Capitalism was built on the principle of free markets
and open competition. Adam Smith proposed a hidden hand
that regulates these markets and classically advised
that absolutely no regulation and supervision is
required, as this hidden hand takes care of everything.
On the other hand, Karl Marx proposed that every society
is a commune and everything must be owned by everyone.
Historically speaking. in practical world, none of these
extreme views survived in their purest form. World
realized and it was practically proven that while on one
hand, everything owned by everyone, in the absence
of competition and reward, is a road to suffocation of
economic and social growth, and on the other hand, the
hidden hand of supply and demand, does not always take
care of everything and some intervention and regulation
is required, to make sure that power is not abused and
everyone plays fair. Beside, it is universally accepted
that certain things like, defense and national security,
law and order, high school education, currency,
transport and communication utilities like roads, air
and virtual waves, cannot be entirely left on private
ownership. Virtually, every country in the world, now
has a some sort of hybrid of these two extremes, in
place. Some of these hybrids lean towards left, some
towards right and discussion continues that where is the
correct balancing point and how much of which is too
much? Probably, there is no one, right balancing point
and it differs in different situations and at different
times. One thing may be perfectly right in one
situation, at one time, but may turn out to be wrong in
other situation, at other time. Still we can and must
be able to find some broader, universally acceptable and
applicable principles that are always good, in every
situation like national security is Federal government’s
job or highways must be maintained by states or high
school education must be governed by local governments.
Modern global markets can be justifiably compared with
grounds and play fields and government with a referee,
who’s job is to make sure that every player is
provided with open and plain field and every one plays
fair.
Fair play in economic and financial markets also
depends on the conditions that everyone has equal access
and open field to play with and no one is allowed foul
play and must not be able to abuse power and resources.
In economic terms, there shouldn’t be any monopolies,
cartels and anti-trust, fraudulent and malpractices.
Whenever, any major wrong doing happens that has
widespread, deep and obvious implications like market
crashes and failures and when as a result of it there
are proposals for more government intervention and
regulation, there is always a loud and repeated outcry
against too much government. In this post we will try to
analyze on factual bases and not on propaganda or
ideological bases, how correct and sound is the argument
against too much government. Do we really have what is
termed as too much government, or the fact is contrary
to it, and we actually need more government intervention
and regulation of economic and financial markets?
Remember, before Capitalism, there was feudalism and it
is still the dominant economic system in many countries
of the world. People all over the world, specially in
West, revolted against feudalism because it had the
monopoly of a certain class on entire economic,
political and social system. There were elites, who had
all the privileges, respect, power, wealth and money and
then there were other people who had none of these. The
feudal system was replaced by Capitalism, after several
bloody revolutions, all over the world, particularly in
West, on the promise of a sizable middle class and equal
opportunities for all citizens, that were supposed to
build the bridge between upper and lower class.
Initially, Capitalism provided these results and gained
unprecedented world-wide popularity as a
successful economic system. But, recently, those trends
are noted to be reversed and the gap between rich and
poor is widening, again. This is generally defended as
everyone’s right to make as much money as possible.
Accepted. But if accepted unconditionally, current
trends propose that a large proportion of world’s
population has suddenly become stupid and cannot
compete, anymore, which is ridiculous and illogical. It
is an impossible proposition. What factual analysis
shows, is that Capitalism has created a new
privileged class, that is brutally abusing its resources
and power. This is creating an unequal field between
privileged ones and the others, a hazard that Capitalism
was supposed to avoid, not accelerate. Lets analyze this
claim in the light of facts. Disney, Viacom, Time
Warner, News Corporation and General Electric together
own more than 90% of the media holdings in United
States. U.S. Political system has the monopoly of two
political parties, Republican Party and Democratic
Party. Recent financial crisis provided a golden
opportunity to break down the monopolies in automotive
industry, but it was failed by corporate lobbies with
the help of their pimps in Congress. U.S. automotive
market has the oligopoly of General Motors, Ford,
Chrysler, Honda and Toyota. Breakfast cereals have
the oligopoly of general Mills, Post and Kellogg. 50%
of soft drinks market is dominated by Coca Cola, 21% by
PepsiCo, 7% by Cadbury Schweppes and most of the
remaining market is occupied by Cott Corporation and
National Beverage Company. Above are just a few of
the examples, that spread over almost all the sectors of
economy. So, where are the free markets? Where is the
open competition? and where are the equal opportunities
and open fields for everyone? Isn’t it that the feudal
lords are replaced by even fewer feudal Capitalists, who
have a influence that is far more strong, deep and
widespread (global) compared to the feudal lords? Don’t
they have far more money and influence than any feudal
lord even imagined? These companies spend hundreds of
billions of dollars every year in extremely strong,
powerful and influential lobbies around the world, that
shape the policies at every level like, United Nations
and other powerful and influential international bodies,
institutions, organizations, funds and charities;
federal governments; provincial and state governments;
and local, city and county governments. They also
dictate the policies to most commercial and even
state-run media, because the survival of these media
depends on advertising revenues from big, multinational
corporations. They also run and finance most political
parties, the election campaigns of most political
parties and their candidates around the world. So, where
is freedom of choice and speech? Where is the open
access to information for everyone? Carlos Slim Helu
holds a fortune of 53.5 billions, Bill Gates worth 53
billions, Warren Buffet 47 billions, Mukesh Ambani of
India 29 billions, and Lakshmi Mittal, an Indian British
28.7 billions. Average worth of 1011 billionaires
worldwide, 40% of them U.S. nationals, is 3.5 billions,
0.5 billions higher than a year ago. 164 of them are
comebacks and 97 new, in the middle of one of worst
financial crisis in history of world, when most people
lost their money and the incomes of most people dropped
worldwide. Total worth of these billionaires is 3.4
trillion dollars, 38% of it belongs to U.S. nationals.
In 2004, BP had sales of 252.4 billions (same company
that is found to have serious discrepancies and
negligence in the maintenance of its wells, resulting in
huge spill in gulf of Mexico, seriously endangering wild
life, echo systems, economy, business and tourism.
Company has been unable to stop this spill for over
forty days now), Exxon Mobil had 237.1 billions in
sales, Total energy company of France made 131.6
billions, Allainz of Germany made 112.3 billions and
ConocoPhillips made 104.7 billions. Compare these
with median household income in United States in 2007
was $50,233.00, a rise of 1.3% compared to previous
year. Average median income of full-time working men, in
United States during year 2007, was raised to $45,113
from $43,460, (3.7 time the minimum wage compared to 3.6
times the minimum wage in previous year). Full time
working women earned an average of $35,102 in 2007,
compared to $33.437 in 2006 (raised to 2.9 times of
minimum wage from 2.8 times of minimum wage in 2006).
The median income per household member (including all
working and non-working members above the age of 14), in
United States, was $26,036 in 2006. 12.3% of all
households in United States lived in poverty in 2007.
Every person has a right to make money, as much as
possible. Accepted. Every person has a
different capacity to make money. Accepted. But, can
these mind-boggling differences like, many living in
poverty, while some people are making tens of billions
of dollars and some companies making hundreds of
billions of dollars, can be created just by one’s
ability to make or not make money? A careful analysis of
data and reports proves that this is not the case!
Power, influence, contacts, lobbying, anti-trust
practices and money itself plays a huge role in these
success stories. When jobs of these rich and wealthy are
endangered, sky starts falling and everyone in congress
and media, becomes extremely active to save them. But,
what about 12.3 percent living in poverty in world’s
richest country? It looks like nobody cares about them!
Sky doesn’t fall with their hunger and poverty. They are
a different type of human beings compared to ones who
work at Wall Street. If you talk about raising minimum
wage for them, business is immediately endangered.
Helping them is welfare, a burden on economy. It is hard
to extend unemployment payments for them, even in the
toughest time, because “we cannot afford it”. Universal
health care will bankrupt 2 trillion-dollar economy,
while we keep providing multi billion dollar bailout
packages to wall street and repeatedly failing
automobile companies, from tax payers money. Don’t we
send our representatives to congress to safeguard our
(voters, citizens and tax payers) interests and rights?
Or we send them to become our lords and distribute our
money to people and companies that are already rich and
that messed up the world’s economy?
