Concern about economics: Some questions

Global trade and market economy are not a new concept. Mankind has moved from one end to the other part of the globe for marketing products. Arabian perfume did find market in Europe in the 15th Century because of its superb quality. As far back as in 594 BC, Athens exported olive oil in return for grain. Adam Smith in his famous book Wealth of Nations advised not to produce that item which could be imported at a lower price from abroad. Adam Smith's book was published in 1776. Now it seems that the concept of globalisation and free market economy has been reincarnated in the 20th century. Of course, these economic weapons have been forcefully used against the fragile command economy of the socialist world.   The western world was proud of its economic performance, and it had reasons to be so.
But in the early eighties of the last century, Ronald Reagan, the late US President, and Margaret Thatcher, the late Prime Minister of Great Britain, used the theory of market economy in their own ways. According to their views, the government has nothing to do with the economic affairs of a country. Its function is restricted to maintaining law and the size of the government should be minimal because it is an impediment to the economic growth of a country. Market will take care of everything. Reagan's adage was "surplus wealth of the rich will trickle down to the poor." President Kennedy said that the high tides would lift all boats.
The glorification of the market economy gained further momentum with the collapse of the Soviet world. In the meantime, China moved away from Mao's path and took oath of allegiance to the market economy, of course with much state control. Chinese leader Deng Xiaoping  used to say: "To get rich is glorious". Adam Smith said in The Theory of Moral Sentiments: "The rich man glorifies in his riches because he feels that they naturally draw upon him the attention of the world and that mankind is disposed to go along him in all those agreeable emotions, with which the advantage of his situation so readily inspires him. The poor man on the contrary is ashamed of his poverty. He feels that it either places him out of the sight of mankind or if they take any notice of him if they have, however scarce, any fellow feeling with the misery and distress which he suffers."
Invincibility of market economy got a shock and faced the worst economy disaster in 2007-2008 AD during the global economic recession. In the developed countries, so long very loud against government intervention, no other option could be found safe and except the financial assistance from the public exchequer. Some organisations had to be rescued under the plea 'too big to fail'. The US President had to come forward with billions of dollars for rescuing the distressed corporate. At one stage, the US government probably became the top share owner of the country.
While taking oath as President of the USA, Barack Obama acknowledged the role of the government and said that the size did not matter, how efficiently it worked would be looked at. After observing the roles of the government during this depression have there been any changes in the views of the protagonists of the free market economy? During the crisis, either money market or any share market did not or could not rescue a single distressed company. Of course, long before this crisis, the number one currency dealer, George Soros, admitted that the market system, like every other human arrangement, is inherently flawed.
For centuries the economists have been highlighting the market value, known as market capitalisation, of both share market and currency market before the people. But what contribution it may make to the economic development of a country? Mahathir Mohamad, the former Prime Minister of Malaysia, wrote in his book A New Deal for Asia, "Currency trading is said to be 20 times bigger in money terms. But what benefits do we derive from it? Apart from a few people making huge sums of money, it has created no increase in employment, no growth in business or in the wealth of nation and people."
The same words can be applied in case of share trading also. Market capitalisation does not have intrinsic value. But unfortunately, the media always presents the issue in such a manner that creates misunderstanding and panic. At the decline of a huge amount of market capitalisation, it is   sometimes reported that a huge amount of money has been smuggled out from the market. Numbers of share remaining the same, the airy calculation of price differs without having any financial impact on the economy. The stock exchange is a market, where financial instruments are traded. It does not and cannot provide any financial assistance to any proposed or ongoing corporate organisation. The reason is very simple. It is a place for trading and not investment. If the economy of a country becomes buoyant, the share market will be bullish, not the other way round. Hyper sensitivity is a very old disease of a stock exchange. This causes damage to the innocent shareholders/investors.
In 2004, when the Congress with the support of the Left won the election in India, the Mumbai stock market collapsed. Again, when in 2009 the Congress won the election sans Left support, the Mumbai stock exchange was overheated and trading had to be suspended. On both the occasions, the Mumbai stock exchange behaved in silly and unreasonable manner --- because no financial policy would change overnight, particularly in India, where the bureaucracy is notorious for lethargy and delays. What happens, be it in India or anywhere around the globe, rumour-mongers and persons with ulterior motive either create panic or over-joy and misguide the innocent people. There are issues, like those revolving round the stock exchanges, which need to be studied by PhDs dealing with the capital market. In all kinds of trades, certain methods are followed purely for flourishing the business without paying any attention to ethics or the greater cause of the people.
Again, a quotation from George  Soros's book The Crisis of Global Capitalism  may be suitable for the purpose. He says, "Politicians gain recognition for getting elected not for the principles they represent. Business people are esteemed for their wealth, not for their probity or the contribution of their business to social and economic wellbeing. What is right has been subordinated to what is effective and this has made it easier to succeed without paying any heed to what is right."
Needless to say, we see a grave danger here to the stability of our society.
 rezaulparvaz@live.com