This book was published first in 2010, and is now being brought out in a new Indian edition essentially to reach out to a large number of potential readers in this country. The author, Jaime P. Monfort, being a rare professional who practices what he preaches, is bringing out this edition to suit Indian pockets at a price much lower than the original edition which essentially catered to the US market.
The Monfort Plan is a much needed outcome of innovative scholarship, because capitalism as it has evolved has lost its way somewhere, and has developed a number of flaws, which take something away from the overall welfare of human society. The sub-title of the book appropriately focuses on “The New Architecture of Capitalism”, because as we can see now, capitalism in the manner that it has been practised has led to growing disparities not only across nations but within nations as well. At the same time, today’s brand of capitalism has ignored the negative externalities that growing production and consumption of goods and services has imposed on the global commons and on the natural resources and ecosystems of this planet. The reality of climate change, which is the result of cumulative emissions of greenhouse gases (GHGs), has led to an increase in the concentration of these gases such that the severe impacts which we are witnessing today as consequence of climate change will in the future become far more serious and impose much greater risks on human beings as well as other species. The Intergovernmental Panel on Climate Change (IPCC) has provided up with projections of climate change and its impacts, which would create unacceptable levels of risk for human beings, ecosystems and all species on earth.
The issue of inequality of income and wealth clearly diminishes the welfare of society, because the fact that the rich are getting richer and the poor are restrained in mobility upwards certainly reduces the welfare of large numbers who are thus deprived of equal opportunity. This book deals in considerable depth with the issue of inequitable development as the ugly face of capitalism. The analysis presented goes beyond neoclassical economics and certainly involves the incorporation of other disciplines such as sociology, psychology, history and to an extent even anthropology. The author is uniquely qualified for analysis of this complex phenomenon, because as he himself states, he became multidisciplinary to be able to understand the complexity of the human condition as an outcome of capitalism.
Inequality in different countries is a subject of regular assessment by the World Inequality Lab which brings out an annual World Inequality Report (WIR).
The findings of the WIR 2018 are that inequality varies greatly across regions. One important indicator used in the report is the share of total national income accounted for by just a particular nation’s top 10% earners. In 2016 this was 37% in Europe, 41% in China, 46% in Russia, 47% in US-Canada, and around 55% in Sub-Saharan Africa, Brazil and India. The highest level of inequality was seen to be prevalent in the Middle East, where it was estimated that the top 10% holds 61% of national income.
Jaime P. Monfort has also included the lessons of history and the impact of historical developments on today’s economic reality. In doing so, he has analyzed the actions and effects of the Bretton Woods institutions, the whole record of development assistance and external aid, the spread of globalization, and the exercise of power by lobbies and vested interests. If a statistical relationship was to be arrived at linking the growth of inequality in any society and the power of special interest groups and lobbies, it would become apparent that the rich becoming richer and the poor remaining neglected is the direct result of special interest groups exercising political power to enhance their own income and wealth and thus acquiring further political clout. Today’s capitalism, therefore, is only accentuating and strengthening the forces that are at the root of economic inequalities across the globe.
The political economy of the human condition and the fundamentals of inequitable growth and development are provided in this book through an in-depth analysis of different sectors of the economy. For instance, there is considerable insight provided on the functioning of financial institutions and access to capital for different sections of society, particularly the poor. The special case of agriculture is highlighted because in the developing countries poverty is often associated with the state of agriculture, what with the vagaries of weather and climate as well as constraints in access to finance, knowledge, new technologies and inputs like seeds for high yielding varieties. Farming and agriculture in most parts of the world are essentially private sector activities, but they are influenced heavily by government policies and actions, which, as the record shows, have left poor farmers in many countries with serious disadvantages.
The Monfort Plan also discusses the role of the so-called “third sector”, which is essentially the non-government or not-for-profit sector. Increasingly this sector has an important place in the economy of several countries. In a publication by Peter Drucker in the Harvard Business Review in 1989, he states “Few people are aware that the nonprofit sector is by far America’s largest employer. Every other adult—a total of 80 million plus people—works as a volunteer, giving on average nearly five hours each week to one or several nonprofit organizations. This is equal to 10 million full-time jobs. Were volunteers paid, their wages, even at minimum rate, would amount to some $150 billion, or 5% of GNP”.
In many parts of the world, in fact, the role of NGOs is expanding and bringing about some impressive improvements in the lives of those who are served by them. The non-profit sector is doing valuable work in several communities in fields as diverse as education, irrigation, decentralized supply of renewable energy, healthcare and disaster management. With the impacts of climate change adaptation measures would have to be put in place which in several respects are much better managed by non-profit organizations and which are sensitive to local conditions and realities than governments.
Overall, this book articulates a large number of solutions, but it would be unrealistic to expect that in 500 pages of published material one would be able to find all the answers to the problems associated with capitalism as it exists today. What is far more significant and useful is the fact that a publication such as this would trigger and stimulate discussion and debate by which solutions would emerge in different parts of the world, diverse as the conditions may be from one place to the other. With that objective in view, the author has clearly provided a remarkable analysis and assembly of concepts and insights, which would be extremely useful in creating “The New Architecture of Capitalism”.