My teacher at the CIEFL (now called EFLU) once related this interesting anecdote. He told his daughter, aged 9, a story of a poor family. The poor family did not have a proper shelter (a leaky roof), they had no decent clothes, and they had very little to eat. And so the story went. Later that evening, he was amused to hear this daughter of 9 tell the story of the poor family to her younger sibling (aged 6). “Once upon a time, there was a poor family: they were so poor that they didn’t have a television or a fridge; they didn’t even have good shoes.”
The story illustrates the essence of what we are going to discuss in this blog – how do you define ‘rich’ and ‘poor’. In ‘advanced’ countries, poor people live in stinky tenements. In India, poor people live on pavements and under flyovers. In advanced countries, poor children go to government schools that don’t have decent playgrounds. In India they clean coffee tables and tea cups. Some children die of malnutrition before they even mature into child labor.
The point is that capitalism encourages the disparity between the rich and the poor. It may turn out that the poor people of a later generation may enjoy overseas vacations like the rich do today. But by then, the rich would be traveling to Mars and Venus. The poor may get to live to be 70, but the rich would be young as ever at 100+ The disparity is inherent in a capitalist system.
Mr Narayana Murthy of the Infosys fame talks about making India a better place, making the world a better place. He says he wants to do it by creating jobs with disposable income. The whole problem started with disposable incomes, as Marxists would argue: those who had disposable incomes ‘bought’ the labor of those who were living hand to mouth. In due season, with the additional labor as capital, the early capitalists gained a huge surplus of property. It is pointless to argue with Mr Narayana Murthy and the likes who glibly talk of Weber and Frantz Fanon (Strange that Mr Murthy should be talking about black skin and white masks: he is so unsure of his appeal and it is people like him who try to put on a white mask.) in the same breath (with Mohandas Gandhi uncomfortably sandwiched in the middle – or in the muddle).
Those who talk of the evils of communism wax eloquent on the dangers that are inherent in a totalitarian system; at from being a benevolent dictatorship – it could degenerate into a malevolent dictatorship any time. There are also those who argue that any kind of dictatorship is abhorrent in and by itself – even if it is benevolent. Let us concede that point. But then, compassionate capitalism – a term I heard first in Mr Murthy’s book, is equally a contradiction in terms. The first capitalist, who had disposable income, simply did not share it with his neighbor who was living hand to mouth: he (more likely than she) ‘bought’ the neighbor’s labor with that extra income he saved up (hail the protestant ethic) and built his estate!
Now the real problem with capitalism – as we all now know – is that it has degenerated into crony capitalism. Not that it will, it has, all over the world…
“In its lightest form, crony capitalism consists of collusion among market players. While perhaps lightly competing against each other, they will present a unified front to the government in requesting subsidies or aid (sometimes called a trade association or industry trade group). Newcomers to a market may find it difficult to find loans or acquire shelf space to sell their product; in technological fields, they may be accused of infringing on patents that the established competitors never invoke against each other. Distribution networks will refuse to aid the entrant. That said, there will still be competitors who "crack" the system when the legal barriers are light, especially where the old guard has become inefficient and is failing to meet the needs of the market. Of course, some of these upstarts may then join with the established networks to help deter any other new competitors. Examples of this have been argued to include the keiretsu of post-war Japan, the print media in India, the chaebol of South Korea, and the powerful families who control much of the investment in Latin America.”[http://en.wikipedia.org/wiki/Crony_capitalism]
Another example of crony capitalism is the 2G scam in India. So much newsprint has been wasted on this topic already that I see no point in wasting any more here. In India too, an established soft drink – Thumsup – could not find ‘shelf’ space in shops when Coca Cola bought over Parle drink. After trying to kill the brand for more than a decade, Coca Cola had to drop the idea and allow Thumsup space under the Indian sun. But then, India is not an out and out capitalist society, much as Mr Murthy would and his ilk would like to make it.
Thumbs up to mixed economy.
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