Opinion
Capitalism and Communism
With the economic meltdown, the big argument of course has now gone on to the merits and demerits of capitalism. There are people who talk about how the US is nationalizing its economy and capitalism is at an end. They talk about the American ideal and say that big businesses should be allowed to fail if they are not fit to survive in the market place. They talk about how capitalism has made the US economy and by seeking to infuse a lot of funds and propping up sick companies; the US is doing a great disservice towards capitalism.
The converse argument of it is this ' It is not the people who make decisions who are affected by the failings of the company. Typically, they are the last people to be affected. The axe falls on people lower in the organization. They lose their jobs; if they have no savings, they have to fight for their next meal. American capitalists are not Dagny Taggarts or Hank Reardens if one reads the book of ideal capitalism 'Atlas Shrugged' written by Ayn Rand; they comprise more of Owen Boyles.
The arguments that are made are more to the effect that private enterprises are more efficient than Govt enterprises. But that may not be true.. in India here, we have examples of Govt institutions which are much better than the privately run organizations of their class. In many others, what we call bureaucracy in Govt institutions is called process in private industry. Just to quote an example ( and from what I understand, this is not an isolated case)- I had a case where by my phone company told me that my credit card bill payment had been reversed and they would not give me any documents for it. The bank on the other hand maintained that the charges had not been reversed. What followed next was a farce which lasted for 15 days because both the companies were so stuck in their own processes that they wee unable to do anything about it. The bank had a process by which they could not give me the document that I needed while the phone company would not move if it did not get the document. How different is it from Govt bureaucracy? However, the same story rules. Private institutions are perceived to more efficient than Govt institutions because they are more money hungry. At the end of, is it justified?
The big 3 in the US automobile industry have been guilty of having neglected green concerns because it involves too much investment. If they had already pit in incremental amounts before, they would still be in a position to fight the Japanese models. Instead, they coasted on. We see the end result where they have to ask the US Govt. for a bailout. So, at the end of it, is the CEO of the company accountable? Has he been replaced? What about the other senior management and the board of directors? Is there any accountability for the imminent loss of millions of jobs? No. But that is today's capitalism. Rich man rules. He is practically above the law. He is only prosecuted if there is no other way to shield him AND it gets other people's hands dirty. The rule of law is now a fig leaf. Now, even that is sought to be ignored.
I am not trying to run down capitalism or free enterprise. I realize that it is a very vital component of the economy and that capitalism is the way to go forward. However, as I mentioned at the start, we donot have ideal capitalism. We have a capitalism that needs to be regulated. Therefore, the ideal economy is therefore a mix of capitalism and socialism. You cannot take out the Govt from the economy but at the same time you cannot have the Govt run the economy either. We need the Govt to definitely regulate and police the the economy .We have witnessed the fall of communism; we are now witnessing the fall of capitalism. Obama has realized that in the US; when is it that we here in India would realize that?
22-Feb-2009
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Harish Yagnesh
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