People-centric economic model

The journey of human civilisation started with a desire to live a peaceful and prosperous life with freedom. It led to society-building by surrendering certain rights to society. The society became the basic ingredient with a slogan to create a harmonious and prosperous life.

Simultaneously, the instinct to dominate and rule fellow humans got stronger and different models were invented. This instinct led to the creation of theories - Marxism, capitalism, socialism, liberalism, etc. The liberal order is the classiest model to rule the people. It is devised in such a sophisticated way that people feel they are empowered, running the system and the system revolves around them.

Liberal order adopted the economy to rule the people and made the army and power subordinate to it. This order is based on the ruthless and cut-throat competition. The survival of the fittest has become a major catchphrase. Societal thinking, or the basic role of society, is confined to slogans. It gave birth to inequality, class system and exploitation of fellow humans. It caused multifaceted problems, including poverty, food insecurity and existential threat of climate change. It disturbed the peace, and people are fighting in the name of nationality, class, ethnicity, group, etc. The desire for a peaceful living and prosperous life is becoming a distant dream.

The globalisation drive took this division to the global level. It helped the powerful economic players to colonise countries without attacking or physically occupying them. It is the most sophisticated and dangerous form of colonisation because the colonisers do not have any responsibility but rights to exploit the people.

The process of societal thinking was reversed to individualism. Despite all the claims that we live in a global village assisted by the hyper-digital revolution and connectivity, individualism is still ruling us. The main culprit of return is the economic system. There is a need to bring back the initial ideology of human civilization – to live a peaceful and prosperous life with freedom.

For that purpose, it is necessary to fix the economic system. There are three fundamental problems with the liberal economic system: unfair means of wealth accumulation; weak or non-existent mechanisms of redistribution of wealth, ruthless competition, and the invisible hand. These have shifted focus from society to individualism.

We have to tackle the problem of accumulation of wealth triggered by greed and facilitated by liberal economic order. It has devised tools that facilitate accumulation of wealth in a few hands. The main instrument is the financial system. This system is based on interest rates, which encourages people to benefit from their money without investing in productive means. Moreover, it provides opportunities for risk-free investment. It also facilitates the big fish to eat small ones through the networks of banks. It does not take into account humans and their needs.

The financial system also helps powerful people and countries control individuals and colonise nations. Once trapped, it becomes extremely difficult to escape the debt trap. We can find numerous examples to support the argument. For example, every year, hundreds of farmers commit suicide in India due to financial obligations. The list of countries that have been trapped is very long. It includes countries like Pakistan, Argentina, Brazil, Greece etc.

In addition, the financial system has developed fake currency to buy real commodities. The countries with powerful currencies like US dollar, Euro, UK Pound, etc., exploit the resource-rich states.

The liberal order has the weakest or no wealth redistribution mechanisms in the name of an open market and equal opportunities. In reality, equal opportunities are only for the most powerful. The system is designed in such a way that wealth attracts wealth. In the beginning, the social security concept was implemented to protect the poor. However, with the growing power of the private sector, this system started to weaken. Now, inequality and poverty are on the rise, even in the wealthiest countries of the world.

A liberal economic order promotes ruthless competition. It assumes that all are equal and have the resources to compete. Thus, countries should open their borders and markets for the big players and multinational companies. In reality, there is no equality and small business groups cannot compete with big companies. Liberal economic order depends on the invisible hand to regulate and run the system.

In a nutshell, the liberal economic order is all about the market, money and resources. Humans are the only source of earning money. It has diverted the focus from humans and society and strives to maximise profit. There is a need to devise an economic model that keeps humans at the centre, not profit.

The process of building a new system should be started from the financial system. The interest-based system should be replaced with an interest-free one. For that purpose, few options can be explored. First, people should be encouraged to invest in productive means, rather than just depositing in banks. The investment will bring new livelihood opportunities. These opportunities will assist in lowering inequality and poverty and pave the way for eradication of poverty. Second, the banks should invest in real-time projects and offer partnerships to people like cooperative societies. They should share the profit and loss, according to the share of the partnership. Third, the concept of community banks for interest-free loans can also be explored. The Akhuwat model in Pakistan can provide guidance on this front. Fourth, there is a need to replace fake currency with real one.

The world needs to devise comprehensive wealth redistribution mechanisms. It is a need of time. It is required to tackle issues of inequality and poverty. It is a fact inequality breeds insecurity, which leads to conflicts. Redistribution of wealth is not only an economic subject, but also a matter of security, and we have to put efforts into lowering inequalities to secure peace. Without sustainable peace, no business can flourish except the business of war.

Redistribution of wealth will also create economic opportunities for the market players. How? When poor people will have money or resources, they will spend more on goods and services. It will create a sustainable cycle of supply and demand. It will also help counter bubble and burst phenomena.

The Zakat system of the Islamic economic model is the best example of redistribution of wealth. Muslims can adopt Zakat system and non-Muslims can learn from it to devise their own system. The invisible hand always remains invisible and works when powerful players face challenges.

For example, during the financial crisis of 2008, big companies minted trillions of dollars from their respective governments. They forget about the lectures on market forces and the invisible hand. These companies also compel the governments to give them concessions in taxes and let them play their way in the name of free market and competition. When the government comes to rescue common people from the market crisis, they urge it and the people to believe in the invisible hand. Thus, there is a need to think beyond the invisible hand.

The best available option for governments to introduce a visible hand is to strengthen the State-Owned Enterprises (SOEs). These enterprises will generate revenue for the State and lessen dependence on tax revenue. It will help avert pressure from the private sector and undue demands. The private sector and their proponents always portray a scary picture of SOEs. They do not hesitate to destroy SOEs through different means.

They do it in a systematic manner. They find their friends in the system and then depute them to turn SOEs into loss-making entities. After that, they start an anti-SOE campaign. They advocate the State has nothing to do with business. Thus, all SOEs must be sold to the private sector.

There are a few suggestions that can help the States focus more on people, and it will pave the way for a people-centric economic model. These suggestions, however, are not the final word; these can be refined further.