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Über dieses Buch

This book is divided up into three sections. The first deals with the problem of the World economy and the most important issues affecting the World economy. The second analyses problem mainly affecting the developed countries. The third analyses the issues in the developing countries particularly in the BRIC countries.




In 2012, the former head of the Federal Reserve, Alan Greenspan, was asked if his convictions on the merits of free markets had influenced his judgment and ability to design policies to prevent the financial crisis of 2008. Greenspan replied that it was now obvious that there was a basic mistake in the model that he thought of as the critical structure behind the world economy. Mirowski (1991) argues that the major equations of the ‘marginalist revolution’ that form the basis of neoclassical economics came straight from the theories of energetics. Energetics is the study of energy flows and storages. Because energy flows at all levels, from the quantum to the biosphere and cosmos, ‘energetics’ is a field encompassing thermodynamics, chemistry, biological ‘energetics,’ biochemistry, and ecological energetics. Mark Blaug (2002) calls neoclassical economics ‘sick, a soporific scholasticism of mathematical formalism where the slogan No reality, please, we’re economists rules.’ Capitalism, under the globalization process, is now a global religion. The alternative is possibly an Eastern approach to economics, an approach rooted in the culture and philosophy of the orient, particularly of Japan, India, and other Asian countries. This culture does not approve of the rationalism of Bentham and John Stuart Mill, which is the basis of Western (Anglo-American) economics. The Asian culture, particularly the Japanese culture, promotes cooperation, altruism, and working for the sake of the work, not for results.

Dipak Basu, Victoria Miroshnik

1. World Trade Organization and World Economic Architecture

Since the Doha meeting in November 2001, the WTO has started a round of negotiations on new agendas. The opposition of the developing countries, particularly India, has been neutralized. A careful analysis will show these meetings are nothing but a series of defeat and collective suicide of the developing countries.

Dipak Basu, Victoria Miroshnik

2. Patent Laws and the Developing Countries

The levels of tension between rich and poor countries are now at even higher levels than in Seattle. Instead of taking the opportunity for dialogue, rich countries have offered little or nothing to address the concerns of the developing countries. The poor are asked to accept the agenda whether they like it or not and to swallow their rage as rich countries, claiming to represent global interests, once again impose their minority views. On the Draft Declaration on Intellectual Property and Access to Medicines, there were two options (


Option 1

Nothing in the TRIPS Agreement shall prevent Members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement shall be interpreted and implemented in a manner supportive of W.H.O. Members’ right to protect public health and, in particular, to ensure access to medicines for all. In this connection, we reaffirm the right of W.H.O. Members to use, to the full, the provisions in the TRIPS Agreement which provide flexibility for this purpose (


Dipak Basu, Victoria Miroshnik

3. Free Trade or Trade Management

The recent outbursts in the USA and Britain against the movement of jobs to India though business process outsourcing is a lesson for ‘free-traders’ who have propagated the virtues of free trade to the developing countries to open up their economies to the unrestricted imports from the developed world. The debate is not about to go away but will intensify, thus eventually forcing the developed countries to use increasingly protectionist measures against the developing countries like India.

Dipak Basu, Victoria Miroshnik

4. A New Reserve Currency

There has been a recent demand from Germany’s Bundesbank to repatriate a large portion of its gold reserves held abroad in the Federal Reserve of the USA. By 2020, Germany wants 50 percent of its total gold reserves back in Frankfurt – including 300 tons from the Federal Reserve. However, the Federal Reserve refused to submit to an audit of its holdings on Germany’s behalf ( Thus, questions are being raised around the world about whether the dollar is the world’s safe-haven asset and whether the Federal Reserve, a privately owned company, is a trustworthy banker for foreign countries.

Dipak Basu, Victoria Miroshnik

5. Doha Climate Talk of the UN: Science vs Market

The UN climate talks in Doha in 2012, where 10,000 delegates from all over the world gathered, was nothing but a gigantic effort by the developed countries and their banks to create another speculative market on carbon missions, which would not benefit the world and would not have any impact on the global climate either (

Dipak Basu, Victoria Miroshnik

6. Economic Policy in the Developed Word before 2008

Almost one in six Japanese lived in poverty in 2007 (…/poverty-in-japan). Experts estimate the poverty rate doubled after the real estate and stock markets collapsed in the early 1990s. After years of economic stagnation and widening income disparities, this once proudly egalitarian nation is belatedly waking up to the fact that it has a large and growing number of poor people. Japan’s poverty rate, at 15.7 percent, was close to the OECD’s figure of 17.1 percent in the USA, whose glaring social inequalities have long been viewed with scorn and pity here (…/OECD2013-Inequality-and-Poverty).

Dipak Basu, Victoria Miroshnik

7. The Economic Crisis of 2008: Causes and Solutions

‘An open, competitive and liberalized financial market can effectively allocate scarcer resources in a manner that promotes stability and prosperity far better than government intervention,’ Henry Paulson, the US Treasury Secretary said in Shanghai in March 2007. Now this sounds like a big joke given the fact that both the US and UK governments have nationalized banks and financial institutions in order to avoid a complete meltdown of their financial system. On September 7, 2008 the US government nationalized two huge US banks, Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Mortgage Corporation). That means in effect that the government is paying for the losses of the shareholders and investors in these banks – $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding. These liabilities are equal to all the publicly held debt of the USA. Both the USA and the UK, along with their European partners, have allocated a vast amount of money to support their struggling banks. This program is designed to buy a mountain of defaulted housing loans and other worthless assets from banks and finance companies and will cost an estimated $700 billion to $1 trillion

Dipak Basu, Victoria Miroshnik

8. Financial Stability and the International Monetary Fund

The IMF has proposed two new global levies on banks to be considered. The first, the ‘financial stability contribution,’ is a flat levy to be paid by all banks to generate a self-insurance fund equivalent to 4–5 percent of each country’s GDP, totaling about $1–2 trillion. The second levy, called the ‘financial activities tax,’ or FAT, is on the profits and remuneration of banks, and this money can be paid into general revenue, meaning that it is not geared for insurance but to deter risk-taking behavior. The IMF also recommends that resolution regimes, or ‘living wills,’ be mandated alongside this scheme to try to address some of this moral hazard so that taxpayers will not be forced to bail out banks if they can fail without causing systemic collapse (

Dipak Basu, Victoria Miroshnik

9. The Greek Tragedy and Its Lessons

The IMF admitted it had failed to realize the damage austerity would do to Greece as the Washington-based organization catalogued mistakes made during the bailout of the stricken eurozone country. In an assessment of the rescue conducted jointly with the ECB and the European commission, the IMF said it had been forced to override its normal rules for providing financial assistance in order to put money into Greece. Fund officials had severe doubts about whether Greece’s debt would be sustainable even after the first bailout was provided in May 2010 and only agreed to the plan because of fears of contagion. While it succeeded in keeping Greece in the eurozone, the report admitted the bailout included notable failures. ‘Market confidence was not restored, the banking system lost 30% of its deposits and the economy encountered a much deeper than expected recession with exceptionally high unemployment’ (

Dipak Basu, Victoria Miroshnik

10. Russian Reforms and Its Consequences

When the Soviet Union came into being after the 1917 Revolution Russia was a very poor, backward, agricultural country. The immediate priority of the government was to encourage economic development and introduce socialist economic management with economic planning as the central pillar of that system. Despite civil war, invasions, and repression the economy experienced rapid growth so that by 1938 the Soviet Union had become an industrialized country with industrial production levels matching those of Germany and Britain. After the destruction of World War II, the economy revived very quickly and throughout the 1950s and 1960s it experienced impressive growth under the leadership of Khrushchev, who made some attempts to allow some flexibility for the rural economy and small industries (Gomulka, 1971). Khrushchev was replaced by Brezhnev in 1964, who started the debate about possible reforms in prices and structure of production in order to sustain the growth rate of the economy. However, the economic reforms in the Soviet Union had to be postponed due to the great diversion of resources to the defense sector as a result of a number of international conflicts in which the Soviet Union was involved.

Dipak Basu, Victoria Miroshnik

11. Economic Reforms in India

The major argument of the proponents of economic reform is that the earlier planned development in India from 1951 to 1990 restricted the growth of the Indian economy. The reality does not always support that argument.

Dipak Basu, Victoria Miroshnik

12. Privatization

India’s own experience shows that private companies are not any paragon of virtues. Calcutta Electric Supply Corporation, for example, is a private company but has failed to pay about Rs. 9.6 billion for the electricity it has purchased from the West Bengal State Electricity board, which, as a result, is on the verge of bankruptcy (planningcommission. Recently the BJP government has handed out Rs. 3.5 billion of subsidies to the private sector steel plants. The situation is the same in many other states in India and in other countries where private companies either have failed or have to depend on massive state subsidies to survive. In Japan, for example, the government is buying massive amounts of shares of the private banks and private companies to keep them alive.

Dipak Basu, Victoria Miroshnik

13. Privatized Pension

A proposal to privatize the pension scheme was implemented in India in 2013. The plan is to invest a large portion of the pension fund in the stock market to prop up certain favored companies. The fate of the pension will thus depend on stock-market fluctuations. The employees may gain but may also lose heavily as happened in the wake of the crash of Unit Trust in India about ten years ago.

Dipak Basu, Victoria Miroshnik

14. Inflation in India

India uses the wholesale price index (WPI) to calculate and then decides the inflation rate in the economy ( In India, a total of 435 commodities data on price level is tracked through the WPI, which is an indicator of movement in prices of commodities in all trade and transactions. It is also the price index that is available on a weekly basis with the shortest possible time lag only two weeks. The Indian government has taken the WPI as an indicator of the rate of inflation in the economy.

Dipak Basu, Victoria Miroshnik

15. Labor-Market Reforms in India

Foreign direct investment in China is almost ten times that in India. Rather than looking at the cause of this huge gap, the Indian government is now pushing labor reforms to make this country a more attractive destination for foreign investment. The Indian Ministry of Labor supports strongly the China model as one of the ‘doable options’ for making the labor market more flexible and attractive. The purpose is to turn India into a ‘preferred FDI destination.’ The so-called experts say India needs its prohibitive labor policies, which are designed to protect the weakest members of the society against unrestricted exploitation by the private-sector employers. These experts, taking their lead from the World Bank, is saying that India is lacking is an ‘exit policy’ that makes it easier for unprofitable ventures to sack workers.

Dipak Basu, Victoria Miroshnik

16. Privatization of Electricity

Privatization of electricity is one of the most important policy prescriptions suggested by the World Bank and the IMF. The rationale is that the public sector electricity generating and distribution companies are both inefficient and unviable. The only alternative is to invite private sector to produce and distribute electricity. In fact such is the strength of faith in the private sector that no new loans for energy development of the developing countries are granted by the World Bank unless they will be in the private sector. The IMF is also putting pressure on the borrowing countries by suggesting the sale of public sector electricity generating and distribution companies in order to reduce public budget deficit and subsidies (

Dipak Basu, Victoria Miroshnik

17. Economic Reforms in China

The Chinese economic reforms and the Soviet (during Gorbachev) and Russian economic failures have attracted worldwide attention because a number of countries in the developing world and various Eastern European countries have been implementing the same type of economic reforms and structural adjustments, supported by international financial institutions like the World Bank, the IMF, and the EBRD. It is an important question as to what lessons we can learn from this. Although Yeltsin, immediately after the destruction of the old Soviet Union, implemented the structural adjustment program, commonly known as ‘shock therapy,’ it was Gorbachev who initiated the process and tried to build the necessary institutional structures. Similarly, although Deng in China is known as the architect of the Chinese reform process it was Mao Tse-tung himself who, after the failure of the Cultural Revolution of 1966–1976, initiated the reforms in agriculture and land ownership in China that later developed into the so-called Chinese-style reform process.

Dipak Basu, Victoria Miroshnik

18. Industrialization and Land Question

A letter from Count Leo Tolstoy on October 20, 1908 (addressed to the Federation of Single Tax Leagues in Australia in reply to an address of respect and good wishes presented to him on the occasion of his eightieth birthday) has significant merit regarding the land issues under globalization (Wenzer, 1997). He wrote:

The injustice and evil of property in land has long ago been recognized. More than a hundred years ago the great French thinker, Jean Jacques Rousseau, had written: The one who first fenced in a plot of land, and took upon himself to say, ‘This land is mine,’ and found people so simple-minded as to believe him, that man was the first founder of the social organization which now exists. From how many crimes, wars, murders, calamities, cruelties would mankind have been delivered had some man then uprooted the fences and filled up the ditches. The injustice of the seizure of land has long ago been recognized by thinking people.

Dipak Basu, Victoria Miroshnik

19. Evaluation of the Millennium Goals of the UN for Africa

The Millennium Development Goals of the UN include injections of substantial financial aids to the developing countries in Africa. The recent declaration of the developed industrialized countries’ forum G8 was to increase debt relief and expand foreign aid for Africa. This issue begs some important questions.

Dipak Basu, Victoria Miroshnik

20. Economic Roots of the Middle-East Crisis

The invasion of Syria started in 2011, after the destruction of Libya, when Syria was a prosperous stable country with no apparent economic problems. Just like in the Ukraine and Georgia, and also in Egypt and Tunisia, some very violent crowds were hired by some strange shadowy agency, financed by a group of countries in the Arabian gulf and Turkey. The purpose was to change the regime first by creating mass demonstrations and then concerted international denouncements by mainly the Western media, followed by some violence and ultimately a change of the regime by force (Brzezinski, 1997, 2010; Rice, 2000; Shulsky and Schmitt, 2002). The same pattern was used in country after country with two major exceptions, Libya and Syria. In both cases initial mass demonstrations were followed by armed insurrections supported by foreign powers. In Libya, the foreign powers were France, the USA, the UK, and NATO, with some involvement from Saudi Arabia, Qatar, UAE, and Turkey. However, in Syria the armed groups came directly from Saudi Arabia, Qatar, UAE, Libya, and Turkey to change the regime. The Libyan regime collapsed quickly because of the direct attacks from NATO. In Syria, NATO was not able to take part because of the opposition raised by Russia and China in the UN Security Council.

Dipak Basu, Victoria Miroshnik


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