Economics Essay Example | Topics and Well Written Essays - 1750 words

Economics - Essay Example Global capitalism has been tried before in the world and it has failed. However, when the reforms proposed by the West prove ineffective, it tends to blame the East for its innate weaknesses like insufficient entrepreneurial skills. The matter of the fact is the entrepreneurial skills of the Third World and the ex-communist countries are quite similar to those of their Western counterparts. If the people in the third world do not suffer from certain fundamental deficiency in cultural or genetic heritage, then what could be the reason behind the fact that the capitalism is successful only in the West? An answer to this puzzling question is the failure of the Third World and the ex-communist countries to produce capital. The poor people in the developing world are not wanting in the assets that make capital successful. They in fact hold these assets in defective form: the ownership rights are not fully documented, the terms of the businesses are not defined and the industries are not l ocated at suitable places the cumulative result of which is that these assets cannot be turned into capital. In the West, the property is fully documented which can be used as a capital for producing surplus value in various forms such as mortgage and securities. Because of the absence of this representational process, the third world countries are undercapitalized. The third world despite assimilating a lot of western cultural traits has failed to follow the example of the West in this crucial area of producing sufficient capital. This is the mystery of capital. The fundamental difference between the western nations and the Third World and the ex-communist countries is that only the former have the knowledge of converting capital from places which the other countries cannot. This absence of the conversion process in the Third World is compounded by the failure on the part of the West to understand the origin of the capital. This book is an effort to trace the history of capital and learn right lessons from it to help poor countries overcome their problems which have nothing to do with deficiencies in culture and genetic heritage. This fact has been made clear by the fact that the regions which are culturally as diverse as Russia and Latin America share the same problems because of building capitalism without capital. The Third World today faces the same challenges such as lack of enforcement of property rights, poor law and order situation and biased business and trade regulations which were faced by US in its early history and other Western countries only a couple of centuries before. There are at least five questions which need to be answered to understand why the role of capital despite being the most important component of Western development is not adequately understood: first, how much saving has been done by the poorest sectors of society in the west; second, what is the nature of capital and what is its role in the creation of wealth; third, why have the governments not been able to put the â€Å"dead Capital† in the hands of the poor people to some profitable use; four, why have the lessons not been learnt from the history of successful capitalist countries and five, why the adoption of the Western legal system in the third world has not delivered. The Mystery of Missing Information In the Third World, the documentation of property