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October 21, 2020

Myths about economic ideas

Opinion

October 21, 2020

Myths about economic ideas have greatly influenced the ruling elite of the world, prompting them to come up with strange assertions about investment, wealth generation, innovation, state role in managing business and the free market.

It is difficult to cover all but let us challenge some of these myths because their influence is not confined to the ruling elite but economists, intellectuals, philosophers, financial experts, development consultants, political scientists, sociologists, lawmakers and even psychologists have been fascinated by the bizarre ideas of those that hold a blind belief in the miracles of laissez faire.

This romanticism with the economic philosophy has led to the development of a narrative that seems to be dominating all academic and political discussions. It is defended by ideologues of the free market with a missionary zeal. From Milton Friedman to Niall Ferguson, all appear to have a dogged determination to prove that all the progress and prosperity that humanity has made is because of capitalism. To the ideologues of this ideology, the voracious greed of the business class and its gargantuan appetite for profit has opened the venues of innovation and modernity. Plunder, exploitation, slavery, oppression, colonization, wars seem to feature nowhere in the writings of those who fiercely assert that the market economy is the only way forward. If they do mention it is to create an impression that colonialism was benevolent and altruistic.

Since such ideas greatly affect a common person, it is important to build a counter-narrative challenging these economic myths. Oligarchs in third world countries also offer laissez faire to help with the ills of the economy but in doing so they impoverish their people, promoting cronyism and allowing the market forces to plunder. From Manmohan Singh to Benazir Bhutto and Jair Bolsonaro to Nawaz Sharif and Imran Khan – all have seemed to have a strange fascination with this economic ideology.

In a recent address, Prime Minister Imran Khan heaped eulogies on the free market. Without naming the great student leader Mairaj Muhammad Khan, a rare species in Pakistani politics who fought for peasants, workers and the oppressed throughout his life, the prime minister criticized him for speaking against feudals and the rich, arguing that it is capitalists who generate wealth.

It depends how one views wealth. If it is economic output in the form of a product then in reality it is not a businessman who generates wealth but two factors that lead to the creation of a product – nature and the toiling masses. For instance we get trees and wood from nature, making furniture and other things that we want. We get rubber from nature, making tyres and other products. In reality, it is not ‘miraculous capitalist wealth’ that helps churn out commodities but the sheer hardworking working classes that make it possible.

A capitalist uses this labour power to enrich himself. The history of capitalism is replete with this outright theft of labour power, which some economists call surplus value. How is this value created? Let us say a capitalist hires 500 labourers, offering them Rs800 each as a daily wage, making them work for eight hours. In reality the wage offered to him is worth just for one hour work; the rest of the seven hours are devoted to the investor. It is unpaid labour of seven hours that each of these 500 workers is offering that helps a businessman amass money. No wonder a capitalist keeps on multiplying wealth – from one factory to another, two to four and so on and so forth – while the toiling worker hardly gets enough to keep him/herself alive.

There are other economic myths that have to be challenged and rejected with cogent arguments as well. It is often claimed the West is rich because they followed the free market economy, encouraging the lords of capital to invest and make money. In reality, it was the sheer exploitation of the white working classes in Europe and North America and plundering of the colonies that enriched the advanced capitalist world. Is it merely a coincidence that all capitalist powers or the countries that are relatively prosperous also happened to be colonial powers? If the US and the West are the richest places on the earth, can it be simply assumed that they owe all their opulence to the ideals of the free market? Many historians agree that there could not have been any industrialization in the West and North America if there were no plantation and there could not have been any plantation without slavery.

Can we forget that when Christopher Columbus stepped on the Americas, the population of indigenous people even according to conservative estimates was around 25 million (though a number of historians claim it was over 120 million) but within a few decades only five millions were left. Around 12.5 million slaves were shipped to the New World between 1525 and 1866 alone. Close to two million perished in the dreaded Middle Passage. Some estimates suggest four million hapless souls lost the battle of life during the arduous journey.

It is now an open secret that Spain and Portugal would rob the Incas, the Mayas and the Aztec, bringing ships loaded with gold and silver, which would be plundered by other European powers. It was not only the plundering and massacre in the Americas that fueled the wealth of modern capitalist countries but the UK too is believed to have stolen around $45 trillion from colonial India besides ruthlessly exploiting Ireland and several parts of the world. British-imposed famines led to the deaths of around 35 million people in Bihar, Orissa and Bengal. France is accused of not only brutally killing over a million people in Algeria but it also exploited millions others in Indo China and other parts of the world where it subjugated local people. Belgium’s Leopold II killed around ten million Africans.

Even before the industrial revolution in England, more than 35 percent of the world was under Western power, reaching an all-time high in 1945 with around 85 percent of the globe falling under the sway of Western colonial empires and other imperialist forces. One wonders why our ruling elite do not see this bloodshed, massacre, plunder and naked exploitation while heaping eulogies on this system. Even after the end of colonization, Western powers eliminated popular leaderships in the developing world, thrusting puppet dictatorial regimes upon the people that protected Western interests rather than serving their own citizens.

It is time to challenge these myths at each and every forum. It may not bring back the millions that were wiped out by greedy money makers. It may not reverse the destruction caused by the colonial subjugation of people but it could at least serve to clarify that the opulence that we see in the advanced capitalist world is not because of the philosophy of laissez-free. It is not because of any economic competition but the result of naked aggression, callous genocides, outright destruction and unspeakable crimes against humanity. Behind the veneer of this market competition lies the hidden brutal history that must be exposed.

The writer is a freelance journalist.

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