One of the common arguments in that recent discussion about nuclear power went like: OMG how dare you diss capitalism, its just helped like hundreds of millions of Indians and Chinese to come out of poverty!
Don’t get me wrong – I’m a believer in free markets, but capitalism is overrated. Chinese capitalism for example has been incredibly tightly government controlled, so its rather difficult to compare with American capitalism when talking about lifting people out of poverty.
And then there’s India:
The long-term future of the Indian middle class is secure. The factors that have driven its success â€” a sure grasp of English, a facility with technology, a talent for innovation â€” will continue to be important in the global economy.
But the 300 million or so Indians living in acute poverty are being crushed by inflation. If they thought washing the floors, driving the cars and cleaning the windows of the middle class would open the doors to a better life, they know now that they were wrong. With prices rising, their savings are being eaten away. Higher food and fuel prices are being driven by big changes in the global economy that look set to continue. Even the most cheerful optimist in the past decade has seen the huge divide between the haves and have-nots, but the hope has persisted that it would somehow go away. Inflation has set like cement into that divide, solidifying the gap between the two Indias. The future for the country is two futures: rosy and grim. Indian companies will buy more foreign businesses and more Indian children will starve. In economic terms, India has become neither the U.S. nor Sudan, but something in between â€” a Latin American republic with an entrenched class chasm. Higher levels of crime and social unrest are almost certain to follow.
So not only is there the myth that Indian capitalism’s benefits are trickling down to everyone, but people are explictly ignoring the dangers that come with an incredibly class-divided society. I would argue that it should be an aim of any government to prevent its society becoming more materially unequal. Not only does that indicate that there is huge market failure, but it doesn’t bode well socially.
My point is that economic growth has to be managed. I much prefer the open economy India has now compared to the old tightly regulated ‘license Raj’. But let’s not kid ourselves about the downsides to unfettered capitalism and pretend its the only solution to how society works.
|Post to del.icio.us|
Filed in: Economics,India,South Asia