Capitalism and Free Market economies with a heart


Prof Yunus in an address in 1994 at the 85th Rotary International Convention, makes some very important observations about how the capitalist and free market economy as experienced in most countries has failed to deliver the goods to most of the world’s population.

I think he is spot on in saying “Poverty is not created by he poor”. In the same way, the digital divide is not created by those who do not have access to technology. It is created by the greedy entrepreneur who essentially subverted the free market system to his own liking. Why is that when you call up Dell to buy a laptop or a desktop computer, you are able to configure the system to your hearts and wallets content, but you have to purchase Windows no matter what? Why does that happen? It is because of the so called “Microsoft tax” that is levied for each and every computer that leaves the factory. This money is collected even if Windows is not installed.

How can this then help in bridging the so called digital divide? Why is it that no matter which rural village one finds oneself, there will be some farmer or “the poor” handling and using a cellular phone. As I have indicated in this post, there is a business model that manged to avoid the divide.

What we need in both developing and developed countries is to get our elected officials to understand the subversion of the free market by some monopolistic/oligopolistic vendors/businesses to the detriment of both the economy and the people. We need to put in corrective measures – be they via legislation or other subtle means – that will correct this “unseen” distortion. The Taiwanese effort to ensure that all hardware acquired by them is vendor certified to run Linux is an extremely big step forward. The other is the adoption of Open Document Format. As Prof Yunus says in: “Profit maximization is recognised as the best principle to ensure the optimal use of resources. It tells you when you are going in the right direction in mixing inputs, when you are going in the wrong direction, and when you have just the right combination of resources. Free market competition ensures that you are pushed out of any comfortable position when your competitor finds a better combination or better product or better way of doing business. It is the driving force for all innovations, technology changes, and better management.”

Without free market conditions, we cannot but be bullied into submission into mediocrity and stagnant products. The perception of free market is not sufficient, there has to be constant vigilance to ensure that it is not subverted.

As Thomas Jefferson said: “The price of freedom is eternal vigilance”.

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