It will not only be unrealistic but absolute nonsense not to recognise the importance of economics and to deny its rightful place. Economics can be called the backbone of the world. But it would be disastrous to impart the functions of heart and brain to it which, unfortunately, economists are hell-bent upon doing. Still more disturbing is the fact that not only the capitalists but also the socialists tend to put economics at the top of the agenda, though their motives are contradictory.
Capitalists adopted economic exploitation as their central ideology, their sole aim being to exploit the needs of, desires and weaknesses of human beings to enhance their own economic status. They never had any genuine concern for human plight and whatever sympathy they pretended to possess, was aimed at silencing the critics, to vanquish socialism or to serve a long or short term purpose. Socialists had genuine concern for the common lot and endeavoured for their economic empowerment through equitable distribution of money.The extremist form of socialism, communism, had the Soviet Union and China as its best representatives. Both manifested initial success in terms of economic development as well as equitable distribution distribution of wealth. Till the time the revolutionary fervour was at its zenith, the men controlling the government had dedication, and turpitude was not rampant, matters did not go awry. But the system was bound to show decadence with the passage of time as revolutionary fervour is always short-lived, and because the system itself ignored the humanness of human beings.
Capitalists steadily gained successes because they did not hesitate to use every possible trick, every method of exploitation and all possible means - good or bad, legal or illegal, and moral or immoral, for their growth. Their fundamentalist approach had modified every department of social and political life. They succeeded in popularising secularism and democracy which gave them immensely greater room to maneuver. The marginalisation of religion and remodelling of social values had opened new vistas for their growth. While they persisted in their endeavours to transform the whole of society into either the consumers or the consumed, they also took well-planned, calculated steps to monopolise wealth by reconstructing the economic system. The plan comprised liberalisation of the economy, popularly known as Lassez fair, adoption of a tax system that helped the cause of the industrialists and not that of the common people, establishment of a banking system and stock exchange that mobilised public money for their use, establishment of such economic structures as would accelerate the upward mobility of wealth (from the poor to the rich), complicating the science of economics so that the common man, not even the intelligentsia except the experts, could comprehend what happens at the economic level, using economists to devise such criteria of economic development as to suit their strategy, and multiplication of demands by transforming treachery, dishonesty and falsehood into an art.
It is evident that the ultimate goal of the economic exploiters is to concentrate, as much as possible, the wealth of the whole world into their own hands. One significant step in that direction was the establishment of the banking system. The banking system, private or nationalised, has only helped the rich, specially the big business. What, ideally should have been,is that the wealth of the rich should have helped the economic betterment of the poor. Banking has done just the opposite. The little money that the labourers, the artisans, the peasants, the clerks, the lower middle class people and the upper middle class servicemen are able to save by curbing their desires and curtailing even some essential expenses, is mostly submitted to the banks. Businessmen get hold of this mammoth money from millions of commoners, in the form of loans to establish mills, , factories, department stores and companies. With this money they earn huge profits, ranging sometimes from 50 to 300%. A very small portion, usually between 8-15% of what they amass is given back as interest to the banks, and a yet smaller portion, 4-12%, of that interest is distributed among the real owners of the money. This small interest is used as a decoy to trap the naive commoners. The common person has no other option as his/her money is not big enough to be turned into an asset to commence any business, and security problems compel them to put their hard earned money into the reservoirs of the banks. If ordinary people even contemplate starting their own business with the assistance of bank loans, they either fail to fetch it, on account of their inability to submit sureties, or, if at all they succeed in getting loans, they have to run the great risk of getting entangled in a debt-trap; for, their incomes usually are not able to cope simultaneously with fulfilling routine requirements and, repaying the loan instalments to the bank. In case the business fails, the probabilities of which are high, they do not have sufficient financial backing to make up for the losses; they often have to clear the loans by selling whatever small assets they have. The private banks, wherever they exist, accentuate the upward mobility, for, while the incomes from the nationalised banks are utilised, at least, partially, for welfare activities, the whole profits of private banks are credited to the owners. Industrialists themselves do not believe in keeping the majority of their money in the banks, they either invest in profitable ventures or convert it into movable assets, the cost of which keeps on rising. These assets prove to be of great utility in procuring further loans. Their business continues to expand with the help of people's money, and the value of their assets continue to show an upward trend.
Inflation, which is the outcome of the conspiracy by industrialists and their cronies in the government, ensures that whatever they pay as interest on the loans (and taxes) is compensated and whatever the public gets as interest on their money is more or less recruited: inflation recovers their money. The poor account holders thus get virtually nothing while with their money, the big businessman builds big palaces and companies. In short, the banks have become mere vehicles for transferring wealth from the less-moneyed to the more-moneyed. Businessmen also run big financial companies where again, the depositors' money is used to give loans at much larger interest rates to those seeking it. Finance companies do not only earn themselves but also help industries by financing consumer items of all kinds including vehicles, air conditioners, televisions and refrigerators. Insurance companies are also booming, they are able to compete with banks because they cash in on the personal fears of the people. The common man is always wary of accidents and sudden deaths, and to ensure financial safety for their survivors, they oblige the insurers despite the fact that these institutions often pay interest even less than what the banks do.
The forces of economic exploitation have benefited immensely from the banks. but, there are some drawbacks in the banking system. First, they have limited capacity to cater to the ever-increasing demands of manufacturers and traders. Second, banks can provide money only up to a certain limit, and only for a certain period. The compulsion of paying back the instalments shortly after the procurement of loans would sometime bring the companies and their directors under insurmountable pressure. This would stall or tarry their growth. Thirdly, banks regularly meddle in the affairs of the business. Fourthly, in case the business suffers loss, the banks do not share it and have to be repaid the whole loan along with the interest. Banks, being managed by competent people, it is not easy to deceive them.
To overcome all these these obstacles, the stock-exchange was erected. This would provide a regular supply of money and the corporates would be able to initiate new projects without diluting their own assets. By making laws for the establishment of 'proprietary limited' and 'limited' companies, they limited their legal responsibilities in case the companies failed. The stock exchange serves their purpose by amassing wealth from the common people for their use at tremendously easy conditions. They would not have to face the innumerable constraints put by the banks. It would be easier to convince the public of the "enormous benefits" of investing in their companies. The biggest advantage, of course, would be that, in case there are diminished returns, the loss would not fall on their shoulders alone,. They could, without much difficulty, transfer the major portion of their loss to the small shareholders who have no option in such circumstances except to sell their shares at much lower prices than that at which they were bought. It is hardly surprising then that the frequent ups and downs in the stock market are often artificially produced in order to benefit a major investor or harass a competitor in the market. The minor shareholders, the common man, almost always have to bear the brunt. The share market has turned speculative on account of the increasing role being played by middlemen. The companies being limited, the directors, in case the company is on the verge of collapse, use the manoeuvrability of the laws and regulations to minimise their own losses. But the minor shareholders who, combined, often, own more than the directors, are in no position to avert disaster.They have money to invest in the companies, but no role to play in formulating the policies. The directors use their position to safeguard their own interests, obviously, at the expense of hundreds of thousands of minor investors. When the debentures are declared open, the public has no method of its own to examine the credentials of the company and have to rely solely on whatever little information, presented in a way as to attract investors and avoid any legal implications, is made available to them by the directors. There is no fool-proof method to determine the genuineness of a company. With an increasingly greater number of people falling in love with the share market, it has become no less speculative than the lottery, and bookies and investment companies have surfaced. These companies succeed in luring the commoners, because, unable to understand the nuances of the stock exchange, they prefer safety. These companies are adept in the art of investment and their guile helps them make big fortunes. Whatever they earn is naturally, ultimately paid by the people. Betting has further complicated matters, and the bosses of the bookies use their links and influence to generate false ripples in the exchange. To boost public investment, the share market and sensex-indexes are broadcast daily on radio and TV; the impression that goes to the public is that the survival of the economy depends only on the sensex.
To equate industrial production with economic development is grossly misleading. In truth, it is misplaced to call industrial production, production; for, it has nothing to do with the real production and only helps in the redistribution of the already produced material and wealth. Had even this redistribution been based on equitable and justifiable premises, industrial activity could have been a great boon for mankind. On the contrary, it has become an instrument in monopolising wealth produced anywhere on the earth, into a few hands. This monopoly turns would-be boom to bane. What we call real production is from natural resources like land (farms, orchards, mines, animals, nuclear energy, etc), water (oceans, rivers, etc) and atmosphere (sun energy, etc).
It is through farming, cultivation of fruit, animal husbandry, poultry, fishery, mining and generation of electricity and nuclear energy that mankind receives regular supplies of products for their survival and comfort. The industry only remodels these products into items of comfort or grandeur. Thus the function of industries is to remodel and distribute the material and wealth. This is important, but when it leads to several medical and social problems and accentuate disparities in society, rethinking is required. If the present model of privatisation perpetuates, the affluent will continue to increase in affluence and the poor will continue to grow in poverty. The priority, of course, has to be determined in relative terms.
By nourishing the consumer culture, economic exploitation has succeeded in bumping a society in which men and women consume more tea and coffee, than milk, ghee and cheese, more ice creams, soft drinks and wines than fresh fruit and sugarcane juice, and wear garments made of synthetic fibres more than clothes of cotton. Such has been the impact of high pitched advertising that the people opt for useless, often harmful and sometimes dangerous foods and drinks in preference to those that are rich, nutritious and salubrious. This, is aimed at impeding the growth of the agricultural sector and small manufacturers and traders. Big business has always dispensed of the small scale industry and has been steadily contriving to asphyxiate it. The small sector faces extraordinary difficulties in the face of onslaughts by big industrialists who command all the necessary resources to influence the choice of the people and the policies of the government.
The 'economic reforms' that the economic exploiters and their economist friends have been clamouring for all over the world are nothing but the additional licences to maraud the masses of whatever they posses or earn. It is, in truth, permission for exploitation under the garb of free-market and is aimed at removing all possible obstructions in their path to the ultimate destination which is to gain absolute control over all the resources of production - material or human. Capitalists have always attached unparalleled importance to the capital and have tried to lighten the role of skill and and minimise the significance of labour. With the advent of machines, first they succeeded in reducing the role of labour in manufacturing. But they knew that even the machines were to be regulated by men and it was not feasible to develop instruments for every task. They then decided to exploit labourers by giving them petty sums as cost for their work. Whenever the workers displayed unity and demanded increase in their salaries or allowances, their demands were either rejected threatening them with expulsion, and sowing seeds of disunity in their ranks, or, when they had no other choice except to yield, they would recover whatever was conceded to them by raising the rates of the products of the company. The hike in the salaries of the workers gave little respite, as the prices of essential items increased proportionally. The irony is that even the capital the industrialists boast of, belongs mainly to the common people and has been amassed through the institutions of banking and the stock exchange.
Modern economists, who are mere cohorts of the MNCs (Multinational Companies), tend to lay emphasis only on economic growth, which indicates rise of the Gross National Income per annum. This criteria is largely inadequate to measure advancement in the conditions of common people. It only gives an idea about the rise in the fortunes of industrialists as it does not inform about the distribution pattern of newly generated wealth. It also fails to inform real additions (proceeds accumulated from natural resources) to the stock of materials possessed by mankind.
It has be proven time and time again that there is hardly any change in the distribution pattern as a result of economic growth. With few exceptions, growth in almost all countries tends to widen the gap between the rich and the poor. The truth is that the economic fundamentalists know that the economic growth is directly proportional to the inequality of distribution; for more equitable distribution would leave less number of individuals and families in a position to purchase the costly consumer goods. It therefore suits the ingenious fundamentalists to maintain the disparities between the incomes of different groups of people as possible.
How can the so-called rate of economic growth be accepted as true GNP? By its very definition, it refers to the total monetary value of all goods and services produced with the geographical boundaries of a nation during a given year. (by the resident citizens of that country), and it is calculated by valuing the outputs of all 'final goods' and services at market prices. Thus, the rise in the Gross National Income fails to take into account the rise in market price, i.e. inflation. The exact rate of growth must instead, be calculated by the formula:
Growth rate = Increase in GNP - Inflation Rate
If, for example, the growth rate of a particular country, say India, comes out to be 6% and inflation is 8%, the real growth rate would be -2%. But this is deliberately ignored because, the industry, as well as the government, are always eager to give the impression that the nation is progressing well. And, unfortunately, for the economic fundamentalists, the nation means only the industry and for the rulers of the nation, only the government. The nation itself, hardly if ever, finds itself in a position of long tern economic security. Thanks to industrialisation, the common national may be having a few goods to keep them in good humour, but no assets to back them. All the assets having been steadily maintaining their upward mobility from the poor to the rich, from the rich to the richer, and from the richer to the richest.
|Copyright: [(c) IFEW 1997] This material is published in Insight and is the property of the Islamic Foundation for Education and Welfare (IFEW) [http://www.IFEW.com/]. Such material may be reproduced only in print or e-mail on the condition that this copyright notice follows it and that a copy of the publication is sent to Insight (PO Box 111 Bonnyrigg NSW 2177 Australia), insight@IFEW.com. Electronic publishing of this article on the internet, whether through the web or ftp is prohibited. However, those wishing to make internet users aware of a particular article or the publication are welcome to direct others to the relevant URL or the Insight home page [http://www.IFEW.com/insight/]. Note that opinions expressed in Insight are not necessarily those of the editorial board.|