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Global economic recession – A crisis of capitalism?

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In August 2019 the top economists, CEOs and businessmen met in the US and the G7 leaders met in France to discuss ways and means of evading the looming economic recession. They had seen the early signs and were trying to prevent the occurence of yet another downturn which has now become cyclic and almost inevitable. Yet the recession seems to be upon us with a vengence, hurried on by the effects of the Covid pandemic and the war in Ukraine. We are bankrupt thanks to our politicians while the poor people in Europe it seems have to decide between eat and heat this winter.

There had been economic downturns since the early 18th Century but the worst ones have been recorded since1929 when the Great Depression hit the world. An economic recession is defined as a significant decline in the GDP lasting several months and widespread unemployment and negative changes in other vital economic parameters. A depression is more severe in degree and longer in duration. The GDP drop in the Great Depression in 1930 was 26.7% the biggest ever. This depression was followed by rapid growth and full employment but the good times did not last long. Recession recurred in 1937 with a GDP decline of 18.3%. This cycle of boom and crisis continued with recessions occuring in 1945 (GDP drop – 12.7%), 1949, 1975, 1982, 1991, 2009 and 2021.

The main cause for the Great Depression in 1929 is said to be a reduction in spending resulting in a decline in production and rise in unemployment. The share market had also crashed. The global financial link that was in operation due to the Gold Standard had caused the depression to spread world wide. What caused the initial reduction in spending is not clearly explained. Similar theories were put forward to explain the subsequent crises but seldom were they convincing. External circumstances like pandemics, droughts and wars had sometimes been contributary factors but robust economies should not show such vulnerability.

John Maynard Keynes proposed that governments must intervene to control the ups and downs of the economy, going against the then prevalent idea that the free market should be allowed to drive the economy along its naturally advancing path. According to him the main driving force of the economy is the agregate demand which is measured as the sum of spending by households, business and government. During recession the agregate demand is reduced resulting in decreased output and unemployment. By increasing spending, both public and private, production could be stimulated and the economy would recover. This is where the government could intervene by increasing public spending and increasing the availability of money for private spending and also introducing fiscal measures. Keynes would advocate deficit spending on labour intensive infrastructure projects to stimulate employment and stabilize wages during economic downturn.

However, the Austrian School of Economics took a different stand, and they said recession and booms were a part of the natural order of capital development and government intervention could worsen the crisis. Keynesian policies dominated till about the 1970s when many advanced economies suffered inflation and slow growth. Keynesian economists had no answer to this crisis. They believed that fiscal measures could solve the crisis while the Monetarist economists advocated that judiciary use of monetary measures would aleviate the crisis. A New Generation of Keynesian economists arose in the 1970 to 1980 period who strengthened the argument that fiscal policies could be effective against economic downturn.

The global financial crisis in 2007-08 caused a resurgence in Keynesian thought and many governments including the US and the UK adopted these policies. However this crisis also showed that Keynesian theory must come to terms with the monetary aspect of the problem too and presently the Keynesians it seems are trying to address the monetary issues. It is seen that no economist seems to have an effective solution or a clear explanation for the recurrent economic recessions that had affected the world since the 18th Century.

Sri Lankan government in 2019-20 was caught in the initial stages of the recession before it was overwhelmed by the Covid pandemic. The then government’s decision to reduce taxes and stimulate spending in a crisis situation resonate with Keynesian fiscal policy but proved to be disasterous in a country where poor people depend on state welfarism for survival. Now Sri Lanka seems to have gone in the opposite direction after consultations with IMF and has introduced high taxation while keeping the interest rates also high. The two together may discourage investment in industry and service which may worsen the economic decline. The interest rates may have to be brought down sooner than later if industries are to survive. However, all these are kneejerk reactions for nobody knows the real cause of global economic recession.

Did Karl Marx know? He said “The real barrier of capitalist production is capital itself” (Capital, Vol 111). According to him the accumulation of surplus capital due to profits adding on to the real value of a product over and above the cost of production which is determined mainly by labour, introduces a contradiction into the system. This is the cause of all the woes of capitalism. The causes are not accidental or natural in origin but arise from systemic elements of capitalism as a mode of production and basic social order. It is consequent to the profit motive as described by Marx as a two-faced law with the same cause for decrease in the rate of profits and a simultaneous increase of the mass of profits. In other words the development of productivity of labour causes on the one hand a decrease in the rate of profit (net profit expressed as a pecentage of the intial total investment) and on the other hand an increase in the absolute mass of the appropriated surplus value or prifit. This is the chaotic system that the profit motive creates which attempts to cut cost of production including labour costs with the use of machinery that replaces humans (eg. use of self-driven trucks have caused loss of employment for thousands of drivers in the US) or finding cheaper labour (in poor countries) and such other methods.

Marx may be correct in his analysis of the inherent contradiction in capitalism. If we are to explain this problem in simple words, let us imagine that the world has a population of hundred people and they have to produce an item essential for life and the owner of production pays them Rs.10 as wages and expects to sell the item at Rs.11 , such a system is not possible. The problem is of course much more complex but the system may have lasted due to its complexity although it is crisis laden and bound to collapse.

Buddhists could look at this problem from a different angle that Marx did not see though he spoke about the profit mortive. Marx had not taken into consideration the psychology of greed which is a very strong, inherent and primary character of human nature. Buddha in his endevour to find a solution to human suffering realized that greed was the cause of suffering. We may say that all ills of the world, related to economy, wars, climate etc are caused by greed. Buddha’s analysis of the psychology of greed has not been equalled by modern psychologists who seems to have omitted to delve deep into the phenomenon. According to Buddha greed could occupy the human mind at three states; a dormant state, an active state and a manifested state. Buddha had recommended measures to be taken to control all three states. The practise of “Dana, Seela, Bhavana” are the measures that could be taken to control greed in all its three states. Buddhist civilisations of yore which practised these good deeds had developed a detached attitude which restrained the acquisitive human nature. Now of course all that seems to have changed. Sri Lanka and the whole world is engulfed in greed and are doomed unless corrective measures to control greed are taken.

N.A.de S. Amaratunga



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Opinion

Capt. Dinham Suhood flies West

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A few days ago, we heard the sad news of the passing on of Capt. Dinham Suhood. Born in 1929, he was the last surviving Air Ceylon Captain from the ‘old guard’.

He studied at St Joseph’s College, Colombo 10. He had his flying training in 1949 in Sydney, Australia and then joined Air Ceylon in late 1957. There he flew the DC3 (Dakota), HS748 (Avro), Nord 262 and the HS 121 (Trident).

I remember how he lent his large collection of ‘Airfix’ plastic aircraft models built to scale at S. Thomas’ College, exhibitions. That really inspired us schoolboys.

In 1971 he flew for a Singaporean Millionaire, a BAC One-Eleven and then later joined Air Siam where he flew Boeing B707 and the B747 before retiring and migrating to Australia in 1975.

Some of my captains had flown with him as First Officers. He was reputed to have been a true professional and always helpful to his colleagues.

He was an accomplished pianist and good dancer.

He passed on a few days short of his 97th birthday, after a brief illness.

May his soul rest in peace!

To fly west my friend is a test we must all take for a final check

Capt. Gihan A Fernando

RCyAF/ SLAF, Air Ceylon, Air Lanka, Singapore Airlines, SriLankan Airlines

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Opinion

Global warming here to stay

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The cause of global warming, they claim, is due to ever increasing levels of CO2. This is a by-product of burning fossil fuels like oil and gas, and of course coal. Environmentalists and other ‘green’ activists are worried about rising world atmospheric levels of CO2.  Now they want to stop the whole world from burning fossil fuels, especially people who use cars powered by petrol and diesel oil, because burning petrol and oil are a major source of CO2 pollution. They are bringing forward the fateful day when oil and gas are scarce and can no longer be found and we have no choice but to travel by electricity-driven cars – or go by foot.  They say we must save energy now, by walking and save the planet’s atmosphere.

THE DEMON COAL

But it is coal, above all, that is hated most by the ‘green’ lobby. It is coal that is first on their list for targeting above all the other fossil fuels. The eminently logical reason is that coal is the dirtiest polluter of all. In addition to adding CO2 to the atmosphere, it pollutes the air we breathe with fine particles of ash and poisonous chemicals which also make us ill. And some claim that coal-fired power stations produce more harmful radiation than an atomic reactor.

STOP THE COAL!

Halting the use of coal for generating electricity is a priority for them. It is an action high on the Green party list.

However, no-one talks of what we can use to fill the energy gap left by coal. Some experts publicly claim that unfortunately, energy from wind or solar panels, will not be enough and cannot satisfy our demand for instant power at all times of the day or night at a reasonable price.

THE ALTERNATIVES

It seems to be a taboo to talk about energy from nuclear power, but this is misguided. Going nuclear offers tried and tested alternatives to coal. The West has got generating energy from uranium down to a fine art, but it does involve some potentially dangerous problems, which are overcome by powerful engineering designs which then must be operated safely. But an additional factor when using URANIUM is that it produces long term radioactive waste.  Relocating and storage of this waste is expensive and is a big problem.

Russia in November 2020, very kindly offered to help us with this continuous generating problem by offering standard Uranium modules for generating power. They offered to handle all aspects of the fuel cycle and its disposal.  In hindsight this would have been an unbelievable bargain. It can be assumed that we could have also used Russian expertise in solving the power distribution flows throughout the grid.

THORIUM

But thankfully we are blessed with a second nuclear choice – that of the mildly radioactive THORIUM, a much cheaper and safer solution to our energy needs.

News last month (January 2026) told us of how China has built a container ship that can run on Thorium for ten years without refuelling.  They must have solved the corrosion problem of the main fluoride mixing container walls. China has rare earths and can use AI computers to solve their metallurgical problems – fast!

Nevertheless, Russia can equally offer Sri Lanka Thorium- powered generating stations. Here the benefits are even more obviously evident. Thorium can be a quite cheap source of energy using locally mined material plus, so importantly, the radioactive waste remains dangerous for only a few hundred years, unlike uranium waste.

Because they are relatively small, only the size of a semi-detached house, such thorium generating stations can be located near the point of use, reducing the need for UNSIGHTLY towers and power grid distribution lines.

The design and supply of standard Thorium reactor machines may be more expensive but can be obtained from Russia itself, or China – our friends in our time of need.

Priyantha Hettige

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Opinion

Will computers ever be intelligent?

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Alan Turin and the Turin machine

The Island has recently published various articles on AI, and they are thought-provoking. This article is based on a paper I presented at a London University seminar, 22 years ago.

Will computers ever be intelligent? This question is controversial and crucial and, above all, difficult to answer. As a scientist and student of philosophy, how am I going to answer this question is a problem. In my opinion this cannot be purely a philosophical question. It involves science, especially the new branch of science called “The Artificial Intelligence”. I shall endeavour to answer this question cautiously.

Philosophers do not collect empirical evidence unlike scientists. They only use their own minds and try to figure out the way the world is. Empirical scientists collect data, repeat and predict the behaviour of matter and analyse them.

We can see that the question—”Will computers ever be intelligent?”—comes under the branch of philosophy known as Philosophy of Mind. Although philosophy of mind is a broad area, I am concentrating here mainly on the question of consciousness. Without consciousness there is no intelligence. While they often coincide in humans and animals, they can exist independently, especially in AI, which can be highly intelligent without being conscious.

AI and philosophers

It appears that Artificial Intelligence holds a special attraction for philosophers. I am not surprised about this as Al involves using computers to solve problems that seem to require human reasoning. Apart from solving complicated mathematical problems it can understand natural language. Computers do not “understand” human language in the human sense of comprehension; rather, they use Natural Language Processing (NLP) and machine learning to analyse patterns in data. Artificial Intelligence experts claim certain programmes can have the possibility of not only thinking like humans but also understanding concepts and becoming conscious.

The study of the possible intelligence of logical machines makes a wonderful test case for the debate between mind and brain. This debate has been going on for the last two and a half centuries. If material things, made up entirely of logical processes, can do exactly what the brain can, the question is whether the mind is material or immaterial.

Although the common belief is that philosophers think for the sake of thinking, it is not necessarily so. Early part of the 20th century brought about advances in logic and analytical philosophy in Britain. It was a philosopher (Ludwig Wittgenstein) who invented the truth table. This was a simple analytic tool useful in his early work. But this was absolutely essential to the conceptual basis of early computer science. Computer science and brain science have developed together and that is why the challenge of the thinking machine is so important for the philosophy of mind. My argument so far has been to justify how and why AI is important to philosophers and vice versa.

Looking at computers now, we can see that the more sophisticated the computer, the more it is able to emulate rather than stimulate our thought processes. Every time the neuroscientists discover the workings of the brain, they try to mimic brain activity with machines.

How can one tell if a computer is intelligent? We can ask it some questions or set a test and study its response and satisfy ourselves that there is some form of intelligence inside this box. Let us look at the famous Alan Turing Test. Imagine a person sitting at a terminal (A) typing questions. This terminal is connected to two other machines, (B) and (C). At terminal (B) sits another person (B) typing responses to the questions from person (A). (C) is not a human being, but a computer programmed to respond to the questions. If person (A) cannot tell the difference between person (B) and computer(C), then we can deduce that computer is as intelligent as person (B). Critics of this test think that there is nothing brilliant about it. As this is a pragmatic exercise and one need not have to define intelligence here. This must have amused the scientists and the philosophers in the early days of the computers. Nowadays, computers can do much more sophisticated work.

Chinese Room experiment

The other famous experiment is John Sealer’s Chinese room experiment. *He uses this experiment to debunk the idea that computers could be intelligent. For Searle, the mind and the brain are the same. But he warns us that we should not get carried away with the emulative success of the machines as mind contains an irreducible subjective quality. He claims that consciousness is a biological process. It is found in humans as well as in certain animals. It is interesting to note that he believes that the mind is entirely contained in the brain. And the empirical discovery of neural processes cannot be applied to outside the brain. He discards mind-body dualism and thinks that we cannot build a brain outside the body. More commonly, we believe the mind is totally in the brain, and all firing together and between, and what we call ‘thought’ comes from their multifarious collaboration.

Patricia and Paul Churchland are keen on neuroscientific methods rather than conventional psychology. They argue that the brain is really a processing machine in action. It is an amazing organ with a delicately organic structure. It is an example of a computer from the future and that at present we can only dream of approaching its processing speed. I think this is not something to be surprised about. The speed of the computer doubles every year and a half and in the distant future there will be machines computing faster than human beings. Further, the Churchlands’, strongly believe that through science one day we will replicate the human brain. To argue against this, I am putting forward the following true story.

I remember watching an Open University (London) education programme some years ago. A team of professors did an experiment on pavement hawkers in Bogota, Colombia. They were fruit sellers. The team bought a large number of miscellaneous items from these street vendors. This was repeated on a number of occasions. Within a few seconds, these vendors did mental calculations and came out with the amounts to be paid and the change was handed over equally fast. It was a success and repeatable and predictable. The team then took the sample population into a classroom situation and taught them basic arithmetic skills. After a few months of training they were given simple sums to do on selling fruit. Every one of them failed. These people had the brain structure that of ordinary human beings. They were skilled at their own jobs. But they could not be programmed to learn a set of rules. This poses the question whether we can create a perfect machine that will learn all the human transferable skills.

Computers and human brains excel at different tasks. For instance, a computer can remember things for an infinite amount of time. This is true as long as we don’t delete the computer files. Also, solving equations can be done in milliseconds. In my own experience when I was an undergraduate, I solved partial differential equations and it took me hours and a lot of paper. The present-day students have marvellous computer programmes for this. Let alone a mere student of mathematics, even a mathematical genius couldn’t rival computers in the above tasks. When it comes to languages, we can utter sentences of a completely foreign language after hearing it for the first time. Accents and slang can be decoded in our minds. Such algorithms, which we take for granted, will be very difficult for a computer.

I always maintain that there is more to intelligence than just being brilliant at quick thinking. A balanced human being to my mind is an intelligent person. An eccentric professor of Quantum Mechanics without feelings for life or people, cannot be considered an intelligent person. To people who may disagree with me, I shall give the benefit of the doubt and say most of the peoples’ intelligence is departmentalised. Intelligence is a total process.

Other limitations to AI

There are other limitations to artificial intelligence. The problems that existing computer programmes can handle are well-defined. There is a clear-cut way to decide whether a proposed solution is indeed the right one. In an algebraic equation, for example, the computer can check whether the variables and constants balance on both sides. But in contrast, many of the problems people face are ill-defined. As of yet, computer programmes do not define their own problems. It is not clear that computers will ever be able to do so in the way people do. Another crucial difference between humans and computers concerns “common sense”. An understanding of what is relevant and what is not. We possess it and computers don’t. The enormous amount of knowledge and experience about the world and its relevance to various problems computers are unlikely to have.

In this essay, I have attempted to discuss the merits and limitations of artificial intelligence, and by extension, computers. The evolution of the human brain has occurred over millennia, and creating a machine that truly matches human intelligence and is balanced in terms of emotions may be impossible or could take centuries

*The Chinese Room experiment, proposed by philosopher John Searle, challenges the idea that computers can truly “understand” language. Imagine a person locked in a room who does not know Chinese. They receive Chinese symbols through a slot and use an instruction manual to match them with other symbols to produce correct replies. To outsiders, it appears the person understands Chinese, but in reality, they are only following rules. Searle argues that similarly, a computer may process language convincingly without genuine understanding or consciousness.

by Sampath Anson Fernando

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