At a recent gathering of central bankers in Kuala Lumpur, the IMF?s Managing Director Dominique Strauss-Kahn conceded that advanced economies are ?already in a depression?. So swiftly are so many economies falling into the red that the word ?depression? is beginning to replace ?recession? in portrayals of the crisis.
Depressions are staggering events with enormous consequences for economies and societies. Since they are systemic in nature, the effects permeate into every aspect of life?from the micro-level decisions that individuals make to the forms of collective organisation and support networks that groups have to manage distress.
In atomistic societies, economic depression translates into mental depression and anomie in individuals, leading to nervous breakdown, suicidal tendencies and psychological crimes. Health and happiness in overly materialistic societies rests on ?retail therapy? or the delusive sense of satisfaction that is derived from having purchasing power to go to supermarkets or malls and buy things to tide over emotional angst. Depressions take the winds out of the sails of consumer demand and pose a serious existential crisis for people used to being credit card-happy and splurge-prone. Consumerism, as a way of life, is badly hit by depressions and this unsettles the rhythms and certainties which individualistic societies take for granted.
Some of the objective mitigating factors that might save people in advanced economies from worse fates in the current global depression, compared to its predecessor, are improved health care services, state-guaranteed bank deposits of small savers, social security provisions like food stamps and unemployment doles.
Yet, the subjective and socio-psychological fragility in advanced economies augur great hardships, tumult and upheavals in the coming years. It is in this context of spreading gloom that the US Director of National Intelligence, Dennis Blair, estimated the economic crisis as the most serious national security threat facing his country.
Unlike advanced OECD countries that suffer from acute social frailties, India?s less individualised and more communitarian value system is sturdier and capable of weathering the storms of global depression.
For good or bad, Indians take shelter in family, neighbourhood and community much more than westerners do. These institutions are great fallback options when the economy slips or tanks because they provide alternative reference points for affirmation, acceptance and self-worth.
Despite India?s integration into the global economy since 1991, it has not been as ruthlessly ?modernised? to the point of measuring an individual?s accomplishments isolated from the groups to which she belongs. Thus, when an individual gets laid off or loses her savings in a corporate collapse, the typical Western feelings of failure, guilt and self-destruction do not easily enter the Indian mind. Imbued with very high levels of religiosity and providential notions of ?good times? and ?bad times?, Indians have a DNA that is much more resilient to the tough times of global depression.
India?s objective economic indicators are also far from recession, not to mention depression. Last month, Business Week cited many economists arguing that higher savings, favourable demographics, productivity gains, and weaker exposure to global vicissitudes will steer India from the excesses of the ?global crash?.
When one of the protagonists in Danny Boyle?s Slumdog Millionaire says, ?India is the centre of the world, and I am at the centre of the centre?, it is a reflection of this confidence. For all we know, by the time the dust clears from the global depression, India could find itself in hot pursuit of China, which has upstaged Germany to become the third largest economy in the world.
The author is a researcher on international affairs at the Maxwell School of Citizenship & Public Affairs in Syracuse, New York