Monday, November 9, 2009

Is free market capitalism fatally flawed?

(605 words)
While the OECD (The Organisation for Economic Co-operation and Development (OECD)
is saying that major economies across the world are showing strong signs of recovery, 23% of 29000 people in 27 countries who participated in a BBC World Service poll feel free-market capitalism is fatally flawed.

Here are my observations and comments re the scope of the above analysis (OECD) and poll (BBC World Service):

1) The BBC World Service's poll is not global (covered 27 countries, WTO has 152 and UN over 190)
2) Neither do major economies constitute the "global economy"
3) Nor do the G20 constitute the global economy, even if they represent some 70-80% of its GDP

And here are my observations and comments re the essence:

I) The current (economic) system in the 27 countries surveyed may be either "fatally" or "very" flawed but has to consider: In how many of them is the system real "free market capitalism"?

Communism vs Capitalism (and people's memories from the former and experience with the latter): Aren't the good old times due to bad or selective memory? Plus, again, in how many countries do people experience a real - genuine "free market capitalism"?

II) What is equally if not more worrying IMO is that the BBC World Service poll in those 27 countries (as well as other surveys that have come to my attention recently) indicates there are majorities almost everywhere (in those 27 countries) that want government to be more active in regulating business!

More active in regulating business? Does that mean more regulation or better regulation, one may ponder?
Of what business? What do they respondents have in mind when they express or agree to that view? Large and small or micro business? In general or specific sectors (eg financial)? Domestic or foreign ?

The above are very crucial IMO, if one is to get any useful conclusions out of the popular view for regulation that seems to exist.

III. Thus, IMHO:

a) The economic system in many countries today is flawed but that system is not free market capitalism

b) A key factor leading to the flaws and resulting popular dissatisfaction with the current economic systems are major flaws in competition laws and related supervision of the markets.

c) the BBC World Service poll results show need for better functioning free markers and better welfare state, both!

d) The BBC World Service poll results show the need to secure peoples' basic needs and for giving people more freedom in pursuing wants and dreams in their work/economic or social or other aspects of their lives.

e) Neoliberalism and conservatism tend to underestimate the fundamental human "need" for basic needs including the security of social security

f) Most political parties and platforms miss the concept that some things are better done by the market, some better done by the public sector. Each sector has activities where it is stronger.

Instead we are flooded by ideologies that either theologise the markets and demonise the state and its public sector (eg most Libertarians) or, to an increasing again level, the opposite, ie theologise the state and its public sector and demonise the private sector.

Modern systemics and dynamics are complex and volatile thus they are difficult to grasp. Thus some resort to the aforementioned and other simplistic models that have IMO confused the public opinion.

What is the solution? Not simple, but a basic element of any model I have in mind is:

To have the state/Society guarantee all its members that rain or shine their basic needs will be covered and then let them go out to real free markets to pursue their wants.

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