True, the initial symptoms were not of a classical capitalist crisis. For, it had emerged from a structured fraud by what Obama calls the 'greed' of the Wall Street's 'too big to fail' banks. Not due to any accumulated production or classical recession. But then the 'decaying, outdated infrastructure', as Thomas Friedman calls it, has been a witness to the gradual US decline under the weight of the capitalist model it had itself championed. The nation had lived on steroids as did the 'baseball players of the 1990s'. 'We compensated for years of stagnating middle class wages the easy way', he says. Ever widening trade gap, cheap consumer credit to splurge on and diminishing competitiveness have been overawing the system.

This is the problem with steroids and antibiotics. Normal monetary tools available with the Federal Reserve have lost barb because bank rates in US are already at near zero level. The corporate lobbies insist that employment can be generated by more stimulus and full freedom for them to operate. But stimulus itself is induction of state funds to keep private industry alive. It is form of heavy state subsidy, and an admission of the corporate failure. Now the cheap Yuan is solely blamed for the American crisis. Yuan may be a factor. But the real causes are more complex and remedies more arduous.

Let us begin with Obama's currency war at G-20. It was not China alone but many others had expressed reservation about imposing strict norms like GDP-exchange value correlation. At least half a dozen countries, including Germany, have opposed any kind of institutionalized 'punishment' of economies for their efficiency. Indian corporate establishment is also divided on arbitrary fixing of exchange rates.

To salvage its economy, the US is now considering a move to buy up treasury bonds to push down long-term interest rates. This will weaken dollar and thus enhance the competitiveness of US exports and cut imports. But the problem is that other countries can also do so with their currencies. Japan has already initiated such a move to safeguard its economy. This will then be the beginning of a full-fledged currency war. In EU, the ferment has taken different forms. The UK has responded by large-scale firing of the government staff, defence cuts, stiffer immigration rules and official austerity measures. Labour unrest supported by the students have crippled France. Similar troubles are brewing in Italy.

Clearly, the classical western capitalist model is under severe stress. Instead of the promised 'global village', we find each country turning into a ghetto with various kinds of protectionism and trade wars. Anti-dumping duty is the favourite device to block imports. Free trade comes with so many strings. Countries are putting hurdles in imports citing things like 'security' and 'alien' control. This is most widely applied in the case of Chinese communication and power equipment. US itself had, that too under George Bush, scuttled the acquisition by a Saudi company of a UK firm that controlled a chain of US ports on security ground. Same had happened when a Chinese firm tried to take over a US power company under Bush.

Things like Washington Consensus are on the wane. The WTO, the ultimate in free trade, is left with an occasional dumping case. Like the free trade myth, multilateralism is also dead. Countries are picking and choosing bilateral free trade agreements only when it suits them. Until two years back, it was fashionable to talk of the unipolar world and its sole super power. Now the latter finds its agenda rebuffed at different fora. China's emergence as the second power and a shift from the Atlantic to Pacific are not the only developments of the decade. Other powers have also begun asserting their rights.

Look at Obama's wish lists for his Asian visit. A nation that had for long used its vast market power for economic sanction on others, is now on a massive quest for markets. In India, Obama acts more as a marketing executive. The doctrines of intervention and strategic partnership, so loud under George Bush, have been pushed to the background. Obama now avoids talking of sucking India into 'democracy alliance' against China or joint naval build-up. His military talks in India is confined to sales of US military aircraft and surveillance equipment. Already, agreement has been reached for about ten billion dollar worth sales on government-to-government basis without open bids.

This includes 10 C-17 Globemaster III, 99 F414 GE fighter jet engines. Then there are sale of marine engines by Caterpillar. GE may source dollar 4 billion worth of diesel locomotives for Indian Railways. Then there is sale of 30 Boeing 737s valued at dollar 2.7 billion, marine engines and assembly plant by Harley-Davidson. India has almost yielded to the Walmart's pressure to permit it open retail chains.

The list is endless if one considers the vast scope in fields like agriculture and infrastructure. This is a major achievement for Obama who can now make it a show piece of how he is expanding the US exports and enhancing employment opportunities for the Americans. A team of over 260 business honchos are accompanying Obama. He may use such lure to win over the corporates who are engaged in a running battle with him on the issue of new regulations and tax cuts.

Despite the cosmetic remedies, the present capitalist model will have to tackle two of its fundamental flaws. The vicious circle predicted by Karl Marx in 19th century is now in full play however much we try to ignore it. Competition and efficiency, key to the very survival and profit, can be achieved only through better technology and labour saving. Workers are dispensable as 'labour' but a 'consumer' jobless labour play havoc with the economy. Thus unemployment inhibits demand for goods, which in turn, leads to production cutback which leads to more loss of jobs and recession.

The contradictions of jobless growth is no more imaginary. Already, this is the biggest concern everywhere (in US it has crossed 9 per cent). The increasing protectionism and outsourcing controversy are just warning signals. The second flaw is the very sustainability of the system. Despite all arguments dispelling the fears, it is not going to be easy to overlook the acute problems of climate change, conflicts for fuel sources and degradation of earth. (IPA Service)