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25 September 2012

MYTH: Rich people, companies and countries became rich because they were smarter and worked harder.

This unspoken, unverified belief is not only widespread among the rich, but, sadly, many middle class, poor and uneducated people in the world also share it. Everyone who shares this belief will logically also believe that poor countries remain poor because their people are not as smart and do not work as hard.

The reality is quite different. For hundreds of years, the rich countries have stolen the wealth of and exploited people in the rest of the world. Imperialism, colonialism and slavery brought incredible riches to the countries that executed these.

Small-scale free enterprise encourages invention, innovation and diversity, and contributes to local communities. The economics faculties of most Western universities highlight these benefits of a transparent market in which many small firms are fully competitive. Unfortunately, since 1600 when the British East India Company and the Dutch East India Company were formed, multinational corporations have played by different rules. Fabulously lucrative, they inspired future generations of capitalists to invent ingenious strategies to turn their corporations into the most wealthy and powerful entities on the planet.

Huge multinationals have tremendous capital on hand to pour into new endeavors, a resource that can’t be matched by smaller competitors. They can produce enormous quantities of goods at lower costs, and even sell at a loss to bankrupt the competition. In most Western countries predatory pricing and other actions intended to bankrupt a competitor are illegal, but these are difficult to prove and rarely prosecuted. Even when they are prosecuted, it’s almost always too late to prevent the harm. By the time Microsoft was brought to trial for violating the Sherman Antitrust Act, it had already effectively destroyed Netscape, once the most widely used web browser.

Of course there are smart, hard-working people who are rich. There are also millions of smart, hard-working people who are poor. Capitalism works well for some people, but not for everyone. What the world needs today is economic democracy, the empowerment of people to make economic decisions that directly shape their lives and communities through locally-owned, small-scale private enterprises, worker-owned cooperatives, and publicly-managed utilities. It decentralizes decision-making and gives citizens the right to choose how their local economy should be run.

excerpted from After Capitalism: Economic Democracy in Action by Dada Maheshvarananda (Puerto Rico: Innerworld Publications, 2012).

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