Need for New Capitalism

Currently, just 80 richest people in the world have wealth equal to that of 50% of the global population.

By next year, 1% of the world’s population will own more wealth than the other 99%.

These startling statistics are from a research by Oxfam, published in January 2015.

1,826 Global Billionaires are worth $7.05 trillion (Forbes, 3 Feb 2015), which is just a little less than the combined 2013 GDP of Japan ($4.9 trillion) and Germany ($3.7 trillion)!

So, we can just gape at the widening gap between the haves and the have-nots, and start debating about the world’s free market economies, and if they are really working towards reducing income inequalities.

On Monday, I stumbled on a funny news item. Apparently, in London, in the heart of St. James, a group of hippies occupied a building to protest against the evils of capitalism.

You will ask, what is funny about it? Well, it was the wrong building. The office they went to, to hoist their banners, had shifted to a new location many months ago.

And anyway, ‘hippies’? In these days?

They seem to be living in a wrong age, too! But I think they are right - at least partly - in protesting against capitalism.

We have come to accept that if the means of production is largely, or entirely, privately-owned and operated for profit, then it is a boon.

But it turns out to be a bane. We see that private property, capital accumulation, and competitive markets are making the rich richer, leaving the poor behind.

Is that a problem?

Well, look at this. An article I read (The Economist, 3 Jan 2015) starts this way: “In the next 40 years, humans will need to produce more food than they did in the previous 10,000 put together.

“But with sprawling cities gobbling up arable land, agricultural productivity gains decreasing, and demand for biofuels increasing, supply is not keeping up with demand. Clever farmers, scientists and entrepreneurs are bursting with ideas. But they need money to make this jump”.

Who has that kind of money to invest?

Of course, we know who has the money. But we also know that they may not see a good return on investment here. And if they do see, how much will they take, or make?

Is 'Wealth maximization' from the perspective of Capitalism really going on that well? 

Communism, which has fallen in most of Europe, with the end of the cold war and Soviet Union’s  disintegration, still thrives in countries like China and North Korea. But in a new capitalistic form.

Despite trumpeting itself as the bastion of capitalism, we have seen USA bailing out private enterprises like American Insurance Group and General Motors, in billions. State intervention in a free market economy!

Obamacare, and his new promises to fund college education, show us how that  sometimes market economies will be forced to play the role of welfare states in a socialistic form.

‘Neo-Capitalism’ which had risen in 1960s  as a social theory blending both capitalistic and socialistic ideologies, saw some growth with many governments choosing to privatize public institutions in a phased manner, but did not catch up.

But, frankly, with no good alternative economic system in sight, our answer could be in ‘Creative Capitalism’ for now.

Bill Gates who is once again the richest man on the planet in 2015 says in a Harvard Business School article: "Creative Capitalism” is an approach where governments, businesses, and non-profits work together to stretch the reach of market forces so that more people can make a profit, or gain recognition, doing work that eases the world’s inequities.