Capitalism must be very carefully handled
it is a good system, said former Prime Minister Tun Dr Mahathir Mohamad.
Dr Mahathir said events that led to the present global financial crisis,
which affected the West very much showed that uncontrolled capital could actually
destroy even the big economies.
Capitalism has many different interpretations, some declare it as complete
free movement of capital into a country to invest and exploit while others feel
that there should be some control over the movement of capital.
"Because capital is a very powerful instrument...it actually can destroy an
economy as much as it can build an economy. Many countries now especially in
Asia are wary of complete free flow of capital," he said from Sarajevo,
Bosnia-Herzegovina, in a question and answer session about the future of
capitalism, in a video conference interview.
The session was conducted by Dr Frank-Jurgen Richter, the President and
founder of Horasis: The Global Visions Community, an independent international
organisation committed to enacting visions for a sustainable future, in
conjunction with the Plus International Expressway Conference and Exhibition
2101, which ended here today.
Talking further about the cause of the present financial crisis, Dr Mahathir
who is in the capital city of the Balkan state for a visit, said that
in many countries abdicated their role because they decided that the market
will control the economy and the market would play the role of regulating
"But the market is about making money. So, when they saw a chance to abuse
the system to get money for themselves...they did not hesitate," he said.
As such, Dr Mahathir said that governments need to regulate the functions of
banks and make sure banks did not lend far too much money.
"The crisis started because too much capital (was) lend out without any
proper consideration as to the prudence of lending money to the people, who
actually turned out unable to pay their debts," he said.
Answering a question on the rise of protectionism in the United States and
Europe, Dr Mahathir pointed out that most countries in the world including East Asia had the
tendency to protect certain industries regarded as of national character or
very crucial to the economic growth of their country.
"So we had to accept that there cannot be really total openness...some
countries will try to protect not by tariffs or physical blockage but by having
certain conditions such as qualities...specification, etc...which means in effect
you have become protectionist," he said.
On China, Dr Mahathir urged those who had the idea that China posed a threat
to the world, to re-think about it.
"Because China is there and will be there, no matter what you do, and is
to be a great world power...but I think to curb China's growth and all that
not the right approach.
"You have to accept that China is going to be very strong economically and
strong economies obviously must have strong military capability to protect
themselves. This is not a threat to the world," said Dr Mahathir.
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