Alternative Economic Model and The Third Way
Aggrieved with the acute limitations of the Newtonian economic model, Karl Marx prescribed the alternative economic model of Communism which was followed for some period by China and Soviet Russia and today We find communism has failed and somehow the world is following a mixed path of capitalism and socialism. — Dr. Dhanpat Ram Agarwal
Today when our Country, Bharat is celebrating its 75th year of its political independence, our Prime Minister has thought of an idea of Bharat@2047 and to make India a developed country in the next 25 years. Basically this is a thought for resurrection and resurgence and re-emerging of Bharat as the most powerful economy the position which it held for centuries until the 17th century. It was only because of the British exploitation and looting of our precious economic resources and imposition of the Newtonian Economic Model that today. We are passing through the process of challenges of unemployment and poverty in the country. Therefore there is a need for introspection and self-analysis of our domestic strength based on our natural and Human Resources without succumbing to the western powers for foreign investment and foreign technology. Bharat has enough intellectual resources and the energetic youth to regain our glory. Even today, we are self sufficient in food grains and dairy products. Our space research programs are of world standard which is evident from the fact that We are launching satellites for many other countries successfully. We are the fastest growing country in the world today and the fifth largest economy on nominal value and the third largest on purchasing power parity after China and USA.
However in the pursuit of becoming self-reliant and to regain our dignified economic status with zero poverty and zero unemployment, we will have to look for the broader framework of the nuances of the alternative “Third Way” which is quite different from the Newtonian Economic Model which has so far failed to achieve the sustainable economic development in any country around the world. The whole global community is looking towards Bharat, particularly after Covid-19, when we developed our indigenous vaccines and also supplied it to various other countries to save life of millions of people.
The whole world is suffering today from the problem of unemployment, poverty, inequality and the vagaries of climate change. The world is also suffering from the problems of geo-politics and terrorism. There are emerging challenges of artificial intelligence, energy security and several health related issues. There are contradictions in the present financial architecture which has allowed US hegemony with its Dollar diplomacy. It is very ridiculous to know that in the past all the countries which have printed Fiat money have suffered from hyper inflation but surprisingly today US is immune. The magnitude of 3.5 trillion US Dollar printed by US Fed Reserve helped it to reduce its inflation, its interest rate and the US dollar gained in value as compared to the currencies of the rest of the World. It is only recently that due to Russia-Ukraine war that US suffered from inflation and was forced to increase the Fed Rate but still the US economy is moving upward consistently except few jolts. In normal circumstances if it was a case of any other country which has the debt burden of such a huge magnitude, it would have been declared bankrupt. The international credit rating agencies would have downgraded the risk perception but on the other hand US government can use its power of economic sanctions against any country at its volition.
Therefore it is necessary to bring a change in the economic model which is being followed since the past 3-4 centuries in order to achieve the long term solution to the aforesaid critical problems. In order to do it, we need to understand the meaning and the fallacies of the various facets of the neo-liberal capitalism or the open market economic model. The Newtonian model speaks about five basic assumptions.
1. Market Equilibrium - It presupposes that markets are self-regulated and the prices adjust automatically with the quantities on the principles of demand and supply. We have seen that this assumption does not work and market intervention is necessary by various regulatory authorities around the world in every country.
2. Invisible Hands- This assumption presupposes that the individuals feel motivated in the pursuit of making profits and for wealth creation. This may be partially true but this requires lot of Enterpreneur Development program and skill development and infrastructure support which the present Government is trying to achieve. Start-up India initiative is part of the drive for giving a fillip to innovation and Enterpreneur skill of the young Indians.
3. Law of supply and demand.
4. Say’s Law- Supply creates its own demand - Supply side economic policy which was started by Reaganomics and Thatcherism have created huge debt burden and also resulted into BOP crisis in India due to blind following of the same during Rajiv Gandhi regime.
5. Laissez-Faire: Basically it means no interference by the Government in business and self regulation is best for optimisation of the economic resources. The Government should confine it’s role for law and Order and for national security for defence and home affairs. This approach has led to massive privatisation and the process is still being followed. However for growth with social justice and for a fair competition it is essential for the Government to control the public utility services and the strategic sectors for larger public interest.
We have seen that the aforesaid assumptions have led to several economic and social problems of environment, inequality and social unrest and the whole world is suffering with unemployment and poverty besides several other Geo-political challenges.
Aggrieved with the acute limitations of the Newtonian economic model, Karl Marx prescribed the alternative economic model of Communism which was followed for some period by China and Soviet Russia and today We find communism has failed and somehow the world is following a mixed path of capitalism and socialism.
In both the system of capitalism and communism and in the mixed Deriatives of either of them, there is a predominance of materialism and consumerism. This has led to colonial mindset in the name of economic globalism and the present financial architecture has been created on the edifice of this attitude of brutal exploitation of natural resources and has given rise to the problems of global warming and poverty coupled with poor standard of living in a large part of the world or the global south.
The world is therefore looking for a new economic order the voice for which started echoing from non-aligned movement (NAM) in the post Second World War era after the creation of United Nation and the outcome was the U N Charter and United Nation Conference on Trade and Development (UNCTAD). However these institutions have failed to deliver any effective results but the process of exploitation is still continuing with the support of the Breton wood institutions. This continued suffering of human being has created an awareness amongst the people across the world that inequality in the distribution of income and wealth is not only between the nations but also between the peoples within the national boundaries. Therefore the cause of the problem is not the country alone but the corporates who decide the policies across nations and across the globe. These Multinational or the transnational corporations who control the world indirectly in the pursuit of making more profits and more wealth. Thus the invisible hands are the real demons. The survey and the research by the benevolent NGOs and civic societies are unearthing the unholy nexus between the pharmaceutical companies and the food processing companies for the several health related and the environmental problems by polluting the air, water and the fertility of the soil and making the nature poisonous.
Therefore the Newtonian economic model which is purely materialistic has to give way for a holistic and more humanistic approach for economic development which is imbibed in the Third Way of Shraddhey Dattopant Thengadi and the Integral Humanism of Pt. Deendayal Upadhyay.
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