“Empowerment” must replace “Subsidies”

According to a World Bank Report (2008), the poorest 20% of world population consume only 1.5% of resources, middle 60% consume 22% while the richest 20% consume more than 76% of resources. This is the pathetic state of affairs we live in.

Inequality is a fact of life; society being an extension of individuals/ families, there would always be inequality in the society. As famously put by Karl Marx, there would always be two classes in the society- the Bourgeoisie (owners of resources) and Proletariat (workers). The control of resources makes the Bourgeoisie powerful and prosperous and the workers weak. The solution as suggested by Marx was a class-less society without private ownership of properties.

However, as evident from the history of the world, this kind of a system based on socialism has failed. The principal reason is that such a system kills the human motivation to excel and thus results in inefficiency. On the other hand, we have also seen the perils of capitalism. The same motivation that makes people efficient, is also responsible for the greed and the unmindful exploitation of people and the planet, which today challenges the very existence of humanity.

So, what is the way out?

The possible middle way can be achieved through a two-prong strategy that balances good things of both the capitalist and socialist systems, i.e. creating an equitable structure within the capitalist system.

(1)    The Government needs to be highly proactive in empowering the poor (proletariat) and making them efficient by enhancing their skills and expertise, i.e. their intellectual resources need to be strengthened as the way to physical and financial resources is through the intellectual resources. Appropriate institutions need to be created to work for the education and training of the sections of the society with very little physical and financial resources.These institutions include educational/training institutions, financial institutions, community based institutions, primary producers’ institutions and support institutions; the legal structure of the institutions does not matter much, they can function either under the government or private or civil society domains. Another important factor is the creation of infrastructure that works for the poor. So, the points emphasized by Amartya Sen hold huge significance: invest in education, health and other social overheads. The points have been appreciated by very few of the countries of the world. This partially explains why there is so much poverty and inequality in the world today.

(2)    The initiatives for the proletariat has to be funded through the taxes raised from the Bourgeoisie class; so they cannot be discouraged in their endeavor in any way. Appropriate policies those make their work easy have to be in place. Monetary grants for this class have to be discouraged; in its place, economic infrastructure needs to be created (like roads, communication network, etc) 

Moreover, an enabling environment needs to be created for both the classes of the society. “Empowerment” has to replace “Subsidies”. Empowering people means making them go up the income ladder forever. On the other hand, subsidies make people complacent. The beneficiaries of subsidies believe that there is a Government which will always give them low-priced grain and they need not work hard to earn them. The capitalist system is efficient because it motivates people to excel; the same spirit is lost when the government extends mindless subsidies. Subsidies result in large scale wastage too. There is nothing worse than a situation where people are complacent and inefficient in a capitalist system.

But the political parties everywhere would waste the hard earned money of its citizens on unnecessary subsidies for their political benefits. It has been proved beyond doubt that giving two pieces of bread to a poor man never solves their problem; they have to be enabled to earn their bread. A strong and wise leader can see the flaw in the socialist system and amend it by using the capitalist means.It requires a vision and high political will.