Aiding Caitalism
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Seeing the latest newscasts of civilian protests in
connection with the recent NATO Summit in Chicago, and with the
political elections around Europe, it is sad and confusing to see the
public gather under the banner of deriding capitalism.
How can it be that capitalism’s track record over hundreds of years is immediately questioned after only a few years of stagnant growth? And this is following decades of the fastest worldwide increase of wealth creation in history!
The recent protests bear eerie similarities with the Live 8 concerts in the summer of 2005, held in eight cities around the world simultaneously. The masses gathered to espouse their collective ‘wisdom’ on economic policy to pressure the world's leaders in connection with the G8 meeting being held. The message was largely the same as it is today; increase aid dependency and offer broad debt relief. Only that time it was to Africa.
Ironically, I think Africa’s long history of aid dependency can serve as valuable lessons for the European Union now as it is bartering more loans to save bankrupt countries.
Dambisa Moyo, who Time magazine listed among the world’s 100 most influential people of 2009, stated the following in an interview in connection with the release of her book Dead Aid: “In 60 years we have had over $1tn in aid go to Africa [...] In the 1970s, Africa had 10% of its population living in poverty; today that number is over 70%."
The same economic mechanisms apply to Africa as to Europe, but are either ignored or misunderstood in the mass indulgence of the public’s feel-good activism.
No matter how well-intentioned, obstructing the disruptive forces of entrepreneurialism that capitalism promotes tends to hamper innovation and job creation.
The economist Joseph Schumpeter popularised the term ‘Creative Destruction’ to describe a process where economic values and power structures built up by previous companies and labourers are destroyed to make room for something better.
The alternative to this continuous rejuvenation is an economy that stagnates from participants’ priorities being focused on protecting privileges in existing hierarchies.
Yet, wealth and welfare of a people is not guaranteed merely from establishing democratic representation and principles of free-market capitalism. It is more a matter of what priorities a nation will choose to pursue and its culture to promote.
Take Britain, for example, which has shifted from efficiently allocating resources and focus that resulted in the invention of photography, television and the computer.
These technologies laid the framework for the knowledge, media and digital sectors, possibly the most profitable industries today. But that was all well over half a century ago now.
Today I cannot think of a single recent innovation coming out of Great Britain.
The focus seems to have shifted firmly from nurturing the world’s most ingenious engineers to educating the swankiest bankers and lawyers, all with the world’s best remuneration packages.
Considering that some of its largest banks have either collapsed or been outright nationalised in order to survive, I am skeptical about the value and job creation that these professions have contributed overall in comparison to its legacy of scientists and engineers.
In Moyo’s harsh critique of aid she highlights how it primarily supports the lifestyles of 500,000 people working in the aid industry, with most money going to salaries for Westerners. The little money that reaches Africans is siphoned off by the corrupt dictators that they inadvertently help to stay in power as a consequence.
Reflecting on the arguments she posits, I can perversely see Africa’s present aid situation as a metaphor for the economic actors in the West.
Europe’s countless EU and government representatives and bankers holding cushy and secure jobs are the aid workers. And the dictators are the top one percent owning all the wealth in society.
Oscar Wendel is conference manager for Construction Week.
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Aiding capitalism
How can it be that capitalism’s track record over hundreds of years is immediately questioned after only a few years of stagnant growth? And this is following decades of the fastest worldwide increase of wealth creation in history!
The recent protests bear eerie similarities with the Live 8 concerts in the summer of 2005, held in eight cities around the world simultaneously. The masses gathered to espouse their collective ‘wisdom’ on economic policy to pressure the world's leaders in connection with the G8 meeting being held. The message was largely the same as it is today; increase aid dependency and offer broad debt relief. Only that time it was to Africa.
Ironically, I think Africa’s long history of aid dependency can serve as valuable lessons for the European Union now as it is bartering more loans to save bankrupt countries.
Dambisa Moyo, who Time magazine listed among the world’s 100 most influential people of 2009, stated the following in an interview in connection with the release of her book Dead Aid: “In 60 years we have had over $1tn in aid go to Africa [...] In the 1970s, Africa had 10% of its population living in poverty; today that number is over 70%."
The same economic mechanisms apply to Africa as to Europe, but are either ignored or misunderstood in the mass indulgence of the public’s feel-good activism.
No matter how well-intentioned, obstructing the disruptive forces of entrepreneurialism that capitalism promotes tends to hamper innovation and job creation.
The economist Joseph Schumpeter popularised the term ‘Creative Destruction’ to describe a process where economic values and power structures built up by previous companies and labourers are destroyed to make room for something better.
The alternative to this continuous rejuvenation is an economy that stagnates from participants’ priorities being focused on protecting privileges in existing hierarchies.
Yet, wealth and welfare of a people is not guaranteed merely from establishing democratic representation and principles of free-market capitalism. It is more a matter of what priorities a nation will choose to pursue and its culture to promote.
Take Britain, for example, which has shifted from efficiently allocating resources and focus that resulted in the invention of photography, television and the computer.
These technologies laid the framework for the knowledge, media and digital sectors, possibly the most profitable industries today. But that was all well over half a century ago now.
Today I cannot think of a single recent innovation coming out of Great Britain.
The focus seems to have shifted firmly from nurturing the world’s most ingenious engineers to educating the swankiest bankers and lawyers, all with the world’s best remuneration packages.
Considering that some of its largest banks have either collapsed or been outright nationalised in order to survive, I am skeptical about the value and job creation that these professions have contributed overall in comparison to its legacy of scientists and engineers.
In Moyo’s harsh critique of aid she highlights how it primarily supports the lifestyles of 500,000 people working in the aid industry, with most money going to salaries for Westerners. The little money that reaches Africans is siphoned off by the corrupt dictators that they inadvertently help to stay in power as a consequence.
Reflecting on the arguments she posits, I can perversely see Africa’s present aid situation as a metaphor for the economic actors in the West.
Europe’s countless EU and government representatives and bankers holding cushy and secure jobs are the aid workers. And the dictators are the top one percent owning all the wealth in society.
Oscar Wendel is conference manager for Construction Week.
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