TheRodinhoods

How seriously do you take capitalism in a democracy?

Capitalism – a profit based economic system in which all or most means of production are operated and owned privately. Capital investment as also production, distribution and prices of goods and services are determined in a free market, rather than by the state.

Socialism – State owns the resources and the property. Production and resources are shared between people by the government.

Democracy – A system where all people collectively choose a smaller group of people to decide for them, the applicability of socialism or capitalism on a case by case basis.

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Yesterday, around 2 P.M. we lost power at our office. It lasted all for 5 minutes. One of my colleagues complained- “See what happens when you vote Kejriwal in, now there is going to be power cuts in winter, I can only imagine how summers will be like”. Interestingly, less than 2 months back he had voted for AAP in the Delhi elections. “He will cut electricity prices and ensure water for all but think about it, aren’t the resources limited? He needs to cut it back somewhere, which means we will get less of it” he went on, “get ready for a horrible summer”.

This got me thinking – is this friend of mine absolute nuts!!

He voted this man in, knew full well that there were some water and electricity redistribution plans and yet he is now upset with what? His own voting decision? Should he not be happy? His candidate won. I am not sure if I am more amazed at how quickly perceptions change or how careless people are with their vote. I am not particularly supportive or against any political outfit. If at all, I am quite a fan of Arvind’s style and expression. Especially the bit he does with that epic barb – “Sir ji, hum kaun log hain”? For that reason alone, I wish he stays around.

Anyways, coming back to the point – what role does capitalism play in deciding who comes to power? In fact, who really decides who comes to power? Is it really the aam aadmi? The burgeoning middle class of India? The media? The minorities? The super rich? The poor people?

Now if it is votes and votes only, then cutting electricity in a few VIP areas will save you enough MWs to light up 1000s of poor households.

It begs the question – why don’t governments do more of this then?  Why 24 hour electricity in VIP areas and none in slum clusters?

More people more problems – a typical retail sector nightmare.

In the simplest terms, too much effort will have to be put in, in order to get the poor votes if each of their demands had to be satisfied individually. There are just too many poor people all of whom have different demands.

Rich people on the other hand have the power to incentivize the candidate as also the money to influence the voter. Most of all, they are few in number so you know who you have to talk to.

How the whole voting scheme runs in a pure capitalist structure:

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Of course everyone wants to be rich. The inherent nature of capitalism is such that once the poor voter becomes rich he behaves no different. What could be an ideal solution? Is there such a thing as a socialist democracy?

You may also like to read the – Indian Economic Outlook – 2014 and my post on the Stock Market Outlook for 2014.