KEVIN BALDEOSINGH
No society which has high levels of illiteracy or innumeracy can become developed. That is obvious. Yet it is ineconomicracy which may be the most pernicious kind of ignorance, precisely because it is often the literate elite who are most clueless about economic principles.
Thus, it is common for academics outside the field of economics to badtalk capitalism and, in UWI, from inside.
And yet it is an irrefutable fact that capitalism has brought more benefits to more people than any other economic-cum-political system ever tried by any society.
To argue otherwise is not only a-historical but anti-historical.
But, of course, the intellectual types who adopt this populist position do not respect data and logic, since they invariably believe that anyone who disagrees with them is either unintelligent or suffering from tabanca.
While their anti-capitalist rhetoric usually centres around supposed oppression of the poor, the critics’ arguments are rarely empirical but always moralistic.
Their main point is that capitalism encourages greed, with all the supposed evils that come from that vice.
This is a risible assertion when made by fat culture critics, although not as hilarious as the tabanca delusions of marasmé academics.
But the irony is that the indubitable economic, political and cultural success of capitalist societies may not be a direct outcome of capitalism but, rather, a consequence of the virtues that are necessary for a successful capitalist system.
In his book Why Globalisation Works, former World Bank economist Martin Wolf writes: “The essence of the commercial syndrome is voluntary agreement, honesty in dealings, openness to strangers, respect for contracts, innovation, enterprise, efficiency, promotion of comfort and convenience, acceptance of dissent, investment for productive purposes, industry, thrift and optimism.
“This is the attitude of the merchant throughout the ages.”
This point was made in different form by the founder of economics, Adam Smith, in his less well-known work The Theory of Moral Sentiments.
Smith was far from enamoured with business people, but his Invisible Hand argument was that the market system ensured that all parties to a transaction benefited, no matter what the self-seeking intentions of the individual.
Ironically, while Smith’s anti-mercantile arguments were rejected by people who would come to be called right-wing fanatics, it is now left-wing ideologues who oppose capitalism and its necessary virtues.
“Anti-liberal attitudes that had foundered on the shipwreck of 20th century nationalism and totalitarianism are bubbling up, like flotsam, on to the surface of political life,” Wolf wrote.
“Old preferences for the comforts of community over individual striving, for traditional ways over rapid change, for the beneficence of the State over the cold logic of the market, for collectivism over freedom and for the nation over the global economy have been reborn.”
The ethical and psychological principles listed by Wolf have a corollary in political principles. In his book The Tyranny of Experts, economist William Easterly (like Wolf, also formerly of the World Bank) argues that capitalism only works on the basis of individual rights.
Governance, he points out, involves two fundamental challenges: knowledge and incentives—ie, how do you find solutions to problems and, having found them, how do you get people to implement them?
“A system based on individual rights offers some solutions to the knowledge and incentive problems,” Easterly writes.
“The individual best informed about how something will affect the individual is usually the individual.
“Under individual rights that include free speech, a free press, and consent of the governed, individuals will protest any harm the government does them...Everybody must have the right to choose which problems they will solve.
“You then have a whole society full of problem-solvers seeking the most fanatically efficient solutions possible for each other.”
It is therefore not surprising that the anti-capitalist crowd also badtalk individualism and praise collectivist ideologies. But what is individualism?
Individualism is defined as placing high value on personal freedom, achievement, opportunity, and advancement.
Collectivism is defined as valuing harmony, cooperation, and respect for those in authority. So which system has better outcomes?
The data is unequivocal: countries that score low on individualism include China, Singapore, all the Arab countries, and countries in Africa.
Countries in the top third for individual freedom and democratic capital include Canada, France, Italy, Britain, and all the Scandinavian nations.
And it is quite obtuse to argue that these latter nations are, by any significant measure, including goodwill and trust, worse off than the former set of countries.
My commentary colleague and namesake in the Guardian, former energy minister Kevin Ramnarine, in his November 29 column developed a point made by leading businessman Emile Elias, about good economics being bad politics.
This is why economics illiteracy is so pernicious. A simple measure like repealing the Minimum Wage Act, for example, could well reduce both unemployment and crime.
Yet such a measure is politically impossible when an electorate can never understand the economic logic behind such a policy.
And, unfortunately, this is a place where even the educated commentators choose to not understand such basic principles: which is one reason, among many, that T&T remains Third World.
KEVIN BALDEOSINGH is a professional writer, author of three novels, and co-author
of a History textbook.
