Capitalism- A Curse or a Blessing? (Day 23)

Before I start sharing my thoughts, let me talk about two systems that most countries choose. I want to avoid confusion because most of us are taught over years to hate certain types of systems ;) Words like communism or socialism create knee jerk reactions among many of us. 

1. Political System: A country can choose the political system to be a democracy, a monarchy, or an authoritarian/totalitarian system where a group of individuals rules the region. This group includes dictatorship, aristocracy, communist forms of government.
2. Economical System: An economic system is a means by which societies or governments organize and distribute available resources, services, and goods across a geographic region or country. A country can choose capitalism, socialism, or communism as an economic system for it. 

You can see that communism is a form of the political system as well as an economical system. Communism is often mixed with socialism but there is one major difference. In communism, there is no private ownership, and government makes most, if not all, of the decisions. In socialism, private ownership is allowed but the society focuses on a fair distribution of national resources, and achieve and maintain equality of income and wealth among citizens.

In this post, I am going to focus on the economical systems, mainly on Capitalism, and how it is slowly giving a way to Socialism. Capitalism is an economic system of free markets and private ownership. It is a system where it is assumed that greed is good, and people are rational.  Greed would drive them to maximize output and to have more and more. Rationality will help them make the right decisions. Supplement these two beliefs with free markets- where there is no intervention by the government or anyone. Let market forces decide what is good for society. The government is supposed to stay out of the economic system.

Capitalism is generally accepted as the best system in contemporary society. It has no doubt helped the US and many countries to achieve rapid growth and raise the standard of living for most of their citizens. I am in no way trying to prove that capitalism is a bad form of an economic system. What I am trying to say is that it has outlived its usefulness in the form that we have known capitalism so far. I explain this in my jugaad way. There are two forces at play at any time- the good, positive, creative forces and the bad, negative, destructive forces. So far the good positive and creative forces have helped get the best out of a capitalist society. However, as time is passing, the negative and destructive forces are becoming more powerful. They are acting in opposite ways and making capitalism show its dark sides. Here are some examples how Capitalism is becoming crooked.

• Income Inequality is worsening in capitalist societies. This is what has happened in the US over the last 4 decades.
  
  
• 1948-1979, the bottom 90% shared 67% of income growth. 2000 to 2007, all growth went to top 10%. Income for bottom 90% actually declined!

  

• Wealth Inequality- Same Story. The top 5% has taken 75% of the growth in household wealth. The bottom 60% population, it has actually gone down.

  
  

• CEOs/CFOs in most companies take home 100 to 10,000 times more than the lowest-paid employee. The value disparity between two individuals in the same group, with the same mission, is widening to astronomical proportions.
• Capital vs  Labor. Capital is taking over Labor.  Easier to make Money on Money than Money by Work! \
• Increased influence by the rich on the regulatory, legislative and electoral processes within the country with campaign contributions, lobbying, and control on media. They are better able to manage their own interests at the costs of the mass.
• The narrow pursuit of profit has made health care, drugs most expensive in the USA. Health issues and emergencies are depleting the finances/savings of some families and pushing them over the edge. Money moves from the bottom to the top due to inflated health care.
• Failure of democratic processes in controlling the size and power of corporates has created monopolies in most major industries. Such monopolistic power has killed the benefits of free markets and competitive forces in terms of lower prices. This results in more money moving from the bottom to the top.
• Education is corrupted by Capitalism! Harvard has 39B in its chest, Stanford $26B and Yale $29B and still Education costs are skyrocketing. This has resulted college degrees out of reach for many. This results in worsening the income inequality. 
• Big money controls elections and policymaking with Ad spending, lobbying, and campaign contributions.  Wealth can take power away from the people and make Democracy work more FOR the smaller segment of society. US political system seems drifting towards a form of Oligarchy.
• Citizens United Supreme Court decision: Billionaires and large corporations can now spend an unlimited amount of money to promote what they believe in and influence public opinion.
• Koch brothers are now the most important and powerful players in American politics. They support abolishing of minimum wages, medicare-medicaid programs and social security!
• Due to uncontrolled greed in the healthcare system, healthcare is becoming very expensive. Some drugs have 1000-10000% profit markups. A day of hospitalization costs around $5-10,000. Compare this to the $20000 annual wages for many working in retail, factories or fast food restaurants. The money that half-year of work brings, can be charged by a day or two of hospital stay! 

In my opinion, the ugliness of capitalism has started destroying the foundation of society and democratic society. Capitalism needs to be socially responsible and has to evolve into helping society become fair and just.