The capitalism vs socialism debate

Capitalism and socialism, including their precursor and associated ideas, are a part of the economic and political legacy of societies and countries. Capitalism lays emphasis on individual initiative and
autonomy and socialism on societal collective needs and reaching welfare to the weak, poor and disadvantaged and includes working for distributive justice.

Obviously, both have their validities and significant contributions. As it has unravelled all along, both have contributed to the growth and evolution of society, practical as well as theoretical; varieties and huge quantities of goods and services have been innovated, produced and supplied to the ever growing populations of the world.

Capitalism is associated with laissez faire and enables the individual to benefit from and garner the fruits of effort to himself, even though the state has an enabler role increasingly. As the great economist Adam Smith observed, the baker, the butcher and the brewer help the society fulfill its needs out of sheer self-interest and not so much as public service or philanthropy. But we have to concede, society and economy have grown more complex and state intervention through laws and institutions has been more necessary now than ever, inevitable to the capitalist and to the common man.

Capitalism has been known to have been reckless regarding the exploitation of nature and the hapless unprivileged. Economic and social inequality and destruction of nature, depredation of resources, intra and intergenerational injustice have been recognised as the consequence of capitalist free play.

In the context of finance capitalism, it has virtually grown into a casino, quite ignoring the cause of production and consequent distribution of incomes. Despite anti-monopoly and environment protection laws, capitalist control of resources and policy implementation, including electoral outcomes, have been acknowledged.

Capitalist orientation has taken a new articulation since the 90s in India; liberalisation of trade and production, privatisation and globalisation has been the modern clothing of capitalism. No doubt this trend has vastly encouraged individual enterprise. Despite consequential increase in growth, including widening the tax base and collections, the poor have remained considerably unbenefited. They are also beset with increased difficulties regarding institutional access to health, education, skills, capital and social health and old age security. This challenge of halting social benefit is basically political and concerns with distribution of power regarding the economy and policy, including democratic autonomy, accountability and decision making.

Traditionally, socialism has been the answer even from the freedom movement days in the form of the Congress Socialist party, the niche from where the younger leadership emerged in 1930s. This socialist formulation — pro-poor stance in the ownership of capital, state intervention, licensing, control of monopoly, laws to protect labour and to ensure minimum wages, access of land ownership to the poor farm labourer, planning in allocation and harnessing of resources, and priorities regarding projects and programmes, ‘dirigiste’ or state controlled deployment of capital from banks etc — has been an abiding feature of state policy, generally described as socialism.

As an economy advances, newer skills are needed and are virtually imported from all over the world. But the poor are systemically unable to cope with this in the sense of employment opportunities and stable and reasonable incomes. So employment guarantee schemes have emerged since the early 1970s as a socialist remedy.

Capitalist persuasion or influence has termed this employment guarantee, the MNREGS version particularly, as wasteful, contributing to stagnation and misuse of the already scarce resources. This socialist measure on the other hand has benefited the poor manifestly.

Poverty has steadily reduced and rural girls have been put to additional years of schooling and drift migration into urban misery or uncertainty has decelerated. Inter alia these anti-poverty programmes, like MNREGS, have contributed to increasing middle class ranks vastly to nearly 70 crore people.

Development is an ongoing dynamic process and needs continuous tweaking with regard to whom it is intended for, as both beneficiaries and participants. Capitalism as an engine of individual initiative, entrepreneurship and harnessing labour, technology and capital has its importance. Equally, socialism as a device of participatory development and administration, of reaching benefits to the bottom most rungs of society, as a propeller of distributive justice cannot be ignored. Capitalism and socialism are inevitable parts of the legacy of mankind’s development history.

(The writer is a former professor of Maharaja’s College, University of Mysore)