Special Correspondent

“Restructuring capitalism solution ”

Reactivate nation state, says

Prabhat Patnaik

Kerala government must act: Vijayan

THIRUVANANTHAPURAM: CPI(M) Polit Bureau member Sitaram Yechury has said that the global financial crisis is systemic rather than the fallout of the greed of a few or the failure of regulators as was being made out by many.

“This crisis is endemic in the very functioning of the capitalist system and capitalism can come out of it only by restructuring itself,” Mr. Yechury said while inaugurating a seminar on ‘Global financial crisis and its impact on India,’ organised by the AKG Centre for Research and Studies here on Tuesday.

The danger inherent in any such attempt at restructuring capitalism was that it would be at the expense of labour, he said and added, “We in the Left had anticipated this crisis, but we are not happy that our vindication is at the expense of misery of millions.”

The CPI(M) leader said that attempts to increase liquidity in the economy by itself would not solve the problem. The UPA government, he pointed out, was pumping in more money into the economy without realising that it was the insolvency of the borrower that had led to the present crisis. “The government is now targeting to strengthen the lender. This will only make matters worse. You must strengthen the borrower. What is needed now is a high dose of public investment and not high dose of liquidity,” he said.

Addressing the seminar, noted economist and Kerala State Planning Board Vice-Chairman, Prabhat Patnaik, said the need of the hour was reactivation of the nation state and cautioned that financial capitalism’s way of tackling the global economic crisis would also be a way that generated financial fascism. The Left, he said, must remain vigilant about such a danger.

Pointing out that capitalism was moving from one bubble to another over the last one decade and more, Professor Patnaik said that had there been better regulation, the stock market bubble, the dotcom bubble and the asset bubble would not have happened, and recession would have set in earlier as the root cause of the malady was structural and systemic.

Professor Patnaik said the crisis could be overcome only by generating greater demand, the basic stimulus for which should come from the government. The Left, he said, must press for an increase in government investment that would make a difference in the lives of the ordinary working people. This would have to be accompanied by some control on financial flows and trade.

Earlier, chairing the seminar, CPI(M) State secretary Pinarayi Vijayan said the global crisis would have a serious impact on Kerala’s economy. Traditional industrial products of the State such as cashew, spices, coir and handloom products, which had the U. S. as their major market, would suffer a sharp fall in demand. Seafood exports would also suffer for the main reason.

Tourism and IT industries were also likely to suffer serious setbacks on account of the meltdown and, since the Centre was not prepared to step in to help the State tide over the crisis, Kerala would have to devise its own ways to tackle the situation. The State government must make greater investment in infrastructure in order to strengthen the economy, he said.

Earlier, Education Minister M. A. Baby said the situation called for a serious study, given the magnitude of the crisis and its potential impact on the State’s economy.