Submitted to: Miss Hina Ayaz Submitted by: Asfand Ahmed BBA-2A Reg. no.

1011103 Term paper Sociology Date: 24-04-2011

Capitalism:
Capitalism is a difficult, problematic term; it applies to a diversity of phenomenon spread across disparate historical cultures with substantially variable world views. The term "capitalism" means more than just a body of social practices easily applied across geographical and historical distances, it is also a "way of thinking,. The word capitalism is now quite commonly used to describe the social system in which we now live. It is also often assumed that it has existed, if not forever, then for most of human history. In fact, capitalism is a relatively new social system. It means class division Capitalism is the social system which now exists in all countries of the world. Under this system, the means for producing and distributing goods (the land, factories, technology, transport system etc.) are owned by a small minority of people. We refer to this group of people as the capitalist class. The majority of people must sell their ability to work in return for a wage or salary. This is what we mean when we say there are two classes in society. It is a claim based upon simple facts about the society we live in today. This class division is the essential feature of capitalism. It may be popular to talk (usually vaguely) about various other 'classes' existing such as the 'middle class. www.worldsocialism.org/articles/what_is_capitalism.php Mr. ADAM
SMITH CALLED

capitalism as the obvious and simple system of natural liberty

(Wealth of Nations). Example of Capitalism from its beginning in England In early-nineteenth-century England the most visible face of capitalism was the textile factories that hired women and children. Critics like Richard Oastler and Robert Southey, among others denounced the mill owners as heartless exploiters and described the working conditions long hours, low pay, monotonous routine as if they were unprecedented. Believing that poverty was new, not merely more visible in crowded towns and villages, critics compared contemporary times unfavorably with earlier centuries. Their claims of increasing misery, however, were based on ignorance of how squalid life actually had been earlier. Before children began earning money
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working in factories, they had been sent to live in parish poorhouses; apprenticed as unpaid household servants; rented out for backbreaking agricultural labor; or became beggars, vagrants, thieves, and prostitutes. The pre capitalist good old days simply never existed (
REVOLUTION AND THE STANDARD OF LIVING). INDUSTRIAL

Marxist philosopher Herbert Marcuse proclaimed that the real evil of capitalism is prosperity, because it seduces workers away from their historic mission, the revolutionary overthrow of capitalismby supplying them with cars and household appliances, which he called tools of enslavement. www.econlib.org/library/Enc/Capitalism.html

Socialism:
Socialism, it is a system of social organization in which private property and the income distribution are subject to social control; also, the political movements aimed to practice that system. It can also be defined as any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods. a system of society or group living in which there is no private property : a system or condition of society in which the means of production are owned and controlled by the state. It can also be defined as socialismdefined as a centrally planned economy in which the government controls all means of production. "The language of priorities is the religion of Socialism" [Aneurin Bevan] "To the ordinary working man, the sort you would meet in any pub on Saturday night, Socialism does not mean much more than better wages and shorter hours and nobody bossing you about" [George Orwell The Road to Wigan Pier]

"Idleness, selfishness, fecklessness, envy and irresponsibility are the vices upon which socialism in any form flourishes and which it in turn encourages. But socialism's devilishly clever tactic is

to play up to all those human failings, while making those who practice them feel good about it" [Margaret Thatcher Nicholas Ridley Memorial Lecture] It is often thought that the idea of socialism derives from the work of KARL MARX. In fact, Marx wrote only a few pages about socialism, as either a moral or a practical blueprint for society. The true architect of a socialist order was Lenin, who first faced the practical difficulties of organizing an economic system without the driving incentives of profit seeking or the selfgenerating constraints of COMPETITION. Thus, the final plan resembled an immense order book, specifying the nuts and bolts, steel girders, grain outputs, tractors, cotton, cardboard, and coal that, in their entirety, constituted the national output. In theory such an order book should enable planners to reconstitute a working economy each yearprovided, of course, that the nuts fitted the bolts; the girders were of the right dimensions; the grain output was properly stored; the tractors were operable; and the cotton, cardboard, and coal were of the kinds needed for their manifold uses. Heilbroner on Who Predicted Socialisms Demise But what spokesman of the present generation has anticipated the demise of socialism or the triumph of capitalism? Not a single writer in the Marxian tradition! Are there any in the left centrist group? None I can think of, including myself. As for the center itselfthe Samuelsson, Solows, Glazers, Lipsets, Bells, and so onI believe that many have expected capitalism to experience serious and mounting, if not fatal, problems and have anticipated some form of socialism to be the organizing force of the twenty-first century. ... Here is the part hard to swallow. It has been the Friedman, Hayeks, von Misses, e tutti quanti who have maintained that capitalism would flourish and that socialism would develop incurable ailments. Misses called socialism impossible because it has no means of establishing a rational pricing system; Hayek added additional reasons of a sociological kind (the worst rise on top). All three have regarded capitalism as the natural system of free men; all have maintained that left to its own devices capitalism would achieve material growth more successfully than any other system.

Robert Heilbroner.The World After Communism. Dissent (Fall 1990): 429430.

Characteristics of capitalism:
At the very foundation of a capitalist system is the belief in economic freedom. This freedom has two dimensions: freedom of economic choice and freedom of enterprise. Freedom of choice means that in a world of scarce resources the individual is free to make his own economic decisions. Consumers, workers, savers, producers, etc., all are free to make the economic

choices that will impact their lives. Freedom of enterprise is usually more narrowly defined as the freedom to own and operate a business. It also entails the freedom to make all business decisions, limited only by competition and the interplay of the forces of supply and demand in the market place. Due to the concept of economic freedom, the basic economic questions are answered in a market (capitalist) system by individuals acting in their own interest in the market place.

Central to the belief in economic freedom is the concept of private property. Goods and services and factors of production are privately held by individuals. As owners of productive resources, individuals are free to utilize or dispose of their property as they see fit. Thus, individual ownership includes the right to reap the rewards or suffer the risks of economic decision making. As owners of the factors of production, individuals may be rewarded with "rent" for the use of their "land," "wages" for the use of their "labor,'' " interest" as a return on their "capital," and "profit" as a reward for their "entrepreneurship." The opposite of private ownership is public (or government) ownership of the means of production. Public ownership precludes individual decision making, thus limiting the economic choices of the individual.

Individual decisions in a capitalist economy are directly influenced by self-interest. Self-interest is pursued by responding to a system of economic incentives. Positive economic incentives encourage economic decision makers and negative economic incentives discourage economic
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decision makers. These economic incentives guide resource allocation toward the production of goods and services that society wants and away from the production of goods and services not desired by society. In this manner, a business owner pursuing his own economic self-interest would benefit society as a whole. The desire for profit would direct him to put his productive resources into the production of goods and services commanding a high demand in the marketplace. The desire to avoid losses would discourage him from putting productive resources into the production of goods and services that people did not want. In the same manner, consumers seek low prices and avoid high prices for the goods they want, savers seek high interest rates and avoid low ones, workers are encouraged to engage their labor in jobs that command high wages and shift their labor away from those occupations that pay low wages or in which there is a high degree of unemployment. Responding to these positive and negative incentives, economic decision makers pursue their self-interest. Adam Smith, the father of capitalism, noted that if everyone pursues his own economic self-interest, everyone will benefit.

Competition or economic rivalry in the marketplace is the means by which the excesses of individual self-interest are controlled. To perform this very important function in a capitalist system, certain assumptions or conditions are necessary. One condition is that large numbers of buyers and sellers must be present in the market place for competition to exist. The numbers must be so large that no one buyer or seller can control the demand or supply of the good or service, therefore, the price. Another condition or assumption of competition is freedom of entry or exit from the marketplace. If one business exists and commands a high price for the products it sells, other producers must be able to move into the market and compete; therefore, there should be no artificial or real barriers to entry or exit from the marketplace. Another condition is knowledge of markets and prices. Consumers and producers must be aware of markets that exist and the prices of products sold in those markets. Suppose a town has many restaurants. If consumers are unaware that more than one exists, the impact of their ignorance will be that the one restaurant they are aware of will be able to monopolize the marketplace. If all the conditions for competition are present in the market place, it is believed that the benefits of competition will

be lower prices, greater variety, and better quality. These are benefits desired by all consumers in the marketplace.

The desires of buyers and sellers are communicated in the market place through a price system. Buyers communicate the quantities of a good, service, or resource they are willing and able to purchase at various prices, and suppliers communicate the quantities of those items they are willing and able to sell at various prices. The interaction of the buyers and sellers results in a market price. Adam Smith believed that the market place acted as an "invisible hand" operating to balance the desires of both buyers and sellers and establish a price both could agree upon. The prices determined in the market place assist in determining the answers to the "what," "how," and "for who" questions.

If all the other characteristics are in place, capitalist (market) theory advocates a limited (laissezfaire) role for government in the economy. Government is to make and enforce the rules (laws) and settle disputes that arise between economic players. Its role is to establish a legal framework for the economic system to operate in, rather than to play a role in making economic decisions. Adam Smith believed that government intervention in the market place would interfere with the "invisible hand" and prevent the system from operating efficiently; therefore, he advocated a "laissez-faire" economic policy for government.

Characteristics of socialism:
Democratic
Socialism is the movement of the people, the workers and should not depend on any selfidentified elite who would guide the poor unterclasses into paradise. Everybody has a vote in the movement and everybody should have a vote in political and economic matters, because these affect everybody.

Bottom-up, not top-down

Socialism depends on people taking action themselves, from the bottom up instead of being directed by small elites, top down. In socialism people are free they are not the slaves of anyone or they have full freedom that with whom thy want to work.

Global
To organize along national lines is not effective. The socialist movement should be a worldwide one, because the problems and issues we face are global too. And socialism deals with that it helps to solve the problems of a nation by let them observe how the other countries solve their problems.

Equality:
Socialism seeks to encourage egalitarianism among people by giving them with many of the same social benefits. Examples of benefits given to the individuals in a socialist society can be educational, health care, and care for the elderly and the susceptible. Socialism means paying for things without necessarily expecting a financial return, just for the greater good. One of the characteristic of socialism is that it seems of being achieved slow, but serene, improvement. http://www.cloggie.org/politics/socialism.html
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Economic inequality and capitalism:

In capitalism the economy is in the hand of the upper class people who own the industries and properties, but they think that only way to let their profits maximize is to have a productive labor. It also says that there should not be any focus on past activities all focuses should be on the future how to increase productivity by any mean. In capitalism there is an economic and income inequality the upper class have the maximum wealth of the society and the rest of the people live under the lower wealth by which they cannot receive proper standards of living and live in poverty. This concept of having maximum wealth makes capitalist dominant on the lower class by which they make people work in their firms and not giving them proper wages exploits their working abilities by which the lower class think that they are being bought by the upper class and they are like a product which is used in the way as people who buy them want to use. The example above in the definition of capitalism clearly shows that how people and their abilities are exploited by capitalist.

Economic inequality and socialism:

Socialism strongly discourages inequality. As socialism is a concept of being free and equal. In socialism all people are given equal rights to explore themselves and their abilities as they want. People are given freedom to do any work they want which basically increases the productivity in an economy as people invest more, have production more and lead country towards development.

Extent of freedom and capitalism and socialism:

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Capitalism is an evil of freedom; it helps to terminate the freedom from the working class as the upper class has the most power in their hand so they do not allow lower class to decide anything. In capitalism people do not have the right to live as they want they dont have any right to practice whatever they want their decision power is diminished so that they cannot any action against the leading class.

Whereas socialism is strongly in favor of freedom because it gives full freedom to the people that whatever they want they can do there is no one who can stop them, it helps them to enhance the abilities of the individuals by which innovation happens in an economy which helps in increasing productivity and helps in increasing development .

Productivity and socialism and capitalism:

Capitalism is better for productivity as demand and supply are increased in market through premeditated planning. More competition is brought, which results in development of growth which prospers an economy of a nation. People get benefit which strengthens the productivity of the economy. As Capitalism gives a larger boost to the production so thats why many countries practice it. As in Capitalism there are no shifts of goods and services to politics because it is free from politics; religion ethics etc. and it is treated as an individual attempt. As compared to socialism productivity is high in capitalism. A level is set by the government on form of taxes and others to make sure the level of playing field for private industries Whereas, socialism explains that if a theory of production is not beneficial for a person or if it causes harm to any one social institute, it should be abolished. This stops the entire economy for increasing its productivity which declines the economic growth. Socialism have never survived in the society because it looks at equally at everyone which hinders it from providing demand and supply to the market, market place therefore do not exists. In a socialist economy, there is no market as such. The government provides for the people. Downfall of USSR is an example to this.

State capitalism:
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State capitalism has various different meanings, but is usually described as a society wherein the productive forces are controlled and directed by the state in a capitalist manner, even if such a society calls itself socialist. State capitalism is an economic system in which governments for political purposes operate market outcomes. Governments hold state capitalism since it serves both political and economic purposes not since it is the most competent means of generating affluence. It puts immense financial resources inside the state official control, allows them to access cash that helps them to safeguard their domestic political capital and in many cases it increase their leverage on the international ground. The rise of globalization is a factor that state capitalism stems, because it helps in hampers the flow of ideas, information, people, money, goods, and services within countries and beyond international borders. State capitalism has also come to refer to an economic system where the means of production are privately owned and the state exerts considerable control over the allocation of credit and investment. As by Marxist view State capitalism is usually defined in this sense: as a social system combining capitalism the wage system of producing and appropriating surplus value in a commodity economy with ownership or control by a state http://www.marxists.org/archive/marx/works/1880/soc-utop/ch03.html

The term state capitalism used by other socialists to refer an economic system that is technically capitalist, where the profits from an economy are collected by business and private owners largely subsidized, developed and where vital research and development is undertaken by the state sector at public cost. http://www.imadahmed.com/706246076/state-capitalism-and-the-crisis/ Basically all the operations are controlled by the state for the betterment of the citizens and to enhance economic progress. Government make the strategies and give to all the firms and industries working in the country and the firms and industries have to implement those decisions in their firms which basically diminishes their decision power and employees and the citizens lose their freedom and their morale goes down which decreases the productivity and chain goes on and effects whole economy.

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Welfare capitalism:
Welfare capitalism refers either to the combination of a capitalist economic system with a welfare state or, in the American context, to the practice of businesses providing welfare-like services to employees. Welfare capitalism in this second sense, or industrial paternalism, was centered in industries that employed skilled labor and peaked in the late 19th and early 20th centuries. http://en.wikipedia.org/wiki/State_capitalism In his kind of capitalism the industries are more concern about societys benefits and people concern they are more towards the measures which can give benefit to the citizens and their employees. In state capitalism the firms are free to what they want they can do there is no external factor like government and any other political influences which can direct them how to do work. The plan those strategies which can maximize their profits and decrease their cost keeping in mind the social responsibility which they on account of taking resources from the society like input resources, labor, land and entrepreneur abilities. They work those actions which can be benevolent for not only their firm but also society as a whole.

Economy of Pakistan:
Pakistan, an impoverished and underdeveloped country, has suffered from decades of internal political disputes and low levels of foreign investment. Between 2001-07, however, poverty levels decreased by 10%, as Islamabad steadily raised development spending. Between 2004-07, GDP growth in the 5-8% range was spurred by gains in the industrial and service sectors 12

despite severe electricity shortfalls - but growth slowed in 2008-09 and unemployment rose. Inflation remains the top concern among the public, climbing from 7.7% in 2007 to more than 13% in 2010. In addition, the Pakistani rupee has depreciated since 2007 as a result of political and economic instability. The government agreed to an International Monetary Fund Standby Arrangement in November 2008 in response to a balance of payments crisis, but during 2009-10 its current account strengthened and foreign exchange reserves stabilized - largely because of lower oil prices and record remittances from workers abroad. Record floods in July-August 2010 lowered agricultural output and contributed to a jump in inflation, and reconstruction costs will strain the limited resources of the government. Textiles account for most of Pakistan's export earnings, but Pakistan's failure to expand a viable export base for other manufactures has left the country vulnerable to shifts in world demand. Other long term challenges include expanding investment in education, healthcare, and electricity production, and reducing dependence on foreign donors. http://www.indexmundi.com/pakistan/economy_profile.html The slippage in agriculture was mainly attributable to the weak performance of both the major and minor crops. Major crops, accounting for 34 percent of agricultural value added, grew by 2.8 percent against an impressive recovery of 6.9 percent last year. The performance of two major crops, cotton and wheat, was lackluster as the cotton crop suffered from pest problems in Southern Punjab while wheat production was adversely affected by the lack of rain in March when the formation of wheat grain takes place. The size of the cotton crop is estimated at 10.0 million bales - 1.6 percent lower than last year while that of wheat is estimated at 19.767 million tons against a target of 20.0 million tons, a shortfall of 1.2 percent. The performance of rice and sugarcane - the other two major crops - has been modest at best with the rice crop estimated at 4.848 million tons - 8.3 percent higher than last year and sugarcane at 53.419 million tons - 2.6 percent higher than last year. These two crops are highly water intensive and the improved availability of water helped increase their production. Minor crops, accounting for 12 percent in agricultural value added showed a 'weak' performance, growing by only 1.7 percent. Widespread rains during the monsoon season of 2003 (July-September) and increased snow fall in the catchment areas contributed to an improvement in the water situation during the year. The canal
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head withdrawals in the Kharif 2003 and Rabi 2003-04 seasons were higher by 5.0 percent and 26.2 percent, respectively over the previous year. However, during winter (January-March 2004) the actual rainfall was 40 percent lower than normal and this had a severe impact on the wheat crop.

Manufacturing:
One of the most important developments of the year has been the sharp acceleration in manufacturing growth. Overall manufacturing grew by 13.4 percent in 2003-04 against a target of 7.8 percent and last year's 6.9 percent. This impressive growth was underpinned by the highest ever growth recorded in large-scale manufacturing which accounts for 68 percent of overall manufacturing, and exhibited broad-based growth of 17.1 percent against a target of 8.8 percent and last year's 7.2 percent. Improvements in the macroeconomic environment, a decline in the cost of capital, the availability of consumer financing at affordable rates, strong growth in exports and a general feel good mood in the economy have been responsible for this unprecedented growth in large-scale manufacturing. Over the last four years, the large-scale manufacturing sector has grown at an average rate of almost 10 percent per annum thereby increasing its share in GDP from 9.6 percent to 11.8 percent. Major industries that registered double-digit growth include: sugar, cement, cooking oil, jeeps and cars, motorcycles, motor tyres etc.

Poverty:
The discussion so far points to the fact that Pakistan's economy has gained more strength during the outgoing fiscal year. Overview of Pakistan's Economy By Pakistan Ministry of Finance Riding on the strong economic fundamentals of last year Pakistan's economy has gathered greater momentum during the fiscal year 2003-04. Acceleration in growth accompanied by a sharp pick up in industrial production, a strong upsurge in investment, and a further strengthening of the external balance of payments have been the hallmarks of this year's

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performance. The pre-payment of high cost external debt, the strategic re-entry into the international capital markets through the floatation of a Eurobond and the re-basing of Pakistan's national accounts have been the other stellar occurrences of the fiscal year 2003-04. No efforts to revive the economy will be complete unless these macroeconomic gains are transferred to the masses in terms of an improved standard of living. The efforts of the last five years have started yielding positive results and this year has seen the incidence of poverty declining, enrolment in primary, middle and matric levels rising, and various quality of life indicators improving.

During this fiscal year, Pakistan succeeded in attaining; a higher than targeted growth in real GDP, powered by stellar growth in large-scale manufacturing and a continuing robust performance in services; a double-digit growth in per capita income, reaching $ 652; a strong rebound in investment, particularly in private sector investment owing to a rare confluence of various positive developments on the economic scene; low inflation and an investment-friendly interest rate environment; an unprecedented increase in credit to the private sector; sharp increases in the consumption of electricity and gas reflecting rising levels of economic activity; a reduction in the fiscal deficit; on target tax collection; a buoyant stock market with an all-time high aggregate market capitalization; a double-digit growth in exports and imports; workers' remittances maintaining their momentum with the current account balance remaining in surplus for the third year in a row; a continued accumulation of foreign exchange reserves and stability in the exchange rate; a sharp decline in the public and external debt burden; a lowering of the interest cost through the pre-payment of $ 1.17 billion of high cost external debt; and a successful return to the international capital markets through the floatation of a Eurobond.

From the grassroots perspective, the incidence of poverty has declined by 4.2 percentage points over 2001 figures. Other social indicators such as enrolment in primary, middle and matric levels; access to sanitation, safe drinking water, housing, electricity and gas have all showed marked improvements. Two successive years of strong growth along with over Rs.860 billion of cumulative spending over the last five years on social sector and poverty related programs is now beginning to bear fruit. Notwithstanding these improvements, much remains to be done, and this is that critical juncture in time when maintaining momentum through policy stability is
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paramount. While socio-economic and macroeconomic policies pursued during the year they have had a strong influence on this across-the-board improvement, an increasingly broad and dynamic global recovery with industrial production and global trade picking up sharply, have aided Pakistan in this endeavor.

International Environment:
Unlike in the past two to three years, this year has seen a relatively benign global economic environment after almost three years of weak and fragile growth in the world economy. A strong rebound in world trade, a robust recovery in the United States and emerging Asia, especially China, and the strongest showing for the Japanese economy since 1996 are offering grounds for optimism for the global economy in general and developing countries in particular. This optimism has encouraged the staff of the International Monetary Fund (IMF) to raise its forecast for global growth by about 0.5 percentage points to 4.6 percent in 2004 and 4.4 percent in 2005. Notwithstanding a strong and broad-based recovery in the major growth poles of the world economy, the Euro area is still exhibiting anemic growth of 1.7 percent for 2004. The United States has led the way with growth of 4.6 percent in 2004, supported by a resurgent Japan, with 3.4 percent. The growth momentum is exceptionally strong in emerging Asia where the Chinese economy is leading the way and is projected to grow by 8.5 percent in 2004. More robust income growth in the advanced economies is expected to stimulate activity in developing countries through trade, mainly in the form of higher export volumes. Developing countries including Pakistan have suffered from the slowdown in world trade in 2002, chiefly because of weak demand in the advanced economies. The pickup in global activity that began in 2003 and intensified in 2004 should translate into stronger and more sustained export growth for developing countries and this could be further augmented if progress is made in reducing trade barriers as envisaged in the Doha Round.

Notwithstanding a strong and broad-based recovery in the world economy there remain risks to the short-term outlook which will have a direct bearing on developing economies, including Pakistan. Oil prices have increased substantially from $ 26.5 per barrel in September 2003 to

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almost $ 42 per barrel on June 1, 2004. According to one estimate, a $ 5.0 per barrel increase in oil prices over the baseline price persisting for one full year will reduce global growth by 0.3 percent with an attendant impact on developing countries. Furthermore, the extra-ordinary rise in the price of oil fuels headlines inflation which can have severe monetary policy implications. The stronger-than-expected global economic recovery, the depreciation of the US dollar against other major currencies, relatively low inventories, OPEC announcements of prospective production cuts, the 'fear factor' surrounding a possible disruption of supplies from the Middle East and some speculative activity have been mainly responsible for this unprecedented surge in oil prices. Without a stable and low oil price outlook, this global recovery seems tenuous at best.

GDP Growth:
Real GDP growth, once again, surpassed the target (5.3 %) with a headline number of 6.4 percent during 2003-04 compared to last year's 5.1 percent rate. This buoyant growth was aided by a 13.1 percent and 5.2 percent growth in the manufacturing and services sectors, respectively. The performance of agriculture fell short of the target by growing at 2.6 percent against a target of 4.2 percent and last year's achievement of 4.1 percent. When compared with other developing countries in general and East and Southeast Asian countries in particular, Pakistan's growth performance has been quite impressive. Developing nations grew, on average, by 6.1 percent while East and Southeast Asian countries like Hong Kong, Singapore, Korea, Indonesia, Malaysia, Philippines, Bangladesh and Sri Lanka registered growth rates ranging from 1.1 percent to 5.5 percent in 2003-04. Few countries in the region, namely China, India and Thailand grew faster than Pakistan during this period. Fiscal stimulus in the shape of large public sector spending and a conducive interest rate environment provided important support to this growth picture in Pakistan.

Agriculture:
The slippage in agriculture was mainly attributable to the weak performance of both the major and minor crops. Major crops, accounting for 34 percent of agricultural value added, grew by 2.8 percent against an impressive recovery of 6.9 percent last year. The performance of two major
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crops, cotton and wheat, was lackluster as the cotton crop suffered from pest problems in Southern Punjab while wheat production was adversely affected by the lack of rain in March when the formation of wheat grain takes place. The size of the cotton crop is estimated at 10.0 million bales - 1.6 percent lower than last year while that of wheat is estimated at 19.767 million tons against a target of 20.0 million tons, a shortfall of 1.2 percent. The performance of rice and sugarcane - the other two major crops - has been modest at best with the rice crop estimated at 4.848 million tons - 8.3 percent higher than last year and sugarcane at 53.419 million tons - 2.6 percent higher than last year. These two crops are highly water intensive and the improved availability of water helped increase their production. Minor crops, accounting for 12 percent in agricultural value added showed a 'weak' performance, growing by only 1.7 percent. Widespread rains during the monsoon season of 2003 (July-September) and increased snow fall in the catchment areas contributed to an improvement in the water situation during the year. The canal head withdrawals in the Kharif 2003 and Rabi 2003-04 seasons were higher by 5.0 percent and 26.2 percent, respectively over the previous year. However, during winter (January-March 2004) the actual rainfall was 40 percent lower than normal and this had a severe impact on the wheat crop.

Manufacturing:
One of the most important developments of the year has been the sharp acceleration in manufacturing growth. Overall manufacturing grew by 13.4 percent in 2003-04 against a target of 7.8 percent and last year's 6.9 percent. This impressive growth was underpinned by the highest ever growth recorded in large-scale manufacturing which accounts for 68 percent of overall manufacturing, and exhibited broad-based growth of 17.1 percent against a target of 8.8 percent and last year's 7.2 percent. Improvements in the macroeconomic environment, a decline in the cost of capital, the availability of consumer financing at affordable rates, strong growth in exports and a general feel good mood in the economy have been responsible for this

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unprecedented growth in large-scale manufacturing. Over the last four years, the large-scale manufacturing sector has grown at an average rate of almost 10 percent per annum thereby increasing its share in GDP from 9.6 percent to 11.8 percent. Major industries that registered double-digit growth include: sugar, cement, cooking oil, jeeps and cars, motorcycles, motor tyres etc.

Construction:
Another star performer has been the construction sector registering a growth rate of 7.9 percent against a target of 5.4 percent and last year's growth of 3.1 percent. Housing and construction has been identified as one of the major drivers of growth and the government has taken various budgetary and non-budgetary measures to boost this sector which has responded positively despite higher input prices. Another star performer has been the electricity and gas distribution sector which registered a massive increase of 22.5 percent in 2003-04 against a decline of 2.6 percent last year.

Per Capita Income: The sharp rise in per capita income which was witnessed last year continued during 2003-04, albeit at a relatively slower pace owing to a decline in net factor income from abroad (mainly workers' remittances). The per capita income in dollar terms increased by 12.0 percent from $582 last year to $ 652 during the outgoing fiscal year. Last year per capita income in dollars grew by 15.7 percent on the back of a massive increase in net factor income from abroad resulting in a two year per capita income average growth rate of 13.9 percent per annum.

Investment:

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Total investment rose to 18.1 percent of GDP in 2003-04 against 16.7 percent last year. Most importantly, fixed investment rose sharply to 16.4 percent of GDP against 14.8 percent last year. What is highly encouraging is the significant rise in private sector investment -from 11.2 percent to 11.7 percent of GDP. This year's growth is overwhelmed by massive investment in large-scale manufacturing by the private sector which grew by 25.4 percent during the year. Two interrelated sectors, construction and ownership of dwellings grew by impressive rates of 23.5 percent and 25 percent respectively, implying heavy investment in the housing and construction sector. National savings as a percentage of GDP remained at around 20 percent on account of a significant improvement in the current account balance. It is noteworthy that the national savings rate has increased by 8.3 percentage points since 1998-99.

Inflation:
Tame inflation has also been one of the hallmarks of this government's macroeconomic policies. The rate of inflation as measured by changes in the Consumer Price Index (CPI) averaged 3.9 percent during the first ten months of the current fiscal year against 3.3 percent in the same period last year. Food and non-food inflation averaged 4.9 percent and 3.1 percent respectively as against 3.1 percent and 3.4 percent during the same period last year. Much of the surge in food inflation over last year has been due to both demand and supply factors resulting in an increase in the prices of wheat, wheat flour, rice, meat, edible oil and onions. The government has taken various measures to improve the supply situation of wheat including the import of 1.0 million tons of wheat with a concurrent wheat export ban. Central Banks around the world tend to focus on core inflation, which excludes the impact of food and energy prices. Core inflation basically represents policy (fiscal, monetary, exchange rate) induced inflation. Core inflation remained quite subdued owing to prudent macroeconomic policies pursued during the year and averaged 3.3 percent against the headline (overall inflation) number of 3.9 percent for the ten months of the current fiscal year.

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Poverty:
The discussion so far points to the fact that Pakistan's economy has gained more strength during the outgoing fiscal year. All its macroeconomic indicators show marked improvements over last year. The macroeconomic policies and reform programs pursued over the last five years have not only made the economy healthier but also set the stage for taking the economy on a higher growth path. Have such policies and programs improved the living conditions of the people? Have they reduced poverty and improved social indicators? These are valid and frequently asked questions. The government believes that the efforts to strengthen the economy will not be completed unless macroeconomic gains trickle-down to masses in terms of improved living conditions.

Encouraged by two years of strong growth (5.1% in 2002-03 and 6.4% in 2003-04) and over Rs. 860 billion of cumulative spending on the social sector and poverty related programs over the last five years, the government asked the Federal Bureau of Statistics (FBS) to conduct a sample Survey of Household Consumption Expenditure (HCES) with a view to gauging the impact of the macroeconomic and social sectors on the living conditions of the people of Pakistan. The Survey, covering 5046 rural and urban households from all the four provinces of Pakistan, was conducted during April 19, 2004 to May 06,2004. The findings of the Survey are highly encouraging. Not only has the incidence of poverty shown a significant decline but other social indicators as well as indicators that represent the living conditions of the people have shown marked improvements over 2009-10. http://www.yespakistan.com/economy/overview-pak.asp

PORTER AND KRAMER:

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Porters and Kramers said that there should be corporate shared value rather than cooperate social responsibility because CSR is basically only concerned with the firms profit as they do social work just for diminishing the effect made by them on account of making products. They emphasize on CSV because it would diminish the bad effect which would occur first while

producing. By using shared values firms can direct relate to their consumers which would be getting benefits and it would increase their demand for the products which increases the employment as there would be investment more which increases the employment opportunities for youngsters. Shared values can be developed by reconceiving products and markets, redefining productivity in value chain, and enabling local cluster development. By having shared values in the society there would be a better relation between the enterprises and their costumers.

IMPLICATION OF THE THEORY IN PAKISTAN:

Shared can have a very good effect on the society as there would be share values then enterprises would be more concerned about the costumers interest rather than their own interest. If they would be more concerned about costumers than costumers too will be more towards the enterprises and the demand for their products would increase which would increase the production and the result would be higher economic growth and unemployment would decrease. As Unilever does, they have assigned shared values in their organization by which they have a strong relation toward their costumers as it was estimated that about 50% of the consumers are more concerned towards Unilever. So if all firms would adopt shared values then in Pakistan the
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economic condition would be better share values encourages entrepreneurs to shoe their talent and abilities by which innovation in Pakistan would increase which will take Pakistan to a new phase.

References: www.worldsocialism.org/articles/what_is_capitalism.php http://www.econlib.org/library/Enc/IndustrialRevolutionandtheStandardofLiving.html www.econlib.org/library/Enc/Capitalism.html Robert Heilbroner.The World After Communism. Dissent (Fall 1990): 429430. http://www.marxists.org/archive/marx/works/1880/soc-utop/ch03.html

http://www.imadahmed.com/706246076/state-capitalism-and-the-crisis/
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http://en.wikipedia.org/wiki/State_capitalism http://www.yespakistan.com/economy/overview-pak.asp

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