Reshaping capitalism

Steve Forbes has castigated President Obama for his ‘open letter’ published in the ‘Economist’ of October 8, 2016. In the said article, Obama had discussed ‘four areas of unfinished business in economic policy that his successor would have to tackle’. Obama explicitly expressed his frustration and confusion about the future of the US economy and political system.

Forbes says: “The whole thing encapsulates the wrongheaded and obstinately held thinking that has brought the US and the world economies to a near halt. The duration of the stagnation-and the feeling that there really is no end in sight-is breeding increasingly ugly politics.” 

Why such harsh criticism? Though Obama tries to reflect the ground realities, yet he still eulogies the capitalist system as an engine of growth. He reminds us all that “It is important to remember that capitalism has been the greatest driver of prosperity and opportunity the world has even known”. So, he doesn’t dare to commit the blasphemy of criticising capitalism for the economic woes and political problems of the US. Rather, he portrays capitalism as an architect of global prosperity.

What he does not take into account is that, after the Industrial Revolution in the late 18th and 19th centuries, capitalism created an unequal social, political and economic system not only in the industrialised countries but the world over. Did colonised and peripheral countries enjoy the same opportunities as the industrialised or coloniser countries did? Did capitalism create a level playing field for colonies or peripheral countries? Didn’t imperialist countries plunder cheap raw material, including labour, of colonies and peripheral countries? Didn’t these countries oblige peripheral countries to buy their finished product at prices with premium? Didn’t imperialist countries destroy the naturally evolved industries of colonies and peripheral countries? What happened with the Subcontinent?

Even after the Second World War, when colonies started getting independence, they were made to wear the neo-colonial yoke and could not develop at the required rates of growth. Almost all newly independent countries were subjected to political manipulation by the capitalist world led by the US. An illegitimate ruling elite, comprador classes and groups of newly independent countries were lured to dance to the tune of these masters for their selfish ambitions.

While local rulers served their masters with seamless loyalty and obedience, their masters did not reciprocate and did not demonstrate generosity by providing them capital at cheaper rates or without any strings attached. They did not transfer technology and they did not train their human resource, for the neo-colonist could not afford to give up on the cheap labour.

How can a country develop when it is not politically stable with efficient governance and when it does not have capital to invest in infrastructure, industries and R&D? How can a country develop when it does not enjoy the luxury of state-of-the-art technology?

So, how can Obama credit capitalism for global growth, opportunities and prosperity? Capitalism not only created the model of inequality but it also, inter alia, thrives on inequality.

One doesn’t need rocket science to understand that the crisis of capitalism is directly proportional to the development of developing and peripheral countries. The statistics of the last 30 years, if checked with an unbiased mind, will clearly reflect this reality.

Interestingly, Obama gave the real reason of the crisis of capitalism. He says that, “More fundamentally, a capitalism shaped by the few and unaccountable to the many is a threat to all. Economies are more successful when we close the gap between rich and poor and growth is broadly based.”

What Steve Forbes is unable to appreciate is that almost all developed countries are floating freely in deep troubled waters. Doesn’t he know that Japan for the last two decades is not only suffering from stagnation but is also unable to arrest its downward drift? All measures, including their negative interest rates, have been of no help? Doesn’t he know that Brexit was a direct, though misled, consequence of globalisation? And, what is the outcome of Brexit?

Doesn’t he know that both the presidential candidates of the US have failed to offer any viable economic plan for the recovery of the US economy and for stemming the increasing inequality and debt-to-GDP ratio?  Where are the opportunities for the Americans that they used to enjoy during the 1960s, 1970s and even the 1980s? Is the American middle class increasing in size or shrinking day by day?

Why have erstwhile champions of globalisation resorted to protectionism? Why are anti-globalisation leaders in western Europe commanding popular support? And why have central banks in almost all developed countries lost their main tools of manipulation and opted to negative interest rates?

Factually speaking, a new objective force, the ‘Sci-Tech-Human power complex’ is reshaping the world. It is also dynamically determinant and is not under the control of governments or corporations.

Steve Forbes is right in saying that productive forces cannot be placed in the hands of the state as was enshrined in the classical socialist doctrine, for people now are more active than governments. Yet, the sustainability of economic and political systems depends upon their inclusive and egalitarian character. Developed countries must repudiate their religious economic thinking and say goodbye to the model of inequality. They must invest extremely generously in the developing countries to boost equitable global growth. Inclusiveness and egalitarian system are the way forward.

Email: Murtaza_khuhro@yahoo.com