In the last decade the world has seen two significant events, the crumbling of communism in Eastern Europe and the spread of market economics in the third world. Although economic reform had been under way in several parts of the world since the 1980’s, the collapse of communism was perfectly timed to resolve the genuine problems of reformers and destabilize their mainly leftist dissidents.
Some in the west were dissatisfied with achievements of the market economics. According to them, liberal capitalism has failed to provide rapid material advance for everybody; poverty remains unconquered and, in the midst of abundance for some, seems all the more reprehensible. Although this verdict is absolutely wrong, capitalism and the economic prosperity it has cherished in the west have freed innumerable people from poverty, and created the means to help the others.
The use and implication of capitalism varies from country to country. In America, shareholders have a comparatively big say in the running of the enterprises they won; workers, who are for the most part only weakly unionized, have lesser influence.
In countries like Germany, the representatives of unions serve on supervisory board; the companies’ main bankers also have plenty of clout in the strategic decisions of management. In Japan, however, shareholders played virtually no role except to provide capital, managers and entrepreneurs have been left alone to run their enterprises as they seem fit mainly for the sake of employees and of allied companies, as much as for shareholders.
Despite these discrepancies, all species of capitalism have had certain essentials in common. These are the ingredients that will need preservation if liberal economics is to go on to further triumph. Nowadays capitalist countries have alienated, to a high degree, the realms of politics and economics. In fact, in capitalist countries, it makes sense to think of each of these realms in its own right.
In communism or under feudalism, by contrast, the political and economic realms were essentially one and the same. Those in power impudently exercised their claims over resources in fundamentally non-market ways. Unlawful transactions aside, these systems left little scope for voluntary economic arrangements. Private proprietorship has virtually been a feature of capitalist economics.
One could easily argue, that for much of the 1980s, the southern China was more capitalist place than India. In southern China state ownership of property was the rule, but enterprise Supremes were given increasing liberty to run their business themselves. Even without private property, a separation of politics and economics was achieved, and the price structure began to direct distribution of resources. On this spectrum, India has much more private ownership, but until the reforms of the early 1990s it also had a system of state control that rivaled that of USSR. Capitalist economics, despite such institutional differences, also have much else on common in the market system that flourishes when politics and economies are kept apart; decisions about the allocation of resources are highly decentralized. This is its greater strength.
Enormous advancement in East Asia has already caused much tension over trade in America and the European community. As economic liberalization proliferates, the pressure of competition on the west’s low and medium tech manufacturers will increase. Opponents of America’s free-trade agreement with Mexico emphasize the treat that cheap imports pose to American manufacturers. In the same way, EC has been inexcusably hesitant to grant the reforming countries of Eastern Europe liberal access to the community’s market. These are disturbing signs that spread of capitalism in the poorest parts of the world may undermine support for the market economics in the countries where it has already performed splendidly. Above all capitalism is, the pro-change, pro-growth choice and its future is not at all obscure.
About the author :
Sr. Lecturer in Media Studies in a leading Indian university. A freelance columnist, contributed numerous articles for leading newspapers, magazines and websites. He can be contacted at www.psis.co.in
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