Friday, January 16, 2009

Capitalism Fundamentalist

I have often mentioned that the balance of power between corporates and citizens is misaligned. Naomi Klien in her book The shock Doctrine Rise of Disaster Capitalism tries to examine that same issue. Here is Naomi in interview with Charlie Rose. There are three different issues involved. First, corporations do get favoured status v/s the citizens and that hurts vast majority citizens to favour a few. Second, this is usually forced at the time of crisis. Third, usually government is the one that enables the favouring of status.

Naomi, further, gets into a debate with Milton Friedman's ideas. However, in certain areas, she does mention that she is simply against this collusion between governments and MNCs. Ithink this is playing wrongly on the word "shock" and mis-construing Milton Friedman. Kindly note that I do not fully endorse Friedman's policies but I agree about his views on difference between "intent" and "experience" of soft-hearted well-meaning policies. Austrian Economists has post on Milton Friedman's arguments against Naomi Klein in the video editing (there are 6 other videos if you like this one).

Charlie Rose asked her about India and China - she does mention about China but ignores India. India is real example as it followed the traditional middle-ground between socialism and capitalism. Indian constitution states the country as "socialist". And Indian experience shows correct example of her first quote "Only a crisis actual of perceived produces real change - when the crisis hits the change depends upon ideas that are lying around." India is a classic case of this being done in right fashion. Indian 1991 balance of payment crisis led us on reform path that has put more people out of poverty than 40 years of semi-socialist administration.

I believe she is correct in her observation of collusion between corporates and governments. I believe that this is being "streamlined" and this threatens the very roots of capitalism - as even Milton Friedman would argue. I am hoping that experts like Prof. Elizabeth Warren will restore this balance. I am hoping this "credit shock" will be a good time to "push this reforms"! :)