Is this the end of the capitalism? That’s one question many economic pundits have been trying to answer in the middle of the ongoing major international economic meltdown.
The current economic crisis did push developed nations like USA, Germany and Great Britain into a suffocating spiral of financial downturn.
Until recently Mr. Bill Gates, ex-chairman of Microsoft has been making speeches promoting capitalism and encouraging worldwide governments to promote more capital inflow into free market. Suddenly he stopped giving any more such speeches after the catastrophic collapse of American insurance giant AIG.
Mr Rupert Murdoch, the managing director of Sun News Corporation also gave a series of lectures “The 2008 Boyer lectures” on ABC network in Australia following the worldwide economic downturn.
In one of these lectures he did not promote capitalism in particular but greatly emphasized the importance of free trade across the world and warned Australia that it may miss the opportunity of emerging as an economic powerhouse in Asia-Pacific zone if it does not allow more free trade with its neighbours.
Some economic experts blamed the present economic crisis entirely on capitalism and free trade. Some of them even said that Communism will replace capitalism as stated by Karl Marx in his “Manifesto of Communist party”
“Manifesto of Communist party” often referred to as “The communist Manifesto” was first published in 1848 and is one of the world’s most influential political manuscripts.
In this edition, Karl Marx argued that capitalism, like previous socioeconomic systems will produce internal tensions which will lead to its ultimate destruction. Just as capitalism replaced feudalism, capitalism itself will be displaced by communism, a stateless, classless society which emerges after a transitional period.
The important issue that I need to address here is the relationship between the expansion of the many existing rich economies and the development of capitalism. The meaning of the relationship has to be specified with some care because of the significance of the expansion of Europe in the creation of world market.
The commodities that sustained the global economy until recently were produced by the labour of those inhabiting the so called developing world. But the conditions and the uses of the proletariat(labour of these millions of these people) were punctuated by the interests and conflicts of the bourgeoisie(upper class and the merchants) in the rich nations of the present day World.
The capitalistic society of today was built on the ruins of feudalistic society through the time period of 16th to 20th centuries.
A crucial step in the transition to capitalism was that land should become a commodity, to be freely sold or rented without restriction by customary laws, the rights of monarchs, feudal lords, peasant communities or whatever. Thus the feudalistic society gradually faded away into extinction paving way to capitalism.
Capitalism is the system of production of goods and services for market exchange in order to make profit. These commodities were produced by the producers with no intention of consumption.
Capital invested in the circulation of commodities (eg by wholesalers, chain stores) and in provision of finance and credit (eg. by banks and finance lending organizations) continue to play important role in a capitalist society.
The lack of control over these enterprises which floated unrealistic and speculative profits and also the indiscriminate lending by the banks and financial organizations with no proper and analytical assessment of risk led to the plague like effects of financial mess spreading rapidly to these hugely interdependent capitalistic entities.
The Governments of those nations in severe crisis are now trying very desperately to pull themselves out of this financial black hole by releasing huge bail out packages which may not be truly sufficient enough.
Maybe it’s the end of the capitalism and this newly emerging great economic depression may be bigger than the early 19th century depression and will give rise to many socioeconomic changes.
In his Boyer lectures, Rupert Murdoch predicts a period of great transformation that will bring prosperity to billions around the world. This new age of freedom will unleash a new global middle class.
The nations rich in real and full labour capabilities and also those nations with sufficient natural resources will lead the world as the new power houses.
