CAPITALIST Matters

The purpose of capitalism is to make profit and generate dividends to shareholders and keep this going for as long as possible. Capitalism is not concerned about generating employment or preserving the environment because these only reduce profit or in other words, being concerned about the environment or generating employment does not make more money. It is the same with worrying about rehabilitating and compensating those displaced by a factory or a mine since it is too cumbersome and expensive. What is done when faced with such a situation- Cut corners? Make deals with those in power? Turn a blind eye to environment and good of the people? All of it is happening in our country.

These are issues with unbridled capitalism and capital will flow out once it has exhausted all resources in a particular region or resources become too expensive, whether it be labour or minerals and once it leaves, only then does the true cost of their operations come into full view. This is why we need some regulation and control over the functioning of capitalism. Communism and socialism as a pure concept may be past its glory days and capitalism is also getting there with the current string of crises showing no signs of abating.

It is only obvious that we are seeing the re-emergence of Keynesian economics, where private enterprise is allowed to function with the government intervening in certain sectors and also during periods of crisis. But I would go a bit more than that, government should play the role of the regulator and also participate in certain sectors such as public transport, power, water, education etc because in a country with vast underdevelopment only the government can provide certain goods and services. Whenever there are profits to be made and that too in the immediate future, there and only there will capitalism fill the demand. The current trend has been high economic growth with little growth in employment* as investments are high in capital intensive sectors and not labour intensive sectors which makes for good economic growth numbers but bad for people and if we do not give people opportunities to develop and add to the skills of our working population, once capital finds greener cheaper pastures, we will be left in the lurch.

We need investment and economic growth for the good of our people, we need jobs and education for our people and a healthy and prosperous environment to be preserved for future generations and not just GDP growth that will only fill the coffers of a few rich industrialists and politicians in their payroll.



Nandan Nilekani's book 'Imagining India' is quite naive in assuming that capitalism is the panacea to all our economic problems and the left parties in India are merely being boisterous as they are tied down to old ideas and the 'red corridor' is merely an outcome to over-activism and dismisses the work of Medha Patkar and Aruna Roy. He fails to understand that their work is to ensure equitable development and social justice and they have gained a place because the ruling parties have been hand in glove with corporates in exploiting natural resources with scant regard to the environmental and social consequences. Development has to be atleast Pareto neutral in the worst case and even then it is futile and it has to be a Pareto improvement(1) and what we have are Pareto inefficient outcomes and that is what fuels the naxal movement in this country.

If we have unbridled capitalism, we will only have development and growth in statistics and tables while even a billion Indians can be left in the lurch without any access to a decent standard of living or hope for the future.


*http://articles.economictimes.indiatimes.com/2012-02-04/news/31024793_1_labour-intensive-labour-productivity-manufacturing-sector

1-   http://en.wikipedia.org/wiki/Pareto_efficiency