I think its absolutely abhorrent that 9 Indians own 50% of the wealth generated in India. It reveals the moral failure of Capitalism. What possible intelligence could they have and what possible value have they provided the world that other men couldn’t that merits them having that level of wealth?
The answer: Nothing.
Capitalism’s moral argument is that we need an incentive system to reward men for work, to create innovation that helps humanity.
What it doesn’t tell you is that, since most of the wealth acquired in history is immoral, and the overlords of older immoral systems shift to newer economic systems like Feudalism, and then Capitalism, the whole system never even had a fair start!
And a lot of publicly funded innovation is given off to private interests for them to make money!
And although they prop up smart innovators with their Capital and cause innovation and jobs, they have low risk for their failures which most people of lower classes don’t. Even from that position, Capitalists repeatedly crash markets with their gambles. And there is no accountability after that fact!
The old wealth rides the backs of other smart men without providing much of value by themselves. Even newer wealth created by innovators takes on these roles of older wealth(tech monopolies).
And a lot of new wealth was generated before there was economic egalitarianism. And there are systems of economic exclusion - like elite private education etc, with legacy and moneyed admissions. Capitalists do form networks with folk of merit. But this whole system works for the interests of those with more Capital, than offering an egalitarian social mobility opportunity to all people.
Certain Indian old wealth, just like the old wealth of any nation were just in the right place at the right time. Russian Oligarchs, Arabic oil barons were simply at the right place and time - they didn’t do anything of value.
Jeff Bezos is creating a lot of value. He deserves quite a bit of money for what he is doing. But why are the Amazon workers underpaid in US and EU so much so that public money from government needs to provide assistance to those workers? And why are governments paying huge money to Amazon from public funds? That’s just corporate welfare.
And the investors who saw Bezos’ vision deserve some cut, sure. But there is no moral justification for the Capitalists who simply bet on innovative men to take the most chunk, there is no moral justification for the executives and decision makers to get a massive chunk of the wealth while the workers at the bottom suffer with underpayment and lack of social mobility.
We recognize that our governance is to be democratic. But why are Corporations so totalitarian in their structure?! ‘Private tyrannies’. Corporations are nice to their high skilled labor because they need them to be productive - sure. But the power structure is still totalitarian. Sure, the government lays down laws to protect workers - but Capitalists have vast money that they can pump into politics to set terms to their favor.
There is no moral justification for those Capitalists from Andhra that I know of, starting their businesses with their inherited wealth, make huge money with the hard work of working class men, who are so underpaid they can’t be that socially mobile in society and get better lives for their children. There is no moral justification for the absolute control of Capital and decisions surrounding it by the Capitalists.
Let’s dive into more details!
Inequality inequality everywhere!
Capitalism produces vast income inequality. The home of insane Capitalism i.e. U.S.A has higher inequality than new Capitalist states like India and China. And an important fact to note here is that U.S.A’s inequality is essentially theft from the whole globe - it is the center of world Capitalism after all!
And ‘State Capitalist’ states like China manage this inequality better than states like India which rely on foreign corporations and have to be more free trade and let in foreign investments.
China gets to set better terms and reduce inequalities within because they essentially own the world’s production! This is because greedy American Capitalists shifted huge production to China at the expense of American Workers since the poor Chinese workers had no labor rights and gave cheap labor costs.
Apple devices are produced cheaply in China for example and the Capitalists and the upper class who own Apple shares make a handsome profit margin - at the expense of the American workers.
Why I call Capitalism ‘theft’, is because the workers who produce the output that Capitalists profit from are completely at the mercy of Capitalists as far as their wages go, and as far as the prices of the products they consume goes, and as far as the investment decisions go.(China might face similar issues now as Capitalists now move to cheaper labor locations since Chinese economy improved enough to have higher wages for their labor).
Workers in US had some power earlier with all the unions and communist movements etc. So they got a good deal after the great crash of Global Capitalism in the early 20th century, when the power of the unions and communists forced President Franklin Roosevelt to create a ‘New Deal’ where the interests of the workers are also considered (Just white workers, plus the War efforts were key in the economy - these downsides can be discussed later). This new deal of Social Democracy kept Capitalism afloat for a fair bit, and we are now seeing the downsides again! (New Deal - Wikipedia).
Working Class wages are stagnant in the first world. American, French and UK working class are suffering. That’s why we see phenomenon like Trump, the Yellow vests, and Brexit! This stagnation of wages for the Working class of the Western Economies is because Capitalists recklessly shift their Capital to the third world economies because we have lower workers rights and lower wages.
Even as this shift in Capital helps poor countries, by the design of Capitalism, the wealthy in the poor countries horde most of the wealth, and the politicians who are paid by the wealthy let this system run amok. Thereby increasing the inequality both here and globally as the workers of the world suffer.
We recently had a huge Trade Union protest in India which the sold off mainstream media didn’t even bother reporting about. Taken in absolute numbers, we routinely get among the world’s largest mobilization of protesters for better workers conditions and rights. (Central Trade Unions protest against Modi’s labour reforms).
All Capitalism is Crony Capitalism
I m also guilty of perpetuating the myth that it’s solely the Capitalism in developing nations that is broken. That somehow, Western Capitalism is more pristine than Indian Crony Capitalism.
It is true in the sense that Western nations are vastly more business friendly for anyone to run businesses in - they don’t have to deal with government minions vying for a bribe even in the lower levels like we do in India.
But Western Capitalism is also quite ‘Crony’. Legal corruption via lobbying leads to disproportionate power to the Capitalists allowing them to go around rules, or change rules and laws, and recklessly gamble away the people’s wealth for short term profit leading to an inevitable crash of Capitalism which is then bailed out by public wealth!
Whether the influence of those with Capital influences public representatives via illegal bribery or legal lobbying is mere semantics. The Conflict of interest remains, which is why there is no such thing as ‘Crony Capitalism’, it’s just Capitalism. All Capitalism is Crony.
The natural conclusion of this system is that those with Capital are represented vastly better and over time - they trickle the wealth upwards and alter the system to remove worker power.
And they supply quite a bit of middle class jobs which is why the middle class rarely questions Capitalism. Because we are doing quite well! This is why upper middle class folk like the biggest Indian writer on this site for example, preach Capitalism intensely - because they are immune from the suffering of the working class.
Even middle class folk do see lack of jobs TBH - but they have more of a net to fall back on and attempt something else.
And if the cornerstone of Capitalism is enabling innovation - even that is stifled in the late stage Capitalism. What we see now are a bunch of huge monopolies, owned by few individuals.
For example: Entrepreneurs are the new labor for Capitalists! Within tech, new innovations are rapidly acquired and consolidated under the big tech companies and they routinely let innovation die if it helps their margins.
Another example: Vague Capitalistic competition arguments were used to achieve the destruction of Net Neutrality in America which actually stifles the broader business of individuals in the free market by concentrating power in the hands of the bigger tech giants in the realm of internet. Internet btw was invented by the US military i.e. a publicly funded body.
While the Social Democracies of E.U do relatively better than America in metrics measuring quality of life, and people work less, vacation more, have social mobility due to free health and education, there are still working class struggles. Working classes are starting to suffer as Capitalists move out their capital to poorer nations with cheaper labor and lower human right enforcement.
All these economies are interdependent. So the Capitalism’s ‘Supply Side economics’ which arose with Reagan in the U.S.A, and Thatcher in the U.K, also spread to European nations. They are also now prescribing ‘austerity’ to fix the failures of Capitalism. (I recall even Modi govt talking about debt recently to evade questions).
Example of Cronyism in E.U: Deutsche bank recently is apparently doing massive business from a tiny little bank in a small European nation which shouldn’t be having that level of wealth channeled through it! [1]
The biggest bank in Europe is basically participating in gimmicks to evade regulations. This can be seen throughout the history of modern financing - big Capitalists gaming with their access to different networks and differing exchange rates etc. (Since global trade is essentially zero sum - every evasive measure taken by the rich or upper middle class to preserve their wealth does indeed hold back someone else from getting their basic needs).
Capitalists waged wars on workers unions and communist academics to systemically stifle any sense of working class power. Not just locally within America, but globally by waging war on Communist experiments in Asia and Europe.
In India the wealth is kept in the top based on illegal bribery in our thriving black market. In the US, the wealth is kept on top via the legal means via which the rich exert vastly more influence than the common people. The rich of America have waged a terrible class war upon the world proletariat throughout the 20th century.
This class war has gotten so intensified at the latter end of 20th century and in the 21st century that both big parties of America buy into Supply Side economics(Economics of theft as I like to call it), where there is no socialist workers movement big enough to at least tax the rich(and enforce more Keynesian interventions rather than do the austerity nonsense) even after the big crash of global Capitalism of 2008!
Brief History of Capitalism: Marxian Social Analysis [1]
My father worked in the US for a short while before deciding to come back to India. This was around the time I was born. The Fiscal irresponsibility of Americans used to baffle my dad. We (me and my brother) were raised with middle class thrift. How did this American cultural quirk come to be?
There is a common myth, that the American culture of living on credit and consuming to an excess is what leads to market crashes. (Spread around by Capitalist literature - I read and believed that shit).
Capitalists created the supposed irresponsibility of Americans that the rest of the world perceives as the excesses of American culture.
No human wants to keep working hard for multiple decades. Most people just want a simple self sufficient rural family life. Workers would inevitably accumulate some wealth to settle - especially repetitive alienating work. Such is human nature. But to keep people working, Capitalists kept rising the workers’ real wages(adjusted for inflation).
There were also new products coming out, new advertising about those products, and all these workers could afford to consume more with their rising real wages. This is the period of post war economic boom that exists in the minds of older generation Americans which gave rise to the myth that if you just work hard in Capitalism - you will get your rewards, and the new age myths that Millennials are lazy and don’t want to work etc.
Consumerism became a cultural thing. It spread world wide, everyone likes to make money and spend it on new shiny things, and show off your status by getting better and better things etc.
But this promise of Capitalism is a false promise. Things were that way because workers were needed at that point. As soon as rising women workers and immigrant workers created an excess of workers and the Capitalists had better bargaining power, the real wages stopped rising even though improving tech enabled the workers to be vastly more productive and the Capitalists to gain vastly more profit. But the culture and lifestyles were already created and the subsequent generations were also operating on the Capitalist myth that hard work in America would grant them results.
Americans then had to take on debt to sustain their lifestyle and culture. Both men and women took on debt to the tune of over 10 trillion at this point, with similarly crazy student debt of over a trillion. All of this, to live up to the promised American dream.
As this is going on in America, Capitalism spread globally propped up by American military might. Capital shifted to new markets with cheap labor like India and China and more, at the cost of first world working class. Dictators and autocrats were propped up in resource rich nations and few individuals in the west and few Capitalists in these developing nations horde most of this wealth. The traditional powers in all the regions held their power even in the new Capitalist status quo since they already held disproportionate assets. They spent their money on the public representatives and they in turn assisted these Capitalists to get their hands on more projects etc. Vicious cycle.
So you have the American economy at a bursting point of exploitation, with people working under huge debts to live up to the minimums that came easily to previous generations, and you hence have Capital leaving to cheaper labor locations. These debts in the form of mortgages on houses are packaged and sold around, complete with insurance schemes to offset failed payments. And Capitalists de-regulated the commercial and investment banking allowing for gambling of investor wealth which was safer earlier.
Meritocracy in Capitalism is kind of a myth. It obviously does exist to a degree. But social mobility is terribly low. Your birth conditions still determine your fate across most of the world. This is why the stories of individuals making it big against all odds are repeatedly sold. To perpetuate the Capitalistic myth.
We can write a whole another long essay on the Environmental disruptions of rapid irresponsible Capitalism which disproportionately will effect the poor.
Justice for thee, none for me
One of the most worrisome aspects of Capitalism is how Capital shapes justice. There is no justice for the powerful - we see that routinely across nations.
India:
None got implicated in the 2G scam in the Congress rule. Amit Shah, Yogi have history of shady encounters where I don’t expect to see any justice.
Justice systems are quite underfunded and under staffed and have long pending case queues and this gives ample opportunity for the rich to use their Capital to effect the witnesses, the evidence etc. Ex: Salman Khan evading his obvious crime.
More recently, a Youtuber who was trying to expose the failings of a private company Lodha got hit by a massive slander/libel lawsuit! r/india - LODHA Group files INR 100 CRORE Defamation court against Youtuber Activist Krishnaraj Rao.
America:
There is a systemic assault on the government coffers by the Capitalists. There is a massive demonization of ‘Big Government’ by the conservatives and Republicans. Even though their theocratic, anti-civil right and pro-military and fascistic foreign policy ideas are all ‘Big Government’.
They hypocritically rail against big government when it comes to regulations on the market - because late stage Capitalism is about ‘extracting’ wealth from the system by weakening and working around regulations. Capitalism desperately depends on Government for its very survival and yet, it incessantly attacks the government, most of which is populated with stooges of Capital anyway.
The government ends up being underfunded and oft unable to fight the lawsuits from Capitalists. [2]
There was barely anyone held accountable for the global Capitalist crash of 2008. Public money was used to bail out the banks with the assumption that if the Capitalists are kept afloat, they will invest and get the economy going again. What is this public money? Money lent to the government by the rich! Which the government has to pay back with interest! In 1930 depression, government got money by massive taxes on the rich at least which was used to keep Capitalism afloat. Those days are gone in America apparently.
And then the rich got more free money with Trump’s tax cuts. They are expected to invest it to create jobs and help the economy etc, based on the logic of ‘Supply Side Economics’. What will they invest it on exactly? And who is left with purchasing power in their economy?
All the fruits of the productivity of the workers was kept from them by the Capitalists as I mention in the history above. Women entered the workforce. So did a lot of immigrants. With no wage growth. American families took on a lot of debt to sustain the promised lifestyle. The debt was essentially the wealth that they themselves generated which was kept by the Capitalists and given back to them as loans to afford the expensive lifestyles(which don’t have to be that expensive except for the profit of the Capitalists).
Americans are addicted to prescription medication to keep up with the pressures of Capitalistic exploitation.
When the American workers were stretched to their limits, the Capitalists did more risky betting leading to the crash. Now with the free money from Trump’s tax cuts - what is there to invest on? The workers are already performing at their peak possible performance! And being exploited by the Pharmaceutical industry as they do so.
So the Capitalists just bought back some shares. Artificially inflating stocks, so they can make some bucks. All of this is only hastening the next crash. JP Morgan predicts one in around two years from now apparently!
Ex: Apple and Amazon reached a valuation of 1 trillion, post the tax cuts. What is the argument for this change - that people are confident and perceive that Amazon is worth more because they are investing in some new spaces? No. It’s all horseshit. It means nothing real. Its all mechanisms to trickle wealth upwards with some vague arguments about bringing confidence to the markets by owning more shares etc.
Ex: Harley Davidson bought back some shares, the rich cashed out. Now they are closing shop and moving to Thailand apparently. (Their only market of China was ruined by Chinese tariffs as a backlash to Trump tariffs).
Even Indian corporations are now buying back shares. This wasn’t even possible in law in America only a few decades ago. But the Republicans, the most dangerous party in world history - uprooted that law too.
Aping the West
India, especially under Modi is following the pro Corporate policies which will help no one except the rich. For all their chest thumping about Hindu pride and pride in our non-existent historic technology - all they seem to be doing is copying more American policies (Corporate lobbying, political funding, private health and other insurances, private schools).
Congress is pretty much exactly the same. Neither of the big parties have a good vision for the future. All they do is rely on the failing Corporations of the west(failing the working class people that is, they are doing well for themselves, and middle class can be apathetic). Corporations which evade tax both in US and in India, via nations which are tax havens. So…
We are focused on job growth from foreign investment but what sort of jobs are we getting, and where is the wealth going? And are we building local expertise? Like China does? Are we luring Indian talent back by offering them good deals like China does to build our own industries etc. Are we regulating big industries well enough, and fixing infrastructure and pollution which are quickly turning India into among the most polluted nations in the world? No.
Only Kejriwal to my knowledge has some semblance of the right instinct!
“Kejriwal discussed his views on corruption and the state of the Indian democracy in his book Swaraj. He advocates for a decentralization of government and the involvement of the panchayat in local decisions and budgets. He claims that foreign multinational corporations have too much power in the central government and the politicians at the centre are not being held accountable for their actions after their election.” [3]
That’s in the right direction! The anti corruption thing was also in the absolute right direction. There is no broad vision or great solutions yet, but its at least in the right direction. And there is no point trusting marketing geniuses like Modi to have an actual vision - the public and the academics have to mobilize and push for the right vision themselves, and engage in dialogue with the politicians who show some good will to people like say Kejriwal and other local non-big-party candidates who are more accountable to people.
We need more grassroots movements to run all cities with a popular government. And decentralization of power should enable more active public participation in local governance in smaller towns as well, and add more accountability to the representatives. This will give instant assistance to broad swathes of our populace.
We also need an active state with long term ideas to protect and build local industries and expertise, instead of letting foreign corporations run amok. And to lure our high skilled folk back from other nations.
Path Forward, for the U.S.A and India
One word - “Ecosocialism” [4]:
This word has its own long history and sets of ideas, all of which won’t necessarily be applicable to our world economy now. But the instinct that the word captures is morally, economically and ecologically right, which is why I wanted to use that word to describe the direction in which humanity should collectively go towards in the future.
The first big problem of Capitalism is that its based on the myth or dogma that unchecked profit motives of those with Capital is supposed to grant good outcomes for all of us. What it is in reality, is just pure theft. The cyclical recessions of Capitalism have tremendous social and economic costs on the poorer sections of society as the rich get more rich.
You see the oligarchs on the top control all major institutions with their Capital, and now they are just riding it out and accumulating wealth as all trust in Capitalism is slowly destroyed over repeated financial crashes.
Another major problem of Capitalism is that there is no accounting for the actual costs of setting up industries. This real cost is borne by people. Rising pollution causing cancer? Rising global warming causes sea levels to rise and creates unexpected ecological events? All of this is borne disproportionately by the poor people! Pollution effects all our buildings for example - and we have to spend on cleaning that up ourselves. Capitalists pollute waters, and public has to spend on cleaning that up. Corporations get great deals from governments but evade taxes anyway, while the middle classes pays solid taxes. The ecological cost was never accounted for.
Ex: Take the simple act of digging into the ground and extracting a resource. All the ecological costs I mentioned above- Not accounted for. Just the labor and equipment cost is accounted for. Even on top of this - the worker doesn’t get a cut of the surplus he produces and doesn’t get a say in its investment - i.e. the Capitalist can just shut the whole thing down and move to China. The neighborhoods disrupted by industries don’t get a say in those decisions either.
As we can see from the example, we need accounting of the ecological disasters caused by our work and that needs to be borne fairly by the Capitalists, not just the people. And the reckless shifting of Capital with no rules to hold them back(Laissez Faire Capitalism) by the ones on top causes social and economic disasters. So we need to remove unilateral totalitarian control over Capital and give more say to workers. And we need to use Capitalistic incentive systems sparingly on areas where it actually makes sense.
Lets look at what certain left leaning intellectuals and politicians have in store for America to solve the crises of Capitalism and how we can apply similar ideas in India.
Democratic Socialism in America:
- Pushing for Workers Self Owned Enterprises [1]. And giving more share holder power to workers. This is a morally fairer class structure, and prevents crashes by slowing down aggressive movements of Capital to scrounge up profit without really creating value with it. Existing enterprises (Senator Elizabeth Warren had a bill that proposed something like this) should also give more power to the workers on key decisions. Ex: If someone wants to close down a place with a lot of workers - he can be forced to sell it to them instead and they can become a self owned enterprise.
- Seizing back ‘commons’ or those resources of a nation that should belong to everyone. It’s morally unjustified to have private profiteering over resources that collectively belong to the country. There will be aspects of resource extraction where private competition can bring about innovation and those aspects can be outsourced to private players. The running of vast projects should be yet another ‘role’ that you get due salary from - it shouldn’t entitle you to take all the profit. Plus, you have the problems of these big energy interests protecting themselves politically and ignoring climate change issues! (This nationalization of certain industries is being talked about in public in the UK, but not the US yet). (This is a fair re-distribution that must happen in the West first, and can happen in the developing nations soon after).
- A first step of high taxation and spending on Eco friendly tech and solutions and infrastructure to create jobs. (Congresswoman A.O.C routinely talks about this).
Vague vision for India:
- Increase government transparency via third party open source tech(I think India has enough expertise to pioneer this and sell these solutions to other democracies). Caps on election spending so that grassroots parties can better compete with big parties. Fight against black money in elections. Public funding for independent media(will become easier the more we re-distribute black wealth to the people, and white wealth via better taxation on rich). Phase out men in key roles that allows corruption by big Capitalists- and make government systems more automated and transparent - we have enough tech talent to do this ourselves - we can take lead on these solutions and sell to other nations. Local tech startups can do this.
- Decentralization of power as suggested by world renowned economists and Kejriwal. (‘An Economic Strategy For India’, By Rajan, Gopinath And Others: Full Report). The more centralized power is, the fewer people that wealthy interests can corrupt. If we have good decentralization and representatives are more accountable via transparency measures, via getting black money out of elections and via popular movements by educated middle class folk of all sorts of backgrounds - that will help immensely.
- Seizing commons and other mechanisms to get back wealth that rightfully belongs to the public. Black wealth in our parallel economy is insane. And govt knew mechanisms to make this happen, which were recommended by economists even - but they went with demonetization instead.
- Spending on environment to create jobs. First start on a planned system to our crop burning issues near Punjab - creates employment and reduces toll on environment that we the people are already paying for. Infrastructure to keep industries at a distance and much more. And government needs to encourage local private talent to build more expertise in planning more solutions.
- Fix the farmer problem with a public risk management system and not crony private insurance. A long term program to train and shift population to other sectors while staying there, without having to move to overcrowded poorly planned cities for that work.
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