Capitalism as a Solution to Third World Countries
The third world countries are mainly those developing countries which are still not on the primary notch in terms of their economies. These countries are mainly from the continents of Asia and Africa and are followers of mostly a mixed economy, i.e. a concoction of both socialist and capitalist. Continue reading to know more.
The third world countries are mainly those developing countries which are still not on the primary notch in terms of their economies. These countries are mainly from the continents of Asia and Africa and are followers of mostly a mixed economy, i.e. a concoction of both socialist and capitalist.
To upgrade these third world countries to higher levels, a system of complete privatisation deems necessary. As we have all witnessed in the past, Socialism causes undervaluation of goods as things that belong to everybody do not really belong to any body. People tend to over-exploit public amenities/goods which lead to a degraded valuation of the public assets. In developing nations like India, Philippines, Brazil, Mexico etc. it is very essential to recognise the need for a pure capitalism in order to fasten the development process.
Many people argue about class struggle and inequality of distribution of income and wealth in capitalism, but that is indeed a myth. Capitalism does not make the poor poorer, as capitalism is only a system which makes it possible for a person to fit in where they can offer their best, for a price that suffices at least their basic needs. It is a trade between the one who is offering and the one who has to offer, with the finest possible arrangement.
The first word that hits our mind when we read capitalism is ‘profit maximisation’, which is why we refrain from the idea of pure capitalism. Profit is undoubtedly a driving force of capitalism but it in no way is the only driving force on-board. Capitalism works on rigorous competition, and can surely never be won entirely through a profit surge.
The third world economies are in dire need of a capitalist society along the breakthrough of dynamism. Vigorous activities and progress is the key to a level up in the game of the battle of economies.
Poor nations tend to remain poor due to the lack of capitalism and are not actually poor because of the particular system. The question arises why capitalism never flows to such countries, which is why we confuse capitalism with poverty. The reason why capitalism fails to flow in poorer regions is due to the lack of inputs in the area for a successful set up of production. Capitalism indeed, is a driver of higher productivity, contented people, and prosperity.
The developing countries – especially the poorest in the lot – face issues such as high unemployment, social unhappiness & distress, heavy debts, almost no proper facilities related to health, education, sanitation etc. These problems, if analysed in depth, could be solved through a market economy. When there is a system solely dependent on the market forces of demand and supply, there is automatically an equilibrium that prevails. When privatisation takes over, companies want to produce more, so they hire more, increasing the employment levels, discharging money into the economy with regular incomes to people, leading to lesser debt burdens which cause a decline in social distress and increases joy amongst the citizens. Now the question arises – how shall capitalism flow to the poorest of the countries? The answer is – through self-sustainability and substitutability; or as I would like to call it the SSS algorithm. When a nation decides to be self- sustainable, if not fully but to its maxima, it finds out ways to create everything within their own borders by choosing alternatives and substituting the inputs which are not available by the inputs which are. That is how capitalism can actually make its place even in the poorest of the poor nations; it would not be as easy but if and only if they want to come out of the poverty, will they be able to climb up.
As far as the already developing nations are concerned, it is not that hard for them to sustain a full market economy. The nations which are already in the process of development have structured markets, good competition, required inputs, productive workforce, and people willing to work harder and join the productive workforce. All they have to do is to adopt the idea of complete privatisation and implement it before it’s too late for them to be called as first world/developed economies.
Let us not forget that by privatisation we do not mean complete foreign power in a home country. The resources should be reasonably distributed and foreign investments shall come through in a rational way.
The government has a major role to play in capitalism, more than we think it does rather than only owning public assets. But their contribution shall be minimal and only in the aspect of making sure that capitalism does not ruin the equity. It has to be a capitalist’s, or as we call it, a “market economy’s” government’s responsibilities to provide for the basic facilities like that of health and primary education to the poor. The government shall be on a lookout for a tax system strong enough which is able to provide for the poor’s facilities in an economy solely dependent on capitalism. Once the poor’s attain their basic education, a system shall be generated wherein the poorer sections get equal opportunities to compete in the competitive market. The poorer regions can always have alternative industries which are best suited for a location and income level like theirs with the required inputs, therefore, again promoting a market economy, with prices best suited to the particular group. There is no denying of the fact that people shall definitely get what they work for in addition to equal and fair opportunities.
Whereas, the state shall also keep in mind that the tax operations should be sensible, and not aggressive. If the money earned by the people who actually worked hard for it is taken advantage of, for the people who did not even do their fair bit, it defeats the entire purpose.
The market shall focus on development whereas the state shall focus on equity through development.
The state shall only intervene when it needs to make a market situation better off or dilute a single enterprise’s market power to lessen the exploitation and avoid a monopoly.
In my opinion, capitalism is the way forward from a developing nation to a developed nation because we have seen socialism tremble down and a mixed economy making the financial system not move any further because of the ill effects that come when there is a state interference, let that be due to lethargy, corruption, misconduct, or a ‘taken for granted’ attitude.
It was not very long back when companies had to ask for the state’s permission to shut down because of insolvency. Most of the times, these companies were rejected any closure and were instead supported by subsidies and tax concessions while they still ran with numerous employees in hand but not a single penny in their banks. Such a move brings incompetency and under-utilisation of resources which could have brought about a change in the economy otherwise. It makes the people less productive because of the surety of income that leans in and the company less worried about market competition. In the end, it only leaves the country as a whole, with under developed systems and outputs which are below standards.
Socialism can only make a country better off if and only if it is not backed up by misconduct and/or corruption, which is highly not the case everywhere. It gives rise to what is often known as ‘Tragedy of Commons’ and is a better alternative in very small economies. We commonly see great economies running as a mixed economy where we also often notice how the public sector is mostly in debt, inefficient, or out of order. The essence of this notable occurrence sums my analysis.
Every system takes its own time to prevail and prosper and I acknowledge the fact that things are easier said than done, but if we do not take a drastic measure today, such are the countries who will always come under the category of ‘third word nations’ despite having the potential and resources.
I, in no sense mean to favour a particular type of economic system for every system has its own flaws and strengths, but as a person of high concern towards the developing economy like that of ours, India, which has been on the road of development for over 70 years now, feel that it is time that we change our perspective towards something bolder and stronger!
The content of this article is completely under the subjugation of my personal opinion according to the best of the knowledge I possess. Any bigotry towards a particular individual/group of individuals is not at all intended
As writing is something I am the most passionate about, I do not restrict myself to a particular niche. I am open to all domains - from Business, Economics, Finance, to Human Resource, Marketing and a lot more. As a content writer, I always follow the deadlines and make sure that my content is free from errors and plagiarism. Being a person who loves to learn, I am always keen on taking up different projects, conducting the required research, and learning about the same. I am very open to feedback and/or positive criticism, and believe that life is a constant building process.