Marx succinctly points out: “The process of production appears merely as an unavoidable intermediate link, as a necessary evil for the sake of money making. All nations with a capitalist mode of production are therefore seized periodically by a feverish attempt to make money without the intervention of the process of production” (Capital). Time and again it has been proved that money created without investing human labour and bypassing the process of production has no real existence. Such a flow of artificial capital to the financial sector was a clear indication that the real economy had either stagnated or was lunging towards a perfect crash. The availability of cheap capital (low interest rates) with relative ease resulted in an overnight boom in the real estate sector across the globe, including markets otherwise deemed to be ‘high risk’, e.g. Pakistan, thereby giving a false image of booming economic activity. However, such illusory business only lasts till the so-called ‘confidence’ created by the banking sector in real estate continues to persist, which in turn owes its existence to the mutual trust between various banks, as long as they are prepared to buy the losses and debts of each other. Their mutual trust entirely depends upon the activity carried out in the process of production — the real economy. With the disappearance of this activity, the artificial economy flounders. Massive downsizing freezes the buying power of the consumers. The artificially inflated prices force buyers to withdraw their money from the market. This pushes the panic button that proves lethal for an already fragile economy. Here, the relevancy of Marx once again expresses itself. According to him, it is not the dearth of commodities but lack of people’s buying power, which is the salient feature of the capitalist mode of production. The inherent anarchy rooted in the system comes to the fore.{Globalisation and its Discontent 2...Daily Times}
Posted on: Fri, 02 Jan 2015 13:32:36 +0000
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