Geopolitics

Will the US rediscover its role of a responsible capitalist power after the twin wars and devastating financial crisis?

In this very probing article from http://www.oilprice.com/, author Gregory R. Copley, discusses the fallouts of the latest financial crisis and the military adventures, in terms of the weakening status of the US as a super power. Is the US the modern Roman Empire? Can wealth and military power forever maintain the superpower structure? Author has some interesting conclusions where he lays out the much-needed strategic mindset to navigate in this post-crisis, transformed world.

Author asks this question:

“The question is whether this current process through which the US is going must inevitably be played to a conclusion which sees the US itself — as the Roman and Hellenic and Mongol and British and Netherlands and Soviet empires once were — broken apart or reduced to modesty among the ruins of grandeur? It is not. Nothing is written which cannot be re-written.”

What changed the communist bloc in the aftermath of the cold war? How did the defeat transform PRC and Russia? Copley has an interesting explanation:

“The Russian Federation’s grand strategic growth began only with its recognition that it was forced, with the death of the Union of Soviet Socialist Republics (USSR) in 1990-91, to put aside the pretensions that it had been a superpower. The defeat of the USSR-led bloc by the US-led bloc, which determined the end of the Cold War, engendered in Moscow the deep reflections and reorganizations, which only defeat can bring. Russia, with this realization, was able to revive the strategic momentum, which had been thwarted by the 1917 Revolution.

The West, and particularly the United States after the end of the Cold War, wallowed in a condition even worse than defeat. It wallowed in victory.

With defeat comes the ability — indeed, the license, mandate, and demand — to sweep out failed or obsolete institutions; to scour out the sclerotic accumulation of laws and bureaucratic procedures; and to purge the perpetuation of the kind of strategic insensitivities which had led to defeat. With victory, no such license is granted, and the presumption of superiority reinforces and compounds ancient structures. It does, however, reinforce the thinking and architecture, which had led to victory. Further, victory it leads to the excesses of those who ride to power on the exhausted backs of those who, in fact, had created the victory.”

…

“Thus, in relative terms, post-Cold War, Russia and — in a different fashion — the People’s Republic of China (PRC) learned, re-organized, and began the process of rebuilding their societies, less hampered by the earlier constraints of state structures. They prepared for a new world, and acted accordingly. They learned from history, ancient and recent. The West — but again, particularly the US — engaged in no such introspection; did not bow to the humbling workload of reconstruction; and was left hidebound by institutions which had acquired the towering and massive strength of fortifications built for a war long past.”

And what is west suffering from? Copley says, “the Saudi disease”

“Wealth and identity, while being built, demand absolute self-awareness, discipline, and a constant understanding of context. Wealth, when it is being spent, is blind to everything but self-gratification. I once called this “the Saudi disease”: I am wealthy, therefore I am smart. It is now the Western disease. And the West will continue its decline until it has sunk so low, spent so much, that it is forced and humiliated into self-review. Even alcoholics — those who admit their condition — are aware of this phenomenon.”

Excellent observation combined with analysis, Copley points out the potential alliances that may be forged between US and India, power structures in the Atlantic, Pacific and Indian Ocean.

Read the article at:

http://www.oilprice.com/article-the-us-finds-its-superpower-structure-and-capital-are-insufficient-to-cope-with-a-transformed-world.html

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Starting Point

Capitalist's Dharma

Couple of years ago, when I was still in my MBA program, I had an interesting exchange of thoughts through a series of emails, with a member of my project team. The topic was the economic systems of the world. I believe he had somewhat a libertarian streak in him. He was in support of laissez-faire market economy whenever US policies were in question, yet had some reservation toward free trade. Our debate lingered on for few days mostly him trying to stubbornly defend the virtues of capitalism in its current form, and me trying to profess the beauty of combining the best from all possible ideas instead of rigid adherence to an ideological viewpoint. Somehow, I had a feeling that he thought I was a socialist.

It is sad that good, intelligent people become so intellectually rigid, that they hide behind labels, which prohibits them from seeing the benefits of middle ground. It also makes them dumb enough not to grasp the importance of certain thoughts, theories and ideas within the context of the times in which they are profoundly relevant. What I mean by that, is, while we don’t need to adhere to Keynesian economics in every situation, it could have its relevance in certain times, as the best solutions to the prevailing problems could emerge from Keynes’ economic theories. But wait, isn’t giving credence to Keynes is like embracing socialist policies, as government is invariably “messing” with free markets? The problem is, we are in a world where free market proponents are always suspecting government motives and actions to uplift the powerless in the society while on the other end of the spectrum, the so-called staunch socialists who see nothing but satanic soul in every capitalist. Does anybody care that we humans are incapable of transcending the dualities that exist in every facet of our lives? Why do we have to always emphasize the difference, instead of joyfully experiencing the beauty of unitive nature notwithstanding such dualities? Dharma is simply rediscovering that essential nature we were born with, which will help us to transcend the dualities we struggle with. It is gratifying to know that we have examples of highly successful capitalists amongst us who have lived by this dharma, created wealth, improved the lives of thousands around them and all by exemplary set of actions without a tinge of greed. Narayan Murthy, the founder of IT giant Infosys, is one such luminary.

Let me make one thing clear. I have nothing against free market economic system. In fact, I am fascinated by the way markets regulate themselves. Free markets provide the best possible conditions to achieve material progress. I think wonderful things have happened in this great nation of ours exactly because of the unleashing of human entrepreneurial potential. Capitalism has worked here to such an extent that the countries around the world have bought into the idea of liberalizing their economies and done away with socialist agenda; China and India are prime examples. But my worrying mind is troubled by the huge economic imbalances created by this very system, which promises to lift millions out of the grip of poverty. Many believe that the economic divide between the rich and the poor in the US has reached scandalous proportions. Can this imperfect system, tarnished by its capacity to wreak havoc as evidenced by the financial crisis, sustain itself with its emphasis on self-interest? Is my MBA friend who fiercely argued for an Ayn Randian kind of system, where only those with superior abilities and their self-interests should triumph and rest should suffer (he didn’t say that, I inferred) as if they were social parasites worthy of elimination from the system, correct? Is Darwinian model the right one for humans with such great capacity for compassion?

This debate took place when the US economy was still buzzing in a Kudlowesque “Goldilocks” economy. While I had read enough by that time to expect a major financial crisis of global proportions, my friend was still stuck on the greatness of this unbridled capitalist system, which allowed those who were in positions of power to indiscriminately take risks with other people’s money to rake in millions of bonus money. Yes, self-interest, at its best! So, even though, economy was doing fine, the leveraged world of financial markets was writing a nasty script that included millions of ordinary, hardworking Americans losing jobs in panic firing by corporate America! Is that “creative destruction?” Can capitalism sustain itself if some within this system get richer and powerful with every tiny effort while rest get crushed despite their gargantuan efforts to stay afloat and sustain their livelihood?

I believe in capitalism, but one that is humane and accommodative. Capitalists have to perform their functions with a clear understanding of human dharma—dharma that brings to fore the essence of what makes humans a superior life form. While self-interest drives people to action, every capitalist should measure the success of his action by the positive impact on society. Wealth accumulation should be a by-product of one’s honest hard work—Warren Buffet style—and, not the result of the ruin of many others, a la Madoff. But, unfortunately, crony capitalism leads to monsters like Madoff to game the system and sustain their lavish lifestyle for a long time. In the meantime those of us who struggle to get good education, work hard to realize some of our dreams, live by the rules that only apply to the powerless in the society, and nurse a reasonable dream of dignified life, face a potential life-altering failure with one crisis precipitated by these greedy crooks. Ordinary people, despite all their good intentions, by the sheer burden of such failures, experience “experimental neurosis”—a state of inertia experienced by laboratory animals when they are faced with a sudden new environment, which renders them unresponsive to stimuli. A system that renders the majority of its productive population into such state of inertia can degenerate into economic chaos and destabilize everything. Our capitalist system is reaching that dreadful stage where things can quickly reach an inflection point and destroy all the great things that are part of a capitalist society, in no time.

So, my solution is, it is time to rebuild capitalist society with a different emphasis. While self-interest could still be a reason for one’s action, it should be enveloped by a motive that seeks greater good of the society and not its misery. This is not all that idealistic, actually. One has to let human dharma to guide one’s actions, control one’s greed, and evaluate consequences, and then follow-through by weighing the outcomes of one’s actions. When we are mindful of these principles, we will be socially responsible. We will not be less competitive or shy of employing all our God-given abilities to create wealth by adhering to these principles; in fact, we will thrive because rest of the world will benefit from our actions.

Yeah, I know, this still sounds very idealistic. But, being hopeful of a better world for its entire inhabitants is one that I don’t mind writing about.

One last thing, I am sure, that friend of mine from MBA, has changed his mind and his rigid views about capitalism after watching the economic devastation in the wake of global financial crisis.

Should every economic cycle bring such suffering to so many? Can we limit the swing of the pendulum to an inch to the right and an inch to the left?