Sunday, June 30, 2013

Consumer, Producer and Market

Household final consumption expenditure constitute India's 59.5 percent of GDP in 2008-2012 as per world bank data. Household final consumption expenditure (formerly private consumption) is the market value of all goods and services, including durable products (such as cars, washing machines, and home computers), purchased by households. Consumption shows utilization of wealth but the question runs deeper than figures. Is wealth creation enough ? Is wealth reaching the poor household even with the above 5% GDP growth rate?

Lop sided nature of Indian capitalism promotes few entrepreneurs, mostly as an employees and almost all as a consumers. This is well reflected in our quest to create jobs rather than suitable ecosystem for a new venture. I am seeking attention towards our socio-economic environment where masses are looked as consumers rather than producers. By focusing only on profit making, even BOP reduces the concept of wealth to just money, and the rest – i.e., the community and the environment - are reduced as the resources for exploitation.

Most of the poor people in India are engaged in agriculture and allied activities. The markets are distorted with oligopolies of the traders and producers are not getting proper prices for their produce. Most of the markets are strongly biased in favors of traditional trading communities. One more hidden fact : Caste reduces the transaction cost in India. That is a proper conclusion coming from the research study. [Caste discrimination and transaction costs in the labor market: Evidence from rural North India]. So, pleading with the privileged traders to share their luck may be an utterly fruitless exercise. There is need of deep market reform in India. This idea has been floating from a long time. When we fail to reform markets through regulation (that turned into license raj !), we thought of creating jobs to pull worker from the field to cities. Now on realizing that cities will not absorb the agricultural workforce, schemes such as MGNREGS are created to stop migration. So we are back to square one and problem with the market remains same.

I give weight-age to an inclusive more than an efficient market. Left Parties will always see every individual looking for reform in state policies as a suspect who has succumbed to the lure of the market. And everyone knows how socialism has failed ! Market will always go for person with better information and resources. Neo-liberals cry for efficiency without even giving chance of equal opportunity to everyone. That is the problem of our neo-liberal friends who seems propagator of free market without even surveying ground for this step. Instead of finding out why the idea of regulated market has not worked, we are scrapping the idea itself gradually. In the futile chase of efficiency, we are loosing our sights. Our markets are neither inclusive nor efficient.

There are some views that don't change with the time. Once, I have written an article heading Consumer Culture 5 years ago. But in these five years, I did learn few things about markets and social justice. Still, I am undecided on final answer. Yes, I subscribe to the words of Laurence J. Peter who argued --- “Some problems are so complex that you have to be highly intelligent and well informed just to be undecided about them.”

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