E. Ablorh-Odjidja, Ghanadot 

I read a letter written to the Daily Graphic, titled “I agree with Joe Frazier.”  The subject was about the meltdown within the global economy.  After reading, I couldn’t help but conclude that the writer, one Omohakpor Enaye, was a socialist.

Anaye’s  agreement with Joe Frazier, apparently, stemmed from their mutual distrust of capitalism.  And because of this distrust they have concluded that “Creative Socialism” and not “Unbridled Capitalism” should be the cure for the current global economic malaise.

By “Creative Socialism,” Frazier and Anaye meant some amount of government interference with the free market.  There is already some interference with the market now.  So the question becomes how far must a government go. 

With the prescription of “Creative Socialism” over “Unbridled Capitalism,” Anaye and Frazier not only endorsed socialism, but also betrayed the relish with which some socialists often received bad news about America.  Even so, whatever is happening to the world economies is not limited to financial markets in America alone.  

For clarification, The Economist magazine has a summary of balance sheet on banks in the US and those in Europe in its October 4 – 10 issue.

It reads “By some measures, many European banks look more vulnerable than their American counterparts do….In America, outside Wall Street, the banks have lent 96 cents for each $1 of deposits. Continental European banks have lent roughly 1.40 (Euros) for each 1 (Euro) on deposit.”

That banks in Europe have been the most aggressive lenders is clear in the above statement; a phenomenon which is  at odds with the socialist nature of European institutions as opposed to  those of America.  This should, therefore, provide a window of doubt about the curative impact of the “Creative Socialism” on the ailing global economy.

Capitalists will say that the troubles in the world economy today are evidences of corrective measures of the free market at work; together with the suspicion that these corrective measures have been made necessary by “Creative Socialism” ideas gone awry.

For instance, the housing sector of the US economy, where the current troubles started, is highly susceptible to government interferences, and, therefore, "Creative Socialism" tinkering since housing the poor is, historically, a government concern.

“Creative Socialism” has its faults too in that it cannot be perfect.  Frazier and Anaye may be right to suggest that the Great Depression was arrested through “Creative Socialism” policies.  However, where they were wrong was the implication, without showing how, that the woes of the depression era was brought on by “Unbridled Capitalism."

The "Welfare System," a product of the depression era policies, and a good instance of creative socialism at work in America, had to be rescued in the 90s by more government intervention.

Also, by this time in the 90s, the same US government was pushing the policy of private ownership of dwellings for the poor (Creative Socialism) as part of the Cranston-Gonzalez National Affordable Housing Act.  This policy, though good in its intentions, had bad consequences that were to show up on the financial markets of 2008.

Before then, Wall Street had fashioned a loan package aimed at the poor and sold as an investment plan.  Banks bought the plan, and then proceeded to write the risk off their books by insuring it through companies like AIG.  When the poor, predictably, started defaulting, the trouble in the housing sector began.

Wall Street is cold blooded capitalism at work, but putting policies in place that allowed easy loans for house ownership by the poor, as happened, is more of a socialist thought.  It is a noble thought, but one whose consequences should have been predictable. 

But socialists have been quick to blame capitalism.  To them the current meltdown is an indication of the impending death for the capitalist economy as practiced in America; indeed, the demise of which they have long awaited for.

James Shikwati,  the publisher of the African Executive, wrote a piece in the same magazine’s issue of  October 2008 titled “Global Financial Crisis: Free Market Advocates have NOT taken Cover!”.  In it, he defended capitalism.

He  said “in a socialist system, no one would ever have discovered that the collapsed companies in America had a problem, taxpayers' money would have kept them artificially in operation. It is precisely because of the market system that the World was made aware that the companies were in trouble.”

He was writing about bank and financial institution failures in America that brought on the burst in the housing bubble.

Shikwati was not denying that there was trouble with the capitalist system.  He was decrying the fact that socialists refused to see the self-corrective tendencies within American capitalism.

Looking back, it is capitalism that has made America a very wealthy nation.   But America is not alone in this enterprise.  Chine is fast becoming one.  A drive through the streets of Accra will show  how Third World countries like Pakistan are going capitalist too; selling cheap goods in the Ghanaian economy; usually goods that can easily be manufactured in Ghana. 

It is within the small industry's sector in Ghana that the most damages to national economy occur.  When tooth picks, the manufacturing of which can be handled with our modest brand of capitalism, are imported, then you know we are in trouble. But this is one issue and area that “Creative Socialism,” if it is to be of any use, can help resolve.

E. Ablorh-Odjidja,Publisher www.ghanadot.com, Ghana, October 22, 2008

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