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=Averthanus=
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BACK TO ECONOMIC BASICS.
Averthanus L. D'Souza.
The term "meltdown" is currently used only to describe an
extremely serious destruction of a system. It was first used in the
context of the total destruction of the nuclear power plant in Chernobyl in
the then Soviet Union. Meltdown connotes the destruction, not only of the
exteriors of a system, but also of its very core. In this sense, the use of
the term "financial meltdown" applied to the current financial crisis is
entirely accurate. Popular media describes the crisis in many ways -
financial crisis, economic recession, deep depression, et cetera.
However, the use of the term meltdown describes the situation most
accurately because it best expresses the reality of what is happening to the
international economic system today.
What we are witnessing is not just some dysfunction which has
brought about the collapse of the entire banking system but a more
fundamental flaw in the very foundation on which the entire banking system,
and, for that matter, the entire economic system, has been built. These
fundamentals are simply not compatible with objective realities and have
now proven to be unsustainable. The "meltdown" should cause us to take a
closer look at the very basics on which the Industrial Economy has been
constructed.
Economic collapse and moral values.
The economic system has been built on the principle of
"production." Every aspect of the economy is driven by the need to
"increase production." Over the last few decades we have witnessed an
unprecedented emphasis on the need to increase production and to improve
productivity. Governments have set up and fostered National Productivity
Councils and have provided incentives to increase productivity. This has
involved the large-scale exploitation of natural resources - mineral,
marine, fossil and even human. Everything, including human beings, have
been treated as resources to increase production. All the so-called "Human
Resources Development" programmes have been aimed at maximizing the use of
human resources in the productive process. By a strange twist in the
nightmare of production, human beings have also become necessary as
"consumers" of the very goods which they produce. Thus the system has
created the need to bring about the unification of production and
consumption. It is best represented by the image of the serpent which is
swallowing its own tail. In reality, we have created an economic system
which is self-destructive.
The present economic system requires the destruction (or
"exploitation") of resources which are not renewable. Many scientific
studies undertaken over the past four decades have conclusively shown that
at the rate at which we are exploiting non-renewable resources, we will
reach a dead end in less than a hundred years. Coal, oil, lignite and
other minerals will soon be exhausted. Even now, the cost of recovering
these resources has become uneconomic. However, we still, foolishly,
persist in pursing the unattainable goals set by myopic economic theories.
The present economic system, backed by the financial system, has continued
to blow the bubble beyond its capacity to sustain the pressures. Like any
other balloon, the economic bubble has finally burst, with all the negative
consequences which we are now experiencing. However, we have distorted our
perception to such an extent that we fail to see that we cannot put Humpty
Dumpty together again even if we galvanize all the king's horses and all the
king's men. Injecting billions of dollars into a system that has
collapsed is precisely the wrong thing to do. What the world needs is an
alternative.
Gandhi and Schumacher.
The signs that our industrial economy was not sustainable was
evident to several wise men, most prominent among whom were Mahatma Gandhi
and Ernest Schumacher. In his epoch making book "Small is Beautiful"
written in 1973, Schumacher outlined his economics "as if people mattered."
He was following in the footsteps of Mahatma Gandhi who was convinced that
all production activity should be for the benefit of Man. His saying that
"there are enough resources to meet everyone's need, but not enough to
satisfy everyone's greed" is often quoted loosely without a proper
understanding of the underlying philosophy. Gandhi and Schumacher
distinguished between misery, sufficiency and surfeit. According to them,
no individual should suffer deprivation of the most basic necessities of
life. On the other hand, they both asserted, a surfeit of commodities
would result in economic disaster. Schumacher argued that economic
growth would be good only to the point of sufficiency. Limitless growth
would be disastrous. How true their understanding has proven to be!
The economics of Gandhi and Schumacher was based on the use only
of renewable resources. The world has been rudely awakened to this
realization only now because of the economic meltdown which it is facing.
Humankind has been reckless in its "exploitation" of the earth's resources.
We have been wasteful of the resources which have been given to us by God
for our sustenance. What is staring us in the face is a catastrophe of
unprecedented proportions. Our pride has blinded us to the consequences of
our actions. We have chosen to ignore the truth that men are not the
masters of the universe; but that Man has been placed in a position of
stewardship over the bountiful resources of Nature. Good stewardship
requires that we use our resources prudently and sparingly. Profligacy is
not only an individual sin, it is also a social sin. And social sin has
its inevitable consequences as we are witnessing today.
Economics and Social Order.
Another major error which humankind has made is to
compartmentalize social life into impenetrable sectors. Economics has been
severed from politics and politics from sociology. We look at the economic
problem in isolation from the social, cultural and ethical dimensions which
are integral to the system. We have overlooked the fact that bad
economics also has negative health consequences. The principle of
excessive production has led to the widespread consumption of junk food, for
example, which, consequently has led to the worrying problem of obesity in
children, and hitherto unknown spread of pediatric diabetes. The
blinkered approach of health workers fails to make the connection between
bad health and a flawed economic system. Economics is not just about
money. It is also about the health of the community. Very few people see
the connection between a failing economic system and the increase in
violence in society. Mental health is as much a concern (or should be) of
Economics as the financial health of the banking industry. The two are
closely interrelated. It is for us to make the connections, and to
understand the proper relationships.
Above all, the current economic meltdown should awaken us to the
realization that what we need is not just an alternative economic system,
but a radical overhaul of our ethical system. Call it a cultural
revolution, if you like. Our individual and social values are at stake.
What we need is an urgent revitalization of our ethical principles which, in
the final analysis, determine the nature of our economic, political,
educational and social systems.
= end =
Averthanus L. D'Souza,
D-13, La Marvel Colony,
Dona Paula, Goa 403 004.
Tel: (0832) 2453628.
