By J. Yanqui Zaza
|Karl Marx||Adam Smith|
Is capitalism having a bad coverage? Well, many voters under capitalism are having more doubts about the benefits of this economic system or “trickle down theory.” In a 2016 Poll, Harvard University found that 51 percent of young American voters rejected capitalism and have positive views about socialism, similar to the conclusion of the 2011 Pew Poll. President Donald Trump, then U.S. presidential candidate stated that, “America’s economic system is rigged;” U.S. Senator Bernie Sanders stated that had Americans been under socialism the price of a medicine would not have increased from $40 in 2001 to $40,000 in 2016. In the 6/14/17 NY Times newspaper, he concluded that capitalism “is a dismal failure.”
In Europe, French Democratic presidential candidate Mr. Jean Luc Melenchon wants his government to have a role in the economy; current German Chancellor; Mrs. Angela Merkel stated that a government’s ownership in corporations does not only increase government revenue, it also discourages outsourcing of jobs as well as reduces the practice of violating laws. The current Prime Minister of the United Kingdom, Ms. Theresa May was quoted as rejecting the “free market ideology of Thatcherism,” and reminded British voters that her “…Party still believes in a post-war Keynesian consensus of government intervention…”
The result of capitalism in Africa is even worst. Living conditions within its oldest Republic, founded in 1822, Liberia, with enormous natural resources, is a nightmare, especially for those residents living on $2 a day. Why is Liberia a sad story? Well, when capitalists offer bribes to bureaucrats, they (capitalists) end up paying to the government minuscule revenue earned from natural resources and inflating prices of goods and services such as housing units. President Ellen Johnson Sirleaf and the World Bank introduced the idea to pay excessive salaries to a few advisers in order to dissuade them from accepting bribes. Ironically, the rate of corruption has increased because the anti-bribery measure, a disparity in salary, in itself, is a source of corruption, while bribery, one of the lifelines of capitalism, has continued.
If Africa or Liberia wants to prosper, should it reform capitalism? By the way, what is the difference between the idea of public-profit-making (socialism) and private-profit-making (capitalism)? Capitalism is the economic system that allows private-profit-making investors to own and, or manage lucrative resources, while socialism allows government bureaucrats to make profits for society from owning and, or managing major lucrative assets. Proponents of socialism say a majority of society benefits when governments build housing units, manage utility entities, mine diamonds and, or cut and sell logs for profits. On the other hand, capitalists, because of greed to make more profits, will always use any means, including practices against the tenets of fairness, honesty, transparency, etc.
The debate about the benefits of government-profit-making activities versus the benefits of private-profit making activities has been around for centuries. However, the European leaders’ denunciations of capitalism and their positive view of socialism came at a bad time for capitalism. It came at a time when the African Union Committee accused big business of siphoning $50 billion out of Africa yearly because capitalists coerce or bribe African leaders into signing flawed concessionary agreements. Additionally, the report that capitalists, and not government bureaucrats, promote bribes offering is another bad news for capitalists. This second bad news is not only reported by John Perkins, in his book called “Economic Hit Man;” but it is also reported by International Transparency (IT). Big business is the key promoter of bribes offering, IT Study concluded.
This latest rejection of capitalism is pale as compared to the condemnation expressed by other European leaders after the 2008 financial economic meltdown. France former President, Nicolas Sarkozy stated "either we re-found capitalism or we destroy it…because Financial capitalism is irresponsibility." British former Prime Minister, Tony Blair said modern-day capitalism based on speculation had been "perverted" and was "an immoral system.” Mrs. Angela Merkel, Chancellor of Germany stated that capitalism should be reformed.
Is capitalism redeemable, or do the past and current shortcomings of capitalism indicate that the century-old economic system is irredeemable? For this article, let us review how profits of lucrative assets are distributed between government and private-profit-making investors since profit is the residual of the total economic activities of communities or countries. For example, how come governments operating under capitalism continue to experience budgetary problems, while those operating under socialism do not? Or why government such as the United States and United Kingdom charge higher users’ taxes, but Germany does not because it receives other types of revenue such as dividends from T-Mobile International, 400 Banks, Volkswagen, Airbus, etc.? Alternatively, the United States of America ($18 trilion) and United Kindgom ($8 trillion) owe 34.0% ($26 trillion/$69 trillion) of the total $69 trillion debt owed by 147 countries, all because these countries do have limited role in the economy.
If none of the above explanations is convincing, let us review the public-profit-making entities of China, which have generated $3 trillion reserves. Chinese state-owned entities do not only make huge profits for society, but they are efficient, according to 6/16/2017 NY Times. The Editorial stated, “…Interestingly, when Britain handed control to private companies to upgrade London’s subway system more than a decade ago, the result was substandard, budget-busting work, etc. By contrast, China, under socialism, has engineered one of the most effective economic transformations in modern history in part through relentless investment in infrastructure, traditionally financed…” all because state-owned entities own and, or manage lucrative assets.
Finally, if Liberia were to reduce its reliance on the practice of taking more money away from the pockets of its citizens in the form of users’ taxes and, or reduce its reliance on borrowed money form lending institution such as the World Bank, then it should at least adopt the Botswana’s economic policy and play a role the diamonds industry, gold, logs, etc. It could also accept certain aspect of New York City’s Rent Control Policy, for example, by constructing affordable housing units near the proposed government ministerial office-complex to be built by the Chinese not only to reduce the cost of living, but also to retain skilled manpower.
Well, yes, profiteers such as the World Bank, Monrovia-landlords, diamonds dealers, etc., will insist that capitalism is good and socialism is inefficient. But remember, the World Bank would not survive if countries become solvent such as Botswana, which covers about 50% of its budget from revenue of the diamonds industry. Equally too, Monrovia-landlords would not be in the position of influence to dictate national policies if government had ownership of buildings for government offices and for employees to use as personal homes. Remember also, an insolvent country cannot dictate its own destiny, a recipe for chaos.