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Financial or Multi-Dimensional Crisis?

By M. Nadarajah

Going Down

‘ Private equity company Blackstone Group LP (BX.N) CEO Stephen Schwarzman said on
Tuesday that up to 45 percent of the world’s wealth has been destroyed by the global credit
crisis. “Between 40 and 45 percent of the world’s wealth has been destroyed in little less than
a year and a half,” Schwarzman told an audience at the Japan Society. “This is absolutely
unprecedented in our lifetime.” ’ (Reuters, 12 March 2009)

Permanently in Crisis

The very poor communities across the globe are in ‘a permanent crisis’ from a class and crisis
perspective, because that is the way the mainstream global economic structure and process
works. Even for many analysts and academics, there cannot be a situation when we will not
have the poor among us. They insist that there will always be poor among us as a given. And
that is ok even though they are, in a sense, in a perpetual crisis -- no permanent shelter, no
food security, no regular contractual jobs and no secured future. No problems with that!

Somehow their suffering is never seen as a crisis. It is a given part of the system, and we are
hardly shaken by it. The billions in this reality are never a focus of the mainstream media.

For the poor, crisis is the way life is, and they handle it for themselves and their families on a
day-to-day basis. Every day is an uphill task and for hundreds of thousands of people
(including many children) across the globe, this could mean going to bed hungry.

It is estimated that more than 1 billion people are chronically hungry across the world. For
millions of people, there is already no food security. Even in the supposedly wealthy US, it is
estimated that about 35 million Americans do not know where their next meal would come
from! Not that there is not enough food to provide for the hungry people of the world - it is
just that they do not qualify for the food as they are not part of the ‘demand’ to consume the
available ‘supply’ (of food)!

Perhaps from such an angle, the much internationally-acclaimed but locally-criticised (in
India) Hollywood-Bollywood film Slumdog Millionaire is a soft critique of the mainstream
economics and celebration (and to a good extent, romanticism) of the spirit of poor people
who are always in the state of ‘permanent crisis’ but creatively trying to deal with it. Of
course it does not offer a solution as much as a dream or fantasy.

The Periodic Crisis

For those who have been gainfully employed, the middle classes, entrepreneurs, financial
wizards and bankers, etc., the present economic downturn is a damning crisis. It is not the

way their life should be. Furthermore, the mainstream media are bent on presenting this crisis
in all its drama. News on this hot topic sells anyway.

Crisis is a crisis. People have a bad time. The human cost of the present crisis is really pain
and more pain for the group mentioned above. For instance, economic crisis-related suicides
have increased across the globe. Japan, which has the highest number of suicides in the
developed world, has recorded in excess of 30,000 suicides for 2008, i.e. over 25 suicides per
100,000 persons. There is a general increase in suicides in Asia as in the 1997 Asian financial

In countries like Australia and the US, the matter is getting bad. Special units and suicide
hotlines are being set up to deal with depression and suicidal tendencies caused by the
economic slowdown. In Australia, between October and December 2008, there has been a 34
percent rise in suicide-related calls for help because of financial pressure related to the crisis.

Millions of people have lost their jobs across the world. More millions are expected to lose
their livelihoods. According to a ILO report, the labour market projections for 2009 shows
definite deterioration in the global labour markets for both women and men. Two scenarios
are given. In the best-case scenario, 18 million jobs would be lost, which would amount to a
global unemployment rate of 6.1%. In the worst-case scenario, there will be a loss of more
than 50 million jobs, which would equate to a rate of 7.1%. Of this, about 21 million would
be women. If the worst-case scenario happens, the number of poor working people who will
be unable to earn enough to lift themselves and their families above the poverty line (USD2
per person per day) may rise to 1.4 billion. This is nearly half of the entire world’s employed.
Further, some 200 million workers earning USD1.25 or less a day, mostly in developing
economies, could be pushed into extreme poverty.

The periodic crisis makes it even more difficult for those in the “permanently in crisis” list.

And Now, Finding the Cause of the Crisis …

The economic crisis has now offered the world a new intellectual enterprise, and it is gaining
strength. From across the political spectrum, analyses of causes of the present financial crisis
and economic downturn are being offered and, in the same breath, solutions are being
presented. As it can be expected, some of these solutions, particularly from the right, are
being sold. For many, the economic crisis, of course, offers business opportunities! `

The Chinese term for crisis captures within its meaning domain both the notion of ‘danger’
and ‘opportunity’. The intellectual response to crisis has also provided both these elements.
The only difference is that way opportunity is perceived.

Just walk into any popular book and you will see many, many books from across the political
spectrum -- from the 'free market' theorists to the 'new imperialism' ones -- available for your
consumption, not only to understand the crisis but also to address it, both immediately and in
the long term. Radicals to Nobel laureates to pop management gurus generously offer their
thoughts and solutions. There is a resurgence of Marxist/socialist theories. If one has been
following the intellectual output during the various crises from the distant and/or recent pasts,
it is easy to find rehashed arguments and solutions just as much as you will find some writers
who have been consistent in tracing and monitoring these crises and predicting future ones.

Looking more closely, one group just wants to look at the sub-prime mortgage crisis in the
US, and to deal with the present crisis from that starting point since it kicked up the whole

problem for the US, European and global economies. They want to re-examine financial
regulation nationally and globally, tighten it, do more tinkering to the present system and
move on. It is business as usual, with, of course, some tweaking here and there. In fact, a
crisis is seen as a portal to more economic opportunities.

The other group, looking at the crisis more historically, wants to go beyond the crisis. They
look at sub-prime mortgages as only one of the many responses to inherent structural
problems of the global economy based on the profit-only bottom line tendency (and on the
appropriation of value produced by one group by another group). For many among this group,
the present problem has its roots in the period after the end of the Second World War and
begins with the post-war economic reconstruction of Japan and Germany/Europe. They want
us to re-examine and fundamentally change the way we organize our economy and manage
our society.

Perhaps a revealing analysis is the fact that from post-World War II onwards, there has been
progressive degeneration of the ‘real economy’ and progressive growth of the ‘finance
economy’. Real wages, productivity and demand have fallen or shrunk. With many new
locations of increased production and capacity, we are also now faced with the problem with

Over the years, political, industrial and financial leaders have tried many ways to deal with
these long-term structural economic problems. Even while addressing a complex of needs, the
dot com bubble, global war on communism then and terrorism now, Afghanistan and Iraqi
wars and their reconstruction efforts, and huge sub-prime mortgages in the US were, in the
main, all attempts to deal with the problems of national and global economies. Political and
economic leaders were looking for ways to prop up economic activity...any how. While in all
of the above efforts, the US acted as a leader, a transnational group of entrepreneurs from
across the globe benefited.

It is instructive to know that using war to benefit national and global economies is certainly
inbuilt into the mainstream economic system. It is central to financing and sustaining the
‘American dream’, which has bursted out of the borders of the political entity that is USA and
become a powerful globally available and appropriated cultural idea.

Even so, all these could not really arrest the coming of the present crisis. The sub-prime
mortgage crisis in the US has taken the world towards a disaster that it is waking up to.

Real productive enterprises provide goods and service that do something better than what
existed previously: creating jobs and increasing productivity and overall efficiency. Economic
growth and progress in the real world take place because of ‘product entrepreneurs’ and the
labouring community who make profit or earn wages, invest these earnings in creating new
products or enterprises, or in consuming the produce of the real economy. According to one
UN Report, since 1980, ‘economic decline or stagnation has affected 100 countries, reducing
the incomes of 1.6 billion people. For 70 of these countries, average incomes are less in the
mid 1990s than in 1980, and in 43, less than in 1970’.

For now, the real economy, which supports real people, their wages, production of real goods
and creation of value, is in bad shape. Stagnation in the real economy has resulted in investors
promoting the ‘financialisation of the economy’, a strategy to make money ‘out of
nothing’...some sort of economic voodooism!

Financial institutions are creating profits out of nothing. Trillions of dollars have been created
out of nothing and there is a huge financial world out there that operates solely on it. It is just
an empty world that solely plays on the rise and fall of trends within paper-money markets. If

that amount was really available and justly distributed in the real economy, we would not
have poor people going to bed hungry.

Financial entrepreneurship has become more dominant in the national and global economies.
As many creative minds are absorbed by the war economy to support wars, entrepreneurial
creative minds are being tapped by financial institutions to create various financial
instruments of ever-fancier derivatives, collateralized loan obligations, mortgage-backed
securities and bonds. These are strategies to create not value but just profits.

Competition in the financial economy is often a zero-sum contest. For every investor or
speculator who wins, there’s another who loses. It builds a ‘fictitious world’. But competition
in the real economy generates creativity, better products and consumers. It builds the real
world, however badly organised that is. .

We have all consciously or unconsciously participated in creating the fictitious world. Today,
the fiction is breaking up and coming to bite us ... with a vengeance. The real economy is
going to ensure that this bite is a really hard one so that all of us would remember it!

Aren’t We Facing a Deep Cultural Crisis?

The present economic philosophy is gearing the world towards its slow destruction. The
central tendency that drives us is profit and, closely associated with it, greed. Making profit
anyhow is a value. That has become the basis of social life, and it influences every aspect of
our everyday life expression. Our notion of progress, performance, success and achievement
is also influenced by it.

Even within this profit-bottom-line economic framework, instead of paying attention to the
real economy, we have allowed the financial entrepreneurs to lead. This has not only affected
the real economy entrepreneurs who have been disciplined and held prisoners on the results
for the ‘quarter’ but also heightened the drive to achieve profit from ‘nothing’. Now, we are
all floating on fictitious capital and building fantasy worlds on a foundation of ‘nothingness’
generated by the vacuous values of speculated futures.

All these have gone on for years deeply affecting Earth and all lives. Without serious attention
to ‘deep sustainability’ in an all-round sense (not just in an ecological sense but in terms of
socio-cultural life, politics, economics, and technology), we have been moving towards
‘multi-dimensional crises’. The scant real attention to sustainability by mainstream economic
activity and contemporary entrepreneurship have caused Earth and human societies great
harm and continues quite unabated.

Indiscriminate consumption without any sense of limits has pushed us towards an ecological
crisis. In addition, the push of the darker side of the ‘American Dream’, which is based on
consumption and more consumption, needs resources of about 6 more earths to match
American consumption levels for the whole world. We are already living on resources of the
future generations!

The present global unsustainable economic activity is also based on the benefits of a
‘permanent war economy’; wars will be invented, which directly depend on labour and
creativity for the production of weapons and on sound strategies for killing human life. This
also involves hurting the environment in such episodes of violence. US war on terror could
cost about $2.4 trillion by 2017 and many entrepreneurs see it as an investment in American
security. This could progressively mean more of what was once seen as ‘war of independence’

within nations or regions being re-designated by media and foreign policy as ‘war of
terrorism’ so that we can invest in them.

In addition, the present economic structuring of society contributes to inequality of haves and
have-nots, which expose huge sections of the human population, including children, to “a
permanent crisis”. And, many more to periodic cycles of economic and financial crises.
According to a 1999 United Nations report, ‘the income gap between the fifth of the worlds'
people living in the richest countries and the fifth in the poorest doubled from 1960 to 1990,
from 30 to I to 60 to 1. By 1998, it had jumped again, with the gap widening to an astonishing
78 to 1’.

In a deeper sense, and as a growing critique of the indigenous people movement of the
dominant economic development paradigm, we have lost touch with the older holistic
cosmology to the present ‘capitalo-centric’ one. While the former created a culture and
mentality of very close relationship between Nature and Society, the later separated them to
the detriment of both. While the former created a deeper sense on ‘inter-being’ marked by
mindful inter-connectedness of all creations, the latter fashioned us into islands and as a
species that dominates all living and non-living Nature and plays God. In this context, it is
interesting to note that there is a growing popular cultural theme, to some extent generated by
Hollywood films that depicts the human species as a parasite or a virus that needs to be
controlled or exterminated for the planet to survive!

The dominance and arrogance of the capitalo-centric culture and mentality are certainly the
basis of all economic/financial crises. But today this crisis must be seen together with all
other crises we have brought upon ourselves: ecological crisis, a crisis in legitimacy and
democracy and socio-cultural crisis. This is a period when we have to come to terms with
‘multi-dimensional crises’.

If you make a cursory examination of the online religious/spiritual interventions in addressing

the present crisis, the focus is on the critique of values that animate us and the career of those
values and on the need to re-evaluate our values orientation. However, mainstream
institutional efforts today are directed only at seeking to treat the symptoms of a deeper socio-
cultural crisis.

By design or default, a vast majority of us has chosen to ignore a deeper solution to the
multiple crises-prone economic system we are in. A deeper solution would result in
dismantling the basis of economic and political power, re-organising production, ownership
and distribution of wealth, and re-structuring legitimacy and leadership for a global society
based on principles of authentic justice, equality and freedom. There is much to lose and too
many institutional changes for some very powerful people, corporations and institutions.

We, as governments, simply do not have the will to do it. Even with the growth of all kinds of
philanthropy, including corporate philanthropy, global multiple bottom lines initiative and
social codes of conduct, the hand that claws in, grabs and takes just refuses to become a hand
that nurtures, protects and gives. That requires a massive cultural shift.

‘Going Down’ as Part of the Script of a Global Human Drama

So, in the meantime, as the history of economic/financial crisis cycles goes, we will
eventually come back to where we are today, maybe in another 10 to 15 years. The crisis then
may not be as serious as today. It will be just another episode with its own specificities in a
global human drama series that seems to continuously deny itself an all-together new season

with a different breed of producers, authors, cast and crew. It is like watching some
Hollywood or Bollywood film: we really know what is going to happen, but we still watch,
don’t we?

* Originally published as an opinion piece in an online newspaper, Malaysiakini, April 2009

Dr. M. Nadarajah is a sociologist by training. He belongs to the Asian Public Intellectuals

(API) Community, a community of filmmakers, theatre people, songwriters, poets, activists
and academics working in Thailand, Malaysia, Indonesia, Philippines and Japan for a
sustainable Asia. His work focuses on cultural and sustainability issues. He lives and works
from Kuala Lumpur, Malaysia. Email address: