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

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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.

Must Banks Be Publicly Owned?

Even as analysts and policymakers in the United States and Europe are debating whether nationalisation is the best option to deal with the crisis in the banking system, governments have already opted to hold a majority of ordinary shares in the expanded equity bases of leading banks. Objections aside, the scale of the crisis portends that the need to inject more capital into the system will only grow. In addition, deregulation and the transition in banking from a structure that was based on "buy-and-hold" to one that relied on an "originate-and-sell" strategy almost certainly points to the need for a publicly owned banking system to ensure the proper functioning of the private sector.

A Crisis of Distribution

This essay examines the consequences of the global economic and financial crisis for income distribution. It first discusses the distributional background of the crisis, which is followed by an assessment of the impact, again on distribution, in different countries and then outlines the policy implications.

Those Who Forget the Regulatory Successes of the Past Are Condemned to Failure

Contrasting and analysing the role of regulation and regulators in dealing with two financial crises in the United States brought on by epidemics of control fraud - the us savings and loan debacle of the 1980s and the ongoing financial crisis that first became acute in the us non-prime mortgage sector - this essay argues that there is no substitute for effective regulation. Deregulation, which relies on private market discipline does not prevent or contain such epidemics. On the contrary, it fosters a climate that encourages them.

What Is Driving Global Deflation and How Best to Fight It

While the United States' emphasis on reviving banks and public spending are both important, neither addresses directly the main source of deflation, which is that the global imbalances are no longer being recycled effectively. The basic problem is not the imbalances per se, but the unsustainable way financial deregulation and neoliberal global order absorbed and recycled them. The us has lost much of its capacity to either absorb or recycle trade surpluses generated elsewhere. So, in addition to reasserting public control over the credit creation process, the us has to be prepared in case the dollar plunges in value, and focus on how to resume the recycling of trade surpluses before contraction begins to destroy them. The global monetary standard and thus the integrity of monetary reserves need to be safeguarded, and a recycling of trade surpluses would wean world demand away from its dependence on us overspending without the world getting stuck in a depression.

The Global Meltdown: Financialisation, Dollar Hegemony and the Sub-prime Market Collapse

An exploration of the roots of the current credit crisis in the process of financialisation, where profit-making occurs increasingly through financial channels rather than through trade and commodity production. This process and the explosion of private financial flows globally helped the United States preserve and establish its pivotal place at the centre of the international financial markets after the collapse of the Bretton Woods arrangements in 1973. It argues that the mechanisms that helped sustain growing global imbalances and preserve the role of the dollar as international money are under threat in the current crisis.

The Practice of Social Theory and the Politics of Location

Concerned with the ways in which "globalisation" seems to be undermining "the politics of location", this essay argues that the latter is both possible and necessary. However, a contemporary politics of location must be articulated from a "postnational" standpoint that opposes the essentialisms of yesterday without being indifferent to place. Locations matter not because some places are superior or inferior to others but because places differ. These differences do not need to be celebrated, museumised or protected from contamination, but they must be allowed to survive. If social theory is partly shaped by its contexts, then "we" - no matter who we are or where we are located - are better off with a multiplicity of such contexts.


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