Meltdown and Resurrection: India as the Economic and Political Catalyst for World Transformation

Dr. Glen T. Martin

Professor of Philosophy, Radford University, USA

Secretary-General, World Constitution and Parliament Association

December 2008

            My effort to understand the economic and political potential of India is closely linked to my personal experiences in many visits to India as well as my concern for the fate of our planet and its peoples.  As Secretary-General of the World Constitution and Parliament Association concerned to understand our human situation as deeply as possible, I have interacted with the street children of Delhi and Mumbai and repeatedly walked the streets of Kolkata at 5 AM stepping over the bodies of some of the tens of thousands of people sleeping on those streets.  I have watched the raw sewage from the millions of Chennai citizens pouring into the Bay of Bengal.  I have been guided by local social workers through some of the many horrific slums of Kolkata, Chennai, and Mumbai, seen child labor and watched piece workers make articles for multinational corporations for close to starvation wages. 

  1. Behind the Meltdown: the Problem of Institutionalized Greed.

            In recent decades the Indian government, like much of the rest of the world, embraced globalized economics and the economic philosophy of neo-liberalism.  The impact of this globalized “free market” capitalism began to be chronicled in books that appeared in the 1990s such as When Corporations Ruled the World by David C. Korten (1995), The Globalization of Poverty: Impacts of IMF and World Bank Reforms by Michael Chossudovsky (1999), and Stolen Harvest: The Hijacking of the Global Food Supply by Vandana Shiva (2000).  Yet the devastation caused by unfettered globalized capitalism continued unabated to the present collapse of the global banking system.  Even before the present meltdown in Fall of 2008, excellent books were appearing chronicling the devastation and irrationality of the system: Empire with Imperialism: The Globalizing dynamics of Neo-Liberal Capitalism by James Petras and Henry Veltmeyer (2005), Economic Democracy: The Political Struggle of the 21st Century by J.W. Smith (2006), The Web of Debt: The Shocking Truth about Our Money System by Ellen Hodgson Brown (2007),and The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein (2008).

     These books describe the devastation of life on Earth caused by the world’s present economic system, necessarily enforced by militarism from the world’s imperial powers. However, to understand our world today requires that we understand the roots of the current world system in the European expansion during the 16th to 20th centuries during which the present world economic and political system developed. This system of sovereign nation-states was first formally recognized in the 1648 Treaty of Westphalia that ended the 30 Years War in Europe. These early imperial centers proceeded to divide the world among themselves, appropriating for themselves the cheap slave labor and resources of the majority of humankind who were organized as colonies of these imperial centers of power. The imperial powers controlled this system conceptually with their ideologies of sovereign nation-states, civilizational superiority, and the economics of Adam Smith: “free trade” as a cover for their nationalistic competition to control the global wealth-producing process in their own interests (Smith, 2006, Chs. 1-4). They affirmed the ideology of unlimited capital expansion (at the expense of nature and the poor) as the only possible route to development and prosperity but attempted to channel this process of expansion (in ways that were anything but “free trade”) to the ruling classes of their respective nation-states.

With decolonization (which largely took place within the twentieth century), many of these colonies (including India) were discharged from their former colonial masters as wretched basket-cases of nations, impoverished financially, culturally, technologically, and structurally. Just as the colonies had been kept weak and impoverished by the sovereign overseers, after decolonization they became subject to manipulation, overthrow, destabilization, or outright domination by one or the other of their former colonial masters. They also became subject to financial control by the World Bank, IMF, and multinational corporations. Hundreds of millions of poor now live in these countries as in prison camps, unable to leave and utterly unable to improve their own condition – controlled economically, politically, and often militarily from abroad.

The Director-General of the World Trade Organization in the 1980s wrote an article for the Wall Street Journal that began with the sentence “Globalization is a reality of our time.” This globalization, as Vandana Shiva has pointed out, is a prescription for the dispossession of 80% of the planet’s population. This “reality of our time” is not an accident, any more than the colonial exploitation and impoverishment of the majority of humankind was an accident, any more than centuries of slavery and violence against peoples of color was an accident. It is a carefully planned and constructed process of the most powerful economic and political forces in the world to convert the economies of the world to serve their own interests.

     Derivatives and Debt-Money.  The problem of the global meltdown is often said to be derivatives.  Derivatives are a direct consequence of banking not democratically regulated for the common good.  They are speculative bets, made mostly with borrowed money, on the fate of stocks, on the future of corporations, on foreign currencies, on whether interest rates will rise or fall – on almost anything.  They do not constitute investment in the production of goods and services so often touted as the beating heart of capitalism.  However, they represent the very essence of the institutionalized greed that has historically characterized all capitalism.  According to the Bank of International Settlements as of a year ago, the total face value of derivative bets worldwide amounted to $596 trillion, about 10 times the gross domestic product of the entire planet.  Since these are unregulated and largely unprotected bets (speculations) made by major banks and investment companies and several times over beyond the assets of these companies, a failure of any significant portion of the system might well create a bursting the bubble effect impacting the rest of the system.

This is exactly what happened: a collapse of the interdependent network of derivative speculations bringing down the banking systems of the entire world, causing, as always, immense suffering to the poor of the world. The meltdown in India is a mirror of the worldwide meltdown.  But the problem of a flawed banking system is not limited to the irrational system of derivatives, as Ellen Hodgson Brown (2007) has shown, a gigantic lie beyond the global banking system claims that money creation must be done for use by private banks in the form of public debt. The people of the U.S. alone are in debt to the process of money-creation for use by private banks to the amount of over 10 trillion dollars as of September 2008. The system of private profit is predicated on public subsidies as well as the expectation of externalizing the costs of doing business onto nature and society.  A rational and just banking system would abolish both these absurdities and would be predicated on creating general prosperity rather than extreme wealth for the few at the expense of the majority of people and nature.

  1. Justice, Freedom, and Full Economic Prosperity.

The problem of making India an economic powerhouse for the 21st century and eliminating poverty in India is clearly linked to India’s relationship to the rest of the world system. If the world system after the meltdown is reestablished on the same principles of institutionalized greed and legally protected exploitation of nature and people, then India will likely continue to mirror the extremes of wealth and poverty and destruction of nature found worldwide.  If the world system is transformed into one based on rational economic and political principles, then India could become a powerhouse commensurate with its size and substantial resources, as it should be.  But because of its immense size and potential, the resurrection of India need not depend on the prior transformation of the world system.  As we will see below, India could free itself substantially from the collapse of the world system by forming the core of an economic and political federation potentially open to all, and she could accomplish these same positive goals quite rapidly from within. India needs to become the vanguard of a truly democratic and powerful economic order for the rest of the world.

It should be clear from the above that the immense problems faced by human beings on the Earth are all interrelated and interdependent.  You cannot solve the problem of poverty without dealing with the on-going destruction of the environment that diminishes resources and makes real wealth in terms of goods and services ever-more elusive.  Nor can you solve these problems without dealing with the problem of militarism and inevitable arms races that suck ever-more wealth into these environmentally destructive, counter-productive, and destructive activities.  You cannot deal effectively with healthcare and the control of sickness and disease without dealing with militarism, the environment, and poverty. Economics cannot be disentangled from the entire matrix of our human condition on the Earth.

The economics of prosperity cannot be created without the cooperation of effective democratic government, for the historical oligarchy of the rich will not, and cannot, create universal prosperity.  And the democratic government created for the purpose of economic prosperity must, at least potentially, be capable of dealing with the nexus of global problems beyond the scope of today’s present-day nation-states.  It would not be of much benefit to eliminate poverty in India in the next 10 years when the global environment may well not support higher forms of life within the next 50 years. As a recent article puts it, “Sir Nicolas Stern, former Chief Economist of the World Bank, estimates that the direct economic consequences of climate change – leaving aside the social and environmental effects – will be a depression greater than the Great Depression of the 1930s and a financial cost higher than the Depression and the two world wars combined” ( The world is interdependent and interrelated.  Any solution must at least be a global solution and must deal in an integrated way with the nexus of global problems.

The roadmap toward a new economic paradigm is included within the Constitution for the Federation of Earth (see  This Constitution unites the national units of the world into a federation and predicates global economics on global prosperity rather than scarcity.  Under Article 17, the Earth Federation will be activated in three stages, the first operative stage being reached when merely 25 nations (or global political units with a minimum population of 100,000 each) have ratified or when there has been a direct referendum of 100 World Electoral and Administrative Districts.  This initial portion of the world’s population would be joined together under the Earth Constitution in a federation in which poverty would be very rapidly eradicated, health-care for all would be developed, the environment would be protected and restored, and the stage set for the abandonment of militarism.  Seeing this success, other nations of the world would rapidly join until, within a very few years, the 90% of the Earth’s population would be included and the final operative stage of the Earth Federation will have been reached. India alone, with its immense population, and with some 35 internal states and union territories, could satisfy these conditions to initiate the first operative stage of the Earth Federation.  It could be the powerful shining example for the rest of the planet inviting other peoples and nations to the rapid joining of its initial Earth Federation until the economics of the entire planet became rational and democratic.

Article 1 of the Earth Constitution specifies the “Broad Functions of the World Government.” These six broad functions form the central responsibilities of the Earth Federation and are the central justification for its creation: (1) To prevent war and secure disarmament, (2) To protect universal human rights, including life, liberty, security, and democracy, (3) To obtain equitable economic and social development for all peoples on Earth, (4) To regulate world trade, communications, transportation, currency, standards, and use of resources, (5) To protect the global environment and the ecological fabric of life, and (6) To devise solutions to all problems beyond the capacity of national governments. Each of these articles addresses a global crisis that is clearly “beyond the capacity of national governments.” There can be no meaningful economics that does not effectively engage these crises.

The Earth Constitution creates a democratic world commonwealth directed to the common good of humanity and future generations. It is non-military by law (Article 2) and democratic at every level, leaving economic and political self-determination to the nations insofar as these conform to universal human rights and world law (Article 14).  In the second operative stage outlined in Article 17, all nations joining the Earth Federation must begin to demilitarize. All transnational corporations are regulated by the World Parliament, and global banking is mundialized with one Earth Currency having the same value throughout the Federation.

The Earth Federation now regulates the international actions of demilitarized nation-states through world laws legislated by the World Parliament. Conflicts are settled through the world court system and violators are subject to arrest and prosecution by the world Attorneys General and the World Police. Similarly, transnational corporations are regulated through the democratic legislation of the World Parliament. Their expertise and organizational infrastructures can now be used to promote universal prosperity while protecting the environment.  Coca Cola, Kentucky Fried Chicken, Monsanto, or Union Carbide can no longer exploit and devastate the people of India.

The economic powerhouse arises as the Earth Federation issues debt-free, interest-free money to promote the prosperity, truly free trade, and well-being of the people of Earth while protecting the planetary environment. Individuals, corporations, state and local governments may all take advantage of low interest or interest-free development loans that are not premised on exploitation of the debtors in the service of private profit. Money and banking are now used in the service of the common good of the people of Earth and in protection of the “ecological fabric of life” on our planet. The rich can no longer exploit the poor (or debtor nations) through a system of loans and debt that has so far created such misery for the peoples and nations of Earth.

Article 4 of the Earth Constitution, entitled “Grant of Specific Powers to World Government,” item number 17, reads: “Establish and Operate world financial, banking, credit and insurance institutions designed to serve human needs; establish, issue and regulate world currency, credit and exchange.” To do this effectively, Article 8 of the Constitution establishes the “World Financial Administration.” Section G. 1. F. reads:

Pursuant to specific legislation enacted by the World Parliament, and in conjunction with the Planetary Banking System, to establish and implement the procedures of a Planetary Monetary and Credit System based upon useful productive capacity and performance, both in goods and services. Such a monetary and credit system shall be designed for use with the Planetary Banking System for the financing of the activities and projects of the World Government, and for all other financial purposes approved by the World Parliament, without requiring the payment of interest on bonds, investments or other claims of financial ownership or debt. 

     Our global monetary system today is 99% composed of privately created debt-money (Brown 2007). Because of this we live in a world of global scarcity and desperation requiring, as we have seen, massive military training for counter-insurgency warfare and massive military interventions by imperial nations designed to protect and promote the present world domination on behalf of wealthy investors. The Earth Constitution is explicit that money must be created by the Federation as debt free money addressed to the common good and planetary prosperity. Unproductive financial speculations, such as derivatives, will be prohibited by law, as will unsustainable production externalizing its costs onto nature and society for the sake of private gain.

Under the authority of Article 19 of the Earth Constitution, a Provisional World Parliament has begun operating since 1982. During its ten sessions to date, the Provisional World Parliament has passed some 42 World Legislative Acts (WLA) designed to implement and develop the infrastructure of the Earth Federation under both the spirit and letter of the Earth Constitution. These acts are not binding on the final world parliament once the Constitution is ratified.  However, they serve to elaborate the content and spirit of the Constitution, and they will likely serve as a compelling model for the final World Parliament.

These acts include the creation of a World Economic Development Organization (WLA 2), an Earth Financial Funding Corporation (WLA 7), a Provisional Office for World Revenue (WLA 17), a World Patents Act (WLA 21), a World Equity Act (WLA 22), a World Public Utilities Act (WLA 38), and an act for a World Guaranteed Annual Income (WLA 42) (see Together they are laying the economic foundations for a global market economy based on human rights, promotion of the common good, and a democratic world order that benefits everyone, not just the present 10 percent of humanity who today own 85 percent of all the global wealth (Brown 2007, p. 271).

As early as the first session of the Parliament in 1982, when WLA 2 was passed creating the World Economic Development Organization (WEDO), the Parliament saw through the deception of debt-based money creation. Among the means of funding for WEDO is the directive to develop the financing potential and procedures defined under Article 8, Section G, paragraphs (d), (e), (f) of Earth Constitution to base finance on people’s potential productive capacity in both goods and services, rather than on past savings. Even though the Constitution gives Parliament the right to levy taxes, no such process is necessary within the sound monetary policy formulated by WEDO.

From this principle of funding under the Earth Constitution, that is, the creation of debt-free fiat money and credit based on the potential of those funded to produce sustainable goods and services, follow all the other principles of the Provisional World Parliament that are building the infrastructure for an equitable and just world order. With government-issued debt-free money, the Earth Federation will hire tens of millions of unemployed people in the Third World to restore the environment, replant the forests of the Earth, and restore the degraded agricultural lands of the Earth.

It provides a “new deal” for the people of Earth. The tens of millions hired to restore the environment will have money to exchange in their local economies. In conjunction with interest free loans or grants for building infrastructure, sanitation systems, education, healthcare, and many private and public sustainable new enterprises, local economies will “take off” in that dynamic circulation of money within communities that economists speak of as economic health. Inflation is easily controlled by maintaining a balance between money supply and available goods and services, which a public banking system can easily do. However, the need is so great that sustainable production must develop rapidly and continuously along with research into sustainable technologies, alternative energy, and cooperative forms of living (such as the research being done today in Auroville, India).

The Constitution guarantees everyone on Earth a minimum wage entirely sufficient to live with dignity and freedom (under Article 13). It provides every person on Earth with free health care, free education, and ample insurance in case of accident or old age. Once the militarized nation-state is removed, along with gigantic corporate and banking institutions dedicated to maximizing private profit for the few, economic well-being is not difficult to achieve. India is the subcontinent most suited to initiate this process of world transformation.

The world order can be fairly easily transformed into one of planetary peace with justice and prosperity. The present world-system of scarcity and domination is a result of the principle inherent in money created as public debt to private financial elites and on a global system of maximizing private profit at the expense of nature and the common good of the people of Earth. Perhaps the most fundamental secret is in “democratic money”: money issued debt free in the name of the productive capacity of the citizens of Earth to produce sustainable goods and services, issued by a public banking system run for the common prosperity of all.

Practically speaking, the origins of this economic transformation (requiring, as we have seen, transformation in other areas of human life) could well begin in India, given its immense population and resources. India historically has produced some of the greatest philosophies and religions or world history. Today, we understand that the new paradigm for human life must integrate all fundamental aspects for life on our planet, from the elimination of militarism, to protection and restoration of the environment, to the economics of prosperity rather than scarcity.  

The Constitution for the Federation of Earth provides both a roadmap and a new paradigm for rapid, sustainable development.  It forever frees not only the people of India but potentially the people of Earth from imperialism of militarized nations and the exploitation from global centers of capital.  Yet India is unique because she contains within herself the resources to initiate this global resurrection of our desperate human condition. Within the Earth Constitution, we not only find a path for concrete action, but just as important, a vision of our higher transformative possibilities, all of which are uniquely applicable to India.