"Is 20th century capitalism failing 21st century society?

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In 1989, Communalism collapsed in Eastern Europe and at that time it was said that Socialism is the longest road from capitalism to capitalism. Collapse of Soviet Union in 1991, Chinas adoption of market reforms from 1978 have let to socialist detour. Capitalism in true sense means a system of governance that originates with state permission for non-state actors to exercise economic power, subject to a set of rules and regulation. Under this definition, capitalism depends upon a delegation of power from the state to economic actors and upon the coercive power of the state to design, monitor, and ultimately enforce market regulation. The pricing mechanism coordinates supply and demand within a given market framework, while the visible hand of government enforces the framework and keeps it up to date. But this begins the enormous social, economic and political challenges in major economies of the world. With modern capitalism or 20th century capitalism came many challenges, from subprime crisis to Eurozone crisis, capitalism have been put at the periphery. 1. 20th century capitalism, in other words, marginally valued pure financial capital too highly, while marginally valuing human, natural, social, and cultural capital at zero - or, at the limit, negatively 2. The gap between rich and poor in the world has widened in the past 30 years. For eg. In 2007 the top 1 percent of earners took home 18.3 percent of national income that is more than two and a half times their level in 1973, when their share was 7.7 percent in USA 3. With aim of increasing profits due to capitalism, an economic revolution that favors those on top and squeezes those in the middle. The technology revolution and globalization have allowed the very talented, the very lucky and the very brave to build companies and make fortunes. This has also created a highly numerate super class of workers technologists, engineers, traders whose skills are in great international demand and whose salaries have soared accordingly. Meanwhile, a vast swath of jobs ranging from manufacturing, to clerical work, and now to routine law and accounting can be done much more cheaply by machines or by people in lowerincome countries. 4. The major obstacle that capitalism have is that it failed to deliver at a crucial historical juncture i.e. Great Depression. It left the world deeply skeptical about self organizing market system. 5. Government intervention and increased spending. Capitalism of the 19th century, especially in Britain and the U.S., was characterized by very low taxes--no federal taxes at all and in the U.S.-almost no government services. Capitalism of the 20th century was characterized by rather high tax rates, large governments with substantial social services, and an expanding set of regulations covering everything from working conditions to financial services to the environment. 6. Change in Monetary policies. Money remained pegged to gold until 1971, but the intellectual trend toward "discretionary monetary policy" (originally to address unemployment) and floating currencies began early in the century and became dominant in the 1930s. Governments in developed countries grew to 25% to 50% of GDP. Some countries became communist, and their government/GDP ratio hit 100%. By the end of the century, the communist experiments had been abandoned, while the developed countries struggled with entitlement bloat, hideously complicated tax systems, regulatory coagulation, and monetary chaos.

7. No control over the unemployment rate and damage to climate was the key issues which are not taken care of my capitalist economies. Failure of Doha Rounds and Impasse over the unemployment rate has made the situation worse for capitalist governments. Considering the above issues, 21st Century Capitalism should be different. When everything has become society centric. Importance of humans and environment is of top priority even the marketing strategy of companies have become societal centric. Customer Relationship Managements have been improved; Holistic Marketing Strategies are being applied. Corporate are looking for better corporate social responsibility. Seeing this , the 21st Century Capitalism should be Societal capitalism which seeks to blend the best qualities of each system while dampening the disadvantages of socialism and capitalism. Programs that meet a social capitalism standard include things like government control of wages and working hours; measures that protect the lower-level employees while not unduly inhibiting the practice of business. It should incorporate the following changes 1. Today, in the twilight of the first decade of the 21st century, we must renew a failing global capital base with entirely new kinds of capital. The time is now to pump newer, more valuable kinds of capital valuing human, natural, social, and cultural capita. 2. When we capitalize these, the un achieved opportunities of the poor - then will finally have value: they can finally be priced, and so the fat cats of the world won't be free to destroy them with impunity 3. Innovation should be at the heart of it, as without it no culture will thrive. Capitalism will boost innovation and with help of socialist approach, it will be well distributed till the bottom of the pyramid. 4. Militarized accumulation, financial speculation - and the sacking of public budgets should be avoided instead a new approach should be evolved of controlling the miscellaneous budgets or un planned budgets in every economy 5. Government should have long-term view of the future that affects both saving and investment, especially in people, and above all by a feeling of community solidarity that is reflected not only in cooperative labor-management relations but also in a willingness by the rich to be taxed to pay for a generous system of social security. The 21st Century Capitalist approach should maintain a vibrant economic system and still spread its fruits not merely widely but universally

Submitted By : Ankur Dhoot Purnava Ganguly Smriti Pandey MIB, Delhi School of Economics