It’s time for the world to reform capitalism from within

News: Pandemic has highlighted the need to reform capitalism to make it work for everyone and to make the world a better place to live in.

Why there is a need for reforms in capitalism?

Though Capitalism had helped in incentivizing science to develop and produce vaccines in record time, it also disincentivized allocation and availability of vaccines to the most vulnerable.

Jerry Z. Muller, in The Tyranny of Metrics, highlighted how obsession to quantify and accordingly incentivize human performance leads to unmeasurable issues.

Along with pandemic, there are other major problems faced by the world. For example, climate change and inequality.

Though we recognize Climate crisis but without appropriate incentives, capitalism can decelerate the world’s fight against it.

Also, the World Inequality Report of 2022 highlighted the inequitable distribution of wealth, which is considered a side effect of capitalism.

How to reform capitalism?

First, acknowledge and understand the problem.

Second, after understanding the problem, a genuinely unbiased assessment of the successful and problematic aspects of capitalism is required. The benefits of capitalism need to be democratized.

For example, trade-adjusted programs, special and differential treatment haven’t realized their potential due to insincere design, poor prioritization, and a weak focus on enabling conditions.

Third, there is a need to clearly articulate the meaning of safety nets and form mechanisms that can ensure their efficient and inclusive application. This requires inter-linkages between different components of a society.

Fourth, giving importance to the distribution of the economic pie is as important as increasing its size. Hence, we can begin by setting objectives of inclusion, sustainability, and resilience.

Fifth, we need managed competition to maximize value for consumers as well as employers. Hence, the potential of cooperatives and collectives need to be reaped to give power back to people, communities and prioritize equity. For example;

– One, India’s community owned-and-managed enterprise models. These consider productivity and worker welfare as equally important objectives.

– Two, people-first public-private partnerships, which aim to prioritize the interests of people while considering the long-term gains of infrastructure investment for the economy and society.

Source: This post is based on the article “It’s time for the world to reform capitalism from within” published in Livemint on 18^th Jan 2022.