Global capitalism in crisis needs to be re-examined

15:03, February 10, 2010      

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The eruption of global financial crisis (GFC) has spurred many people in the Western nations to consider or re-examine the orientation for the development of capitalism, and capitalist society as a whole is sure to bring forth some new changes in the incoming post-crisis era.

In a recent interview with People's Daily reporters, Dr. Iwo Nakatani, an ace economist and the director of the Mitsubishi UFJ Research and Consulting Co., Ltd., or Japan's big think tank, gave his own perceptions on trends of global capitalism during GFC. He noted that the United States turned out half of the total global gross domestic product (GDP) at times in the wake of World War II; it thus became a hegemonic power with prevailing advantages economically and militarily, and took the lead for a period of time globally.

Since the onset of GFC, the prospects and orientation for the development of American capitalism have been a focused topic of debate among governments, academic circles and news media. Amid these heated debates or disputes, Professor Luigi Zingales of the University of Chicago Booth School of Business, and co-author of the book "Saving Capitalism from the Capitalists", has arrested wide attention for his own viewpoints. Of late, Professor Zingales had another interesting new article out, namely, "Capitalism after the Crisis".

Professor Zingales noted that the current economic crisis pointed to the banking system, which constitutes the very core of American capitalism. The crisis under way is destined to alter the relationships between the financial supervision and the role of big banks and the leading market player and, more importantly, to inflict changes in the attitude of the American public toward their system.

The government has all along maintained a heavy hand of social control; … in which "the response to crisis is variously characterized by the rise of … that it provided greater fairness and better access to justice have failed,…" said Luigi Zingales.

Preconditions for the crisis, he acknowledged, and especially the massive rescue tactical measures taken by some financial firms and government departments for banks and big companies have oriented the U.S. toward the direction of the "European combinationism" and even toward more centralization of power; this in turn lands the American-type capitalism in a perilous situation.

According to Yoshihiro Francis Fukuyama, a John Hopkins University professor and co-author of the "End of History and the Last Man", the post-crisis world has not changed much after President Barack Obama's one year in office. He further noted that a flood of good news coming in is actually no good news. By such a rapider recovery, he explained, the U.S. is not meant to seek a long-term solution since it has not been ravaged so seriously to such an extent.

Moreover, in his recent interview with People's Daily reporters, Dr. Jean-Marc Coicaud, the director of the United Nations University (UNU) office at the United Nations Headquarters in New York, maintains that capitalist system is most likely to foil or thwart itself if it lost itself in a "maze" of knowledge.

He owed GFC chiefly to speculation by U.S. banking institutions and also to knowledge deficiency. As a matter of fact, the concept system and related analytic methods of economics in most Western developed nations were led astray in the late 1990s and the early 2000s. It has been ascribed to the erroneous concepts and analytical framework that led to an underestimation of risks caused by speculation and to an overestimation of imposed economic and social values.

The U.S. subprime mortgage crisis of 2008 has developed rapidly, spread into a global economic shock, and triggered the late-2000s economic recession worldwide. And governments around the globe joined efforts and taken prompt, positive measures to cope with it, so that major developed nations, such as Australia, Germany and France, have begun picking up and global economy to stabilize in the second quarter of 2009.

To date, the impact of global financial crisis is still around and the very foundation for the recovery remains relatively vulnerable. A preliminary judgment, nevertheless, tells people that global economy has begun to step into the post-crisis era.

By People's Daily Online
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