CAPITALISM ON TRIAL

By Farouk Martins Aresa

Politicians are the marketers of ideas that benefit their constituencies. Capitalism is on trial not because it has failed as some would want us to believe, but because the amount of profit generated turned into greed for a very few at the expense of the middle class and the working class. Anytime we reach that point in history either in 1928 or 2008 where wealth is concentrated in the hands of the very few, there has to be repercussion.

Africa can learn from United States of America on one hand and Sweden on the far side without going through their trial stages. They both practice creation and distribution of wealth and resources with emphasis on the amount of profit desirable for the individual entrepreneur. The important result is the creation of viable middle class society with a good purchasing power. Without large patrons of goods and services, there is no profit.

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Capitalism must not and will not die. It has been a long transformation from the old feudal system when money and power were concentrated in the hands of the very few. It has somehow come to a full circle again since 1928. Of all the Countries in Africa, Nigeria and Kenya will never give up on Capitalism, said one professor to our dismay in the early 70s in Toronto, Canada. We thought socialism was the way out of our little problems then.

The current trial of capitalism as a result of greed in the stock and credit markets can be easily blamed on the poor stretching out beyond their dreams. But the victims always get the blame. There is nothing wrong with living good on earth before we go to heaven because those who do, did not come with special talents, grace or education. While the C students use others’ ideas to create a bliss from the profit of job creation, the A students are the professors and the thinkers whose ideas were bred in test tubes in the universities.

Man as an animal is capable of excess without supervision. If there is incentive in form of money and it is neither regulated nor supervised, man is capable of abusive behavior. The greed in man will raise its ugly head without a leveler. This is what brought capitalism to trial and the stock market could not maintain its balance. That the blame is going to the victims for daring to live well is not surprising. Decent housing for everyone is not asking too much. There is nothing toxic about it except those who made money from it. Golden parachutes and gold plated toilets in humongous houses of the few are where the blame lies.

The success of the individuals in each society once the government nudges the amount of profit acceptable through taxes depends on our habits, taste, needs and wants. If everyone starts with a million naira or dollars, by the end of the year or so, while some would become billionaires others would become peasants. Ability to attract other people’s money and create jobs from surplus labor come out of individual acuity. It is not those who come up with the ideas that make it, it is those who bring it to reality in the market.

Their salesmen are politicians that turn concepts which benefit their goals into the perception of the voters, whether it suits them individually or not. The middle class has benefited from government policies from the days of agricultural revolution where lands are bought by treaties, war or eminent domain and distributed to working class for some years until they own it. This was what happened in Europe and America, though we may not know it going by their stand towards African farmers today.

That was how middleclass was created out of working class. They took farming out of the hands of feudal lords sucking out most of the profit, put it in hands of those who toil the land so that workers had enough money left to feed, clothed and send their children to schools on their way to becoming middleclass.

The industrialized or manufacturing period paid workers wages that was even better than that of the farm workers. So they were able to afford the same comfort and goods as the middleclass. The same was true of the Italians that rose from construction business in America, or the Asians from California gold rush, the food and restaurant business.

Introduction of the unions that were able to unit and demand more money for their labor was evident in the auto industry. United Auto Workers members could afford to send their children to colleges, universities and buy homes in the same neighborhood as other middleclass families. The farm and the textile workers were also able to demand more money, moving into and expanding the middleclass.

In order to reduce the amount of labor and skill involved in farming and from industrial revolution, light and heavy machineries were introduced. Railways, subsidized by the governments increased trade across  the land, while machines increased efficiency and maximized profit for the top managers. It resulted into mixed blessing for the workers. Globalization and the fall of communist countries created another set of workers working for lower wages for low skill jobs that were not as profitable to produce in the developed countries. As immigrants became unpopular in developed countries, low paid jobs followed immigrants back home. 

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Very few of the profit made from efficiency and transfer of low skill jobs were realized by the expanded middleclass in the farming, manufacturing or industrialized factories. They become bitter, protectionists and with little tolerance for immigrants. Their anger were channeled  by conservative to get governments out of the way, to discourage regulation of all industries including the financial houses with the notion that too much government was an intrusion in peoples’ lives. That is the same government that produced middleclass workers.

Those who have seen government as too big and their taxes too high in order to pander for the poor found themselves seeking the same help for the first time in their lives. Some of them had moved away from unions that they had benefited from. They got hooked on the promises of liberal and conservative politicians who dangled and enchant them with their own riches, that these workers could only dream of.

Africans can industrialize their agriculture and carefully utilize other resources as it is going to be needed for the same reasons they are exporting them raw. What follows are other goods and services providing jobs for our young people. Housing, roads, railway and waterways must be subsidized. Education and healthcare at low cost and no cost for the very poor allow the population to become educated consumers.

Low income housing has gone out of style. It is more desirable to provide mixed income housing so that the poor can emulate the progressives and their children can learn from one another. Basic houses can be built beside one with unfinished deck so that the family can build later to a predetermine structure. Water, solar, wind and waste recycle powers are the way all countries are moving these days. We have to keep on reinforcing what we know until we put them into practice.

Europe and America coming to the rescue of the financial houses in 2008 must send a signal to Nigeria in particular, flush with external reserve, that we must use our resources to fortify our infrastructure no matter what the World Bank or IMF think. We lost our good credit rating given immediately after paying off Paris Club. We now find out that even excellent credit ratings can be rigged in U.S. A. Nobody place their self interest decision in the hands of extrinsic influences.

Stay tuned for Greed Is Under Fire.