(Weekly Organ of the Communist Party of India (Marxist)
July 22, 2012
Foreign Capital’s Pressure & A Pliant Govt
IMPERIALIST globalisation, led by international finance capital, is in a desperate search for newer avenues for profit maximisation. It is in the very nature of the capitalist system to ensure that capital can never remain unemployed. In order to employ itself to earn profits, it consigns a large body of human beings as a reserve army of labour. However, in the current global situation which is today in the eve of the fifth wave of capitalist crisis, its hitherto available options for profit maximisation appear to be exhausting. Hence this desperation.
Imperialist globalisation, by maximising profits, had sharply widened the economic inequalities, both between and within countries. The consequent decline in the purchasing power in the hands of the people created a demand constraint for profit maximisation. This was sought to be overcome by advancing cheap credit (sub-prime loans) whose spending bolstered the aggregate demand in the short term. However, when the time came for the repayment of loans, the large-scale defaults led to the global financial meltdown in 2008.
order to overcome this crisis, massive bailout packages were
given to those
very financial corporations who were responsible for the
crisis in the first
place. These bailout packages were funded by the capitalist
states who borrowed
to do so. While the financial corporates were resurrected,
many governments in
these conditions, newer avenues have to be created for profit
international finance capital. Thus come the pressures on
is now President Obama’s turn to ‘advise’ (read pressurise)
Obama’s comments should not be seen as an ‘one off’ effort.
international credit agencies had downgraded the ratings,
hoping to pressurise
this report, Fitch
are strong suspicions that these agencies promote the agenda
finance capital by manipulating their ratings. They had
earlier given AAA
rating to mortgage-based debt of companies like Enron. In
2008, on the eve of
the global financial meltdown, they had given a similar rating
to Lehman Brothers
and the insurance giant AIG.
These two were mainly responsible
for the Wall Street collapse. Reports say that the
instance, in the line of such pressures on
There is a long list that all these pressures are demanding: Open up the retail trade sector for foreign investments, i.e., allow retail giants like WalMart to enter India; sharply reduce subsidies; decontrol the prices of diesel and other petroleum products; hike foreign investment ceiling in the insurance sector to 49 per cent from the current 26; allow foreign investment in pension funds to go in for market investments, i.e., speculation; allow foreign banks to take over Indian private banks etc, etc.
retail sector in
this reality, unfortunately such pressures seem to be working.
Pranab Mukherjee resigned as finance minister to become the
candidate, the prime minister took charge of the ministry,
meetings of officers urging them to “reverse the climate of
pessimism” and to
“release the animal spirit.” He transferred 19 officers in the
department. Within hours, the anti-avoidance tax rules (GAAR)
If the UPA-2 government proceeds on the course of such ‘reforms,’ then it may generate the so-called ‘feel good factor’ for international finance capital and India Inc. But for the bulk of Indian people, the situation will worsen. The opening up of the financial sector, where the life long savings of the majority of Indian people are parked, will create uncertainty and insecurity for the future of millions. Further, none of these ‘reforms’ will address, leave alone solve, the problems faced by the people like price rise, unemployment, poverty and misery. Realistic definitions of poverty estimate that nearly four-fifths of Indian people, more than 80 crores, would be below the poverty line. Given this reality, the proposed ‘reforms’ may enlarge profits for private capital and give prettier balance sheets to India Inc, but they would simultaneously enlarge the growing divide between the two Indias, heaping further misery on the already groaning majority.
What the Indian economy and the people require is a significant growth in domestic demand through employment generated by public investments that can sustain a healthy growth. The massive tax concessions, of Rs 5.28 lakh crore, as a stimulus to India Inc resulted in the fall of industrial growth rate from 8.8 per cent in June 2011 to minus 3.1 in April 2012. This course must be abandoned and the legitimate taxes thus collected must be used for public investments.
is, therefore, neither a dearth of resources in the country
nor avenues for
economic growth. What is required is a set of correct policies
that can provide
relief to the people while building our much-needed
people’s mobilisations must be strengthened to pressurise this
to change its policy direction in the interests of
July 18, 2012