A new socio-economic world order-II

Marxism practiced in early 20th Century by Russia, China and some East European countries is one example of distribution of wealth. But the system failed as it created state monopoly leading to inefficiency and lower growth. No one can deny the popular dictum: Human beings does not exert their best in absence of fear and greed. Why one will put extra effort and pressure on his physical and mental capability, when there is no reward for efficiency or punishment for inefficiency. You cannot ignore stick and carrot policy.

The western world managed to stop spread of Marxism in their countries by adopting welfare economy, so that the marginalized population is paid unemployment dole to maintain their basic necessities. 

This helped them to grow at a faster rate than others due to increased demand from the lower starta of the society. But alongwith the growth of western world, there was pressure on natural resources like Crude, Iron Ore and other minerals. This led to commodity boom, when both India and China were growing at fast rate. The distortion in income was much acute in countries of Africa, Middle East and Latin American countries, where the rich having control over natural resources became super-rich with little emphasis on education of masses. The poor in these countries remain marginalised and could not contribute towards the demand of industrial goods. With saturation of demand in Western World, great hope was created from the economic growth of China and India. With China focussing on Export-led growth created huge capacities for industrial goods. 

With growth of India and China tapering down, there was inadequate demand for balancing the excess capacity created. These countries too contributed to inequality in their systems in order to keep labour cheap for competing in Exports. This inequality has failed to create enough domestic demand.

The solution now lies in creating most modern educational institutions and healthcare institutions at affordable rates for masses in not only India and China, but in Africa, Latin America and middle East.

The Western world and developed economies along with rich in other countries need to contribute this for the lower bottom of the society. 

There is no point in talking about globalization, if you do not own the responsibility.

This is needed for their own survival.

The need of new socio-economic world order

   Tamso Ma Jyotirgamay

   Asato Ma Sadgamay

   Mrityor Ma Amritamgamay

   Let Ma Saraswati bestow the knowledge, wisdom, and courage to every citizen in the world to overcome   darkness, dishonesty and fear of death.

  Some very disturbing reports are appearing in economic world recently.

  According to Oxfam, an aid group based in Australia, Just 62 rich persons hold wealth near to total wealth of bottom 50% population of the world. There are also reports about severe recession engulfing the world.   

 Though the two news are not related to each other, but if analysed deeply, the inequality in income and wealth can cause recession. Huge income gap can lead to slowing of demand from bottom half of the population, which has every reason to cause recession. It is the poor, who suffer the most during recession as they cannot afford any loss in their income and reduced spending by them aggravates the situation.

This will lead to severe law and order deterioration with restive hungry mob will move to loot, snatching etc. This  is already observed by pirate syndicates operating from some African countries like Somalia. The Governments world over should start realizing the situation and take corrective measures.
 

Not just the Governments, but the rich corporates should engage in improving the lot of deprived millions in continents like Africa. Any increase in income of the bottom 20% population will increase the demand for goods and services leading to revival of demand and combat the recessionary pressure. Instead of providing free food packets, they should open affordable educational institutions, which will increase their income on sustainable basis and bring them into maintream.  Any terrorist organisation need large manpower to be brainwashed and become a terrorist or extremist. More population coming into mainstream will reduce the extremist activities too.

The accumulation of wealth in few hands has led to poor demand from the larger population. Law of marginal propensity to consume is to be understood by the Governments world over for better distribution of wealth. Rich should not go for philanthropy just to satisfy their egos, but for sustainable development of the society.


 It is high time, the economists and heads of state world over seriously put their thought in the matter to  resolve the issues for establishing new socioeconomic world order. 

While business must make profits, they must contribute a part of it to the society, which makes profit happen.