Nothing could be as intriguing as opting to watch unintelligent flicks like the one titled “Main tera Dushman” ( “I, your enemy”) The story of the particular movie is not unique, out of this world or even commendable, on the contrary it is highly predictable. It is about a baby elephant who lost his mother in a shootout attack instigated by the villain when she intervened to save the kidnapped son of a forest officer by taking a bullet in her head. The baby elephant, naturally keeping up with the hereditary custom of not forgetting, took a wide-angled snapshot of his mother’s murderer in that instance and kept reliving it in his memory until the day he took his revenge. In the meanwhile, the baby elephant went on to live with the kidnapped boy’s family, ate food with them, shared dinner jokes, and learnt good English. It was his reading capabilities that led him Bombay by following sign boards on the road, and once there, he was able to keep the streets clean of bandits, the hoodlums, socio-paths and deviant mothers by feeding babies with milk out of dropped bottles. And it was there in the rough city of Bombay that he finally came face-to-face with his mother’s killer, and before I could continue watching the movie, I’m sure that he stretched out his trunk, snatched away pistol from the villain’s hand in a split second, pulled the trigger and shot the villain precisely between his eyes . The end. The moral of the story? Definitely revengeful, and open to many interpretations.

We follow the channels which suit our tastes more. There is diversity in how messages are received and evidently, and must I also say sadly, when you look closely you’ll see that the moralistic connotations of this movie are actually alive and thriving in our routine life. It’s only that, we fail to see the presence of such an incredible angry elephant in all of us, sometimes sharply felt from the news jibes that we receive from our television screens, hitting us at the right anger-sensors at the right time, the right place when the TV anchors righteously yank away at our corrupt world (often through politicizing and creating partiality for improving their TV ratings).

The notion that the way the messages are received is dependent on how they are conveyed reminds me of an agitated conversation that I once had Fernando, my friend who teaches at an elementary school, when he was reading to me children’s reading book about a big fish and small fish. It is needless to go into details of the story, but I think it is important to point out what the story actually conveyed to our fragile, and receptive young minds—that it is absolutely OK for big fish to eat little fish.

“But it’s an innocent story. Besides isn’t it true that big fish eat small fish?”

“But such a message can incorporate values that we don’t want… It may also justify bullying, and harassments from those who are stronger than us… Take another example, this is also a typical case with the corporate world, that it’s ok to take over the naïve, defenseless little businesses. I find it a little upsetting for its complete lack of human sensitivities and the values that we are inculcating into our little minds…” As I continued with my vigorous verbal onslaught against this particular children’s book.

“OK Fine, I understand what you’re trying to say. But let’s take it in another way. Isn’t it nature that big fish eat small fish?”

“Nature is ferocious, my friend. I still say, that nurture (and how we do it) is the best medicine against this ferocity of nature. Now do you want our children to go wild and do exactly as the animals do when ripping each other apart?”

‘Zeeba, I have serious reservations about your ‘nurture’. If you admit that nature that big fish eat small fish is nature, then by advocating nurture, are you implying that small fish should start taking revenge against the big fish? Do you really not see that you are molding the literature and adjusting it just to fit your values, no matter how questionable they might be to others? You are tilting towards favoring a universalized code of morals. You are advocating brainwashing, based on what YOU think is right? But you know what? I know you are not right!”

I was alarmed at such a deviation that sparkled out of a mere children’s book, and that he said I was wrong was a blatant lie. That heated nurture vs. nature debate went on for another two hours, between three cups of cappuccino and two Italian sodas with a twenty dollar hefty bill. We refused to reach to any conclusion, but we did manage to agree that the messages emitting out of our media is open for interpretations, and the fact that there can be no singular, unified interpretation is what makes it even more dangerous, because after all, it’s the same messages which a pacifist may interpret very differently from a fascist. But how do our little children interpret them? It all depends on how it is communicated to them.

It leads us to another assertion: that probably it’s not the media that is taming us, but quite on the contrary. Maybe, it’s our own convictions based our own personal histories that propel us to judge things in a manner very different from others. Maybe it’s better for everyone to emit, disseminate and portray entirely un-opinionated messages, perhaps this could be the only way that can save one from becoming completely dogmatic. Maybe, in the end, stopping to impose on others is what can protect us from the angry, revengeful elephants in all of us from shooting our villains in their heads.

Where the MPs’ expenses

money would have been

better spent

 

 

 

Public money should be used to give the most vulnerable a safety net, not to line pockets of the already affluent, writes Rowenna Davis

 

                  As the moats, horse manure, chandeliers and duck houses have come pouring out of the Westminster expenses bag over the last fortnight, I have been working on a series of interviews with asylum seekers. The power inequalities couldn’t be more pronounced. While those at the top are getting more than they are entitled to, those at the bottom are consistently getting less than they deserve.

Half an hour’s tube journey from the ornate House of Commons, a group of African women bustle into the Crossroads Women’s Centre in Kentish Town. They squeeze into the room with their prams, talk quietly to advisers on worn seats and rummage through jumbles of old clothes. They’re here because there’s nowhere else for them to go; statutory services have failed to provide them with the support they need.

Many would argue that these women should not be entitled to the same support as vulnerable British citizens. But they are not. Their benefits are just two thirds of the average and often come in vouchers rather than cash; their education is segregated and their health benefits are difficult to obtain. But talking to the women at the centre, it became clear that most of them are not even getting the small, second-class services they are entitled to, let alone the ones they need.

One woman told me about how she arrived in Heathrow airport when she was 13, alone and clutching little more than a passport. She’d made a lucky escape from armed rebels in Uganda, and was looking for refuge. As an unaccompanied minor, she should have been entitled to state support until she was 18, but this was denied. With no benefits, she fell on to the streets. When she begged the council for help, they shouted at her to go away.

In cases like these, asylum seekers don’t get what they are legally entitled to because of discrimination. In others, it is because social workers do not have the time or training to get to grips with an overly complicated and ever-changing system of benefits. But most frequently, social workers cannot help because national policy prevents them from doing so.

One woman I spoke to for example, a lady who had fled rape in Burundi, was left pregnant on the streets after she was told she wasn’t eligible for benefits. After a month sleeping on buses and inside doorways, she tried to kill herself. Luckily she was rescued and admitted into a psychiatric hospital where the doctors – knowing the state would not provide for her – decided to keep her in the ward until she gave birth. But when she was too weak to breastfeed her newborn son, the nurses still said she was “not eligible” for milk on the ward.

After days spent hearing stories like this, I’d go home and switch on the news. To hear that an MP had managed to claim £1,600 for a floating duck house while an unaccompanied child was being denied shelter was shocking. To hear that claims were being made for champagne when babies were being denied milk was diabolical. If this sounds overly emotive, it shouldn’t. We must be clear about this – MPs expenses are paid with public money – these funds should be going to provide a safety net for the most vulnerable, not being redirected into pockets that are already adequately full.

These women’s stories throw the stark power inequalities in society into sharp relief. While MPs – the majority of whom are privileged, white and male – take more than they are entitled to, the most vulnerable – largely women and children from ethnic minority backgrounds – are getting less than they deserve. When thinking about how to move to a fairer system of claims in Westminster, we should also think about a fairer deal for those outside it. The injustice of entitlement for those at the bottom is as big as those at the top.

• For advice and information, please contact Black Women’s Rape Action Project, based at the Crossroads Women’s Centre on 020 7482 2496 or bwrap@dircon.co.uk.

 

The Ending of

America’s Financial-Military Empire

By MICHAEL HUDSON  

The city of

Yekaterinburg, Russia’s largest east of the Urals, may become known not only as the end of the road for the tsars but of American hegemony too; as the place not only where US U-2 pilot Gary Powers was shot down in 1960, but where the US-centered international financial order was brought to ground.Challenging America is the prime focus of extended meetings in Yekaterinburg, Russia (formerly

Sverdlovsk) today and tomorrow (June 15-16) for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization (SCO). The alliance is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and

Mongolia. It will be joined on Tuesday by Brazil for trade discussions among the so-called BRIC nations –Brazil, Russia, India and

China.The attendees have assured American diplomats that it is not their aim to dismantle the financial and military empire of the

United States. They simply want to discuss mutual aid – but in a way that has no role for the

United States, for NATO or for the US dollar as a vehicle for trade. US diplomats may well ask what this really means, if not a move to make

US hegemony obsolete. After all, that is what a multipolar world means. For starters, in 2005 the SCO asked Washington to set a timeline to withdraw from its military bases in

Central Asia. Two years later the SCO countries formally aligned themselves with the former CIS republics belonging to the Collective Security Treaty Organization (CSTO), established in 2002 as a counterweight to NATO.Yet the Yekaterinburg meeting has elicited only a collective yawn from the US and even European press despite its agenda — nothing less than the replacement of  the global dollar standard with a new financial and military defense system. A Council on Foreign Relations spokesman has said he hardly can imagine that Russia and China can overcome their geopolitical rivalry, suggesting that America can use the divide-and-conquer that Britain used so deftly for many centuries in fragmenting foreign opposition to its own empire. But George W. Bush (“I’m a uniter, not a divider”) built on the Clinton administration’s legacy in driving Russia, China and their neighbors to find a common ground when it comes to finding an alternative to the dollar and hence to the US ability to run balance-of-payments deficits ad infinitum.What may prove to be the last rites of American hegemony began already in April at the G-20 conference, and became even more explicit at the St. Petersburg International Economic Forum on June 5, when Mr. Medvedev called for China, Russia and

India to “build an
increasingly multipolar world order.” What this means in plain English is: We have reached our limit in subsidizing the United States’ military encirclement of Eurasia while also allowing the

US to appropriate our exports, companies, stocks and real estate in exchange for paper money of questionable worth. The artificially maintained unipolar system,” Mr. Medvedev spelled out, is based on “one big center of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks.” At the root of the global financial crisis, he concluded, is the fact that the United States makes too little and spends too much, particularly its vast military outlays, such as the stepped-up US military aid to Georgia announced just last week, the NATO missile shield in Eastern Europe and the US buildup in the oil-rich Middle East and Central Asia.The sticking point for all these countries is the ability of the

United States  to print unlimited amounts of dollars. Overspending by

U.S.  consumers on imports in excess of exports,

U.S. buy-outs of foreign companies and real estate, and the dollars that the Pentagon spends abroad all end up in foreign central banks. These banks  then face a hard choice: either to recycle these dollars back to the

United States by purchasing US Treasury bills, or to let the “free market” force up their currency relative to the dollar – thereby pricing their exports out of world markets and hence creating domestic unemployment and business insolvency.When China and other countries recycle their dollar inflows by buying US Treasury bills to “invest” in the

United States, this buildup is not really voluntary. It does not reflect faith in the ability of the

U.S. economy to enrich foreign central banks for their savings. Nor does it represent any calculated investment preference. It is  simply a matter of a lack of alternatives. U.S.-style “free markets” hook countries into a system that forces them to accept dollars without limit. Now they want out. This means creating a new alternative. Rather than making merely “cosmetic changes as some countries and perhaps the international financial organisations themselves might want,” said  Mr. Medvedev at the end of  his

St. Petersburg speech, “what we need are financial institutions of a completely new type, where particular political issues and motives, and particular countries will not dominate.”When foreign military spending forced the US balance of payments into deficit and drove the

United States off gold in 1971, central banks were left without the traditional asset used to settle payments imbalances. The alternative was to invest their subsequent inflows of US dollars  in US Treasury bonds, as if these still were “as good as gold.” Central banks now hold $4 trillion of these bonds in their international reserves. These loans have financed most of the US Government’s domestic budget deficits for over three decades now! Given the fact that about half of US Government discretionary spending is for military operations – including more than 750 foreign military bases and increasingly expensive operations in the oil-producing and transporting countries – the international financial system is organized in a way that finances the Pentagonand also US buyouts of foreign assets expected to yield much more than the Treasury bonds that foreign central banks hold.The main political issue confronting the world’s central banks is therefore how to avoid adding yet more dollars to their reserves and thereby financing yet further

US deficit spending – including military spending on their borders. For starters, the six SCO countries and BRIC countries intend to trade in their own currencies so as to get the benefit of mutual credit that the

United States until now has monopolized for itself. Toward this end, China has struck bilateral deals with Argentina and Brazil to denominate their trade in renminbi rather than the dollar, sterling or euros, and two weeks ago China reached an agreement with

Malaysia to denominate trade between the two countries in renminbi. Former Prime Minister Tun Dr. Mahathir Mohamad explained to me in January that as a Muslim country, Malaysia wants to avoid doing anything that would facilitate US military action against Islamic countries, including

Palestine. The nation has too many dollar assets as it is, his colleagues explained. Central bank governor Zhou Xiaochuan of the People’s Bank of China put  an official statement on the bank’s website, explaining  that the goal is now to create a reserve currency “that is disconnected from individual nations.” This is the aim of the discussions in Yekaterinburg.Aside from no longer financing the U.S. buyout of their own industries  and the U.S. military encirclement of the globe, China, Russia and other countries would no doubt like to enjoy the same kind of free ride that

America has been getting. As matters stand now, they see the

United States as a lawless nation, financially as well as militarily. How else to characterize a nation that proclaims a set of laws for others – on war, debt repayment and treatment of prisoners – but flouts them itself? The

United States is now the world’s largest debtor yet has avoided the pain of “structural adjustments” imposed on other debtor economies. U.S. interest-rate and tax reductions in the face of exploding trade and budget deficits are seen as the height of hypocrisy in view of the austerity programs that Washington forces on other countries via the IMF and other

Washington vehicles.The

United States tells debtor economies to sell off their public utilities and natural resources, raise their interest rates and increase taxes while gutting their social safety nets to squeeze out money to pay creditors. And at home, Congress blocked, on grounds of national security, China’s CNOOK from buying Unocal, much as it blocked

Dubai from buying US ports and blocked other sovereign wealth funds from buying into key infrastructure. Foreigners are invited to emulate the Japanese purchase of white elephant trophies such as

Rockefeller Center, on which investors quickly lost a billion dollars and ended up walking away. In this respect the US has given

China and other payments-surplus nations no alternative but to find a way to avoid further dollar buildups. To  date,

China’s attempts to diversify its dollar holdings beyond Treasury bonds have not proved very successful. For starters, Hank Paulson of Goldman Sachs steered its central bank into higher-yielding Fannie Mae and Freddie Mac securities, explaining that these were de facto public obligations. They collapsed in 2008, but at least the U.S. Government took over these two mortgage-lending agencies, formally adding their $5.2 trillion in obligations to the national debt. In fact, it was largely foreign official investment that prompted the bailout. Imposing a loss for foreign official agencies would have broken the Treasury-bill standard then and there, not only by utterly destroying US credibility but because there simply are too few Government bonds to absorb the dollars being flooded into the world economy by the soaring

US balance-of-payments deficits.in late 2007, seeking more of an equity position to protect the value of their dollar holdings as the Federal Reserve’s credit bubble drove interest rates down,

China’s sovereign wealth funds sought to diversify. China bought stakes in the well-connected Blackstone equity fund and Morgan Stanley on Wall Street, Barclays in Britain, 

South Africa’s Standard Bank (once affiliated with Chase Manhattan back in the apartheid 1960s) and in the soon-to-collapse Belgian financial conglomerate Fortis. But the

US financial sector was collapsing under the weight of its debt pyramiding, and prices for shares plunged for banks and investment firms across the globe.Foreigners see the IMF, World Bank and World Trade Organization as

Washington surrogates in a financial system backed by American military bases and aircraft carriers encircling the globe. But this military domination is a vestige of an American empire no longer able to rule by economic strength.

US military power is muscle-bound, based more on atomic weaponry and long-distance air strikes than on ground operations, which have become too politically unpopular to mount on any large scale. On the economic front there is no foreseeable way in which the United States can work off the $4 trillion it owes foreign governments, their central banks and the sovereign wealth funds set up to dispose of the global dollar glut.

America has become a deadbeat –a militarily aggressive one — as it sruggles to hold onto the immense power it once earned by economic means. The problem for the rest of the world  is how to constrain its behavior. Yu Yongding, a former Chinese central bank advisor now with China’s

Academy of

Sciences, suggested that US Treasury Secretary Tim Geithner be advised that the

United States should “save” first and foremost by cutting back its military budget. “

U.S. tax revenue,” he said, “is not likely to increase in the short term because of low economic growth, inflexible expenditures and the cost of ‘fighting two wars.’”At present foreign savings are what finance the

US budget deficit by buying most Treasury bonds. The consequence is taxation without representation for foreign voters as to how the US Government uses their forced savings. It therefore is necessary for the financial diplomats to broaden the scope of their policy-making beyond the private-sector marketplace. Exchange rates are determined by many factors besides “consumers wielding credit cards,” the usual euphemism that the US media cite for

America’s balance-of-payments deficit. Since the 13th century, war has been a dominating factor in the balance of payments of leading nations – and of their national debts. Government bond financing consists mainly of war debts, as normal peacetime budgets tend to be balanced. This links the war budget directly to the balance of payments and exchange rates.Foreign nations see themselves stuck with unpayable IOUs under conditions where, if they move to stop the

US free lunch, the dollar will plunge and their dollar holdings will fall in value relative to their own domestic currencies and other currencies. If

China’s currency rises by 10 per cent  against the dollar, its central bank will show the equivalent of a $200 million loss on its $2 trillion of dollar holdings as denominated in yuan. This explains why, when bond ratings agencies talk of the US Treasury securities losing their AAA rating, they don’t mean that the government cannot simply print the paper dollars to “make good” on these bonds. They mean that dollars will depreciate in international value. And that is just what is now occurring. When U.S. Treasury Secretary Geithner assumed an earnest mien and told an audience at

Peking University in early June that he believed in a “strong dollar” and China’s

US investments therefore were safe and sound, he was greeted with derisive laughter.Anticipation of a rise in

China’s exchange rate provides an incentive for speculators to seek to borrow in dollars to buy renminbi and benefit from the appreciation. For

China, the problem is that this speculative inflow would become a self-fulfilling prophecy by forcing up its currency. So the problem of international reserves is inherently linked to that of capital controls. Why should

China see its profitable companies sold for yet more freely-created US dollars, which the central bank must use to buy low-yielding US Treasury bills or lose yet further money on Wall Street?To steer round this quandary it is necessary to reverse the philosophy of open capital markets that the world has held ever since Bretton Woods in 1944. On the occasion of Mr. Geithner’s visit to China, Zhou Xiaochuan, minister of the Peoples Bank of China, the country’s central bank, said pointedly that this was the first time since the semiannual talks began in 2006 that “China needed to learn from American mistakes as well as its successes” when it came to deregulating capital markets and dismantling controls.So an era is winding to its end. In the face of continued

US overspending, de-dollarization threatens to force countries to return to the kind of dual exchange rates common between World Wars I and II: one exchange rate for commodity trade, another for capital movements and investments, at least from dollar-area economies.Even without capital controls, the nations meeting at Yekaterinburg are taking steps to avoid being the unwilling recipients of yet more dollars. Seeing that U.S. global hegemony cannot continue without the spending power that they themselves supply, governments are attempting to hasten what Chalmers Johnson has called “the sorrows of empire” in his book by that name – the bankruptcy of the

US financial-military world order. If China, Russia and their non-aligned allies have their way, the

United States will no longer live off the savings of others in the form of its own recycled dollars, nor have the money for unlimited military expenditures and adventures.

US officials wanted to attend the Yekaterinburg meeting as observers. They were told No. It is a word that Americans will hear much more in the future.Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at

University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) He can be reached via his website, mh@michael-hudson.com 

Deadly social change

By Ayesha Siddiqa
Friday, 01 May, 2009 | 02:58 AM PST  

 

A LOOK at today’s

Pakistan does not inspire confidence in the state. In addition to the Talibanisation threat in some parts of the country, there is chaos in other areas like Balochistan where people are dissatisfied with what the state has to offer.

Then, there are those areas where there is no conflict but that have begun to look at other options because the state has little to offer. In fact, in places like Gilgit sections of the people are beginning to look north, towards

China in fact, which now appears a more attractive proposition. The state and the establishment have little to offer by way of explanation except that this is a conspiracy to destroy the state.

This is not to imply that the Pakistani state does not have enemies. However, this kind of a mindset is not likely to discover solutions to the numerous problems the state faces. The establishment, the government and its functionaries are not prepared to accept that years of an unstable sociopolitical system are unlikely to have better results than the ones we see in the form of Talibanisation and political radicalisation.

Owing to space constraints I will concentrate on the threat of Talibanisation which seems to be growing beyond the Frontier province and is present in south

Punjab as well. It would not be surprising to see Swat’s domino effect on other parts of the country in the grip of similar sociopolitical circumstances. The influence and victory of the TNSM in Swat was due to a combination of factors such as the long absence of social transformation in the region, stagnation of the political power system, which the TNSM now claims to have changed, and the inability of political representatives to honour the mandate given to them by the public in last year’s polls. It is tragic that those who were not voted into power by the ordinary Swati are ruling Swat today. The ANP has surrendered its powers.

This model could come to be replicated in other parts such as south

Punjab. For many, this area, ranging from Mianwali to D.G. Khan and

Bahawalpur, should be the least likely area for Talibanisation. A closer look shows that it is not. First, it has remained a favourite breeding ground for numerous militant outfits especially those linked with the

Kashmir struggle. There was not much effort to mop up this area besides superficial measures such as banning some outfits that nevertheless resurfaced under other names.

Second, this part of

Punjab is prominent in terms of large landownership and a feudal lifestyle. This is also an area where feudal institutions in terms of economic power merged with political and spiritual power. So, many prominent political families are not just significant due to their wealth and political power but because they are connected to the shrines as well. The gradual institutionalising of the power of the shrine has strengthened them rather than giving some breathing space to ordinary people some of whom are moving in the direction of rabid religious ideologies. So, it is lack of understanding of this background that leads people to show surprise that south

Punjab, which was considered a hub of Barelvi Islam, is moving towards Deobandi and Wahabi ideologies.

A closer look, in fact, shows that a lot of Barelvis have shifted towards other ideologies and are part of the jihad industry without abandoning their original ideology. The gap between the Barelvis and Deobandis has narrowed most peculiarly in south

Punjab. Is it because of the hundreds of madressahs that mushroomed in this belt especially in the 1980s? The answer is yes and no. Yes because the new madressahs, which were different from the traditional ones in the area, introduced a more dramatic curriculum that nurtured in the students an appreciation of sectarian and ideological differences. Hence, the sectarian violence in the region, which predates the current shift, dates back to the 1980s and 1990s.

The radicalisation, including sectarian violence, represents an urge for social transformation because some prominent landowners in this area are Shia as opposed to the underdogs most of whom are Sunnis. The growing radicalisation in southern

Punjab shown up in the inability of the state to carry out land reforms and shift the socioeconomic and political power structure from a pre-capitalist society to a capitalist one will have its consequences in the years to come. So while the proliferation of madressahs is part of the problem it does not explain the social development in its entirety. Not to mention that southern

Punjab as a sub-region has suffered due to the gradual, reverse migration of the elite to other parts of the country creating a power vacuum that is ready to be filled by another lot.

The movement of the youth towards jihad, hence, is a warped form of social transformation in which the dispossessed youngsters have suddenly found a source of empowerment. The promise of a better life in the hereafter in which they will get hoors, a crown of jewels and have 70 individuals forgiven is something that they cannot expect in this life. Not to mention the monetary compensation their families get from militant outfits for their sacrifice. What is dangerous is that none of this is being voiced as part of social transformation. When a change takes place the bulk of the people will remain sacrificial lambs while others will replace the existing power elite as in Swat.

Sadly, no one wants to talk about

Punjab because the current leadership is too engrossed in its political pragmatism to touch militant outfits. The bulk of the PML-N leadership does not have the vision to mop up the province while there is time to do so. If it were not for the political narrow-mindedness of the political elite, a clean-up in

Punjab would require a well-planned police operation to be followed by the arduous task of social reconstruction.

The writer is an independent strategic and political analyst.

ayesha.ibd@gmail.com

The Global Financial Community 

 

by Prabhat Patnaik  

 

Lenin in Imperialism had talked about a financial oligarchy presiding over vast amounts of money capital through its control over banks and using this capital for diverse purposes, such as industry; speculation; real estate business; and buying bonds, including of foreign governments.  The finance capital that Lenin was talking about belonged to particular powerful nations; correspondingly, the oligarchies he was referring to were national financial oligarchies.  He talked for instance of French, German, British and American financial oligarchies.  But in the current epoch of ”globalization” when finance capital itself is international in character, the controllers of this international finance capital constitute a global financial oligarchy.  This global financial oligarchy requires for its functioning an army of spokesmen, mediapersons, professors, bureaucrats, technocrats and politicians located in different countries. 

The creation of this army is a complex enterprise, in which one can discern at least three distinct processes.  Two are fairly straightforward.  If a country has got drawn into the vortex of globalized finance by opening its doors to the free movement of finance capital, then willy-nilly even well-meaning bureaucrats, politicians, and professors will demand, in the national interest, a bowing to the caprices of the global financial oligarchy, since not doing so will cost the country dear through debilitating and destabilizing capital flights.  The task in short is automatically accomplished to a large extent once a country has got trapped into opening its doors to financial flows. 

The second process is the exercise of peer pressure.  Finance Ministers, Governors of Central Banks, top financial bureaucrats belonging to different countries, when they meet, tend increasingly to constitute what the distinguished Argentine economist Arturo O’Connell has described as an ”epistemic community”.  They begin increasingly to speak the same language, share the same world view, and subscribe to the same prejudices, the same ”humbug of finance” (to use Joan Robinson’s telling phrase).  Those who do not are under tremendous peer pressure to fall in line; and most eventually do.  Peer pressure may be buttressed by the more mundane temptations that Lenin had described, ranging from straightforward bribes to lucrative offers of post-retirement employment, but, whatever the method used, conformism to the ”humbug” that globalized finance dishes out as true economics becomes a mark of ”respectability”. 

But even peer pressure requires that there should be a group of core ideologues of finance capital who exert and manipulate this pressure.  The ”peers” themselves are not free-floating individuals but have to be goaded into sharing a belief-system.  There has to be therefore a set of key intellectuals, ideologues, thinkers and strategists that promote this belief system, shape and broadcast the ideology of finance capital, and generally look after the interests of globalized finance.  They are not necessarily capitalists or magnates; but they are close to the financial magnates, and usually share the ‘’spoils”.  The financial oligarchy proper, consisting of these magnates, together with these key ideologues and publicists of finance capital, can be called the ”global financial community”.  The function of this global financial community is to promote and perpetuate the hegemony of international finance capital.  And here the most critical issue concerns the relationship of this global financial community to the politics of particular countries. 

 

To say that the World Bank and the IMF are the main breeding ground for these key figures who are part of the global financial community and mediate the relation between particular countries and globalized finance is to state the obvious.  True, the Fund and the Bank are not the only institutions; there are sundry business schools and departments of economics, of business administration, and of finance in prestigious Anglo-Saxon universities.  But even for the products of the latter institutions, the Fund and the Bank often act as ”finishing schools”.The relation between the key ideologues of finance capital and the governments of the various countries has itself undergone a major transformation in the more recent period.  Earlier these ideologues were transplanted from the Fund and the Bank, as part of an implicit conditionality, to the Ministries of Finance in different countries, and the whole effort was to ensure that they functioned to promote the interests of international finance capital while remaining free from political intervention.  They operated in short as career bureaucrats; governments might come and go, elections might make people throw off ”neo-liberal” rulers and replace them with the critics of ”neo-liberalism” who had hitherto occupied oppositional space.   

But ”neo-liberalism” persisted notwithstanding such changes in government, because key bureaucratic positions continues to be occupied by members of the ”global financial community”, either the same ones serving ever new governments, or new ones that came with government change but from the same flock.  And there were various instruments devised to ensure that the new governments could not interfere in their functioning, such as the Fiscal Responsibility legislation that tied the hands of governments, or the so-called independence of the Central Bank that took a whole range of economic policies outside the purview of elected governments, or the sheer hard-sell of something called ”development” that was just a euphemism for the neo-liberal agenda. 

 

But with the Fund and the Bank getting increasingly marginalized as international lenders, and hence as the gendarme of international finance capital, owing mainly to the paucity of funds at their disposal, this ”placing-Fund-Bank-employees-in-Finance-Ministries” strategy, though still practiced, has needed to be supplemented by more forthright measures whereby members of the global financial community are directly inducted into political appointments.  From occupying bureaucratic positions within an overarching political process they have started moving directly into political positions. 

 

Obama’s political appointees include people like Rubin, Geithner, and Summers, who are indubitably members of the global financial community and who collectively are in complete charge of economic matters in the Obama administration.  Bush’s replacement by Obama has merely led to the replacement of Paulson by Geithner. The Wall Street giant to which one of them is loyal may be different from the one that commands the other’s loyalty, but each of them is loyal to some Wall Street giant and is a true exponent of the ideology of finance capital.  Larry Summers, another political appointee, who had occupied an important position in the

Clinton administration, has been re-inducted into the Obama administration, having occupied the position of the President of Harvard University for a while in between.   

He reportedly earned $8 million last year, $5.2 million from a leading hedge fund D. E. Shaw, and $2.77 million from forty speaking engagements before executives of banks and financial firms.  Lecture fees of this order, amounting to about $70 thousand per lecture, are not paid merely for satisfying intellectual curiosity or quenching the thirst for knowledge.  They are a pay-off for preaching the ideology of finance capital, for imparting to neophytes the belief system shared by the members of the global financial community.  It is of some interest to know that as

Clinton’s Treasury Secretary, Summers had turned down all suggestions for regulating hedge funds, claiming that those who operated such funds were smart and sophisticated enough to invest prudently! 

 

How people like Summers, Geithner and Rubin come to occupy such important political positions within the

U.S. system is pretty obvious.  American Presidential elections require massive amounts of money, a good chunk of which invariably comes from Wall Street.  The story doing the rounds for a while was that Obama had got most of his funds from small donations of $100 each garnered through the internet; but this was complete nonsense.  Obama like others before him had also tapped Wall Street and the appointment of the trio, who had organized Wall Street finance for him, was a quid pro quo.  The elevation of members of the global financial community to run the American economy therefore should cause no surprise.What is more surprising is the way the financial community has insinuated itself into political positions even in a country like India which had a prolonged anti-imperialist struggle whose legacy still remains, and where politics, admittedly electoral politics, is taken very seriously by the people.  The case of Manmohan Singh is too well-known to be recounted here, but in recent years members of the financial community have been smuggled in through the Rajya Sabha route into the nation’s politics and kept in readiness for important political positions.  None of them has ever participated in any political activity; none of them has ever won an election on the basis of popular mandate; and none of them has ever even been particularly loyal to the political Party which nominates them.  Nonetheless they emerge as key political figures and promote even within a system marked by universal adult suffrage the interests of international finance capital. 

 

Similar examples can be cited from a host of other countries.  Everywhere, members of the global financial community are implanted upon the political process to look after ”economic affairs”, which means to promote and protect the interests of international finance capital by ensuring that the neo-liberal policies are carried on.  This dialectical interaction between traditional politics on the one hand and the members of the financial community implanted upon it on the other constitutes one of the most significant aspects contemporary bourgeois life. 

 

Marxists, when they speak of ”bourgeois democracy”, are often accused of resorting to hyperbole.  ”Democracy” after all is ”democracy”; why talk of ”bourgeois” democracy and ”peoples”’ democracy?  True, one must never pooh-pooh bourgeois democracy, since, of all the possible forms of bourgeois rule, it is the one that gives the people the widest possible scope for organizing themselves into a force of resistance.  But the limitations of bourgeois democracy, the sham that the bourgeoisie is forever attempting to reduce it to, are equally palpable.  This country is at present engaged in a remarkable electoral exercise, but once the results are out, the jockeying to ensure that the economic levers of the country continue to remain in the hands of the members of the global financial community will be equally intense.  It is as if after the people have spoken the real game will begin to ensure that their words count for nothing.  Winning elections is not enough; defeating this post-election game acquires even greater significance. 

 

________________________________________Prabhat Patnaik is an economist at the Centre for Economic Studies and Planning in the School of Social Sciences of Jawaharlal Nehru University in

New Delhi.   This article was published by the International Development Economics Associates on 21 April 2009; it is reproduced here for educational purposes. ________________________________________ 

Failure of microfinance? Urban/urbaneWednesday, March 18, 2009
Ahmad Rafay Alam

A person is considered to be in poverty when their daily income is less than two dollars, the amount of money needed to buy the basic foodstuffs for a healthy and productive life. Last month, the Planning Commission reported that

Pakistan’s poverty rate had jumped from 23.9 percent over the last three years to a staggering 37.5 percent. In other words, more than 60 million Pakistani barely earn enough money to feed themselves.Some time ago, I was approached by subsistence farmers from

Bahawalpur.These were farmers who owned five acres of land or less, though most of the families in their area cultivated no more than an acre or two. They were some of the nearly 40 percent of Pakistani struggling to stay above the poverty line. And they had an incredible story to tell of the manner in which already impoverished farming communities were being forced into cyclical debt at the hands of poverty- alleviation and microcredit organisations.

Small farmers need only a few thousand rupees to pay for their input costs – the seed, water and labour needed to cultivate their landholdings. Cultivation earns them a few thousand rupees’ profit. With this money and from some of the crop they harvest, they feed themselves and take care of their basic needs for the year.

Then along comes the National Rural Support Programme (NRSP), a government-run NGO. It dazzles these poor, illiterate farming communities of tales of economic development through microfinance and poverty alleviation.

Tales are told of how the NRSP will create community organisations and loan its members Rs10,000 each, money they can use to pay for their input costs. And then some. Tales are told of how farmers can take the surplus and benefit from the infrastructure development the NRSP will bring: things like tube-wells, roads, schools, watercourses, and so on.

What the NRSP does not tell them is that it loans the Rs10,000 with mark-up. At the end of a year, the farmer is expected to pay back Rs12,000. What the farmer isn’t told is that he won’t even be getting Rs10,000. After deduction of registration fees (Rs1,200), bank-account-opening charges (Rs500) and fees incurred by the NRSP (Rs500), the farmer is left with considerably less. What the NRSP doesn’t tell him is that his yield will scarcely cover the repayment of the loan.

Somehow, the farmers manage, and then the NRSP offers them Rs15,000, with the same registration fees and charges. This time the farmer has to pay back Rs18,000. Which he does. With some difficulty. And then the NRSP offers the farmer a loan of Rs20,000. And thus the story of circular debt begins.

The farmers who came to visit me had been in the NRSP for three to five years. None had a good word to say about the manner in which microcredit organisations were operating in their area. The farmers were illiterate and couldn’t understand the terms on which they were taking money. One of the documents they signed to get the funds was in English. Some of its terms are:

“If any one member [of a community organisation] fails to honour the agreement, then all the others will be held responsible; Their possessions and/or monies can be taken from them to make up the breach; Their assets will be taken and auctioned off to recover not only amount lent, but expenses of lawyers, courts, agents and auctioneers as well as mark up, up to a maximum of Pk Rs. 1,000,000.”

They could hardly understand the documents they were made to sign and mark, let alone the ones in English. Yet they had imparted their thumbprints on the documents, making them somehow legal. But how can such an agreement pass the litmus test of law? Not when the people entering it had no means to understand its terms and conditions. The documents the farmers were made to sign do not contain any reference to the mark-up they have to pay.

Many had pawned whatever gold or silverware they had in their homes. Some recipients of NRSP loans had been forced to sell plants and fruit-bearing trees to pay back their loans. Others were being forced to sell their land. Yet others were forced into the clutches of other microfinance organisations or, worse, usurious moneylenders.

The situation was alarming enough for the federal ministry of food, agriculture, and livestock to commission a report of what was going on. The report is terrifying. In Mehrab Goth, a tehsil in Bahawlapur, 2,396 households out of a total of 3,800 are in debt to the NRSP or other microfinance institutions. They are not just in debt, they are poor. They are not just poor, they are impoverished. Some cannot even afford to feed themselves and their families once a day. At the same time, in Islamabad and throughout

Punjab, political bigwigs debate the finer points of democracy. The dining tables at the Presidency and at Raiwind overflow with the munificence of their hosts.The NRSP isn’t the only player in the region. Other microfinance institutions include Khushali Bank and the First Micro-Finance Bank.

These organisations have it good. They get their funds from international donor agencies or other banks, which are more than happy to lend at market rates without the bother of having to open up branches in far-off places. The microfinance institutions merely tack their service charges onto this rate, jacking up the mark-up and making their rates unconscionable. As long as the villagers keep on paying, the officers and employees of the microfinance institutions can earn their salary and perks.

On March 12, the Planning Commission hosted a conference on the state of microfinance in

Pakistan and during which meeting recommendations were made for the future. The farmers were heard. The recommendations must be: stop the usurious business of microfinance in

Bahawalpur and elsewhere. Write off, just as

India did a few years ago, the debt accrued by the poor borrowers. Take action – including winding up – of those institutions that knowingly took advantage of the poor. There are far too many starving Pakistanis for our rich, well-fed politicians to ignore.The writer is an advocate of the high court and a member of the adjunct faculty at LUMS. He has an interest in urban planning. Email: ralam@ nexlinx.net.pk

Gaza: The logic of colonial power

As so often, the term ‘terrorism’ has proved a rhetorical smokescreen under cover of which the strong crush the weak o Nir Rosen o guardian.co.uk, Monday 29 December 2008 08.00 GMT o Article history I have spent most of the Bush administration’s tenure reporting from Iraq, Afghanistan, Lebanon, Somalia and other conflicts. I have been published by most major publications. I have been interviewed by most major networks and I have even testified before the senate foreign relations committee. The Bush administration began its tenure with Palestinians being massacred and it ends with Israel committing one of its largest massacres yet in a 60-year history of occupying Palestinian land. Bush’s final visit to the country he chose to occupy ended with an educated secular Shiite Iraqi throwing his shoes at him, expressing the feelings of the entire Arab world save its dictators who have imprudently attached themselves to a hated American regime. Once again, the Israelis bomb the starving and imprisoned population of Gaza. The world watches the plight of 1.5 million Gazans live on TV and online; the western media largely justify the Israeli action. Even some Arab outlets try to equate the Palestinian resistance with the might of the Israeli military machine. And none of this is a surprise. The Israelis just concluded a round-the-world public relations campaign to gather support for their assault, even gaining the collaboration of Arab states like Egypt. The international community is directly guilty for this latest massacre. Will it remain immune from the wrath of a desperate people? So far, there have been large demonstrations in Lebanon, Yemen, Jordan, Egypt, Syria and Iraq. The people of the Arab world will not forget. The Palestinians will not forget. “All that you have done to our people is registered in our notebooks,” as the poet Mahmoud Darwish said. I have often been asked by policy analysts, policy-makers and those stuck with implementing those policies for my advice on what I think America should do to promote peace or win hearts and minds in the Muslim world. It too often feels futile, because such a revolution in American policy would be required that only a true revolution in the American government could bring about the needed changes. An American journal once asked me to contribute an essay to a discussion on whether terrorism or attacks against civilians could ever be justified. My answer was that an American journal should not be asking whether attacks on civilians can ever be justified. This is a question for the weak, for the Native Americans in the past, for the Jews in Nazi Germany, for the Palestinians today, to ask themselves. Terrorism is a normative term and not a descriptive concept. An empty word that means everything and nothing, it is used to describe what the Other does, not what we do. The powerful – whether Israel, America, Russia or China – will always describe their victims’ struggle as terrorism, but the destruction of Chechnya, the ethnic cleansing of Palestine, the slow slaughter of the remaining Palestinians, the American occupation of Iraq and Afghanistan – with the tens of thousands of civilians it has killed … these will never earn the title of terrorism, though civilians were the target and terrorising them was the purpose. Counterinsurgency, now popular again among in the Pentagon, is another way of saying the suppression of national liberation struggles. Terror and intimidation are as essential to it as is winning hearts and minds. Normative rules are determined by power relations. Those with power determine what is legal and illegal. They besiege the weak in legal prohibitions to prevent the weak from resisting. For the weak to resist is illegal by definition. Concepts like terrorism are invented and used normatively as if a neutral court had produced them, instead of the oppressors. The danger in this excessive use of legality actually undermines legality, diminishing the credibility of international institutions such as the United Nations. It becomes apparent that the powerful, those who make the rules, insist on legality merely to preserve the power relations that serve them or to maintain their occupation and colonialism. Attacking civilians is the last, most desperate and basic method of resistance when confronting overwhelming odds and imminent eradication. The Palestinians do not attack Israeli civilians with the expectation that they will destroy Israel. The land of Palestine is being stolen day after day; the Palestinian people is being eradicated day after day. As a result, they respond in whatever way they can to apply pressure on Israel. Colonial powers use civilians strategically, settling them to claim land and dispossess the native population, be they Indians in North America or Palestinians in what is now Israel and the Occupied Territories. When the native population sees that there is an irreversible dynamic that is taking away their land and identity with the support of an overwhelming power, then they are forced to resort to whatever methods of resistance they can. Not long ago, 19-year-old Qassem al-Mughrabi, a Palestinian man from Jerusalem drove his car into a group of soldiers at an intersection. “The terrorist”, as the Israeli newspaper Haaretz called him, was shot and killed. In two separate incidents last July, Palestinians from Jerusalem also used vehicles to attack Israelis. The attackers were not part of an organisation. Although those Palestinian men were also killed, senior Israeli officials called for their homes to be demolished. In a separate incident, Haaretz reported that a Palestinian woman blinded an Israeli soldier in one eye when she threw acid n his face. “The terrorist was arrested by security forces,” the paper said. An occupied citizen attacks an occupying soldier, and she is the terrorist? In September, Bush spoke at the United Nations. No cause could justify the deliberate taking of human life, he said. Yet the US has killed thousands of civilians in airstrikes on populated areas. When you drop bombs on populated areas knowing there will be some “collateral” civilian damage, but accepting it as worth it, then it is deliberate. When you impose sanctions, as the US did on Saddam era Iraq, that kill hundreds of thousands, and then say their deaths were worth it, as secretary of state Albright did, then you are deliberately killing people for a political goal. When you seek to “shock and awe”, as president Bush did, when he bombed Iraq, you are engaging in terrorism. Just as the traditional American cowboy film presented white Americans under siege, with Indians as the aggressors, which was the opposite of reality, so, too, have Palestinians become the aggressors and not the victims. Beginning in 1948, 750,000 Palestinians were deliberately cleansed and expelled from their homes, and hundreds of their villages were destroyed, and their land was settled by colonists, who went on to deny their very existence and wage a 60-year war against the remaining natives and the national liberation movements the Palestinians established around the world. Every day, more of Palestine is stolen, more Palestinians are killed. To call oneself an Israeli Zionist is to engage in the dispossession of entire people. It is not that, qua Palestinians, they have the right to use any means necessary, it is because they are weak. The weak have much less power than the strong, and can do much less damage. The Palestinians would not have ever bombed cafes or used home-made missiles if they had tanks and airplanes. It is only in the current context that their actions are justified, and there are obvious limits. It is impossible to make a universal ethical claim or establish a Kantian principle justifying any act to resist colonialism or domination by overwhelming power. And there are other questions I have trouble answering. Can an Iraqi be justified in attacking the United States? After all, his country was attacked without provocation, and destroyed, with millions of refugees created, hundreds of thousands of dead. And this, after 12 years of bombings and sanctions, which killed many and destroyed the lives of many others. I could argue that all Americans are benefiting from their country’s exploits without having to pay the price, and that, in today’s world, the imperial machine is not merely the military but a military-civilian network. And I could also say that Americans elected the Bush administration twice and elected representatives who did nothing to stop the war, and the American people themselves did nothing. From the perspective of an American, or an Israeli, or other powerful aggressors, if you are strong, everything you do is justifiable, and nothing the weak do is legitimate. It’s merely a question of what side you choose: the side of the strong or the side of the weak. Israel and its allies in the west and in Arab regimes such as Egypt, Jordan and Saudi Arabia have managed to corrupt the PLO leadership, to suborn them with the promise of power at the expense of liberty for their people, creating a first – a liberation movement that collaborated with the occupier. Israeli elections are coming up and, as usual, these elections are accompanied by war to bolster the candidates. You cannot be prime minister of Israel without enough Arab blood on your hands. An Israeli general has threatened to set Gaza back decades, just as they threatened to set Lebanon back decades in 2006. As if strangling Gaza and denying its people fuel, power or food had not set it back decades already. The democratically elected Hamas government was targeted for destruction from the day it won the elections in 2006. The world told the Palestinians that they cannot have democracy, as if the goal was to radicalise them further and as if that would not have a consequence. Israel claims it is targeting Hamas’s military forces. This is not true. It is targeting Palestinian police forces and killing them, including some such as the chief of police, Tawfiq Jaber, who was actually a former Fatah official who stayed on in his post after Hamas took control of Gaza. What will happen to a society with no security forces? What do the Israelis expect to happen when forces more radical than Hamas gain power? A Zionist Israel is not a viable long-term project and Israeli settlements, land expropriation and separation barriers have long since made a two state solution impossible. There can be only one state in historic Palestine. In coming decades, Israelis will be confronted with two options. Will they peacefully transition towards an equal society, where Palestinians are given the same rights, à la post-apartheid South Africa? Or will they continue to view democracy as a threat? If so, one of the peoples will be forced to leave. Colonialism has only worked when most of the natives have been exterminated. But often, as in occupied Algeria, it is the settlers who flee. Eventually, the Palestinians will not be willing to compromise and seek one state for both people. Does the world want to further radicalise them? Do not be deceived: the persistence of the Palestine problem is the main motive for every anti-American militant in the Arab world and beyond. But now the Bush administration has added Iraq and Afghanistan as additional grievances. America has lost its influence on the Arab masses, even if it can still apply pressure on Arab regimes. But reformists and elites in the Arab world want nothing to do with America. A failed American administration departs, the promise of a Palestinian state a lie, as more Palestinians are murdered. A new president comes to power, but the people of the Middle East have too much bitter experience of US administrations to have any hope for change. President-elect Obama, Vice President-elect Biden and incoming secretary of state Hillary Clinton have not demonstrated that their view of the Middle East is at all different from previous administrations. As the world prepares to celebrate a new year, how long before it is once again made to feel the pain of those whose oppression it either ignores or supports?