The most important criteria for assessing the performance of an economic system

The phenomenon of globalization has become ubiquitous in the new neo-liberal world order of the last few decades.  This particular form of capitalism has steadily replaced socialistic and communistic forms of economic arrangement in many countries in the world.  While proponents of this global economic model argue that this is the best possible system, there are also those who strongly oppose various aspects of this system.  Taking a historical perspective, we see that the events of the two centuries are shaped and defined by the practice of capitalism.  In a way, the peaking of European colonialism coincided with the consolidation of capitalist economic theory, which ultimately replaced it.  In other words, the power and influence wielded by large multinational corporations today (which are the façade of global capitalism) is nothing short of a variant of imperialism.  While conceding that concentrations of power and finance in and of themselves do not lead to oppression and injustice, empirical evidence of the workings of the capitalist model suggests such an outcome.  Similarly, while neo-liberal economic paradigm might have improved the Gross National Products of individual nations and improved the general standards of living, there are other aspects to human wellbeing that is not easily measured and fulfilled (Dixon, 1998, p.125).

For instance, when assessing economic systems, it is only logical to consider the consequences to the environment alongside measures of human standard of living.  There is an emerging consensus among intellectuals and research scholars that there is indeed a strong correlation between the two concepts.  In other words, it is rarely a coincidence that poverty thrives in hostile geographies and that affluence is usually seen in ambient landscapes.  Apart from the literal sense of the word, ‘environment’ could also be taken to mean the political and socio-cultural context of a particular geographic space.  Further, global capitalism has led to the practice of exploitation of cheap labor offered by Third World nations.  So, while global capitalism is further developing the length and breadth of its reach, it benefits certain sections of people while disadvantaging others (Thorsby, 2001).

Going by criteria such as GDP, per capita income, etc, one would conclude that the United States is the most prosperous and advanced country in the world.  But probing a little further, we find that there are sections of the population that lives in poverty and without access to life’s necessities.  This should come as a surprise for most, for the United States is often projected as the land of the free and the home of the brave.  People both inside and outside the country associate the United States with abundant opportunity for work, prosperity and overall success.  While these assessments are not completely imaginary, it does goes to suggest that beyond the ostensible wealth and opulence there is also widespread poverty (Eckersley, 2009).

If such are the realities in the most prosperous nation on earth, what kind of future awaits underdeveloped nations?  A majority of the poor live in rural towns and villages,  where local ecosystems such as water bodies, forests, soil fertility, etc are under unprecedented strain.  The Asian Development Bank notes that for more than half a billion Asians living below the poverty line “local ecosystems and the natural resources associated with them are essential to daily health and wellbeing” (Allen, 2005, p.144).  Women and children are especially vulnerable, as they it is usually their responsibility to collect resources such as water and firewood – a process that exposes them to polluted water and air.  Sub-Saharan Africa is identified to be on the verge of a major catastrophe.  Statistics from rural regions in India, Pakistan and Sri Lanka further reinforce the fears of human rights activists and environmentalists.  The situation is equally grave in some parts of China and Mongolia.  (Dixon, 1998, p.125) While the economies of countries such as India and China are growing at an impressive pace, there is no proportionate improvement in the quality of life for most their citizens.  Hence factors such as access to healthcare, pollution levels of air and water, quality of education systems, functioning democratic systems, equitable distribution of key resources, etc also need to be included as criteria for evaluating the effectiveness of an economic system.

In conclusion, it is quite clear that much of the criticism directed at prevailing methods of assessing economic systems is quite justified, especially in the context of the developing world.  The objections related to this practice can be seen as part of a broader critique of contemporary industrial societies.  These criticisms include deceptive mass advertisements, over-population, environment damage, toxic dumping, corporate greed, etc.  A good starting point for reform would be the United Nations Human Development Index (HDI), which includes a broader list of parameters in assessing health, wealth and prosperity of a society.  For example, in spite of being the leading global economy and military power, the United States is superseded by Scandinavian and Western European countries in the recent HDI index released by the United Nations (Eckersley, 2009).  As ultimately all economic systems serve a social and political goal, it is important to evaluate their merits in this broader context, as opposed to strictly financial and statistical terms.

Works Cited:

Allen, Robert C., Tommy Bengtsson, and Martin Dribe, eds. Living Standards in the Past:  New Perspectives on Well-Being in Asia and Europe.  Oxford, England: Oxford University Press, 2005.

Dixon, John, and David Macarov, eds. Poverty:  A Persistent Global Reality.  London: Routledge, 1998.

Eckersley, Richard. “Is Life Really Getting Better?.” The Futurist Jan. 2009: 23+.

Thorsby, C.D. (2001). Economics and culture. Cambridge : Cambridge University Press (Retrieved on Oct, 21, 2009)