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OP-ED: What does the future hold for economies?

  • Published at 06:02 pm May 31st, 2020
economic crisis economy
Overcoming the challenges for a better future for all BIGSTOCK

Democratic accountability is the only option

There is no doubt that Karl Marx will remain ever-relevant in the normative discussions of political economy and political philosophy. However, too much excitement of a group of neo-Marxist to operationalize Marx again in both body and real politick is like a higher dose of Victorian romanticism.

Many of the criticisms of 21st-century capitalism and current applications of neoliberal economics, or attempts of it, are valid, yet socialism or communism will not be a potent political force either in the arena of functional ideas or in everyday politics.  

The ultimate failure of the socialist projects in eastern Europe and elsewhere in the world is too big a shock to recover from -- practically and conceptually. The successful movements to create classless societies eventually ended up creating a new class hierarchy of party elites and socialist bureaucrats. Now it seems that some kind of social hierarchy is intrinsic to human nature and the real challenge is ensuring merit-based social mobility rather than utopian classlessness.

Secondly, it has been proven that common or state ownership of enterprises creates a lesser incentive for the fullest individual effort. It grossly affects the competitiveness of a socialist country and its enterprises in terms of creativity and quality in the global landscape.

Thirdly, the republics of socialist ideology failed to incorporate even an acceptable level of democracy, liberty, and public accountability in their systems, effectively relegating it to repressive totalitarianism or even dictatorship. The neo Marxists still don’t have answers to these blatant truths. Hence, their dream of resurgence just on the perceived or real fault of the current form of capitalism is half baked.

The worldwide communist movement since the mid-19th century till the early 1990s when it collapsed after some success in the latter part of this long epoch, has accomplished one thing. It has forced the developed capitalist societies to embrace the welfare state model. Good social security for common people has kept the political left turn in these countries at bay and the welfare model of the state has been comparatively the best model so far.

Wealth generation vs redistributive justice
The new slogan of the neo-Marxist and many social democrats is income inequality. Oppression of working-class, surplus appropriation, and other famous phrases like these do not figure much in their vocabulary nowadays. Income inequality is the new leftist buzz word. 

But the Marxists or hardcore social democrats do not have a practical solution to this seemingly chicken and egg paradox. They are too obsessed with redistributive justice -- higher tax for the wealthy and corporations and tax cuts plus welfare schemes for the vast working and middle class. 

But where would the money for all these come from?

Wealth creation is the answer. Wealth is created through more and more production of goods and services, and marketing of those for creating a permanent or perpetual consumer base which ought to ever-expand until it reaches its full potential. 

Only more wealth will allow more practicable taxation and funds in the hands of the government to pursue welfare or better social security schemes. 

The platitude of simplistic “Tax the rich, give the poor” doesn’t work. Too much taxation without enabling wealth generation will just ensure flight of capital and wealth out of a country in this world of competition for attracting capital. 

The policies are required to be carefully calibrated to balance the encouragement for wealth creation through production and collect a fair amount of tax for redistribution in the forms of social safety net and other welfare schemes.

Jobs, technology, and the environment
Technology in manufacturing and even service seems inevitable. It eats up jobs, but who can counter the profitability logic of a business. Averse of technology may result in losing competitiveness in production cost and quality and seal the fate of enterprises of a country. Also, any global consensus on prevention or slowing down of job-eliminating technology is improbable. 

So, will more people become jobless in the coming days? Will they share jobs with others; meaning more part-time jobs than full time? Or, will there be some provision of social benefit and joblessness normalized? Or, will there be a rise of anthropologist David Graber’s famous term, understood to be nonessential jobs? Many of the people filling these positions lose it even if there is a slight economic crisis. There has to be some plan for them. 

The other harm affordable technology ie machine and plant-based industrialization does is pollute the environment and cause global warming. However, the development of green or eco-friendly technology is a ray of hope. 

A big part of the developed world is already shifting towards green technology -- Germany is shutting down nuclear power plants and resorting to renewable energy. The shift involves some cost and technology base. Can developing countries do the same?

Corruption, good governance, and accountability
Many of the developing countries aren’t proper democracies. They are a dictatorship, quasi-democracy, or mixed regimes. Fairness, justice, and accountability are difficult in those countries. Cronyism, patron-client dealings, quid pro quo, or plain corruption like bribery at every step become rampant in their systems. General rules of the economy fall flat.

Unpredictability creates economic uncertainty and hampers the prospects. Critical domestic investment and FDI becomes very hard to achieve in such conditions unconducive for the investments. Job creation suffers and that adversely affects society. Even for a benevolent dictator, it becomes difficult to reign in these power and interest nexuses. 

All this cronyism destroys the quality and economic viability of development projects too. Mere GDP figures could be misleading or misrepresenting. Democratic accountability is the only solution; a lack of it or long term absence will ensure high corruption and acute distortion of systems and values leading to total collapse.

Democracy, majoritarianism, and populism
Majoritarianism isn’t a democracy. Democracy has certain fundamental tenets. Majoritarianism pushes the minority community to the margin and imposes political and economic distress on them. 

Populism, these days, is often about satisfying the discriminating ego of the majority community. It has social, political, and economic implications. The other form of common populism is excessive and beyond the means of welfare programs. Perpetually high and ever-increasing budget deficits immensely harm the economic health of a nation in the longer term.

Many East and Southeast Asian countries have already rolled out and proved the balanced formula of politico-economic emancipation. For the rest in the developing world, customization and execution of that is the real work. Cultural variation might be an issue. Overcoming that is the function of collective agency and resolve of a nation.

Sarwar Jahan Chowdhury is an opinion contributor to Dhaka Tribune. 

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