- Across the world, economic inequality and the ability or inability of the political class to address it is a major concern.
- There is no doubt that capitalism has played a pivotal role in many economies and brought out the best of human potential, but the system produces as much uncertainty to the have-nots as it produces paybacks to those who have.
- There is an African form of capitalism that we have not exploited. It is deeply entangled in the traditional cultural practices of property ownership and moderated by cultural systems.
- With a few tweaks, we may arrest the increasing inequalities. This will demand selfless leadership to implement.
Kenyans welcomed the New Year with great optimism. Economists predict staller economic performance this year owing to relative peace occasioned by the ''Handshake''.
In the midst of this positive narrative is the rising economic inequality.
Across the world, economic inequality and the ability or inability of the political class to address it is a major concern. In the recent past, local media have shone a spotlight on the rising national debt as well as increasing taxation and spending. These policies are advanced by the government under the assumption that they will narrow inequality.
On the other hand, there are those who argue that taxation and spending should be decreased to enable private sector entrepreneurialism fuel economic dynamism.
While from the outset each side seems to make great sense, they are wrong. It is often presumptuous to think that the policies that buttress these views will be enough to guarantee economic prosperity and social stability in an environment with an uneven playing field.
There is no doubt that capitalism (where the market determines the price and characterised by private ownership of the means of production, distribution and their operation for profit) has played a pivotal role in many economies and brought out the best of human potential, but the system produces as much uncertainty to the have-nots as it produces paybacks to those who have.
It inevitably advances inequality, unless the underlying political systems keep it on check.
In my view, the world never kept pace with the intrinsic dynamism of the system that continuously re-invents itself. We need new versions of capitalism and democracy.
Many of the countries that have always embraced classical capitalism are in deep trouble as they watch the erosion of the middle class and the rise of poverty, with great accumulation of wealth in the hands of very view. In France there are street protests while Italy, Britain and Germany are experiencing great anxiety among the middle class.
Sharp differences of opinions on capitalism emerged in post-Obama US when President Trump began to erase some of Obama policies like Universal Healthcare that was considered anti-capitalist. Even the Unions resisted the same issue of health in Kenya.
The main problem in capitalism is that there are people who always have better information than the market has. And when this information asymmetry gets into the stock market, small investors, often the poor, suffer the most. Examples include the cases of Uchumi and Mumias where the rich sold out before trouble struck and left the poor with the burden of unchecked capitalism.