Economic Crisis?

“No, Thank you, but I am not an economist.” Susan George’s rejoinder was sharp and quick when former chairman of India’s Agricultural Prices Commission G S Bhalla was just about to introduce her at the Institute for Development and Communication (IDC) that had invited her for its inaugural series of lectures.

The Transnational Institute, of which she is president, has listed among the “common errors” any tendency to describe Susan George as an “economist” and warns us that she has “no formal degree in this area.”

Considering what the economists have done to the economy, very soon many economists will be making requests that they must not be introduced as an “economist”. But Susan George is one who has perhaps benefited a great deal by actually not being one.

Courting fame in the mid-seventies with “How the Other Half Dies: the Real Reasons for World Hunger”, a cult book whose mention will always precede even George’s hurried interruptions -- please don’t call me an economist, I am not one -- and adding to the progressive constructive and liberating debate against the neo-liberals with her recent works as “Hijacking America: How the Religious and Secular Right Changed What Americans Think (Polity Press 2008) “Another World is Possible if... (Verso, 2004), hers has been a voice of hope amid the gloomy orchestra of capitalism.

An independent scholar-activists and a bulwark in the fight against the horrors of the global system, Susan George displays a passionate anger at the inequities of a system that condemns hundreds of millions of human beings to lives of brute survival, and at the hypocrisies of those who benefit from that very state of affairs.

It was pleasure listening to her scintillating lecture at the IDC, and all the more pleasure because among the audience was Prof Randhir Singh, one of the most honest student and teacher of Marxism, someone who should have been hailed as a genuine Sikh community hero but perhaps never qualified for the honour because he was studying what many Sikh scholars call “comrade-ism”.

George’s ability to make us understand the complexities of the financial meltdown and underlining the interconnections between the global economic recession, environmental degradation, and food security issues without letting is know that we are listening to triply-filtered macro economics is the beauty of a great scholar.

Those now schooled in neo-liberalism, most of them even subconsciously, will be left cold by Susan George because neo-liberalism numbs the human senses. It will not inspire you to join a social movement, or be sad at any unjust action of the government, or itch to contribute to an effort to protect the natural world.

George underlined how “everything is connected to everything” but still how essential it is to identify the priority connections, to understand how they work together and what we can do to change them, because they definitely do need changing.

In her typical way, George started by hitting the audience with facts of the problem.

She talked of the crises of mass poverty and growing inequality within individual countries and between the rich and poor countries and also about the financial crisis “that Wall Street, the City and the public authorities refused to see coming because they were living in bubble-land. It began with the subprime affair in the United States but has spread inexorably like a lava flow in the US and elsewhere, threatening to plunge the global economy into a prolonged period of stagnation as severe as the Great Depression.”

And she also underlined the third “most ominous of all” crisis of climate change. “It is accelerating faster than most scientists, much less governments, thought possible, causing many to ask if we have not already entered the era of the runaway greenhouse effect.”

No, there is not much serious opposition to what George brings out with facts. No one seriously denies the numbers. The World Bank has already conceded that it had grossly underestimated—by about 400 million—the numbers of the very poor. Even then its figures stop at the year 2005, which means the recent upheavals in food and energy costs that have swelled the ranks of the impoverished are not counted.

“It may not be obvious to everyone that the world is actually awash in money. Most of it is still in North America and Europe but the numbers of the seriously rich on other continents are catching up fast. Those who have the money know very well how to keep it and, with their hired help, the battalions of lawyers, accountants and lobbyists, they are busy salting away their profits in tax havens, finding loopholes and protected investments, lobbying fiercely in parliaments and ministries against regulations on banks and financial markets. As you can see, I began by talking about poverty but I am already touching on the links with the financial crisis.”

If you dislike data, figures, statistics, pie charts, graphs, take these from Susan George. You would love hearing her reel out the data.

* Ten million people, according to a recent Merrill-Lynch World Wealth Report, together boast investable, liquid funds of more than $40 trillion? That’s 40,000 billion or 40 followed by 12 zeroes.

* This wealth is above and beyond the value of their houses, cars, yachts, wine or art collections and so on and it is equivalent to about three times the GDP of either the United States or Europe.

* Assume that you have one billion dollars, which is the cut-off point for the latest Forbes magazine list of 1125 truly rich individuals in the world. If despite your billion you are such a dim-witted investor that you get only a five percent return on your fortune, you will still have to spend $137.000 every day of the year in sheer consumption or you will automatically become richer.

Want to know about inequality? By George! Here is a ready reckoner for dummies.

* The UN World Institute for Development Economic Research, WIDER, estimates total world household assets at about $125 trillion. This is about three times world GDP and unsurprisingly, the top two percent of the world captures more than half of that wealth.

* The top 10 percent, which certainly includes many of us here, hold 85 percent, while the bottom half of humanity is obliged to stumble along with barely 1 percent.

* All you need to be classed in the top half of humanity is a meagre $2200 in total assets—that includes your house, your land or items like your car or your refrigerator—hardly a princely sum.

* If all household assets were divided equally—impossible and probably not even desirable to achieve—everyone on earth could have a share of $26,000. So again, money as such isn’t the problem.

To those who often get swayed by the neo-liberals assurances that the progress being made in the world will one day end poverty, George’s words can shatter even that assurance. Rising tides will not lift all boats. Neo-liberals do admit that inequalities have grown, but still argue that the poor are better off than they were. “It seems almost rude to remind them in turn that falling tides have the opposite effect, they swamp and strand the more fragile boats and that is where the tide of the financial crisis is now taking us.”

Indians are so fond of quoting China all the time. And often worry that it should be “Cheeny Kum, India Zayada”. Susan also quotes the Chinese example. “It’s true that economic growth has reduced poverty, particularly in China, one must also ask “At what cost?” China has now overtaken the United States in greenhouse gas emissions and frighteningly has hardly even begun its transition to the automobile society. China also requires at least 10 times as much energy as the more mature industrial societies to produce a unit of GDP.

Growth certainly isn’t the answer ecologically, but even economically it fails the test because the benefits accrue almost entirely to the top of society.

It is entirely possible to push tens of millions of poor people off the ledge where they had just gained a foothold and send them back into the depths of poverty. Food riots, most of them urban, in at least thirty different countries have revealed another scary new phenomenon: the worldwide food crisis. Until now, food shortages and famines tended to be local, but so many societies have accepted neo-liberal trade mantras and become dependent on world markets for their basic daily staples that today a sudden spurt in prices is felt from Haiti to Egypt to Bangladesh.

The Bank-Fund-EC policies have made a tiny fraction of international society rich beyond imagining, they have kept many dependent countries dependent in a new, less visible sort of colonial relationship and they have made so-called free trade, privatisation and unfettered capitalism the rule in countries that previously wanted little or nothing to do with them. Furthermore, they have imposed their policies with relatively little organised protest because their ideology has been expertly produced, packaged and delivered.

The frantically innovating financial institutions, the large institutions that know perfectly well that they are “too big to fail”, are leading to mass murders that don’t seem visible. “Now that the bailouts are coming thick and fast, we have before us a singular example of socialism for the rich, the well-connected and Wall Street, in which the profits are grabbed by the usual suspects and the losses, tremendous losses, are billed to taxpayers. The United States has in effect nationalised these institutions and their debts—without getting anything from the financial industry in exchange.”

SOLUTION

Susan George was clear that had it been possible for “people like us”, for “we, the people” to set things right, they would have done so. The fact is, it is not possible. “Time has passed for telling people to change their behaviour and their lightbulbs,” she said. No, she did not ask people to stop changing their behaviour or stop changing their lightbulbs but underlined that what was required was a much bigger thing: Change the entire economy into a climate friendly economy.

Scale up the environment industry was her panacea. “We must have the courage to challenge not just our political leadership but the entire neo-liberal, unregulated, privatised, capitalist economic system in place in order to provoke and promote a quantitative and qualitative leap in the scale of environmental action.

George said, and many hearts would have broken at hearing her words, that individual and local solutions are tragically insufficient.

She saw the financial crisis as a great opportunity for her solution and said the ecological transformation and environmental practices can earn money, create jobs, run economy, and benefit business.

“Politicians must be convinced that these policies will not just work but also be highly popular with their constituencies.”

People, business and government must come together in a new incarnation of the Keynesian war economy strategy. Push for massive investment in energy conversion, eco-friendly industry, new materials, efficient public transport; the green construction industry and so on.

The scenario can be sold to the elites. A huge ecological conversion is a job for a high-tech, high-skills, high-productivity, high-employment society. It would be supported by the entire population because it would mean not just a better, cleaner, healthier, more climate-friendly environment, but also full employment, better wages, and new skills, as well as a humanitarian purpose and an ethical justification.

She suggested an international currency conversion tax, a worldwide carbon tax, and building of broad citizen alliances as part of new steps to generate funds that could be invested in reversing crisis which has reached a critical stage. Debt cancellation procedures should be linked with reforestation, soil conservation, water management and making public transport more energy-efficient. Economic packages to banks must carry an ecological criterion.

World Sikh News