• EconAfterHours

Inevitable wedlock- The two C’s

Updated: Mar 11, 2020

by Soumya Jeet

The principal economic systems in the world, much as we see today, arose owing to the response of different ideologies to the rapid changes perpetrated by the industrial revolution. Just like every religion on the face of earth preaches peace and harmony albeit taking different routes, different economic systems too ultimately vie for material abundance and prosperity, again by taking very different routes. How that abundance and prosperity are to be distributed is the main difference between the two extremes of the economic spectrum, capitalism and communism.

Before delving into profundities of the matter, let us consider an example. Can we ever imagine, even in our wildest dreams that one day the BJP and INC will collude? Never, right? At least not in the near future! They will not because they reside on different poles, not necessarily by virtue of ideological differences (in that case CPI and RSS should have been the examples). Quite similarly, the proponents of capitalism and communism who reside on either end will have gone berserk at the idea of convergence two decades ago. In terms of their philosophy, submergence might have been a better word. However things have changed and in the modern day, the single giant upholder of communism is in shreds. However, is it an instance of submergence? The average staunch capitalist viewed communism and socialism to be ‘Satanic Ideas’ and firmly believed that it was to be a matter of time before communist regimes collapsed. In this case, apparently the collapse of the U.S.S.R. might send off signals that vouch for the capitalist’s ego. But a closer look tells a different story.

Industrialism came with a host of chain effects- urbanization, thirst for technological advancements, technical knowhow, education and most importantly a trend of wasteful consumerism. All this have significantly influenced the values, mindsets and general economic perceptions of economic units. Command economies seem to work well in the initial stages of industrialization. But when its tail effects follow, consumer demand increases, economy becomes more complex and at the same time, technology becomes more and more sophisticated. At this time market mechanisms seduce with all its charm and the ideological passion gradually evaporates to allow condensation of comfort in one’s life- the comfort of averting mass mobilization of resources; the comfort of snuggling with little capitalistic ideas. This is exactly what happened with Hungary and Yugoslavia. But this was not submergence by capitalistic ideologies; this is the essence of convergence and the beginning of a symbiotic walk.

Now let us study the other side of the two way involuntary reaction. The other extreme, laisssez faire, is long dead and buried. Thus, with the father dead, the offshoots are more susceptible to being tamed by socialist interests. National economic planning, nationalization of several institutions in most countries and all other controls speak of this metamorphosis. One thing to be made distinct is despite common parlance, the U.S. is not synonymous with capitalism and extreme market societies; thus when delineating the effects of change in market economies, we are not necessarily talking in singular reference to any particular economy, but to the whole bunch in collectivity. The way industry is an economy is organized, the way the government regulates the businesses, the way the government guarantees social security and other services and also protects interests of buyers and sellers from time to time have more or less evolved from the cultural and political history of the place in question. And all these need some sort of governmental intervention. What is important is that an economy’s affiliations should never be based on these indicators because these are not the ultimate visions of different economies and speak minimally about production and distribution.

Once a system sits firmly, it becomes sedentary with respect to change. However, the way the two seemingly opposite systems have inherently found grounds for collusion and adoption testifies the need for a more accommodating and resilient system which can easily lodge ideals as and when necessary. Convergence therefore isn’t an option, it’s the stark reality. It’s only a matter of time now. A lot of time though; given the resistance to change.

Bibliography and Citations:

  1. Huntington Samuel P. and Brzezinski Zbigniew. Political Power: USA/USSR (1989)

  2. Grossman Gregory. Economic Systems (1995)

  3. Wiles Peter. Will capitalism and communism spontaneously converge? (1999)

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