Did capitalism win too soon?
When the Berlin Wall came down in November 1989, a cheer went up across the continent as it marked the end of communism in East Germany and Central Europe. This was followed in 1991 by the breakup of the former Soviet Union, with the Central Asian republics becoming sovereign states. The collapse of the Soviet Union, once the embodiment of communist power, was celebrated around the world as the final victory of capitalism. The great debate between the two rival ideologies that occupied some of the best minds of the 19th and 20th centuries seemed well and truly settled. Capitalism won hands down when the process of German unification began and the Soviet Union, once a superpower, was brought to its knees.
The general consensus was that a state-controlled economy was unable to provide its citizens with the wealth evident in capitalist societies, where individual enterprise and talent were allowed full expression. The general perception of communism in people’s minds was one of empty shelves, long lines of citizens queuing for hours to buy basic necessities, and a system governed by the rationing of supplies. Communism was also associated with huge Soviet-style projects that turned out to be white elephants. The Soviet Union, the main proponent of the economic theory of Marx and Engels, was in tatters.
China, the other great communist power, had embraced capitalism with a vengeance. Since Deng Xiaoping’s economic reforms (1978), China has become a thriving wealth-generating machine and lifted millions of ordinary people out of poverty. Riding on the economic success of capitalism, China is now the second most powerful nation economically and a major military power that will be ready in a few years to challenge the United States, the world’s only superpower. While embracing the capitalist economy, the Chinese Communist Party retained overall control over citizens, and political rights were never promoted.
The victory of capitalism may have been proclaimed too soon. In fact, in many parts of the world, including America, the bastion of capitalism, the inequality spawned by the greedy nature of capitalism has led to rethinking. The essential characteristic of capitalism is profit. While this is acceptable, what is not is the fact that while the upper elite grab most of the wealth, those at the bottom of the pyramid struggle; in a globalized world, jobs go to countries where the cost of production is much lower. Since China opened up, many American factories have closed in the United States and started production in China, where profits were much better thanks to lower labor costs. This led to resentment against China. Donald Trump made good use of this during his election campaign by relentlessly targeting China, not only for stealing American jobs, but also for not respecting international rules in the conduct of business.
Trump’s shock election victory over Hillary Clinton in 2016 was in part because Central America as well as the less educated, unschooled masses voted overwhelmingly for him. This section has been disappointed by new ideas about climate change, which have led to the closure of job-creating industries like mining towns. Many of them have become ghost towns, with only old people left behind and young people forced out and looking for work outside. Trump came up with the America First slogan and it resonated across large swathes of the countryside and in the suburbs. Protectionism, which is anathema to capitalism’s free trade mantra, crept in as the United States attempted to back away from what it had passionately preached to the rest of the world since World War II.
The 2008 financial crisis brought many American giant corporations under the scanner for rigging numbers and engaging in all kinds of manipulation, not just in the United States but around the world. Goldman Sachs, the giant American multinational investment bank, has been accused of misleading its investors and profiting from the collapse of the mortgage market, in the housing sector. Despite losses, he paid huge bonuses to the big bosses of the company. He has been involved in many shady deals in other countries, including Malaysia and Libya. Financial journalist Matt Taibbi, writing for Rolling Stone magazine, described Goldman Sachs as a “big vampire squid” sucking money instead of blood and masterminding “every major market manipulation since the Great Depression”.
Disillusionment with businesses has steadily increased since the financial crisis of 2007-2008. This, coupled with job losses and the growing gap between the wealthy elite and struggling ordinary men and women, led to the Occupy Wall Street protests. It started in New York’s financial district and spread to 28 other cities, as well as European capitals like London, Paris and Berlin, in addition to cities in South America.
Protesters gathered in Manhattan with the simple slogan “We are the 99%”, meaning that one percent of the giant corporations grabbed all the wealth and power while the others struggled with very little. No one really knows who came up with this slogan. Some say economist Joseph Stiglitz first made the distinction, while others say anarchist David Graeber. It hardly mattered. The slogan touched the hearts of many, mostly struggling young men and women who gathered in Manhattan’s Financial District on September 17, 2011. It was a cry against inequality and the dire plight of young people struggling to repay their student loans and find it. difficult to get secure jobs to support themselves. The movement lasted about two months, during which young people camped outside international financial centers, pitched tents and held up slogans. 750 such sit-ins have taken place around the world. Not that he got much. But the anger and resentment against the one percenter was there for all.
Currently, the big tech giants – Google, Apple, Facebook and Amazon – are facing public and government anger for circumventing anti-trust or monopoly-guiding rules and using its users’ personal data for lucrative. The Cambridge Analytica scandal that rocked Britain in 2011 concerned the collection of data from 87 million Facebook users for political advertising and to push the Brexit vote in the upcoming referendum. Facebook and Google between them now have access to all user information, starting with where you’ve been, what your likes and dislikes are, what messages you send, everything searched and deleted, all apps used as well as a user’s political ideology or religious views. All of this is stored and can be used to advance products, policies or policies, all at a cost of course. Governments around the world, including India, are trying to rein in these tech giants with a reach far beyond any government.
Just as the frustration of suburban and rural America was exploited by Trump, the rise of Bernie Sanders and the left wing in the Democratic Party was the result of the disillusionment and frustration of urban youth who wanted change. and turned away from greed and materialism. of capitalism. Sanders lost to Joe Biden for the Democratic nomination, but he has drawn significant support from young Americans who are tired of materialistic, get-rich-quick America. People like the young and dynamic Alexandria Ocasio Cortez and other self-proclaimed socialists are now trying to advance the leftist agenda within the Democratic Party.
Does this mean a return to communism? Not at all. No one is ready to give up the political freedom, democracy and human rights that are part of the liberal ethos of capitalism. The authoritarian political form of governance long associated with communism, as practiced in China as well as the former Soviet Union, is a big no. It is more a matter of democratic socialism, where the government provides basic needs to all citizens such as health care and education for free or at a reduced cost. The government also intervenes directly to help the economically weaker sections of society. The safety net that is provided to the poor in most of Europe in capitalist economies was at one time adequate, but as governments have cut spending these sections are struggling to cope. The model of democratic socialism ensures that freedoms are intact and that there are jobs as well as opportunities for small businesses to earn a decent living. Denmark and Sweden perfected democratic socialism.
Both capitalism and socialism have their uses, but neither system offers a perfect solution. Communism is dead and buried, but democratic socialism is alive and well. Capitalism must correct its faults if it is to prosper in the next century.