Modern capitalismleads to inequality

The absence of a real wage growth in the Philippines is among the major obstacles that prevent the country from reaching middle class status by 2040. In a briefing, World Bank senior economist Rong Qian said: “Actually this phenomenon that you see, the real wage increase between 2000 and 2016, the growth rate was ZERO in the Philippines. And this is something that I’ve never seen in other countries, especially in other developing countries.” Qian also said that raising real wages – which can be defined as purchasing power – would be essential in achieving the 2040 economic targets. 

During the past 17 years, from 2000 to 2017, the average annual GDP growth, in the Philippines was 5.3%. But the real wage growth rate, during the same period was ZERO %. Who were the beneficial beneficiaries of the increase in the national wealth? Obviously a handful of people benefited and the labouring class did not benefit at all. In spite of this anomalous position, businessmen, by and large, continue to resist any calls for increasing minimum wage. Is it because businessmen would rather seek added profits by refusing to allow labor any share in the increase in profits, rather than by seeking ways to improve productivity? In the Philippines, the low productivity is blamed on the laboring class while in other countries it is management that accepts the responsibility to search for ways to improve productivity.

The whole world is undergoing global unrest which will, sooner or later reach our shores. In a recent interview, Zanny Minton Beddoes of the Economist magazine outlined the four global shocks that are now causing social and political unrest. Here is her interview:

“... the rise of populism which is true, but I think it’s more of a description than it is an explanation. The fact that this is happening in this country, in Britain, as you say across Europe, in each case there are some individual reasons. But I think the fact that we have this anger and frustration in so many countries at the same time suggests to me there are deeper causes. And I’ve been thinking about this a bit. 

And it strikes me there are four big shocks that we’re going through right now in the world economy. And each of them is enough to make people anxious and worry about the future. 

So one is the whole computer revolution, the technological revolution. ...we are at the beginning [of the] middle of this, probably, huge change in the nature of our society from that change. People are feeling anxious. Majorities of people now across the advance world think that their kids are going to be worse off than they are. People are worried about the future of work. So that’s one big shock.

The second is, I think we’re in the midst of this very big geopolitical shift. {During} the latter half of the 20th century, the US was the undisputed global leader. Now, we have in the form of China, you know a rising power. It’s going to be the world’s biggest economy in not to distant future. And it’s an authoritarian dictatorship. The authoritarian regime is becoming more authoritarian, the more it rises.

That’s a big power shift, a big challenge to the United States that I think is also a second big shock.

Third one is the demographic shock. Populations are aging. We’re all living longer. The combination of rising life expectancy and declining fertility means that the kind of nature of society is changing as populations aged. The median age is rising pretty dramatically across much of the world.

And then the fourth one, and this, I think is climate change which is going to be the other defining shock of the next few decades, because we’re seeing the impact in the form of more extreme weather patterns. We’re also seeing in the younger generation a kind of current credo – for goodness sake address!

And you put all those together, they’re all profound shocks to the established political system.”

Beddoes added one reason for the rise of populism: “At the moment we see a lot of anger, a lot of frustration, a lot of scapegoating. And a lot of, you know ‘snake oil salesman’ pretending that there are easy answers.”

The Economist magazine has been the bible for capitalism for more than a century. But in this interview, its editor-in-chief reserved its severest criticism for the modern day capitalist and said capitalism has to undergo revolutionary change.

Economies all over the world are becoming increasingly concentrated in the hands of a few companies or business families. Big businesses are also taking steps to protect their monopolistic positions Beddoes said: “We need to have a renewed focus on competition.”She was, however, pessimistic because she observed:” And I think part of the problem ...is that many people who have done very well out of this – out of a system they considered to be meritocratic – the highly skilled, the highly educated [ big business] are probably less inclined for bold reforms.” 

In almost every country where there were demonstrations on the streets, the answer to the query why they were demonstrating was almost the same – Corruption, Unemployment and Inequality. This was the rallying cries in Chile, Lebanon, Iraq, Ecuador,France. How long before we hear these cries on the streets of this country?

Creative writing classes for all 

Young Writers’ Hangout on November 9 with Mailin Paterno & November 23 with Tarie Sabido (1:30 pm-3pm; stand-alone sessions) at Fully Booked BGC. Adult class on fiction writing with Jose Y. Dalisay, Jr. on November 16, 1:30-4:30 pm. For details and registration,  email [email protected].

*      *      *

[email protected]