I do not remember witnessing this kind of global panic in my lifetime. Probably the twin towers crash generated a reaction of similar magnitude as the recent financial meltdown and recession.
Among others, a lot of well off people are going to be directly affected by the current financial crisis, hence these high decibel alarm bells. Significant market values of high profile companies have been wiped out, rich individuals who invest actively in stock market have suffered devaluation, many companies have begun to fire employees and cut costs, and as bigger companies face slowdown, their smaller suppliers face greater threat to survival. Consumers have begun to tighten spending and fears of recession giving way to depression are already stalking. Though a lot has been written and a lot is yet to be written about this turmoil, my purpose here is to draw up its deeper structural links and paint the broader picture by viewing it together with other crises facing the human society.
This global financial crisis, expected to last longer than most of us hope, joins the other four equally global and longer lasting crises that humanity has been facing since at least a few decades now. The global terrorism and inter-community conflicts. The global warming and unsustainable exploitation of natural resources. Sustaining, if not rising, levels of poverty, unemployment and inequality between and within nations. And the high levels of psychological stress that many of us bear due to modern work and life styles. These crises span all domains of human society – economic, cultural, ecological, and psychological. I will merely remind here that all these phenomena are eventually linked to the structure of the current dominant economic system that man has designed. And the political system that supports it. Let us briefly look at each of these crises in turn.
First, that the current financial meltdown and accompanying economic recession is a direct outcome of undisciplined financial transactions of the free market is not in doubt. The utterly unregulated derivatives and other speculation driven markets combined with large scale lending and borrowing choked the system to the point of no return. Even the temporary fuel and food inflation that preceded and overlapped with the general recession was at least partially due to unregulated speculation and hoarding.
Second, the widespread international terrorism is directly linked to the US-led global wars and can be traced back to its ambitions of strengthening its economic and military control of the globe. While the connection with the economic system is not direct, the desperation of America and its allies for control over global oil reserves and other natural resources did play a role in these conflicts. Control of these resources has been crucial to sustain the high growth economic activities and ultra consumerist lifestyles that are integral to the free capital market driven economies.
Third, it is now well accepted by everyone but a few self-delusory beings that the global warming and climate change is the direct consequence of human-induced rapid burning of fossil fuels. This unsustainable rate of burning has been done to meet the requirement of high growing economies and consumerist lifestyles. As the environmental externalities were not valued by the market, digging the fossil fuels, though ecologically disastrous, made economic sense. It enabled the producers to control energy and material costs and the well off consumers to enjoy the luxuries of energy intensive living like comfortable housing, private transport, and many lavish consumptions.
Fourth, though it is not a widely agreed effect, there is a link between the current economic paradigm and economic inequality and poverty. As average income of all economic organizations is roughly equivalent to average wage of all working people, a few can draw very high salaries only at the expense of the vast majority drawing less than average. A way of dealing with such glaring inequality and consequent discontentment has been to sustain a multi-layered and widely distributed income among people. Such multiple layers are created in the form of several hierarchies of employees with differential wage rates, earning differences between companies, between various economic activities, and between countries and geographies. Although such deep economic stratification of society helps in diffusing mass mobilization of discontent and creating cushion of managers, it also reinforces inequality and poverty. Casual wage labourers commonly seen working on farms, construction sites, small and medium factories, small road-side shops, as ragpickers and as private help in rich and middle-class households in the developing countries are examples of the most deprived economic classes in capitalist societies. Their numbers are large but their incomes are far less than prevailing average prices of commodities including several essential ones. A terribly divided lot, they try to survive on the fringes by cutting into their families’ essential needs like nutritious food, adequate clothes, shelter, hygienic surrounding, access to basic healthcare, and education of children.
Fifth, even the economically well off individuals in today’s society suffer from severe levels of psychological stress and related psychosomatic disorders. The most evident proof of this is the rising markets for pharmaceutical products on the one hand, and a variety of psycho-religious and stress relieving services on the other. The latter kind of services are offered by both professional trainers and religious, semi-religious and spiritual healers. The following of these sects has increased phenomenally among high earning individuals leading stressed work, family and social lives. It is not difficult to see that meaningless work roles and stressful working hours in the corporate sector combined with rapid paced consumption driven social life is at the core of most of our psychological problems. It is also not difficult to see that this is integral to the current economic system.
All the above examples of crises are meant to merely restate the fact that they are symptoms of the economic system that is predominantly driven by materialistic growth, consumption and greed. This system has proved to be too cruel and insensitive.
A major correction is therefore needed in this system to move towards a more humane and eco-friendly one. Such a change may of course not come through during the current course of events. Whether and when it occurs will depend on the interplay of political forces. One thing is certain: the battles on the global political arena will intensify and become messy. Capitalist lobbies will use all their financial muscle to try and retain as much autonomy as possible. Religious-Right groups will raise the bogey of 'moral values' and demand greater fundamentalist control over behaviour of organizations and people. Some on the Left will ask for greater authority of the State over people.
Saner voices will be of those who will demand real and greater democratic rights to the ordinary people. Democratic structures and channels that ensure even the economically weakest a proportionate say in the process of decisions and policies alone can guarantee economic, ecological, cultural and psychological contentment for all. We are still far behind such real democracy. But that is the way to move.
* The author is a former faculty member of Indian Institute of Technology (IIT) Bombay and Indian Institute of Management (IIM) Lucknow, and is currently a member of a start up venture that develops mathematical models for planning and policy analysis. His areas of interest include mathematical modeling, biological evolution, physics, development and environment, sustainable economics and industry, and social change.