ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Profound Structural Flaws in the US Financial System That Helped Cause the Financial Crisis

We are now in the midst of the worst financial crisis since the Great Depression. This crisis is the latest phase of the evolution of financial markets under the radical financial deregulation process that began in the late 1970s. This evolution has taken the form of cycles in which deregulation accompanied by rapid financial innovation stimulates powerful financial booms that end in crises. Governments respond to crises with bailouts that allow new expansions to begin. As a result, financial markets have become ever larger and financial crises have become more threatening to society, which forces governments to enact ever larger bailouts. This paper analyses the structural flaws in the current United States financial system that helped bring on the current crisis.

When the Facts Change: How Can the Financial Crisis Change Minds?

This essay argues that pragmatism as a temporary prop to stabilise the crumbling financial system is distinct from pragmatism as a governing ethic. The emerging common sense worldwide and in India aims to be the latter. Yet, in the absence of sufficient grounding in a broad theoretical doctrine, this incipient pragmatism may be insufficient to dislodge the prevailing doctrine of neoliberalism and thus may, in fact, end up being a temporary reaction.

Steering Out of the Crisis

The global financial and economic crisis is of such magnitude that 2008 will probably be looked back upon as a turning point equivalent to 1945, 1971 and 1989. The silver lining is that the crisis has discredited many established ideas about how societies should run their economies, and the impact of this discrediting will last well beyond the recovery. The crisis provides opportunities for advancing a social democratic vision of a moral society, with more of a balance between economic democracy and political democracy, especially in finance; one in which states regain confidence to surveil markets, as in the Keynesian era. A three-stage programme to steer out of the crisis towards something better and very different from what has been followed under neoliberalism is set out. The first deals with the immediate crisis. The second with the restructuring of finance. The third - to which virtually no attention has yet been given - deals with respecialising western economies. Getting far with most of the items would require a step-up in multilateral cooperation.

The First Network Crisis of the 21st Century: A Regulatory Post-Mortem

The current financial crisis should be viewed as a network crisis, because due to a whole series of deregulation measures, financial reforms and technological and financial innovations, the world has become closely networked into a global market, with laws, and policies functioning within national boundaries. This essay points out that the increased integration of the global market today brooks no further postponement of major reforms. The risk is that if sound, transparent and effective regulation is not built into the international financial architecture to foster open trade in goods and services, emerging markets would neither have the confidence for investment abroad, nor would they have the confidence to open their markets to higher volatility and contagion risks. This crisis therefore is likely to trigger considerable changes in the way we think about the behaviour of markets and the proper role of regulation and governments, particularly in crisis management. What is needed is a dynamic, evolutionary, interactive, and holistic understanding of how complex markets evolve and mutate.

The Recent Crisis in Global Capitalism: Towards a Marxian Understanding

This paper analyses the current crisis through a Marxian framework. It focuses on the creation of a new regime of accumulation (neoliberalism) since the 1970s as a response to the profitability crisis of the late 1960s and 1970s in global capitalism. The regime, while addressing that crisis, could never fully address it in the sustained realisation of profits/surplus value. What then of the efficacy of a Keynesian fix? From a Marxian viewpoint, the Keynesian solution is also inherently unstable as state-supported capitalism invariably runs into other crises (such as in the 1970s), which would force further changes in the system. Marxian prescriptions would go beyond the market vis-à-vis state debate to focus on the very institutional structures that perpetuate capitalism of one kind or the other.

The World Crisis, Capital and Labour: The 1930s and Today

Almost nowhere are the labour movement and the left prepared to respond to the world economic crisis even as the latter deepens. Today's economic crisis and labour's response cannot be a replay of the 1930s and yet one can learn from that historical experience. The left around the world presently finds itself in a difficult position without, in most places, a strong socialist organisation or a powerful labour movement. The key to the development of the labour and social movements and of a socialist movement in the United States and in Europe will be, as it was in the early 1930s, the development of militant minorities, ginger groups in the workplace and unions, in communities, and in the various fronts that challenge the status quo.

The World Crisis: Reforms to Prevent a Recurrence

The current financial crisis started in the financial sector of what was thought of as the country with the most sophisticated financial system, and that has spread almost universally and with startling rapidity by virtue of either financial or trade interdependence or both. Preventing a recurrence of such a crisis - which is a quite different exercise to overcoming the present crisis - demands reforms to the financial system. The question discussed in this essay is: What reforms? What needs to change? Preventing a recurrence requires a three-point programme: a reversal of the past policy of encouraging bank mergers and its replacement by a vigorous anti-trust policy directed at the banking sector; a determination to make monetary policy anti-cyclical (aided by the adoption of asset-price indicators); and reform of the regulatory system. There are a large number of reforms that are desirable, but the key ones are addition of macro-prudential regulations to the existing system of purely microeconomic regulation, and the penalisation of maturity mismatches in the financial system.

Regulating the US Financial System to Avoid Another Meltdown

There is broad agreement that lax financial regulation, especially in the United States and United Kingdom, contributed in a big way to the current global financial mess. In recent months, there have been widespread calls for a regulatory overhaul of financial markets regulation. But there is little agreement on what those specific changes should be. If the power and influence of private finance is not reined in, we will return to the destructive deregulation/bailout dynamic that has characterised the last several decades. This paper lays out a nine-point plan for regulatory reform, specifically tailored to address the structural flaws in the us financial system.

Anatomy of the Financial Crisis: Between Keynes and Schumpeter

It is instructive to see how the issue of business cycles was looked upon by John Maynard Keynes and Joseph Schumpeter, each of whom wrote masterly tracts on the subject in the 1930s. Though Keynes was concerned with a short-run problem, Schumpeter was concerned with the long-run dynamics of the capitalist system. Given the present financial crisis, it is possible to argue that the true rationale of a stimulus package in countries such as India that are still low in terms of their average level of living ought to be to address fundamental, long-term, rather than short-term, issues.

South Asia? West Asia? Pakistan: Location, Identity

While Pakistan's geographical location has not shifted in the last 38 years, there has been a marked shift in terms of its identity and associations. In the past, what is now Pakistan was closer to, and more part of, the larger south Asian or "Indian subcontinental" identity, but it has now "corrected its direction" (apna qibla durust kar liya hai). In some ways, the Pakistani identities of the Muslim and the south Asian/Indian are competing identities, often mutually exclusive. A secular India with a Muslim minority would not wish for a stronger Muslim south Asian identity while a Muslim Pakistan may not want to belong to an idea or union, in which it would be marginalised and subservient to a power which it sees as its nemesis.

Reframing Globalisation: Perspectives from the Women's Movement

This is a feminist invitation to rethink the nation-to-globalisation narrative that structures prominent approaches to India's post-independence history. Exploring the question from different vantage points, it argues that the long history of the women's movement in India from the 19th century onwards has been fundamentally international in scope within which the "nation" occupied a troubled position. The more recent challenges of caste and sexuality are further reasons to question a unidimensional conceptualisation of the present. The very pressing uncertainties besetting the future of the women's movement in India - and elsewhere - would be better appreciated within a "post-national" as against a "global" conjunctural analysis.

The Postnational, Inhabitation and the Work of Melancholia

Sri Lanka today is a postnational location, the uncomfortable home of a nation that never was, and never will be. If anthropology has been concerned with the particularity of "other" cultures defined as a "moral elsewhere" beyond the comprehension of universal reason, then anti-colonial nationalism has sought to claim a universality for the particularities of national culture. This essay sketches a preliminary description of the double loss imposed by the impossibility of the nationalist project, a loss that cannot be mourned in an ordinary way.

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