{"id":13245,"date":"2017-08-01T10:44:00","date_gmt":"2017-08-01T05:44:00","guid":{"rendered":"http:\/\/jworldtimes.com\/old-site\/jwt2015\/?p=13245"},"modified":"2017-08-01T10:44:00","modified_gmt":"2017-08-01T05:44:00","slug":"capitalism-in-the-dock","status":"publish","type":"post","link":"https:\/\/www.jworldtimes.com\/old-site\/studykit\/currentaffairs\/daily-articles\/capitalism-in-the-dock\/","title":{"rendered":"Capitalism in the dock"},"content":{"rendered":"

\"Capitalism<\/a><\/p>\n

By: Hussain H Zaidi<\/strong><\/p>\n

There was a strong sense of deja vu as one watched the protesters clash with the police on the eve of the G-20 summit in Germany\u2019s port city of Hamburg. For several years, whenever such multilateral events take place, people who are disillusioned with capitalism \u2013 as well as its celebrated progenies, globalization and free trade \u2013 take to the streets.<\/p>\n

During the WTO ministerial conference held in Seattle, US in 1999, the protests gathered so much momentum that they overshadowed the deliberations held at the forum. So why are the people up in arms against capitalism and all that it stands for?<\/p>\n

The discontent with capitalism dates back to its rise in the 18th century. Over the past two centuries, the opposition to capitalism has sprung from two sources. First, from philosophers and theorists who saw in capitalism a diabolical instrument of exploitation. Karl Marx is at the forefront of such thinkers. The opposition to capitalism has also come from the working class, which has found itself squeezed by large businesses in the name of cost-competitiveness. To understand the opposition, one needs to look at the genesis of the capitalist form of economic organisation.<\/p>\n

Capitalism arose in England in the 18th century and then spread to Continental Europe. The intellectual basis of capitalism was provided by three British thinkers: Adam Smith, David Ricardo and Jeremy Bentham. Smith and Ricardo founded classical economics while Bentham provided the legal and political justification for capitalism. Together, their work drew upon two mutually incompatible concepts of nature, which dated back to antiquity.<\/p>\n

The first concept identifies nature with harmony and justice. The natural order \u2013 being inherently beneficial \u2013 necessarily brings in happiness and prosperity for individuals. By the same token, when left to their own devices, the market forces have the tendency to usher in an optimal outcome in the long run or \u2013 as Bentham would call it \u2013 \u201cthe greatest happiness of the greatest numbers\u201d.<\/p>\n

Government intervention in the market will only make matters worse. The best thing that the government can, and should, do is to keep its hands off the economic activity and let \u2013 in the words of Smith \u2013 \u201cthe invisible hand\u201d of the market act freely. To date, laissez-faire, which translates to \u2018leave them alone\u2019, remains a cardinal principle of capitalism \u2013 even when it is applied in a softer form.<\/p>\n

One implication of the harmonious view of nature is the labour theory of value, which has an important place in classical economics. As per the theory, the more labour a worker puts in, the more value he takes out in the form of wages. The outcome is \u201cnatural justice\u201d.<\/p>\n

The other concept of nature divorces it from justice or harmony. Instead, the natural order is regarded as exhibiting a ceaseless and ruthless power struggle or conflict. As interpreted by classical economists, this view sees society as consisting of classes rather than individuals. The interests of one class are always at variance those of others. This leads to a class conflict. As production steps up, the scarce land is increasingly brought under cultivation, resulting in larger rents for the landlord and smaller profits for the capitalist. Meanwhile, the labour gets wages that just enough for it to subsist.<\/p>\n

As a result, the classical economists highlighted perpetual antagonism between the land-owning and other two classes (capitalists and workers) in order to prove that the landlord was the ultimate villain. In its historical context, taking such a position was also necessary to make a case for free trade. It was left to Marx to use the logic of the labour theory of value to show that the interests of the working and the capital-owning classes were also irreconcilable and that the capitalist was the villain of the piece. To date, the labour theory of value \u2013 expounded by the early proponents of capitalism \u2013 remains a powerful intellectual instrument at the hands of the opponents of the capitalist form of economic organisation.<\/p>\n

Any economic system may be assessed by looking at how it answers two fundamental questions as well as the relative importance it attaches to them. First, how do we increase the national pie \u2014 that is, the gross domestic product (the question of efficiency)? Second, how do we distribute it (the question of equity)? Capitalism gives far more importance to the first question and answers it by reposing an idealistic faith in the free-market mechanism.<\/p>\n

The question of equity has little importance in capitalism. In fact, many advocates of capitalism have called for deliberating increasing economic inequalities to give an impetus to capital formation. Economic growth in turn creates jobs and drives up the incomes of the middle and lower classes. The benefits of economic growth are thus believed to trickle down from the affluent to the rest of the society. But do they? Since capital has a strong tendency towards concentration, the fruits of economic growth are based on a laissez-faire policy that tends to be concentrated in just a few hands.<\/p>\n

\u2018An Economy for the 99%\u2019 \u2013 an Oxfam publication that was released in 2017 \u2013 gives credence to the view that capitalism enhances inequalities. We must look at some of the data reported. First, the richest one percent has owned more wealth than the rest of the world since 2015. Second, eight percent now own the same amount of wealth as the poorest half of the world. Third, the incomes of the poorest 10 percent went up by less than $3 a year between 1988 and 2011. At the same time, the income of the richest one percent ratcheted up 182 times as much.<\/p>\n

Fourth, in the US \u2013 the world\u2019s largest economy and the bastion of capitalism \u2013 the growth in the incomes of the bottom 50 percent has been zero over the last 30 years while the incomes of the top one percent have grown by 300 percent. Fifth, over the past 25 years, the top one percent has gained more income than the bottom 50 percent put together. Sixth, in 2015-16, the world\u2019s 10 biggest corporations collectively possessed revenue that exceeded the combined public revenue of nearly 180 economies.<\/p>\n

Can capitalism have a human face? Paradoxically, the answer is both in the affirmative and the negative. During the cold war, capitalism did have a human face. But for many, it was only a diluted form of capitalism that was designed to keep the \u2018monster\u2019 of communism at bay. It was in reaction to the threat of communism that the welfare state was born in several parts of Europe. However, the demise of communism also sounded the death knell for the welfare state and the market forces gained unassailable ascendency. The ultimate beneficiaries, as the above data suggests, have been the mega businesses while the ultimate loser has been the working class.<\/p>\n

Despite their differences, the classical economists and Marxists agreed on one point: the collapse of capitalism. For Marxists, capitalism would break down because of its inherent contradictions that arose out of the class conflict. For the classical economists, capitalism\u2019s virtues, instead of its vices, will inexorably cause its downfall. The process of economic growth ultimately leads to a slump in profits, which are the mainspring of economic activity in a capitalist economy. So far, neither of the doomsday scenarios has come true. Capitalism is alive and kicking.<\/p>\n

Source: https:\/\/www.thenews.com.pk<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

By: Hussain H Zaidi There was a strong sense of deja vu as one watched the protesters clash with the police on the eve of the G-20 summit in Germany\u2019s port city of Hamburg. For several years, whenever such multilateral events take place, people who are disillusioned with capitalism \u2013 as well as its celebrated …<\/p>\n","protected":false},"author":149,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5285],"tags":[574,1264,257,8438,1226,358,610,1161,8781,537,8467,3790],"_links":{"self":[{"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/posts\/13245"}],"collection":[{"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/users\/149"}],"replies":[{"embeddable":true,"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/comments?post=13245"}],"version-history":[{"count":0,"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/posts\/13245\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/media?parent=13245"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/categories?post=13245"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.jworldtimes.com\/old-site\/wp-json\/wp\/v2\/tags?post=13245"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}