May 17th, 2004
Stocks Plunge in India
Sonja Ghandi recently won elections in India. She is the latest incantation of the socialist ruling family that mired India in decades of poverty. Shortly after her victory, she appealed to the Communist Party of India and the Communist Party of India-Marxist (there’s a difference?) to form the ruling coalition. In response, “India’s stock market took the biggest one-day drop in its 129-year history” until regulators shut down the markets in a (futile) response to halt it. I believe that the drop was motivated by two factors: the potential for the reversal of 13 years of economic liberalization and uncertainty over how a socialist/Communist coalition can reconcile its ideology with a commitment “to the orderly and healthy development of financial markets that reflect the fundamentals of the economy” and a policy that “will be pro growth, pro-investment, pro-savings and pro-employment.” It is of course impossible to reconcile a socialist ideology with a market economy. The response of the new finance minister is pragmatism: “We are not pursuing privatization as an ideology…wherever privatization is necessary in the national interest it will be carried forward.” In other words, the idea is to reap the benefits of a free market, while not actually allowing any economic freedom – or to have one’s cake and eat it too. It’s interesting to note that the practical value of liberalism has been almost universally recognized, especially since the end of the cold war, even by socialist and communist parties. This is significant because the “dictatorship of the proletariat” is opposed to the very notion of freedom. The prerequisite of individual rights however, is still universally ignored. Until the moral case for freedom replaces “national interest” as the basis for a market economy, endemic global economic instability will remind us of the consequences of a mixed economy.
One Response to “Stocks Plunge in India”
This is what I was worried about. I hope this is not the beginning of the end for us.
dinesh.
By Dinesh Pillay May 17th, 2004 at 11:08 am