THE world has been pushed to the precipice of another global financial disaster after the great depression of 1929. The crisis has raised a fundamental question is the era of market capitalism over and are we going back to the Keynesian capitalism in which the state was at the centre of development?

The US government offering a bailout plan to rescue the Wall Street bankers and Britain's action of buying 60 per cent and 40 per cent share in the Royal Bank of Scotland and Lloyds TSB by injecting the liquidity to the tune of 20 and 17 billion pounds, respectively, subscribe to the view that the state is back and this move by some political economists is considered to be partial 'nationalisation' and burial of Thatcherism and neo-liberalism.

Neo-liberalism was basically ultra minoritarian ghetto before the debt crisis of the 80s. Starting from an embryo at the University of Chicago with the philosopher economist Friedrich von Hayek and his students like Milton Friedman at its nucleus, the neo liberals and their funders have created a huge international network of foundations, institutes, research centres, publications, scholars, writers and public relations hacks to develop, package and push their ideas and doctrine relentlessly.

Now, it is a dominant ideology, based on market economy and serving as the main pillar of the capitalist economic globalisation.

However, there are many conspiracy theories which allege that the current crisis has been manufactured by neocons in an attempt to reassert US ascendancy in world politics and economy in the new century. In this regard, they first attacked Iraq on the pretext that it possessed WMDs, though the aim was to occupy Iraq, control its oil reserves and tame Iran through 'Rambo' tactics.

However, the neocons failed in their first adventure. The war in Iraq has cost US heavily and, according to Noble laureate Prof Stigliz, it is a $3tr war which is having a devastating effect on the US economy.

Economist and critic F. William Engdahl says that to shape the future of global banking through creative destruction, panic was incited by a well designed long term strategy to change the face of European banking; weaken it with toxic junk, the asset-backed securities; force enough of it into liquidation or cheap enough to buy at fire-sale valuations.

The idea being to create colossal global financial giants, then use their muscle to ravage European banks, advance their global agenda over the coming years and dominate world finance and increase US hegemony in the new century.

That's the scheme, and Engdahl calls it “a fight for the survival of the American Century”. Built on 'the twin pillars of American financial (and military) dominance,' the game is far from over. “Battle lines are drawn.” EU nations have their own ideas. Stabilisation and recovery plans as well that differ from Washington's and look much sounder. It remains to be seen where things are headed and whether competing nations can work together and do it effectively. They haven't much time.

It should be noted that the financial crisis trigged by the oil crisis of 1973 and debt crisis of the 1980s were also well managed and manipulated by the US to reassert its dominant role in the global economy through the IMF's structural adjustment programmes.

These programmes forced the developing countries to devalue their currencies, open their economies to outside world, privatise public assets, lay off workers under the downsizing scheme, cut development expenditure and withdraw subsidies from the food item and essential utilities like water, gas and electrify. SAPs have affected the poor the most.

Whatever the outcome of this financial crisis, its human dimension must be taken into account. Whatever the G 7 countries have done so far have bailed out the Wall Street industrial capitalism, not the poor working class who are in need of help on the part of the rich.

Keeping in view the anarchic and exploitative nature of capitalist market economy, it is good to replace the current international financial system with a better one, respecting people, not capital, and reinstating the role of the state regulating market so that it should not hurt the welfare of the marginalised sections of society around the world.

MANZOOR ALI ISRAN,

SZABIST, Karachi