Academic journal article Journal of Competitiveness Studies

Global Capitalism and Developing Countries

Academic journal article Journal of Competitiveness Studies

Global Capitalism and Developing Countries

Article excerpt

Understanding the capitalism system and how it functions should be part of public discourse. Viewing capitalism as merely an intellectual exercise may prevent renewal of the system and deepen the gap between those who design market policies and the majority affected by the system on a daily basis. To understand how the capitalist system operates is necessary in light of market imperfections and the conflicting outputs of the system. While the system enables a wide segment of the population to have access to opportunities, there is a tendency to concentrate wealth in the hands of a few. Furthermore, market temptations and manipulations stimulate deception, corruption, and misdeeds.

Though, generally, there is widespread belief in the basic principles of capitalism (free choice, free competition, private property), this does not mean that the system is immune to turbulent and periodic crises. Indeed, in any society, these principles are often violated by governments, making it impossible to defend the proposition of the existence of pure capitalism. The interference of governments and powerful corporations in the market is common both in developing and developed countries. However, this interference in the market mechanism can weaken any economic system and distort the idealism and practicality of the system.

The term 'global capitalism' has different meanings to people around the globe. While some view it strictly as widening economic opportunities, others focus on exploitation and the loss of a traditional way of life. In recent years, the debate on global capitalism has been intensified, especially by those capitalists who believe that global capitalism is taking a turn that is not benefiting people equally. George Soros (1997), for example, has argued that capitalism has led to a period of disorder stating, "Laissez-faire ideology ... does not recognize the need for a world order. An order is supposed to emerge from states' pursuit of their self-interest. But, guided by the principle of the survival of the fittest, states are increasingly preoccupied with their competitiveness and unwilling to make any sacrifices for the common good." Soros has asserted that the possibility of an eventual breakdown of our global trading system is high.

Writing in the Harvard Business Review, Barton (2011) warned that the frequency of economic crises has enlarged the gap between business and society. He stated, "Recall that trust in business hit historically low levels more than a decade ago. But the crisis and the surge in public antagonism it unleashed have exacerbated the friction between business and society. On top of anxiety about persistent problems such as rising income inequality, we now confront understandable anger over high unemployment, spiraling budget deficits, and a host of other issues." Barton suggested a deep and thoughtful change in how capitalism is practiced. Otherwise, he projected, the future will not be a bright one. Barton went on to write that "If capitalism emerges from the crisis vibrant and renewed, future generations will thank us. But if we merely paper over the cracks and return to our pre-crisis views, we will not want to read what the historians of the future will write. The time to reflect--and to act--is now."

Irrespective of criticisms of capitalism, the system has contributed to human prosperity, especially in the West, lifting millions from poverty in emerging economies and, most importantly, deepening hope among a large segment of the population. However, what should not be overlooked is the fact that capitalism has, like any human-made system, experienced ebbs and flows. Without any meaningful action, the future of capitalism is not as positive as we may wish it to be. There should be courageous efforts to confront the ills of capitalism and generate incentives for solving ever-emerging human problems. In addition, the western approach to promoting capitalism and forcing it on traditional societies needs to be curtailed as it can deepen societal fragmentation, spur the loss of a cherished way of life, and risk economic prosperity. …

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