Anupam- The Dreamer

We all have grown up learning about the theories of capitalism, socialism and communism. These are essentially the economic and political philosophies which determine the economic and political structure of the society. But here, I would like to look at them from the point of view of basic human nature and try to figure out why capitalism succeeded in general, and what led to the downfall of socialism and communism from this viewpoint.

Capitalism is a philosophy which advocates the private ownership of the means of production, which are basically land, labour and capital. When the society transitioned from the agriculture-based economy to the industrialized economy in the 1750s with the dawn of Industrial Revolution in Europe, capitalism was the natural outcome. It is said that “Necessity is the mother of invention”, so capitalism thrived to fulfill the needs of massive amount of production. Basically, the requirements of society were fulfilled by the capitalism model of economy. And here you see, capitalism was in coherence with the human nature of innovation, to improve the living standard, reward to the talented people, and rewarding hardwork. Humans have an innate zeal to improve their life, thus promote innovation in every sphere of life. Then, humans value talent of a person and believe that more reward should be given to the person who contributes more and has more skills. And humans want to do hardwork to get that extra reward. All these conditions were there in capitalism. So, essentially the majority of the values of capitalism aligned with the values of human nature. Therefore, the capitalism was a huge success across many nations in Europe and soon it spread over many of the former colonies of the colonial powers.

But, capitalism also had its own flaws, like the frailties of human nature. Humans in their quest for improvement and seeking a comfortable life, are also greedy and selfish at times. So, the rich capitalists who owned big industries started exploitation of the labourers for making more profits. They treated labourers like cogs in the machines, where the labour was also understood just like a part of the machine in the industry. So, like machines, they were expected to work for 24*7, ignoring the other basic human nature of empathy and mercy. When, this greed of capitalists surpassed the level of tolerance of the worker community, then this gave birth to the forces of communism and socialism in the mid-1850s. These philosophies advocated for violent overthrow of the capitalist class and advocated for community ownership of the means of production. The proponents gave the slogan “From each according to his ability, to each according to his needs”.

Initially, communism and socialism seemed very benign and charitable concepts to improve the condition of the worker class through labour laws, better work conditions, protection against exploitation, but as we can see now, these philosophies in their raw form have almost became extinct everywhere in the world. Wherever, they exist till now, is a very diluted form of the same, and no country in the world is truly communist or socialist. While it alluded to the general nature of humanity to be more kind towards each other, not to be greedy and selfish, and have community spirit, the basic things that led to its downfall  is the lack of accountability and responsibility with the leaders governing on behalf of the community as a whole. As such, the corruption and abuse of power was rampant in the communist societies. Plus, there was no incentive for the people who were talented and hardworking, because there was no reward for their extra efforts. This is a basic human nature that if a person does extra work and does not get rewarded for it either by money, property, land or any other benefit, then what is the incentive to innovate and do that hard work. The people will then be demotivated and become complacent. The society as a whole cannot progress without having a differential system of rewarding the talented, skilled and intelligent people. All these reasons in combination, led to the downfall of communism and socialism.

Now, we are at the stage where capitalism in different forms and shapes is more or less accepted form of economic system, prevalent all over the world. Even the communist China, after the opening of economy in 1970s, has adopted capitalism in various forms in the economic activities. Because if any country wants to go forward, it has to innovate and produce more goods and services, and that is best served by capitalistic model. However, the capitalist model has its share of flaws, which I have discussed above, like greed, exploitation, not caring about the environment and Planet, excessive concentration of wealth in the hands of a few individuals, and money over everything. Therefore, in order to overcome the negative elements in the capitalistic model, we must not lose focus on the basic human qualities, which promote charity, empathy towards the poor and weaker sections, taking care of our Planet, and creating a more just and equitable society. This calls for reforms in the pure capitalistic model, some of which are already being implemented across the world.

Today, the world needs “compassionate capitalism” model, where the capitalists or the industries need to take care of their stakeholders like shareholders, workers, customers, society around the industrial areas, and the environment. Profit-making cannot be the sole focus, and it has to be accompanied by equitable distribution of wealth between different stakeholders. The capitalists have to contribute their bit to protect the communities around them by empowering them through CSR initiatives in the areas of education, healthcare, skill development etc. They must also ensure that the environmental pollution through the industries is brought to the minimum through continuous innovation. The example of some of the richest industrialists who have become philanthropists like Bill Gates, Warren Buffett, Tatas, Azim Premji etc. is very heartening. They are the role models who have demonstrated that the industries can be run in a way that it benefits all the stakeholders. The world needs more of “compassionate capitalism”, which combines the best of human qualities and which incorporates the best things of communism and socialism as well. The need to innovate, progress, develop, focus on talent and skill, on the one hand, and on the other hand, the need to be compassionate towards poor and weaker sections, equitable and sustainable development, and all-round progress of the humanity.

It does not really matter by whatever name our developmental model is called, the important thing here is that the model has to align with the best of human qualities and needs for it to be successful in the times to come. And it has to align with the forces of nature. And no power on the Earth is more powerful than the fundamental laws of nature and the mankind. To align with them, is to be successful and to work against them is a sure-shot and proven model of failure. I hope we adopt the first one.