Human values should matter in capitalism

THE Ukraine crisis, the migrant workers’ tragedies and the farmers’ agitation —these are failures of equitable governance in recent years. Access to hydrocarbon resources, which Russia has aplenty, and which other countries need, is a fundamental cause of the Ukraine war. The principal beneficiaries of violence to settle disputes are producers of arms. Prolonged violence benefits them, whichever side wins or loses, while people suffer around the world with disruptions caused by economic sanctions — which are weapons of mass disruption — imposed by powerful countries.

Climate change is an existential crisis threatening all nations. While they fight wars among themselves, nature that nourishes all continues to bleed. At the heart of the climate crisis is the excessive use of hydrocarbon energy to increase economic productivity. The history of economic advancement, higher labour productivity and increase in incomes is umbilically tied to the replacement of human energy in agriculture, industry and services with the energy obtained from hydrocarbon sources, and with replacing human intelligence with artificial intelligence.

Those who own the sources of natural and human energy can accumulate great financial wealth. Wars, hot or cold, among rich countries to control access to the abundant sources of hydrocarbon energy in the Middle East continue to throw countries into turmoil, while the ownership of resources there has also enabled some autocracies to become supremely wealthy.

Capitalism’s history is the story of an ongoing struggle of owners of capital to convert human labour and knowledge into the property of capitalist enterprises. Slaves and indentured labour transported across continents have enabled great fortunes to be built for centuries. Migrant labour, with limited rights for decent treatment as human beings, continues to create wealth for agriculturists in the USA, and in India too.

With the abolition of slavery in the Southern United States, plantation slaves became free to earn money in terrible working conditions in factories and butcheries in the Northern United States. In the UK, coal miners lived short lives, working underground to provide fuel for the ships of merchants and the British Navy that sailed across oceans to build a vast empire.

Labour unions in the UK and the US demanded decent treatment of workers by capitalists. Laws were made to protect the rights of workers for adequate wages, and to form associations to protect their rights against the power of capital.

The tide turned against workers in the latter half of the 20th century. American economist Milton Friedman declared that the purpose of a capitalist business enterprise must be to use resources efficiently and make profits for investors. In this paradigm, the natural environment and human labour are merely commodities to be processed within the corporate enterprise.

‘Iron Lady’ Margaret Thatcher defeated the unions. Former US President Ronald Reagan said the government was the problem and that private enterprises were the best solution for the well-being of society. He set off a process of deregulation of business, which was later codified into the World Bank’s ‘Ease of Doing Business’ framework for rating countries as attractive destinations for investment of global capital.

The problem of uncontrollable climate change is only one of the problems covered by the 17 UN Sustainable Development Goals. Other problems are persistent economic inequalities within and among countries, inadequate and inequitable public health and education, and harm to nature with inappropriate modern technologies (for example plastics and fertilisers). Solutions to these systemic problems require a paradigm shift in the fundamentals of economics.

Paradigms are formed by ideas supported by power to impose them. Paradigm shifts are resisted by powerful institutions who are beneficiaries of the dominant ideas. The paradigm of economics governing global economic policies is founded on the concepts of property rights, market constructions and price measurements, which must change.

American ecologist Garrett Hardin’s ‘The Tragedy of the Commons’, a foundational premise of the 20th-century economics, says human beings are incapable of governing a common resource that belongs to everybody, and therefore nature’s resources must be converted into private property so that they can be efficiently used. This is a foundational principle for corporatisation of farms and forests, and the privatisation of public services. It also results in power shifting from common citizens to capitalist owners, and in their continuing power to frame the rules of economic policies.

Conversion of natural and human resources into commodities for the use of capitalist corporations requires ‘markets’ in which these commodities can be efficiently traded. Economists want to improve the ‘efficiency’ of labour markets by removing ‘frictions’ caused by collective demands from social movements and workers’ unions for protection of human rights.

Markets also require fixation of prices to establish the value of what is being exchanged. Capitalists offer money, the other side their labour, knowledge and access to their land and sources of water. Whereas farm produce and human labour are perishable commodities, money is not. When land, labour, knowledge and water are converted into money value, those with larger money resources can withhold payments, and can buy off others’ property. Thus, they have a greater power to fix prices.

Signs of a shift in the economic paradigm are visible. Unions are becoming active again in the US and the UK to demand fair treatment of all workers. Gig workers, who corporations could use at their convenience for their businesses, are obtaining rights for social security. The Indian Government’s economic advisers are grappling with the needs and rights of migrant workers, and they are struggling to provide social security to all workers. The farmers’ agitation also highlighted systemic problems of the economy. Indian farmers are resisting the wave of corporatisation of economies that has swept the world along with globalisation.

A new paradigm of economics must be built in the 21st century which gives precedence to the rights of human beings and nature over the property rights of financial owners. Human values must matter more in economic policies than stock market valuations of corporations and GDPs of countries.