The Square Circuit

Academia, parenthood, living in a bankrupt city, and what I read in the process.

Tuesday, December 12, 2006

the free market

Although the rampant corruption of the Republicans in Congress and the Bush Administration (see DeLay, Cunningham, Ney, Halliburton, and so on) is chipping away at the once-unquestionable belief that "private business can always do better than government" and "the free market is the wisest and fairest mechanism in existence," those beliefs are still quite strong in the general population--and, it goes without saying, even stronger in government these days. That's why it was so refreshing to read Mohammed Yunus' Nobel Prize speech that he gave the other day. He won the Prize for his "banker-to-the-poor" efforts (briefly: loaning small amounts of money to the world's destitute can help them improve their lives, and can also be a viable business proposition), but in his speech he does a fantastic job making a more nuanced argument about capitalism. He says:

"Capitalism centers on the free market. It is claimed that the freer the market, the better is the result of capitalism in solving the questions of what, how, and for whom. It is also claimed that the individual search for personal gains brings collective optimal result.

I am in favor of strengthening the freedom of the market. At the same time, I am very unhappy about the conceptual restrictions imposed on the players in the market. This originates from the assumption that entrepreneurs are one-dimensional human beings, who are dedicated to one mission in their business lives--to maximize profit. This interpretation of capitalism insulates the entrepreneurs from all political, emotional, social, spiritual, environmental dimensions of their lives. This was done perhaps as a reasonable simplification, but it stripped away the very essentials of human life."

Wow. I"m not sure I've ever heard this so precisely and sensibly stated. He goes on:

"Many of the world's problems exist because of this restriction on the players of free-market. The world has not resolved the problem of crushing poverty that half of its population suffers. Healthcare remains out of the reach of the majority of the world population. The country with the richest and freest market fails to provide healthcare for one-fifth of its population.

We have remained so impressed by the success of the free-market that we never dared to express any doubt about our basic assumption. To make it worse, we worked extra hard to transform ourselves, as closely as possible, into the one-dimensional human beings as conceptualized in the theory, to allow smooth functioning of free market mechanism.

By defining "entrepreneur" in a broader way we can change the character of capitalism radically, and solve many of the unresolved social and economic problems within the scope of the free market. Let us suppose an entrepreneur, instead of having a single source of motivation (such as, maximizing profit), now has two sources of motivation, which are mutually exclusive, but equally compelling 3/4 a) maximization of profit and b) doing good to people and the world."


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