Sunday, January 29, 2012

Social discrimination in capitalism

Both, capitalism and socialism are vulnerable to social discrimination, but the operating mechanism differs. Under market economies, I have noticed that the following

1. Inefficient Markets

In inequal economies, discrimination operates through demand and supply. Essentially sellers from discriminated communities get bad pricing for their products/services. Their products/services are bought by the "market", if similar products/services are not available at good price or volume through vendors from other communities. Of course, in extreme cases in India, markets themselves can be segmented, since customers themselves are segmented. In fact, parallel economies can exist in some regions with inter-linkages controlled by the non-discriminated communities.

2. Supply chain discrimination

Supply chain units closer to the markets are hard to discriminate against, if markets are efficient. But for those further down the supply chain, dog-in-the-manger type approaches by those ahead of them in the supply chain are not uncommon. Another technique is to take innovation value and create competition through tying up with other suppliers from own community. These new suppliers are then given the the knowledge taken/stolen from the discriminated community. This is espescially true in those business areas, where the intellectual property rights are more important then the non-intellectual property rights in the generation of business value through some product/service.

3. Labour market discrimination

Labour market discrimination is too common and is reasonably well understood. Essentially those without recourse are exploited by paying them less and giving them poor working conditions by threatening them with changes in production technique and/or usage of labour from cheaper areas. Of course paying, promoting, rewarding differentially for same work is also very common.

4. Capital market discrimination

While the essential theme remains same. Access to capital still remains the source of all ills. One would expect that capital would always flow to those people, who can use it better. This is true, if such people are aware and active. But subjugated and exploited communities are structually unable to separate selves from their day to day realities and take on the risk of gestation periods in positive NPV projects. So they end up selling their thoughts, words and actions to enable their selves to survive. In fact they tend to lose shame and prefer to stay entombed in their miseries, since their histories have taught them that resistance is futile. They lose moral strength and "karma-rebirth" theory also encourages passive learned helplessness and ritual action. It is only by increasing their moral strengths, that they might be able to start with small enterprises initially. Dhamma is one tool to stop the learned helplessness and increase self-reliance.

In each of the above, the pre-existing social networks of the involved individuals is a key factor. The exact nature of a node and the exact nature of the relationship between two nodes may vary.

If political, economic and social democracy are viewed through the lens of such a social network analysis, it is easy to understand why "political democracy is a farce without social and economic democracy".
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