'MEDIA LENS: Correcting for the distorted vision of the corporate media
February 7, 2008
MEDIA ALERT: ‘CREATIVE DESTRUCTION’ – THE MADNESS OF THE GLOBAL ECONOMY - PART 2
Exchange With The Independent’s Hamish McRae
In Part One of this alert, we noted an observation made by Hamish McRae, economics columnist at the Independent:
“Bankers, like the rest of us, make mistakes, but the scale of the mistakes, particularly in US banks, has been enormous.” (McRae, ‘The markets are bad, but don’t panic just yet’, The Independent, January 23, 2008)
We asked him why he talked merely of “mistakes”, adding:
“Why are the terms of your analysis so narrow; so skewed towards the perspective of financial power?” (Email, January 23, 2008)
As an alternative, we suggested a few observations made in Part One; in particular, that the current economic system is both innately unstable and destructive. We asked McRae why he appears to reject such a rational analysis. On the same day, he wrote back confusingly:
“Thanks - I see your point. I suppose I feel I should deal with the world as it is, rather than as it might be. Is that narrow? Well, yes if you are seeking a discussion of the merits and demerits of the present global market economy, but no if you are trying to understand and calibrate what is actually happening. I think I am probably more use doing the latter.”
We responded:
“You say: ‘I feel I should deal with the world as it is.’ Perhaps it would be more accurate to rephrase this as: ‘I feel I should deal with the world as I see it.’”
His reply, sent as he was about to head for the World Economic Forum in Switzerland:
“Not sure - let me think about it. But in all earnestness I do think that you should not discount the huge progress made in India and China in lifting people out of poverty. I visited both in recent months and am in awe. I shall have to stop this interchange as I have to pack for Davos now.”
But just how accurate is McRae’s observation of the “huge progress made in India and China”, a mantra that appears regularly in the corporate media?
India And China: The Latest ‘Success Stories’ Of Capitalism
Cheerleaders for capitalism are keen to advertise the system’s ‘successes’. Earlier, model countries were said to include Japan, South Korea, Malaysia and Thailand. But that was before the East Asian financial crisis of 1997-98. India and China are today’s poster states for capitalism.
Some progress in these countries is real. However, as we noted before, any social progress under ‘neoliberal reforms’ has not been sustained and, moreover, has been to the detriment of people losing out elsewhere in the global economy (not to mention the damage to global ecosystems).
Another important factor, glossed over in conventional reporting, is that massive state intervention and subsidies have been required to ameliorate the worst consequences of ‘shock therapy’ in following neoliberal doctrines of ‘market reforms.’ Political economist David Kotz notes that China’s strategy of opening up its economy since 1978 “bears almost no resemblance to the neoliberal approach followed by Russia.”
For example, government price controls were lifted only gradually in China. Also, the large-scale privatisation of state-owned enterprises, upon which many people depended, did not begin until 1996, 18 years into the transition. The state continued to direct and support large state enterprises, only gradually loosening its regulation as experience grew of operating in a market environment.
Public spending and public investment continued to grow, rather than shrink as in Russia. China did not privatise its banks, as Russia did, but retained a state-controlled financial system. And rather than rapidly eliminating barriers to trade and capital movements, China has retained significant controls over both. (Kotz, ‘The Role of the State in Economic Transformation: Comparing the Transition Experiences of Russia and China’, Political Economy Research Institute, University of Massachusetts at Amherst, October 1, 2004; http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_51-100/WP95.pdf)'
February 7, 2008
MEDIA ALERT: ‘CREATIVE DESTRUCTION’ – THE MADNESS OF THE GLOBAL ECONOMY - PART 2
Exchange With The Independent’s Hamish McRae
In Part One of this alert, we noted an observation made by Hamish McRae, economics columnist at the Independent:
“Bankers, like the rest of us, make mistakes, but the scale of the mistakes, particularly in US banks, has been enormous.” (McRae, ‘The markets are bad, but don’t panic just yet’, The Independent, January 23, 2008)
We asked him why he talked merely of “mistakes”, adding:
“Why are the terms of your analysis so narrow; so skewed towards the perspective of financial power?” (Email, January 23, 2008)
As an alternative, we suggested a few observations made in Part One; in particular, that the current economic system is both innately unstable and destructive. We asked McRae why he appears to reject such a rational analysis. On the same day, he wrote back confusingly:
“Thanks - I see your point. I suppose I feel I should deal with the world as it is, rather than as it might be. Is that narrow? Well, yes if you are seeking a discussion of the merits and demerits of the present global market economy, but no if you are trying to understand and calibrate what is actually happening. I think I am probably more use doing the latter.”
We responded:
“You say: ‘I feel I should deal with the world as it is.’ Perhaps it would be more accurate to rephrase this as: ‘I feel I should deal with the world as I see it.’”
His reply, sent as he was about to head for the World Economic Forum in Switzerland:
“Not sure - let me think about it. But in all earnestness I do think that you should not discount the huge progress made in India and China in lifting people out of poverty. I visited both in recent months and am in awe. I shall have to stop this interchange as I have to pack for Davos now.”
But just how accurate is McRae’s observation of the “huge progress made in India and China”, a mantra that appears regularly in the corporate media?
India And China: The Latest ‘Success Stories’ Of Capitalism
Cheerleaders for capitalism are keen to advertise the system’s ‘successes’. Earlier, model countries were said to include Japan, South Korea, Malaysia and Thailand. But that was before the East Asian financial crisis of 1997-98. India and China are today’s poster states for capitalism.
Some progress in these countries is real. However, as we noted before, any social progress under ‘neoliberal reforms’ has not been sustained and, moreover, has been to the detriment of people losing out elsewhere in the global economy (not to mention the damage to global ecosystems).
Another important factor, glossed over in conventional reporting, is that massive state intervention and subsidies have been required to ameliorate the worst consequences of ‘shock therapy’ in following neoliberal doctrines of ‘market reforms.’ Political economist David Kotz notes that China’s strategy of opening up its economy since 1978 “bears almost no resemblance to the neoliberal approach followed by Russia.”
For example, government price controls were lifted only gradually in China. Also, the large-scale privatisation of state-owned enterprises, upon which many people depended, did not begin until 1996, 18 years into the transition. The state continued to direct and support large state enterprises, only gradually loosening its regulation as experience grew of operating in a market environment.
Public spending and public investment continued to grow, rather than shrink as in Russia. China did not privatise its banks, as Russia did, but retained a state-controlled financial system. And rather than rapidly eliminating barriers to trade and capital movements, China has retained significant controls over both. (Kotz, ‘The Role of the State in Economic Transformation: Comparing the Transition Experiences of Russia and China’, Political Economy Research Institute, University of Massachusetts at Amherst, October 1, 2004; http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_51-100/WP95.pdf)'
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