Re: Capitalism vs. Socialism in India?

[Srinath S <srinaths@usa.net>]

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vamsi@siliconcorp.com wrote:
<<<<<<
I remember quiet well about discussing in detail about stable vs. unstable
systems
before.  While you casually use phrases like "whether India can be made
demand
driven or not", I would like to note that you cannot actually make a system
into
something that is "unstable" (or at least not for very long).  What do I mean
by
this?  Well, take democracy and socialism as an example, when combined these
two
form an unstable system where the resulting system is clearly socialist only
or a
democracy only but not both.  So, you cannot "make" this into that so casually
as
if we have a choice.  Following the same thread, I have asked you to combine
the
notion of time with the concept of stable/unstable systems which I believe
might
give Modern Economics a good run well into the next century.
>>>>>>

Well natural systems have a tendency to find their own level, as you have put
it. I agree. But don't have any assumptions that such an equilibrium would be
automatically economic prosperity. For all we know, complete annihilation
could be the equilibrium point that the system is headed towards. Only if the
system is largely demand driven, can we hope to reach an equilibrium of
economic prosperity. And that means, every demand in the system has a (more or
less) equal opportunity to register itself onto the system and get met with
supply.


<<<<<<
Hence, perpetually asking whether a system will be demand driven given a
capitalist system is sort of like asking whether water will flow down hill?
I
argue that a capitalist system must naturally give rise to demand-driven
system.
>>>>>>>

No, my question is not whether water will flow downhill but what lies
downhill. There are many equilibrium points and a free-for-all system and
likewise capitalism need not automatically go downhill towards economic
prosperity.


<<<<<<
Really!?  How do you explain the rapid proliferation of Cable TV giving rise
to
one of the largest networks in the World.  Is this strictly capital driven?
Are
you sure that you are not distorting the facts!?  The low Internet population
is a
result of totally different reasons.  First, the local toll structure by DoT
(where the customer is charged per time unit of time) discourages web
browsing.
Hence, internet users are primarily email users with the exception of
Universities
or IT Companies.  With the invention of web based email, several users can
have
one dialup account but have separate email IDs.  With high cost of local tolls
and
relatively high cost of dialup accounts, the consumers have resorted "dialup
multiplexing" where several people share a single dialup and where they use
it
primarily for email.  It is not that India is not a demand driven market - it
already is!  The problem is more subtle.
>>>>>>

Have a look at my question again. I am not asking my internet has not spread.
(It is because of monopolistic policies and I agree). But my question was that
how come with just 0.2% of the population using it, it takes up a hue chunk of
the ad space on billboards, etc.? Because, that is where the "money" is -- an
abstraction called money that has no relevance to what value was added to the
system in earning them.

<<<<
The demand-driven vs capital-driven models are far less effective in
explaining a
massive democracy.  India is already a demand-driven market.  In fact, India
has
always been a demand-driven market.  Instead, demand has been systematically
distorted/suppresed by absurd policies of a socialist era.  And now, some of
us
have conveniently concluded that the problem is whether the Indian Economy is
demand-driven or not when the real problems are elsewhere.
Capitalism/free-market
vs socialism form a complete set that will allow us to fully explain India's
lingering problems which includes distorted demand (rather than lack of
demand).
>>>>

I don't agree. In fact, demand driven can be a more general model that takes
capitalism vs socialism into its stride. Socialism (as it was practised) was
certainly not demand driven because of centralized controls. Each demand
needed to be somehow associated with the centralized control mechanism to be
recognized. Capitalism led to free market because in order to earn capital
there needed to be an unearthing of demands of the system. But in today's
world, one can earn huge amounts of capital (get huge amounts of buying power
in the system) by unearthing demands of some other system.

How to figure out whether a system is demand driven is quite complex. The main
hurdle in this is that we don't know what we don't know about a system...

Best,
Srinath



Ideas for India: Building the future -- together
http://www.ideasforindia.net/

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