The Great Recession and economic justice

So, the Great Recession is here. American unemployment rate is 9.6%, the highest since the Great Depression. American poverty rate is around 17%, the highest since the 1960s. And add to that mind-boggling poverty in countries like India. For example, India has anywhere between 300 million and 500 million people in poverty. The growth rate that gets advertised in India is confined mainly to urban areas, and that too, mostly to a narrow self-serving elite. And the future growth trajectory of the world economy as a whole does not inspire great optimism at the moment. Add to that possible long-term losses due to environmental catastrophe, and the picture turns pessimistic.

Despite the presence of incorrigible optimists who would work on nothing other than space exploration technology, the time is one for deep introspection about how to order society in the economic domain. All of a sudden, some old dictums have become very relevant. And the ones I have in mind are from socialistic parlance. One says “ From each according to his ability, to each according to his need “. The other goes “ From each according to his ability, to each according to his work “.

American Republicans will probably eagerly embrace the second dictum. They have spent and intend to spend most of their fire-power to defeat the first dictum. They do believe in a particular version of “ from each according to his ability “, that version being the capitalistic free-market demand-supply version. And the version of “ from each according to his work “ that they are okay with is that represented by the free-market wage. If you are illiterate or old or disabled, and if the unemployment rate is high, most of the Republicans are happy with a “ take care of your own needs “ kind of principle.

Of course, with CEOs of top companies drawing millions in salaries as the job market suffers, the principle being followed sounds more like “ from each according to his superficiality, to each according to his greed “. Given how the American establishment has genuflected before Reaganomics and Social Darwinist ideas, this should not come as a surprise. And yes, there is a precedent – of robber barons carrying out their agenda of greed while America reeled from the Great Depression.

While America is not a right-wing dictatorship, there are aspects of it that make one wonder if it is any different. The amount of investment in the creation and satisfaction of artificial wants and the utter lack of urgency about the welfare system effectively means a decoupling between the well-to-do and the struggling masses, somewhat similar to the urban-rural divide in India. If this decoupling becomes more pronounced, and if right-wing attempts to destroy the public school system and the welfare system succeed, we may well see a slide towards a state of affairs described by “ to only the few who have power “.

The actual final equilibrium can be anywhere between “ to each according to his needs “ and “ to only the few who have power “. The latter state of affairs is untenable, and much conflict may result to pull society towards some semblance of the former. In countries like India, that process is already underway in the form of food riots and violence. America, staid America, fastidious about adherence to a locally optimal rule-of-law, will have to find its own way to solve the economic justice problem.