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The weakness of the Capitalist Economic System Print E-mail
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Article Category - --Science
Sunday, 10 October 2010 16:57
Capitalist system as a substitute for the communist system gives a very bad impact for the development of world economy. Capitalist is derived from the capital, it can simply be interpreted as 'capital'. In a capitalist system, ultimate power is held by owners of capital, which in the modern economy of capital owners in a company are its shareholders.

Shareholders as the highest authority in a company would delegate power to the top management who are appointed by the General Meeting of Shareholders (GMS). Not uncommon in a company's largest shareholder or majority can double as top management.

This is not directly will cause top management to work for the interests of shareholders and not for the benefit of employees or workers who are also part of the company, because they are appointed and dismissed by the shareholders through the AGM. This situation will encourage top management to make employees or unions as a 'cash cow' in achieving its objective, which is the essence of knowledge management.

Weakness For System In Modern Company

What interests of shareholders? The answer, of course, profits continue to rise which will be followed by rising stock prices and dividends. In the current system can only increase corporate profits enjoyed by the shareholders and does not have a significant impact on the welfare of employees or workers. Many companies make a profit and continues to increase every month, quarter, semester and yearly. Is this profit increase will be followed by an increase or an increase in employee salaries or the workers? Of course the answer is not. Especially in Indonesia, where most employees and workers is not a permanent employee and contract only six months or a year. Are they going to feel the benefits of increased corporate profits? Once again, of course not.

Capitalist system if it is like the human body, where the pain suffered by one finger then it will cause pain around the outer and inner tubu. Compare if the finger is fixed to cincing diamonds, whether other parts of the body will feel the effect directly? Does eye at all times keep the finger so as not to wound, burn and so will feel the effect? Does nose at all times maintain a finger through the senses of smell will feel the effect? Is the mouth which is a tool to enter the energy source for finger will feel the effect? Likewise, other body parts.

The capitalist system is a system that is integrated with each other globally. Where the incidence of crises in companies or other countries that have a direct linkage or directly with the company or our country, would not want as part of the capitalist system will feel the domino effect is very significant. On one side of their profits will not provide a significant impact, in other words the effect of loss received by a society with a capitalist system is not comparable with the effect of benefits to be received.

The above illustration describes how unfair capitalist system treats the shareholders and employees or workers who are part of a company. The advantage is felt only by shareholders, while losses will be felt by all sections of the company, employees or unions are no exception. Then how is the system fair? According to the author, a fair system is to make employees or unions as the sole shareholder. Gradually this system will make one company will be owned and by employees. In this case the people outside the company's internal prohibited from owning shares in a company, this is not directly will reduce the dependence of a global company as a liaison point between the company and the outside world globally through stock ownership has been lost.

Weakness As The Financial Institutions Banking System

The next fundamental weakness of the capitalist system is the system of interest. Positioning of the capitalist system of money as something that has a value based on time, so money will have different values due to time differences. This situation will force financial institutions, particularly banks provide financial aid to the expected return rate, so the interest can be defined as 'no help without reward'. This is contrary to the principle once a Muslim, because Islam is the largest religion in Indonesia, where aid is given with sincerity and let God Almighty who responded with his ways.

Knowingly or not interest is one of the main factors causing the 1997 financial crisis and the current global financial crisis. All financial institutions, both banks and non banks withdraw funds from the people with the lure of interest and channeled back to the community to obtain benefits in the form of interest. Greed will encourage financial institutions to channel funds to any party on a large scale, occurred akibanya bad loans which have a major impact on the institution itself. In Indonesia it was before the crisis and spur the monetary crisis, whereas in the United States was spurred mortgage crisis that caused the global financial crisis. On one side if the government or central bank conduct strict regulation would also be bad for the economy because it will occur a phenomenon called credit crunch. Where financial institutions are reluctant to extend credit due to tight regulation so that the economy is not running, especially the real sector which employs many workers.

Imagine, a system that provides an alternative 'forward hit back hit' this is applicable today. What fools we are, create a system in such a way without any solution to overcome them. Then what is the solution? The solution will not be easy, because it's not an easy task to change a system that has been accepted for centuries. Slowly and surely, the system of interest can be removed, the first step split between productive consumption loans and credit. In place of interest for consumer credit may be withdrawn 'donations' which is the sincerity of the customers without coercion. This can happen if communicated well. Persoalnya, not the foundation of financial institutions who live off donations and there is a cost of money, whether the cost of money can be covered by the 'donations'? Of course you can! A good two-way communication will make creditors and debtors as a co-worker and mutual benefit. Substitute interest of earning course credit for the results, such as the concept of Islamic economy.

Weakness In Exchange Rate System

Capitalist system as a system of majority applied in many countries, including Indonesia, putting the value of money as something different because of differences in time, place, power of purchasing power, and so forth. This difference would encourage speculators to take advantage as much as possible without regard for the fate of the people.

In general there are two exchange rate system, the system of fixed exchange rates and floating exchange rate system. Fixed exchange rate system requires governments to maintain foreign exchange reserves for exchange rate remains stable and is at the expected position, while the floating exchange rate system, the strength of demand and supply in the foreign exchange market (forex) will determine the value of a currency terhadaap other currencies.

Both systems are still implemented in some countries. Actually, Indonesia during the new order uses a system of fixed exchange rates, although in theory the system used is the floating exchange rate system, because the government determines the upper and lower bounds of the rupiah against other currencies and the government may intervene to push the rupiah exchange rate keposisi expected. After the financial crisis because the government through the Bank Indonesia was not able to resist attack by speculators and keep the exchange rate remained stable, pushing Indonesia has adopted a floating exchange rate system.

Both systems have weaknesses, because the exchange rate of a currency can be used by some parties who are not responsible for the gain advantages, both economic and non-profits in the economy, because both systems are highly vulnerable to outside economic factors that can not be controlled by economic actors.

For example, a state x using the system of fixed exchange rates, those who want to undermine the government of the country X and has a strong financial state can invade x exchange rate by purchasing foreign currency using the currency of country x is a massive and continuous, consequently x state government will have difficulty maintaining its exchange rate at the expected position, because the attack was made suddenly and continuously because the goal is to undermine the government of the country x, so x is the state foreign exchange reserves over time will drastically depleted or even exhausted and minus because it was owed another kenegara. History records, this phenomenon led to Suharto must be willing to resign from the presidency Indonesia, which has been occupied for 32 years.

It also can apply against the states that use a floating exchange rate system, the actions of speculators who have strong financial can push a currency exchange rate keposisi they expect to gain profit. For example, Indonesia with a floating exchange rate system, and there are parties who want to create chaos in Indonesia, can use these dollars to realize his ambition by buying dollars on a large scale and continuous use of rupiah that will push the rupiah weakened, with a record of other parties as players in the forex market to support this, as a result of BI will have difficulty maintaining stability in the rupiah and inflation will increase because of raw material used to produce goods and services purchased in dollars.

Increased inflation will be followed by peninggkatan interest rates to attract funds through savings and deposits in order to reduce the amount of money circulating in the community that will reduce the rate of inflation and push the rupiah keposisi expected (rupiah strengthened against the dollar). On the other hand, the increase in interest rates will cause economic actors are reluctant to apply for credit and more tends to invest funds in the bank, as a result of the real sector does not run, unemployment is not absorbed, so that high crime rates, poverty increased, and many of his domino effect.

What is the solution to this? The answer is togetherness, get rid of greed and want to share for the benefit of all. The initial phase could be done possibly by way of imitating the European Union to impose a single currency, it also can be tried for the ASEAN region, then gradually in Asia-Pacific and eventually the world are expected to use the single currency. So far, the main factor causing the difference value for money of a country with other countries, since rich countries and rich countries reluctant to share with the poor and taking advantage of the system that they created themselves.
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