Do not let the 'cure' destroy Capitalism?

A good comment by Abdullah in response to: Do not let the ‘cure’ destroy capitalism, By Gary Becker and Kevin Murphy, FT, March 19 2009 20:04

Cure

It is a tradition among the capitalists to defend their failures by citing other successes. To make it worse, the much touted success is applicable only to a narrow section of the soceity and for the rest it is nothing more than relatively-better-failure. The repeated crises or busts are a consequence of the nature of boom in capitalist economies. It is like an athlete who takes steroids for narrow short-term success to the detriment of his long-term health. The ingenuity of capitalism is to make the recipients of the boom and the bust different, thus causing lopsided wealth creation. Expectedly the world experiences an ever-increasing rich poor divide under capitalism, with no trickle-down effects even at the best of times. With capitalism in decline, the fictitious trickle-down would never materialise.

The capitalists are indeed aware that GDP is a misleading measure of a nation’s progress, however they seem to insist on using this measure to swamp discrepancies that underlie summed up figures. Even in the cited case of China that is now home to the third largest GDP, people describe the divide between urban and rural areas as being two different countries or worlds ruled by one government. The rural move towards the urban areas for low wages; the best that restaurant and factory workers can get is up to 600 Yuan or £49, while rent for a two bed room unit exceeds this amount leading to overcrowding in accommodations. Health care, education and other amenities are certainly beyond the scope of these wages. Unemployment rife and many are not paid for their work; official unpaid wages run into the billions. This pushes many into prostitution to cover living costs and some into suicide to draw attention to their plight. The cities keeps homeless and other damaging sights away using guards as part of their image management strategy. This is before we discuss the rural situation. In contrast the rich do not publicise their wealth to avoid hostility from the masses, indicative of the chasm dividing them.

Internationally the 1960 GDP of 20 richest nations was 18 times that of the 20 poorest nations; by 1995, it doubled to 37 times. According to the UNDP 2003 report, more than 50 nations grew poorer in the previous decade. A UNICEF study in 2000 stated: “A new face of ‘apartheid’ seems to be” spreading across the globe, as millions of people live in wretched conditions side-by-side with those who enjoy unprecedented prosperity”. Therefore there is no denying that the world has seen great wealth generation, but the gaping question is “for whom” and “by whom”. Capitalism ensures the prosperity of the narrow “for whom” section of the population. The spill-over of the economic experiment into other aspects of societal life has been more disastrous.

The debate between the free-marketeers and the interventionists as to which is the right course of action for alleviating this crisis is irrelevant if they come from capitalist foundations. The world has grown desperate to escape the perpetual patchwork of free-market followed by intervention followed by another cycle of policies, which only lets crisis reinvent itself in another guise each time. The pro-capitalist intellectuals have drawn their last card with a poor defense of capitalism and a future proposal based on the mere fact that "it is the only game in town". By failing consistently in the opportunity given to them, they are inevitably making way for the only other game to come to town.

Abdullah