Guyana Chronicle
February 23, 2004

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President Hugo Chavez of the Republic of Venezuela, in his brief encounter with Guyanese last week, reignited the clarion call for eliminating social and economic disadvantage in society and re-invoked the view that capitalism and foreign exploitation cannot be the instruments for purging this sustained deprivation among the poor. This, indeed, is the call for a new economic format.

Non-Marxist versions of socialism
However, the cry for capitalism can be heard loud and clear today. Since the end of the cold war, we have witnessed a barrage of testimonies on the failure of Marxism and socialism. The former Soviet Union and several other East European countries are consistently being cited as examples of the failure of socialism. Many of these countries masqueraded with socialism as an economic system of production, when in fact, totalitarian regimes shaped an extreme command economic system that drove the entire societies. However, most of these so-called socialist experiments were non-Marxist versions of socialism. Today, unfortunately, the dominant presence of capitalism through superceding these socialist experiments is presented as a panacea for all of society's ills. And Marxist theory is posited as the cause of these failed socialist experiments and increasing the plight of the poor. The Marxian perspective is a theory in the same way as the capitalist outlook is a theory. Why not then apportion blame on capitalism in any society where its dominance sustains social and economic disadvantage?

And it is as if capitalism perceived as a miracle maker, is the ultimate champion of social and economic disadvantage. It is as if we have reached the end of ideology, meaning that capitalism is the last stage of economic evolution. But this is not the case, as evidenced throughout history. Every economic system of production, as all social phenomena, is subject to change. The rate of change, however, varies from society to society.

Capitalism is an ideology for the rulers in a society where capitalism is the economic system of production. Capital accumulation, private ownership of the means of production, self-interest and the profit motive, and free competition, are important components of capitalism. Its unifying feature is individual competition.

Capitalism stagnated & weakened
Serge L. Levitsky in his Introduction in Das Kapital showed how capitalism has burgeoned. However, this supposed flourishing of capitalism has stagnated and even weakened, as supported by the following:

(1) The increase in joint-stock companies has occurred, but they have not consistently enabled accumulated capital to be redistributed as profit among shareholders. The accumulation of profits still is monopolized by top managers.

(2) The trade unions, while ably inflicting workers' demands on the capitalists, however, have left unchecked the pauperization of the masses. Real incomes of poor people not only in third world countries, but also the poor from the United States, have declined, despite unionization.

(3) Modern capitalist states have set goals of intervention to protect the poor in such areas as, establishing minimum wages, housing grants, school subsidies, social security programs, and progressive tax systems to the creation of a welfare state. Marx would have found some of these developments incredible. The purpose of these interventions is to achieve a balance between private and public control over the activities of capitalism, in order to prevent labor exploitation. But given the consistent decline in real incomes and increasing poverty rates, even within the United States, we can hardly say that labor exploitation is a thing of the past.

(4) It is true that Marx did not foresee the expansion of the middle class brought about, initially, by capitalist endeavors. This new middle class emerged through acquiring shares in capital; therefore, they would have a vested interest in sustaining capitalism. But this development now has taken a u-turn. The middle class in many countries worldwide, including the United States is shrinking. Their median wages and salaries have decreased over the last two decades. If the present trends in earnings continue, less than half of all Americans will be in the middle class in the first few years of the 21st century. Today, this is shown to be true in the United States and many countries in the Third World, as the working and lower classes have increased their size.

(5 In theory, as capitalism penetrates a society, economic prosperity consumes the nation. This level of prosperity can dissipate class-consciousness, and may have very well done so during the different developmental phases of capitalism. But given a decline in real incomes for the poor, a shrinking middle class, and rising poverty, all occurring together in the United States and elsewhere, the possibility of class-consciousness aggressively becoming part of the social fabric of society is real.

(6) Clearly, increased poverty, a decline in real incomes for the poor, and a shrinking middle class, will require governmental interventions, such as housing grants, school subsidies, etc. These interventions intended to protect the poor, invariably, are based on socialist principles and so there is some interaction between capitalism and socialism.

Capitalism against the poor
Capitalism as an economic system of production is fine if everyone starts on a level playing field. However, this is not the case where capitalism drives the economy. Support for these capitalistic elements is desired. However, capitalism by itself is not sufficient for any society with a high level of social stratification, that is, a society characterized by considerable inequalities.

The United States, the bulwark of capitalism, has not worked well in the interest of working people. But capitalism has always enhanced the quality of life of the upper classes and the power elite. A close examination of the American Society will attest to this scenario.

Right now, the US has about 35 million Americans living below the federal poverty line, 43 million without health insurance, and parts of the US like Central Harlem has an infant mortality rate higher than that of Bangladesh. Wealth and income inequality are spectacularly striking in the U.S.

According to the Statistical Abstract of 1993, this wealth constitutes real estate, corporate stocks, bonds, and business assets. The largest amount, 68 percent of the wealth is owned by 10 percent of the country's families. This 10 percent controls over 50 percent of all real estate, 90 percent of corporate stocks and business assets, and 95 percent of bonds. The super-rich, 0.5 percent of Americans, possesses 27 percent of the nation's total wealth.

The average per capita income is approximately about $19,000 per year, and the average family income runs about $36,000 annually. The top 20 percent of the population earns about 44 percent of the income in the U.S., and the bottom 20 percent gets less than 5 percent of the country's income.

In the Reagan-Bush era with the use of supply-side economics (trickle-down economics), the evidence is clear that those in the highest income brackets did exceedingly well, while the working classes experienced reduced real incomes. The argument in supply-side economics is that exempting capitalists from the capital gains tax and other financial burdens, will induce these capitalists to plough more investments into their corporations, and in the final analysis, workers stand to benefit.

Applying numerous perspectives
The history of those Reagan-Bush years has demonstrated the fallacy of capitalism helping the working people through its individualistic orientations. More recently, allowing private corporations to administer welfare programs has produced minimal results for poor people in the U.S. The Asian financial crisis of 1997, especially the bankruptcy of Japanese Banks, shows how vulnerable capitalism is to the global economy. The repercussions were felt in the US, and the consequences are far from over.

Societies with sharp inequalities may require a complementary relationship between capitalism and socialism. Fukuyama in the Time, May 22, 2000, believes that the rumblings of anti-globalists show that the egalitarian sentiment still is alive, and that socialism is making a comeback. Capitalism and socialism are theoretical perspectives that have to be modified in appropriate combinations when applied in different cultures. Problem-solving in national development requires the search for numerous theories, and not solely capitalism and socialism, that would provide the best perspective. Prejudicing the usage of any theory, including Marxism, in seeking solutions would shortchange the real applications for development. And those who outrightly reject the Marxian theory is guilty of this prejudice.