Is Free Market Capitalism failing?

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Is free market capitalism failing? Do we need a new economic system? Twenty years ago when the Berlin Wall collapsed and the Cold War ended, the mere suggestion that something was wrong with capitalism might have sounded preposterous, absurd, and almost insane. Back then we saw the collapse of the mighty Soviet Union and perceived the end of socialism when mother Russia itself dumped its trademark ideology, opting instead for free market capitalism. Come to think of those changes, surely those were no small matters! It appeared that the fall of the Berlin Wall in 1989 might have been the crushing victory for free-market capitalism. And yet people today are questioning the merit of capitalism, even in its own cradle.

A new BBC World Service global poll, surveying 29,033 adult citizens (living in major urban areas) across 27 countries (Australia, Brazil, Canada, Chile, China, Costa Rica, Czech Republic, Egypt, France, Germany, India, Indonesia, Italy, Japan, Kenya, Mexico, Nigeria, Pakistan, Panama, the Philippines, Poland, Russia, Spain, Turkey, Ukraine, the United Kingdom, and the United States of America), conducted between 19 June and 13 October 2009 by the international polling firm GlobeScan, together with the Program on International Policy Attitudes (PIPA) at the University of Maryland finds that dissatisfaction with free market capitalism is widespread, with an average of only 11% saying that it works well and that greater regulation is not a good idea. [1] That is, eight in nine people believe that free market capitalism is bad; it has failed and is not working for them any more. So overwhelming is the verdict against capitalism that no statistical magic or jugglery can put a dent to the conclusion drawn from the study.

What is rather quite discomforting and embarrassing is that even in a country like the USA, the flag-bearer of capitalism, the dissatisfaction is quite high. Three in four (75%) Americans think that capitalism is not working satisfactorily in the USA. Outside Pakistan (21% in favor) and the USA, no other country taking the poll has a satisfactory rating above 20%. That is, if you take away the USA and Pakistan as outliers, the overriding view in all the other 25 countries taking the poll is that capitalism is simply not working for them. It either needs a replacement or a complete overhaul.

The most common view, held by an average of 51% among the people polled by GlobeScan/PIPA is that free market capitalism has problems that can be addressed through regulation and reform. An average of 23% feel that capitalism is fatally flawed, and a new economic system is needed–including 43% in France, 38% in Mexico, 35% in Brazil and 31% in Ukraine.

So, why this despair against free market capitalism that was once believed and put forth as the “cures all” and “fits all” economic system? The answer can be found in the collapse of the financial sector – banking and insurance institutions of the USA and many of the capitalist countries in the last couple of years (or more specifically in the last 13 months). So interrelated and inter-dependent the global economy has become that once the financial institutions inside the USA started collapsing the ripple effect could be felt thousands of miles away in distant continents. Even countries like Nepal and Bangladesh are not immune from what happens in the Wall Street! While hundreds of billions of dollars have been funneled in by the Obama administration to rescue the troubled financial institutions and giant industries, the US economy is still showing little sign of recovery. Some Wall Street experts tell me that we may not see a full economic recovery during Obama’s first term, i.e., we may have to wait for his second term, if he is reelected.

Dissatisfaction against President Obama today is at an all time high. Most Republicans claim that Obama has no clue as to how to solve the current economic crisis. Forgotten are the sad facts that he had little to do with the collapse of the free market capitalism. As any Democrat would tell you it is Bush Jr. “stupid” — the moronic predecessor with a peanut-size brain and low IQ — who should be faulted and not Obama! The unfortunate fact for the Democrats is that the “intellectually disadvantaged” predecessor is no longer occupying the White House; it is Obama today who must now find the Aladin’s magic lamp to rescue America from the ills of Bush Jr. It’s a tough job for the new president while people’s patience is running thin! Many Americans are increasingly showing tell tale signs of PTSD!

So, what could be done with capitalism? Is it fixable? The BBC poll suggested some interesting results here. In 15 of the 27 countries polled, a great majority would like their government to be more active in owning or directly controlling their country’s major industries. The formula suggested is nationalization of heavy or major industries – that is more like the old socialist model.

This view is particularly widely held in countries of the former Soviet states of Russia (77%), and Ukraine (75%), but also Brazil (64%), Indonesia (65%), and France (57%). Knowing too well how some former party insiders within the collapsing Soviet system had overnight become billionaires one can sympathize and understand the rationale that the people living in those newer republics of the former Soviet Union today want more stringent government oversight. We can also understand the mindset of people within Indonesia and Brazil, where capitalism has not been as deeply rooted as it is in Western Europe and North America. But what is wrong in France, now led by Sarkozy, a tiny Hungarian, who can be mistaken for a dwarf, who is forced to talk about national identity yet unable to address his citizens as did General de Gaulle? [2] He probably needs a burqa to hide his hideous self since that is a more passionate subject for silly politicians like him that are devoid of any brilliant idea about fixing their country’s economy!

Majorities of the poll takers support governments distributing wealth more evenly in 22 of the 27 countries –on average two out of three (67%) across all countries. In 17 of the 27 countries most want to see government doing more to regulate business–on average 56%. As we all know, the poll takers’ desire here cannot materialize without dumping the free market capitalism, which does not allow for a fair or even distribution of wealth.

The poll also asked about whether the breakup of the Soviet Union was a good thing or not. An average of 54% people polled said that it was a good thing. This was the majority view though in only 15 of the countries polled. An average of 22% said that it was mainly a bad thing, while 24% was neutral. Among former Warsaw Pact countries, most Russians (61%) and Ukrainians (54%) believed that the breakup of the Soviet Union was a bad thing. In contrast, four in five Poles (80%) and nearly two-thirds of Czechs (63%) felt that the disintegration of the USSR was a good thing.

The poll numbers from Russia should not come as a shock to anyone familiar with recent media news reports that confirm the nostalgia in Russia about the “good old” days. [3] Free market capitalism, once considered an elixir, has not done anything positive for most Russians. The gap between the rich and the poor, almost invisible during the Soviet era, is too visible these days, widening exponentially every passing day. As is well known among social scientists, when under stress, especially in difficult times, people tend to blame the present and picture a rosy picture of the past. Forgotten then are the memories of short supplies and long queues in front of stores. The generation that grew up in the 1960s, 1970s or 1980s associates their youth directly with the U.S.S.R. and see its once mighty empire fragmented into pieces, weak and vulnerable, having little role to play in the world today. Russia is not even part of G7! The younger generation, born after the collapse of the empire, feels romantic about an era that it has little knowledge about outside what it hears from the elders. Its theories are molded today by the despicable condition that it finds itself with a failed experiment with free market capitalism. So, we can understand the poll numbers from Putin’s Russia!

The BBC poll, while not a death-nail yet to the casket of all mighty free market capitalism, does poke some serious concerns about its health. If America fails to resuscitate her failing economy fast, thus reviving faith in its old economic system, it won’t be too far when one day, we shall hear the death bell of free market capitalism. And who knows we may even see the resurrection of old socialism, or something entirely new that is a third way –” a shift of paradigms from envy (destructive socialism) and greed (destructive capitalism) to contributive, distributive, and harmonic justice, so that interest-free money based on real goods rather than on debt can build universal capital ownership into every human being! [4]

Notes:

[1]. http://www.globescan.com/news_archives/bbc2009_berlin_wall/

[2]. To see the relevance of comments about Sarkozy, see, for instance, Shaykh AbdalQadir’s article: The political class as eunuchs, http://tinyurl.com/yay7mle

[3]. See, e.g., http://tinyurl.com/yfdlj8n

[4]. See an interesting topic “Model Islamic Justice Project Launched to Close the Wealth Gap in a Just Third Way” by Dr. Robert D. Crane: http://tinyurl.com/ydn43t3

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[The author is indebted to Peter Connors of the BBC for bringing the BBC poll results to his attention: Wide Dissatisfaction with Capitalism – Twenty Years after Fall of Berlin Wall.]

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