By Ravi Kant

The Industrial Revolution in the 18th Century gave ‘Capitalism’ deluge of publicity. Its bottom-line is to make profit based on the premise of private ownership. It has also been heavily criticized by eminent men of letters due to its insensitive nature of operations. Karl Marx believes Capitalism brings destruction with itself. That brought many other ideologies like Communism, Socialism, Marxism, etc. but unfortunately those ideas also have its own sets of problems on its implementation and control like Capitalism for the Economy. These alternative ideologies to Capitalism aspire for removal of private ownership and want everything to be regulated and controlled by the State. But in the present epoch, with the rate our Economy is moving and growing we heavily need Private players and ownership for the proper functioning of the Economy and maintain the cycle of “one person’s spending is the income of another person”.

The Industrial Revolution in the 18th Century in Britain generated various employment opportunities to the people that were giving birth to Middle-class, urbanization, etc. at that time. But unfortunately these opportunities came with strict long working hours which decreased productivity, child labor, end of traditional and infant industry; the city grew without planning forcing workers to live in unhygienic conditions and any complaint and sickness by the laborers consequently lead to fire from the job. The present capitalistic structure is almost similar to the operation of Capitalism at the time of Industrial Revolution. Hence we can say that there is insensitive capitalism which is still revolving around the Economy. Professor Jayati Ghosh wrote about the lack of concern for human life towards workers from India and other countries migrating to Qatar for Jobs. She even said that 95 percent of all Indian Workers are in Informal activities which are exploitative and low-paying contracts. (Source: Jayati Ghosh, “Workers dying in Qatar”, www.macroscan.org). The other best example of insensitive capitalism is Walmart. Walmart is known for following effective cost-leadership strategy which is a good strategy to survive in the Retail Industry. But this company provides harsh and long working conditions for employees, gender-bias, cases of locking employees inside the stores, low wages, etc. They treat their employees in inhumane ways. The coming of MNCs is a boon for developing countries that provided variety of job opportunities with standard pay packages but unfortunately it also brought deluge of work with long-working hours, setting up their bases in farmer’s land thus depriving them of their livelihood, job-insecurity, negative externality to households and environment, for example Vedanta establishing its Plant in Niyamgiri Hills of Orissa and Pesticides in soft-drinks case, etc. Prabhat Patnaik in his article, “Class War at the Capital” wrote about the working conditions at the Maruti-Suzuki Plant in Gurgaon, India is also another example of insensitive capitalism where workers are not allowed to take fluids so that they do not violate their quota of five minutes of toilet visit per working day and are paid less wages.

Though Capitalism brought with itself a variety of opportunities and aspirations, it also brought insensitivity with itself. Hence what is required is more humane and sensitive form of Capitalism that will bring full stop to criticisms she is encountering. We need to provide the workers of all the Sectors in the Industry with congenial and ethical atmosphere to work that will increase their level of productivity which will help improve company’s profit. Also, if we want our economy to progress and prosper what we need is the combination of both Capitalism and State-intervention. This combination works very well in the Bertrand Trap Model especially in the Airline Industry where slashing of prices goes on-and-on by all the players in the industry. The Consequence of all this is they all fall prey to Bertrand trap causing mounting losses in the Industry and ultimately Government or State comes to save the Industry. Even at the time of Global Financial Crisis, US felt the need of Keynes’s theory of recession which speaks that Government, if needed, can help the Economy to recover from the recessionary phase of business cycle, most popularly known as fiscal stimulus packages. The sum total of humane and sensitive capitalism, Government Intervention and ethical form of business model will turn an Economy into a Robust Economy that will have ingredients of prosperity, peace and happiness in it otherwise insensitive capitalism with unethical model of business will invite resistance, crime, anarchy which will bring doom to the Economy.

Ravi Kant holds Economics Honors degree from Ramjas College, University of Delhi. He likes researching in the areas of Economics, Strategy, Politics, English Literature and Social Issues. Besides that he loves watching Parallel and offbeat Cinemas of Bollywood. He aspires to be a well-known and an eminent Consultant in the area of Economics and Strategy. Presently he is doing his MBA from Institute of Management Technology (IMT), Hyderabad.

Posted by The Indian Economist | For the Curious Mind