In defense of capitalism

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We live in what are described as post-capitalism times where the economic system that promotes the virtues of creating individual wealth has been variously described as broken, defunct and even failed. It has, according to many morphed into a system, where the oligarchs control the resources required to make immense wealth and leave the rest to fend for themselves and fight over scrap. Some go to the extent of romanticising the concept of a welfare state where basic worries like food, shelter and education are assured for all by the state.

It is acknowledged, however, that wealth creating economic activity is the path to generating enough resources to afford that kind of nanny state where one is looked after from the cradle to the grave, but one is not certain that unbridled capitalism is the way to do that. The looming spectre of  AI replacing human labour as a factor of production has further added to the chorus denouncing capitalism as a dehumanising and even sinister force hell-bent upon lining the coffers of already very rich oligarchs and their cronies. With the failed experiments of communism as a cautionary tale about the danger of going in completely the opposite direction with regard to harnessing the resources of a nation for the greater good of its people, one is left at a crossroads, when it comes to choosing an economic system that keeps everyone happy.

To the credit of capitalism, the immense wealth and the generally high standard of living found in Western Europe, North America and elsewhere are the result of following unbridled capitalism. The bastion of communism, the Soviet Union and its allies in East Europe collapsed under the weight of their own contradictions. Fellow communist nation China was walking down the same course of self-destruction, until it changed course in the late 1970s and adopted capitalism lock, stock and barrel, heralding an unprecedented era of growth and wealth increase for the average Chinese.

Similarly in India, hundreds of millions of its people came out of extreme poverty for the first ever time on the back of big ticket reforms carried out in the 1990s that opened up the Indian economy to the world allowing it to finally step on the gas pedal, when it came to achieving fast paced economic growth.

As a matter of fact, wherever capitalism has been allowed to strike deep roots, it has transformed the economies and destinies of the people concerned. The most definitive proof of this lies in nations across the South East Asian region, especially in places like Singapore,Hong Kong and Taiwan. It is also true of other nations in the region like Malaysia, Thailand and even communist Vietnam.

Capitalism is a far from perfect system of bringing about economic growth and suffers from myriad ills that are well known and documented. These range from colonialism in the past and inequitable distribution of wealth to exploitation of peoples and environmental degradation in the present times.

Yet, it is the only system that has delivered. From lifting nations and peoples out of poverty to the funding and financing of education, healthcare, infrastructure, discoveries and inventions, there is much that has been the gift of capitalism to the world.

Does capitalism have a future?

Does the only system of economic growth and development which has been adopted to varying degrees by 70 to 80% of the world’s population have a future? One would imagine that it does.

Where capitalism went wrong was in the part where it allowed the profit motive to quite often disregard the moral and ethical bedrock that should define any model of economic enterprise. While it is similar to communism in that human follies that corrupt the system led to its assumed fall of grace, capitalism is not a basically untenable system like the latter is.

The ills of capitalism include the primary one of allowing certain groups to prosper at the cost of others which alienates the former leading to much resentment on their part. Often the ones who fall behind are the ones whose parents and grandparents had prospered under the capitalist system - the same system that was now promoting the rise of a new elite that possess the skills now in demand. The obvious case in point is the rise in demand for technology workers at the cost of traditional blue collar workers. This has led to the rise of right wing ultra nationalist governments across the world who pander to the fears of such people by putting in place protectionist trade policies that impede global trade and do more harm to the capitalist system, in turn exacerbating the problems of the very people who claim to have been left behind in the economic sweepstakes.

Currently, there is a tendency for nations of the world to enter into separate trade agreements with nations or blocs of nations, rather than continue within the existing global trade order which served the world so well in the years following the Second World War, right up to the present times. These populist measures ultimately don’t lead to any tenable solutions to what many, especially left leaning people believe are inherent flaws in capitalism. Whatever its flaws, reverting to failed communist and socialist economic models is undoubtedly worse than the temporary protectionist policies put in place by right wing demagogues. 

 The thing with capitalism is that it is anything, but a static process. If large numbers of people feel ill served by the existing trade arrangements of the world, there will be a reaction against it with old certainties being discarded and new ones inexorably taking their place. Right now the capitalist way of doing things is undergoing a flux, but it will find its new balance, like it always does.

The age of AI is changing the way that economic activity will take place in the times ahead with the nature of human labour as an important growth factor undergoing a profound change. There will be both immense challenges and equally immense opportunities presented to the nations of the world as it walks further down the path; yet it will undoubtedly be the capitalist way of doing things that will shine a light on the path ahead. For that has been the way of humans since the earliest times. It has always been capitalist trade carried out between nations and civilizations of the world that has shaped human destiny and will continue to do so.