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Contrary to popular belief, globalization and capitalism in its form today is never going to lift the life of the poor, reduce the income gap worldwide and eradicate global poverty. By themole
Capitalism in definition and practice is an economic system which concentrates the economic power in the hands of the few at the expense of majority. The proponents of free market capitalism argue that free circulation of capital (one of the basic tenets of neo-liberalism) will increase the quality of life of world’s poorest by growing their collective wealth by an unprecedented rate. But yet, we continue to witness the relentless pursuit of short term profit in capital market that has collectively reduce the cumulative capital of the society and has left millions homeless, starved and risking death. For the neo-liberalist, the market is apparently so wise in that it can bring good out of evil. By looking at the way it operates one has to wonder whether is the market suffering from a disease termed ‘economic myopia’. Its symptom includes a long standing problem of economic blindness. To be precise, selective blindness- against the impoverished member of the society, the old, the jobless and the sick. If you are all that they say, it’s your fault because you did not work hard enough. Fuel price is burdening? Well, is not life just tough? Live with it, they will say. According to an interesting article by David Boyle regarding the unbalance distribution of income worldwide, he notes that currencies are changing hands of about $2 trillion a day with only 2% involves trading in real goods and services. The rest is all speculation. This speculative flow increases to fewer people and fewer places and sucks more of the world’s capital day by day. It is so attractive due to its short term profit. In the long run, capital will be pulled away from much needed investment in infrastructures, human capital or scientific research particularly in developing economies. The skyrocketing prices in food and fuel have triggered riots and demonstration in 30 countries. According to an article in a local finance daily, speculators are the primary cause in the recent fuel price hike. As of 2003, assets allocated to commodity index trading stood at US$13billion, but in March 2008 it has gone up to a staggering US$260billion. Much of it is attributed to hedge funds and future contracts stockpiling petroleum, thereby creating an artificial demand in the market causing others to also buy hoping to profit. This results in positive feedback loop and price rises dramatically. As more and more speculative demand fund the fuel market, their price get distorted and its highly unlikely it will return to its original pricing. It has to be noted that the increase has nothing to do with underlying supply and demand and the so called free trade is the culprit, and is strongly condemned. Some political leaders like German transport chief Uwe Beckmeyer blame the spike on manipulation and proposed for a worldwide ban on oil trading by speculator. Nevertheless, judging by the strong lobbying power of these free trade bureaucrats, expect the fuel to reach US$200 per barrel in the near future. Contrary to popular belief, globalization and capitalism in its form today is never going to lift the life of the poor, reduce the income gap worldwide and eradicate global poverty. Instead, we continue to witness how these ‘neo-liberalism’ policies championed by the World Bank, IMF and WTO are forcefully imposed on developing economies which ultimately enrich only certain segment of the society, making the rich richer and the poor poorer. It also suppresses the voice of the local communities; legitimize environmental annihilation and accelerating inflation in developing countries.
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