World over today there are some concerns about Capitalism. As long as socialism was thriving and posing threats capitalism thrived in respective nations as the threat of Socialism and the resulting curb in individual liberty, democratic rights loomed large. However, with the weakening of socialism and the triumph of capitalism in the 90s the threat of the latter is no more a cover for the problems that were purely of capitalistic origins. Its not as though the world is encountering it for the first time. The very origins of Marxism and Socialism in the previous two centuries are due to the dissatisfaction and inequality that capitalism thrust upon the large societies of Europe has been conveniently forgotten. One cant blame public memory being short for it. The tyranny and hypocrisy of the socialist and communist countries and the havoc they wrecked on their own societies in the previous centuries as opposed to continuous economic progress of the capitalist countries in the 20th century have resulted in socialism and communism being perceived of a monster - which of course is the reality as well. Socialism has failed in countries like India as well and capitalistic liberalization has in a short time created a wealthier society that could not have been thought of 25 years back. Clearly, Socialism and Communism are phenomenon of the past.
While all the above is true, capitalism's problems cannot be swept under the carpet anymore. The recession of 2008 was such a rude wakeup call. One not only questioned the selfishness and croniness of capitalists but one has begun to wonder if inequality is an institutionalized reality of capitalistic societies. In countries like America for the first time people wondered if the Great American Dream was a faulty one and questioned the excessive positivism that one celebrated in the past. Wall Street faced protests in America which was unthinkable in the recent past. To the credit of American capitalists many illuminaries among them have criticised aspects of capitalism - this nature of introspection was never found in the near religious and dogmatic allegiance that socialists and communists had towards their ideology. Yet, Socialism/Communism offers a comprehensive criticism of Capitalism a study of which would only facilitate continuous improvement of Capitalism.
The problem though lies in this binary of Capitalism and Socialism being the only possible economic models we can think of. We have been made to believe that no other model is possible to an extent that even raising this question seems ridiculous. Yet, there are options that are worth considering. Before that it is necessary to identify a commonality between Capitalism and Socialism that helps establish the case for a third alternative. Both require centralized organization of societies to run effectively. It is meaningful here to refer to the criticism of Nationalism by Rabindranth Tagore in 1992. He wrote three essays criticising the European, American and Japanese Nationalism - his primary concern was they were aggregations of civil societies to achieve the capitalistic economic parameters and possibilities created by the success of industrialization of the modern era. He perceived it as a process of weakening civil societies and as giving more power to a few who can centrally manage the economy. To this Gandhiji responded saying that India is already a nation in the cultural sense of it as a civilization and that we do not need to worry about the aggregation becoming unnatural only for the primary purpose of economy. Gandhi was true about India and Tagore certainly true about Europe and history bears testimony to these facts. In a nutshell, Tagore identified European aggregation and centralized nation state as creation of the capitalistic world view. So centralization is an essential aspect of a Capitalistic society. Interestingly, communism that opposes capitalism has only furthered the cause of centralization. Capitalism centralizes and creates space for a select set of people to gain more wealth and power who inturn can control the state whereas Socialism directly places this power and control within the state under the garb of creating an egalitarian society. (Many in the world perceive democracy as well as a process that can be manipulated by the capitalistic powers to further their purpose while providing the semblance of a just method). I went into this long prologue in order to highlight the long perceived notion of capitalism having a commonality with socialism in the form of centralization and it providing levers to a few (investors, shareholders etc.,) to control it for their own purposes institutionally.
Let me briefly distinguish Capitalism and Socialism from the perspective of Earning and Spending.
1. Capitalism emphasises on absolutely no control over Earning and Spending
2. Communism emphasises on absolute control over Earning and Spending
It is these absoluteness or a totalitarian approach on either side (with a good intent based on respective ideologies) that creates the need for excessive centralization which can be seen in either philosophies and modern nations. In other words, centralization results in one of these two philosophies. Yet there is a possibility that we have overlooked
3. Consider an economic philosophy that has zero control over earning but some control over Spending
Zero control over earning can continue to create excessively rich people and inequalities as in a pure capitalist country. However, with a difference. The controls/directions/influences on spending will and can be institutionalised that the arising inequality becomes purely hypothetical. In other words, spending (investment) can be directed in a manner that it benefits the larger society and not further only the cause of the individual - all the while respecting the right of the individual to earn and own wealth. This requires imaginative and innovative policies. In a centralized economy this may not be impossible but harder to create policies and implement necessary controls.
However, highly decentralized Communitarian societies ie., societies that are formed of closely knit communities this can be achieved even without state managed policies and controls. In typical communitarian societies, individuals are associated with multiple identities. Each identity raises out of their association with some community. This identity is rich enough that individuals value for the community in turn adds to their life's richness.This results in the rich choosing investments that adds value to them as well as the larger communities that they belong to. These associations are not notional or jingoistic or abstract. They are real for they live within those communities. When the communities are hurt the rich also perceive the damage and hence are incentivised to continuously protect their communities.
If it all looks too idealistic to be true - then we have Dharampal's description of the pre-British India to look for proof. In a study performed during droughts in South India, the British administrators themselves have recorded that in the princely states of India the rich invested their wealth significantly to protect the poor whereas in British managed India the rich were removed from their communities and under greater control of British resulting severely damaged societies. The policies of the princely state of Mysore as well stands testimony to the 3rd option. The success of the old mysore state in the first half of 20th century made even Gandhiji say that if all states were like Mysore we may not need to worry about independence. Dharampal further writes about how money lenders were so much under the control of communities and how they became far more powerful after the advent of British. It must be remembered that India was a highly industrialized country in the pre-Industrial revolution era producing the best quality steel and many other produces. Some of these are now validated by research.
This brings me to a moot-point. The 3rd option is not just about a perspective of economy but perspective of life and the kind of society that we want to build itself. The 3rd option is possible when we want to build a Communitarian Society - the economic philosophy is an offshoot of that. Capitalism and Communism though seem to be ideologies that result in a centralized society. In the former economy is for a certain vision of the society. In the latter society seems to be a result of achieving a certain economic organization.
Are we willing to give the 3rd option a chance? Gandhiji certainly did(and he hated machines the central drivers of economy!)however modernists on all sides outrightly rejected his vision including his own disciples. Communities of pre-British India have demonstrated the utility of such an approach. Can we give this a chance in the modern world? or are we going to dismiss this as a mere fantasy not achievable in a complex modern society?
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