Courtesy Jamaica Observer
Capitalism is an economic system based on private property and private
enterprise and its great virtue is that driven by private gain for
individuals and profits for businesses, it encourages enterprise and
innovation.
Capitalism however, has weaknesses which the state is expected to
address or redress, by providing the conditions for enterprise e.g. law
and order, national defence, infrastructure, education and regulations
of the market to level the playing field.
The most important role of the state is to redress the fundamental
dilemma of capitalism which is the tendency towards inequality among
different groups in society. If the state does not assist the poor and
working class with social services, then material deprivation and social
animosity can cause violence and behaviour which is detrimental to
capitalism itself.
This was the rationale for the welfare state, democratic socialism and
the mixed economy. The rich accept that their good fortune makes it
possible to help the poor through taxation by government. The question
is how much should be reallocated from the rich to the poor to prevent
the society from falling into chaos. The answer depends on philosophies
of governance and social justice. At one extreme is the social
pathologies which blame the victim e.g. ‘the poor are poor because they
do not want to work or have too many children’, and at the other extreme
is steep, possibly demotivating taxation in which the rich pay a larger
percentage of their income as tax.
There is growing inequality of income and wealth across the world, in
societies as widely differing as China, Sweden and the United States of
America. The share of national income going to the richest 1% of
Americans has doubled to 20% in the last 20 years. The trend is evident
in poor countries e.g. India has 48 billionaires and the richest man in
the world is Mexican. The richest 1% of adults owned nearly 50% of the
world’s assets while half of the world adult population owns barely 1%
of global wealth. Nearly half the world’s population, 3 billion people
survive on less than US$2 a day.
The richest country is Qatar with a per capita GDP of $104,284 and the
poorest country is Democratic Republic of Congo, with less than $365.
The gap between the richest and the poorest countries has grown
significantly in the last 25 years.
The rich are getting richer and the poor are getting poor across the
world. While there will always be poor people the world is getting
richer and therefore has the means to alleviate and significantly reduce
global poverty. Charity is noble and for the unemployable but the
problem must be addressed by reducing unemployment and underemployment.
Some of the resources to be used to reduce poverty must come from the
rich and those who are becoming richer.
Governments can do this without depriving capitalism of the driving
force of private initiative and private gain. The problem is that there
has to be a societal consensus that everyone must get better off. This
community spirit needs to be revived and those who raise the issues of
inequality and poverty must not be viewed as undermining capitalism. At
the same time, the Government must do all to make Jamaica a more
business friendly country, without which we’ll all be poorer.
And, we can’t afford, as we are seeing in the US presidential election, to speak only of the ‘middle class’.
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