Saturday, January 10, 2004

Alternative Perspective

Dogmas of the Modern World

Issue 42, January 5, 2004

Compiled by Madhukar Shukla

Alternative Perspective is an attempt to widen our awareness about issues related to business, environment, role and influence of media, geo-politics, culture, etc. It aims to share, on a regular basis, some of those pieces of news and information, which do not find place in the highly monopolised mainstream media. Please feel free to share/ forward/ distribute this newsletter to others who may be interested.

Every age has its own dogmas. In the medieval times, the dogmas revolved around earth being flat, allegience to Church/ Religion/ Caste, divine division of society, etc.... Over time, We have become more enlightened and informed, but the era-specific dogmas persist. Questioning the present-day dogmas - e.g., rationale of economic globalisation, sanctity of the free-market, validity of GDP, etc. - is just as blasphemous, as questioning of existence of God must have been a few centuries back... And just like the dogmas of yesteryears, these present-day dogmas are as much rooted in blind faith as were those in the old times... Both defy the empirical evidence, but continue to be accepted as "facts" by the respective generations...

Note: The URLs of sources used in the text are numbered and given at the end of the Newsletter.

In This Issue:

  • Dogma 1: Economic Globalisation Leads to Proseperity

    This is the popular belief - and belief is an appropriate word, since there are hardly any comprehensive empirical studies on the Impact of Globalisation on the Society and People. This rare study - The Scorecard of Globalisation 1980-2000: 20 Years of Diminished Progress - on the other hand, shows that the belief is erroneous; that actually, the current form of economic globalisation has had negative impact on not just the economic indices, but also on life-expectancy, education, healthcare, etc. The reason, apparently, lies in the conditions put by the IMF/WB for sanctioning loans[1], and the Structural Adjustment Programs: cut-down on social spending deprives society from education (and thus, wealth generating skills); higher interest rates force farmers to remain poor, and small businesses to close down (and thus, increasing poverty and unemployment); eliminating tarrifs kills local businesses; shift from subsistence to export economy drives down the prices globally, making the producers lose money, etc. - Though, of course, for the rich, urban consumers (who are part of the 5th Dogma), this is a boon, because it allows them to consume more by paying less - Perhaps, a more fundamental question one needs to ask is: Why has Globalisation Failed to Deliver?"[2]

  • Dogma 2: GDP is a Valid Indicator of Prosperity (and therefore, of Happiness)

    The logic is that the more is produced and spent, the happier will the people be. The flaw is that all kind of spending does not bring happiness[3]; if people eat more and become obese, they may end up spending more on health-care and medical insurance bills - and while it may drive up the contribution of Food, Healthcare and Inurance industries to GDP - no one is any more prosperous or happier. After all, a society can also be happier and healthier through activities which do not (or minimally) contribute to GDP, e.g., taking care of the children and the elderly, maintaining one's own gardens and homes, cooking one's own food, taking care of the environment, contributing to community activities, etc.

  • Dogma 3: Economic "Reforms" and "Free" Market Economy Fuel Growth

    There is a reason for putting "reforms" and "free" in inverted comma - like "deregulated" markets, "high-growth" economies, "developed" countries, etc., these are adjectives which manipulate one's thoughts and perceptions. In any case, when Adam Smith wrote about how the "invisible hand" of the Free Market would balance production, supply and demand, he was assuming a market in which players are not so large as to influence the rules of the market, no "information assymetries" among players, balanced trades across regions/ nations, etc. The "free" market doctrine, as construed and sold today, is actually a betrayal of Adam Smith's vision[4]: the rich people and corporations are more powerful than nations, trade secrets and patents create information assymetry, and trade barriers and subsidies distort flow of trade. And worse, the morality of "self-interest", which Adam Smith eulogised, has got replaced by pure greed for money[5].

  • Dogma 4: Business must Maximise Shareholder Returns

    This is yet another unchallenged myth of the contemporary world. The reality is that more than 90% stocks floating in the market are "used" stocks: when you buy or sell a share on BSE, Nasdaq or NYSE, the money does not get invested in the company - just like when you buy a second-hand car, the money does not go back to the manufacturer. No one asks "why?", and so the myth perpetuates (supported by business magazines, acadmicians and b-schools). An unfortunate by-product is that business is supposed to be "doing well", as long as its stock prices go up - even if it devastates the local community by closing down a plant, underpays its employees, contaminates the environment, etc.

  • Dogma 5: Consumer/ Customer is the King!!

    The final piece/pawn of this engmatic world-view - the consumer!!. Enthroned as the "king" by the PR machinery, he is actually - often and unconsciously - just a worker, ensnared to serve the economy, and to keep the factory of needs running[6]. In this powerful media-generated world we live in, personal identity is increasingly less a matter of "who I think I am", and more often defined by the address I have, products I buy, how much and what I consume, places I eat in, and even the brands I wear (it is now important that the brand of the accessaries is visible to others!!! - the consumer serves by becoming a walking advertisement). And so, the King, assuming the responsibility to serve those who made him the king, consumes - even if this may mean dying of consumption[7]

    Other Sources Quoted in the Newsletter: