carey_jim

Satyam Shakeout - Barron's

This scandal points to one of the reasons that the dollar is rising in spite of dismal American financial news.

Capitalism rests on a long social/psychological/r... development in Europe, and especially England, which produced the atmosphere conducive to relatively honest, free-trade.

America was lucky enough to begin a new society in 1776, the very year that Adam Smith published his Wealth of Nations, a very radical book for that time.

We shouldn't forget that the Catholic Church prohibited the taking of interest on deposited money, barely a hundred years before the American Revolution, just as Islam does today and that it was the Protestant revolution that paved the way for this and other capitalist inventions.

America was founded in an atmosphere not conducive to free enterprise but to monopolies which were sanctioned by the monarchs of Europe and the Churches that stood behind their edicts (totalitarianism.)

See R.H. Tawney's Religion and the rise of Capitalism: www.amazon.com/s/ref=n...

and Max Weber's The Protestand Ethic and the Spirit of Capitalism: www.amazon.com/s/ref=n...

India threw off the yoke of British imperialism but also profited from the the British by acquiring a unifying language, English, and British parliamentary traditions.

However, Indian feudalism is still in place and manifests itself in the caste system and a dominant religion, Hinduism, which believes in reincarnation and karma. These traditions may not be conducive to a spirit of freedom and honesty, and a willingness to embrace new traditions (free speech, freedom of religion, freedom of choice, etc.) and inventions which seem necessary for a free market to thrive.

I don't think it is wise to be overly pessimistic about India's free market future but this highly unusual example of corporate fraud should give us pause.

In passing, we should have realized that Russia's unbroken history of hundreds of years of totalitarian government would make a transition to free market capitalism very difficult and we shouldn't be surprised at what is happening there now.

China too, is similar to India in that it comes into the modern world with thousands of years of relatively stable traditions which are quite different from those of Europe and the United States and which could easily give rise to economic institutions that are very different from our own, with different vices and virtues.

Mao Zedong can be seen as one more of a very, very long line of emperors who ruled China with an iron fist, where 'communism' was just window dressing in an effort to modernize China[.

It remains to be seen just how long China will remain a 'free-enterprise capitalist society' and we shouldn't be surprised if China reverts back to its long tradition of totalitarianism in difficult economic times.

Another reason for the rise of the dollar.