Sometimes, the debate between those who favour a free market system, and those who favour state-led development gets oversimplified. The debate is caricatured as a binary choice: Wild West, unregulated free markets on one side, and intrusive, Soviet-style government control on the other. But as this contribution from Alex Zarr argues, this is a false dichotomy. Instead, there is a third choice, if you will, the kind of regulated competitive system that has enabled economies like those of Sweden, Denmark, Austria, Finland, Hong Kong, Singapore, South Korea, and Taiwan to achieve historically high standards of living for their citizens. These economies combine competitive markets with sensible and pragmatic government regulation and intervention, striking a balance between protecting citizens’ rights, promoting competition, and allowing markets to do what they do best – allocate capital efficiently. It’s a tough act – it’s all too easy to err one way or the other – but it’s also the very best way we know how to promote human prosperity and comfort. – FD
Collectivism means the subjugation of the individual to a group—whether to a race, class or state does not matter. Collectivism holds that man must be chained to collective action and collective thought for the sake of what is called ‘the common good’. (Collectivism-AynRand)
There is no doubt in my mind that regulated (economic) competition is a social phenomenon that drives excellence, boosts collective benefits and pushes the envelope of innovation and development better than any other economic construct humanity has yet devised. The alternate philosophy, if I give it a name – collectivism, or socialism, or nationalism or any other practice that emasculates the character of competition, has contrasting outcomes, including stagnation, subservience, and dependency.
A range of ‘things’ have touched me in the last few weeks, which have turned my thoughts back to an enduring South African debate; that of capitalism versus collectivist economic models and practices.
I recently watched a movie, ‘The Book Thief’. It is set in the era of Hitler’s Germany. It was not a pleasant place for anyone, except for a few at the helm of the Reich. And, it was not just a nasty place for Jews, Gypsies and Communists. Ordinary Germans lived in fear of each other, their family, their neighbours and the state. Individualism was alien, an enemy, it was banished. It reminds me somewhat of the Old South Africa. Nationalism is not for me. It is a dictatorship by the few morons who use power, force, fear and secrecy to subjugate the many and destroy all forms of freedom.
Since the fall of the Berlin Wall there is first-hand evidence of what a fiasco the Soviet system was. It collapsed under its own contradictions. It was like Hitler’s Germany; a place of fear, corruption, incompetence and servility. It, too, was a dictatorship based on a collectivist philosophy.
I can add a bunch of other collectivist-style systems that have failed to create a better life for the majority of their people; Kampuchea (Cambodia), the Democratic People’s Republic of Korea, the former German Democratic Republic, and Ghana are but a few.
This is not to suggest, in any way whatsoever, that unbridled free markets are the answer either. It is unproductive to set up unregulated raw capitalism as the answer to a better life for all. It, too, fails on many fronts, when left to its own devices. There is no doubt that the 2008 economic travails were a consequence of unbridled greed, unregulated markets and governments being in the pocket of bankers. The huge gap between the super wealthy and the many who struggle at the bottom of the pyramid is a function of too little regulation. However, in the grand scheme of global economic history there has been no force more powerful than regulated free markets to provide a relatively better life for millions.
Most of the contemporary success stories have two primary elements, namely, a hefty dose of free markets, and particularly important, other key freedoms such as expression, individual rights, property ownership, multi-party democratic systems – and secondly, a dollop of government regulation and intervention.
The modern successes in Europe, such as Sweden, Denmark, Austria and Finland have significant government play in the economy. These are not laissez-faire style capitalist states. The so-called Asian Tigers of Hong Kong, Singapore, South Korea, and Taiwan, plus Malaysia, have had strong government involvement in economic matters, both directly and via regulation (The-making-of-an-Asian-tiger).
South Africa has a high proportion of vulnerable people, not because of capitalism, but because of nationalism. The economic solution is not on either lunatic fringe – the collectivists or the capitalists. What we need is the energy of capitalism, the competitive edge it brings to human endeavour. Two characteristics that need to be managed are the propensity for greed to drive behaviours, and the potential for monopolistic practices to arise.
A productive metaphor to appreciate the merits of ‘capitalism with a human face’ is sport. In any sport, there are rules of the game. These are the structures that need to be in place to ensure fairness or equity for participants. Those who choose to participate agree the rules. The other thing about sport is the dynamic of competition. This element pushes people way beyond what they would do if there was no competition.
Competition can only function as a driver of sustainable human endeavour in a social construct where individuals are free to express themselves. The nationalists and communists in our midst are either ignorant, or blindly manipulative. They have no success story to point out. The existence of hugely wealthy capitalists is the best example of where their system has failed. They should be ashamed that so many are poor and they have so much.
alexx zarr: 4 Feb 2014
