We all know that the world is going through a bad phase of economic slow down and right now USA and EU economy is in poor state. The reason for this slowdown is the policies adopted by the capitalist governments across the globe. These policies have increased the gap between ruling class and the labor class.
Although capitalism itself is in great distress as we are seeing the Great economic recession in USA and Europe . But instead of adopting alternative economical policies being suggested by world social forum and other forums, to come out of the present menace, they are trying to pass the total burden on common people by snatching away the very minimum securities extended by the states as we are seeing in Greece and other European countries. The root cause of recent recession can be described in the following 5 stages:-
Stage 1:- started in 2006-- Because of the wrong policies of capitalism the purchasing capacity of common men reduced and this caused the economic slowdown.
Path showed by capitalism -- Asked all the banks to give loans at cheaper rates so that people's purchasing capacity will increase. Banks and financial institutions started the same.
Stage 2 :- started in 2007 -- Because of loan at cheaper rates people's buying power increased and this helped to reduce the recession and growth rate increased.
Stage 3:-started in 2008-- But since there was not actual generation of jobs, when banks asked the people to return the loan amount, they became defaulters. This caused the complete collapse of banks and insurance sectors, led to financial crisis.
Path shown by capitalism -- Asked the governments to bail out the banks.
Stage 4-- started in late 2008 and 2009-- Governments gave heavy packages to bail out the financial institutions, and for this they used the public money i.e. taxpayers money. Some governments took loans from outside to bail the banks.
Stage 5-- started in 2011-- Still no improvement in economy and this caused the governments itself to become defaulter like Greece, Italy, Spain etc.
path shown by capitalism -- Decrease your fiscal deficit. Means reduce your subsidies given to poor. And this is what all the capitalist governments are doing right now.But the actual problem will arise in 2014 and that will be the 6th stage of recession. That is the year when the borrower countries have to return the loan amount. So at that time what will happen lets see.
More or less same policies are being adopted and implemented in our country by the successive governments at center in line of USA and EU. Slowly and gradually we are also privatizing all PSUs, banks, insurance sector, all service sectors.During the great recession of 2008 our country had survived as we had mixed economy since independence and all the core sector, financial institutions and service sectors are controlled by the central governments.But now the pressure has been intensified by imperialist countries on our government to open all the sectors of our country for FDI, that means we also leading towards the same path on which USA and other EU countries are going.
An alternative economic policy suggested by some economists is :-
1) Stop the incentives being given to the industrial houses as tax relief of lacs of crores.
2) Ask the PSU banks and financial institutions to collect long pending loans of crores and crores from big business houses and industrialists.
3) All the basic and core industries should be in the public sector so that profits from these sectors should not concentrate in the hands of few people or business houses, instead it should be public money.
4) Implement land reforms by distributing a vast quantity of land concentrated in few hands at present.
The money generated from the above can be invested to improve the infrastructure like building roads, generating electricity,providing irrigation by making more canals, that will create more and more jobs in the country and the purchasing capacity of the poor people will increase which in turn will increase the demand of the industrial products. This demand will facilitate the increase in industrial growth. Land reform along with investment in agriculture sector at large scale will improve the agricultural growth in rural areas and will support the industrial growth resulting in creation of more and more jobs in these sectors.
Although capitalism itself is in great distress as we are seeing the Great economic recession in USA and Europe . But instead of adopting alternative economical policies being suggested by world social forum and other forums, to come out of the present menace, they are trying to pass the total burden on common people by snatching away the very minimum securities extended by the states as we are seeing in Greece and other European countries. The root cause of recent recession can be described in the following 5 stages:-
Stage 1:- started in 2006-- Because of the wrong policies of capitalism the purchasing capacity of common men reduced and this caused the economic slowdown.
Path showed by capitalism -- Asked all the banks to give loans at cheaper rates so that people's purchasing capacity will increase. Banks and financial institutions started the same.
Stage 2 :- started in 2007 -- Because of loan at cheaper rates people's buying power increased and this helped to reduce the recession and growth rate increased.
Stage 3:-started in 2008-- But since there was not actual generation of jobs, when banks asked the people to return the loan amount, they became defaulters. This caused the complete collapse of banks and insurance sectors, led to financial crisis.
Path shown by capitalism -- Asked the governments to bail out the banks.
Stage 4-- started in late 2008 and 2009-- Governments gave heavy packages to bail out the financial institutions, and for this they used the public money i.e. taxpayers money. Some governments took loans from outside to bail the banks.
Stage 5-- started in 2011-- Still no improvement in economy and this caused the governments itself to become defaulter like Greece, Italy, Spain etc.
path shown by capitalism -- Decrease your fiscal deficit. Means reduce your subsidies given to poor. And this is what all the capitalist governments are doing right now.But the actual problem will arise in 2014 and that will be the 6th stage of recession. That is the year when the borrower countries have to return the loan amount. So at that time what will happen lets see.
More or less same policies are being adopted and implemented in our country by the successive governments at center in line of USA and EU. Slowly and gradually we are also privatizing all PSUs, banks, insurance sector, all service sectors.During the great recession of 2008 our country had survived as we had mixed economy since independence and all the core sector, financial institutions and service sectors are controlled by the central governments.But now the pressure has been intensified by imperialist countries on our government to open all the sectors of our country for FDI, that means we also leading towards the same path on which USA and other EU countries are going.
An alternative economic policy suggested by some economists is :-
1) Stop the incentives being given to the industrial houses as tax relief of lacs of crores.
2) Ask the PSU banks and financial institutions to collect long pending loans of crores and crores from big business houses and industrialists.
3) All the basic and core industries should be in the public sector so that profits from these sectors should not concentrate in the hands of few people or business houses, instead it should be public money.
4) Implement land reforms by distributing a vast quantity of land concentrated in few hands at present.
The money generated from the above can be invested to improve the infrastructure like building roads, generating electricity,providing irrigation by making more canals, that will create more and more jobs in the country and the purchasing capacity of the poor people will increase which in turn will increase the demand of the industrial products. This demand will facilitate the increase in industrial growth. Land reform along with investment in agriculture sector at large scale will improve the agricultural growth in rural areas and will support the industrial growth resulting in creation of more and more jobs in these sectors.
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