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When growth is not good

Zafar Anjum | March 13, 2009
In a world of finite resources, the greed for infinite growth has got us into todays global financial crisis. Its time we asked some tough questions about the nature of the financial systems that control our lives.

For a narrative to work, it should have a dramatic resolution. If that is not possible, an emotional resolution is a must. I thought of this thumb rule of storytelling when I read the news today about Bernard L. Madoffs admission in a US court that he had run a vast Ponzi scheme (US$65 billion)a representative story of Wall Streets breathless search for profits. His ordering to jail may provide emotional resolution to the thousands who lost their money in the Wall Street meltdown but this is definitely not a satisfying denouement.

And Im not alone in holding this view. …There can be no restoration of confidence in the banking systemand therefore no hope for an economic recoveryuntil Wall Street comes clean, says William D. Cohan, the author of  House of Cards: A Tale of Hubris and Wretched Excess on Wall Street in his 11 March op-ed piece A Tsunami of Excuses in the New York Times. If the executives responsible for what happened wont step forward on their own, perhaps a subpoena-wielding panel along the lines of the 9/11 commission can be created to administer a little truth serum.

I doubt if thatll ever happen but the seriousness and the sincerity of Cohans demand cannot be questioned. The current global financial crisis, issuing from the greed of the prodigals and projectors of the Wall Street, has attacked and weakened the very foundations of the capitalistic systemthe system that underpins the globalised nature of trade and life in the world today. While for dramatic reasons the spotlight might remain on the Madoff saga for a while, the actual debate has moved on, to focus on the nature and future of capitalism itself.

The future of capitalism

Capitalismour ability to buy and sell, move money around as we wish, and to turn a profit by doing sois in deep trouble, says Professor Paul Kennedy in an article in the Financial Times.

Nobel Laureate Amartya Sen even argues for making changes in the capitalistic system. The question that arises most forcefully now is not so much about the end of capitalism as about the nature of capitalism and the need for change....the crisis, no matter how unbeatable it looks today, will eventually pass, but questions about future economic systems will remain, argues Sen in his piece in the Financial Times.

Surely, this is not the end of capitalism but the questions about the economic system are aplenty.

Peak Credit?

One of the most important questions is about credit and its scant availability (in the current scenario of credit crunch) for companies.

 

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