In recent days, there was news that
Amazon is forcing its employees, especially the delivery team to urinate in
bottles so as to save time. This is something that has come to be associated
with what is wrong with capitalism and its variants and mutations. What Amazon
seems to have done is nothing unusual if one goes by past precedents? There are
countless stories of excesses by the capitalist enterprises in terms of their
treatment of the employees. Instances from China highlight how poor conditions
haunt the workers who assemble a Nike shoe to an Apple iPhone. They work in
conditions that are pathetic and little time is given even for meeting their
biological requirements. Instances of pregnant women being harassed and
dismissed in factories from China to Sri Lanka to the Central America to avoid
meeting maternity leaves and similar perks too have been well documented. The sweatshops
as these get branded have been considered by a school of thought as something
unavoidable evil in the economic growth trajectory. At the same time, there are
many others who believe the sweatshops represent the ugly manifestation of what
is known as capitalism or market economy.
Capitalism was used perhaps first in
the Marxian writings as it sought to analyse the relative shift of power from
labour to capital. The ownership of capital was the critical element that
controlled the flow of profits and created a shift in the direction of wealth
from labour towards the owners of capita. On the other hand market economics is
very different. Markets focus on competition. The increasing competition
ensures a battle for prices without compromises on the quality. Since consumers
are constant race for lower prices along with the best possible quality, the
producers are forced to match the expectations of the consumers. The failure to
do so in the competitive scenario as the market economy envisages would result
in the shift of the customer loyalties elsewhere. The world is thus dominated
by a race to zero without affecting the quality. To a firm in the market driven
economy it is either the cost reduction for a given level of revenues or the
increase in revenues for given level of costs that would determine their
existence.
Yet, in real life, firms seek to avoid
competition and focus on market avoidance. There is a difference between market
avoidance which ensures the buildup of monopolies while the competition is
around enhance consumer welfare and thus social and economic surplus. In this
context, pro-industry or pro-firm thus have a different meaning than a
pro-market. It is this distinction that needs to be kept in mind as one
analyses the market models. Conservative economics is not about defence of
profits or concentration of profits. It is ideally the primacy of markets and
centrality of producer and consumer choices. Yet, in the long history of
economics, there has been constant attempts to brand both pro market and pro
firm or pro industry as synonymous.
Interestingly, the right wing
economics is not about markets per se. in fact, as one observes the economic
policies of Donald Trump, it was more oriented towards big government spending
something associated with the Keynesian school rather than the schools favoring
the market mode. Margret Thatcher as PM once said in the House of Commons that
she would follow Hayek as their gospel. In this she might have vociferously
indicated her unequivocal support to the market economics propagated by the
Austrian school. Yet, today’s right is more oriented towards cultural or social
right rather than economic one. Austrian school might be finding favor in
countries like Brazil, yet many other right wing leaders’ focus on a dose on
nationalism coupled with big government spending. India for instance has been
focusing on economic reforms over the last year, yet during the pandemic they emphasized
heavily on government spending. There has been threefold increase in fiscal
deficit, yet India plans to spend more in the months ahead while simultaneously
pushing the reforms agenda including privatization of public sector firms.
It would be erroneous to posit right
wing conservative economics as heretic and anti-people. Incidentally, the
evidence posits a similar outcome for Marxian economics too. There is no doubt,
the excesses of capitalism led to the evolution of Marxian theories. Marx attracted
because he offered something different to capitalism. The appeal of collective
ownership was too alluring. The Russian experience or at least that was being
projected did appeal to many. To many countries independent in the 1940s to
1960s, the private sector was too weak to bring in the investment that would
catalyze the GDP growth rate. Therefore, as Keynes would point out, the
government would have to step in and create demand. There was increasing encroachment
of the government into the economy. Yet, this increasing encroachment even at a
certain degree would result in same consequences that would emerge as a result
of capitalism at its peak.
The effects of monopoly by the
government are not different from the monopoly of the corporates. As Big Tech
seeks to colonize the minds, the government too would colonize the minds if
given the absolute monopoly on means of production, distribution and
consumption of goods, services and information. As the government crowds of the
private sector, there would zero alternatives for the workers to seek
employment elsewhere. This would mean a suppression of their rights. Any protest
might be viewed unfavorably and dismissed or even put behind bars. This would
mean the suppression of political freedom. Therefore, as Minoo Masani pointed
out, the government monopoly on economy would cause a erosion of political and
economic freedom and perhaps social freedom too. This was apparently an
indicator of the failure of the Soviet or the Maoist systems. The current
Chinese model is a party run model and thus without doubt a reason for the
absence of economic and political freedom in the country. Ironically, the
Keynesian model despite its emphasis on government intervention is not a
leftist based model. Keynes advocates a strong role for the private sector but
in the cyclical direction. The government intervention has to be
counter-cyclical.
As one examines the economic
ideologies, it is fashionable to bash the right or the conservative models in
the name of promoting inequity etc. Yet it would wrong to term the leftist or
the so called liberal developmental models as something panacea to the global
development. Each economic ideological school deserves a detailed engagement and
not pigeon-holed adjectives and superlatives.
Comments
Post a Comment