Capitalism is a complete system

May 17, 2011 Features / Columnists, Peeping Tom

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Any good socialist will tell you that you cannot divorce the economic from the political, that the political relations reflect the economic realities.
But you also cannot build capitalism with a socialist mentality. That seems a fairly straight forward proposition. Well, not always, because there are still remnants of the view that you can have within Guyana, a move towards a market-oriented system while political systems are imbued with an intervening ethic.
In short, there cannot be effective capitalism under a socialist government. You may have increased production and even trade but that can never be true capitalism unless the political and social relations reflect market-driven realities.
Growth in production and growth in exchanges between countries have often been misconstrued as capitalism. But communist countries have also enjoyed expansion in their economies and trade without being deemed capitalist.
At the same time, the sources of increased production can be private but this does not make the country capitalist because there can be state-directed capitalism.
What differentiates socialism from capitalism is not how much wealth is produced or who produces the wealth but the nature of the economic, social and political organization within the society.
You can have a productive private sector class in a socialist economy but capitalism is a more complete system involving not just who produces the wealth but how the relations of production are tailored.
Unfortunately, there still exists the view that politically one can do certain things such as experiment with models of governance while pursuing a capitalist economy. There exists the misguided view that one can simply remove the state from participation in the economic affairs of the country and have capitalism.
That is a limiting view.
You cannot have a capitalist economy under a socialist system. The PPP made this assumption about the PNC. The PPP argued that what Guyana had under the PNC was state capitalism, with a government espousing socialism but practising capitalism.
The PPP was wrong. The PNC’s system could not have been categorized as any brand, not even a narrow one, of capitalism.
Under the PNC, the state wielded economic and political power but it was a small band of businesses, many of which are still around today and still kicking, especially kicking, who made the most of the situation.
That private sector was a marginalized private sector. The state concentrated on national production and a small private sector on filling whatever voids remained. What existed was a feudal type system, a backward model suited to 18th century Europe rather than for a 20th century, whereby the state commanded authority and domination, and a small band of businesses competed to grab whatever the state left to them.
At the time, there was no flourishing state-commanded private sector activity. The state restricted but did not command private sector activity. The state was everything and there was limited space even for a beholden private sector. Such a system can hardly be described as capitalist.
This is where the PPP was wrong. The PPP wrongly assessed the PNC’s system as state capitalism. As such it saw the PNC as a tool kit in the hands of the capitalist forces and pointed to the fact that despite the severe hardships which the ordinary people were facing at the time, there was small group of private, mainly family-owned businesses that thrived.
But those businesses only thrived because the rest of the entrepreneurial class was pulverized and forced out of the country.
The present private sector is, in the main, a product of such a system. It is a private sector that is risk averse and capitalism cannot be constructed through risk aversion. It is a private sector that is afraid of competition. The Chinese have come to Guyana and domestic firms are complaining rather than competing. It is a private sector, small and fragmented.
How does one therefore build capitalism when the very class that is supposed to build it in Guyana is not developed enough to do so.
Who says that when the state takes a central role in making public investments that after making such investments that the state will step aside and allow private interests to take over?
Where will these private interests be found? Capitalism therefore has to be organized within a complete model. You cannot be espousing free markets and excessive social welfare in the same breath. You cannot speak about private sector being the engine of growth and then at the same time hark back to social initiatives associated with socialism.
Capitalism is a total system. Like the Dutch system of football, every element contributes to the other. Social relations and economic relations cannot be divorced. Thus when one speaks about exiting the state from the economic sphere, one cannot at the same time preach the virtues of the past.

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