In the past few months all media has been flooded with news about casualties of an economic recession touted by some as the worst since the Great Depression of the '30s. The crisis being the worst of its kind has seen millions of people losing their livelihoods while hundreds of corporations scramble for help in all directions to stay afloat. It was easy to see that the hunky-dory era of post dot-com boom was just a house of cards that crashed with the smallest whiff of wind and brought down the entire edifice of capitalism.
It made people question the very fundamentals of a capitalist society and gave fodder to communists ( as I last read in the papers this morning) to brag about their objections to financial reforms in the Indian economy which insulated India to a great extent from the financial downturn in the rest of the world. Being a believer in democracy myself, I find this argument a little disquieting yet a little bit true. All pro-reformists have been asking for easing restrictions on financial entities such as hedge funds so that they can play the Indian markets and play well they should. I am all for the multi-million dollar bonuses of the hedge fund managers who predicted the downturn many years ago and placed huge bets that reaped benefits later.
It made people question the very fundamentals of a capitalist society and gave fodder to communists ( as I last read in the papers this morning) to brag about their objections to financial reforms in the Indian economy which insulated India to a great extent from the financial downturn in the rest of the world. Being a believer in democracy myself, I find this argument a little disquieting yet a little bit true. All pro-reformists have been asking for easing restrictions on financial entities such as hedge funds so that they can play the Indian markets and play well they should. I am all for the multi-million dollar bonuses of the hedge fund managers who predicted the downturn many years ago and placed huge bets that reaped benefits later.
However, I believe that just because we have a strong lobby of pro-reformists, we should not give into the temptations of opening up an adolescent yet not-so-mature market to the vagaries of global capitalism. From a bull run of 20,000 points to the bear hug of 9000, the Sensex had left little counter evidence against the fact that it was the FIIs who were able to play the Indian markets to their shrewd schemes and left the common investor gaping in surprise when the extraordinary returns simply diminshed overnight. We also forget that in an era of money cheaper than dirt, the Private Equity firms in US and UK were able to take millions of dollars of debt and thrust it on corporations they took under their fold in an excuse of increasing value by leveraging the balance sheet. Little did we know that the Frankenstein monster would devour its own master when several healthy companies went bankrupt after PEs took over because of their inability to service the large amount of debt they took. We must also not forget the billions of dollars of institutional money lost in the Madoff scam, a one of its kind Ponzi scheme that shook the very cauldrons of capitalism and raised a very fundamental question: Is there a limit to man's greed???? We were again shook by the Satyam scandal which became an unerasable blot on the Indian IT landscape. Talk about rubbing salt on wounds!!!! We must also not forget that after all the bloodbath, everyone suddenly thanked Keynes for giving them the golden principle of getting out of such a mess and opened a begging bowl in front of the US government to save them and save the planet! So in comes Obama and the age of multi-billion dollar aid packages to save the industry and the letting go of wayward children after a light spank on the back side.
After so much of capitalism bashing, here are the reasons why capitalism still works:
(1) It goes hand in hand with democracy where people have the fundamental right to pursue wealth and enterprise thereby bringing advancement to society.
(2) Capitalistic thought in itself is a motivator for innovations in industry and all other fields of study as it serves for a perfect risk-reward mechanism.
(3) Despite the late awakening of capitalism to the benefits of investing in the social sector, the only way to integrate the world's poor with the rest of the masses and create widespread poverty is to actually treat them as a part of a capitalistic society with a perfect producer-consumer relationship.
(4) When we looking at communism or its relatives, we need little prodding to actually take a loook at what history has to say about socities built on communist ideals.
(5) While capitalism involves trade-offs between economic protectionism and free-market liberalism, it serves as the only viable mechanism of attaining development and prosperity in the long run.
The only bone in the neck here is the economic hooliganism that seems to repeat itself every few decades. Is this some sort of divine intervention into the ways of a chaotic world??????
After so much of capitalism bashing, here are the reasons why capitalism still works:
(1) It goes hand in hand with democracy where people have the fundamental right to pursue wealth and enterprise thereby bringing advancement to society.
(2) Capitalistic thought in itself is a motivator for innovations in industry and all other fields of study as it serves for a perfect risk-reward mechanism.
(3) Despite the late awakening of capitalism to the benefits of investing in the social sector, the only way to integrate the world's poor with the rest of the masses and create widespread poverty is to actually treat them as a part of a capitalistic society with a perfect producer-consumer relationship.
(4) When we looking at communism or its relatives, we need little prodding to actually take a loook at what history has to say about socities built on communist ideals.
(5) While capitalism involves trade-offs between economic protectionism and free-market liberalism, it serves as the only viable mechanism of attaining development and prosperity in the long run.
The only bone in the neck here is the economic hooliganism that seems to repeat itself every few decades. Is this some sort of divine intervention into the ways of a chaotic world??????
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