Mahfuz R. Chowdhury :
(From previous issue)
The Chinese authorities, however, appear to have a much better grip over their system, and are using their economic command very effectively to achieve faster economic growth. In fact, having achieved a yearly growth rate of about 10 per cent, China has since overtaken Japan to become the second largest economy after the United States. Even though their growth rate may have slowed a bit, China still continues to remain the fastest growing country in the world.
Their current system is essentially a mixture of two systems. They have adopted a modified capitalist system for urban development, while pursuing or not fully dismantling the communist system in rural areas. So far, this system has worked well for China. Will it continue to succeed, or will it eventually find followers in other developing countries whose economies have remained quite stagnant? Only time will tell.
What can be said for certain, though, is that capitalism or the market system hasn’t achieved the kind of prosperity needed to help everyone, and the system is very much rigged with profound exploitation – the very argument that Karl Marx made in advocating communism. Indeed, the huge difference that exists between the advanced and developing countries and between the rich and poor within each country bear full testimony to such an argument.
But, at the same time, communism has also failed to deliver what it promised ¾ economic prosperity, because it lacked the proper motivation needed to achieve it.
Thus, communism has failed to bring efficiency for lack of motivation, and capitalism has failed to achieve fairness because of exploitation. To be sure, there are conflicts and tradeoffs involved in pursuing either the communist system or the capitalist system, since fairness wouldn’t bring efficiency and efficiency would require giving up on fairness. Now the big question is, why did communism’s failure lead to its apparent end, but capitalism’s failure didn’t lead to its destruction?
Could it be because society has regarded freedom and efficiency as more important than equality or fairness? Opinion varies. These questions will no doubt receive a thorough scrutiny, especially when economic exploitation continues to severely affect the lives of the underprivileged in society. The true legacy of communism: The communist system itself may have ended, except in the case of North Korea, but the controversy lingers, essentially because capitalism continues to increase wealth at the top without at least first eliminating poverty at the bottom.
The fact remains that, about one third of world population still live below poverty level with not enough food, drinking water or sanitation. Rampant corruption in developing countries, where poverty is much more acute, continues to remain a serious hindrance to improvement. If capitalism fails to remedy the situation, it’s not clear whether that will help revive communism again as a strong and viable system in some modified way.
What is clear though is that people lived under capitalism before ever experimenting with communism. Later, it was the exploitative nature of the capitalist system that led to communism, and then, of course, under pressure of communism, capitalism had to change, mostly for better.
(To be continued)
(The author currently teaches economics at Farmingdale State College, New York)
Capitalism had originated in Europe to essentially supersede the social system known as feudalism. The ultimate transformation from feudalism to capitalism, however, came through a process of democratic movement to replace autocratic regimes with rule by well-to-do middle class men. Democratic ideas grew primarily to facilitate the growth of capitalism, and not necessarily to give political rights to the public. The term capitalism was used to describe a system to promote private investment and industry with little or no governmental control. Of course, capitalism has since undergone many changes.
European countries, from where capitalism began its journey, have since transformed themselves into different welfare states by adopting many of the socialist policies that communism had advocated. In Sweden, for example, the government plays such a role that public spending makes up more than 50 per cent of its total gross domestic product. Even the United Sates, the main benefactor of the capitalist system, have taken up a number of these policies, though to a somewhat lesser extent.
Universal health insurance, unemployment benefits, social security for the elderly, welfare benefits for the poor and the disabled, government regulation of private industries, workers’ rights to unionize, and minimum wage that the industrialized countries have been forced to adopt are good examples of the type of changes that the communist movement has successfully brought to capitalism. These changes didn’t come easy ¾ they were achieved through long and sustained labor and democratic movements over time.
It should be noted why the European countries provide for a much better safety net for the people than the United States. This is because in the United States big business can sway government policy for its benefit, while in Europe the public is able to exert more influence over government policy. Thus, while pure communism may have ended, so did pure capitalism.
Though capitalism has become the dominant system now, what the world actually has is a mixture or combination of the two systems, and the system itself may not be uniformly practiced everywhere.
For now, communism may have lost its war, but capitalism hasn’t necessarily won the battle yet. That battle is fundamentally about the elimination of poverty from society – which is the very basis of the argument for communism. And even if technological progress somehow achieves the goal of ending poverty, capitalism faces another critical problem: the exercise of political power in its system.
In the United States, for example, the concentration of money in just a few hands enables a handful of people to have disproportionate influence on the political outcome. In this way, capitalism, through the creation of rising inequality, may be destroying democracy. This is a serious danger and it may be one of the biggest future challenges for capitalism. Somehow, society needs to establish equal political power for all even when economic power is unequally distributed. This may be achieved ¾ as in some European countries ¾ by the public financing of elections. That process may not fully ensure that the rich and the poor will have equal political power, but it’s more likely to limit the political clout of the rich and possibly open more opportunities for the poor.
Finally, another serious threat to capitalism is social unrest, especially among the critically distressed people of developing countries who see few ways to achieve their goals. Invariably, such hopelessness fuels social unrest. Although social unrest is not at all likely to go away, ending today’s massive world wide poverty and providing equal opportunity for all, would go a long way in creating a less contentious society. The affluent countries indeed have an obligation to make that happen. So, what lies ahead for the world, and whether communism resurfaces in some different form, depends entirely on how the present capitalist system meets these and other challenges that may come in its way.
(Concluded)
(The author currently teaches economics at Farmingdale State College, New York)
