(Weekly Organ of the Communist Party of India (Marxist)
September 20, 2009
9/15: Capitalism�s Attack On World�s Peoples
has been a year since
the legendary financial giant Lehman Brothers collapsed on September
This global giant had weathered the railroad bankruptcies that rocked
World Bank has
explicitly stated that 2009 would be the first year on record since the
War II to register an absolute fall in world output. It has revised its
estimate of a minus 1.7 to a minus 3 per cent fall in global GDP.
twelve months except, for
over 2.3 trillion dollars into the
to the World
Bank, nearly 100 million people will be trapped in absolute poverty in
2.8 million more babies may die by 2015. The ILO has declared that more
million are going to join the existing ranks of the unemployed this
real estimate is bound to be higher as the ILO relies on the data
respective governments, many of whom are not counting the vast number
migrant labour losing their jobs and returning home. In
is the gloom that
according to a
On the occasion of this anniversary of 9/15, many books have been published seeking to unravel the manner in which this crisis unfolded. One of these makes an analysis of the cyclical capitalist business cycle in the entire history of capitalism. It shows that in the aftermath of an average crisis asset prices fall sharply, real housing prices fall on an average by 36 per cent over six years, equity prices by 56 per cent over three and a half years. Unemployment tends to rise by seven percentage points during the down phase of the cycle, which on average lasts four years. Government debt increases by 86 per cent. GDP falls by over 9 per cent on the average, and typically takes ten years to return to what it was before the crisis. This is the history of an �average� crisis. What we are witnessing is much worse than an average crisis. Under these circumstances, it would be naive to exude confidence of a visible turn-around in the global economy.
exuded by the prime minister and the Planning Commission could well be
of gross overestimation of the Indian economy. During this year
elsewhere in the
Instead, as we have seen, the budget papers for this year inform us that as much as Rs 4.18 lakh crore were foregone as tax collection last year as a result of various tax concessions. While continuing these concessions the government has now abolished surcharge on corporate tax and increased the exemption limit for income tax giving an additional bonanza of Rs 10,000 crore. Thus Rs 4.28 lakh crore are the amount that is being foregone by the government's own admission. This is being done under the presumption that with greater availability of capital, the corporate world would expand its activities and thus stimulate the economy. There is a fundamental flaw in this reasoning. No amount of availability of capital can stimulate the economy unless there are people who have the purchasing power to consume what is produced. Instead, if this amount of money was put into direct public investment for building our infrastructure, the consequent job creation would have vastly increased the purchasing power of the people and thereby stimulated the economy. However, like everywhere else, as is the internal logic of capitalism, the governments have stepped in to shore up the corporates through various bailout and stimulus packages rather than bailing out the people through increased public investment. This is clearly reflected in the performance of the top Indian firms (BSE 200) during this year since the collapse of Lehman Brothers. In the last quarter of 2008 the income of these firms rose by 12.8 per cent while their net profits declined by minus 17.6 per cent. In the first quarter of 2009, while their income grew by a minuscule 0.2 per cent, their net profits jumped by 28.6 per cent. In the second quarter of 2008, their income declined by minus 7 per cent, yet the net profits rose by 20.7 per cent. Clearly, while the economic activity is contracting, leading to unemployment and misery for the people, they continue to reap super profits thanks to �bailout packages. Such is the logic of capitalism that puts profits before the people.
It is thus imperative that popular struggles must be strengthened to force our government to adopt policies that put people before profits by vastly expanding public investments.