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Thursday, 20 September 2007

The Entrapment of Feudalistic Ideas Among the Third World Nations - Regulating the Economic Market - Part 2

By: Ahmad Syah Ejaz Bin Hj Ismail

I would imagine most of the Conventional economic theorist wouldn’t agree with me to accentuate that Capitalism do bring and generates freedom or liberty either through economic activities or socio-political being of ones society. One of the great traditional economic thinkers, Joseph A. Schumpeter perceives that only Socialist system of belief can bring equality onto the society and thus distribute wealth among the people.

I do agree with that views to an extent, but in adopting the Socialist idea for the long run will only bring more harm than good. Socialist state is only matters if the masses never taste the benefits of the Capitalistic world and in road to create an intelligentsia among the society for the time being ensuring Capitalistic market to be fully operational supervise and managed by the intelligentsia of the masses usually seen as the middle class.

Capitalism will surely fail if it was driven for profit per se as was seen by the Marxist and Schumpeter in the early decade of the 20th Century. The reason being is that if it was driven for the sake of seeking profits, it will only create a future of “Creative Destruction” as such had been conveyed by Schumpeter. But the modern experience of supervising the markets, mankind had develops a lot of way in regulating Capitalistic market.

Capitalism is changing and evolving especially during the Cold war period where trades and movement of world products is shortened by the development of steam ships and cargo air carrier. I do agree that, had it not been for socialist idea (Not Marxist and Communism because both were very much different from the Socialist economic belief), certain continent of the world might still be under the colonization by the first world. But along the way, the Socialism belief had brought an approach of monitoring the economic market thus avoiding “Creative destruction”.

It can be testify by one major case when the prices of the world’s oil reached it highest peak, but Greenspan point out that America wouldn’t feel the effect of it due to the development of technologies in fuel efficiency. Mankind had created a way in dealing with the problems faced by the Capitalistic world in an un-conventional way.

Views expressed by the Capitalism pessimist that economic market of the Capitalistic world served for the purpose of seeking profits had been challenged in the hands of intelligentsia who managed them (current market). It’s an anti-thesis of the free world prosperity and numerous supervision and regulating bodies set up by the government to overseeing the economic market of the Capitalistic society. Encouragement by the government for the business seeking companies to get involve in the socio-economic development of certain society is also evidence that the day of the traditional economic trade is over.

Business organisations and capitalistic companies now hold the responsibility such as traditional state government. The business trade and commerce which upholds the public interest will be permit to operate in the Capitalistic world through government regulations. Mankind never experienced such situations where government and regulatory bodies does play a major role in business dealings. Ones only need to be smart to outsmart the other competitor in a good spirit of a competition in the free market. There is no more anarchy in the Capitalist business for the whole world.

At variance from the Marxist point of view where it promised of what they can’t deliver, the Capitalist state proved to deliver much more of what they had promised. The power and latent strength of Capitalistic world is not yet fully seen by economic experts where money can be make out of thin air without compromising the public interest. Capitalism had created millions of opportunity for the society either job, profit making, great health care, efficient services and to an extent and able working government pressured by an efficient private sector.

Incompatible from the Communist beliefs that stating future scenario of manipulations by the Capitalist state is considered imminent, the opportunity brought by Capitalism economic system such as free trade and individual ownership is perceive as a threat to segregate the masses into different classes of the have and the have not. The coinage of the Communist and Marxist dogma itself will eventually suppressed the proletariat by the Communist political bureau when they will be vested a veto on who can play high politics and who can play low politics unto the society they’re in. They will rather emphasize on what can’t be done in the state rather than what can be achieved.

The only apprehension that was faced by the society living in the Capitalist state is the suppression of the Capitalistic power unto the society. Will the Capitalistic bodies such as business companies that was driven by profits of certain products will venture into some kind of economic activities (such as anti-competitive behaviour) that will not only affecting the consumers but also the market movement hence impinge on other private companies in a very bad way such as relentless profiteering, abusing of the dominant position or swelling price hiking.

Much had been argued before by traditional economic theorist and I would like to paraphrase of what Mr. [Milton] Friedman expressed on such matters. “Even though the bad effect of intervention by the invisible hand will disturb the flow of the market movement but one cannot deny the crucial intervention of such regulatory body (such as the Free Trade Commission) to rectify imbalance happen due to the abuse of the Capitalistic power in the economic activity of a state”. I see it as an act to avoid Creative Destruction anticipated by Schumpeter at the early of the 20th Century where such a regulatory body in the Capitalistic state is seen as blasphemy unto the Capitalism belief.

It is understandable when ones see that great economic theorist such as Schumpeter failed to see the set up of a regulatory body in a Capitalistic state such as the Trade Commission is important in monitoring the market flow and strengthening the public interest in the emerging power of Capitalistic business organization. In the history of the Capitalistic market economy, none had experienced stoutly the power of the government intervention (the regulatory body) in ensuring market feasibility hence at the same time protecting the public interest.

It was once considered as an anti-thesis to the Capitalistic beliefs that the regulatory body will not harm the market flow so much so that the Communist state was trying to do the very same thing in experimenting their own market at the cost of millions innocent life. The regulatory body as such in the Capitalistic world will have the burden of managing Capitalistic market ensuring it will move parallel with the public interest and mankind prosperous wealth. The reason that the Capitalistic regulatory body is much more efficient and workable compared to the Communist regulatory process is the intelligentsia that works behind such a body.

There are countless views (especially by the Marxist and Communist believers) put into words by conventional economist which put emphasis on how much Capitalism beliefs will only focus on making money, manipulate the workers for personal gain and focusing on profits per se. But the current situations nowadays which clearly proved that is the Capitalist body if were regulated or watched by the higher entity such as the government, they (Capitalist apparatus) too will venture into the social development of a country. They have started to invest and bring wealth into part of the scarce region with wealth in many forms.

What the Socialist believers failed to see is that the Capitalist body is trans-boundary and amiable to move freely without the interjection of a state. As what had been expressed by Alan Greenspan, the nationality of a company is not important compared to the well being of the people affected by their business activities. Whereas one of the major defects of Socialist state is that they cannot venture into foreign market without carrying the flagship of a nation. Unlike the Socialist driven economic apparatus, there is no allegiance into any country by the Capitalist organization. They are more freely to reap the benefits of world’s wealth ignoring the bureaucratic hindrance that had to be passed by the Socialist economic apparatus.

The government i.e. the regulatory body must develop a process to ensure that the increasing power of the Capitalistic apparatus will always be fulfilled by sheer responsibility in concomitant with the emerging power of ones market onto the public. As what had said by Schumpeter, “Great power without responsibility is always dangerous”. Absolute power will leads to absolute corruption not just only in the big apparatus such as the government but also among the private sectors such as happened to Enron.

Apart from regulating the market, the government will have the burden of enticing the Capitalist apparatus to get involved actively in developing the socio economic of a society and not just concentrating taking opportunity arising from the free trade or making profits squandering the sources of a particular continent. Thus such a reciprocal behaviour will create a better world compared during the first year of Globalisation of the market is suggested.

With the success of the Capitalistic idea, there will be more power enthrust onto the Capitalistic apparatus. Not only that, the bad effect of it if not fully monitored will create a major rift and wide gap between the have and the have not. Prime Minister Mahathir once emphasized that the war of the future will not be fought on the basis of ideology, but between the have and the have not. The crucial role played by the middle class in moulding the socio-economic driven Capitalist society is indispensable. With the emerging power of the middle class which played active roles as a government executives providing technical and intelligentsia capabilities to preserve the status quo of the Capitalistic economic business.

To be continue…

3 comments:

afif said...

Your writings has been a quite evidence that you're right winger. It is a tradition among right-wingers to support for free market capitalism. Interestingly, you believe in capitalism just as much as you believe in economic regulations by the establishment. Most ring winger regularly however oppose the intervention by goverment even through regulations. The British Conservatives, American Republican, even Mr Friedman himself has make the struggle of oppposing regulation as part of their much pride political ideologies.

While you, a government servant, wrote that free market has to be regulated. Ironically most people who support the laissez faire system - which majority of them are businessmans, professionals and investors in private sector - believe that the government has no business in business.

Bro, this regulation thingy is leftist tool ok. The Dems of United States of A always wins the hearts@votes of the trade unions simply by weaving more and more regulation into the economy. While their conservative Republican counterpart losing unions votes because of doing the opposing way. It is confusing where you actually stand for? You talk too much of subsidies and regulations - which are left loony and liberal whiner favourite weapons - while smartly criticize them at the same time.

You idolize Tun Dr right? That man had largely regulated our national economy, he opposed Tunku Abdul Rahman policy of free market system, has no love for free trade friendly nations such are America and Singapore. What's more? Have little thought about how much billions of ringgit has he subsidized the economy during his reign. Do I need to tell you that subsidy and regulation are not the aims of capitalist supporters?

Here where I stand: businessman knows his business best, there is no need for much regulations. Well, there may be some aspect we need them such are the aspect of environment. However I believe regulation should be keep as minimum as possible. Resources are far more efficiently distributed by the private sector in the economy, regulation will only disturbs the beautifully natural flow of resources.

Government that governs least, governs best

Tun Teddy said...

I'll answer your views in my next writings (final one on the entrapment of the feudalistic ideas). Watch my space tomorrow.. thanks..

perhaps u can views or read something about the FTC and Anti-trust law by the US government.

cheers..

tun

afif said...

I'll get some reading on FTC and anti trust law. I expect that you will want to elaborate the significance of regulation in breaking up monopolies practice and promoting fair competition.

Thank you

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