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Monday January 30, 2023

How to challenge a dogma - Part III

December 14, 2022

The West and other capitalist countries have thrived on the ruthless exploitation of not only smaller states but also their own people. These champions of the free market economy did not touch the heights of wealth and opulence because of any economic philosophy, but due to the outright aggression they committed against several countries.

Another factor that led to the prosperity of the developed world is colonization of over 85 per cent of the world. And another reason is that these countries were not colonized the way the Global South was. Some of these countries also escaped the ruthless attacks of the Mongols who wreaked havoc across the Muslim world and parts of Eurasia. Only Hungary and Poland were affected to some extent by such invasions. Their aggression against the Muslim world was not without a colossal economic cost.

Iraq and other parts of the Muslim world witnessed large-scale economic destruction that did not let them stand on their feet for the next several centuries. Had the West faced the same scale of devastation, would it have been in a position to grow economically the way it did?

Western and other countries carefully ensured that there was no external interference in their national matters. For instance, Japan did not allow foreigners to intervene in the country for over 100 years. And while Western countries did increasingly exploit other people’s resources – first during the crusades and later throughout the colonization period – their land was not invaded by non-European powers.

Is it merely a coincidence that nations which escaped colonization managed to achieve wealth and prosperity? This speaks volumes about the opulence of the West which rests on colonization, economic deprivation of the Global South and predatory capitalism.

Finance ministers and economic pundits in Pakistan believe that if Pakistan wants to grow economically, it must follow the principles of free trade and ‘let the market decide’. This flies in the face of everything we have witnessed so far. The UK, France and the US are among the world’s most protectionist economies since the dawn of the Industrial Revolution. Japan followed protectionism for over 100 years. The Dutch and other Western nations also followed this policy of protecting their markets and capturing others’.

China remained a closed economy for more than 28 years, and yet it could achieve economic growth of almost five per cent despite the sanctions and economic strangulation by the West. India was not open until the 1980s, protecting its emerging bourgeoisie class from foreign competition. It allowed Western companies to enter its domestic market only after Indian entrepreneurs were strong enough to compete with them.

Our economic experts also argue that the state cannot play any role in economic development and cannot lead to creativity and innovation. This is not true. Governments all over the world work on new technology. In 2018, the US military spent $42 billion in research and development. According to ‘USA Today’, “Military programmes that work on new technology, materials, or gadgets have over the years contributed to the development of several consumer end products, materials used in consumer applications, medical devices, and much more. Some of these products are still made in the United States. In fact, some of the most widely used commercial products today were originally developed for the purpose of defending the country or were a byproduct of military research.”

The newspaper has identified 15 commercial products that are a direct result of military research. American intellectual Noam Chomsky asserts that even the super computer was invented by the Pentagon and handed over to private profiteers to enrich themselves.

It is rather surprising that elite business schools from Karachi to Mumbai, Lahore to New York or London to Paris do not focus on how public funds are used for the creation of several modern devices. No free-market supporter talks about factors that prompt the ruling classes of the US to hand over modern inventions to private individuals who earn tons of money by benefiting from the research funded by the American working class. No economic professor talks about the innovation and creativity carried out by the public sector.

Private companies cannot possibly invent new things without substantial grants or financial assistance from governments. For instance, over $37 billion has been invested for the production of coronavirus vaccines. A large chunk of this amount is funded by the American, European and other governments. But it is private companies that are making huge profits through the vaccine trade, exploiting the misery caused by the Covid-19 pandemic.

In countries like India and Pakistan, economic gurus keep repeating that the public sector can never be creative and innovative. Interestingly, even today, the share of public-sector employment is quite large. Armies are one of the largest employers across the globe. For decades state-run entities like railways, aviation, transport, shipping, etc have provided employment to millions of people.

When the Great Depression hit the Western capitalist world, it was the late Roosevelt’s New Deal – funded by public money – that came to the rescue of this unbalanced economic system, which thrives on the exploitation of the working class.

In Pakistan, contractors are eager to secure government-backed construction projects or any other share in CPEC projects. The combined PSDP budget of the federation and all provinces exceed the amount the private sector spends in perhaps a year to create employment. During the early stage of the pandemic, it was the state that pumped more than Rs1,200 billion, appeasing the business lobby that always thrived on these state favours.

Over $17 billion is spent in elite privileges in Pakistan to ‘help the elite make ends meet’. Every government comes up with bailout packages for textile, surgical goods, construction, vehicle import and stock exchange.

Pakistan’s economic wizards and financial magicians who criticize the role of the state in economic affairs need to revisit their approach. Their claims that the state cannot be creative or innovative or it cannot run the affairs of the economy in an efficient way are untrue.

It is time we revived the role of the state, revitalized state-run entities and pumped profit into the projects and schemes that create long-term employment. All this is necessary for the revival of the Pakistani economy. All subsidies to rich industrialists, business owners and private entities should be abolished.

If capitalists want people to be at the mercy of the market, they should also be left alone dealing with the monstrous creature called the free market and public money should not be used to prop them up. No useless road, underpasses or flyover projects should be undertaken with public money to accommodate these strong proponents of the free market.

Concluded

The writer is a freelance journalist who can be reached at: egalitarianism444@gmail.com

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