Financial Crisis Analysis

Today, we are facing now financial crisis in all over world. I think it is better to introduce about financial crisis at first. In my point of view financial crisis is the stage of capitalist system. The crisis comes time to time in the system and it is not new. We know, 1929 financial crisis was world’s biggest crisis and after that we face two world war to reduce the crisis. You will think I am talking about war and it is not related to financial crisis. But it is not true. Basically, war comes in the stage of crisis.

At first, we should discuss about capitalist system because the crisis has been produced by this system. It is simple every state has system to run that. Currently in the capitalist state what is the system to run the state we will see here. I have already said it is not new financial crisis in the system because every after every 10 years we face the crisis and after some time we forget all the things.

I think here should discuss about capitalist system something. Capitalist systems is different from its all previous system because it runs on money and capital. Now, the question is what is money? Money is nothing but a mediator. It is only exchange value. Suppose, we have a product A and money B then we can exchange from each other if the value is same.

To run every system and every thing basic is productions and products. The basic things is product and money is secondary thing which runs as exchange value. But in the capitalist systems the capital ruled over the production. Here creates all the problem because capital runs but the product remains constant in the situations we face some times inflations and some times crisis.

Now, we will see how the production increase and the sell of products goes in down in the system. The product has been produced for market not for people uses in priority. For example, if we are not able to pay a lump-sum for a product we can’t buy however the product after some times will be diminish. But the run market the product will not be sold.

It is the basic laws of production in the capitalist system. Now, we will discuss about circulation systems. In the circulation system the product comes in market but the money doesn’t come with that in market to buy the product. For example, in a company a labour work 8 hours and produced 100 rupees product but after the 8 hours he get only 20 rupees as a labour value. In this condition 80 rupees goes in the pocket of capitalist. We can assume that if the capitalist spend 40 rupees more to buy the row material, labour, machine etc. however he has still 40 rupees in his pocket. In this conditions in the market the product has been sold only the rupees of 60 and product of rupees remain in the store of capitalist. In this cycle the production accumulation became higher and crisis comes itself.

The capitalist system in this situations use the financial loans to face the problem which we can see today with the banks. Banks are trying to give more and more loans to the consumer. What is the reason behind it? They want to sell their product and want to capture the future saving of the people. I have already written about it with the topic of loans – killer of people future savings.

Lastly, the capitalist system can’t face the problem forever and can’t remove the financial crisis forever because the cycle of capitalist system is very bad. We can say the current scenario of the India. From the 2006 to 2008 the market was on boom because people got the loans and bought the product which was already produced before production of that.

People were thought that India is growing and market is in boom but what about today’s scenario. The market is in its real conditions and all the growth remain same of 2005. Actually, it was not growth it was the boom of capitalist system by the loans. Actual, production was remain constant then how a country can develop and growth. Only the consumptions was developed not production that is why after 2 years again we are facing the problem.

I think it is the analysis of financial crisis in the term of capitalist system. Now, from here we can deal what can be better options to escape the financial crisis.

I will write that in my next post with some example.