The five mysteries of capital
The past five years have been terrible for the communists Third World countries owing to hard-hit poverty, deteriorating economies, tumbling incomes, bitterness, and anxiety. In spite of their efforts to welcome foreign investors, improve trade within and with other neighboring nations, and preparing balanced budgets to prove that they can manage their economies without assistance from the capitalist West, they have met great disappointments.
The dominance of the West has grown since its victory in the Cold war and today, it controls most marketplaces to the disadvantage of most economies. Many nations are facing political and economic disasters at the watch of the American nation. For instance, the Americans, with their imperialistic power and for selfish reasons, watch Colombia in silence as it struggles with a civil war between drug traffickers and the militia and Asia as its economy is dwindling. In addition, it has withdrawn its support to most nations.
In the last ten years, the American economy has grown and gained dominance over other nations. It has achieved this by taking advantage of the precarious situations of the other nations to make a boost in terms of financial gains, stock, and bonds. In fact, there is a growing fear of recession among the rich economies should they fail to partner with the capitalist West. The West seems to be taking over everything throwing investors, businessmen, third World, and former communist nations into confusion and desperation.
There seems to be no escape from the west and its influence. Most disgruntled nations are reacting sharply to these turn of events and assuming the methods laid to them by the capitalists of seeking investors, ignoring riots of suffering, and disgruntled public, and stabilizing their currencies.
It is important to note that the capitalist system is not a remedy. The idea of forcing the world to adopt that system or suffer is in itself irrelevant. This method was tried in Spain more than three times in the 1820s and each time it failed. Many nations today fall back to market economic policies because capitalist ideas fail. However, the capitalists blame the failure of the Third World and former communists’ countries in adopting its system to low IQs and lack of entrepreneurial skills among others.
This is not true. Other nations teem with entrepreneurs and people who have made advancements in the use of technology. In addition, they possess astonishing abilities, enthusiasm, and great talent. Why then would the Americans struggle to keep the technology of modern weapons from these countries? Why is capitalism so selfish it does not give other nations the same things it’s giving the West?
Capitalism is thriving in the world above every other market economy because of its ability to produce capital. Most Third World and former communist countries are struggling with raising capital. It is capital that raises the productivity of labor in a nation. Also, it creates wealth for a nation and this is perhaps why capitalists are progressing while the other nations, however much they struggle to work hard and even do activities the capitalists are doing, still fail. Lack of capital is a hindrance to their success.
However, it is important to note that researchers have found out that these poor nations are able to raise money from savings and that they have enough assets in terms of resources. The only problem is their resources lack a representational process like that of the capitalists. Therefore without representation whatever they have and would have used as capital is considered as dead capital. Unable to get representation, most Third World and communist countries have emulated capitalist inventions to raise capital and start their own domestic capitalism.
The mystery of missing information
Most developing countries especially in the Third World and ex-communist states have a majority of poor people. However, this does not imply that they don’t have possessions. They have many possessions but lack representations. Whatever they own can be termed as dead capital. They cannot use whatever they possess for reasons of securing interest from the third party. Initially, after Britain had left America, immigrants filled the lands that were left, built houses, and started businesses.
The life of possessing assets without representation represents the Third World today. Over the years the disruption that has come with the revolution in the Third World and ex-communist countries has seen growth in populations and rural-urban migrations in search of land and material possession. Buildings have been constructed anyhow and without proper plan posing a sanitation problem.
It is important to note that in the Third World countries, a bigger percentage of the property people own is not legalized. This problem is because legalization requirements and procedures are tight. Also, the qualifications required for an individual to own property or run a business may be too high. During research in Lima, it was observed that to register for a garment workshop took an individual six hours every day at the registration office and 289 days to complete the workshop registration process.
To make it worse, the cost of legal registration compared to the monthly salary of an individual was thirty-one times higher. In other places like the Philippines, to legally own property such as land, it would take a period between 13 to 25 years. These and many other legal requirements and long procedures make individuals not have representation in whatever they own hence having a dead capital. These prompt individuals to become extralegal. They operate outside official law devising ways of getting employed, living, mobilizing, and protecting their assets.
By devising their own set of rules to fit their situations, they end up forming a very vibrant sector. However, this sector remains undercapitalized. This undercapitalized sector will run without representation as it is with many sectors in the Third World countries. This becomes the reason for poverty and the inability of capital to match the Western world. Undercapitalized sectors have sprung everywhere in the Third World Countries doing all kinds of businesses.
Ingenuity is seen in the manufacture of products from these sectors ranging from footwear to clothing, machinery, and cars originally made by the capitalists. In fact, it is the poor who have taken control over production and real estate management through extralegal ways. Moreover, the economies of the Third World and former communist countries are emerging and becoming stronger founded on illegal companies and garbage collectors.
To determine the amount of dead capital found in the Third World and ex-communist countries from their extralegal activities, research was carried out especially on the value of their buildings. The findings were among others that some owners of buildings acquired land illegally and constructed buildings, leased or rented to other people. This indicates that in these nations, it is difficult to know who owns what and where. Dead capital is everywhere and with almost every poor person.
For instance, in Haiti, over 80 percent of the whole population is living in houses that don’t have a legal title deed. However, even with all these issues surrounding the Third World countries, the brighter side is the fact that they are making vast wealth with their extralegal activities. This wealth forms an asset that can be turned into capital.
The mystery of Capital
The dead capital in the Third World countries only serves their domestic purposes. That capital does not serve its main purpose of raising the economies of these nations. The problem with the communist nation is that they forget to make better use of the dead capital instead they use it to solving immediate problems. It is important to note that undercapitalization is so widespread to about 80 percent of the whole world.
Generally, capital forms the main part of a county’s economy. The market economy is powered by the engine of capitalism. In some nations, specialization and division of labor become the source of growth of their economies. They increase their productivity and hence increase their wealth. Specialization requires capital.
It is this capital and in this case, the accumulated resources, that entrepreneurs use to support specialization. A nation can grow from depending on agriculture and other small commercial institutions to be an economic superpower when it understands the mystery found in the capital. In addition, Capital holds a potential that can be used to yield energy. However, it is important to note that the potential is abstract. It must be converted and fixed to make it useful otherwise it remains an abstract concept. Capital is not money as many would think but money is what is required to fix capital.
The mystery is in not thinking of capital as money. Third World and ex-communist countries have a lot of money from their economies but they can not be able to generate capital. In fact, the assets they have are capital that is dormant. Dormant capital is like potential energy that requires fixing to initiate additional production. Therefore, mechanisms must be put in place to activate it to produce energy. These formal property systems are important in determining the legality of ownership of an asset and trading it inside or outside the physical world. In addition, it saves a nation from going through long procedures as it would be the case of no representation.
Most poor nations have the vast potential of capital but lack property mechanisms to fix it so as to produce greater value and expand the market. In comparison, the West has formally fixed all their assets which include chattels, houses, and every piece of land available. Also, every new product, building, and even commercially valuable commodity is a formal property owned by someone. Therefore, to unlock the potential lying in the capital, a formal property mechanism must be put in place.
Additionally, Third World and former communist countries must adopt this system in order to boost their economies. It may be difficult to go through the legal procedures and apply formal property mechanisms in all properties a nation and its individuals own. However, a number of ways that the West has used to achieve this can be used by the poor nations. These include ensuring that the economic potential of assets is fixed, putting into one system all dispersed information, ensuring that there is accountability, and ensuring that assets are fungible. Other methods would include networking people and protecting transactions.
The mystery of political awareness
The state of many poor countries results in people migrating from one place or city to another in search of work. People flock into the cities and involve themselves in extralegal activities. Others flee their nations and isolated societies to meet their needs and raise their living standards. Overwhelmed governments demolish shanties made by the poor people or simply construct structures like pavements, stalls, and schools for them.
The governments have come up with their own political programs to cope with these issues. This revolution is similar to the one experienced two centuries ago by the West only that this one in the present is growing rapidly and its impact is great in the lives of people. Many governments have failed to keep up with the astonishing speed of social upheavals and extralegal activities that are replacing the established laws.
Additionally, migrants who move from non-West nations into the developed nations find numerous opportunities to develop themselves. These developed nations have advanced and well-developed institutions. These institutions offer immigrants jobs and opportunities to get an education. It is important to note that these individuals get absorbed into a networked property system. These systems improve their living standards as well as enabling them to produce surplus value.
This is the opposite of what happens when migrants migrate into their own countries. Their countries lack proper systems of fixing their assets into fungible forms and integrating them into formal sectors. In addition, they lack responsible agents who will provide them with devices and connect them to sources that will make them become productive. In case this has not happened, the migrants devise and invent extralegal plans and arrangements that replace the existing laws. They carry out their activities with an intention to survive and be incorporated in the expanding market.
Established laws in a country give entrepreneurship an opportunity to triumph. For instance, The West integrated everyone into one system of property under the law. This made entrepreneurship to succeed as it gave room for individuals and businesses to produce a large amount of surplus and to expand the market. Governments in the Third World countries should integrate legal property systems that will create a larger network necessary to create an increase in capital. This network system takes the idea of property ownership from an individual perspective and opens it to a larger network of imaginations.
Moreover, without an integrated formal property system, most governments and market economies become underproductive. The problem with the markets of the Third World and ex-communist countries is the unavailability of standard norms. In those markets, the governments there cannot rule by the law and the agents cannot interact. The replacement of the existing legal law by the extralegal sector by the poor is a shift from small scale organization to one with a bigger context.
The national leaders display political blindness because they are unaware that these extralegal groups are spontaneously organizing themselves and growing rapidly. The entire issue is seen as a massive influx which poses a great threat to health, employment, and security. In addition, the leaders are unaware that it’s only when they will intervene and come up with one legal property system to replace the outmoded system they are using so that these extralegal activities stop.
Another area of political blindness is the fact that only a few people know that the problems they are facing are not new. Issues like extralegal activities and migration that are affecting most cities today happened during the industrial revolution in the West.
The non-West methods of alleviating the problems through stopgap measures and piecemeal solutions cannot work. These methods were tested by the advanced nations of the west and they failed. The answer to this problem can only be found when governments reform the laws. In addition, to facilitate the division of labor, the government needs to establish its law on the property system. This way, living standards, and productivity will rise. Also, people will be able to specialize and get opportunities in widening markets as well as increase capital formation.
Moreover, there are other problems that non-Western countries are facing. These include rural-urban migration that causes population increase and pile-ups in the cities, poor infrastructure, and many more. However, these are far from the fundamental problem affecting them which is that they have a revolutionary movement that has more problems. The potential value of this revolutionary movement has not been harnessed. It is until this will be done that the problem will be resolved. They need to view the whole issue affecting these people in totality, know the real cause of the disorder, and come up with a strategy that will resolve the problem.
Finally, there is a great need for the Third World and former communist nations to pull their resources together, organize their assets, and put in place legal measures to ensure the representation of these assets. Additionally, these nations should come up with new ideas that will create of productivity in various economic sectors of their nations. The population in these should be provided with basic requirements, infrastructural amenities as well as employment opportunities. This put together will enhance the living standards of these nations and open room for them in the widening market.