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Dec 13, 2011

Occupy Wall Street movement: Good Capitalism, Bad Capitalism

Image Source: watchdocumentary.tv
Occupy Wall Street movement which started as a series of demonstrations in New York City based in Zuccotti Park in the Wall Street financial district has gained worldwide momentum. Over 900 major cities of the world are reported to be buzzing with replica protests of Occupy Wall Street currently. Nepal didn’t remain untouched by the wave. Nepalese intellectuals paid their tribute in their usual way, declaring it an end of capitalism, blaming capitalism for anything and everything that has gone wrong in this country and calling for similar protests. 

The shallowness of their understanding is evident by the way every major disturbances in the West is heralded as the ultimate endpoint of capitalism, and a vague alternative system promising utopia is promised. It is very unfortunate that while spewing hairsplitting criticisms of capitalism most usually the income inequality, critics forget to acknowledge that capitalism as compared to every other political and economic system so far known is better at creating wealth and lifting millions of people out of abject poverty. It is surprising that advocates of social justice and equitable distribution of wealth find that capitalism is the only system that creates enormous wealth, so indigestible. To understand the Occupy Wall Street movement objectively and its relevance to Nepal, it is necessary to understand what exactly gave rise to the protests and also that, rather than a monolithic form as described by its critics, capitalism has different forms. It is imperative to understand that there is good capitalism and bad capitalism, and the distinction between them is the first step towards solving the aforementioned problems.

Crony capitalism, which is the form of capitalism where wealthy corporations and politicians tie up in a “you-scratch-my-back-I scratch-yours” fashion to abuse power and wealth for each other’s vested interests, is bad and is one of the true causes of discontent among the protesters. Two of the major issues raised in the Occupy Wall Street movement are bailing-out failing banks with the taxpayers’ money and rising income disparity among the citizens. If one digs deeper, both of these are results of crony capitalism. The banks having close ties with the politicians are rescued with the taxpayers’ money instead of letting them face the consequences of their mistakes. Similarly, income disparities rise because of governments providing special privileges to those wealthy corporations through various means such as subsidies, tax-rebates, special licenses, and favorable policies.

Free market capitalism that rewards entrepreneurship, risk-taking and innovation, and at the same time provides easy universal access to economic activities to all citizens is a blessing. There are enough evidences that when allowed to work, the market has lifted more people out of the mud and misery of poverty than any government. And it has been true regardless of the culture, tradition, religion, economic base, and civilization of the society practicing it. The most prevalent myth about free market capitalism in Nepal is that in free market capitalism the economy is dominated by cartels and syndicates. 

Source: Facebook
Whatever little degree of capitalism Nepal has practiced so far has been riddled with practices of crony capitalism. The majority of the wealthy class of Nepal were either born rich or became so by political and bureaucratic connections. Why do few business houses thrive whereas majority of the populace languishes in poverty? Why do few industrialists dominate the economy? Not because they provide quality goods and services to satisfy the customers but because they happen to have political and bureaucratic connections. License permit regime has been a key factor in sustaining and fostering the close ties between politicians and businessmen. The few people who supposedly control the majority of the wealth of the nation do so because they are politically powerful and well-connected. But, despite this, there are also entrepreneurs in Nepal who came from a humble background and made a fortune by providing goods and services to the hundreds of thousands of satisfied customers. If we criticize capitalism blindly, we are also criticizing these people who risked everything they had and provided something useful to the society and made fortunes. It would be mere foolishness to criticize these ‘job creators’ for the unemployment problems in the country. Even our neighbors -socialist India and Communist China, who didn’t look at capitalism with favor in the past have embraced it after realizing their folly. It would be a hug mistake for Nepal to take the already abandoned path.

Fights against capitalism have already become the war of the past. Today’s interconnected and globalized world begs for a different fight. A fight to ensure the benefits and privileges of capitalism to even the poorest of the poor. A fight to eliminate close ties between politicians and large corporations and let the markets work freely. The debate for the future is not whether to have capitalism or not, but what kind of capitalism to have- the crony capitalism that plagues the economy of Nepal or a free market capitalism that ensures equal access to economic activities and equal respect of rights of every individual citizen.

-Surath Giri