Saturday, December 20, 2008

Casino capitalism and the exile of ethics

In this analysis of the current economic meltdown, John Samuel places the blame on unbridled capitalism and the lack of ethics in financial and economic policies and practices



The story of casino capitalism and deadly growth starts with the banishing of ethics from economics. It is also about lack of accountability in the political process, in corporate governance and in economic policy. Growth became the new dogma and orthodoxy. Monetarism ruled the market. Casino capitalism thrived on the subversion of politics and governance through the new power cartel -- politics, driven by media, money, markets and military.

The context of the present crisis needs to be located in the profound political transitions that occurred between 1978 and 1982 across the world. The Reagan-Thatcher formula of neo-conservative politics and neo-liberal economic policies created a policy paradigm based on military might and bulldozing finance capitalism. By cutting taxes for the rich, there was surplus money to ‘invest’ in financial markets, and the cumulative deregulation of the financial sector ensured that the surplus money of the rich then moved across the globe in search of huge profits. Speculative finance capitalism, easy money with low interest rates, and the increasing distance between the movement of finance capital and the real economy created artificial demand and artificial growth, without real assets on the ground. This is what created the bubble. Wall Street moved far away from Main Street and the financial tsunami hit with the fall of one of the biggest investment banks, Lehman Brothers. The shaky foundations of one of the biggest insurance companies, AIG, caused all inter-bank lending to come to a halt and resulted in the credit crunch.

The downward spiral was bound to happen. Many of us have warned about the consequence of neo-liberal capitalism and unregulated finance capitalism for the last 15 years.

In early-2006, in an article titled ‘American Dream at the Crossroads’ (http://infochangeindia.org/200610026715/Other/Features/American-dream-at-the-crossroads.html), I had written: “While Bush is busy fighting a shadow war in Iraq and the ‘war on terror’ globally, the shape of the American economy is far from soothing. On the surface, it looks rosy. With an estimated growth of 3.5% this year, unemployment low and fat profits, the economy looks robust. However, if we look at the other key indicators, then there is less space for any optimism. The US trade (current account) deficit for 2005 has been reported at $804 billion (nearly 7% of the GDP). Scrap metal and waste paper are two of the biggest export items. There are enough signs of an impending financial crisis on the horizon.”

Investment banks and finance capitalism have focused on economic growth at the cost of the ethics and fundamental rationale of an economic system. The finance capital market looked more like a global casino, thriving on speculation, derivatives and quick money, without having any real assets. As finance capitalism got more detached from the real assets on the ground and the real economy and wealth, double-digit returns and quick profits gave rise to even more speculation. This created short-term artificial demand, and inflated real estate and commodity prices and a high-risk credit market.

While the neo-liberal policy paradigm created a whole new generation of billionaires and new policy and political dogmas, the new conservative politics gave rise to unilateral militarism and two costly wars. The Anglo-American finance capitalism and an unethical war proved to be too costly to sustain in real economic terms. This bulldozing capitalism and militarism, presided over by the bully George Bush, also created new reactions in the form of Islamist jihad and the politics of terror.

While everyone was singing songs of “robust” growth, the health of the US economy actually went from bad to worse. Household debt rose from 50% of GDP in 1980 to 100% of GDP in 2006. Much of the new debt was invested in real estate and sub-prime lending to anyone and everyone buying a house -- without any credit rating -- creating a housing bubble which saw an annual appreciation of almost 20%. This gambling was simply not sustainable as the price of houses went through the roof -- far removed from their real value. By 2007, the debt of the financial sector was about 116% of the GDP, compared with a mere 21% in 1980. During the last few years, the top five investment banks freaked out in the market and speculators and investors laughed their way to the bank almost every day.

However, the context of this crash is different from earlier ones. Unlike in the 1930s, the active economic zones of the world have now shifted to Asia. While in 1930 most countries in Asia had stagnant markets, a much smaller manufacturing sector and less productive capacity, the situation is dramatically different today. Both China and India have a growing domestic market and productive capacity. Asian banks and the financial sector are relatively well protected. Many learnt a lesson from the South-East Asian economic crisis of 1997. Central banks of Asian countries have total deposits of around $4 trillion. The National Sovereign Funds of the Gulf countries and the savings ratio of Asian countries are still robust. While China has one of the highest savings rates in the world, and India has a savings rate of more than 25%, the public debt of these countries is also healthy. Japan, though, has a huge public debt that is more than its GDP. Many Asian companies are cash-rich so they may still invest in expansion plans and many of them could acquire new, cheap assets in the USA and the UK.

Though Asian economies will be affected in the short-term, particularly in the service, real estate and financial sectors, Asian and West Asian economies look more resilient with the potential to balance out within the next two years. China has already committed $586 billion to stimulate domestic demand and the markets. India, too, is making an effort to stimulate the economy by announcing various packages of around $150 billion.

Due to the coordinated efforts, the faster pace of communication and the internal strengths of emerging economies and markets, the situation today may not be as dire as in the 1930s. This will be a deep recession, which will affect all sectors and economies, and deeply impact some sectors, but overall the devastation will be less. It will be a long and painful period lasting upto 2012, inflicting varying degrees of pain and trouble.

The present financial and economic crisis is also located in the ethical deficit in governance, management and economy. The greed-driven and growth-oriented ideology of finance capitalism alienated governance from politics, management from accountability and economy from ecology. The fall of Enron and many other companies clearly pointed to the lack of corporate accountability and the nexus between the corporate and political elite. Citizens were transformed into consumers of credit, services and goods. Mass political leaders were replaced by telegenic technocrats who looked to the rich countries, rich corporations, and Bretton Woods institutions for ideas, ideology and legitimacy.

Such a cumulative subversion of ethics and political processes led to a deficit of accountability and legitimacy in governance and economic management. This lack of accountability and transparency and the new nexus of corporate-technocratic-political elites created the conditions for casino capitalism to thrive and grow. But the growth proved to be deadly not only for the greedy investment bankers, but also for more than a billion poor people around the world.

InfoChange News & Features, December 2008

Sunday, December 14, 2008

Great Depression to Deep Recession

Political contexts of Economic Crises


John Samuel


Politics and economy are twins- shaped and driven by power-relations. Finance Crisis does not happen in a political vacuum. Politics and policy choices often shape, make and break economies and the financial architecture. So it is important to unpack the political contexts, causes and consequences of the financial and economic crisis. There seems to be a clear connection between war, economic crisis and political transitions.


In spite of the confident rhetoric of political leaders, economy did not necessarily dance according to their music. In early 2007, George Bush boasted that “economy is powerful, productive and prosperous”. It would be worthwhile to compare this with the message of President Calvin Coolidge to the congress on Dec 4, 1928: “Enlarging production is consumed by an increasing demand at home and expanding commerce abroad. The country can regard the present with satisfaction and anticipate the future with optimism”. Within less than a year of that statement, on 29th October 1929 the great crash happened at the New York Stock Exchange, arguably the most traumatic experience in the history of capitalism. The near universality of this economic crisis and its political implications are not too far to forget.


The political context of the great depression and the ongoing financial crisis are not the same. However, there is one shared context- concentration of wealth in few hands- and consequent increase of inequality. The prosperity of the USA in the 1920s was very fragile; five percent of the population received more than one third of the income and seventy percent of the population got an annual wage hardly good enough for survival. The roots of the great depression can be traced back to the consequences of the First World War. And the consequences of the great economic crash in the early thirties made enabling conditions for the rise of fascism as well as the context for the Second World War. This eventually led to the reordering of the world in the aftermath of the Second World War. However, there is a substantial difference between the political context of the great crash and that of the ongoing financial and economic crisis.


The present financial crisis is a result of the cumulative impact of the neo-liberal economic paradigm and unbridled financial capitalism in the last twenty years. The globalization of market, media, technology, and finance went hand in hand with the globalization of discontent and globalization of terror. They fed into each other with increasing virulence. Thus economic growth was accompanied by inequality, injustice and reactionary politics. George Bush and Osama Bin Laden fed into each other. The rise of neo-liberal capitalism- driven by hyper-consumerism and economic growth`-perpetuated a new addiction for oil. The oil addiction shifted the theatre of international politics to the West Asia and Gulf Countries. The powerful countries sought to control oil and other natural resources- through the power apparatus of the military and markets. This created new forms of imperialism and militarization. The new oil economy irrigated markets, war machines as well as terrorism. Though the gulf war in the early nineties proved to be a profitable enterprise for the USA, the Iraq war proved to be a lost game, in terms of economics and politics. The economy, military and the unilateral power of the USA got overstretched and became increasingly brittle. In spite of the boastings of Bush, the economy began to bleed in the context of a costly war. It was estimated that around US$ 3 trillions was used to blow up Iraq- killing hundreds of thousands of people, making deep wounds in the world as well in the economy. The eclipse of military adventurism and casino-capitalism- eventually shook the political power of the White House and the economic muscle of the Wall Street.



The context of the great depression in the 1930s needs to be located in the interwar economic and political order of the world. The crash of the New York Stock Exchange on Oct- 29, 1929 led to a deeper universal crisis-which at that time looked like a collapse of the capitalist world economy. However, it is important to note that at that period Communism was a viable economic and political alternative to capitalism. In spite of the great depression, economy of the USSR was less affected due to the strength of the state- controlled Soviet system of economy. The economic and political consequence of the First World War also created to fertile ground for the rise of right wing militant politics in the form of Nazism in Germany and Fascism in Italy and other parts of Europe. Though America emerged as an important player in the aftermath of the First World War, the USA was neither a unilateral super power nor the dollar became the super currency of the world. The finance capitalism was far less globalised than the preset time. The political economy of oil was still in its early stages. The world was still a big colony of the British and European powers.


Now the context is dramatically different. It is an irony of history that the USA blew up lots of money for the war in the Gulf and Iraq, and now the Economy of USA will have to depend on the money and oil from the very same Arab world. The USA has to depend on the trillions of Foreign Exchange reserve from the Gulf Countries, and other Asian countries, such as China, Japan and India. Many of the tops Banks and business enterprises in the West is increasingly owned by the rich Arabs through investments as well as the strategic use of the National Sovereign Funds of many Gulf countries. While the market in the Europe and the USA got increasingly saturated, the new power of vibrant markets shifted to emerging economies of Brazil, Russia, India and China.


The dramatic recession in the USA in 1930 spread to Germany and the rest of the world. The industrial production in the US and Germany fell about a third from 1929 to 31. There was a slump in the demand and price of primary commodities-including rice, tea, coffee, wheat and silk. Many of the Asian, African and Latin America countries- dependent on the export of primary commodities suffered due to the slump in demand. The world trade fell by 60%. The crisis resulted in the rise of massive unemployment which varied between 20 to 50%- in different countries. The epidemic failure of Banks and credit-crunch actually led to the great stock exchange crash. By the second half of 1930, 603 banks failed, including the Bank of the United States, which accounted for the loss of about one third of the total deposits. By January 1932, 1860 banks have failed. The automobile production- a key sector of the economy in those days- reduced more than 50% within two years. The combined output of the world’s seven economies declined around 20% within three years of 1929 to 32. Millions lost job and unemployment in the USA and Germany was above 33%. The depression resulted in a sharp increase in tariff and resultant reduction in international trade. And the world trade almost collapsed. In fact, Great Brittan- the original imperialist masters of the “free trade” abandoned free trade in 1931.

However, the immediate response to the depression was a series of half baked panic reactions- including protectionism, cutting deficits and more conservative budget with less public expenditure. This further made the situation worse. It took another five years of concerted effort to re-energize the economy. And as a matter of fact, the Second World War helped the USA to increase demand and production to shift the economy in to a growing pattern.






The seeds of the Second World War were very much there in the ‘reparations.’ The vast and undefined ‘reparations’, as the cost of war and the damage done to the victorious powers, was imposed on Germany in the Versailles Peace Conference in 1919. Though John Maynard Keynes – who participated in the Versailles Peace conference as a young economist in the British delegation- warned against “reparations’ through an illuminating paper, The Economic consequence of Peace (1920) - the political leaders of the day ignored his arguments. As a result Germany plunged in to an economic crisis in the aftermath of the First World War, and this is what provided the fertile ground for the rise of Hitler and that of Nazism.

There is a connection between economic crisis, political turmoil and possible shifts in the governance. Germany was indeed a major industrial power and when the crisis of Germany was followed by the crash of the US Economy- there was a much more impact- economically and politically. This gave rise to Fascism in many parts of Europe. But it also gave rise to the New Deal of President Franklin Roosevelt in the USA, following the economic model of John Maynard Keynes. The New Deal consisted of a series of policy and economic measures to address unemployment and stimulate economic demand. The first New Deal Programme (1933-35) sought to restore public confidence and resulted in a series of legislation, including the one on Public works and policy measures. The second phase of the New Deal began in 1935. Path-breaking social legislation in 1935 included Social Security Act (a scheme for unemployment insurance, disability insurance and old age pension) and Wealth Tax Act and the National Labour Relations Act. In the eight year history of the New Deal, a total of US$ 11 billion was spent and provided employment for 8 million workers in the USA. The New Deal signified the role of the state in redistribution of wealth. Though the package was a radical step in many ways, it did not help to completely address the economic crisis- as the USA again faced a recession in 1937-38. However, it represented the far-reaching and stunning socio-economic reforms and established the role of an interventionist state. Thus began the political legitimacy for the Welfare state across the world.

The finance crisis may lead to a deep recession. Such a shift is powerful enough to shape new paradigms of policy, development and institutional framework in the next five years. Great Depression was the beginning of a paradigm shift in the policy, politics and nature of the state. The political outcome of the Finance Crisis may be too early to predict. But one could see multiple shifts in the political process and governance in the years to come.

The ongoing financial recession played a very important role in shifting the politics of the USA. It is yet to be seen whether the team of Barack Obama can turn the tide of politics and economics. There is indeed a danger of conformist politics with a high doze of optimistic rhetoric. A black man in the white house may be a great political symbolism. But whether it would transform the politics and economics in the world still remains a billion dollar question.

Saturday, December 13, 2008

In the Birds Nest

Changing Contours of China


John Samuel


Today is a freezing Saturday of December in Beijing. I was looking for Chairman Mao.

People said he might be there at the Tienanmen Square- that is where the place allocated to him. I went there looking for him. His huge portrait looked in a sort of splendid isolation. Mao is a lonely portrait of an old man in the new China. There were not many visitors at the Tienanmen Square.

Taxi driver told me that I should rather spend time in the happening place- the Birds' Nest.

Bird’s Nest- the venue of Beijing 2008 Olympics- did not look lonely. Even on a freezing morning, there were more than ten thousand people. Tens of thousands are coming to Beijing to see the pride of China- the gleaming architectural marvel designed by a French architect. And it is not free. One ticket costs 50 RMB (equivalent to 300 Rs). That does not decrease the queue. It is indeed the happening place. I looked for Chairman Mao there too. I could not find him anywhere in the enthusiastic crowd. At last I found him on the leather bag of a fashionable woman- Mao too may have new market in the branded world -like Che Guevara!

Since I could not find Mao anywhere, I asked my friend. She said Mao drifted away from public space and memory somewhere in the early eighties. He walked away to the labyrinth of history. His statues slowly but surely disappeared- one by one. First, from Public Square, then from office buildings and then from Universities. There is one statue remaining in Beijing- at the University for Chemical Industries. It seems Deng Xiaoping’s team erased Mao and Maoism from the public space and memory.

The art Museum in Beijing is now celebrating the paintings of New Era (1978-2008).These paintings are actually a witness of the changing tastes and contours of the society. I could see some beautiful realist paintings of the 1970s and then slowly the coloures and contours changed. Techniques too changed. Now one could see more globalised art- abstract paintings that could be done by anyone from any country- though there is a Chinese touch here and there.

Birds Nest too is a bit abstract. It is surrounded by the gleaming building and the glow of the new China. But somewhere behind the Birds Nest- very close to it- there is a temple dedicated to the Taoist goddess of beauty. Birds Nest is sizzling with thousands of enthusiastic Chinese tourists on a freezing morning- and there is a whole bunch of tourist agencies and souvenir shops- selling the pride of China- declaring the arrival of China on the global stage. When I walked to the 15nth century temple- constructed during the Ming Dynasty- they said it was closed. No one was there. They told me that it would not open on weekends.

The CCTV9- the government run English TV Channel- keeps reminding us about the "Strategic Economic Dialogue Meeting” of the two "super" powers- between the largest economy and the largest developing country in the world. Of course, the number of Olympic gold medals and the Birds Nest auditorium- with a capacity of more than ninety thousand people- reaffirm super power perception in the collective memory of the growing middle class Chinese people. There is more nationalism and the old Maoism and communist dreams seemed to have taken a backseat somewhere.

But there is a less visible world behind the glow of the globalised China. There are so many new confusions, social trauma, new inequalities and hundreds of millions of lonely people. There are layers and layers of China- not only in terms of its depth of history and civilization- but in terms of its society, people and culture.

Mao is not the only lonely man in the new China. Amidst busy traffic and crowded streets, there is a growing burden of lonely people- who are pushed in to the rat race of economic comforts and the ever –growing need for more money to buy new homes , new cars, and the latest gadget or holiday offer.

Someone I know had to go through a difficult time. She had to undergo therapy for a serious ailment. She was in the hospital for a couple of months. She came to meet me. I asked whether anyone was there to support her during those difficult times. Tears started making channels on her face- she was overwhelmed with a sense of unspeakable sorrow. She has a good house. She has a very good car. She got her degree from UK and she is a high value technical professional. But there was no one to visit her during her two months in the hospital. Her parents passed away. She neither got a brother nor a sister. She had a partner- for a couple of years. He moved to another country and no longer in touch. She was too busy in her work and earning more to pay more mortgages. She did not have time to get friends. Then she was hit by the unbearable burden of loneliness. It is in such spaces the new spiritualism and religion is coming in. There is a very significant growth of tantric Buddhism and evangelical Christianity- largely through cell churches.

During the time of Chairman Mao, there was a huge public education against superstition. Now even big office buildings are inaugurated with all ceremonies to ward off bad omen and bad luck. New sense of insecurity, loneliness and new superstition can be seen and felt when you scratch the glow of the new era. The new era and new capitalism seem to give a sense of new pride to many middle class Chinese. But that also increased the sense of insecurity and alienation.

Before the beginning of the new era, cycles defined the streets of China. A man with a cycle and enough earning for living, was an eligible bachelor. There was a binding force of community. Within the community, many meetings and festivals gave new opportunity to discover love and life partners. Such communities are more of nostalgia in the new China. There are still cycle tracks on the road. But the roads are full of cars- and it is no longer easy to cycle on a busy street in Shanghai or Beijing.

Beijing is booming. Shanghai still shines - almost like the Manhattan of the east. But there is also a concern about the increasing inequality and migration. The population of Beijing is touching 18 million. Now there is already a move to restrict migration to Beijing. Many young people consider a registration in Beijing or Shanghai as status statement. But that can not solve the new sense of loneliness among many young people- particularly professional women-in the midst of growing buildings, new KFC chicken shops and mushrooming massage spa in Beijing.

Mao may want to sleep peacefully in his grave. Maoism is not even in the Museum. There are two statues of a sad Marx and grumpy Engels at the Shanghai Institute of Administration. Marx in Shanghai could be the title of a novel about the new China.

China is an amazing place- one can discover layers behind layers every time. One can discover some new thing- food, taste or flavor- every time. China is still an amazing place- ever waiting to be discovered.

Sunday, December 7, 2008

China in the days of Meltdown

John Samuel


Taxi drivers are often the best barometers of a society. They are a part of the common people. They know the city- its glow and underbelly. So I began my discussion with my Taxi driver in Beijing. He told me that he got less business and there were not many foreign tourists. He was worried about financial crisis- though he hoped that government would do something about it.


It seems China has anticipated the Finance Crisis and also adopted a comprehensive strategy to address the situation. In spite of such preparedness, there is a shared sense of nervousness among people. People spend less and save more. There is an unarticulated sense of impending trouble. But there is also a sense of confidence- that the government would be able to manage the trouble.

There are around 200 million migrant labors who moved from villages and agricultural sector to the booming real estate and manufacturing sector, in the last ten to fifteen years. They are the people who are hit by the present crisis. Hundreds of factories in export zones (such as Guangdong) are shut. Maximum number of lay off are among the direct subsidiaries of Multi National Corporations or the direct suppliers of such big companies. So now there is a reverse migration from Cities to villages.

While government has announced a package of US$ 586 billion for stimulating domestic demands and building rural infrastructure, they announced 9 point economic and fiscal management programme to stabilize and manage the economy. These include a) Reducing the interest rates b) A massive programme for rural credit for new ventures- where local government will offer guarantee c) A programme to provide loans to start new enterprises d) Stock market stabilization strategy and e) Weekly risk monitoring and management .

Anticipating an urban-rural migration, there is a coordinated effort between the federal government and the provincial government, along with county administration, to initiate a whole range of projects on high quality rural infrastructure. This will include rebuilding schools, improving hospitals, constructing new roads, bridges etc. Apart from this, 140 new airports are planned across the country.

Though there is a slow down of the construction activity in Beijing and other big cities, the real estate is yet to show a serious crisis here. The demand has decreased (though loans are still available). But the price has only come down to 10% to 15% in the housing sector in Beijing

There is a conscious strategy to encourage internal tourism and the number of people traveling within China is increasing. There is also a new effort to encourage tourism to Taiwan- in the context of the new equation with the government of Taiwan. However, there are clear evidences of decreasing number of foreign tourists. This may have a direct impact on hotel and airline industry.


It seems China has a comprehensive security policy in the context of the finance crisis. There is restriction on visas. All international organizations are under new surveillance. They are now very careful about each and every business proposal or financial deal. It seems China is far ahead of India in terms of planning, risk analysis and preparedness.


There are very interesting debates about the Financial Crisis in China. The key debate is whether the first priority should be to strengthen Chinese economy or to help to stabilize the global economy by pumping in more money to the US. There seems to be fierce debate on this in the Chinese media and less debate in English- as government imposes more restriction on English media.

Unlike many other countries, China is unique in terms of the scale of operations and also the fast pace of implementing policy recommendation. China has highly centralized form implementation and a much better orchestrated coordination between the federal and provincial governments. So there is a much better chance to implement a demand stimulation programme- which will have multiple layers and dimensions- at a much faster pace than many other countries.

China seems to have a three prong strategy a) A Huge programme focusing on rural and small town infrastructure development (in the last fifteen years- it was more urban focused development) b) A growth stimulating programme by providing generous loans for small and medium level enterprises in the third and forth tier towns/cities- closer to the rural area c) A fiscal management strategy.

Last week, they finished the fifth round Strategic Economic Policy Dialog with the US. The discussions were led by Hank Paulson and the Chinese vice-premier. This is a part of the external strategy of building bridges and strategically positioning in the context of the financial crisis. Chinese leadership very well knows the USA will be more dependent on China much more than before. At the same time, it is in the interest of China to make sure that the economy of USA rebounds to its earlier vibrancy. China needs an economically vibrant USA to export its goods and services. And the USA needs the Chinese foreign exchange reserves to stabilize its finance system. CCTV 9 (English Channel) did a special programme focusing on European businessmen in various cities and how they felt about the pinch of Finance crisis. Of course, they gave the general narrative "it will be difficult- but China will come out in flying coloures".




In many ways, the situation of China is exactly opposite to the USA. In the USA, everything is driven by credit- personal spending to the consumer market to new investments. In China, it is still driven by the saving. In spite of everything, people spent only a percentage of their earning, most of the people who buy houses would prefer to take only 30 to 50% as loan- instead of hundred or eighty percent mortgage in many other countries. China got one of the best saving ratios in the world. Public debt ratio too is good in China. So the saving driven economic model may actually help China in the difficult days ahead.

There has been a cottage industry predicting the fall and doom of China. But don't underestimate the quality and caliber of the leadership in China .There seems to be a difference between the external perceptions- and the multiple layers at work in China. There is a sort of inbuilt resilience within the system of governance. Though the economy and financial sectors have opened up, there is still a strong regulation and control management system at work in China. Most of the big Chinese corporations are owned or controlled by the government. This is quite different from the free market of the USA or Europe.

Having said this, China has a huge export market- and the financial melt down may severely affect the export market, particularly if many people in the US and Europe lose jobs. Though China is confident to keep the growth rate at the level of nine percent, it may actually come down in the next one year. It may have some difficult effect in some provinces and in the short run many millions of migrant workers may move back to their villages and countries.

China, with its centralized economic management, a strong sense of nationalism (this has a psychological impact), and the possible simulation of demands may be able to cope up with the finance crisis better than many other countries.

Wednesday, November 26, 2008

Death of a Dogma

An obituary to the Washington Consensus

Editorial, November 25. The New Age. Dhaka


In an ethical liberal democratic system, the state is expected to determine the boundaries of market and citizens are expected to determine the boundaries of the state. But the dogma reiterated that ‘market knows the best’. Thus, market began to determine the boundaries of the state and the state began to determine the boundaries of the citizens. Then markets were captured by speculative finance capitalists and investment banks. The finance market got increasingly detached from real people, real wealth and real economy. Market was driving the governments, writes John Samuel


‘IT IS over’ – a succinct way of informing the death of a dogma;the greed-driven neoliberal capitalism. That is how one of the Wall Street analysts on September 15, 2008 described the fall of the Lehman Brothers. The fall of Lehman was a visible signifier of the tsunami that hit the base of a turbulent sea called the Wall Street – the world of high-pitched financial trade and investment.

It was the story of a disaster foretold.

That morning a painter called Geoffrey Raynold landed up in Manhattan and unveiled a large canvass painting – The Annotated Fuld – showing Richard Fuld, the beaten chairman and CEO of the Lehman Brothers, with sunken eyes. The painter invited Lehman employees and others to scrawl their message on the canvass; someone scribbled: ‘This sucks.’ The next day the painting was sold for $100,000.
The rise and fall of the Lehman Brothers is symbolic of the rise and fall of the neoliberal economic policy paradigm. When the financial market roared in glory, the speculators, traders and typical financial intermediaries played in the global casino, like those in Atlanta city, as if there is no end to the good days. The rich laughed their way to the bank every day – dined, wined and partied – with perpetual cheers as the stock market index climbed to the sky. Sensex has become too sexy to sustain. And many got seduced to the red hot stock market. The percentage of Americans owing stock rose from 16 per cent in the 1970s to more than 50 per cent by 2005. Everyone wanted a piece of the cake.

It is true that the Lehman Brothers is a 158-year-old brand. However, it is actually a 14-year-old company that was spun off by the American Express in 1994. In 1994, the Lehman Brothers only had a relatively smaller capital base. But the ambitious captains of Lehman were thirsty for profit and capital. To make more profits, they borrowed huge sums in relation to its real size. Its debt became 35 times more than its capital – an unsustainable ratio. But they were making profits and they jumped in to the lucrative real estate markets with new financial instruments – derivatives – to make more quick money.

Credit-rating agencies too played the casino game. The top credit-rating agency Moody and Standard and Poor gave AAA rating – the top one – to those greedy nexus playing the game all along. It was a clear conflict of interest when the same bankers paid Moody and S&P to give them a good credit rating to their respective banks. It was a lie waiting to be exploded in the scandal of subprime lending – easy mortgage given away to anyone ready to buy real estate, unmindful of their economic capacity to repay the loans.

These intermediaries were betting someone else’s money – if they gain, they make a huge bonus. If they lose it is someone else’s money that is lost. No wonder that Richard Fuld made $490 million as the CEO of the Lehman Brothers, making the best use of stock options. Those whiz kids, called investment bankers, went for risky deals and quickie profits, as they too could make their millions through the stock options. Many of them made their millions and moved on. And now the party is over. More than a trillion dollars worth stock market wealth vanished in a single day. They call it financial meltdown. That was the beginning of the end.

Dogmas are authoritarian doctrines. Neo-liberalism emerged in the early 1980s, became a dogma over a period of ten years. The dogma was that ‘market knows the best.’ It consisted of tax cuts for the rich, more indirect taxes, which affect the ordinary people, deregulated financial markets, easy money with less interest rates and free market with forced liberalisation of the economy, market and financial sectors across the world. Anyone who questioned the dogma got marginalised as heretics.

In fact, by the late-1970s, the market got saturated in the US and Europe. They required new market for the movement of the finance capital as well as manufactured goods. Unless the market was expanded to the emerging economies and unless there was a free flow of capital, the Anglo-Saxon capitalism in the early 1980s would have faced a deep crisis. The state too was saturated and fat. That is how the neoliberal agenda, along with neoconservative politics of the Reagan era entered the scene.
Many of the developing and poor countries were in the debt trap resulting from the oil price shock in the 1970s. So the US and its allies used the World Bank and the International Monetary Fund as strategic institutions to force many of the debt-driven countries to open up their markets and deregulate their economies. By the early 1990s they called it the ‘Washington Consensus’ – a neat packaging of the neoliberal dogma, pedalled across the world by the Word Bank and the IMF. The charismatic face of Bill Clinton and the glib talks of Tony Blair painted the neoliberal dogma with a ‘human face’.

Investment bankers looked like sexy guys with lots of money. Globalisation became a fashion statement for many countries. Those who challenged it were simply ignored and sidelined. The World Economic Forum became the fashion street – an extension of the Wall Street. Political leaders and corporate executives went there for annual pilgrimage. The deadly dogma preached growth and growth, toasted for the new billionaires. Newspaper told the rags-to-riches stories of the new billionaires. Billons of poor were put under the carpet. Poverty and inequality did not make it to the front page. Bill Gates, Warren Buffet and Laxmi Mittals smiled at us from the TV channels and front page of newspapers. The upward mobile, upper cast and urban class in the metros of India celebrated it with a saffron glow – India Shining. Governments competed to show how much they are committed to the neoliberal dogma. Any sceptics were dumped as the relics of the past or the residues of the left.

When neoliberal finance capitalism, initiated by the Anglo-American axis of Reagan-Thatcher combine, pushed to us the new order of the day, their wholesale agents, the Word Bank and the IMF, pedalled neo-liberal policies as medicines for all ills in all countries. By the early-1990s, the neoliberal globalisation and deregulation became the dogmatic ‘mantra’ of the day. Politicians wanted to be in the good books of Uncle Sam and bureaucrats wanted to be in the good books of the Brettonwoods. When the Soviet model too collapsed, the neoconservative intellectuals began to pedal old wine in new bottles – ‘The End of History’, ‘Clash of Civilisation’ and ‘There are no Alternatives’.

There emerged a deep nexus between the Wall Street and the US treasury. It is not a mere accident that Hank Paulson, the treasury Secretary, was the former chief executive of Goldman Sachs. Many of the top executives in the government and the Word Bank came from the Wall Street. The money-driven corporate politics and the agents of investment banks in the corridors of power and their media minions created the myth of the growth engine driven by unbridled finance capital.

Everyone in the corridors of power all over the world was sold to the idea of the inevitability of neoliberal capitalism. Neo-liberalism was signified as the politics of economic elites. During the last twenty-five years, the politics in many countries got corporatised, primarily driven by money and media and fund managers and agents of big corporations. The policymaking too was subcontracted to the votaries of neoliberal dogma. Though many of them talked about ‘freedom’ they were actually in the business denying dignity and fudging freedom. Meanwhile, the Forbes Magazine kept celebrating the increasing number of billionaires in the midst of a billion who went to bed hungry every day.

Many warned that the wolf was on the way – but who got time in the midst of the party? George Soros, one of those original gurus in the financial capital market, warned about ‘market fundamentalism’. Warren Buffet, the old hand at the Wall Street, called derivatives as the ‘financial weapons of mass destruction’. But everybody was busy partying, making the quick bucks, till the wolf was at the door.


In an ethical liberal democratic system, the state is expected to determine the boundaries of market and citizens are expected to determine the boundaries of the state. But the dogma reiterated that ‘market knows the best’. Thus, market began to determine the boundaries of the state and the state began to determine the boundaries of the citizens. Then markets were captured by speculative finance capitalists and investment banks. The finance market got increasingly detached from real people, real wealth and real economy. Market was driving the governments. And now the governments are forced to bail out and nationalise the losses, while the rich few got away with their fat profit. The federal government had to take the huge burden of two big mortgage companies and dumped more than $5 trillion of the debt of the companies to the lap of taxpayers – almost doubling the amount that the US owes to its lenders. This is termed as the biggest transfer of debt in the history of money. Almost a couple of trillion dollars is pumped into the economic system to keep those sinking ships afloat. Ultimately, it is the people who end up paying for the indulgent excess of the rich and powerful in the global casino of the so-called free market. Free market was never free and now the toxic burden is dumped on the people.

Bush presided over a brutal war and a deadly financial casino. The US unilateral militarisation prostituted the term ‘democracy’ and ‘freedom’ by bombing people and countries – first in the name of the so-called weapons of mass destruction and then in the name of ‘freedom’ – spending $3 trillion. The unbridled neoliberal finance capitalism bulldozed ahead with greed till it crashed. The boasts or bombs of Bush did not help to conceal the smell of the reeking dogma under the carpet. The American dream became a nightmare within a few weeks.


The dogma is dead – now under the debris of the famed investment banks. There is no more consensus in Washington. Karl Marx must be laughing in his grave in London.

Sunday, November 23, 2008

Dealing with Finance Crises

John Samuel


We are in the beginning of the slump. And it may deepen by the second half of 2009. My sense is that it will take three to four years to recover- i.e. by 2012. Though there will be slump and reduced production and demand in the US, most of the emerging economies got a growing domestic market- and manufacturing capacity. In the 1930s- most of the present emerging economies did not have a growing market - and the primary trade was in commodity- when the commodity market- primarily exported to Europe etc collapsed, the impact of the crash (1929) also adversely affected Asian countries in a big way.

So this will be a deeper recession than the earlier ones in the late seventies, and late 90s. But the world economy may be more resilient now- due to more coordinated efforts, quick remedial actions, growing market-with absorption capacity and productive capacities, and potential recalibration of the currency market. It is also due to the fact, Banking and financial sector is more regulated in the emerging market. So the central banks in Asia countries got almost 4 trillion USD as deposit. Many of the established companies in India, China and the gulf are actually cash-rich: so the ongoing credit crunch may not affect their expansion plan so much- though they may delay it in the very short term.

Those who will be severely affected are:

1) Real estate business- that is primarily driven by the credit market. So many builders will burst the demand will decrease and they will not be able to pay back the mortgage. This is also because there is lots of short-term foreign investments- that too based on international credit- and that will dry up. But our banks like HDFC are relatively safer as their terms for housing mortgage are rather on conservative terms (floating interest rates) and mostly given on credit worthiness.

2) A section of BPO and IT will be affected. But not all of them will be wiped out- because many of the Western countries will find it cheaper to do operations in India. However, they may renegotiate for lesser price- and this may result in reduction of salaries and benefits across the board in BPO and IT sector. Such cuts will not be more than 10 to 15% - it may not drastically affect the consumer market- though there will be less demands for cars and mobile phone etc.

3) Shipping, Airlines and transport may be affected in the short term

4) Hotel and tourism will be affected too.


Though India will be certainly affected- there is less reason to panic- as this can actually turn in to a great opportunity for India.

There has to be short-term and long term measures to deal with the crises..

Here are some possible options-

1) Stimulate demands- by substantial government expenditure in the area of rural economy, infrastructure, and agriculture. ( FRBM-2003- needs to be scraped)- A neo-Keynesian strategy with a focus on rural economic generation may help in many ways.

2) A review of the existing financial and banking framework- and ensuring that we have a robust regulatory framework that do not stifle growth and at the same do not expose us to big volatile financial market elsewhere.

3) A coordinated efforts by all the major banks, corporate actors and policy makers to develop a strategic framework to restore investor confidence, ensure that there are no drastic cuts in the jobs and to make sure that the new stimulation for demand, monetary policies, and investment patterns are balanced. For example, the usual steps are cutting interest rates, cutting tax in some crucial sectors, ensuring the stock market stability- by banning/regulating short-selling and sudden withdrawal of international investments- a more coordinate strategy to make sure that Stock exchange and currency are stable.

4) Massive tourism promotion- with cheaper price-hotels may have to renegotiates the cost of labour and cut the prices by fifty percentage. Government should go out of way to get tourists- particularly from Middle East and Europe and ensure a sort of "value for money" tourism.

5) A strategic trade-framework- particularly with Asian , East European, Central Asian and emerging African economies- this may help us in the long run. Actually Central Asia will again emerge in the next phase. So it is important for India to strengthen strategic relationship with Iran, Central Asia and Afghanistan. Central Asia also got so much natural resources.

6) A well coordinate programme to regenerate the rural economy by a clear plan for boosting Small and medium scale industries- with a value-chain process- that also create markets as well as stimulate demands.

7) A multi-sectoral task force headed by the Prime Minister to do every day assessment and weekly action plan- in the next one year. In fact NREGA can be redesigned and used as a major means to stimulate demands- by extending the area of operations.

8) A careful and well planned security action plan( along with top-end intelligence inputs) to make sure that there is no political disruptions, major sabotage, or terror attacks that would paralyze the economy. There has always been a connection between economic crisis, violence, terror and war. So the next three years- government will have to be very vigilant.

9) It is important to call an all party meeting- and also a meeting of all finance ministers and chief ministers to make sure that at all levels we have thoroughly coordinated effort to stimulate demand as well as growth, to restore investors’ confidence and to ensure coordinated intelligence. Government should also think of declare a package of something like US$ 250 to 350 billion for stimulating demand in the next two to three years.( this will send positive signals about the confidence of Indian economy)

In fact, India can actually use this challenge as an opportunity to rise up to the occasion and emerge as a much more economically and politically stronger country. But I wonder whether our present or even potential leadership - in the post election scene- may have the political and economic imagination to make use of this opportunity
And transform India and south Asia.

Every economic crisis is a potential warning signal for a politics of fascism or politics of transformation. We are in the midst of a defining period- like the one from 77-83. There are defining periods of history- that actually influence and shape the world for the next twenty to thirty years. The period from 2008 to 2012 will be such a defining phase of history- and the world will not be the same after 2012- there could be high profile disruptions, assassinations, economic troubles and political turmoil- and eventually the birth of a new paradigm. If we look at the word- this happened between 1925 to 30, 1945 to 50, 1977-82 and now at the end of the Regan-Thatcher paradigm- we are getting in to the transition period of 2008 to 12.

It is those who an capture the political and economic imagination- it is those who can come up with big ideas- and possible way forward- will influence the world till 2030 or 35.

Thursday, November 6, 2008

Raaga...

Music makes Memories Intimate!
Rekindles nostalgia,
Of unfolding worlds within
And beyond.
Music makes a magic.
Of the breeze deep within.


A raaga of Bhimsen Joshi...
Stir up the intimate worlds...
And the gush of youthful memories..
Of Sawai Gandharv
Festivals.
Of moonlit nights,
Of motorcycle rides..
Of a tree...in a starry night
Smell of a winter.
Anticipating a spring.

Discovering
Everyday – sunrise, noon, evenings and moon
Smell of Burgi at GaneshKhind.
A fountain in a circle,
Days of sunny drizzle..
Of Music, Cinema, Poetry, Politics
And Love.

Getting Lost
Rediscovering again and again
Learning new pathways.
The raaga of a dawn
Makes me smile.


John Samuel

Saturday, October 25, 2008

Happy Diwali!

Happy Diwali!

It is time to celebrate...indeed!
Diwali with a billion diyas.
In the midst the dark clouds
Hovering over an idea called India...

Diyas in the hearts of darkness.
The lights that can dispel despair...
The lights that can heal the wounded.
The lights that will expose the lies.
The light that will make us smile.
The lights that can diffuse bombs deep within...

Diyas, beyond a Diwali.
Of hope and healing.
In the midst of a winter...
Burnt smell of prayers...
Smell of Sulphur
Raped nuns!
Screams of children
Blood on the streets
Flesh fuming in the air.
Terror dancing in deadly flames...
Frozen consciousness in a chilly night!
In the days of bicycled bombs!
Deadly entertainments on the TV screens
Reeking mouths of ministers.
Fashion parade.
Parliament in a cacophony
Slaughtered ideals
And plastic people.


A billion more lights.....
To fight the demons within.
To wake up our land to the freedoms...
To a garden of bright flowers and fragrance
To listen to the sighs and sorrows.
To erase the tears.


An eternal Diwali...
With a billion diyas in the eyes...
Jingles of the flowing rivers.
Mingled with the magic of a dream
No hungry child on the bed
No crackers.
No sound and fury.
Only silence of prayers.
The warmth of the diya,
Soothing our souls
For ever.
.
Dignity blooms in the morning sun,
In a million coloures of the spring.
Let my India shine tomorrow
Beyond the shames of today,
And the shadows of yesterday.


We are the diyas,
On a million pathways to the truth...
With a billion smiling diyas in the hearts
Dancing in the winds
Diwali, waiting for us...
We too are waiting.
For ever...

Happy Diwali.


John Samuel

Wednesday, October 15, 2008

Vietnam Views

John Samuel


Every city has its colours, character and smell. Ho Chi Minh City reminds me the colours yellow and green. Those buildings with French flavour- with yellow walls and green windows- and that greenness of the trees and parks in the midst of the buzzing city make me smile. Those millions who move on mobikes or those cars pleasantly marginalized in a sea of motorcycles and bicycles gave some sense about the middle class- character of the charming Saigon-now named after Ho Chi Minh- the national hero of Vietnam. I could smell sweat on the pavements, petrol in the air and the fragrance of morning flowers in the park. Spas are sprouting in the midst of new neon-lit nights. Pimps politely promise the new pleasures to potential customers in the shadow of high rise buildings as the night gets settled in. This is a city with a history- of trade, colours, cultures, bold and beautiful people, war, dreams and promises.

Ho Chi Minh is not merely a city. Ho Chi Minh is more than a national myth. Ho Chi Minh is more than the name of a simple ordinary man who did extraordinary things to discover the collective power of dignity, unity and freedom of a people. Ho Chi Minh signifies a collective sensibility of self-reliance, pride, perseverance and urge for freedom. In 1976, the charming city of Saigon in the south of Vietnam became Ho Chi Minh City – symbolizing the freedom and liberation from more than a hundred years of French colonialism and the imperialist invasion.

I had a breakfast with a group of HIV positive people- organized as a community organization called the Rose. I could smell a bit of rose in their sense of hope and resolve to live- by supporting and caring for each other. The little child of two years with a beautiful smile does not know that both her parents in the early twenties are HIV positive people. But she is HIV negative and happy. Her parents are very young- who got HIV when they used to share the syringes for the drug use. Now they are active members of the Rose group- who get together twice or thrice a week to sing, meditate and to support each other. Community still matters here. There is still a culture of mutual care and support.

In the evening, I was sitting with a neighborhood group of women in an inner district of Ho- Chi Minh City. They shared with me stories and boiled cassava. They told me stories of support and survival, stories of stopping domestic violence- stories of hope and change- stories that changed lives and helped to discover dignity and power within. . In the porch of a shop-cum- house they meet twice in a week to discuss the community issues, to receive complaints, to decide the course of action in the case of a domestic violence or family trauma. They served me my favorite childhood dish- boiled tapioca/cassava with onion- chilly sauce. The tapioca taste caressed the nostalgia of my childhood Kerala in India. The stories of women’s empowerment inspired me to imagine a more just and joyful world.


Ho Chi Minh is the official name of the Saigon city. But Saigon is evident every where- on the bill boards, in the shops and on the street. The old charms of an erstwhile Saigon with streets in the shadows of trees, bicycles, the brick-built Cathedral, river and breeze have got submerged in to the high rise building, noisy night clubs and the smell of petrol.

I went to the Durga temple near the Chinese street. The young priest Ramesh Aiyyer smiled at me – recognizing the brown face of a country cousin- and told he could manage to speak “koncham, koncham” Tamil. An old steamer got his great grant father from the South of India to the Saigon. The Hindu culture in the South Vietnam goes much deeper than the migration from the South India during the colonial period. The Cham culture- that influenced parts of the present day Southern Vietnam and parts of the Cambodia- evolved out of the Hindu religious practice and beliefs. The Mosques in the city smell of the history of trade- the Muslim traders from different parts of India and Arabia came to these lands in search of spices and spouses. The Chinese – who left the city after the liberation in the 1976-, are back in full business. Ho- Chi- Minh City- is the cosmopolitan Saigon transformed in to a busy city- a city that began to look more like Bangkok and the charms of old Saigon are fast fading away. This city of 6 million people in many ways symbolize the new Vietnam- confident, relatively more open, busy- and with fading of an old world.

Part II

Vietnam is no ordinary country. It is a long country with a long history. It is history of troubles and tribulations, wars and victories, survival and sustainability. So fighting and winning wars made them a people and culture with a sense of shared identity and history. In the 9th century, they drove back the Chinese Hams, ending a history a thousand years of Chinese subjugation of the region. In the 11th and 12 the century fought against Chams who sought to invade the country. Genghis Khan and his grandson Kublai Khan too came here to find the armed resistance in 13th century- that drove them back. The Ming and Ching dynasties of China once again tried to occupy the land in the 15nth and 17nth century respectively. No way- they too had to go back. Then the French came. They fought for thirty years. But French with new weapons and colonial power persisted. In 1860 the French occupied what used to be known as the Indo- China (consisting of the present day Vietnam, Cambodia and Laos). By the beginning of the 20th Century, the French consolidated their power and divided the present day Vietnam in to three provinces- Tonkin in the North, Annam in the Centre and Cochinchina in the South. This division of the country with a shared sense of history was not merely for administrative convenience but it was a strategy to divide and rule. This colonial driven process of dividing the country influenced the history of the country to this day. Even after hundred years of such division, there is a subtext of political and cultural tensions between the North, Centre and South of Vietnam. Though the French colonial period was relatively small in the long history of Vietnam- they made lasting imprints. The original Vietnamese script – resembling the Chinese script- was replaced by Latin script. But this also helped print books in a much easier manner and eventually helped to educate a large number of people. The shift of script- from the one that is based on images or ideas to the one based on phonemes- in many ways symbolized the shift from the old feudal aristocracy to a new sense of modern Vietnamese identity. Paradoxically the linguistic subversion by the French helped to popularize the written word. And the written Vietnamese in the Latin Script helped to spread nationalism and resistance against the colonialism and imperialism.


Those young men came back after their higher education in Paris brought ideas for change and challenge. The French steamers brought them back to Saigon with Marxicism and massive resolve to challenge the French. The romance with Communism started when few of those young people started the Indo-China Communist Party in 1929. These particular moments of 1929 and the dreams of those idealist young men changed and influenced the history of three countries- Vietnam, Cambodia, and Laos. While those ideas of promised Utopias inspired the poor and ordinary people and helped to mobilize the people against the Colonialist and imperialists, they also left scars of bombs, death and destruction across three countries.

The story of resistance against French Colonialism and American Imperialism is one of the most inspiring stories - in the twentieth century -of the collective resolve of the ordinary people to stand against the most brutal and unethical powers of the world. A young lawyer- who later came to be known as Ho Chi Minh- founded Viet Minh – or the league for Independence in 1941. Viet Minh – the movement for freedom became popular and enjoyed the mass support. They have declared independence in August 1945 in Hanoi. Emperor Bao Dai- from the Vietnamese Royal Family-abdicated and offered his services as an advisor to the new regime of the people and by the people. French did not want to lose their precious piece of colony in the east. They still controlled the South of Vietnam- the Cochichina province. While French tried to co-opt the northern resistance movement though an agreement in March 1946, they also declared Cochinchina as an independent country – and sought legitimize this by asking the erstwhile King Bao-Dai as the head of the State. Viet Minh did not keep quite. Nine years of guerilla war followed and like in the case of all the earlier wars from the 9th Century onwards, this time too the organized collective will of the ordinary Vietnamese prevailed. They defeated the French in 1954 and sent them back to France forever.

Free from the French, Vietnam was on the way to build a free country. But that was the beginning of a new war- one of the worst in the recent human history. Once the French colonialist left, the American Imperialism got paranoid about the possible spread of Communism to the entire Asia As a part of countering Communism in the east, the USA used the usual tactics of propping up a puppet government in the Southern Vietnam against the people’s government in the north. Here too the Vietnamese people’s movement refused to surrender to the will of the power of bombs and bulldozing imperialism. They got reunited in the name National Liberation Front (communists, democrats and nationalists) - Viet Cong- and fought back against the American dominance. This is what led to the Vietnam war- the brutal face of American Imperialism. Larger tones of bombs were dropped in this one country than the entire Second World War. There were 580, 000 American troops in 1969. The American Military committed some of the worst war crimes- by using weapons of mass destruction of Chemical .Bacterial and nasty weapons. There are still thousands who are suffering from the use of chemical weapons by the American army. Even in the 1960s and 70s, the USA spent more than US$ 150 billion to bomb a Country – the most brutal one in the name of prostituted promise of “Freedom”. The American bombs destroyed 70% percent of northern villages and left 10 million hectors of land barren. The face of a naked, nasty and obscene imperialist aggression stared at the world with sense of impunity- in the midst of the cold war. In the midst of the war- the most inspiring leader of the people’s movement- Uncle Ho as endearing called by the people of Vietnam- died in 1969. This eventually evoked a world wide response against the brutality of American Imperialism and also huge mobilization of young University students against the Vietnam War. The protest against Vietnam war across the world- not only reflected the ideals of angry young people, but also it initiated a new peace movement beyond the traditional left and the right forces. The Vietnam protests helped to politicize the civil society in America, Europe and many parts of the world.

In spite of all the powers, bombs and propaganda machines of the world, USA miserably failed in Vietnam. Viet Cong captured Saigon in April 1975 and renamed it as the Ho- Chi Minh city in 1976- as the symbol of freedom and liberation. After a period of brutal war of deaths, destruction and migrations, Vietnam emerged as the Socialist Republic of Vietnam. Though the country emerged victorious, there was a new war waiting to happen – against the Pol pot regime of Cambodia. The story of Vietnam seems to be the story of war and survival.

The new independent Vietnam was supported by the USSR and many other countries including Iraq. The war torn Vietnam was one of the poorest countries in the world. People sought to migrate to different parts of the world. Many students got scholarship to study in Russia and other parts of eastern Europe. Iraq offered jobs to many Vietnamese youth. India too supported Vietnam at the height of their struggle and Nehru is still a popular name among the elder generation. Though many from the earlier generation speak fluent Russian, English teaching is one of the most vibrant businesses in the Hanoi and Ho Chi Minh city. If the history of Vietnam from the 1950s to 1980s is the history of war and survival, the history of Vietnam in the last twenty five years is the history of the revitalization of a country – emerging with dignity and development from a really bruised war-torn past.

While sticking to some of the basic principles and values of Socialism, the Communist Party and government consistently sought to renew themselves to be relevant to the needs of the people and trends of the world. In 1991, the government of Du Muoi introduced Doi- Moi (Renewal- signifying the opening up of the Stock Market and economy). This was followed by the new initiative for grassroots democracy and democratization – through mix of Local self governments, civil society organizations, fatherland friends’ organizations of the frontal organizations of the Communist Party and strategic coordination of the NGOs for delivering development at the grassroots level in collaboration with the government. Vietnam moved in to the highway of steady economic growth- one of the highest in the world. As the economy grew at the rate of 6- 8% annually, the level of poverty reduced from 58% in 1993 to around 20% in 2008. The country made tremendous progress, within matter of a decade or two, in terms of human development and gender equality. There are laws like Gender Equity Law and the Law to combat domestic Violence. There is also tremendous progress in Education, there are now new issues concerning the quality and access to education. Many people in the rural area- particularly among the ethnic minorities and older generation, illiteracy are still prevalent.

While the economy grew, the rate of corruption too grew. Though government took some stern measures, including the execution of few very corrupt officers in the public sector companies, the culture of corruption penetrated in to various levels of the system. There are indeed relatively more concerted efforts led by the government to counter corruption and now a new anti-corruption law. Many of the local Civil Society Organizations and NGOs are now increasingly involved in tracking the public budget and exposing corruption. But the new economic elites in collusion with the old power elites seem to have developed a new nexus- undermining the promised and values of socialism. The powerful Communist Party and Government try hard to fight corruptions within and beyond. The economic growth also brought in a new culture of consumerism and communism is more like sense of old consensus and nationalism rather than a paradigm for social transformation. The young people told me that the most boring thing in their University Education is the compulsory course on Marxicism. When Marxicism becomes a mere text book to be taught, dictated and followed, even the best streams of humanist experiments can become a boring dogma. That is the tragedy of Marxism within the comedy of a consumerist young generation who are keener to catch with the best of the world in the shopping malls and the cyber cafes.


In spite of the new challenges and certain restriction to the press freedom and political mobilization beyond the Party frontal organizations, the overall record of the Communist Party and governance in Vietnam is impressive. It helped to create a broad base of an educated middle class with millions of mobikes. In a country of around 89 million people, there is a very inspiring story of the government and NGOs working together in a coordinated fashion to reduce poverty and injustice. The inequality has increased. There are few new young millionaires. Land speculation is high. The cost of living in the cities is spiraling upwards. The inflation is more than 23%. But still the government is very much in control. Per-capita income has increased to more than US$ 800. From a food deficit country, the country has emerged as one of the large exporters of rice. Though Vietnam which fought one of the most difficult wars with the American Army, it has now a booming trade with USA. A more confident, better educated and economically active middle class ensure a very important balancing act of political culture and economic growth.


There are many things to learn from Vietnam and Vietnam too is in the process of learning and adapting new policy process from across the world- in terms of governance, civil society, development and democracy. Last year when I had a chance to meet the Polit Bureau members of the Communist Party, they have very explained their vision of balancing the economic growth and market process, along with socialist principles and social policy paradigm- what is generally termed as Market Socialism. Vietnam seems to have combined an element of democratization at the grassroots level along with a conscious and concerted agenda on social and economic development. In spite of a single party government and restrictive environment at the macro level, the government encouraged grassroots democratization process, women’s empowerment, and strategic plans for local development. In spite of being a Government led by the Communist Party, Vietnam provides ample space for the NGOs to operate in coordination and collaboration with various governmental and civil society processes. After all economic growth is not a bad idea- when it is combined with the commitment for social development and justice. The negotiation of Vietnam with market did not compromise its agenda for Social Development. However, Vietnam faces new challenges of corruption, inequality and inflation.

The story of Vietnam is the story of survival, sustainability and renewal. It is such a story that makes most of the Vietnamese dignified, confident and proud of their country.

Friday, October 3, 2008

Towards the Solidarity Economy

John Samuel

Keynote presentation at the Asian Conference on Solidarity Economy and socially responsible Business on October 3, 2008 in Bangkok



Ethics is what makes the economy humane- an enabling force for exchanges among people, societies and countries. Devoid of ethics, economy can perpetuate predatory forces of dehumanization, commodification, violence and war. Economy needs to be an enabling process that helps human beings and environment to sustain and thrive. And Economics devoid of ethics can be extractive, exploitative and imperialistic. In fact, both Adam Smith and Karl Marx began their search for viable economy from strong ethical premises.

Solidarity is an act of identifying with other human beings with a shared sense of destiny, dignity and responsibility. Solidarity is based on the principles of mutual empathy, mutual support and the greater common good. Solidarity helps us to go beyond the greed of the self to the need of other people, societies and countries. Solidarity does not depend on the principle of the ‘Survival of the fittest’. It seeks to promote the sustainability of human beings and environment.

Economy signifies an interface among human beings and societies that facilitates the link between natural and social resources to meet the human needs and comforts. Economy also signifies the dominant modes of production and distribution. The notion of market represents the dynamics of demand and supply of goods and services among human beings, societies and countries.

However, the market-place is not a neutral space of such exchanges based on demand and supply. Any mode of exchanges among human beings and societies are driven by power relationships and value assumptions. Hence the market place is inherently political. The key question is whether the dominant power-relationships and political process within the market shape the choices and values of human beings or whether a universal framework of human values and sense of solidarity drives the power relations within the market. The assumption behind the free market economy is that the invisible hand of the market is capable of dealing with all human demands and needs in an efficient way. However, the so-called free market economy is driven and controlled by few very rich companies and few powerful countries. Most of the poor countries and poor people at the receiving end of the so-called free market economy. The Solidarity Economy is a critique of the extractive economic paradigm of the free market variety and at the same time it is an effort to build alternative vision of an ethical economy. The alternative search for the solidarity economy on the one hand seek to promote an ethical normative framework for a people-centered economy and on the other hand seek to learn from the various practices of enterprises and business based on the principles of solidarity.

Solidarity Economy is an effort to reiterate and rediscover the ethical basis of a viable, sustainable and socially and ecologically responsible economy. Here are some of the perspectives on the Solidarity Economy:

1) Ethical basis for a solidarity economy needs to be based on the values of cooperative solidarity, economic and ecological sustainability, accountability, human rights, democratization, diversity and justice- social, economic and ecological.
2) Seeks to promote alternative practices and thinking to challenge monopoly capitalism and exploitative economic paradigm. Market is too important to be left to the fancies of finance capitalists in search of perennial profits and their subservient policy makers

3) Seeks to democratize economy, knowledge and technology.

4) Seeks to promote fair profit in a vibrant and enabling market place It places people and environment before the profit

5) Promoting Local Economies that are accessible and affordable to the poor and marginalized people.

6) Would advocate for trade justice and national and international public policies to promote fair trade across the world.

7) Anticipates long term social and environmental consequences of economic behavior.

8) Proactively seeks to engage with stakeholders to promote accountability and to make them realize the consequences of their actions at the market place, society and the world.

9) It promotes the public policy perspective that those who have greater economic resources at their disposal have a greater responsibility towards the society and environment.

An Economy which creates monopoly of power- through monopoly capitalism and imperialism- will undermine the values of democracy, human rights and perpetuate violence and war. Wherever there are human beings and wherever they exchange goods and services, there will be a market. But the question is what are the guiding principles of such exchanges, and who control the modes and manner of those exchanges. When markets and economy get captured by few forces of monopoly and those who have unbridled thirst for profit and power, the ordinary human beings become the victims of the market- without any sense of agency or bargaining power.

The solidarity economy perspective is not against the creation of wealth. It supports ethical entrepreneurship and human creativity and efforts to create wealth. Competition is not a bad word. But exploitation is an obscene act. Profit is necessary to sustain any vibrant economy- as profit helps people to create enough surpluses for the greater good. But profit becomes obscene when it based on extracting and exploiting people, nature, countries and continents.



The Solidarity Economy is based on four ethical pillars of Ethical production, Ethical Investment, Ethical market and Ethical Consumption. The solidarity perspective seeks to reiterate that human beings are capable of cooperative solidarity and ethical business. The Solidarity Economy is for fair profit and viable and sustainable economic paradigm that sustain environment, people and societies.

The solidarity Economy perspective seeks to encourage people and communities to enter the market and assert their capacity to negotiate and bargain in the market. Such perspective promotes vibrant local economy – including production and exchanges of services at the grassroots level. The democratization of economy, transparency and accountability of the investors, producers, market and consumers are the defining forces of a solidarity Economy.



1. Ethical Production.


Human beings will have to produce both goods and services for their survival and comforts. Ethical production will be guided by the basic values of human dignity, fair wages and conditions of work and environmental and social responsibility. The Solidarity Economy perspective seeks to support small and media scale enterprises and sufficiently decentralized production practices. Most of the poor people are producers as well as consumers.


It may not be always possible to have small or medium level productions modes to serve the need for growing economies and demand. So it may also be necessary to have big production facilities of goods and service. This where it is important to ensure the corporate accountability to the workers, communities, shareholders and consumers. It is important to move beyond the usual public relations rhetoric of the “corporate social responsibility to Corporate Accountability. However, the fact of the matter is most of the big multinational corporations, while subscribe to the rhetoric of corporate social responsibility, tend to have scant regard for any accountability mechanism. Many of them tend to violate the statutory regulations, perpetuate corruption of politics and economy, and tend to maximize profit at the cost of workers, communities and environment. Solidarity Economy perspective seeks to demand strong ethical guidelines- such as corporate accountability, ecological sustainability, human rights, and fair wages.


While the value of their labour does not increase the prices of consumer goods keep increasing. Most of the small and medium level farmers who produce agricultural commodities hardly get any bargaining power in the market place, as most of the time it is the middle men who often tend to control and influence the market. The producers often do not get any opportunity to bargain with the value chain and get fair returns for their labour


2. Ethical Investment


Ethical investment is based on the basic values that motivate the process of investment. Here, investment is not merely a means to maximize profit, but also a means to serve the large society in terms of generating gainful employment, protecting the environment, promoting human rights and democratization. Ethical investment place people ahead of profit. While ethical investment too seeks to make profit, it will challenge the unbridled and unethical thirst for profit. Ethical Investment requires transparency, accountability and social responsibility in the process of seeking a fair return on the investment.


Ethical investment is not merely about finance. It involves investment in terms of time, resources, ideas and process for the greater common good of humanity and environment. It would actively discourage investment in those industries that perpetuate environmental pollution, unbridled greed, violence and war. Ethical investment is both about the choices of values and the manner of investment.


3. Ethical Market.

Market is a means for exchanges of goods and services. Ethical Market is a means to serve the larger society- in a fair, predictable, efficient, effective and sustainable manner. Market is necessary for all our social and economic sustenance. However, when Market becomes God, the power tend to get accumulated in the hands few who would use market as a means to amass wealth and power at the cost of basic values.

An ethical market is an important link between investor, producer and the consumer. The so-called Free Market has been never free. Hence, it is important to have optimum regulations by the state and the society to make sure that market is a means to serve and exchange. It is often those middle men who control the market. Traders tend to control the market forces through influencing the finance market, commodity market and consumer market. The principles of an ethical market should make sure that the producers and workers do get fair returns and consumers do get quality services and goods.

While the State should encourage and enable ethical market mechanism, it is not the business of the State to control the market. It is important to have optimal regulatory mechanism to protect the local and national economy from the predatory finance and speculative capitalism.


4. Ethical Consumption.One of the reasons for the environmental degradation, increasing inequality and increasing morbidity is the unethical consumption. When market and money become the God, they are means of desire. The modern markets tend to demands through selling desires. Advertisements are the means for selling new desires to create new demands for the products and services. As a result people tend to derive their sense human self-worth not through creativity but through consumption. When people tend become less creative and more productive, consumption becomes a mode of life itself. The rich countries and people waste huge amount of precious resources – including non-renewable energy- through unethical consumption. Unethical consumption focuses more on the self, than the society. Unethical consumption focuses more on the status of the consumer rather than sustainability of the environment.


Ethical consumption needs be based on the values of need, environmental sustainability and social responsibility. An ethical consumer will ask the question whether the products and services that he/she consumes harm human beings and environment. Ethical consumer will always discourage wasting resources- particularly food and energy- and seeks to share and maximize the use of the consumer goods and services.

The resources of the earth are not limitless. It is increasingly clear that exponential growth of human activity and market forces damage the ecology of the planet. A relatively small minority of people and countries tend be richer and richer and large majority of people are impoverished every day. This is unethical. This is what solidarity Economy seeks to challenge and change. The Solidarity Economy seeks to humanize the production, investment, market and consumption. It seeks to challenge the commodification and dehumanization at all levels. It is based on the principle of creativity, community and communion. Solidarity Economy is local and global at the same time, where every consumer is a citizen who can claim his/her right and seek to enlarge the freedom of others.

The Solidarity Economy seeks to enhance and enlarge human freedoms to enjoy and sustain life and environment. It seeks to economic and political empowerment of all people across the continent, cultures, gender and colour. It seeks to challenge imperialist economy and politics- an economy of violence and war. It is a search of an enabling economy and empathetic market that would help us to expand our choices in a sustainable, responsible and just manner. As Gandhi said, we have everything to meet everyone’s need but not greed. The solidarity Economy is one more step for us and the next generation to reiterate that “Another world is Possible”

Thursday, September 18, 2008

An Agenda for Social Development

19 Sep, 2008, 0413 hrs IST, ET Bureau
The Economic Times, New Delhi.


By John Samuel

Development is the expansion of human freedoms to enjoy and sustain life and environment. Development involves strengthening of the capacity of human beings to realise the full potential of human creativity for the greater common good of people, society, environment and civilisation . Human dignity and democratisation — social, economic and political — need to be the defining force in the envisioning and process of development.

Economic growth and social development should feed into each other to empower people and the nation. Empowerment of people involves the ability to ask questions, seek solutions, make strategic choices and claim human rights. India is empowered when its people are enabled, educated and empowered. An agenda for social development needs to be based on transforming India economically and socially. We need to envision a process of social development that help economic growth, protect environment and strengthen just and democratic governance. We have to strengthen economic growth that helps us to decrease social and economic inequality.

An agenda for social development should prioritise five key areas: food sovereignty, women’s empowerment, universal quality education, universal primary health care, and the right to livelihood. We need to envision a new partnership between the government, non-governmental organisations and the corporate sector to make India free of hunger and poverty in the next 20 years. This requires new imagination, investment as well as a transformation of our governance.

Food sovereignty calls for a long-term strategy to increase food production and distribution by revitalising agriculture, particularly the small and medium-level agriculture. This would require new investment in technology, rural infrastructure, support for small farmers and a viable market mechanism. The most important challenge is to develop sustainable agriculture without harming the environment.

In spite of India’s economic growth, we are far behind in terms of ending poverty, malnutrition and maternal mortality. Social, economic and political empowerment is a crucial step in addressing both causes and consequences of poverty. There is evidence that reveals a correlation between women’s empowerment and social development. We need to increase our investment, manifold, to ensure women’s empowerment at every level of the society. Women’s right to land and access to other productive assets are crucial. There has to be special focus to strengthen women’s self employment and their right to livelihood. In most of the poor families women are primarily responsible for food security and nutrition. Hence, there has to be a universal programme for economic empowerment of women.

It is important to go beyond the minimalist ambition of universal primary education and seek a vision of universal quality education at all levels. While there has to be an intensive five-year strategy to make sure every single child will have access to affordable and quality education, we also need to have a whole strategy to create a highly skilled workforce through dramatically increasing vocational streams of education, particularly in consonance with the demands of the growing economy. The key to long-term social and economic development is quality higher and technical education , particularly with special focus on research and developing technological solutions. While we have to commit around 8% of GDP for improving education, this can be done only through new financing mechanisms. A new partnership among government, non-governmental organisations and the corporate sector is needed. A mix of public and private financing is also necessary. Education is a key lever for economic development. However, the state has to ensure access to quality education to everyone, especially those who have been historically marginalised. Education is an arena where we can combine the agenda for social justice and economic development.

In the past 20 years, quality and access to primary healthcare have decreased even in relatively more advanced states. Access to affordable primary health care should be able to address issues of maternal and infant mortality, malnutrition and increasing instances of communicable diseases, including malaria, TB and HIV. However, this may require a whole new strategy for public health in India. Public investment in primary health care is low in India. That has to go up. Local self-governments should be made responsible for the management of primary healthcare institutions and primary education. A new partnership between local selfgovernments and community-based organisations at the grassroots level is possible. State and central governments may invest in developing basic infrastructure and set minimum standards of service and quality, but operational responsibility should be with local self-governments.

The agenda of social development meets the agenda of economic growth in the area of the right to livelihood. Social development and economic growth are two sides of the same coin. New strategies to ensure rural livelihood, which may include agriculture, agro-industries, non-urban-based knowledge parks, and revitalisation of small and medium scale industries in the rural area, are needed. This will slow the unbridled rural-urban migration in search of livelihood and regenerate rural market and economy. Programmes under the National Rural Employment Guarantee scheme should create enabling assets for rural economic generation and long-term employment opportunities to satisfy its intent.

It is important to develop a 20-year perspective with clear operational strategies focusing on these five pillars of social sectors. This also means finding new financial and institutional resources to ensure the concerted, continuous and sustainable efforts. It is in the long-term interest of the corporate sector and key economic actors to ensure social development to decrease inequality and strengthen and democratise governance. Entrenched inequality, poverty and marginalisation are recipes for increasing violence, and consequent social and political instability. Political and social stability is crucial for economic growth and development. It is all the more reason for combining the agenda of social and economic sector development with a vision of a strong, stable, prosperous and peaceful India, an India empowered enough to transform the world.


(The author is a policy expert and the international director of Actionaid)

Wednesday, July 16, 2008

Imagine a New SouthAsia!

John Samuel


Imagine a New South Asia- where borders will be transformed in to bridges and bonding; where all children will go to school, where no one will go to bed hungry; where the human rights of minorities will be respected; where there will be more prosperity and peace, rather than war and violence; where people can rise above the narrow walls and interest to share a common destiny of the peoples’ of South Asia-one the biggest resources of people, culture and civilzational space in the world.

Let us imagine a new South Asia- that can transform itself and the world. Let us imagine with passion and conviction about the immense possibilities of a South Asia driven by prosperity, peace, democracy and mutual trust; a South Asia, where the autonomy and sovereignty of each country will be respected and at the same time we together seek to mould common futures based on shared commitment, interest , culture and a passion to transform our challenges in to opportunities, our poverty in to prosperity and our deeply entrenched mistrusts in to a sense of trust and mutual respect.

Many skeptics may say that it is a romantic dream- devoid of any sense of reality. However, dreams can be the beginning of a new dawn. In a growing climate of cynicism, young people should not lose the ability to dream about a New South Asia. Dreams can dare to challenge the constraints of past and present. We need to dream about a new South Asia- we need new dreams to heal the wounds that haunt us; we need a new dream that can transform our agonies and mistrust. My generation does not have to be the prisoners of the past. We can indeed be the shapers and makers of future- as shared sense of future of a New South Asia, with a new sense of political and poetical imagination. We need to rediscover a new poetry and politics in this primordial melting pot of cultures, languages, civilizations and human history.

The old South Asia is the balance sheet of the power equations that emerged out the rather the brutal process of decolonizing. Now it is time to outgrow from the past baggage of negativity - negatively defining our own different national identities- and of the deep mistrust that got nurtured by the powerful forces and countries of the world. As long as the countries in South Asia are more in to a mode of undermining each other and in to mindless arms race, we all will be dependent more on other powerful countries for aid, arms and arbitration. The issues of poverty, politics of exclusion, communalism, extremist nationalism, discrimination, and environmental crisis in the region are very much interwoven and intermingled. While the neo-liberalization had created a minuscule minority of upward mobile urban upper middle class, the balance sheet of neo-liberal policy prescriptions does not look bright. There is growing inequality, displacement, trafficking, conflicts and violence. The aggressive neo-liberalism not only undermined the small farmers, and small scale agriculture, it has also created a large vulnerable middle class- who have not gained much out of the of the economic globalization. More deprived rural farmers and an increasing number of vulnerable middle class, particularly young among them, fall pray to various kind of religious fundamentalism. The reactionary politics of “negativism’ and religious fundamentalism is often turned against the immediate “other” or the “other” neighboring country. This negative sense of identity and “patriotism’ perpetuates a social psychology of mistrust as well as a tendency to “externalize” the problem and blame it on the immediate neighboring country. It is an easier short-cut for a political class who will rather blame others rather than taking responsibility to address problem or an issue with a positive agenda. It is easier to mobilize the people against a perceived “other” or an “imagined” enemy. Such politics of hate and mistrust tend to mobilize the semi-literate or illiterate masses against another country- or an imagined enemy within or across the border. They transplant their “patriotism’ to a game of cricket or to allegation against “illegal” migrants from across the border. In most of the countries in the region, national identity or “patriotism’ is not defined in terms of positive identification with culture, people and history. Patriotism” is often identified in negative relation to another country in the region. So the “indianess” is defined in negative relation to Pakistan or Bangladesh or the other way around. It is important to develop a sense of South Asian identity beyond our own sense of imbibed sense of “nationalism”. We need to exorcise the ghosts of the past within our mind and political discourse. We, as South Asians, have much more in common – in terms of language, culture, food, music and tastes- than any set of people in this world. Hence, it is important to find lasting solutions based on mutual cooperation, collaboration and joint efforts to address the issues of inequities, injustice, mistrust and conflicts in the region.

The fact of the matter is that largest number of poor people live in South Asia. We as a region is most vulnerable to natural, social and political disasters. There is whole range of violent politics and range of extremism and terrorism in South Asia. Conflicts over natural resources, identity and inequality are on the rise in South Asia. While most of the governments give lip-service about SAARC, no one seriously invest in making SAARC a viable and effective South Asia forum. Unless we challenge and change this situation, South Asian countries will remain poor, with a growing club of few billionaires. The growing sense of injustice and inequality will perpetuate new conflicts, spiraling defense expenditure and undermine democracy and development across South Asia.


The primary responsibility of challenging and changing the condition to a large extend will depend on the attitude and approach of India to its neighboring countries. India is perceived as a hegemonic and arrogant power by most of the people and governments in South Asia. And there is a deep sense of mutual mistrust and mutual undermining between Pakistan and India. Such a situation makes SAARC as one of the most ineffective regional forums in the world. Transforming this situation demands a transformation of the approach and attitude of the government of India. India, with a growing economy, technology, and a democratic polity, can indeed play a much more enabling and empowering role in South Asia, instead of a hegemonic role and rather aggressive posturing. The first step towards lasting peace in the region is to develop workable and realistic solutions to entrenched conflicts in Kashmir and Sri Lanka, without undermining the sovereignty and integrity of the countries involved in the conflicts. This also means evolving a broader framework for addressing issues of conflicts within countries.

However, the firs step towards such a process should involve developing a set of positive social and cultural agenda that can be owned by all countries of the region. It is important for India and Pakistan to reach a common minimum programme to reduce the conflicts and mistrust. Though there has been significant improvement in the relationship between these two countries, they are not good enough to transform rather depressing situation of the region. Once there is more trust and mutually enabling attitude between these countries divided by a sort of iron curtain, it is indeed possible to develop a clear South Asian agenda and joint programme, with support of Bangladesh, Nepal, Sri Lanka, Bhutan, Afghanistan and Maldives, to ensure poverty eradication, universal education, technology transfer and disaster mitigation initiatives. It is also imperative for South Asia to develop a framework for human rights.

While a South Asian Federation may be an idea whose time has come, it is important to work towards creating enabling conditions for such process among the peoples and governments of South Asia. It is important to unleash our positive potential on a set of positive social and political agenda. The first step towards is to create enabling environment for free movement of people, and to begin with provisions for visa on arrival in all countries.

Here are seven possible policy options towards paving the way for a New South Asia:

1) A South Asian People’s Parliament. It is indeed possible to conceive a South Asian people’s parliament where there will be a sense of equal grounding for the big and small countries of the region- where different sections of the people can be represented. This process can evolve over a period of five to ten year, though it is possible to make a modest beginning of South Asian People’s Parliament. One can learn lessons form European Parliament and Africa Union. This parliament can discuss key issues that confront the region and come out with common policy framework and solution on social and economic sectors.
2) A South Asian Education Fund: The key for unleashing the potential of South Asia lies in univeralisation of education and a joint investment in higher education, science and technology. This would enable the emergence of an educated middle class across South Asia. The presence of educated, enlightened and liberal middle class is indeed important for the sustenance and growth of democracy and economic development in the region. India can play a role in initiating this Fund, and also helping to establish Institutions of excellence for science, technology and management in different countries of South Asia.


3) South Asian Climate Change Management and Disaster Mitigation Framework. The issues of climate change and natural disasters in the region will have an impact across the borders. Environmental impacts and natural disasters do not respect any national “borders” and hence there is a need for a joint fund and mechanism to address the causes and consequence of environmental crisis and natural disasters.
4) South Asia Poverty Eradication Programme. Poverty is one of the crucial stumbling blocks for peace and regional cooperation in South Asia. If there is a joint fund, joint framework and joint effort to address issues of poverty through shared policy framework and approach that can indeed bring positive dividends for peace and prosperity in South Asia. As long as our countries have entrenched poverty, inequality and injustice, we will not be able to move towards a vision of peaceful, prosperous and peoples’ South Asia.

5) A South Asian Charter on Human Rights will help to develop a framework to protect the rights of minorities in each of the countries, and also ensure a framework for realizing the Economic, Social and Cultural rights of people.

6) A South Asian Economic Management Framework. This could include a mutually enabling and supporting trade framework, a shard framework for fiscal policy, a possible South Asian currency and a joint framework for supporting economic growth of each country through developing knowledge, technology and an optimal market.

7) A South Asia Charter on Human Right to Food for supporting small agriculture and regional buffer stock of food to address potential food crisis.


The idea and imagination of a New South Asia will have to be discussed and debated among peoples of South Asia. People across South Asia will have to be mobilized for towards a new vision of peaceful, prosperous and peoples South Asia- a South Asia without poverty where every person and community can live with a sense of dignity. It is imperative for India to bring about a paradigm shift in its approach in the region, to transform itself from a hegemonic and arrogant power to an enabling and supporting country that can treat all its neighboring countries as equal in letter and spirit.


It is time to rediscover the dream of Rabindranath Tagore:


WHERE the mind is without fear and the head is held high
Where knowledge is free
Where the world has not been broken up into fragments
By narrow domestic walls
Where words come out from the depth of truth
Where tireless striving stretches its arms towards perfection
Where the clear stream of reason has not lost its way
Into the dreary desert sand of dead habit
Where the mind is led forward by thee
Into ever-widening thought and action
Into that heaven of freedom, my Father, let my country awake

It is time to rekindle a politics of hope. We need to go beyond the politics of protest and mistrust to a new politics of proposals and politics of transformation. We need to make a new tryst with destiny in South Asia.