PRAGOTI

 
As you all must remember that after the outbreak of the financial crisis in 2008, the President of the UN General Assembly constituted an expert commission on finance to suggest ways of getting out of the present crisis and avoiding such crises in the future. This commission was chaired by Prof. Joseph Stiglitz. The Commission has submitted its preliminary recommendations which is provided in the attachment.
 
Overall my feeling is that the commission has done a great job in terms of identifying the basic cause of the crisis in the functioning of free markets, particularly in the advanced capitalist economies. Secondly, the commission unlike many schools of thought in the West who think that the crisis is only a problem of advanced countries, makes the valid point that the impact of the economic crisis on the developing world has been devastating bringing down millions of people into poverty and unemployment. Since the commission acknowledges the negative impact on the developing countries its recommendation also focuses on the upliftment of these countries.
 
As far as the recommendations are concerned, the first point that the commission makes is the need for a coordinated fiscal stimulus on the part of all the advanced economies. At the same time the commission also argues for flow of credit and finance to the developing countries. This idea of a coordinated fiscal stimulus is not new. It was proposed even during the times of the Great Depression but because of the opposition of the finance capital could never materialize. This opposition of finance capital is still continuing against any such attempt to expand state intervention to come out of the crisis. However, as a long term measure, the Commission suggests multiple regulations on the finance sector, particularly with regard to financial innovations and architecture. It also suggests that a Global Economic Council should be set up to control finance, which in itself is again a very bold idea.
 
The importance of the recommendations of the commission cannot be over emphasized. Particularly, in the context of the G-20 meeting in London tomorrow, one has to wait and see whether the recommendations of the Commission is seriously taken into account by the world leaders. However, going by the debates taking place in and around the G-20 summit it is not likely that the Commission's recommendations will receive due recognition and action on the part of the G-20.
 
One thing is however clear that the crisis is only aggravating in the absence of a well thought out program to deal with it. The choice before the world leaders is very clear. Either they again take refuge in the ideology of neo-liberalism which created the crisis to begin with, or they move towards an alternative economic order in the lines of what the Commission has recommended. In a matter of days this choice will be clear.