21st Century, a new Paradigm?

Ravi PERERA

Marx is dead. In the former Communist countries, Marx’s ideal, a society where one contributed according to his capabilities and received according to his needs has been dethroned by a culture in which contribution apparently is according to the pay while a person’s needs are as much as he can afford. Predictably, the Marxist were vague about the yardstick of measuring a person’s contribution and of course his needs.

As it turned out the members of the Communist hierarchy had much larger needs than the rest while their contribution to the common good, even by a generous assessment, amounted only to political activity, the value of which they eventually determined. How greatly they assessed their worth, almost all Communist leaders held power for life, unless removed by a palace coup or infirmity! Eventually when the whole thing collapsed we realized that in reality these countries were run down States with life standards almost on the lines of third world countries.

And now it appears that economic Laissez-faire, the antithesis of the Marxist lore, has also received a wrenching blow from which its recovery is bound to be long and painful. This system does not pretend to have permanent solutions nor an ideal end result. Its advocates contend that a society in which individuals are more or less free to pursue their economic and other ambitions, of course within a legal system, provides the best basis for individual success as well as general prosperity. Judged in terms of material comforts and even social stability, countries which adopted these ideas have not done badly at all. It is said, quite plausibly, that persons living in the capitalistic Western countries today enjoy a standard of life not available to any civilisation hitherto.

If choice is the yardstick in such matters, the range of choices available to their citizens in every sphere of life seems almost incredible from the perspective of an underdeveloped society. It is to be expected that a system focused so much on wealth creation will favour the rich. A fundamental reality of life is that richer a person, the greater the material choices available to him in both quantity as well as quality. This is the spur that drives a consumer society while also periodically leading to the massive haemorrhages that convulse the economy. Relentless competition that the system entails is not for the faint hearted. In order to be ahead of the game its devotees need to constantly invent newer, often risky, vehicles of wealth creation. In such a scheme of things a huge crisis could be triggered by a simple thing like industrial over-production or more complex causes like sub-prime lending or once fashionable off balance-sheet leveraging. The modern financial system is so complex that the administration is generally caught flat footed by each crisis which obviously has different triggers.

Are these occasional convulsions symptoms of an essentially unstable system or are they necessary “corrections” that keep the system vibrant and healthy? It is argued that these crisis and the resulting regulatory reactions clean up the system, eventually clearing the decks for further economic advancement. It may well be that out of the present debacle will emerge a new world order of Capitalism which will see several newly emerging economies with life standards at least respectable, if not comparable vis-a-vis the West. Large countries such as China, India, Brazil, Russia, South Africa and parts of the Middle East have already begun evolving into active Capitalist economies. Admittedly there is still a long way to go. Even today American consumers account for about 21% of the global GDP.

The emerging countries have vastly different cultures from the established Capitalist countries of the West. In some of these countries the rule of law, a defining feature of Western democracies, is yet tenuous with personal and family bonds often over-ridding the law. It will be interesting to observe the progress of Capitalism in old and somewhat rigid social orders seemingly ill inclined towards new ideas and innovations. It cannot be denied that the Capitalist countries of the West are intellectually vigorous and hugely innovative. An examination of the world-wide Intellectual rights and patent holdings will illustrate their overwhelming lead over the rest.

Every year’s list of Nobel Prize winners will again confirm the intellectual contribution of the numerically much smaller European races. Countless number of modern day comforts we now take for granted are in fact the result of ideas originating in the mind of some individual from one of these countries. Whenever we ride a car, switch on our TVs, get inoculated against once fatal diseases or even read newspapers we pay homage to a system which has made these into common products available mass scale. The original innovator was undoubtedly hoping his brainwave would lead to fame and fortune. But if his surrounding culture did not encourage new ideas and backed experimentation the spirit of innovation would not have flourished. This effloresce of the human spirit in the West is not merely economic but extends in relative terms to almost the entire gamut of human activity including art, the sciences, literature, music and even sports.

Evidently there are many roads to financial success. In fact many of the newly emerging economies have so far ridden on mass scale re-production and by attending to outsourced services.

Will Capitalism replicated in these new soils be as bountiful as it was in Western countries?

And will societies so hierarchal and even fatalistic achieve the kind of distribution of wealth we see in Western countries today? The answers obviously lie in the future. In the West, democracy is a fundamental tenet. In several of the emerging economies democratic structures are merely decorative while its operational methods awkward, to say the least. Many of these countries are also handicapped by their institutional lack of strength and integrity.

If anything, Capitalism has proved to be incredibly creative. While it permeates the new economies Capitalism’s impact on the hitherto hopeless masses in these countries could be epoch defining. Even in little Sri Lanka most people now believe that consumer choice is a fundamental right. Today, a car, TV or a mobile phone is not some favour bestowed by an unworldly power or a beneficent political authority.

This fundamental attitude change is occurring among billions of the world’s inhabitants to whom the only wearable garb from time in memorial was their poverty. In the last decade alone about one third of the populations in the poor countries have escaped the clutch of grinding poverty.

As we come towards the end of the first decade of the 21 Century we confront a world where the two major systems of the last Century, Communist and Capitalist, are either dead or badly wounded.

Realities we once accepted as permanent features have suddenly disappeared or appear shaky.

Meanwhile several countries which were clients or aid receivers of either Moscow or Washington have emerged as formidable economies, some even rivalling their former patrons. In these uncharted waters will a new paradigm evolve?