Curbs on speculatory finance and an aggressive expansionary fiscal policy are the answers to what has gone wrong in the world today,writes Sunanda Sen.
This case has been compared to the Enron scam in the US, and indeed there are many similarities. These dodgy financial practices can work during a boom, but start to unravel in a slump. As the Indian economy also slows down, as export orders come down, and particularly as auditors and external investors start looking more closely at the books, there may be more unsavoury revelations emerging from the corporate world. If recent experience is any guide, maybe we should start by being especially suspicious of all award-winning companies,writes Jayati Ghosh on the Satyam scam.
Finally it is official. Satyam's Rs 7000 crore corporate accounting fraud has been acknowledged to be the biggest fraud in the history of India's big bourgeoisie. While Enron, an American corporate certainly outdid the who's who in corporate crime in India in recent years, there have been many contenders for the title in the last two decades. Global Trust Bank is still fresh in our memory. In this latest instance, Price Waterhouse Coopers is implicated along with Satyam.
Pragoti brings to its readers three articles by three very noted economists which separately and together establish the role of fraud and dirty money in the history of capitalism in general, and specifically in the context of neoliberalism in India.
While the reaction of the Manmohan Singh clique has been cautious and muted and the BJP has adopted a holier-than-thou posturing but carefully avoided pointing any fingers at the corporate sector, the CPI(M) has demanded that the perpetrators of this fraud be brought to book and called for the safeguarding of the interests of the employees. The CPI(M) statement is appended here.
In a very pointed indictment of policy prescriptions derived from neo-classical economic theories, the author brings out how they contribute towards eroding the institutional bases that constrain 'control frauds' and make markets more efficient. Drawing on certain basic premises in the study of 'criminology', he lays out the manner in which such prescriptions produce strongly criminogenic environments that far from containing endemic “control frauds”, actually lead to whole waves of such systemic failures. With globalization, these crises can transmit to other nations through "contagion" or by causing key international investments to fail. Though neo-classical economists minimize the incidence and importance of fraud for reasons of self-interest, class and ideology , such control frauds are in nature of financial super-predators, causing greater losses than all other forms of property crimes combined. They have actually led to a series of recurrent disasters (as brought out for instance in the cases of Latin America and Russia) that have discredited neo-classical policy nostrums throughout the world and paved the way for 'anti-US' and ‘anti-free market' formations in different parts of the world.
The paper presents an interesting perspective on post liberalization stock market trends during the 1990's in an attempt to look beyond the official picture to identify the possible causes behind the recent surge in stock market indices which have led to an incontrovertible and unprecedented bull run on India's stockmarkets.
For most Indians who, since 1991, got used to a steady barrage of opinion, expert economic advice and political re-education on the scourge of the public sector, the minor corruption, inefficiency and incompetence of sarkari babus in state-run enterprises ought to pale into insignificance in the face of everyday stories from the US of what the private sector and free enterprise can do even when the going is not just bad, but critical.
K P Nayar writes in The Telegraph.
For the neo liberal mandarins of the North Block and the Yojona Bhawan a reading of the latest Guardian column by the Nobel Laureate Joseph Stiglitz would be very much in order.Stiglitz has candidly observed on the refusal of the US Congress to approve the bailout package of the Bush Administration –"A sad day for Wall Street, but it may be a glorious day for democracy ".He has reasoned" In environmental economics, there is a basic concept called the polluter pays principle. It is a matter of fairness, but also of efficiency. Wall Street has polluted our economy with toxic mortgages.