Latasinha's Weblog

Social and political Values and Systems in India.

Collapse of the ideology of socialism

Today socialism has its usefulness only as the vision of an ideal society. Socialism, in its effort to control excesses and transgressions of the private sector through state capitalism and controlled economies collapsed like a house of cards all over the world.

The problem of socialism is of performance, not of faith, and the price paid by the nations for this faith has been efficiency and its future prosperity.Almost all the socialist nations had made six specific mistakes: –

  • It adopted an inward looking, import substituting path, rather than an outward looking, export promoting route, thus denying itself the chance to share the world’s prosperity of the 70s and 80s,
  • It set up a massive, inefficient and monopolistic public sector, to which it denied the autonomy of working,
  •  It over-regulated private enterprise, thus diminished competition in home market,
  • It discouraged foreign capital and denied itself the benefit of technology and world class market,
  •  It pampered organized labour responsible for lowest productivity of labour and capital, and
  • It ignored primary education at the cost of higher education.

 The inherent weaknesses of socialism gave to the public want, deprivation, fear and dissatisfaction, which raised doubts in the minds of people allover the world about the efficacy of these principles. The whole atmosphere became suffocating once again for different societies.

Around 1990’s, yet another wave swept the world. Surprisingly, this time, it was led by capitalist ideology, which was supposed to have been defeated by now.

Since 1979, under Margaret Thatcher’s supervision, British Government that had a huge inefficient public sector and a heavily taxed private sector, started reducing its involvement in the economy boldly. Tax rates were cut and simplified. Her success fostered a fundamental change in people’s attitude towards the role of government.

Another example is of New Zealand. Alarmed that the country might finally become bankrupt, the Government, slashed welfare spending and sold off state owned enterprises running at loss. Price and wage controls were lifted, subsidies and trade barriers were lowered and Government employment was trimmed. The result was that New Zealand reduced its inflation to below 1% very soon.

Even communist leader and USSR President Mr.Gorbochov admired and watched her actions with interest. The collapse of the Soviet Union as socialist super power in 1990 effected adversely the commitment of the world to an egalitarian social order and towards socialism “as an ideology and a program”. One after the other, democratic countries started opting for liberalisation.

The shift from economic control to economic freedom took the shape of a larger global movement engulfing western democracies, former communist forces and almost all the developing nations. After experiencing destructive effect of tampering with market forces, many Western and Asian democracies switched over to free economies.

Economists collected the data of the yester years from the world over and concluded –

  • Those countries, which promoted private enterprise performed better than those dependent on state enterprise, Those nations, which encouraged foreign investments, did better than those who discouraged it,
  • Those nations, which opted for an export path with free imports or low tariff did better than protectionist nations,
  • Nations encouraging productivity through right labour policies did better.
  • The countries investing in primary education were better off and had brought down their population rates. Japan, Korea, Taiwan set the example and Thailand, Malaysia and Indonesia followed. Latin America, Chile, Columbia, Costa Rica etc., pursued the same success path.

 Now free economy is destined to shape the world of 21st century. Mr. Paul Johnson says very correctly, “the question, future historians will ask, is not why politicians and public opinion turned against the welfare state, but why it took them so long. Indeed, if ever a theory has been tested and disapproved, it is that of the all powerful, all benevolent state – a theory, that has led in practice to violence, to the death of millions of people and to the scorching of the entire economics and environments. Never before mankind has created such an all consuming monster. In both its totalitarian and social democratic versions, it has proved efficient in nothing except a capacity to squander resources and lives”.

September 3, 2009 - Posted by | Uncategorized | ,


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