of a fast changing society. All the capitalists needed to do were to seize political and military power. The workers, sadly for them, did not become an economic power house within their own right and therefore had to surrender political and military power which they had won through enormous sacrifices. The economic successes of the socialist state were not an adequate substitute. Back to the present. The global reach of super monopoly capitalism created factory countries, countries which acted as enormous factories for the super monopolists as well as targets of investment for excess funds. China, Vietnam, South Korea, even Japan come to mind. Even in these areas of the world, over-production is becoming the norm as consumption in the US and also in Europe drove production to limits unseen before and perhaps never to be seen again. Whole areas of the rest of the world were stripped of metals, fossil fuels and natural resources to feed these factory countries. Even the seas are being emptied of fish. The humongous appetite is becoming unsustainable. But unlike the proletariat who did not become economic power houses, these factory countries are becoming very rich. Japan especially seems to be able to challenge even the US on financial terms and China seems to be fast coming to that stage. But whether they are independent of the US is another question. Do not forget that the US holds the original seed money and investments that triggered the booms in these countries in the first place. In addition, these countries are partly dependent on the US for technology and mainly dependent for markets. It is therefore a reversal of economic wisdom, where economists used to look upon the billions of Chinese as an enormous market. The Chinese now have to depend upon the consumption habits of the Americans as people of the home country of super monopoly capitalism for an enormous market. This is what happens when a diagnosis fails. These economists fail to take into account the power of super monopoly capital and its problems. The other unanswered question is whether the US can recover its original position or will there be a multi-polar world? How then does this all affect Malaysia? It looks like we are all in a quandary. If we wish to get rich in the same way as the Chinese and Japanese, we have to prepare ourselves to compete with them to be a factory country for the US market as well as for US investments when there is a turnaround in the financial crisis. This means carrying on in roughly the same way as we have done, albeit in a more disciplined and efficient way, but this crisis may not be over for some time yet and it is quite difficult to predict whether the US can recover or not in the first place. At any rate it means getting rid of UMNO which is a relic of the past as well as a burdensome and corrupt baggage so that we can better position ourselves to compete more successfully using all the skills and talents we can harness. On the other hand, there is the brave new but enormously risky destiny of plotting our own future for ourselves by overturning our dependence on super monopoly capitalism. This may enable us to avoid future busts, but it may also lock us out from future booms. At any rate it also means getting rid of UMNO which is a relic of the past and infiltrated by selfish and corrupt individuals who think only of themselves and their families (just like the US bosses to pay themselves fat bonuses). There is no way to take such a risky course with such an unreliable party as the main party in the govt. of this country. Looks like I am about to exceed the 1500 word limit. Let me just end here. Unanswered questions will just have to be the subject of future write-ups. God willing. By batsman
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