Capitalism and the world’s ills

S P SETH

Even as the world’s high and mighty met in Davos, Switzerland, for the World Economic Forum to discuss how best to make the world’s rich even richer, the Oxfam came out with a damning report highlighting the gross imbalance between the world’s richest few and the vast number of its poor. It says that just 85 of the world’s richest control as much wealth as half the world’s population that is 3.5 billion people. And this is despite the worst global financial crisis, starting 2007-8, since the Great Depression of the thirties. The responsibility for this lies largely with the top banks, financial institutions and their chief executives. But they have not only escaped largely unscathed but many have ended up doing pretty well out of it. The Oxfam says, “This massive concentration of economic resources in the hands of the fewer people presents a significant threat to inclusive political and economic systems.”

This is a searing indictment of the much touted and promoted system of free wheeling capitalism where the poor keeping getting poorer in many cases and the rich seem to be aiming for stratosphere in wealth accumulation. And the governments keep humoring investors through a bevy of incentives of lower taxes, free and subsidized land for their operations, low production costs and any number of other freebies to attract them to their shores. The so-called ‘trickle down theory’ by which the increased wealth from capitalist mode of production will, over period, reach the poor doesn’t seem to stack up even in the rich countries where, as the Oxfam report shows, the poor are only getting poorer. In the US, for instance, the wealthiest 1 per cent of the population grabbed 95 per cent of growth between 2009 and 2012, while the bottom 90 per cent became poorer. There is something terribly wrong in today’s economic growth model with this kind of inequality and inequity, leading to political and social volatility all over the world.

It was, therefore, refreshing when Pope Francis, spiritual head of the world’s 1.2 billion Catholics, talked about the “tyranny” of capitalism. In an address to foreign ambassadors accredited to the Vatican, he condemned “the cult of money” that is making life a misery for many people. He condemned the “…dictatorship of an economy which is faceless and lacking any truly human goal.” He said that, “While the income of a minority is increasing exponentially, that of the majority is crumbling.” And unchecked capitalism has created “ a new, invisible, and at times virtual, tyranny.”

Pope Francis has now spoken on this theme quite a few times. He reportedly said recently, “In this [capitalist] system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which becomes the only rule.” And this is at the crux of most problems in the world. For instance,  “Inequality [it fosters] eventually engenders a violence which recourse to arms cannot and never will be able to resolve.” He has sought to highlight how the worship of money is creating a moral void in the world where people are disconnected from what it means to be human. He has spoken of “immigrants dying at sea, in boats which were vehicles of hope and became vehicles of death.”  And he said pointedly that, “In this globalized world, we have fallen into globalized indifference… We have become used to the suffering of others.”

Not surprisingly he has drawn the ire of some conservative commentators like the influential US broadcaster, Rush Limbaugh, calling his utterances as “pure Marxism.” Such criticism is ill informed. What is wrong with saying that money and the system (capitalism) which deifies it, should be made to “serve” people and not to “rule” them?

The argument in support of free market capitalism is that it allocates resources efficiently and productively where they are most needed, thus creating and growing wealth leading to greater employment. The problem, though, is that wealth distribution, if and when it happens, is so skewed that the bottom end of the society ends up with crumbs. Besides, the process of wealth creation is invariably based on exploitation, nationally and internationally, of cheap labour of the most vulnerable sections of the society. The recent fires in Bangladesh textile factories, with virtually no fire safety system and the cheapest labor costs, are illustrative of the exploitative nature of the capitalist mode of production. These vulnerable people in Bangladesh and elsewhere in poorer countries where Western brand names are manufactured, are doubly exploited, first by the local manufacturer who has no regard for the safety of his workers and, secondly, by the Western companies that insist on buying at the cheapest rates and raking obscene profits back home. If this is called the efficient allocation of resources by exploiting those who are most vulnerable and hence work for a pittance to increase profits of faceless capitalists, then there is something seriously wrong in the way the system operates. It is totally devoid of basic morality and justice, which requires us to treat our fellow beings, as we would like to be treated ourselves.

Apart from the ethics, or the lack of it, the free market capitalism creates periodic booms and busts; the latest bust, starting 2007-8, is still trying to work its way out. And the victims are invariably the lower ends of a society, as we are witnessing in the United States and Europe. If capitalism were such a rational system based on efficient allocation of resources, what would explain these periodic ups and downs causing the utmost havoc on the poor and middle strata of a society? In the global financial crisis, those responsible for skewing the system and causing the crisis, like the banks and other financial institutions, have been bailed out at the expense of the ordinary tax payers; but many millions of hard working ordinary people have lost their jobs and much more. To quote Obama from his recent State of the Union address, “Today, after four years of economic growth, corporate profits and stock prices have rarely been higher, and those at the top have never done better.” But, he added, “ average wages have barely budged. Inequality has deepened. Upward mobility has stalled…”

Let us not sing praises of a system that celebrates events like the Davos Economic Forum to make rich richer, but instead initiate a new global dialogue and action plan to create a new global system that not only creates wealth but also oversees its fairer distribution. And therein lies the solution to many of the world’s ills, including rampant violence that we witness everyday on our television screens. Pope Francis has done a great service by taking on the captains of an economic system, which is greatly in need of transformation.

Note: This article was first published in the Daily Times.

Contact: sushilpseth@yahoo.com.au