The Global Crisis and the Bail-out Plan: A Misguided Approach

1 Comment » March 2nd, 2009 posted by // Categories: General Articles

The Global Crisis and the Bail-out Plan: A Misguided Approach


Cornelius Ewuoso OP

Ibadan, Oyo State, Nigeria.


It is so sad. It is very sad. What is happening around the world, it is very sad. The global economic crisis. Job losses hitting a record of 2 million in the US alone. In fact, it is expected to reach 3.4 million by March this year. Companies are closing down, banks are folding-up, increasing number of people are becoming homeless due to their inability to pay rent, buy clothing, feed themselves, pay their children’s tuition fee and so on.

            Everywhere around the globe is hit by this crisis. No state or nation can claim immunity. Is it in Zambia with the recent clamour in that country for the urgent need of a programme that will keep the citizens in their offices, and thus ensure a means of livelihood. Or Zimbabwe with the country’s inability to manage the recent Cholera out-break for lack of funds. Or Kenya, with the recent scarcity of grains for human consumption. At random, name the country which may claim immunity. Is Nigeria, where poverty is on the daily increase, the currency is depreciating on a daily basis, inflation in prices thus generating an atmosphere of scepticism about the future. Is it Japan, China, Indian, any of the European countries or the almighty United State of America. In fact, it is so bad in the US that a former company executive took to the street and started distributing his CV (Curriculum Vitae) to anyone he met. He was looking for job wherever he could get one. South American countries and so on, the list continues and the end is not in view.

            Hence, no serious minded or sane leader can claim that his or her country is unaffected by the recent gale of financial crisis. The crisis has crippled a lot of things. Name them, social, education, political, religious orders. And this has forced many of us to ask the obvious, or as you may say, the sane questions, ‘How did it get to this? How did things turn out so bad? What did we do wrong? What did we fail to do?

            So many have attempted this question by simply positing that the essential cause of this crisis is the recent gale of military actions around the globe, particularly US military campaigns.  These wars cost so much and since the US, being in a strategic position in the global economic and financial  development, the world was bound to feel the effects of carrying out such military campaigns.

            But this assertion, or any other similar assertions which seem to posit answers in the same direction, misses the essential point. It is neither the war (though I admit here  that it may have its own impact on the recent down-turn) nor any other similar notion is essentially responsible for this down-turn. Rather, it is the case that ‘capitalism has reached a defining point in its world history’, it has reached ‘its phase’. Yes, the longest economic order has a reached a point where it is now taking a critical look at itself and telling itself, as well as  the world, ‘Yes, this is it guys, I am no longer fit to lead you guys anymore’.

            In all its developmental periods, capitalism has gone through several stages and no stage is as crucial as this present or final stage, where no amount of ‘bail-out plans’ or the likes can ‘really bail it out’. Yes, you may say I am prophesying its doom, its demise. But it is the truth. Yes, it is. The sign has been with us all along and we failed to take notice of it.

            To help us appreciate this better, I have identified three main stages of  the development of this economic order. The first stage is its early stage, with the bourgeoisie and proletarians as the key actors in this stage of development. No other person explained this stage better than Marx himself.

            In this developmental stage of its existence,  the proletarians were more or less alienated from  their labour. They were put into heavy work by the capitalist class and yet, were not compensated for this. The consequent effect of this was that the working force, while they were the ‘real producers’ of the goods, were unable to afford the goods they themselves, produced. But since the goods were produced not for the few people who make up the bourgeoisie, but for the numerous working class and the poor, the result  was a situation whereby ‘there was a large amount of goods produced without an equal consumption rate.

            Hence, from the very beginning of its development, it is exactly the gap which has always existed between available goods and its equivalent consumption mode in capitalism, that will eventually spell out its doom. The sign had been with us from the onset, but we did not take seriously, since it made ‘some’ of us rich. Capitalism is essentially driven by  and animated by consumption. But once this is absent, its death immediately comes in view.

            The attempt to rectify this problem, in the initial stage of its development, and the persistent cries and pleas of ‘alienated proletarians’ led to the second stage, the middle stage of its historical development.  In this stage, capitalism was forced to  relax some of its basic principles and thus imbibe a ‘social or socialist spirit’. This stage initiated the reality whereby we now began to see capitalism as having ‘a social face’. Money was allowed to dwindle down to the working masses.  The concerns of the working and poor classes were supported. Charitable organizations were founded and the effect of this was that the working class, the average people and the poor were no longer separated from the goods produced. They could now afford them. Thus, the period witnessed a mad demand for goods until the goods eventually became scarce. The goods produced could no longer match the consumptive spirit of the consumers.

            Realising this, capitalism made a leap. And it is exactly this leap that eventually initiated its final stage. In an attempt to meet up with the consumer needs, capitalism discovered that it could now achieve more, produce more goods with minimum capital. It discovered that  rather than employ 100 workers to do additions, produce goods in a relatively slow pace, it could now produce more with just few workers and in a record time too. So what did it do? Because of its principle of maximization of profit, it made that leap. Relieved workers of their jobs, retained only the few best to save money and make even more profit. It no longer felt itself obliged to help the masses, since it has a ‘new work force’ with a ‘novel mode of production’. And of course, it enjoyed massive production of goods, only this time, the people could no longer afford these goods since they have no jobs. Capitalism, in this final stage resembles its first stage of development. But unlike the first stage where you had a ‘working masses’, what you find in this final stage is simply a ‘jobless masses’ standing vis-à-vis the ever numerous unaffordable goods produced hence, leading to the eventual collapse of capitalism. The tragedy is that it cannot be redeemed thus, making the ‘bail-out plans’ a misguided approach to this present reality.

            It is a misguided approach because first, the bail-out plan seeks to inject more money into economy particularly the private sector, thus creating more jobs for the jobless masses. But creating jobs in a highly capitalistic oriented sector would mean ‘de-emphasizing’ reliance on technology to accommodate the masses in the wider scheme of things. But this, in itself, would mean a return to a its previous stages of development which would eventually lead to its final stage.

            In other words, the bail-out plan seeks to create ‘a cycle’ whereby things are allowed to go in ‘a cyclical form’, thus repeating previous historical events. President Roosevelt did in the great depression of the 1930s. But see where it is heading back too, ‘another depression’. Economic experts have warned, repeatedly, that things would get a lot worse this year (2009) than the previous year. It is that, let us face it.

            However, you may ask, what should we do then? Should we just fold our arms and watch things destroy? I would say no. But what should we do then? The bail-out plan would end up as a failure, there is no doubt about that. It is not worthwhile repeating this cycle of events. At this stage of our historical development, we must learn to take that bold step into the future. Encourage innovation, creativity, entrepreneurship and thus, creating what I called, ‘inter-dependability’.

            What this inter-dependability seeks, is to create an economic order whereby extremities between goods produced and the consumption rate, capitalism and proletarianism, rich and poor are bridged. The effect of this would be that everyone, in this scheme would become, at the same time, ‘a producer as well as a consumer’. He produces goods through his own creativity and in turn exchanges them with his neighbour who may be in need of these goods and equally has other goods to offer himself. It is more or less an economic order of exchange. In this form of economic order, some compensation is given to the one whose goods are adjudged to be of more value. This way the gap between  goods produced and consumption rate would be greatly reduced, a larger number of people would be meaningfully engaged and no one would become a liability onto others.

            This is our ‘only option’. Not the bail-out, which in my own estimate is a waste of money, or any other similar suggestion. Rather, let us seek to focus investment in individual creativity, innovation and entrepreneurship, thus creating an economic order of ‘inter-dependability’.


Opt In Image
Send Me Free Email Updates

(enter your email address below)

One Response to “The Global Crisis and the Bail-out Plan: A Misguided Approach”


    The write-up has quite some logical reasoning ,depicting capitalism in its raw form as a vicious cycle. Perhaps it is time to revise oure approach to global economic issues by first of all accepting that market forces alone are like a driver of a vehicle who has little skill and therefore prefers streets without traffic, who should not be trusted alone with the lives of his passengers.,Rather a skilled assistant ,in this case government, should be seating beside in the economic vehicle to guide it through dense traffic ,pre-empting potencial crashes and helping blind,heartless and unrealistic market forces to drive everybody,rich or poor to safety. government should not come in after a crash to panel beat twisted iron and to attempt to rescue passengers, some of whom are dead beyond live saving.

Leave a Reply


Home | About | Contact | Login