Relax, I am not going to write an obituary of Free Market Economy, at least not for now. It is also not about stock market crashes. Because these crashes are like fore-shocks that precede a big earthquake. But this about Capitalism which is getting old and hence its derivative the Free Market Economy.
The human being owes a lot to Capitalism, it has given human race an unprecedented progress. The kind of progress man has made during last three hundred years is more than the collective development of four thousand years, preceding this economical model. Capitalism is the product of renaissance. It was considered to be the most natural financial system that has ever evolved. It encouraged competition. It let the individual to work hard and compete. This served two purposes: The consumer got the best at less price and manufacturer grew among ranks for the quality products.
So far so good. However, Capitalism also gave birth to free but heartless market forces. Free market forces are the direct result of human greed. A greed that torpedoed the original healthy competition practices. As smaller merchants grew bigger and they thought the less the competition, the more the profit. So they started buying smaller businesses and an erosion started to the element of Capitalism. Individual businesses started to turn into giants and soon they found their surrounding markets insufficient for their profit appetite. This gave birth to colonialism. The smart European nations engaged in a race of finding new markets and hence colonization of the world started. From Latin Americas to Indo-China, these colonials captured more nations and populations and it was all about acquiring markets. They fought the natives and also fought themselves.
The concept of nation-state and nationalism among other things was also the result of a mutual jealousy. A jealousy to capture more markets. The manifestation of this dark side of human being can be seen in the 18th and 19th century wars in Europe which ended up in the shape of horrible and catastrophic wars named as World War I & II.
Capitalism in its intent was to help human being and help it did till the individual businesses grew bigger then the states. After World War II, US became the flag carrier of Capitalism. Till 1970s the state served as a check, to some extent, over the practices of big companies which by then started working as multinationals. ( Pakistanis and Indians can recall East India Company as the first and unforgettable multinational experience ) Later a new doctrine put into practice which was called Reganistic or Thatcheristic economy. Under this doctrine, the state surrendered and profit hungry multinationals got a free hand in their dealings without any kind of state control. The evaporating state control gave rise to fierce Capitalism or I must say a Very Free Market Economy.
This essentially transformed multinationals into semi-governing units which had their presence everywhere in the world, with their own populations. They acquired enough power to make or break governments. And this was not only confined to smaller nations but even countries like US had to follow the dictates of these MNCs( Multinational Companies ). To quote an example, while US had imposed sanctions over Libya and no individual or business could deal with them, being an enemy country. Three US oil companies got an exemption by virtue of their power and clout.
These MNCs are all for profit and just profit. The notion of serving or helping humanity are the deleted words of an MNCs dictionary. They wanted everything, even those departments such as health and education out of the state’s control to maximize their earnings.
The direct implication of this phenomena resulted in concentration of wealth in fewer hands. If we want to measure the sheer size of these MNCs, you would be surprised to know that only GDP of ten countries is larger than the market capitalization of Walmart! Which is followed by 39 other MNCs and at 50th position we get some country, Norway. This huge size of the companies gave birth to the notion of Trick Down Economy. This essentially means that first deep pockets needs to be filled when once those are filled then some coins might make some rattle on the road, for general public.
I intentionally gave a genesis of MNCs and Free Market Economy. Now these organizations are so huge but it will never reach the contentment and hence more wealth for few and more poverty for masses. This system is now getting fastly into non-sustainable phase. Because when the same MNCs does riskier investments and head for collapse they expect to be bailed out by the public money, the same public which kept on looking towards them for trickle down stage. Not fair. World’s 70 percent wealth is in the hands of 400 individuals and companies. 4.5 Billion people around the globe are passing their lives below the poverty line. This huge disparity is showing the current system has become rickety and needs to replaced.
The recent meltdown of Wall Street can be thought of blessing in disguise. We are witnessing a huge change. A change that is going to put back state control in the affairs of the empire of MNCs. A reckoning to the era of Not-So-Free Economy. If you recall, in late 90s, their was an attempt to divide Microsoft into two companies, to curtail the monopoly, however it couldn’t succeed. I wish it would have been successful and lot of start ups with brilliant ideas might have escaped the acquisition by Microsoft. It is always prudent to make more Bill Gates albeit with less money then to let the wealth be concentrated by one!