Capitalism and Regionalism, In the News

As I wrote yesterday, there is a fundamental contradiction between capitalism, and nationally or regionally oriented power structures. Capitalism pushes for expansion and growth, while nations, and their like, have the desire to preserve local power bases in the face of international competition.

Today's New York Times article "Rapid Declines in Manufacturing Spread Global Anxiety" has a section which exemplifies this :

India’s manufacturing sector, which accounts for about 16 percent of G.D.P., recently recorded its first quarterly production decline in more than a decade.

Since last April, handicraft exports have fallen by 55 percent to $1.35 billion, and textile makers estimate they have slashed half a million jobs. Banks, meanwhile, are restructuring loans for diamond makers and polishers.

And despite tax cuts and a $64 million stimulus package announced in February, Indian textile makers are pushing for more government help.

“We’re competing with countries like Bangladesh, where wages are lower,” said Rakesh Vaid, the chairman of Usha Fabs, a Delhi textile manufacturer. “We’re competing with China where the currency is well managed, and Vietnam where the industry is getting strong support from the government.”

The first stage in this economic contraction was a rush to protectionism, by all countries, seeking to preserve themselves. If the crisis continues, there will be all manner of political, economic and military tensions between different countries and regions.