How does culture affect the success of capitalism?
The common charge levelled at communism often is that it fails to account for human nature. That it operates at a utopian idealist level. That most people would rather take the free stuff and not do any work or do the minimal work required for lack of incentives. It is one of the main reason why slavery fails in the modern economy too. You can whip a slave into doing the minimum, but he'll move a bone unless he's compelled, not out of mean spirit or laziness, but sheer logic. The more skill and quality work demands the more incentives become essential to motivate humans. And incentives remain a goldmine of possibilities in economics. That is why slaves were so often offered freedom in Ancient Rome and other societies where slavery survived long. Unlike the far more barbaric and racially based American. Even skilled work was done by slaves in the case of Rome. Anything that were too low to be done by the elites or the citizens. Even something lucrative like accounting. An escape from servitude made for good motivation. That your children would be citizens, even better. As the generations went each generation would gain opportunities from the last. Families would connive to unite land so as to build wealth across generations, living as living pieces of a great machinery. That's probably where the arranged marriage concept came from. And the opposition to love marriages. You were shirking your duties by marrying for love. In a world where wealth was scarce, building wealth was the difference between back breaking about and living off others back breaking labour.
But that is a topic for another time. The more interesting question then is, does capitalism really account for human nature. It has a record for prosperity, but a century is hardly a great show of reliability in the big picture. Not in the species that received a perfect century of world-class rule under the five good emperors of Rome and then watched it fall apart for 2 centuries afterward. (Check it out if you haven't, it's fascinating. Would you condemn your screw up of a son to death to save the empire and it's future? It would be a hard choice, and t would define the next 2 centuries) So that is what we explore here.
The merits of protectionism. It's fascinating how a beacon of capitalist success might be the perfect example of such an uncapitalist concept. China is famed for it's private business revolution. Protectionism is an idea, that has long been derided as a great source of stagnation. Protect, the local business i.e ban foreign business, or protect local labour, like Andhra Pradesh with it's hundred percent local employees reservation (That's a real thing) All these measures have come to hold the stink of socialism. And yes, a stench indeed is how I would describe socialism is perceived by much of modern India. Without competition the argument goes, there can be no innovation. And thus there will be stagnation. In a purely capitalist world, the consumer knows best, and all is served to him as he pleases. The internal dealings of any buyer and seller are none of our concerns. Let them do as they please. Free them to produce, bring in foreign investment. We rant and rave (at least I do) at each act of regulation, and each restriction placed upon foreign businesses. Us Capitalists, we look at the government as they place regulation upon regulation upon Amazon, trying to find ways to ban their business as Amazon dances around the whip modifying it's business structure over and over until the government gives up. (This ones fascinating if you care to read about it) All there seems to be is a desperate attempt at pulling us back to the old days, before the liberalisation and the new India, that we seem to see today. Business is the lifeblood of this country. It has been for all the powers that have risen and stayed risen since the 20th century. When traders go and complain to the government about their business getting hit by ecommerce, they seem to sticking to an old antiquated order doomed to fail. Adapt or die is the mantra in an ever evolving world. Can't handle the change Deal with it. There is no mercy for the modern businessman. And maybe there shouldn't be. If you are entitled to all the upside (Save some frankly ridiculously high tax) you should probably accept a potential hit on the the downside. Capitalism taketh as it giveth. And for the most part, I've stuck by these ideas. That the long period of socialism that seemingly lost us many a game changing opportunity was a great tragedy wrought by the people, for the people and on the people. God bless Manmohan Singh's Soul and the soul of the western world and everybody in the government that fucked up so bad we practically were forced to open up the economy. It took a near knockout punch, but it got done.
And the Indian economy revelled in the fresh flow of freedom. As the economy opened the country saw a fresh lease of growth. My parents generations great sadness over the lack of Coca Cola and Pepsi, would now be sated with a whole host of goodies, noone in India had ever scene. From one TV channel to hundred and eventually to thousands. 2-3 cars to global brands and ferrari showrooms. The dough flowed in. Ever since then we've been tought in all sources of information that the path wrought for us that year is the optimal one. Captitalism and free markets shall be our saviour. We must attract foreign investment. This is the narrative of modern India. Of of forward lookers and optimists. To capitalists and free marketers it was a constant source of frustration under Manmohan singh to watch a certain socialist politician from West Bengal rip through every liberalisation attempt our PM brought up. FDI, GST, everything that could be blocked was blocked. Goodbye Walmart, I suppose. While socialist schemes like the food security bill, designed to win elections got passed left and right. 1.2 lack crore per year in expenses, pass it right up! We have a very small set of voters paying the taxes. And when the resentment of the people reached a boil, the current disposition pushed into power, promising growth and development, a welcome change to the narrative. When Deng Xiaoping, visited the United States under Nixon he made a point to visit the space centre and other scientific establishment. On returning he openly supported capitalism. Saying a 'It doesnt matter if a cat is black or white as long as it catches mice'
And that became the operating philosophy of Communist Party China. If it works we do it. Too many people? Stop having kids. Communism not working. Capitalism working in your neighbours house? Capitalism it is. Roll open the economy. Let us all bow in wonder at the immensity of brilliance it must have taken to successfuly open up the economy as you lead the Communist Party of China. There is far more danger there from rigid idealists than most would consider. An absolute rule is rarely absolute at that scale. All governments operate on systems. And systems give vast amounts of power to the bearecarcy. A beaurecracy that gains and loses from such big bang reforms. A beaurecracty you rely on to get stuff done. Not only do you not get shot and declared a traitor (And let no man use that term on so great a man lightly) you pull together the start of the single greatest growth spree in human history. A half billion people pulled from poverty. Not too many resumes that good in human history.
The Non Free Market Argument
But the interesting bit, and this is the part that fascinates me, is that the move wasn't absolute. Chinese protectionism clamped down on the internet in China, blocking foreign services from operating. No Whatsapp, or Facebook or Google. And contrary to expected stagnation like Indias case pre 1990 it led to innovation. The lack of foreign interference has led to quality apps build by vast companies often comparable to their western counterparts. In the absence of Google came Baidu, without Whatsapp there was WeChat, and so on. Even as China thrived on foreign investment, by manufacturing for the world, it parallelly leveraged closed markets in another sector. To leverage globalisation even as you spit on it at the same time. And it worked. It's fascinating, and repeatable. Nationalising banks is another case. Not usually popular in free market circles. Present changes in sentiment notwithstanding, sarkari has rarely ever been a compliment. More Sarkari is usually not a good thing. But in 1969 when Indira Gandhi nationalised 14 banks, deposits rapidly went up 800 percent. A vast increase. Despite switching to a seemingly less efficient system of control, the result was a game changer, regarded by the RBI as the greatest single most important economic decision since 1947, greater even than the liberalisation of 1991. It was a game changer, resulting in vast increases in the number of bank branches, including the proportion of rural branches. It increased the involvement of the Indian populace in banking. And the reason, heavily was trust. People did not trust bankers. They were a disliked class, and not very well regarded. At least partly with reason. Unintuively sometimes, liberalisation isn't the answer. It should be. As a lover of freedom and the free market, it's fascinating how often backward seeming moves with bandage instead of medicing, type implications tend to pay off. The India of that era needed it. It doesn't need it now. It would hurt from it now. Terribly. In a system with a degree of stability, trust and enough freedom and optimism to grow the free markets work wonders. Wealth if nothing else is likely to flood in. But to all that call socialism evil and a great failure in the great human experiment that is civilisation. It's interesting to see the parts where it works. What may seem like a wasted period of Indian history may not completely be so. The land reforms, land holding limits that were enforced and nationalisation all reek of a bygone era. And let it remain so. But perhaps not with so much distaste. We might find that some good came from it. Socially the country that got freedom in 1947 needed socialist measures. It needed the land reforms that can legitimately be called theft in modern India, it needed the breaches of freedom that were the blatant nationalisation that took place seemingly at will, like with oil companies, banks and the premier Indian car company today.
This part will be scrubbed from history eventually. I don't see a friendly disposition to out socialist past arriving soon. I pray infact that it doesn't. But let us not purely willify the people who led it. It was the will of the people after all the voted in the socialists time and again. And the will of the people that encouraged them if not compelled them to act as they did. Even in 1980 when Indira Gandhi pushed forward with a liberalisation with the forward plan, she took a lot of backlash. It isn't always obvious the way that is likely to be looked upon well by those who judge us. But if the past reveals anything to us, let it be that the ends that we seek are not always optimally seeked upon rigid principles. No system is entirely perfect. Not democracy, socialism or fascism. No system adapts perfectly to human nature. Some do better than others. But none perfectly. Because the trick isn't as much to adapt to nature, which is constant, but who we are at that place in time. And that is a function of more than nature, but also place and time. A country with bonded labour does not turn into Europe through liberalisation but instead Somalia. And yet a stable country may yet do well with a fair bit more freedom as history has shown us time and again. It all depends on the people. Who they are. How strongly they are influenced by an idea. The people that are to work the system we develop. Sometimes it's best to just focus on getting the rat, rather than focussing how we get it.
The common charge levelled at communism often is that it fails to account for human nature. That it operates at a utopian idealist level. That most people would rather take the free stuff and not do any work or do the minimal work required for lack of incentives. It is one of the main reason why slavery fails in the modern economy too. You can whip a slave into doing the minimum, but he'll move a bone unless he's compelled, not out of mean spirit or laziness, but sheer logic. The more skill and quality work demands the more incentives become essential to motivate humans. And incentives remain a goldmine of possibilities in economics. That is why slaves were so often offered freedom in Ancient Rome and other societies where slavery survived long. Unlike the far more barbaric and racially based American. Even skilled work was done by slaves in the case of Rome. Anything that were too low to be done by the elites or the citizens. Even something lucrative like accounting. An escape from servitude made for good motivation. That your children would be citizens, even better. As the generations went each generation would gain opportunities from the last. Families would connive to unite land so as to build wealth across generations, living as living pieces of a great machinery. That's probably where the arranged marriage concept came from. And the opposition to love marriages. You were shirking your duties by marrying for love. In a world where wealth was scarce, building wealth was the difference between back breaking about and living off others back breaking labour.
But that is a topic for another time. The more interesting question then is, does capitalism really account for human nature. It has a record for prosperity, but a century is hardly a great show of reliability in the big picture. Not in the species that received a perfect century of world-class rule under the five good emperors of Rome and then watched it fall apart for 2 centuries afterward. (Check it out if you haven't, it's fascinating. Would you condemn your screw up of a son to death to save the empire and it's future? It would be a hard choice, and t would define the next 2 centuries) So that is what we explore here.
The merits of protectionism. It's fascinating how a beacon of capitalist success might be the perfect example of such an uncapitalist concept. China is famed for it's private business revolution. Protectionism is an idea, that has long been derided as a great source of stagnation. Protect, the local business i.e ban foreign business, or protect local labour, like Andhra Pradesh with it's hundred percent local employees reservation (That's a real thing) All these measures have come to hold the stink of socialism. And yes, a stench indeed is how I would describe socialism is perceived by much of modern India. Without competition the argument goes, there can be no innovation. And thus there will be stagnation. In a purely capitalist world, the consumer knows best, and all is served to him as he pleases. The internal dealings of any buyer and seller are none of our concerns. Let them do as they please. Free them to produce, bring in foreign investment. We rant and rave (at least I do) at each act of regulation, and each restriction placed upon foreign businesses. Us Capitalists, we look at the government as they place regulation upon regulation upon Amazon, trying to find ways to ban their business as Amazon dances around the whip modifying it's business structure over and over until the government gives up. (This ones fascinating if you care to read about it) All there seems to be is a desperate attempt at pulling us back to the old days, before the liberalisation and the new India, that we seem to see today. Business is the lifeblood of this country. It has been for all the powers that have risen and stayed risen since the 20th century. When traders go and complain to the government about their business getting hit by ecommerce, they seem to sticking to an old antiquated order doomed to fail. Adapt or die is the mantra in an ever evolving world. Can't handle the change Deal with it. There is no mercy for the modern businessman. And maybe there shouldn't be. If you are entitled to all the upside (Save some frankly ridiculously high tax) you should probably accept a potential hit on the the downside. Capitalism taketh as it giveth. And for the most part, I've stuck by these ideas. That the long period of socialism that seemingly lost us many a game changing opportunity was a great tragedy wrought by the people, for the people and on the people. God bless Manmohan Singh's Soul and the soul of the western world and everybody in the government that fucked up so bad we practically were forced to open up the economy. It took a near knockout punch, but it got done.
And the Indian economy revelled in the fresh flow of freedom. As the economy opened the country saw a fresh lease of growth. My parents generations great sadness over the lack of Coca Cola and Pepsi, would now be sated with a whole host of goodies, noone in India had ever scene. From one TV channel to hundred and eventually to thousands. 2-3 cars to global brands and ferrari showrooms. The dough flowed in. Ever since then we've been tought in all sources of information that the path wrought for us that year is the optimal one. Captitalism and free markets shall be our saviour. We must attract foreign investment. This is the narrative of modern India. Of of forward lookers and optimists. To capitalists and free marketers it was a constant source of frustration under Manmohan singh to watch a certain socialist politician from West Bengal rip through every liberalisation attempt our PM brought up. FDI, GST, everything that could be blocked was blocked. Goodbye Walmart, I suppose. While socialist schemes like the food security bill, designed to win elections got passed left and right. 1.2 lack crore per year in expenses, pass it right up! We have a very small set of voters paying the taxes. And when the resentment of the people reached a boil, the current disposition pushed into power, promising growth and development, a welcome change to the narrative. When Deng Xiaoping, visited the United States under Nixon he made a point to visit the space centre and other scientific establishment. On returning he openly supported capitalism. Saying a 'It doesnt matter if a cat is black or white as long as it catches mice'
And that became the operating philosophy of Communist Party China. If it works we do it. Too many people? Stop having kids. Communism not working. Capitalism working in your neighbours house? Capitalism it is. Roll open the economy. Let us all bow in wonder at the immensity of brilliance it must have taken to successfuly open up the economy as you lead the Communist Party of China. There is far more danger there from rigid idealists than most would consider. An absolute rule is rarely absolute at that scale. All governments operate on systems. And systems give vast amounts of power to the bearecarcy. A beaurecracy that gains and loses from such big bang reforms. A beaurecracty you rely on to get stuff done. Not only do you not get shot and declared a traitor (And let no man use that term on so great a man lightly) you pull together the start of the single greatest growth spree in human history. A half billion people pulled from poverty. Not too many resumes that good in human history.
The Non Free Market Argument
But the interesting bit, and this is the part that fascinates me, is that the move wasn't absolute. Chinese protectionism clamped down on the internet in China, blocking foreign services from operating. No Whatsapp, or Facebook or Google. And contrary to expected stagnation like Indias case pre 1990 it led to innovation. The lack of foreign interference has led to quality apps build by vast companies often comparable to their western counterparts. In the absence of Google came Baidu, without Whatsapp there was WeChat, and so on. Even as China thrived on foreign investment, by manufacturing for the world, it parallelly leveraged closed markets in another sector. To leverage globalisation even as you spit on it at the same time. And it worked. It's fascinating, and repeatable. Nationalising banks is another case. Not usually popular in free market circles. Present changes in sentiment notwithstanding, sarkari has rarely ever been a compliment. More Sarkari is usually not a good thing. But in 1969 when Indira Gandhi nationalised 14 banks, deposits rapidly went up 800 percent. A vast increase. Despite switching to a seemingly less efficient system of control, the result was a game changer, regarded by the RBI as the greatest single most important economic decision since 1947, greater even than the liberalisation of 1991. It was a game changer, resulting in vast increases in the number of bank branches, including the proportion of rural branches. It increased the involvement of the Indian populace in banking. And the reason, heavily was trust. People did not trust bankers. They were a disliked class, and not very well regarded. At least partly with reason. Unintuively sometimes, liberalisation isn't the answer. It should be. As a lover of freedom and the free market, it's fascinating how often backward seeming moves with bandage instead of medicing, type implications tend to pay off. The India of that era needed it. It doesn't need it now. It would hurt from it now. Terribly. In a system with a degree of stability, trust and enough freedom and optimism to grow the free markets work wonders. Wealth if nothing else is likely to flood in. But to all that call socialism evil and a great failure in the great human experiment that is civilisation. It's interesting to see the parts where it works. What may seem like a wasted period of Indian history may not completely be so. The land reforms, land holding limits that were enforced and nationalisation all reek of a bygone era. And let it remain so. But perhaps not with so much distaste. We might find that some good came from it. Socially the country that got freedom in 1947 needed socialist measures. It needed the land reforms that can legitimately be called theft in modern India, it needed the breaches of freedom that were the blatant nationalisation that took place seemingly at will, like with oil companies, banks and the premier Indian car company today.
This part will be scrubbed from history eventually. I don't see a friendly disposition to out socialist past arriving soon. I pray infact that it doesn't. But let us not purely willify the people who led it. It was the will of the people after all the voted in the socialists time and again. And the will of the people that encouraged them if not compelled them to act as they did. Even in 1980 when Indira Gandhi pushed forward with a liberalisation with the forward plan, she took a lot of backlash. It isn't always obvious the way that is likely to be looked upon well by those who judge us. But if the past reveals anything to us, let it be that the ends that we seek are not always optimally seeked upon rigid principles. No system is entirely perfect. Not democracy, socialism or fascism. No system adapts perfectly to human nature. Some do better than others. But none perfectly. Because the trick isn't as much to adapt to nature, which is constant, but who we are at that place in time. And that is a function of more than nature, but also place and time. A country with bonded labour does not turn into Europe through liberalisation but instead Somalia. And yet a stable country may yet do well with a fair bit more freedom as history has shown us time and again. It all depends on the people. Who they are. How strongly they are influenced by an idea. The people that are to work the system we develop. Sometimes it's best to just focus on getting the rat, rather than focussing how we get it.
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