Yes, I am not joking. The CCD in my topic is not the coffee shop (Cafe Coffee Day); it’s rather an acronym for Capitalism, Communism and Democracy.
Let’s start with the first “C” that is Capitalism. As defined by many economists it stands for the investment of money by private owner in innovative ideas for the sole purpose of making profit for themselves. Now as many of us might recollect Capitalism didn’t become the buzz word till the 19th century but it was actually well explained by one of the first economists, Adam Smith. He explained the idea of introducing the concept of free market and he referred to it as “The Invisible Hand”. Sorry to disappoint all the readers but there is nothing like the invisible hand in the world (If there was any, no bank in the world would be safe). It is rather a concept which he put forward to explain how if the market was allowed to run freely without anyone’s interruption and everyone was allowed to follow their ideas of interest, the overall economy and the market will benefit from this phenomenon.
The basic idea behind this concept was that everyone works for their own benefit and this collective individualistic search for betterment will lead to a situation of growth and innovative ideas. Let me give you an example, suppose India is playing a cricket match against Pakistan and chasing a huge total. Player X is not that much concerned with his country’s victory but he is concerned that he plays well so according to Adam Smith he will work for the betterment of his own, and in this case it is scoring lots of runs. What this does in the long run is that it indirectly helps his country win the match because in pursuing his self interest of scoring runs he has actually helped India win a difficult match. This is pretty much how economists explain Capitalism. Capitalism is what led people in depression ridden Europe to find new haven in the USA as they believed it was the place which supported capitalism and it seemed the only solution.
Capitalism is what made USA what it is, the sprawling city of New York and those hustling lanes of Wall Street are nothing but product of capitalism. It was as if capitalism was the solution that the world was waiting for since a long time. But the real world is no fairy tale and the reality soon came to the forefront, the problem with capitalism and its concept of leaving the market free was not full proof. Capitalism did create wealth but it also created inequality as Adam Smith had predicted and with inequality came injustice and with injustice came economic divide. As there was no single entity looking over the rise of capitalism, no one could prevent its sudden impact when on 24 October 1929, the NYSE crashed and the world plunged into the Great Depression. People now wanted something which was secure and different and this gave rise to the erstwhile USSR leading to the path of “Communism”.
Communism as defined by many as a classless, moneyless, and stateless social order structured upon common means of ownership. Marx advocated these ideas as the solution of the problem created by capitalism and ending its monarchy in the textbooks of economics. Communism at first appealed to lot of people who were disturbed and frustrated by the unequal distribution of wealth in the world, it acted as a plan suited more to their needs. People started believing that with communism they will get the equal share of the pie and this will lead to prosperity especially among undeveloped countries which were devoid of the wealth created by capitalism and hence the so called “Cold war”.
The reason why Communism failed was very simple actually. Communism promoted common welfare and sharing of property, wealth and rights. Thus my goods are your goods and my house is your house. Let’s go back to the example of the cricket we gave earlier, if capitalistic mindset of the Indian batsmen was replaced by a newer Communistic mind, all the batsmen in the Indian cricket team will lose the incentive to score runs because as communism advocates the profits, the prize and the fame everybody desperately needed (and this was the thing which drove Mr X to score all those runs) will vanish and nobody will have the incentive to do better than the other, inherently making the team less competitive. Thus we can see that communism extinguished the spark of entrepreneurship that guided the world throughout the beginning of the 20th century and led to so much of wealth creation.
The world again accepted the idea of Capitalism but this time it was sugar coated with Globalisation. And here is where “D” of the acronym “CCD” comes from: Democracy. With Globalisation the world became smaller and more accessible to each other. The mixture of Capitalism and Globalisation gave rise to a new term called “Capitalisation”. The world was now the oyster of anyone who had an innovative idea and could reach out to the global world, but as nothing is perfect there was a flaw in this design too. With globalisation many of the multinational company began to dictate terms to underdeveloped countries and once again the cycle of inequality started. Today most of the underdeveloped countries of Africa are still untouched by the prosperity of the west and this can only be removed if we think of Global Democracy as the right of each and every one of us. The IMF and the World Bank should not discriminate against any country rather it should think of the world as a whole and its countries as a single economy working in a democratic society.
If we can achieve that goal then only each and every one of us in the world can actually reap the benefits of prosperity.(and perhaps sit and enjoy a cup of coffee in Cafe Coffee Day-CCD !)
About the Author:
Muzaffar Khan Waris
He is currently pursuing MBA in Energy and Infrastructure from School Of Petroleum Management ,Pandit Deendayal Petroleum University Gandhinagar ,Gujrat. He is an avid reader and loves to watch movies.