[This article I wrote is dedicated to all the Third World Nations regardless of their locations and ethnic background as long as they want to believe in the true potential of Capitalism and its holy endeavour in bringing wealth to close the gap of income differences between the “have” and the “have not”]
By: Ahmad Syah Ejaz Bin Hj. Ismail
Never before were the new developing nations or also known as the Third World Nations getting perplexed and confused on how to manage their economic resources for the betterment of their countrymen. These nations [Third World] were renowned as the main tap of natural resources which can be capitalized and exploited in bringing wealth to their citizens. But it is uncanny for the economist in explaining the failure of their managers i.e. the government in charge to mobilize these resources in bringing more wealth and decrease their interdependent on the core nations [developed] for productivity capital such as cash flow, technology know how and direct investment.
It seems that the interdependence of these new developing nations is infinite towards their former colonizers for survivability. The answers are not that such symbiosis between these two civilizations is a win-win situation but a foreboding. The essence of true Capitalism emphasize on the importance of mutual agreement and voluntary exchange, but with the implementation of WTO must abide rules, the new developing nations has no other options but to abide to the new trade regime just to remain alive. The West and the WTOs’ supporters have failed to see the latent problems this new economic regimes bring such as Free Trade Agreements (FTA) and Bilateral Trades (BIT).
Previously, more than 30% (sic) of the contributing factors of the developing nations success came from countervailing duties (CVDs) and anti-dumping (ADs’) measures not just for the sake of protecting domestic infant industries from harsh competitor of the established economic players but also from un-fair trades between giant business players that were backed up by billions of capital dollars, not to mention foreign hedge funds (which were unknown based). These profits which were gained from CVDs’ and ADs’ were used productivity capital for the government to create national players and funding the educations of their countrymen. It is true that Capitalism encourages maximum profits, but such total abolishment of CVDs’ and ADs’ among the new developing nations will only decrease the much needed funds for their development.
Eventually, their interdependent needs towards the core nations will be infinite and prone to be the subject of the trades’ players. It happened in Latin America when a sovereign nation heed to the instructions of business player [banana republic].
There are critics among academics on how the new developing nations need to scrounge for funds in developing their industries. The most important factor in Capitalism is intelligence. One must bear in mind that billions dollars of capital in central banks is not a guarantee of an economic success. There must be adequate intelligence for these funds to turn into a productive capital. In Capitalism, one can collect the needed funding through speculations. I believe almost 50% of world turnover and profits were based on just mere speculations. But the profits forecast and future perceived turnover must be followed by actions and physical development. The idea of perceiving profits with inaction will only create a disaster in the following bringing down the whole system of economic activities.
The success of speculation is an open secret. For Capitalism, the capitalist government can capitalize on these method in bringing wealth and opportunity. But one needs to be very being careful of not excessively miss abuse their intelligent and skills in speculating growth thus speculation can bring enormous wealth and also dreadful disaster. Not all good things will last and the planner must realize the importance of mobilizing the funds which he got from speculation to a productive capital. Discipline is the main essence in ensuring these enterprises to succeed.
To be continue...
The Great Crash – 1929, by John Kenneth Galbraith. Mariner Books, 1997.