Does Capitalism Kill the Government?

Economic wellbeing is the very first and basic right of an individual and responsibility of Governments. While the whole world is busy creating and acquiring wealth, The Policy Times finds major issues with Capitalism especially in handling public services.


However arguable it may seem, the fact remains that capitalism produces aberrations in the system and infests it with such discreet pests that eat up all the good (for the masses) that could ever come out of the concept. Take for example the working of the government. By the virtue of its constitution, a government must have been a ‘Governing body’, not for profit. But it does impose taxes all around the world. This is to be justified with the philanthropic activities that the government is supposed to take, wherein the wealth from ‘haves’ can be distributed to the ‘have nots’ in a way that eventually shall bring about a society where the wealth distribution is largely equitable. But sadly, that is never the case with a government that adopts capitalism as its basic tenet.

We shall come back to the government a bit later, but first let’s take the example of a bank. A bank must have been a facilitator. Just a facilitator. Not for profit. Why? Because it replaced the system of barter. Establishment of banks brought about the concept of mint (monetary system). But it is to be understood that the system of barter did not have a mediator or a facilitator to regulate the system. Thus transactions were purely based on supply and demand and no part was to be paid to the ‘system’ as commissions. The system was free of cost. But when barter was replaced by the monetary system, banks started making profit from this new method. Ideally, the bank must have been a co-operative society that has pooled in some amount of wealth to create a new system where the cost of minting could be borne by all users. The new system could have facilitated ease of doing business and the system could have been owned by all, for all. But since capitalism must have been born out of this very financial system, banks established themselves as a ‘for profit’ entity that started charging interest akin to brokerage on the transactions of deposits or loans. 

What I intend to say is that in the whole system, at any given time, the money in circulation is constant. If banks are trading on the fixed amount of cash that they have, they cannot demand a surplus that does not even exist. That is to say, if all banks have a consolidated wealth of Rs. 100, they cannot charge something that eventually spirals out of the total amount of cash that they have printed or have put into circulation, the fact being, banks control all the cash in circulation in the system. We cannot print cash as per our need. So, when banks give loans to someone, they usually charge a rate that depends on the risk factor. When the total cash in circulation is fixed, how can they demand an additional 15% (say) or a 20% interest when they themselves know that the extra 15% of interest is a value of money that they have not even printed or circulated in the system. This gives rise to the fact that essentially, when someone is getting rich, someone is getting poor in the system. Even that could have been a natural concept. But because banks mediate, and charge money for their roles, it happens that banks get richer no matter who gets what. Thus, essentially a system of transactions that was free of cost earlier comes with a cost now because the ‘system’ has been replaced by an ‘entity’- Banks.

Similarly, the government should have been ‘not for profit’ and aiming at wealth distribution through philanthropic activities it shall undertake with the money acquired through taxes. These taxes should also be justified and should not be just a means to extract the maximum profit possible. Just like banks, the government aims at maximizing their profits and then, might for the show/display or as a justification of its expenses tries to spend the money on social good, albeit, only in parts.

Just like an NGO which aims to earn no profit, but has to spend on the cost of maintaining themselves, the government spends on itself, rather exorbitantly. So it is a no surprise that bureaucracy and the pride attached to it was born out of the fact that the government was always misusing its funds in taxes for its own fulfilment and adoration. And as a citizen, we have no means to circumcise the government spends. It all remains on the good faith that we are inescapably bound to keep on the government. We can hardly ever challenge the road our nation takes. We can only protest, and might get beaten. We can only elect representative that turn blind eyes and deaf ears to what the people, whom they are supposed to represent in the Parliament, need. We are just a dysfunctional democracy at the end. And let it not escape your cognizance, that the capitalistic system that makes a bank churn profits, is behind the concept of governance too that makes the system extract profits (Taxes/PSUs). The fact that an ‘entity’ called government has replaced the ‘system’ of governance and the social good that it could do through a co-operative system has been high jacked by the cost of establishing and maintaining the entity, is an aberration.