New Capitalism and Growing Inequality as a Menace to Humanity

by V. Mathew Kurian

Capitalism as a socio-economic system arose in Europe initially as ‘merchant capitalism’ and subsequently through a technological revolution metamorphosed into ‘industrial capitalism’. ‘Colonialism’ was the main force behind the establishment of capitalism. It was also instru-mental in imparting ‘vertical’ and ‘horizontal inequality’ in the world. However, there was reaction to colonial capitalism which resulted in ‘socialism’ and ‘political decolonisation’. But ‘economic colonialism’ persisted in the world in the form of ‘neo-colonialism’.

Around the middle of the last century onwards the world witnessed the rise of a new technology called the ‘ICT revolution’. It enabled capitalism to get transformed into a ‘globalised’ and ‘financialised’ system. The main menace of this is growing inequality. Pope Francis has opined that ‘this economy kills’.

In the neo-liberal era the world’s wealth and income have been concentrating into the hands of a few. According to Oxfam statistics, in 2010 the total wealth of the richest 388 persons was on a par with that of the bottom half of global humanity. In 2017 the top richest eight persons’ wealth equalled that of the bottom half. Bernie Sanders, an American Senator and a former presidential candidate, remarks that 0.1 per cent of Americans enjoy 90 per cent of the country’s wealth. The Occupy Wall Street protestors declared that the present American economy functions for the benefit of the top one per cent at the expense of the 99 per cent.

According to the latest Human Development Report of UNDP, 55.3 per cent of Indians are under multidimensional poverty. In Human Development Index (0.624), India’s rank among 188 countries is 131. In Inequality Adjusted Human Development Index the value is only 0.454.

In the recently published World Bank World Development Report (2018), 172 million Indians are extremely poor. So India is the home for 24.5 per cent of the world’s poor. The latest Oxfam Study Report points out that the richest one per cent of Indians now own 58 per cent of the country’s wealth. In their study entitled ‘Indian Income Inequality, 1922-2014: from British Raj to Billionaire Raj’, Lucas Chancel and Thomas Piketty observed that the top one per cent of Indians owns 22 per cent of the country’s income. In a newly published report by Development Finance International Inc. and Oxfam on commitment to narrowing down income inequality, India’s rank is 122 among 155 nations. There is also concentration of landed wealth in India. Seventy per cent of India’s rural population is landless and only 30 per cent owns land. The persistent agrarian distress has been making the life of the majority of people miserable. Since 1995 more than three lakh farmers in India committed suicide. Gender inequality is another dimension of the problem of inequality. According to The Economist (July 7, 2018), the Gender Wage Gap in India is 32.6 per cent. Though in terms of GDP, India ranks sixth in the world, the vast majority of Indians, due to multi-dimensional inequality, are entrapped in ‘immiserisation’ and ‘poverty’. In terms of Happiness Index, India is placed among the world’s saddest nations.

When neo-liberal policies were pressed upon the whole world mainly through the so-called ‘Washington Consensus’ by multilateral institutions like the World Bank, IMF and WTO, the prediction was a just and stable global politico-economic system. But the global recession along with the financial crisis betrayed the neo-liberal claim. This was largely due to the change in the nature of global capital from ‘productive’ to ‘fictitious’. Trillionaires like Jeff Bezos, Bill Gates and Warren Buffet enhanced their wealth not by creating ‘real value’ but by engaging in speculative business. This sort of a ‘capital’ makes the global economy unequal, unstable, unproductive and unsustainable. The world becomes too vulnerable with the rising craze for automation, robotisation and artificial intelligence.

In this predicament, we need an alternative economic system which respects human life and genuine human freedom with distributive justice. So, socially committed people from all parts of the world have to think and work together for the establishment of such a humane economic system.

Dr V. Mathew Kurian is the Joint Director, K.N. Raj Centre, M.G. University, Kottayam.