The death of dogma

“It is over”, a succinct way of informing the death of a dogma, the greed, driven neoliberal capitalism. On September 15, 2008, that is how one of stockbrokers in Wall Street described the fall of the Lehman Brothers. The fall of the Lehman was a visible signifier of the Tsunami that hit the base of a turbulent sea called the Wall street , the world of high pitched financial trade and investment. It was the story of a disaster foretold.

That morning a painter called Geoffrey Raynold landed up in Manhattan and unveiled a large canvass painting, The Annotated Fuld , showing Richard Fuld , the beaten Chairman and CEO of the Lehman Brothers with sunken eyes. The painter invited the Lehman employees and others to scrawl their message on the canvass , someone scribbled, “This sucks”. The next day the painting was sold for a 100,000 dollars.

The rise and fall of the Lehman Brothers is symbolic of the rise and fall of the neoliberal economic policy paradigm. When the financial market roared in glory , the speculators, traders and investment bankers played in the global Casino , like those ones in Atlanta city , as if there is no end to the good days. The rich laughed their way to bank everyday , dined, wined and partied , with perpetual cheers as the stock market index climbed to the sky. Sensex has become too sexy to sustain. And many got seduced to the red hot stock market. The percentage of Americans owing stock rose from 16% in the 1970s to more than 50% by 2005. Everyone wanted a piece of the cake.

It is true that the Lehman Brothers is a 158 year old brand. However, it is actually a 14 year old company that was spun off by American Express in 1994. In 1994, the Lehman Brothers only had a relatively small capital base. But the ambitious captains of Lehman were thirsty for profit and capital. To make more profits, they borrowed huge sums in relation to its real size. Its debt became 35 times more than its capital , an unsustainable ratio. But they were making profits and they jumped in to the lucrative real estate markets, with new financial instruments , derivatives , to make more quick money. Credit,rating agencies too played the game. The top credit rating agency Moody and Standard and Poor gave AAA , rating, the top one , to the those greedy nexus, playing the game all along. It was a clear conflict of interest when the same bankers paid Moody and S&P to give them a good credit rating to their respective banks. It was a lie, waiting to be exploded in the scandal of sub,prime lending , easy mortgage given away to anyone ready to buy real estate, unmindful of their economic capacity to repay the loans. These intermediaries were betting other people's money; if they gain, they make a huge bonus. If they lost it is someone else’s money that is lost. No wonder that Richard Flud made US$ 490 million as the CEO of the Lehman Brothers , making the best use of stock options. Those whiz kids , called investment bankers , went for risky deals and quickie profits , as they too could make their millions through the stock options. Many of them made their millions and moved on. And now the party is over. More than a trillion dollars worth stock market wealth vanished in a single day. They call it financial meltdown. That was the beginning of the end.

Dogmas are authoritarian doctrines. Neo,liberalism, emerged in the early 1980s, became a dogma over a period of ten years. The dogma was that “market knows the best”. It consisted of tax cuts for the rich, more indirect taxes, for the ordinary people, easy money with less interest rates and free market with forced liberalization of the economy, market and financial sectors across the world. Anyone who questioned the dogma got marginalized as heretics

By the late 1970s, the market got saturated in the US and Europe. They required new market for the movement of the finance capital as well as manufactured goods. Unless the market was expanded to the emerging economies and unless there was a free flow of capital, the Anglo,Saxon capitalism in the early 1980s would have faced a deep crisis. The state too was saturated and fat. That is how the neo,liberal agenda, along with neo,conservative politics of the Regan era, entered the scene.

Many of the developing and poor countries were in the debt trap, resulting from the oil price shock in the 1970s. So the USA and their allies used World Bank and IMF as strategic institutions to force open many of the debt driven countries to their markets and deregulate their economies. By the early 1990s, they called it ‘Washington Consensus”, a neat packaging of the neo,liberal dogma, pedaled across the world by the Word Bank and IMF. The charismatic face of Bill Clinton and the glib talks of Tony Blair painted the neo,liberal dogma with a “human face’.

Investment Bankers looked like sexy guys with lots of money. Globalization became a fashion statement for many countries. Those who challenged it were simply ignored and sidelined. The World Economic Forum became the cathedral of capitalism, an extension of the Wall Street. Political leaders and corporate executives went their for annual pilgrimage. The deadly dogma preached growth and growth, toasted for the new billionaires. Newspapers told the rags to riches stories of the new billionaires. Billons of poor were put under the carpet. Poverty and inequality did not make it to the front page. Bill Gates, Warren Buffet and Laxmi Mittals did make it, and they smiled at us from the TV Channels. The upward mobile, upper cast and urban class in the metros of India celebrated it with a saffron glow , India Shining. Governments competed to show how much they were committed to the neoliberal dogma. Any sceptics were dumped as the relics of the past or the leftover of the Left.

When neoliberal finance capitalism, initiated by the Anglo,American Axis of Regan,Thatcher combine, pushed us the new order of the day, their wholesale agents Word Bank and IMF pedalled neoliberal policies as the medicines for all ills in all countries. By the early nineties, the neoliberal globalization and deregulation became the dogmatic “mantra’ of the day. Politicians wanted to be in the good books of Uncle Sam and bureaucrats wanted to be in the good books of the Bretton Wood masters. When Soviet model too collapsed, the neoconservative intellectuals began to sell old wine in new bottles, “The End of History”, Clash of Civilization” and “There are no Alternatives”. There emerged a deep nexus between the Wall Street and US treasury. It is not a mere accident that Hank Paulson, the Treasury Secretary, was the former Chief Executive of Goldman Sachs. Many of the top executives in the government and Word Bank came from the Wall Street. The money driven corporate Politics, the agents of investment banks in the corridors of power and their media minions created the myth of the growth engine, fuelled by unbridled finance capital.

Everyone in the corridors of power all over the world was sold to the idea of the inevitability of neoliberal capitalism. The rise of neoliberalism was indicated the politics of economic elites. During the last twenty five years, the politics in many country got corporatized, primarily driven by money and media; fund managers and agents of big corporations. The policy making too was subcontracted to the votaries of neoliberal dogma. Though many of them talked about “Freedom” they were actually in the business denying dignity and fudging freedom. Meanwhile Forbes Magazine kept celebrating the increasing number of billionaires, in the midst of a billion of poor who went to bed hungry every day.

Many warned that the wolf was on the way. But who got time in the midst of the party? George Soros, one of those original gurus in the financial capital market warned about “market fundamentalism”. Warren Buffet – an old hand at the Wall Street , called derivatives as the “Financial Weapons of Mass Destruction”. But everybody was busy partying; making the quick bucks, till the wolf was at the door.

In an ethical liberal democratic system, the state is expected to determine the boundaries of market and citizens are expected determine the boundaries of the state. But the dogma reiterated that “Market knows the best”. Thus the market began to determine the boundaries of the state and the state began to determine the boundaries of citizens. Then markets were captured by speculative finance capitalists and investment banks. Finance market got increasingly detached from real people, real wealth and real economy. The market was driving the governments. And now government is forced to bail out and nationalize the loses, while the rich few got away with their fat profit. Federal government in the US had to take the huge burden of two big mortgage companies and dumped more than 5 trillion of the debt of the companies to the lap of tax payers, almost doubling the amount that the US owes to its lenders. This is termed as the biggest transfer of debt in the history of money. Almost a couple of trillion dollar is pumped in to economic system in America and Europe to keep those sinking ships float. Ultimately it is the people who end up paying for the indulgent excess of the rich and powerful in the global casino of the so-called Free Market. Free market was never free and now the toxic burden is dumped on the people.

Bush presided over a brutal war and a deadly financial casino. He prostituted the term “democracy” and “freedom” by bombing people and countries, first in the name of the so,called Weapons of Mass Destruction and then in the name of “freedom", blowing up three trillion dollars on a bombing spree. The unbridled neo,liberal finance capitalism bulldozed ahead with greed, till it crashed. The boasts or bombs of Bush did not help to conceal the smell of the reeking dogma under the carpet. The American dream became a nightmare within few weeks.

The dogma is dead now under the debris of the famed investment banks. There is no more consensus in Washington. Karl Marx must be laughing in his grave in London.

* John Samuel is a social activist and the International Director of Actionaid.

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