Thinkers and Philosophy :

All Sciences (Social or Physical) have their basis in Philosophy. Unfortunately, in

Pakistan, original thinking is suppressed. Therefore, we have to understand, how
ideas are evolved. A philosopher, thinker and a social scientist by the name of
Adam Smith, laid the foundation of capitalism. Capitalism is a form of economic
model, through which societies are run. Adam Smith, wanted to end want and poverty.
For that, he tried to gave an economic system. Main points of capitalism

1. Division of labor and Specialization : Each individual is supposed to perform a

simple, repetitive tasks. The benefit of this is that by breaking down complex
jobs, into simpler ones, people are able to learn quickly. Further, even people
with low intellect, can perform these repetitive tasks with ease.

2. Efficiency of Markets :

Adam Smith, stated that markets are the best place for resource allocation. What
does this mean? For example in a sale transaction, there are two parties, the
seller and the buyer. The seller, will try to sell the good, at the highest price,
whereas the buyer will try to buy the good at the lowest price. The seller will try
to increase the features and benefits ( Utility) of his product, in order to get a
higher price from the buyer. Furthermore, he would want, that all buyers, buy his
goods and not from his competitors. This would lead to higher quality products,
lower prices and continuous improvement. By, buying good quality products, that
provide value, the buyer buys more goods, as a result more money, end up with a
good seller. He is able to produce more of the valuable good to the society. In
this way a. competition is encouraged b. good producers are rewarded c. Society
get's more productive.

Private Property :

Private property means, that each individual has a right to own a car, factory,
home. Private property ensures that the assets of a society are well protected.
It's human nature, that we protect our things, very jealously. Private property,
lead to inheritance, whereby the children of the deceased take up the ownership of
the parent. In this way, continuity is ensured. if you add up all the households,
you will get a society. In this way, if a household protects his private property,
on a macro level the entire society does the same.

On these three basis, many countries organized their economies. George Washington,
first president of US, had a copy of Adam Smith's wealth of Nation, he had read it.
Here, comes importance of reading. If we have leaders who read, they are able to
grasp ideas, that can be of helpful to a nation. Unfortunately, we have third class
leaders, who can't spell their names. Hence, new ideas, don't reach them.

Capitalism became the order of the day, it lead to industrial revolution and
economic prosperity. But, this economic prosperity came at a cost. What was this
cost? let us see now.

Karl Marx and Communism :

Karl Marx was born in Germany. Capitalism meant competition and a struggle to
acquire as much wealth as possible. As a result, poor laborers were forced to work
for 18 hours, and also on sundays. They had no rights, they were treated as
animals. The mad desire to get rich, result in severe suffering.

Karl Marx, attacked capitalism and suggested that it was a flawed system.
The Main Points of Karl Marx's ideas :

1. Capitalism, results in exploitation of laborers. The desire to earn more capital

or money, means that the business man would employ all means fair or foul to get
his end. He will force laborers to work more and pay them less. Till a point comes,
that he will pay them an amount at which they will survive only. Also, capitalism,
means competition, Marx felt that all businesses try to defeat their enemies or
competitors. As a result monopolies or cartels will form resulting in severe
exploitation.

He asked the workers or laborers to unite against this exploitation and ask for a
communist state.

A communist state ensures that all citizen are equal. Everyone is provided with
job, education and healthcare. A doctor has the same salary as a laborer. As a
result class conflict and exploitation of poor is curtailed. There is no incentive,
as everyone gets the desired amount of money, for his survival.

Marx ideas were captured in his book das capital. Lenin a political activist was so
inspired that he launched a political struggle to form a communist country in USSR.
He eventually managed to overthrow monarchy in Russia in 1918. USSR or Russia, then
became a Socialist State. Everything was owned by the State, their was no private
property. Each individual was paid equally. China under Mao Tse Tung, also followed
Communism. After world War II, communism became a serious force.

Socialism in Pakistan :

Seeing the success of communism in russia and china. Zulfiqar ali bhutto, raised
the slogan of rotti, kapra and makan. He claimed that he would provide these
amenities to all citizens of Pakistan. Hence, he nationalized everything. Pakistan
was already reeling after the seperation of east Pakistan. Nationalization led to
massive government ownership of colleges, schools, universities, factories,
everything.

Shortfalls of communism and break up of USSR :

Communism encouraged closed economies. It did not allow, free trade between
countries. For example, US is really good at making Iphone, USSR would have not
have imported Iphone. As a result discontent arose in the people. Also, no two
people are equal in terms of intellect. Hence, a rocket scientist was paid, the
same salary as a laborer. Educated people moved out of USSR. The economy collapsed
because communism, resulted in lack of competition. NO one was willing to work
harder to earn more, as everyone was getting same salary. Also, as everything was
owned by the state, No business man or entrepreneur came. Business men in order to
gain more money, devise new methods of business. They create more opportunities,
more innovations, better products and better services. As a result communism
crashed.

Socialism in Pakistan revisited :

As socialist model had failed, it was essential that Pakistan, should move towards
capitalism. US, Europe and Australia had achieved great success on this economic
model. Hence, Pakistan embarked upon privatization. We sold State owned
enterprises. The SOE's were corrupt, useless and a loss to national exchequer.
There was no incentive for anyone to create new products, service or channels. The
government, slowly and gradually sold businesses to the private sector.

Privatization is good in all runs, long, short and medium. Provided that
privatization should be fair and transparent. Nawaz Sharif, sold, MCB and Adamjee
insurance to Mian Mansha for a few billion dollars. This time, around, it is
expected that good industrial units would be sold to business men whereas the
ordinary ones, would remain with the government.