Syllabus: Essay Paper (Economy)
Can Capitalism bring Inclusive Growth?
After the American war of independence , USA had adopted different socio-political economic system. Democracy, republic, capitalism, free trade, private production in large scale. This helped USA to transform itself and became more powerful than Britain, France. When more production, more taxes, and helped govt to redistribute to reduce poverty, unemployment, malnutrition.
Capitalists give more importance to increase the profits, in that process exploit the surplus labour, megre salaries led to lack of purchasing power to citizens to buy, so no demand for products, which caused great depression in 1929. This impacted poor people majorly. Inflation, no food to eat, poverty, unemployment .
Above two scenarios reveal capitalism is reason for inclusive growth and destroying inclusive growth. However to conclude capitalism can’t bring inclusive growth, issue need in-depth analysis.
There are many myths about capitalism, it is favouring some rich people, designing policies to suit bourgeioe, crony capitalism, suppression of poor, and so on. However, all these things don’t define capitalism. It is laissez faire, let us alone, production in the hands of private people , without much state intervention. Recognition merit, with our any discrimination based on caste, religion, race. Encouraging competition so that ultimately people get benefit with low fares. To sustain the competition, companies adopt new technologies, new management models, other simplistic measures that takes society forward. Free trade to reduce the cost of final product and increase the mutual interdependence of countries. Adam Smith greatly said, if every individual thinks about their growth and no state interventions are there, automatically all individuals would move forward. So, if one thinks about oneself, put so much effort, face competition, ascending the ladder, then one’s family is good, society is good, nation also good.
Capitalism brings inclusive growth.
In the medieval India mercantilism was at peaks, and everyone believe it was good, Adam Smith ideas changed the world , and moved towards capitalism. Industrial revolution truly created capitalist class with factory and mass production. There were many concerns of working class, but it helped to improve production, made available cheap products. As growth of nation doubled , redistribution was possible. Later on, many nations adopted capitalism tells it brings inclusive growth. Even communist counties like Russia and China preaching capitalistic principals economically, although politically still stick to communist ideas, and these capitalistic principles helped to remove their poverty.
Capitalism may have some faults, but it is best among other ideologies to bring inclusive growth. Socialism, communism work only during crisis periods. India once adopted socialistic values moved to capitalistic economy after 1991. China, Russia did the same. Xi jinping in recent world economic forum summit strongly pitched for free trade, removal of restrictions reveal how it helps developing nations to improve inclusive growth. In the present-day scenario, where individualism is growing, and selfish actions are gaining acclaim, socialism and communism would not hold water.
Capitalism encourages merit, it does not discriminate based on caste or race. Western countries are welcomed talent from all other countries and using that diverse knowledge for nation growth. Indians like Satyam Nadella, Sunder Pichai could become CEOs of world biggest companies tells hallmark of capitalism. Many black people could occupy highest offices in US like Obama, and in education many scholarships are provided to backward people. In countries like India, in factory no identity based on caste, and promotions also based on talent, so these narrow identities take back seat. B.R. Ambedkar got recognition in capitalistic America, not in India at that time.
Capitalism means competition. With more competition, more technology would emerge, people work so hard and productivity would increase. After creating competition performance of ntpc increased manifold. Before public sectors reluctant to adopt new technologies now they do at their own nonexistence. Progress in technology by leaps and bounds. Now people are talking about 4th industrial revolution, artificial intelligence. Service delivery improved a lot. Without moving our feet we can do shopping at lowest price and return if don’t like it. This tuff competition held many products like education, health are More affordable, new innovations in technology empowering people with new tools. E-seva in Andhra Pradesh made govt. More accountable and quick service delivery. If corruption reduced through technology , more resources at people so inclusive growth.
Capitalism encourages free trade , and reports say that with growing world trade many countries like China, south Korea used it to reduce poverty and unemployment. Economic survey also tells with world trade India also benefited a lot and created many new jobs, to benefit more out of it , India need to shed its restrictions and comply with WTO norms, so more benefits would be occurred.
Capitalism encourages new ideas irrespective of background. In USA many start-ups emerged due to capitalistic based society. These new ideas would develop into new technologies, and new techniques means more exports, so more taxes, so more spending on social sector. US is spending almost 10 on health, whereas socialistic India only 1.5 % of GDP. One must understand nation must create resources to redistribute. Moreover to start start-ups or to do any business, lot of risk is involved if more profits are not guaranteed who will invest ?? If nobody take risk, how can inclusive growth possible??
Capitalism does believe in reason, logic, scientific knowledge. It does not believe in superstitions, rituals, treat religion as personal affair. This helps in develop tolerance, diversity. New ideas come up, good business friendly environment would create, more angel and venture capitalists would invest, so new jobs and inclusive growth.
Capitalism does not bring inclusive growth
Capitalism depend more on trickle-down theory. If more industries , more taxes and more redistribution , but it does not suit all nations. India adopted same during 2nd five-year plan , but not yielded results.
Capitalism believed in merit. In that case Indian reservation system does not hold merit. Our reservation system was to meet historical injustices. If we treat two unequal’s equally it would lead to disaster results. Merit is not good all times, social justice and inclusive growth needed to meet long term goals of nation.
Capitalism leads to concentration of wealth. Thomas Pickett says 1 of population have 58% of wealth and bottom 20 of population have only 1% of wealth. When some people have all wealth, these people dictate policies by funding political parties. Crony capitalism, nepotism, biasness become norm in system. If poor people do not occupy power, how their problems get addressed, and how inclusive growth possible??
Competition is good but not well all times. Now Indian agriculture is opened and need to compete with world best products. Their agriculture using modern technologies, GPS, helicopters, here with primitive methods. How can we bring inclusive growth, if many farmers are committing suicide?? Our MSME products are losing markets and many people are becoming unemployed.
Capitalism means invest more profits would come, in that case less profitable social sector would not attract much investments. After 1991 , Indian govt is not investing much in Agri sector, and relied on more private investments. In the WTO regime, Indian govt need to adhere so many norms which may threaten our food security. Investment on old age people, disabled people and children would not attract much profits, these investments should be done based on welfare principles, but capitalism does not accept that.
Capitalism encourages free trade, new technologies and race in the production. In the madness to win race , people are forgetting values, ethics . Wars are happening due to industrial military Nexus, extreme ideologies are gaining weight due to concentration of wealth. Naxalites are becoming popular by attacking rich zamindars, moneylenders and redistribution of land among tribals.
Free trade is more favourable to rich countries and leading to neo colonialism. Once capitalism was major reason for colonizing African nations, now also many African nations become puppets of developed countries due to their dependence. If nation policies are decided by foreign countries how inclusive growth possible??
Capitalists give more importance to profits. So many MNCs are penetrating into tribal areas to extract mineral resources , for them while process is cost benefit analysis. But not bothering much about environment loss, age old culture of tribals, their agony when displacing them. Tribes in Niyamgiri hills protested against Vedanta, gonds protest against posco steel plant are some examples.
So, from the above analysis, capitalism is may ways threat to inclusive growth. India is good example after the lpg reforms so much inequality increased. There is a paradox in India while Forbes list say that at least 3 out 10 rich people are Indians, Rangarajan committee says 29% of people are feeling below poverty line. However, in the present scenario, there is no better alternative to capitalism. It is the necessary and only evil that can help to achieve inclusive growth. For that we need to make some changes to capitalism.
India at present invested more in steel, oil and other industries where private sector has more interest, but social sector is more opened. According to Amartya Sen this must be changed, and in social sector, govt must invest more, and in the other sector more competition needs to be allowed then only our product will be world competitive. Other thing is every capitalist must imbibe Gandhian trusteeship principle and share profits with workers and treat them with dignity and don’t consider oneself as owner but just a trustee for God’s property, then also inclusive growth possible. More spending on CSR activities would also reduce the negative image of capitalism.
To conclude, our economic survey points out we moved from anarchic socialism to stigmatized capitalism. This stigma towards capitalism must be changed to yield more benefits , for that every rich person should assume they earn money at the cost of poor people, and their luxury at the deprivation of basic facilities to poor people. If capitalists have such mind set, definitely capitalism can be used to bring inclusive growth. Instead of blaming it, all stakeholders must try to reduce the loopholes or problems of it, to bring inclusive growth, removal of poverty, unemployment, illiteracy, malnutrition, good education, hospitals, skill development, and opportunities to all.
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