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Free market fallacies


Michael Jeyakumar Devaraj, during his speech (pic courtesy of Parti Sosialis Malaysia)

THE Socialist Party of Malaysia (PSM) organised a fundraising dinner at the Petaling Jaya Civic Centre on 9 May 2009 which was attended by some 600 members, friends and supporters. I was invited to give a short speech, and this is what I said:

Migrant Mother photograph
Dorothy Lange’s famous photograph of a family
affected by the Great Depression in America
(public domain/wiki commons)
Friends, humankind is facing a serious crisis. On one hand we are witnessing the unfolding of a recession many experts think will be the worst since the Great Depression of the 1930s. Recessions are commonplace in the free market economy. They occur once every 10 or so years.

Conventional economic consensus is that each time such recessions occurs, governments should step in and use public moneys to boost aggregate demand and make it profitable again for the big businesspeople. This is what is being done now — RM72 billion in Malaysia and more than US$1 trillion in America.

But is this a viable solution? Because on the other hand, the world economy is already pressing the earth’s physical limits — petroleum, a non-renewable resource is fast becoming scarce given the way we are burning it up. “Peak Oil” has probably already been reached, and the scarcity of petroleum is going to push prices up again if the “pump priming” succeeds in resuscitating growth of the world gross domestic product (GDP).

Petrol pump
Petrol is fast becoming scarce
More importantly, the ozone layer is developing holes, and ice caps are already melting. We are at risk of causing serious environmental damage, which will lead to serious economic dislocations. And as always it will be the poorest of the world who will suffer the most.

How long can we keep growing the world economy without causing irreparable damage to our environment? Another 20 years? Another 50 years? I think it was a Native American chief who said, “We do not inherit the earth from our parents; rather we borrow it from our grandchildren.” What will be the quality of the earth that we return to our grandchildren?

We need to think out of the box. Can we restructure the economy from one that is premised upon maximising profits for a small group of owners, to an economy where production is for the needs of the majority?

This is where PSM disagrees with the Pakatan Rakyat (PR). We fully support the PR’s efforts to replace the Barisan Nasional at the federal level. But we have serious doubts that the very apt policy of “merakyatkan ekonomi” can be done within the framework of production for profit — within the framework of capitalism; private ownership of factories and banks; and corporate-led globalisation.

Soviet Union poster with caption that translates to 'The Spirit of Great Lenin and His Victorious Banner inspires us during this Great Patriotic War' with Lenin and Stalin
Joseph Stalin (foreground) with Lenin in Soviet Union poster (public domain/wiki commons)

Yes, it is fashionable to say that socialism has failed, that socialism is against human nature. We in PSM agree that there were serious mistakes made in the Soviet Union under Joseph Stalin, in China, and in countries like Cambodia. These cannot ever be denied and should be analysed in detail so that we can make sure these mistakes are not repeated.

But to say that socialism is unrealistic and against human nature is tantamount to saying we reject all religions as well. The truth is, the core values of all religions — the solidarity of all peoples, and compassion towards all, especially the old, the sick and the poor — happen to be the basic tenets of socialism, which is based on the love of humanity. So if you deny the possibility of socialism — of a society based on human solidarity — you are also rejecting the social teachings of all religions as well.

There is a lot of work to be done. We need to work out how we can bring about a system where there is not only economic justice, but occurs within the framework of a genuine democracy. This, we believe, is not an impossible quest, and I would like to invite all of you to join us in making it a reality.

Thank you once again for being with us tonight.


Dr Michael Jeyakumar Devaraj is a physician by training and a founding member of PSM. He is currently Member of Parliament for Sungai Siput.

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3 Responses to “Free market fallacies”

  1. CYC says:

    Though I can’t comprehend the full spectrum of socialist philosophy but I certainly think the presently advocated free market capitalism has serious problems in attaining a just and equitable society. The economic theory that emphasis entirely on the framework of production of profit and GDP/GNP growth definitely does not solve the basic humanitarian problem of sufficient food for everyone and education opportunity to every child which is supposedly the right of every single human being. Thus, the late Dr Nrosvek of Slovenia through his memoirs entitled “The thought of life and consciousness” urged every one to rethink and remodel our economic structure to care for the future of all who live in this small earth.

    Dr Jeyakumar, you have my vote.

  2. Singam says:

    Dr Jeyakumar raises an excellent point. All religions are built upon a core foundation of love and social consciousness. Yet more people have been killed over religious differences than for any other cause. Is that a failure of religion or the failure of the people who used religion to serve their own purposes?

    The core values of socialism are excellent. The failures that we have witnessed are merely the failures of the people who used socialism the further their own agenda.

    The capitalist economic model works to move wealth from the poor to the wealthy. All the parties involved in the capitalist system contribute towards moving this wealth upwards while taking out a reward for themselves. The higher up the pyramid one is, the bigger the reward one takes out. Meanwhile the wealth gap keeps growing exponentially.

    Socialism cannot exist in parallel with capitalism because the capitalist elements will suck the soul out of socialism and cause it to fail. But isolationism is not a solution either.

    Sadly, what I see happening is that the ravages of the Kali Yuga will have to play out and the Apocalypse visit us before the world can be remade in a better model.

  3. KrisBelucci says:

    The article on antibiotics is very good.


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