Is Unrestrained Capitalism Really a Blessing in Disguise?


I recently had an argument with someone who was bent upon convincing me that unrestricted capitalism is nothing but a blessing beneficial for all. The primary motive behind writing this very piece is not any sort of staunch advocacy of any economic mode of production but to challenge the assertions of unmitigated blessings of capitalism. The underlying conviction of the capitalism’s advocate is that capitalism has managed to extensively benefit the citizens of the emerging economies. But is that really correct?

People generally make use of statistics to corroborate their stance that the threefold rise in the global GDP in the past twenty years has contributed to the improvement of the state of the developing economies. If I may dare to differ, I want the readers to realize that the growth in GDP is a golden statistic that may look beautiful on paper presenting a rosy picture of the improvement in the living conditions of humanity, while in reality it might not be the case. And generally its interpretation is distorted and misleading in multiple ways. E.g. ; an increase in the production of ammunition and military equipment also forms a major chunk of the GDP hike statistic of an economy, but how does that factor contribute to the betterment of the deplorable state of poverty in a poor country is beyond the grasp of my feeble mind. The fact that most humans are not very fond of sharing their profits with the lower segments of society ensuing in the accumulation of wealth in a few hands and the constantly diverging income disparities led to the demise of the trickle-down effect principle of GDP rise a long time back. This, indeed, presents a very pessimistic view of human nature but the common sense indicates that if this view was misrepresenting then the fact that the number of people living on between $1.25 and $2 a day has nearly doubled, from 648 million in 1981 to 1.18 billion in 2008, would have been a lie.

Another benefit of capitalism highlighted is that of unconstrained capital and technology transfer between the countries. I am not, by any means, denying the effects of positive advancement brought about by technology. The mere fact that I am so conveniently able to articulate my dissent and disseminate it in a manner so prompt is indeed a blessing of technology in itself. However, there is another bleak yet thought-provoking aspect of this big picture that also needs our attention. The United States of America was so vehement in its desires of shattering USSR into smithereens because the idea of setting up unchallenged capitalism globally had been in line with its imperial ambitions of establishing a global empire by ruling through the power of ideas. This power of ideas has essentially been driven by the motivation of ruthless profit making and capitalizes on the notion that human desires are endless.

A mobile phone for example, whose sole purpose of invention, was to facilitate communication, has become a phenomenon of widespread obsession and enchantment which I tend to find ultimately irksome. This very culture of consumerism shapes our minds, in a certain way where we have started to associate our happiness to the attainment of things we do not need. The innovators and producers, driven by their absolute aspiration to make money, have gone beyond the point of just catering to our needs. They have started to create needs and design desires to make sure we get locked into the cobweb of consumption and over-consumption, unabashedly insensitive towards the social, cultural and environmental implications of their products. Unfortunately, the colossal influx of android phones in my country does not possess the ability to elevate the fifty percent of population living below the poverty line barely able to meet the minimum necessities of life required to survive.

The proponents of unadulterated capitalism claim that profits, being the propelling force, incentivize the economy into innovation and promise advancement and modernity. Another appalling viewpoint I have frequently come across is that poor people are poor because of their lack of motivation to progress and that capitalism guarantees success to anyone possessing the motivation to succeed. The comparison made with Western and European countries in this particular regard is immature and invalid at many levels. These countries have fully functioning social security systems that ensure education and equal opportunities for all segments of society including the most vulnerable. In a country like ours, where the social security system is almost non-existent, the fact that you are born in a poor family perpetuates your fate to remain deprived and underprivileged for the rest of your life. If you are too poor to gain quality education but lucky enough to get some of it, the large disparity in standards enforces unequal opportunities and hence stagnation in terms of upward mobility up the social ladder. The flimsy state of law ensures that progressively taxing the income has failed due to the unabashed culture of tax evasion, therefore regressive taxation emerges in the form of indirect taxes suppressing the poor and pushing them further in the downward spiral. In circumstances like these, if naked capitalism is allowed to flourish without implementing any sincere egalitarian measures, the ensuing results would only benefit the producers and the elites and engender discontentment among the masses.

The assertion that the impact of capitalism has manifested itself in the overall development of the world also needs to be widely analyzed by examining if the world is going in the direction of becoming a better place for everyone or not. Here, I would quote an interesting piece of observation that Dr. Adil Najam pointed out in one of the talks he delivered, though in a very dissimilar context from the one we are debating, yet very relevant to be mentioned. He expressed that if a person on another planet looking down at Earth from some other planet is required to produce a report describing the conditions of the World, considering it as one single country, the response would not be very delighting. He would find out that the Country World is an extremely poor country, with 2 billion people living on less than 1$ a day and 1 billion people living on less than 2.5$ a day. The Country is not just a poor country but it is also a divided country, with 80% of its resources being controlled by 20% of its people, and 80% of its people living on the remaining 20% resources. Moreover, it is a completely degraded country, and also rampant with insecurities such as that of food and water. The Country World would turn also turn out to be a poorly governed country and summing up all these characteristics imply that the Country World is a third world country but the idea of catching the first rocket ship and going out of it is beyond the bounds of possibility because there is nowhere else to go.

With all the good-looking global growth statistics on paper, why is the world not becoming a better place for all to live?

I do not intend to suggest abolishing the concept of free market or to associate the very idea of capitalism with Satan but I strongly believe that capitalism exists in varying forms. There are benign forms of capitalism, where it is ensured that the more the wealth is produced, the more effectively it is redistributed. And then, there is a deep-rooted kind of ‘crony’ capitalism that exists in Pakistan, that was born out of implementing theories like the ‘Social Utility of Greed’ and ‘the Functional Inequality’ during the Ayub’s era. All the facilitatory bodies established to benefit corporations ended up focusing solely on ten to fifteen top-richest households of the country, based on favoritism, leading to terrible income inequalities, accumulation of most of the resources and banks in the control of a handful of families and therefore extreme pauperization of the masses. Capitalism in Pakistan is most certainly far from being benign because of lack of structural and legal checks and restraints and the lack of sincerity when it comes to formulating and implementing pro-poor policies.

On the global level, Noam Chomsky refers to the system of predatory capitalism as “economic fascism” and observes that the impoverishment in the developing countries has mainly come about because of the third world’s compulsory economic liberalism stipulated upon them by the Western States who themselves protected their own economies from the market disciplines and developed. The gigantic corporations and the unrestrained capitalism must not be permitted, specially in a developing economy, on the mere premise of ‘free market’, to rampage around loose trampling everything that comes in the way of their pursuit of profits.

Sarah Khan